Quarterly report pursuant to Section 13 or 15(d)

4. Property And Equipment, Net

4. Property And Equipment, Net

6 Months Ended

Jun. 30, 2013

Property and equipment at June 30, 2013 and December 31, 2012 are as follows:

	June 30		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		495,516		410,260
Property and equipment, net	$	258,328	$	343,584

The Company uses the straight-line method of depreciation over 3 to 10 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 1, 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. 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 six months ended June 30, 2012. The Company recorded an additional impairment charge of $400,000 in the quarter ended December 31, 2012 after further review of the expected revenues from the customer prior to the bargain purchase option date of January 1, 2015. During the six months ended June 30, 2013 and 2012, respectively, depreciation expense charged to operations was $85,256 and $227,157.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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