6. Research and Development
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12 Months Ended | ||
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Dec. 31, 2011
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Research, Development, and Computer Software Disclosure [Text Block] |
The
Company has a research and development testing facility in
Midwest, Wyoming, located at the U.S. Department of Energy
Rocky Mountain Oilfield Testing Center, Naval Petroleum
Reserve #3. The Company constructs the AOT
technology prototypes with the help of various third party
entities, located in Casper, Wyoming. The
Company has purchased test equipment, pipeline pumping
equipment, crude oil tank batteries, viscometers, SCADA
systems, computer equipment and other related equipment for
the purposes of evaluating and testing its AOT
prototypes.
The
Company has research and development facilities in Morgan
Hill, California. The Company has tested ELEKTRA
technologies and legacy products incorporating our ZEFS, MK
IV for multiple makes and models diesel engines,
motorbikes, boats, generators, lawnmowers and other small
engines. The Company has purchased test
vehicles, test engines and testing equipment. The Company
incurred expenses of $1,130,283 and $427,982 for the years
ended December 30, 2011 and 2010, respectively, on its
research and development activities, and $7,444,997 from
February 18, 1998 (inception) to December 31, 2011.
Temple
University License Agreements
The
Company has entered into a research and development
agreement (R&D Agreement) with Temple University
to conduct further research on the ELEKTRA technology.
Under the R&D Agreement Temple University will conduct
a 24-month research project towards expanding the scope of,
and developing products utilizing, the technologies covered
under the License Agreements, including design and
manufacture of prototypes utilizing electric fields to
improve diesel, gasoline and kerosene fuel injection in
engines using such fuels and a device utilizing a magnetic
field to reduce crude oil viscosity for crude oil (paraffin
and mixed base) and edible oil flow in pipelines. If the
research project yields results within the scope of the
technologies licensed pursuant to the License Agreements,
those results will be deemed included as rights licensed to
the Company pursuant to the License Agreements. If the
research project yields results outside of the scope of the
technologies covered by the License Agreements, the Company
has a six-month right of first negotiation to enter into a
new worldwide, exclusive license agreement with
Temple University for the intellectual property
covered by those results. Pursuant to the R & D
Agreement, the Company will make payments to Temple
University in the aggregate amount of $500,000. At December
31, 2011 the Company has completed payment in full of
$500,000 under the R & D Agreement.
On
August 9, 2011, Save The World Air, Inc. (the
“Company”) and Temple University
(“Temple”) entered into two (2) Exclusive
License Agreements (collectively, the “License
Agreements”) relating to Temple’s patent
applications, patents and technical information pertaining
to technology associated with an electric and/or magnetic
field assisted fuel injector system (the “First
Temple License”), and to technology to reduce crude
oil viscosity (the “Second Temple
License”). The License Agreements are
exclusive and the territory licensed to the Company is
worldwide and replace previously issued License
Agreements.
Pursuant
to the two licensing agreements, the Company agreed to
pay Temple the following: (i) non-refundable license
maintenance fee of $300,000; (ii) annual maintenance fees
of $187,500; (iii) royalty fee ranging from 4% up to 7%
from revenues generated from the licensing agreements; and
(iv) 25% of all revenues generated from sub-licensees to
secure or maintain the sub-license or option thereon.
Temple also agreed to cancel $37,500 of the amount due if
the Company agrees to fund at least $250,000 in research or
development of Temple’s patent rights licensed to the
Company. The term of the licenses commences in August 2011
through the expiration of the patents contemplated
thereunder, or unless sooner terminated under terms of the
licensing agreements.
As
of December 31, 2011, the Company recorded the entire
$300,000 non-refundable license maintenance fee as part of
its research and development costs, of which, $200,000 was
paid in November 2011 and $100,000 was subsequently paid in
February 2012. Further, the Company also accrued $78,125 of
the annual maintenance fees of $187,500 which will become
due in August 2012.
As
of December 31, 2011, there were no revenues generated from
these two licenses nor the Company has made a determination
to provide the $250,000 funding in research or development
to Temple’s patent rights licensed to the
Company.
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