Annual report pursuant to Section 13 and 15(d)

4. Property And Equipment, Net

4. Property And Equipment, Net

12 Months Ended

Dec. 31, 2013

Property and equipment at December 31, 2013 and 2012 are as follows:

	December 31		December 31
	2013		2012

Equipment & Installation	$	717,918	$	717,918
Office equipment		23,941		23,941
Computer equipment		11,985		11,985
Total Equipment		753,844		753,844

Less: accumulated depreciation		580,772		410,260
Property and equipment, net	$	173,072	$	343,584

As part of the reverse merger, the Company acquired office equipment with a fair value of $5,706. The Company uses the straight-line method of depreciation over 3 to 5 years. During the year ended December 31, 2011, the Company installed equipment with a total cost of $1,499,080 at the site of its first commercial customer in Centralia, Washington. This equipment is subject to a bargain purchase option on January 1st, 2015 and the Company also bears the cost of asset retirement at the end of the commercial contract should the customer not exercise the purchase option. The Company believes that if required to retire, the scrap value of the equipment would offset the cost of removal. During the years ended December 31, 2013 and 2012, depreciation expense charged to operations was $170,512 and $411,853, respectively. Due to the short-term idling of both power units at the Company’s commercial customer, the Company recorded an impairment charge of $400,000 against the value of the equipment in the quarter ended March 31, 2012. The Company recorded an additional impairment charge of $400,000 in the quarter ended December 31, 2012.