10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 x           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

¨           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-53510

 ARISTA POWER, INC.

(Exact name of Registrant as specified in its charter)

New York	16-1610794
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1999 Mount Read Blvd
Rochester, New York	14615
(Address of principal executive offices)	(Zip Code)

(585) 243-4040

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant has been required to submit and post such files). Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ¨	Accelerated filer                       ¨
Non-accelerated filer      ¨ (Do not check if a smaller reporting company)	Smaller reporting company     x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of August 6, 2012 the Registrant had outstanding 12,376,121 shares common stock, $0.002 par value.

ARISTA POWER, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Unaudited Condensed Balance Sheets as of  June 30, 2012  and December 31, 2011	1
	Unaudited Condensed Statements of Operations for the Three Months and Six Months Ended June 30 , 2012 and 2011	2
	Unaudited Condensed Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011	3
	Unaudited Statement of Stockholders' Equity through June 30, 2012	4
	Notes to Unaudited Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 4.	Controls and Procedures	21
PART II. OTHER INFORMATION		21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	23
Item 4.	Mine Safety Disclosures	23
Item 5.	Other Information	23
Item 6.	Exhibits	23
Signatures		24
Exhibits

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements and Notes

ARISTA POWER, INC.

 Condensed Balance Sheets (Unaudited)

	June 30,		December 31,
	2012		2011
ASSETS
Current assets
Cash	$	23,080	$	371,132
Accounts Receivable (less allowance for doubtful accounts of $0 at June 30, 2012 and December 31, 2011)		343,238		73,312
Prepaid expenses and other current assets		379,926		346,787
Inventory		419,148		539,124
Total current assets		1,165,392		1,330,355
Intangible assets, net		31,869		33,025
Property and equipment, net		207,574		247,858
Total assets	$	1,404,835	$	1,611,238
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current liabilities
Accounts payable	$	853,597	$	889,481
Customer deposits		64,710		112,218
Deferred revenue		146,919		0
Accrued warranty costs		140,074		135,606
Accrued liabilities		326,707		263,621
Current portion of long term debt		11,375		11,072
Total current liabilities		1,543,382		1,411,998
Long term liabilities
Long term debt		33,875		39,638
Total long term liabilities		33,875		39,638
Total liabilities		1,577,257		1,451,636
Stockholders' equity/(deficit)
Preferred stock, 5,000,000 shares authorized, $0.0001 par value; none issued or outstanding at June 30, 2012 or December 31, 2011		0		0
Common stock, 500,000,000 shares authorized, $0.002 par value;12,334,853  and 11,854,644 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively		24,669		23,709
Additional paid-in capital		21,915,600		20,407,748
Deficit accumulated		(22,112,691)		(20,271,855	)
Total stockholders' equity/(deficit)		(172,422)		159,602
Total liabilities and stockholders' equity/(deficit)	$	1,404,835	$	1,611,238

Shares outstanding and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011, as described in Note 5 to these unaudited financial statements.

The accompanying notes are an integral part of the financial statements.

1

ARISTA POWER, INC.

Statements of Operations (Unaudited)

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2012			2011			2012			2011
Sales	$	639,810		$	193,729		$	950,984		$	199,979
Cost of Goods Sold		766,847			420,630			1,262,728			649,213
Gross Loss		(127,037	)		(226,901	)		(311,744	)		(449,234	)
Operating Expenses/(Income):
Research and development expenses	$	112,258		$	258,683		$	258,559		$	618,905
Selling, general and administrative expenses		769,687			500,242			1,428,733			1,608,797
Gain arising from debt extinguishment		0			0			0			(1,000,000	)
Total expenses		881,945			758,925			1,687,292			1,227,702
Loss from operations		(1,008,982	)		(985,826	)		(1,999,036	)		(1,676,936	)
Non-operating revenue/(expense)
Interest income/(expense)		(460	)		39			(1,020	)		(8,354	)
Net loss before income taxes		(1,009,442	)		(985,787	)		(2,000,056	)		(1,685,290	)
Income taxes		0			0			159,220			0
Net loss	$	(1,009,442	)	$	(985,787	)	$	(1,840,836	)	$	(1,685,290	)
Net loss per common share - basic and diluted	$	(.08	)	$	(.11	)	$	(.15	)	$	(.20	)
Weighted average number of common shares outstanding - basic and diluted		12,212,109			8,849,488			12,073,441			8,282,760

The accompanying notes are an integral part of the financial statements.

Shares outstanding and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December, 2011, as

described in Note 5 to these unaudited financial statements.

2

ARISTA POWER, INC.

Statements of Cash Flows (Unaudited)

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
Operating activities
Net loss	$	(1,840,836	)	$	(1,685,290	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation expense		61,502			40,583
Stock-based compensation		428,826			934,753
Financing fees- issuance of warrants, non-cash		108,132			156,047
Stock issued for services and rent		251,854			146,631
Extinguishment of line of credit debt		0			(1,000,000	)
Impairment of assets		0			13,382
Changes in operating assets and liabilities:
(Increase)  in trade accounts receivable		(269,926	)		(2,053	)
(Increase)  in prepaid expenses and other current assets		(33,139	)		(116,286	)
Decrease/(increase) in inventory		119,976			(35,279	)
Decrease  in customer deposits		(47,508	)		(30,059	)
Increase in deferred revenue		146,919			0
Increase in accrued warranty costs		4,468			0
Increase/(decrease) in trade accounts payable and accrued liabilities		27,505			(43,001	)
Net cash provided by/(used in) operating activities		(1,042,227	)		(1,620,572	)
Investing Activities
Acquisition of fixed assets		(20,062	)		(30,228	)
Net cash used in investing activities		(20,062	)		(30,228	)
Financing activities
Proceeds from issuance of common stock		720,000			1,172,500
Payments of  long term debt		(5,763	)		0
Net cash provided by financing activities		714,237			1,172,500
(Decrease)/increase in cash		(348,052	)		(478,300	)
Cash – beginning of period		371,132			584,085
Cash – end of period	$	23,080		$	105,785
Supplemental Information:
Income Taxes Paid/(Tax credits received)	$	(159,220	)	$	0
Interest Paid	$	1,341		$	12,421

The accompanying notes are an integral part of the financial statements.

3

ARISTA POWER, INC.

Statement of Stockholders’ Equity

(Unaudited)

	Number of Shares		Par Value		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders' Equity
Balance, December 31, 2011		11,854,644	$	23,709	$	20,407,748	$	(20,271,855	)	$	159,602
Issuance of common stock		120,000		240		239,760					240,000
Issuance of common stock for goods and services		119,191		238		251,616					251,854
Issuance of warrants with private placements						36,662					36,662
Stock options and stock compensation		380		1		153,969					153,970
Share rounding for reverse stock split		272									0
Net loss for quarter								(831,394	)		(831,394	)
Balance, March 31, 2012		12,094,487		24,188	$	21,089,755	$	(21,103,249	)	$	10,694
Issuance of common stock		240,000		480		479,520					480,000
Issuance of warrants with private placements						71,470					71,470
Stock options and stock compensation		366		1		274,855					274,856
Net loss for quarter								(1,009,442	)		(1,009,442)
Balance, June 30, 2012		12,334,853	$	24,669	$	21,915,600	$	(22,112,691	)	$	(172,422)

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011, as described in Note 5 to these unaudited financial statements.

The accompanying notes are an integral part of the financial statements.

4

ARISTA POWER, INC.

Notes to the Financial Statements

Six-Month Period ended June 30, 2012

(Unaudited)

Note 1 – Description of Business and Summary of Significant Accounting Policies

Description of Business

Arista Power, Inc. (the “Company” or “Arista Power”) was incorporated on March 30, 2001 in the State of New York as Future Energy Solutions, Inc. and in November 2008 changed its name to WindTamer Corporation. In May 2011, the Company changed its name to Arista Power, Inc. to reflect the broadening of the Company’s focus beyond the WindTamer® brand.  The Company is a developer, manufacturer, and supplier of custom-designed power management systems, renewable energy storage systems, WindTamer wind turbines, and a supplier and designer of solar energy systems.

Basis of Preparation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.

In the opinion of management, all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results of operations have been included in the accompanying unaudited condensed financial statements.  Operating results for the three and six-month period ended June 30, 2012 are not necessarily indicative of the results to be expected for other interim periods or the full fiscal year.  These financial statements should be read in conjunction with the financial statements and accompanying notes contained in the Arista Power Form 10-K for the fiscal year ended December 31, 2011.

Method of Accounting

The accompanying financial statements have been prepared in accordance with GAAP.  Arista Power maintains its books and prepares its financial statements on the accrual basis of accounting.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers all short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents.  The Company maintains its cash and cash equivalents in bank deposit accounts, which at times may exceed federally insured limits.  The Company believes it is not exposed to any significant credit risk as a result of any non-performance by the financial institutions.

5

Accounts Receivable

Accounts receivable represents amounts due from customers in the ordinary course of business, based upon invoiced amounts, net of any allowance for doubtful accounts.  We evaluate accounts receivable quarterly on a specific account basis to determine the need for an allowance for doubtful account reserve.  As of June 30, 2012 and December 31, 2011, no such reserve is deemed necessary.

Inventory

Inventory consists primarily of parts and subassemblies for Power on Demand systems, solar photovoltaic (“PV”) systems, and wind turbines, and is stated at the lower of cost or market value.  The Company capitalizes applicable direct and indirect costs incurred in the Company’s manufacturing operations to bring its products to a sellable state.  The inventory as of June 30, 2012 consisted of raw materials amounting to $113,052 and work-in-process amounting to $306,096.  Inventory is reviewed quarterly to determine the need for an excess and obsolete inventory reserve.  As of June 30, 2012 and December 31, 2011, the reserve amounted to $63,004 and $47,171, respectively.

Fixed Assets

Fixed assets are recorded at cost.  Depreciation is on a straight line basis over the shorter of the estimated useful lives or the related lease for leasehold improvements.  Leasehold improvements for space leased on a month-to-month basis are expensed when incurred.  Expenditures for renewals and betterments are capitalized.  Expenditures for minor items, repairs and maintenance are charged to operations as incurred.  Any gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Intangible Assets

Intangible assets consist of costs associated with the application and acquisition of the Company’s patents and trademarks.  Patent application costs are capitalized and amortized over the estimated useful life of the patent, which generally approximates its legal life.  

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset, including its ultimate disposition.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets.   For the six months ended June 30, 2012 no assets were impaired. For the six months ended June 30, 2011, the Company impaired assets totaling $13,382.

Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity.

6

Revenue Recognition

Revenue is recognized when all of the following conditions are satisfied:   (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the sale price to be paid by the customer is fixed or determinable; and (4) the collection of the sale price is reasonably assured.  Amounts billed and/or collected prior to satisfying our revenue recognition policy are reflected as customer deposits.

For research and development contracts, we recognize revenue using the proportional effort method based upon the relationship of cost incurred to date to the total estimated cost to complete the contract.  Cost elements include direct labor, materials, overhead, and outside contractor costs. The excess of amounts billed on a milestone basis versus the amounts recorded as revenue on a proportional effort basis is classified as deferred revenue. We provide for any loss that we expect to incur on these agreements when the loss is probable.

The Company’s top customer accounted for approximately 64% of revenues for the three and six months ended June 30, 2012, and this customer’s accounts receivable balance amounted to 62% of the total accounts receivable as of June 30, 2012.

Research and Development Costs

All costs related to research and development are expensed when incurred, unless these costs have an alternative future value to research and development, in which case they are capitalized.  Research and development costs consist of expenses to enhance the WindTamer® wind turbine design, and costs associated with the development of the Company’s Power on Demand system and the Mobile Renewable Power Station.  Specifically, these costs consist of labor, materials, and consulting.

Warranty Costs

The Company’s standard warranty on each Power on Demand system, wind turbine, and solar system sold protects against defects in design, material, and workmanship under normal use for varying periods, based upon the product sold.  Several warranties have specific additional terms and conditions.  The Company provides for estimated cost of warranties at the time the revenue is recognized.  Factors that affect the warranty reserve are projected cost of repair and/or replacement, component life cycles, manufacturer’s warranty on component parts, and limited historical data. These estimates are reviewed quarterly and are updated as new information becomes available. The impact of any change in estimates will be taken into account when analyzing future warranty reserve requirements.

Stock-Based Compensation

The Company accounts for stock option awards granted under the Company’s Equity Incentive Plan in accordance with ASC 718. Under ASC 718, compensation expense related to stock-based payments is recorded over the requisite service period based on the grant date fair value of the awards.  Compensation previously recorded for unvested stock options that are forfeited is reversed upon forfeiture.  The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50.  Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant’s or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Income Taxes

The Company accounts for income taxes using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.

7

Basic and Diluted Loss Per Share

Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period.  Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued.  In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potentially issued common shares would be anti-dilutive.

As of June 30, 2012, there were 517,400 stock options and 1,699,250 warrants outstanding which, upon exercise, could dilute future earnings.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Note 2 - Going Concern

The financial statements have been prepared assuming that the Company will continue as a going concern.  Since its formation, the Company has generated minimal sales volumes and has incurred a cumulative net loss of ($22,112,691).  The minimal sales volumes to date and recurring losses from operations raise substantial doubt about the Company’s ability to continue as a going concern.  Continuation of the Company is dependent on achieving sufficiently profitable operations and obtaining additional financing.

From 2007 through 2010, the Company raised approximately $4.1 million through multiple private placement offerings at varying prices.  The Company yielded $1.67 million from the exercise of 1.67 million stock options for the year ended December 31, 2009.  The Company established a $1.0 million line of credit with First Niagara Bank on April 26, 2010. On March 17, 2011, the Company received written notice from the Guarantors of the loan agreement (two Company officers and one shareholder) that the Guarantors were required by First Niagara Bank to repay the $1.0 million principal balance of the Company’s line of credit.  The Company has no liability to the Guarantors as a result of the repayment by the Guarantors of the line of credit.  Other than accrued interest and applicable fees, which have been fully repaid, the Company had no liability to the Lender under the line of credit. As a result of this debt extinguishment, the Company recorded a $1.0 million non-cash gain during the three months ended March 31, 2011.

During 2011, the Company raised $3.2 million through private placement sales of “units” that included shares of common stock and a warrant to purchase common stock. In March 2012, the Company sold 16 units generating $240,000, and in April, May and June 2012, an additional 32 units were sold for $480,000. In July 2012, the Company sold 5 units to raise $75,000. This working capital is not expected to be sufficient to fund operational growth, and the Company expects to need to raise additional capital.  There can be no assurance that the Company will continue to be able to raise sufficient capital, at terms that are favorable to the Company or at all, to fund operations.

Note 3 – Long-lived Assets

The following table summarizes the Company’s long-lived assets as of:

	June 30, 2012			December 31, 2011
Property and equipment
Equipment	$	264,861		$	244,799
Furniture and fixtures		38,950			38,950
Software		71,625			71,625
Product Tooling		51,373			51,373
Total property and equipment before accumulated depreciation		426,809			406,747
Less accumulated depreciation		(219,235	)		(158,889	)
Total property and equipment	$	207,574		$	247,858

Intangible assets
Patents	$	34,862		$	34,862
Trademark		4,525			4,525
Total intangible assets before accumulated amortization		39,387			39,387
Less accumulated amortization		(7,518	)		(6,362	)
Total intangible assets	$	31,869		$	33,025

8

Note 4 – Debt

In April 2010, the Company established a $1.0 million line of credit with First Niagara Bank to provide the Company with liquidity.  The facility was secured by the guarantees of two officers of the Company and one shareholder of the Company. The line of credit interest rate was at prime rate, plus 0%, but at no time would the applicable interest rate be less than 3.25%.

The borrowings under the loan agreement were secured by limited guarantees provided by two of our officers, William Schmitz and Molly Hedges, and one of our shareholders, Michael Hughes.  The guarantees were supported by cash collateral accounts maintained by the individuals at First Niagara Bank. Additionally, Gerald Brock, a former director of the Company, granted the guarantors the right to sell 1,000,000 of his shares of our common stock in the event they were required to pay under the guarantees.  Mr. Brock pledged his 1,000,000 shares of the Company’s common stock owned by him as security for his obligations to the guarantors.

In connection with the guarantees, the Company issued to Mr. Brock and the guarantors warrants to purchase an aggregate of 1,450,000 shares of our common stock at $5.00 per share.  The warrants have a term of 10 years, with a six-month incremental vesting schedule in tranches of 25% of the shares under each warrant from the date of issue. As of June 30, 2012, all of these warrants have vested.

On February 26, 2011, the Company received a notice of potential opportunity to cure default from First Niagara Bank, which included a demand payment for interest due of $10,976 as of February 23, 2011 under the Company’s loan agreement.  The notice provided that if the events of default were not cured by March 4, 2011, First Niagara Bank, at its sole discretion, could accelerate or demand payment in full of the obligations and take all enforcement actions or otherwise implement remedies under the applicable loan agreements.  The default was not cured by the Company by March 4, 2011.  Pursuant to the loan agreement, the interest rate under the line of credit had increased by 6% to 9.25% as of the date of the notice.  On March 12, 2011, the Company received a demand notice from First Niagara Bank, demanding payment for full indebtedness to the bank including line of credit principal and interest of $1,012,421, and credit card debt of $25,351 by no later than March 17, 2011.  On March 17, 2011, the Company received written notification from the guarantors of the loan agreement that the guarantors were required by the lender, and did, on March 17, 2011, repay the $1.0 million principal balance of the Company’s working capital revolving line of credit with the Lender.  The Company has no liability to the guarantors as a result of the repayment by the guarantors of the line of credit, and accordingly, the Company recorded a $1.0 million gain on the extinguishment of the line of credit debt during the three months ending March 31, 2011.  Other than accrued interest and applicable fees, which have been fully repaid, the Company had no liability under the line of credit.

On August 24, 2011, the Company purchased equipment for $44,748, financed with a loan from Canandaigua National Bank.  The loan is guaranteed by William Schmitz, our CEO, has a 60-month term, and carries a 4.99% annual interest rate.  Monthly payments are $844. On October 14, 2011, the Company leased office equipment for $9,068, financed with a loan from Canon Financial Services, Inc.  The loan, with monthly payments of $279, has a 6.76% annual interest rate and a 36 month term.  The end of term purchase option calls for a payment of the equipment’s fair market value.

Annual maturities of debt are as follows:

2012	(7/1/2012-12/31/2012)	$	5,610
2013		$	11,688
2014		$	11,782
2015		$	9,540
2016		$	6,629

9

Note 5 – Stockholders’ Equity

On March 7, 2012, our Board of Directors approved a private placement for the sale of up to 100 units, with each unit costing no less than $15,000 and consisting of 7,500 shares of the Company’s common stock and a warrant to purchase 1,000 shares of the Company’s common stock at $10.00 per share.  Each warrant vests two years from the date of purchase of the applicable unit and has a ten-year life.  Each purchaser of the units has agreed not to sell any shares of common stock purchased in the private placement for at least one year.  During March 2012 the Company sold 16 units, which yielded $240,000, and in April, May and June 2012, the Company sold 32 units for $480,000.  In July 2012, the Company sold 5 units for $75,000.

In March 2012, we issued 119,191 shares of our common stock to strategic vendor-investors in lieu of cash for goods and services totaling $251,854.  In August 2012, 3,768 shares of our common stock were issued to a strategic vendor for services totaling $7,160.

On October 18, 2011, the Company’s Board of Directors approved, authorized, and recommended to the Company’s shareholders to file a Restated Certificate to effect a one for twenty reverse stock split. As of November 17, 2011, the holders of approximately 74% of the aggregate voting power of Common Stock delivered to the Registrant written consents approving the adoption of the Restated Certificate.  On December 21, 2011, the Company filed its Restated Certificate of Incorporation with the Secretary of the State of New York, and on December 27, 2011 the one for twenty reverse stock split became effective.  All stock related disclosures, including number of shares of common stock, stock options, warrants, and loss per share calculations have been restated retrospectively to reflect the one for twenty reverse stock split for all periods presented.

During 2011, the Company raised $3.2 million in multiple private placement sales of “units”, $1.2 million of which was raised during the six months ended June 30, 2011.  Each unit cost $17,500 and consisted of 25,000 shares of common stock and a warrant to purchase 875 shares of common stock at $10.00 per share. The warrants fully vest two years from the date of the unit purchase, and have a ten-year term.

In 2011, the Company issued 46,500 shares of common stock to vendors for services totaling approximately $174,000, which included approximately 19,400 shares issued to the Company’s landlord of its Rochester, New York headquarters for base rent payments. Of this amount, approximately 37,000 shares, totaling $147,000 were issued during the six months ended June 30, 2011.

Note 6 – Stock Based Compensation

The Company has established the 2008 Equity Incentive Plan, which is a shareholder-approved plan that permits the granting of stock options and restricted stock to employees, directors and consultants. The 2008 Equity Incentive Plan provides for the issuance of up to 800,000 shares of common stock of which 50,000 shares are available for grant as Incentive Stock Options.  The exercise price for options awarded is no less than 100% of the fair market value of the common stock on the day of grant.  The options generally vest either immediately on the date of grant or 1 to 3 years from the date of grant. In March 2012, the Board of Directors approved an amendment to increase the number of shares available for award under the plan to 1,550,000.  This amendment was approved by shareholders at the Annual Meeting of Shareholders held on May 9, 2012.

For the six months ended June 30, 2012, the Company recorded compensation costs for options and shares granted under the plan of $428,826, as compared to $934,753 for the six months ended June 30, 2011.

Management has valued the options at their date of grant utilizing the BlackScholes option pricing model.  Prior to the fourth quarter of 2009, there was not a public market for the Company shares.  Accordingly, the fair value of the underlying shares was determined based on recent transactions by the Company to sell shares to third parties and other factors determined by management to be relevant to the valuation of such shares.  Beginning in the fourth quarter of 2009, the quoted price for the Company’s shares on the OTCBB was used to value the underlying shares.  Expected volatility is based upon a weighted average historical volatility of peer companies operating in a similar industry.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options.  The expected life of options used was based on the contractual life of the option granted.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  The following weighted-average assumptions were utilized in the fair value calculations for options granted:

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	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		96-97	%		97-98	%
Risk-free interest rate		2.59-2.70	%		3.91-4.20	%
Expected life of options	2.0-9.9 Years			3.0-9.9 Years

The following table summarizes the status of the Company’s aggregate stock options granted:

	Number of Shares Remaining Options		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		364,400	$	5.20
Options granted during 2012		175,000	$	2.04
Options cancelled/expired during 2012		(22,000)		5.76
Outstanding at June 30, 2012		517,400	$	4.11		8.32	$	144,678
Exercisable at June 30, 2012		368,000	$	4.20		8.29	$	78,878

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these unaudited financial statements.

For the six months ended June 30, 2012, the Company recorded compensation costs for options granted under the plan of $426,730 as compared to $409,011 for the six months ended June 30, 2011. Stock option grants amounted to175,000 for the six months ended June 30, 2012 (60,400 for the six months ended June 30, 2011) while 140,400 options vested during that period, and 22,000 options were cancelled or terminated for the six months ended June 30, 2012 (20,250 options were cancelled for the six months ended June 30, 2011). No options were exercised for the six months ended June 30, 2012 or 2011.

The weighted average fair value of options granted during the six months ended June 30, 2012 was approximately $2.04 ($4.40 for the six months ended June 30, 2011). 

On December 13, 2010, the Board of Directors approved a restricted stock grant award to certain employees in lieu of future salary cash payments.  The employees forfeited salary over a twelve-week period to purchase common shares, which were valued at fair market value as of the date of grant.  The Compensation Committee of the Company’s Board of Directors approved a change in the vesting date for restricted stock held by certain employees from April 1, 2011 to August 1, 2011. The Compensation Committee of the Company’s Board of Directors subsequently approved amendments to change the vesting date of these restricted shares to November 15, 2012.  A total of 55,969 shares vested on April 1, 2011, and the remaining 169,368 shares are scheduled to vest on November 15, 2012.

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The following table summarizes the status of the Company’s restricted share awards:

Restricted Shares	Number of Restricted Shares		Weighted Average Fair Value at Grant Date
Non-vested at  June 30, 2012		169,368	$	2.80

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these financial statements.

The aggregate expense associated with the restricted stock awards is $698,690, of which $594,498 was expensed in 2011($525,636 for the six months ended June 30, 2011) and $104,192 was expensed in 2010. 

Note 7 – Warrants

Management has valued warrants at their date of issue utilizing the Black-Scholes option pricing model.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the warrants depending on the date of the issue and their expected life.  The expected life of warrants used was based on the term of the warrant.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  The following weighted-average assumptions were utilized in the fair value calculations for warrants granted:

	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		97-98	%		97-98	%
Risk-free interest rate		2.32-3.03	%		3.95-4.24	%
Expected life of warrants	7.8-9.9 years			8.8-9.9 years

The following table summarizes the status of the Company’s warrants granted:

	Number of Shares Remaining Warrants		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,651,250	$	5.61
Warrants granted during 2012		48,000	$	10.00
Warrants expired/cancelled during 2012		0
Outstanding at June 30,2012		1,699,250	$	5.73		8.04	$	0
Exercisable at June 30, 2012		1,087,500	$	5.00		7.83	$	0

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these unaudited financial statements.

The weighted average fair value of warrants issued during six months ended June 30, 2012 and 2011 was $10.00.  During the six months ended June 30, 2012 and 2011, no warrants vested, none expired or were cancelled.   No warrants have been exercised for the six months ended June 30, 2012 and 2011.

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Note 8 – Consulting Agreements

On May 24, 2010, the Company entered into an agreement with an individual to become a technical consultant, and to assist in further optimization of the Company’s ducted wind turbines. This individual is currently a professor of senior aircraft design and performance courses at the Clarkson University, in Potsdam, New York, the location of one of the Company’ s wind turbine test sites.  Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company.  In conjunction with the agreement, the individual received 10,000 stock options, vesting over a one-year period.  For the six months ended June 30, 2011, the Company expensed $6,746 relating to these options. As of December 31, 2011, all expenses associated with this stock option grant had been recognized.

On October 11, 2010, the Company entered into an agreement with an individual to become a technical consultant, and to assist further in the development of the Company’s ducted wind turbines. This individual is currently an associate professor of architectural engineering and an adjunct professor of mechanical and nuclear engineering at the Pennsylvania State University in University Park, Pennsylvania. Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company. In conjunction with the agreement, the individual received 5,500 stock options vesting over a three-year period. The Company expensed $9,632 relating to these options for the six months ended June 30, 2012, as compared to $7,822 for the six months ended June 30, 2011.

On July 30, 2012, the Company entered into an agreement with an individual to become a technical consultant and to assist in the further development of the Company’s intelligent microgrid system. The individual is currently a professor of electrical engineering at Rochester Institute of Technology in Rochester, NY.  Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company. In conjunction with the agreement, the individual is eligible to receive up to 20,000 shares of restricted stock based upon the completion of certain performance milestones.

Note 9 – Commitments and Contingencies

Employment Agreements

As of June 30, 2012, the Company has employment agreements in place with five members of senior management.  The terms of the agreements are for three years, with the Company’s option to extend employment for a fourth year.  Annual compensation required under the agreements includes base salary aggregating $872,000, as well as annual bonuses based upon achieving certain performance milestones.  All of these agreements contain severance provisions in the event of termination of the employee without cause that require continued payment of the annual salary through the term of the agreement but for a minimum period of at least two years.  The agreements expire at varying times over the period from November 14, 2012 through March 1, 2013.

Operating Lease

On August 20, 2009, the Company entered into a lease for office space in Geneseo, New York requiring a monthly rental payment of $1,400, which commenced on November 1, 2009 and expired October 31, 2011 with a two year renewal option.  In June 2010, the Company relocated its headquarters from Geneseo, New York to Rochester, New York into a larger location.  Inventory, warehousing, and assembly space at the Geneseo facility was neither large enough, nor flexible enough, to allow for continued growth, and therefore management determined that it was prudent to move to a location that could accommodate both manufacturing and assembly growth, as well as to house research and development activities and administrative office space.  On January 27, 2011, the Company signed an agreement and mutual release with the landlord of the Geneseo facility, which provided for the issuance of 1,500 shares of the Company’s common stock as settlement for the early termination of the lease.

In October 2010, we executed a lease for the Rochester facility.  The lease term is from August 2010 through July 2015.  The first year of the lease term requires monthly base rent payments of $5,396, payable in cash or in the Company’s common stock. The base rent increases by 3% on August 1st of the each year of the lease.  The Company also is required to pay its proportionate share of real estate taxes and common area maintenance costs for the Rochester facility.

Annual commitments by year under the Company’s lease agreements are as follows:

	Rental Commitment
2012	$	67,528
2013	$	69,554
2014	$	71,641
2015	$	42,513

Our landlord entered into a lease with a third party that will occupy certain of the space at our existing Rochester facility. We are negotiating with our landlord.

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Warranty

The Company entered into a number of sales orders for Power on Demand systems, solar installations, and wind turbine units.  Certain of these sales orders required deposits of the agreed-upon portion of the purchase price upon acceptance of the sales order.  The advance payments received as of June 30, 2012 amounted to $64,710 (the December 31, 2011 total was $112,218) and have been included in customer deposits.  We expect to install the systems and units associated with these deposits during the next two quarters, as we obtain permits and zoning approvals from customers’ town officials, obtain New York State Energy Research Development Authority (“NYSERDA”) approvals, complete site assessments, and continue product evaluation. The sales orders included product warranties of varying periods, depending on the product sold, against defects in materials and workmanship. The Company provides for estimated cost of warranties at the time the revenue is recognized and has established a corresponding warranty reserve.  Factors that affect the balance required in the warranty reserve are projected cost of repair and/or replacement, component life cycles, manufacturer’s warranty on parts and components, and limited historical data. These estimates are reviewed quarterly and are updated as new information becomes available. The impact of any change in warranty cost estimates will be taken into account when analyzing future warranty reserve requirements. As of June 30, 2012 and December 31, 2011, the warranty reserve totals $140,074 and $135,606 respectively. The following table summarizes the activity in the accrued warranty account:

	June 30, 2012			December 31, 2011
Balance as of beginning of year	$	135,606		$	50,690
Warranty costs accrued		32,816			118,935
Settlements made		(28,348	)		(34,019	)
Total accrued warranty costs	$	140,074		$	135,606

Note 10 –Income Taxes

The Company filed its 2010 New York State corporate income tax return during March 2011, which generated a tax credit for being a Qualified Emerging Technology Company. In January of 2012, the Company received payment for this tax credit, which is reflected in results for the six months ended June 30, 2012.

Note 11- Subsequent Events

In July 2012, we sold 5 units of our common stock which yielded $75,000.  In August 2012, we issued 3,768 shares of our common stock to a strategic vendor for service totaling $7,168.

Note 12- Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”.  ASU No. 2011-05 requires entities to present the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements of net income and other comprehensive income.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity.  ASU No. 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  Furthermore, in December 2011, the FASB issued ASU No. 2011-12 “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” This update defers the effective date of ASU No. 2011-05’s requirement to present on the face of the financial statements reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income so that the FASB can reconsider those requirements during calendar 2012. These standards were effective retrospectively for annual and interim reporting periods beginning after December 15, 2011, with early adoption permitted. Our adoption of these standards during the  2012 did not have a significant impact on our financial statements, as we currently do not have any adjustments to net income in the determination of such comprehensive income.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited historical financial statements and the related notes and the other financial information included elsewhere in this report and in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2012. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of any number of factors, including those set forth under “Information Concerning Forward-Looking Statements” and under other captions contained elsewhere in this report.

Company Overview

We are a developer, manufacturer, and supplier of custom-designed power management systems, renewable energy storage systems, WindTamer wind turbines, and a supplier and designer of solar energy systems.  Our patent-pending Power on Demand system utilizes inputs from multiple energy sources including wind, solar, fuel cells, and the electric grid, in conjunction with a custom-designed battery storage system and a proprietary smart monitoring technology, that releases energy at optimal times to reduce peak power demand, thereby lowering electricity costs for large energy users who are subject to peak usage pricing.  We also sell a Mobile Renewable Energy Station that generates wind and solar energy to an onboard storage unit for military and other applications, and a Renewable Power Station that is a scalable system that can be containerized and drop-shipped to the end-user and assembled onsite at off-grid locations to be used as a “micro-grid”.  Our diffuser-augmented WindTamer® wind turbine utilizes a patented technology for the production of electrical power.   

We were incorporated in New York on March 30, 2001, under the name Future Energy Solutions, Inc.  In November 2008, we changed our name to WindTamer Corporation.  On May 18, 2011, we changed our name to Arista Power, Inc.  Our name change reflected management’s decision to broaden our focus beyond wind turbines.   Our corporate headquarters is located at 1999 Mt. Read Boulevard, Rochester, New York.  Our website address is www.aristapower.com.

The WindTamer® wind turbine was invented in 2002, and in 2003 a patent was issued for the WindTamer® wind turbine technology.  From 2002 until the fourth quarter of 2009, we focused primarily on research and development of our technology and production and testing of WindTamer® wind turbine prototypes.  In the fourth quarter of 2009, we began selling our wind turbines.

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In 2010, we continued selling and installing our wind turbines in a variety of grid-tied and off-grid applications.  Throughout 2010, we also continued research and development efforts on our WindTamer® wind turbine in order to increase the power production of the wind turbine and to decrease its installation and manufacturing costs.  In the first half of 2010, we developed and sold our first Mobile Renewable Power Station for testing and use by the U.S. Army, and operated as a development stage company.  During the second half of 2010, we exited reporting as a development stage company, as a result of increased customer order bookings and sales. We also developed and sold our Power on Demand energy management system, the first of which was commissioned in the first quarter of 2011.  In the fourth quarter of 2010, we began selling solar PV, and installed our first solar PV system in the first quarter of 2011.

During 2011, we continued the research and development of all of our products, with most efforts directed on our Power on Demand system and Mobile Renewable Power Station.  The development of our Power on Demand system and our Mobile Renewable Power Station progressed to where we were able to increase our sales and marketing efforts of such products late in 2011.  Thus far, in 2012, we have continued our research and development efforts of these products, and have enhanced our product marketing efforts through the attendance at numerous trade shows.

As of August 7, 2012, the Company’s current order backlog is approximately $2.2 million which consists of orders for several Power on Demand systems, solar PV systems, and development contracts. Approximately $.8 million of the total backlog is for orders booked in 2012. Total orders booked to date in 2012 amount to $1.5 million.

Financial Operations

From 2002 until the fourth quarter of 2009, we focused primarily on research and development of our technology and production and testing of WindTamer® wind turbine prototypes.  In the fourth quarter of 2009, we began hiring our management, sales and engineering teams and selling our turbines.  In 2010, we continued selling and installing our wind turbines in a variety of grid-tied and off grid applications.  Other than the Mobile Renewable Power Station that we sold for use by the U.S. Army, substantially all of our revenue generated in 2010 was attributable to the sales of WindTamer® wind turbines.  In 2011, we generated revenues from the sales of not only the WindTamer® turbine and Mobile Renewable Power Station, but also our patent-pending Power on Demand system and numerous solar PV installations.

The Company expects to incur substantial additional costs, including costs related to continued product development and expansion. We have utilized the proceeds raised from our private placements to develop and commercialize our Power on Demand system, our Mobile Renewable Power Station, our Renewable Power Station, and our WindTamer® wind turbines, as well as to sustain our operations.  Our future cash requirements will depend on many factors, including the volume and the timing of future orders and sales, continued progress in our product development and cost effectiveness programs, costs to continue to develop both domestic and international sales and distribution channels, and competing technological and market developments. The timing of our ability to generate a positive cash flow will be directly dependent on the way we are able to succeed in managing these factors.

We may require additional external financing to sustain our operations if we cannot achieve positive cash flow from our anticipated operations. Additionally, even if we are able to achieve positive cash flow from operations, we may continue to seek to raise additional capital to accelerate our growth or expand our manufacturing and distribution infrastructure. Success in our future operations is subject to a number of technical and business risks, including our continued ability to obtain future funding, satisfactory product development, and market acceptance for our products.

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Results of Operations

Results of Operations for Quarter Ended June 30, 2012 Compared to Quarter Ended June 30, 2011.

Revenues

During the quarter ended June 30, 2012, we reported revenues of $640,000 as compared with revenues of $194,000 for the quarter ending June 30, 2011. The 230% increase in revenues is attributable to the Phase One development of an Intelligent Micro-Grid for Renewable Energy for Distributed Under-Supplied Command Environments (“REDUCE”) under the guidance of the U.S. Army Communications-Electronics Research, Development and Engineering.

We have received deposits from customers totaling approximately $65,000 as of June 30, 2012. We expect to realize sales associated with these deposits during the next several quarters, as we obtain permits and zoning approvals from customers’ town officials and NYSEDRA for solar PV installations, complete site assessments, and complete installations and inter-connection agreements, although there can be no assurance that we will be able to meet this schedule.

We continue to expand our selling efforts where, by coupling our power management systems with renewable solar and wind energy, we can provide our customers with an attractive return on investment.

Gross Loss

For the quarter ended June 30, 2012, gross loss amounted to $127,000 as compared to $227,000 for the quarter ended June 30, 2011.  The improvement in gross loss is attributable to sales volume increases as well as favorable margins on our solar “PV” installations.

Research and Development

Research and development costs for the quarter ended June 30, 2012 totaled $112,000 as compared to $259,000 for the quarter ended June 30, 2011. This decrease results from research and development funding associated with the Phase One development of an Intelligent Micro-Grid for Renewable Energy for Distributed Under-Supplied Command Environments (“REDUCE”) contract award. A portion of the funding received by the Company for the Phase One development of an Intelligent Micro-Grid for REDUCE will offset operating expenses, as well as any funds received by the Company on any future phases of this project.

Selling, General and Administrative

Selling, general and administrative expenses, or SG&A expenses, for the quarter ended June 30, 2012, were $770,000, as compared to $500,000 for the quarter ended June 30, 2011.  The increase over the prior year was related primarily to an increase in selling expenses to support our expanded sales and marketing efforts, and in non-cash stock option costs for an award to non-employee directors in May 2011.

Depreciation and Amortization

Depreciation and amortization charges were $30,000 for the quarter ended June 30, 2012, compared to $28,000 during the quarter ended June 30, 2011 due to capital purchases made to support business requirements over the last several quarters.

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Other Income (Expense)

Interest expense for the quarters ended June 30, 2012 and 2011 was minimal.

Net Loss

We incurred net losses of $1,009,000 and $986,000 for the quarters ended June 30, 2012 and 2011, respectively. Improved sales margins were offset by higher sales and administrative expenses, primarily due to an increase in non-cash stock option expense.

Results of Operations for Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011.

Revenues

During the six months ended June 30, 2012, we reported revenues of $951,000 as compared with revenues of $200,000 for the six months ended June 30, 2011. The increase in revenues is attributable to the Phase One development of an Intelligent Micro-Grid for Renewable Energy for Distributed Under-Supplied Command Environments (“REDUCE”) under the guidance of the U.S. Army Communications-Electronics Research, Development and Engineering, as well as an increase in the sale of solar “PV” systems, which were added to the Company’s product portfolio in December, 2010.

We have received deposits from customers totaling approximately $65,000 as of June 30, 2012. We expect to realize sales associated with these deposits during the next several quarters, as we obtain permits and zoning approvals from customers’ town officials and NYSEDRA for solar PV installations, complete site assessments, and complete installations and inter-connection agreements, although there can be no assurance that we will be able to meet this schedule.

We continue to expand our selling efforts where, by coupling our power management systems with renewable solar and wind energy, we can provide our customers with an attractive return on investment.

Gross Loss

For the six months ended June 30, 2012, gross loss amounted to $312,000 as compared to $449,000 for the six months ended June 30, 2011.  The improvement in gross loss is attributable to sales volume increases, as well as profitable margins recognized on our solar “PV” installations. 

Research and Development

Research and development costs for the six months ended June 30, 2012 totaled $259,000 as compared to $619,000 for the six months ended June 30, 2011. This decrease results from research and development funding associated with the Phase One development of an Intelligent Micro-Grid for Renewable Energy for Distributed Under-Supplied Command Environments (“REDUCE”) contract award. A portion of the funding received by the Company for the Phase One development reduced operating expenses.  Additionally for the six months ended June 30, 2011, there was a non-cash expense associated with the award of restricted stock to employees that did not recur in 2012.

Selling, General and Administrative

Selling, general and administrative expenses, for the six months ended June 30, 2012, were $1,429,000, as compared to $1,609,000 for the six months ended June 30, 2011.  The decrease in year over year expenses was related primarily to the non cash expenses associated with the award of restricted stock to employees in 2011, and to a reduction in 2012 non-cash financing fees associated with multiple private placements.

Depreciation and Amortization

Depreciation and amortization charges were $62,000 for the six months ended June 30, 2012, compared to $41,000 during the six months ended June 30, 2011 due to capital purchases made to support business requirements over the last several quarters.

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Gain on Debt Extinguishment

The Company recorded a $1,000,000, non-recurring, non-cash gain for the six months ended June 30, 2011, as a result of the default and settlement of the Company’s $1,000,000 working capital loan by the guarantors of the loan. The Company had no obligation to the guarantors as a result of the repayment of the loan.

Other Income (Expense)

Interest expense for the six months ended June 30, 2012 was $1,000, as compared to an expense of $8,000 for the six months ended June 30, 2011, which related to borrowing activity on our line of credit.

Income tax credits were $159,000 for the six months ended June 30, 2012, as we received a New York State tax refund associated with the Company’s Qualified Emerging Technology status for the tax year ended December 31, 2010. No such credit was received during the six months ended June 30, 2011.

Net Loss

We incurred net losses of $1,841,000 and $1,685,000 for the six months ended June 30, 2012 and 2011, respectively. Higher sales and improved gross loss, coupled with a decrease in operating expenses in 2012 was offset by the 2011 $1,000,000 gain on debt extinguishment recorded during February 2011.

Liquidity and Capital Resources

As of June 30, 2012, we had a working capital deficit of $378,000 as compared to a working capital deficit of $285,000 as of June 30, 2011. The decrease in working capital is due to net losses generated from operations, offset by private placement funding.  

During the quarter ending March 31, 2011, the Company generated a $1.0 million gain from the extinguishment of line of credit debt. On February 26, 2011, the Company received a notice of potential opportunity to cure default from First Niagara Bank, with whom the Company had established a $1.0 million working capital line of credit in April 2010, which included a demand payment for interest due of $10,976 as of February 23, 2011 under the Company’s loan agreement.  The notice provided that if the events of default were not cured by March 4, 2011, First Niagara Bank, at its sole discretion, may accelerate or demand payment in full of the obligations and take all enforcement actions or otherwise implement remedies under the applicable loan agreements.  The default was not cured by the Company by March 4, 2011.  Pursuant to the loan agreement, the interest rate under the line of credit was increased by 6% to 9.25% as of the date of the notice.  On  March 12, 2011, we received a demand notice from First Niagara Bank, demanding payment for full indebtedness to the bank including line of credit principal and interest of $1,012,421, and credit card debt of $25,351 by no later than March 17, 2011.  On March 17, 2011, the Company received written notification from the guarantors of the loan agreement that the guarantors were required by the lender, and did, on March 17, 2011, repay the $1.0 million principal balance of the Company’s working capital revolving line of credit with the Lender.  The Company has no liability to the guarantors as a result of the repayment by the guarantors of the line of credit.  Other than accrued interest and applicable fees, which have been repaid, the Company has no liability under the line of credit.

In addition to our $1.0 million working capital loan, our principal source of liquidity has been through private placement offerings of our common stock and warrants to purchase common stock. From 2008-2010, the Company raised $4.0 million through private placement sales of common stock at varying prices.  Out of pocket costs associated with these private placements were minimal.  Additionally, in November 2009, 1,670,000 stock options were exercised, which yielded $1.7 million.  In 2011, the Company raised $3.2 million through sales of “units”, which included shares of common stock and a warrant to purchase common stock.  The warrant vests two years from the date of purchase and has a ten year term.  On March 7, 2012, our Board of Directors approved a private placement for the sale of up to 100 units, with each unit costing no less than $15,000, and consisting of 7,500 shares of the Company’s common stock and a warrant to purchase 1,000 shares of the Company’s common stock at $10.00 per share.  Each warrant will vest two years from the date of purchase of the applicable unit and has a ten-year term.  Each purchaser of units in this private placement is required to agree to not sell any shares of common stock purchased in the private placement for at least one year.  In March through June, 2012, the Company sold 48 units, which yielded $720,000, and in July 2012, 5 units were sold for $75,000.

We have utilized our funds to form our management, sales, and engineering teams, to purchase inventory to satisfy short term customer demand, and to further our research and product development. We have used resources to develop and test our Power on Demand system and our Mobile Renewable Power Station.  We have also utilized funds to develop and launch marketing for our Company initiative to focus on broader applications of renewable energy and power management, including, but not limited to, our Power on Demand system and Mobile Renewable Power Station.

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Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our audited annual financial statements as of and for the years ended December 31, 2011 and 2010, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. There is substantial doubt about our ability to continue as a going concern as the continuation and expansion of our business is dependent upon obtaining further financing, successful and sufficient market acceptance of our products, and, finally, achieving a profitable level of operations.

The issuance of additional equity securities by us may result in a significant dilution in the equity interests of our current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations. Furthermore, our ability to raise additional capital may be made more difficult by a global financial crisis.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to shareholders.

Critical Accounting Policies

As of June 30, 2012, the Company’s critical accounting policies and estimates have not changed materially from those set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Information Concerning Forward-Looking Statements

All statements in this Form 10-Q, future filings by the Company with the Securities and Exchange Commission (“Commission”), the Company’s press releases and oral statements by authorized officers of the Company, other than statements of historical facts, that address future activities, events or developments are “forward-looking statements.”

These forward-looking statements include, but are not limited to, statements relating to our anticipated financial performance, business prospects, new developments, new merchandising strategies and similar matters, and/or statements preceded by, followed by or that include the words “believes,” “could,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “projects,” “seeks,” or similar expressions. We have based these forward-looking statements on certain assumptions and analyses made by us in light of our experience and on our assessment of historical trends, current conditions, expectations, and projections about expected future developments and events, as well as on other factors we believe are appropriate under the circumstances and other information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including those described under the heading “Risk Factors” in Item 1A of Part I of the Company’s 10-K filed with the Commission, for the fiscal year ended December 31, 2011, that may affect the operations, performance, development and results of our business. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date hereof.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct, and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties. All forward-looking statements and reasons why results may differ contained herein are made as of the date hereof, and we assume no obligation to update any such forward-looking statement or reason why actual results might differ. All of the forward-looking statements contained herein are qualified by these cautionary statements.

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Item 4. Controls and Procedures

The Company’s management has established disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within time periods specified in the SEC rules and forms. Such disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management to allow timely decisions regarding required disclosure.

Based on the evaluation of the effectiveness of our disclosure controls and procedures, our Chief Executive Officer and Acting Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2012. 

There can be no assurance, however, that our disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in our periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2012 that has materially affected, or is likely to materially affect, the Company’s internal control over financial reporting.

Part II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in a variety of claims, lawsuits, investigations, proceedings, and other legal actions arising in the ordinary course of our business.  We intend to vigorously defend all claims against us.  Although the ultimate outcome of these claims cannot be accurately predicted due to the inherent uncertainty of litigation, in the opinion of management, based upon current information, no currently pending or overtly threatened dispute is expected to have a material adverse effect on our business, financial condition, or results of operations.  However, even if we are successful on the merits, any pending or future lawsuits, claims, or proceeding could be time consuming and expensive to defend or settle and could result in diversion of management time and operations resources, which could materially and adversely affect us.  In addition, it is possible that an unfavorable resolution of one of more such proceedings could in the future materially and adversely affect our financial position, results of operations, or cash flows.

On November 29, 2011, we filed a complaint in the Supreme Court of the State of New York, Monroe County, against Ultralife Corporation (“Ultralife”) and against Andrew Naukam, Michael Popielec, Bradford Whitmore, Philip Fain, Peter Comerford, Steven Anderson, and John Kavazanjian, all of whom are either current or former officers and/or directors of Ultralife.  On January 17, 2012, we filed an Amended Complaint against the defendants, which asserts eight causes of action:  (1) misappropriation of trade secrets against all defendants; (2) misappropriation of an idea against all defendants; (3) unfair competition against all defendants; (4) breach of contract against Ultralife; (5) fraudulent misrepresentation against all defendants except Mr. Anderson; (6) unjust enrichment against Ultralife; (7) breach of the implied covenant of good faith and fair dealing against Ultralife; and (8) replevin against Ultralife.  The lawsuit centers on defendants’ actions in connection with Ultralife’s development of its Gen Set Eliminator System, and alleged misappropriation by defendants of our intellectual property and trade secrets related to our competing product, the Mobile Renewable Power Station.

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On February 6, 2012, the individual defendants moved to dismiss our Amended Complaint in its entirety and Ultralife moved to dismiss our claims for misappropriation of trade secrets, misappropriation of an idea, fraudulent misrepresentation, unjust enrichment, and breach of the implied covenant of good faith and fair dealing.  On March 9, 2012, the Court issued an Opinion denying, in part, the defendants’ motion to dismiss and ruling that the following claims would proceed in the litigation,:  (1) misappropriation of trade secrets against all defendants; (2) misappropriation of an idea against all defendants; (3) unfair competition against all defendants; (4) breach of contract against Ultralife; (5) fraudulent misrepresentation against all defendants except Mr. Anderson; and (6) replevin.  Two claims were dismissed because they were duplicative or incompatible with other claims that the Court held would proceed in the litigation.  The following chart indicates which claims the Court dismissed and which claims the Court ruled would proceed in the litigation:  

Claim	Proceed in Litigation	Dismissed
1. Misappropriation of trade secrets against Ultralife and Messrs. Naukam, Popielec, Whitmore, Fain, Comerford, Anderson, and Kavazanjian	X
2. Misappropriation of an idea against Ultralife and Messrs. Naukam, Popielec, Whitmore, Fain, Comerford, Anderson, and Kavazanjian	X
3. Unfair competition against Ultralife and Messrs. Naukam, Popielec, Whitmore, Fain, Comerford, Anderson, and Kavazanjian	X
4. Breach of contract against Ultralife	X
5. Fraudulent misrepresentation against Ultralife and Messrs. Naukam, Popielec, Whitmore, Fain, Comerford, and Kavazanjian	X
6. Unjust enrichment against Ultralife		X
7. Breach of the implied covenant of good faith and fair dealing against Ultralife		X
8. Replevin	X

We believe that we have suffered damages in excess of $60 million from the defendants’ actions, although there can be no assurance that we will recover any or all of such damages.  This action is in its early stages of discovery.

Separately, on September 23, 2011, Ultralife filed a complaint, which was amended on February 29, 2012, in the Supreme Court of New York, Wayne County, against us and a non-officer employee of us who is a former Ultralife employee.  In that action, which has been transferred to the Supreme Court of New York, Monroe County, Ultralife has asserted claims arising out of our employment of the former Ultralife employee.  This action is in the early stages of discovery.  We believe that, even if we are unsuccessful on the merits in this litigation, it would not have a material adverse effect on our business, our financial condition or results of operations.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

In March of 2012, we issued 119,191 shares of our common stock to strategic vendor-investors in lieu of cash for goods and services totaling $251,854, and in August of 2012 an additional 3,768 shares of our common stock were issued to one of these vendors for services totaling $7,160.

On March 7, 2012, our Board of Directors approved a private placement for the sale of up to 100 units, with each unit costing no less than $15,000 and consisting of 7,500 shares of the Company’s common stock and a warrant to purchase 1,000 shares of the Company’s common stock at $10.00 per share.  Each warrant will vest two years from the date of purchase of the applicable unit, and has a ten-year term.  Each purchaser of units in this private placement is required to agree to not sell any shares of common stock purchased in the private placement for at least one year.  From March through June 2012, the Company sold 48 units, which yielded $720,000, and in July 2012, an additional 5 units were sold for $75,000.

22

The terms of sales of unregistered sales of securities by us are described in Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities under the captions “Recent Unregistered Sales of Securities”.

The securities referenced above were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended (“Securities Act”), and/or Regulation D, as promulgated by the U.S. Securities and Exchange Commission under the Securities Act, based upon the following: (a) each of the persons to whom the securities were issued (each such person, an “Investor”) confirmed to the Company that it or he is an “accredited investor,” as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such units, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being acquired were being acquired for investment intent and were “restricted securities” for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not Applicable.

Item 5.  Other Information

None

Item 6. 

(a) Exhibits:

31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification Pursuant to 18 U.S.C. Section 1350 by the Chief Executive Officer, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350 by the Chief Financial Officer, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ARISTA POWER, INC.
August 14, 2012
	By:	/s/ William A. Schmitz
		William A. Schmitz
		President and Chief Executive Officer

24

EX-31.1

 Exhibit 31.1

Certification of Chief Executive Officer

as required by Rule 13a-14 Or 15d-14 of the Securities Exchange Act of 1934, 

 as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, William A. Schmitz, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Arista Power, Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant 's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant 's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 14, 2012

/s/ William A. Schmitz

William A. Schmitz

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

as required by Rule 13a-14 Or 15d-14 of the Securities Exchange Act of 1934,

as adopted pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

I, Molly Hedges, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Arista Power, Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 14, 2012

/s/ Molly Hedges

Molly Hedges, Acting Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Arista Power, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William A. Schmitz, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 to the best of my knowledge, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date:  August 14, 2012

/s/ William A. Schmitz

William A. Schmitz

President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Arista Power, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Molly Hedges, as Acting Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 to the best of my knowledge, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Date: August 14, 2012

/s/ Molly Hedges

Molly Hedges

Acting Chief Financial Officer

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Commitments and Contingencies (Details) (USD $)	Jun. 30, 2012
Annual commitments by year under the Company’s lease agreements
2012	$ 67,528
2013	69,554
2014	71,641
2015	$ 42,513

XML

Stock Based Compensation (Details 2) (USD $)	Jun. 30, 2012
Summarizes the status of the Company’s restricted share awards
Number of Restricted Shares Non-vested at June 30, 2012	169,368
Weighted Average Fair Value at Grant Date Non-vested at June 30, 2012	$ 2.80

XML

Description of the Business and Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Accounting Policies (Textual)
Short-term, highly liquid investments with original maturities		Three months or less
Inventory, raw materials	$ 113,052	$ 113,052
Inventory, work in process	306,096	306,096
Inventory reserves	63,004	63,004		47,171
Impairment of assets		$ 0	$ 13,382
Revenue recognition percentage	64.00%	64.00%
Accounts receivable percentage	62.00%	62.00%
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, Number	517,400	517,400		364,400
Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, Number	1,699,250	1,699,250		1,651,250

XML

Subsequent Event (Details) (USD $)	1 Months Ended	6 Months Ended		12 Months Ended
	Jul. 31, 2012	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Subsequent Event (Textual)
Common stock unit sold	5
Common stock yielded	$ 75,000	$ 720,000	$ 1,172,500
Common stock issue to vendor for service renderd, Shares				46,500
Common stock issue to vendor for service renderd				$ 174,000

XML

Warrants (Details Textual) (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Dec. 31, 2009
Warrants (Textual)
Weighted average fair value of warrants	$ 10.00	$ 10.00
Warrant exercised	0	0		0
Reverse stock split			One for twenty
Warrants [Member]
Warrants (Textual)
Warrants vested	1,087,500	725,000
Warrants Expired or Cancelled	0	0
Warrant exercised	0	0

XML

Long-lived Assets

6 Months Ended

Jun. 30, 2012

Long Lived Assets [Abstract]

Long-lived assets

Note 3 – Long-lived Assets

The following table summarizes the Company’s long-lived assets as of:

	June 30, 2012			December 31, 2011
Property and equipment
Equipment	$	264,861		$	244,799
Furniture and fixtures		38,950			38,950
Software		71,625			71,625
Product Tooling		51,373			51,373
Total property and equipment before accumulated depreciation		426,809			406,747
Less accumulated depreciation		(219,235	)		(158,889	)
Total property and equipment	$	207,574		$	247,858

Intangible assets
Patents	$	34,862		$	34,862
Trademark		4,525			4,525
Total intangible assets before accumulated amortization		39,387			39,387
Less accumulated amortization		(7,518	)		(6,362	)
Total intangible assets	$	31,869		$	33,025

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Debt (Details Textual) (USD $)	1 Months Ended					3 Months Ended	6 Months Ended
	Oct. 31, 2011	Aug. 31, 2011	Mar. 31, 2011	Feb. 28, 2011	Apr. 30, 2010	Mar. 31, 2011	Jun. 30, 2012	Oct. 14, 2011	Aug. 24, 2011
Debt (Textual)
Line of credit with First Niagara Bank					$ 1,000,000
Interest rate description					Prime rate, plus 0%, but at no time would the applicable interest rate be less than 3.25
Line of credit facility interest rate minimum					3.25%
Numbe of officiers provided guarantees					2
Numbe of shareholders secured facility by guarantee					1
Number of shares of common stock under guarantee by Mr. Brock pledged							1,000,000
Payment for interest				10,976
Number of common stock issued under guarantors warrants							1,450,000
Per share value of common stock issued under warrants							$ 5.00
Investment Warrants, Term							10 years
Incremental vesting schedule in tranches of shares under each warrant.							6 months
Percentage incremental vesting schedule in tranches of shares under each warrant							25.00%
Line of credit interest rate						3.25%
Increased line of credit interest rate						9.25%
Payment of line of credit principal and interest			1,012,421
Payment of credit card debt			25,351
Payment of principal balance of the Company’s working capital revolving line of credit			1,000,000
Gain on the extinguishment of the line of credit debt						1,000,000
Loan amount to purchase asset									44,748
Term of loan	36 months	60 months
Annual interest rate	6.79%	4.99%
Monthly payments of loan	279	844
Lease of office equipment								$ 9,068

XML

Debt (Details) (USD $)	Jun. 30, 2012
Annual maturities of debt
2012 (7/1/2012-12/31/2012)	$ 5,610
2013	11,688
2014	11,782
2015	9,540
2016	$ 6,629

XML

Stockholders' Equity (Details) (USD $)	1 Months Ended				3 Months Ended		6 Months Ended	12 Months Ended	48 Months Ended
	Aug. 31, 2012	Jul. 31, 2012	Mar. 31, 2012	Nov. 30, 2011	Jun. 30, 2012	Mar. 31, 2012	Jun. 30, 2011	Dec. 31, 2011	Dec. 31, 2010
Stockholders' Equity (Textual)
Common stock, shares issued					12,334,853			11,854,644
Number of common stock and warrant sold		5	16		32
Proceed from sale of common stock		$ 75,000	$ 240,000		$ 480,000
Company raised amount through multiple private placement								3,200,000	4,100,000
Issuance of common stock for goods and services (Shares)	3,768		119,191
Issuance of common stock for goods and services	7,168		251,854			251,854
Reverse stock split								One for twenty
Effective date of reverse stock split								Dec. 27, 2011
Common stock, shares issued to Company's Landlord								19,400
Voting right				Approximately 74% of the aggregate voting power
Issuance of common stock					480,000	240,000	147,000
Issuance of common stock, shares					240,000	120,000	37,000
Warrants [Member]
Stockholders' Equity (Textual)
Vesting period			2 years					2 years
Expected life of warrants (Years)			10 years					10 years
Private placement [Member]
Stockholders' Equity (Textual)
Number of units available for sale			100
Value of each unit up for sale			15,000					17,500
Common stock and warrant consisting in each unit up for sale			7,500					25,000
Common stock, shares issued			1,000			1,000		875
Price per share			$ 10.00			$ 10.00		$ 10.00
Number of common stock and warrant sold		5	16		32
Proceed from sale of common stock		75,000	240,000		480,000
Company raised amount through multiple private placement							$ 1,200,000	$ 3,200,000
Agreed period for not selling the shares			1 year

XML

Stock Based Compensation (Details) (Stock Options [Member])	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Stock Options [Member]
Weighted-average assumptions
Expected dividend yield	0.00%	0.00%
Expected stock price volatility, minimum	96.00%	97.00%
Expected stock price volatility, maximum	97.00%	98.00%
Risk-free interest rate, minimum	2.59%	3.91%
Risk-free interest rate. maximum	2.70%	4.20%
Expected life of options, minimum (Years)	2 years	3 years
Expected life of options, maximum (Years)	9 years 10 months 9 days	9 years 10 months 24 days

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Going Concern

6 Months Ended

Jun. 30, 2012

Going Concern [Abstract]

Going Concern

Note 2 - Going Concern

The financial statements have been prepared assuming that the Company will continue as a going concern.  Since its formation, the Company has generated minimal sales volumes and has incurred a cumulative net loss of ($22,112,691).  The minimal sales volumes to date and recurring losses from operations raise substantial doubt about the Company’s ability to continue as a going concern.  Continuation of the Company is dependent on achieving sufficiently profitable operations and obtaining additional financing.

From 2007 through 2010, the Company raised approximately $4.1 million through multiple private placement offerings at varying prices.  The Company yielded $1.67 million from the exercise of 1.67 million stock options for the year ended December 31, 2009.  The Company established a $1.0 million line of credit with First Niagara Bank on April 26, 2010. On March 17, 2011, the Company received written notice from the Guarantors of the loan agreement (two Company officers and one shareholder) that the Guarantors were required by First Niagara Bank to repay the $1.0 million principal balance of the Company’s line of credit.  The Company has no liability to the Guarantors as a result of the repayment by the Guarantors of the line of credit.  Other than accrued interest and applicable fees, which have been fully repaid, the Company had no liability to the Lender under the line of credit. As a result of this debt extinguishment, the Company recorded a $1.0 million non-cash gain during the three months ended March 31, 2011.

During 2011, the Company raised $3.2 million through private placement sales of “units” that included shares of common stock and a warrant to purchase common stock. In March 2012, the Company sold 16 units generating $240,000, and in April, May and June 2012, an additional 32 units were sold for $480,000. In July 2012, the Company sold 5 units to raise $75,000. This working capital is not expected to be sufficient to fund operational growth, and the Company expects to need to raise additional capital.  There can be no assurance that the Company will continue to be able to raise sufficient capital, at terms that are favorable to the Company or at all, to fund operations.

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Stock Based Compensation (Details 1) (Stock Options [Member], USD $)	6 Months Ended
	Jun. 30, 2012
Stock Options [Member]
Summary of the status of the Company’s aggregate stock options granted
Outstanding number of Shares Remaining , Beginning Balance	364,400
Outstanding, Weighted Average Exercise Price	$ 5.20
Options granted, number of shares remaining options	175,000
Options granted, weighted average exercise price	$ 2.04
Options cancelled/expired during 2012, Number of Shares Remaining Options	(22,000)
Options cancelled/expired during 2012, Weighted Average Exercise Price	$ 5.76
Outstanding number of Shares Remaining , Ending Balance	517,400
Outstanding, Weighted Average Exercise Price Ending balance	$ 4.11
Outstanding, Weighted-Average Remaining Contractual Term	8 years 3 months 25 days
Options, Outstanding, Intrinsic Value	$ 144,678
Options exercisable, Number of Shares Remaining Options	368,000
Options, Exercisable, Weighted Average Exercise Price	$ 4.20
Exercisable, Weighted Average Remaining Contractual Term	8 years 3 months 14 days
Options, Exercisable, Intrinsic Value	$ 78,878

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Commitments and Contingencies (Details 1) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Summary of activity in accrued warranty account
Balance as of beginning of year	$ 135,606	$ 50,690
Warranty costs accrued	32,816	118,935
Settlements made	(28,348)	(34,019)
Total accrued warranty costs	$ 140,074	$ 135,606

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Balance Sheets (USD $)	Jun. 30, 2012	Dec. 31, 2011
Current assets
Cash	$ 23,080	$ 371,132
Accounts Receivable (less allowance for doubtful accounts of $0 at June 30, 2012 and December 31, 2011)	343,238	73,312
Prepaid expenses and other current assets	379,926	346,787
Inventory	419,148	539,124
Total current assets	1,165,392	1,330,355
Intangible assets, net	31,869	33,025
Property and equipment, net	207,574	247,858
Total assets	1,404,835	1,611,238
Current liabilities
Accounts payable	853,597	889,481
Customer deposits	64,710	112,218
Deferred revenue	146,919	0
Accrued warranty costs	140,074	135,606
Accrued liabilities	326,707	263,621
Current portion of long term debt	11,375	11,072
Total current liabilities	1,543,382	1,411,998
Long term liabilities
Long term debt	33,875	39,638
Total long term liabilities	33,875	39,638
Total liabilities	1,577,257	1,451,636
Stockholders' equity/(deficit)
Preferred stock, 5,000,000 shares authorized, $0.0001 par value; none issued or outstanding at June 30, 2012 or December 31, 2011	0	0
Common stock, 500,000,000 shares authorized, $0.002 par value; 12,334,853 and 11,854,644 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	24,669	23,709
Additional paid-in capital	21,915,600	20,407,748
Deficit accumulated	(22,112,691)	(20,271,855)
Total stockholders' equity/(deficit)	(172,422)	159,602
Total liabilities and stockholders' equity/(deficit)	$ 1,404,835	$ 1,611,238

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Statement of Shareholders' Equity (Unaudited) (USD $)	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit
Balance, at Dec. 31, 2011	$ 159,602	$ 23,709	$ 20,407,748	$ (20,271,855)
Beginning Balance (Shares) at Dec. 31, 2011		11,854,644
Issuance of common stock	240,000	240	239,760
Issuance of common stock, shares	120,000	120,000
Issuance of common stock for goods and services	251,854	238	251,616
Issuance of common stock for goods and services (Shares)		119,191
Issuance of warrants with private placements	36,662		36,662
Stock options and stock compensation	153,970	1	153,969
Stock options and stock compensation, shares		380
Share rounding for reverse stock split	0
Share rounding for reverse stock split (Shares)		272
Net loss	(831,394)			(831,394)
Balance, at Mar. 31, 2012	10,694	24,188	21,089,755	(21,103,249)
Balance, shares at Mar. 31, 2012		12,094,487
Issuance of common stock	480,000	480	479,520
Issuance of common stock, shares	240,000	240,000
Issuance of warrants with private placements	71,470		71,470
Stock options and stock compensation	274,856	1	274,855
Stock options and stock compensation, shares		366
Net loss	(1,009,442)			(1,009,442)
Balance, at Jun. 30, 2012	$ (172,422)	$ 24,669	$ 21,915,600	$ (22,112,691)
Balance, shares at Jun. 30, 2012		12,334,853

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Warrants (Details) (Warrant [Member])	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Warrant [Member]
Weighted-average assumptions utilized in the fair value calculations for warrants granted:
Expected dividend yield	0.00%	0.00%
Expected stock price volatility, minimum	97.00%	97.00%
Expected stock price volatility, maximum	98.00%	98.00%
Risk-free interest rate, minimum	2.32%	3.95%
Risk-free interest rate, maximum	3.03%	4.24%
Expected life of warrants, minimum	7 years 9 months 22 days	8 years 9 months 20 days
Expected life of warrants, maximum	9 years 10 months 28 days	9 years 10 months 15 days

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Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of the status of the Company’s restricted share awards

Restricted Shares	Number of Restricted Shares		Weighted Average Fair Value at Grant Date
Non-vested at  June 30, 2012		169,368	$	2.80

Stock Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Weighted-average assumptions used to fair value calculation for options granted

	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		97-98	%		97-98	%
Risk-free interest rate		2.32-3.03	%		3.95-4.24	%
Expected life of warrants	7.8-9.9 years			8.8-9.9 years

Summary of the status of Company’s aggregate stock options granted

	Number of Shares Remaining Options		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		364,400	$	5.20
Options granted during 2012		175,000	$	2.04
Options cancelled/expired during 2012		(22,000)		5.76
Outstanding at June 30, 2012		517,400	$	4.11		8.32	$	144,678
Exercisable at June 30, 2012		368,000	$	4.20		8.29	$	78,878

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Warrants (Details 1) (Warrants [Member], USD $)	6 Months Ended
	Jun. 30, 2012
Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding number of Shares Remaining , Beginning Balance	1,651,250
Outstanding, Weighted Average Exercise Price	$ 5.61
Warrants granted during 2012, Number of Shares Remaining warrants	48,000
Warrant granted, Weighted Average Exercise Price	$ 10.00
Warrants cancelled/expired during 2012, Number of Shares Remaining Warrants	0
Outstanding number of Shares Remaining , Ending Balance	1,699,250
Outstanding, Weighted Average Exercise Price Ending balance	$ 5.73
Options exercisable, Number of Shares Remaining Options	1,087,500
Options, Exercisable, Weighted Average Exercise Price	$ 5.00
Outstanding, Weighted-Average Remaining Contractual Term	8 years 14 days
Exercisable, Weighted Average Remaining Contractual Term	7 years 9 months 29 days
Options, Outstanding, Intrinsic Value	$ 0
Options, Exercisable, Intrinsic Value	$ 0

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Annual commitments by year under the Company’s lease agreements

	Rental Commitment
2012	$	67,528
2013	$	69,554
2014	$	71,641
2015	$	42,513

Summary of the activity in the accrued warranty account

	June 30, 2012			December 31, 2011
Balance as of beginning of year	$	135,606		$	50,690
Warranty costs accrued		32,816			118,935
Settlements made		(28,348	)		(34,019	)
Total accrued warranty costs	$	140,074		$	135,606

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Description of the Business and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

Description of Business and Summary of Significant Accounting Policies

Note 1 – Description of Business and Summary of Significant Accounting Policies

Description of Business

Arista Power, Inc. (the “Company” or “Arista Power”) was incorporated on March 30, 2001 in the State of New York as Future Energy Solutions, Inc. and in November 2008 changed its name to WindTamer Corporation. In May 2011, the Company changed its name to Arista Power, Inc. to reflect the broadening of the Company’s focus beyond the WindTamer® brand.  The Company is a developer, manufacturer, and supplier of custom-designed power management systems, renewable energy storage systems, WindTamer wind turbines, and a supplier and designer of solar energy systems.

Basis of Preparation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.

In the opinion of management, all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results of operations have been included in the accompanying unaudited condensed financial statements.  Operating results for the three and six-month period ended June 30, 2012 are not necessarily indicative of the results to be expected for other interim periods or the full fiscal year.  These financial statements should be read in conjunction with the financial statements and accompanying notes contained in the Arista Power Form 10-K for the fiscal year ended December 31, 2011.

Method of Accounting

The accompanying financial statements have been prepared in accordance with GAAP.  Arista Power maintains its books and prepares its financial statements on the accrual basis of accounting.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers all short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents.  The Company maintains its cash and cash equivalents in bank deposit accounts, which at times may exceed federally insured limits.  The Company believes it is not exposed to any significant credit risk as a result of any non-performance by the financial institutions.

Accounts Receivable

Accounts receivable represents amounts due from customers in the ordinary course of business, based upon invoiced amounts, net of any allowance for doubtful accounts.  We evaluate accounts receivable quarterly on a specific account basis to determine the need for an allowance for doubtful account reserve.  As of June 30, 2012 and December 31, 2011, no such reserve is deemed necessary.

Inventory

Inventory consists primarily of parts and subassemblies for Power on Demand systems, solar photovoltaic (“PV”) systems, and wind turbines, and is stated at the lower of cost or market value.  The Company capitalizes applicable direct and indirect costs incurred in the Company’s manufacturing operations to bring its products to a sellable state.  The inventory as of June 30, 2012 consisted of raw materials amounting to $113,052 and work-in-process amounting to $306,096.  Inventory is reviewed quarterly to determine the need for an excess and obsolete inventory reserve.  As of June 30, 2012 and December 31, 2011, the reserve amounted to $63,004 and $47,171, respectively.

Fixed Assets

Fixed assets are recorded at cost.  Depreciation is on a straight line basis over the shorter of the estimated useful lives or the related lease for leasehold improvements.  Leasehold improvements for space leased on a month-to-month basis are expensed when incurred.  Expenditures for renewals and betterments are capitalized.  Expenditures for minor items, repairs and maintenance are charged to operations as incurred.  Any gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Intangible Assets

Intangible assets consist of costs associated with the application and acquisition of the Company’s patents and trademarks.  Patent application costs are capitalized and amortized over the estimated useful life of the patent, which generally approximates its legal life.  

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset, including its ultimate disposition.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets.   For the six months ended June 30, 2012 no assets were impaired. For the six months ended June 30, 2011, the Company impaired assets totaling $13,382.

Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity.

Revenue Recognition

Revenue is recognized when all of the following conditions are satisfied:   (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the sale price to be paid by the customer is fixed or determinable; and (4) the collection of the sale price is reasonably assured.  Amounts billed and/or collected prior to satisfying our revenue recognition policy are reflected as customer deposits.

For research and development contracts, we recognize revenue using the proportional effort method based upon the relationship of cost incurred to date to the total estimated cost to complete the contract.  Cost elements include direct labor, materials, overhead, and outside contractor costs. The excess of amounts billed on a milestone basis versus the amounts recorded as revenue on a proportional effort basis is classified as deferred revenue. We provide for any loss that we expect to incur on these agreements when the loss is probable.

The Company’s top customer accounted for approximately 64% of revenues for the three and six months ended June 30, 2012, and this customer’s accounts receivable balance amounted to 62% of the total accounts receivable as of June 30, 2012.

Research and Development Costs

All costs related to research and development are expensed when incurred, unless these costs have an alternative future value to research and development, in which case they are capitalized.  Research and development costs consist of expenses to enhance the WindTamer® wind turbine design, and costs associated with the development of the Company’s Power on Demand system and the Mobile Renewable Power Station.  Specifically, these costs consist of labor, materials, and consulting.

Warranty Costs

The Company’s standard warranty on each Power on Demand system, wind turbine, and solar system sold protects against defects in design, material, and workmanship under normal use for varying periods, based upon the product sold.  Several warranties have specific additional terms and conditions.  The Company provides for estimated cost of warranties at the time the revenue is recognized.  Factors that affect the warranty reserve are projected cost of repair and/or replacement, component life cycles, manufacturer’s warranty on component parts, and limited historical data. These estimates are reviewed quarterly and are updated as new information becomes available. The impact of any change in estimates will be taken into account when analyzing future warranty reserve requirements.

Stock-Based Compensation

The Company accounts for stock option awards granted under the Company’s Equity Incentive Plan in accordance with ASC 718. Under ASC 718, compensation expense related to stock-based payments is recorded over the requisite service period based on the grant date fair value of the awards.  Compensation previously recorded for unvested stock options that are forfeited is reversed upon forfeiture.  The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50.  Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant’s or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Income Taxes

The Company accounts for income taxes using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.

Basic and Diluted Loss Per Share

Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period.  Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued.  In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potentially issued common shares would be anti-dilutive.

As of June 30, 2012, there were 517,400 stock options and 1,699,250 warrants outstanding which, upon exercise, could dilute future earnings.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

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Balance Sheets (Parenthetical) (USD $)	12 Months Ended
	Dec. 31, 2011	Jun. 30, 2012
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 0	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, shares authorized	500,000,000	500,000,000
Common stock, par value	$ 0.002	$ 0.002
Common stock, shares issued	11,854,644	12,334,853
Number of shares outstanding	11,854,644	12,334,853
Reverse stock split	One-for-twenty

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Note 11- Subsequent Events

In July 2012, we sold 5 units of our common stock which yielded $75,000.  In August 2012, we issued 3,768 shares of our common stock to a strategic vendor for service totaling $7,168.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 06, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Arista Power, Inc.
Entity Central Index Key	0001424640
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		12,376,121

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Note 12- Recent Accounting Pronouncements

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income”.  ASU No. 2011-05 requires entities to present the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements of net income and other comprehensive income.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity.  ASU No. 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  Furthermore, in December 2011, the FASB issued ASU No. 2011-12 “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” This update defers the effective date of ASU No. 2011-05’s requirement to present on the face of the financial statements reclassification adjustments for each component of accumulated other comprehensive income in both net income and other comprehensive income so that the FASB can reconsider those requirements during calendar 2012. These standards were effective retrospectively for annual and interim reporting periods beginning after December 15, 2011, with early adoption permitted. Our adoption of these standards during the  2012 did not have a significant impact on our financial statements, as we currently do not have any adjustments to net income in the determination of such comprehensive income.

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Statements of Operations (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Sales	$ 639,810	$ 193,729	$ 950,984	$ 199,979
Cost of Goods Sold	766,847	420,630	1,262,728	649,213
Gross Loss	(127,037)	(226,901)	(311,744)	(449,234)
Operating Expenses/(Income):
Research and development expenses	112,258	258,683	258,559	618,905
Selling, general and administrative expenses	769,687	500,242	1,428,733	1,608,797
Extinguishment of line of credit debt			0	(1,000,000)
Total expenses	881,945	758,925	1,687,292	1,227,702
Loss from operations	(1,008,982)	(985,826)	(1,999,036)	(1,676,936)
Non-operating revenue/(expense)
Interest income/(expense)	(460)	39	(1,020)	(8,354)
Net loss before income taxes	(1,009,442)	(985,787)	(2,000,056)	(1,685,290)
Income taxes			159,220
Net loss	$ (1,009,442)	$ (985,787)	$ (1,840,836)	$ (1,685,290)
Net loss per common share - basic and diluted	$ (0.08)	$ (0.11)	$ (0.15)	$ (0.20)
Weighted average number of common shares outstanding - basic and diluted	12,212,109	8,849,488	12,073,441	8,282,760

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Stock Based Compensation

6 Months Ended

Jun. 30, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock Based Compensation

Note 6 – Stock Based Compensation

The Company has established the 2008 Equity Incentive Plan, which is a shareholder-approved plan that permits the granting of stock options and restricted stock to employees, directors and consultants. The 2008 Equity Incentive Plan provides for the issuance of up to 800,000 shares of common stock of which 50,000 shares are available for grant as Incentive Stock Options.  The exercise price for options awarded is no less than 100% of the fair market value of the common stock on the day of grant.  The options generally vest either immediately on the date of grant or 1 to 3 years from the date of grant. In March 2012, the Board of Directors approved an amendment to increase the number of shares available for award under the plan to 1,550,000.  This amendment was approved by shareholders at the Annual Meeting of Shareholders held on May 9, 2012.

For the six months ended June 30, 2012, the Company recorded compensation costs for options and shares granted under the plan of $428,826, as compared to $934,753 for the six months ended June 30, 2011.

Management has valued the options at their date of grant utilizing the BlackScholes option pricing model.  Prior to the fourth quarter of 2009, there was not a public market for the Company shares.  Accordingly, the fair value of the underlying shares was determined based on recent transactions by the Company to sell shares to third parties and other factors determined by management to be relevant to the valuation of such shares.  Beginning in the fourth quarter of 2009, the quoted price for the Company’s shares on the OTCBB was used to value the underlying shares.  Expected volatility is based upon a weighted average historical volatility of peer companies operating in a similar industry.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options.  The expected life of options used was based on the contractual life of the option granted.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  The following weighted-average assumptions were utilized in the fair value calculations for options granted:

	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		96-97	%		97-98	%
Risk-free interest rate		2.59-2.70	%		3.91-4.20	%
Expected life of options	2.0-9.9 Years			3.0-9.9 Years

The following table summarizes the status of the Company’s aggregate stock options granted:

	Number of Shares Remaining Options		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		364,400	$	5.20
Options granted during 2012		175,000	$	2.04
Options cancelled/expired during 2012		(22,000)		5.76
Outstanding at June 30, 2012		517,400	$	4.11		8.32	$	144,678
Exercisable at June 30, 2012		368,000	$	4.20		8.29	$	78,878

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these unaudited financial statements.

For the six months ended June 30, 2012, the Company recorded compensation costs for options granted under the plan of $426,730 as compared to $409,011 for the six months ended June 30, 2011. Stock option grants amounted to175,000 for the six months ended June 30, 2012 (60,400 for the six months ended June 30, 2011) while 140,400 options vested during that period, and 22,000 options were cancelled or terminated for the six months ended June 30, 2012 (20,250 options were cancelled for the six months ended June 30, 2011). No options were exercised for the six months ended June 30, 2012 or 2011.

The weighted average fair value of options granted during the six months ended June 30, 2012 was approximately $2.04 ($4.40 for the six months ended June 30, 2011). 

On December 13, 2010, the Board of Directors approved a restricted stock grant award to certain employees in lieu of future salary cash payments.  The employees forfeited salary over a twelve-week period to purchase common shares, which were valued at fair market value as of the date of grant.  The Compensation Committee of the Company’s Board of Directors approved a change in the vesting date for restricted stock held by certain employees from April 1, 2011 to August 1, 2011. The Compensation Committee of the Company’s Board of Directors subsequently approved amendments to change the vesting date of these restricted shares to November 15, 2012.  A total of 55,969 shares vested on April 1, 2011, and the remaining 169,368 shares are scheduled to vest on November 15, 2012.

The following table summarizes the status of the Company’s restricted share awards:

Restricted Shares	Number of Restricted Shares		Weighted Average Fair Value at Grant Date
Non-vested at  June 30, 2012		169,368	$	2.80

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these financial statements.

The aggregate expense associated with the restricted stock awards is $698,690, of which $594,498 was expensed in 2011($525,636 for the six months ended June 30, 2011) and $104,192 was expensed in 2010.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2012

Equity [Abstract]

Stockholders’ Equity

Note 5 – Stockholders’ Equity

On March 7, 2012, our Board of Directors approved a private placement for the sale of up to 100 units, with each unit costing no less than $15,000 and consisting of 7,500 shares of the Company’s common stock and a warrant to purchase 1,000 shares of the Company’s common stock at $10.00 per share.  Each warrant vests two years from the date of purchase of the applicable unit and has a ten-year life.  Each purchaser of the units has agreed not to sell any shares of common stock purchased in the private placement for at least one year.  During March 2012 the Company sold 16 units, which yielded $240,000, and in April, May and June 2012, the Company sold 32 units for $480,000.  In July 2012, the Company sold 5 units for $75,000.

In March 2012, we issued 119,191 shares of our common stock to strategic vendor-investors in lieu of cash for goods and services totaling $251,854.  In August 2012, 3,768 shares of our common stock were issued to a strategic vendor for services totaling $7,160.

On October 18, 2011, the Company’s Board of Directors approved, authorized, and recommended to the Company’s shareholders to file a Restated Certificate to effect a one for twenty reverse stock split. As of November 17, 2011, the holders of approximately 74% of the aggregate voting power of Common Stock delivered to the Registrant written consents approving the adoption of the Restated Certificate.  On December 21, 2011, the Company filed its Restated Certificate of Incorporation with the Secretary of the State of New York, and on December 27, 2011 the one for twenty reverse stock split became effective.  All stock related disclosures, including number of shares of common stock, stock options, warrants, and loss per share calculations have been restated retrospectively to reflect the one for twenty reverse stock split for all periods presented.

During 2011, the Company raised $3.2 million in multiple private placement sales of “units”, $1.2 million of which was raised during the six months ended June 30, 2011.  Each unit cost $17,500 and consisted of 25,000 shares of common stock and a warrant to purchase 875 shares of common stock at $10.00 per share. The warrants fully vest two years from the date of the unit purchase, and have a ten-year term.

In 2011, the Company issued 46,500 shares of common stock to vendors for services totaling approximately $174,000, which included approximately 19,400 shares issued to the Company’s landlord of its Rochester, New York headquarters for base rent payments. Of this amount, approximately 37,000 shares, totaling $147,000 were issued during the six months ended June 30, 2011.

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Warrants (Tables) (Warrant [Member])

6 Months Ended

Jun. 30, 2012

Warrant [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Weighted-average assumptions were utilized in the fair value calculations for warrants granted

	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		97-98	%		97-98	%
Risk-free interest rate		2.32-3.03	%		3.95-4.24	%
Expected life of warrants	7.8-9.9 years			8.8-9.9 years

Summary of the status of Company’s warrants granted

	Number of Shares Remaining Warrants		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,651,250	$	5.61
Warrants granted during 2012		48,000	$	10.00
Warrants expired/cancelled during 2012		0
Outstanding at June 30,2012		1,699,250	$	5.73		8.04	$	0
Exercisable at June 30, 2012		1,087,500	$	5.00		7.83	$	0

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Description of Business and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Organization, Consolidation and Presentation Of Financial Statements [Abstract]

Description of Business

Description of Business

Arista Power, Inc. (the “Company” or “Arista Power”) was incorporated on March 30, 2001 in the State of New York as Future Energy Solutions, Inc. and in November 2008 changed its name to WindTamer Corporation. In May 2011, the Company changed its name to Arista Power, Inc. to reflect the broadening of the Company’s focus beyond the WindTamer® brand.  The Company is a developer, manufacturer, and supplier of custom-designed power management systems, renewable energy storage systems, WindTamer wind turbines, and a supplier and designer of solar energy systems.

Basis of Preparation

Basis of Preparation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.

In the opinion of management, all adjustments (consisting only of normal and recurring adjustments) necessary for a fair presentation of the results of operations have been included in the accompanying unaudited condensed financial statements.  Operating results for the three and six-month period ended June 30, 2012 are not necessarily indicative of the results to be expected for other interim periods or the full fiscal year.  These financial statements should be read in conjunction with the financial statements and accompanying notes contained in the Arista Power Form 10-K for the fiscal year ended December 31, 2011.

Method of Accounting

Method of Accounting

The accompanying financial statements have been prepared in accordance with GAAP.  Arista Power maintains its books and prepares its financial statements on the accrual basis of accounting.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers all short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents.  The Company maintains its cash and cash equivalents in bank deposit accounts, which at times may exceed federally insured limits.  The Company believes it is not exposed to any significant credit risk as a result of any non-performance by the financial institutions.

Accounts Receivable

Accounts Receivable

Accounts receivable represents amounts due from customers in the ordinary course of business, based upon invoiced amounts, net of any allowance for doubtful accounts.  We evaluate accounts receivable quarterly on a specific account basis to determine the need for an allowance for doubtful account reserve.  As of June 30, 2012 and December 31, 2011, no such reserve is deemed necessary.

Inventory

Inventory

Inventory consists primarily of parts and subassemblies for Power on Demand systems, solar photovoltaic (“PV”) systems, and wind turbines, and is stated at the lower of cost or market value.  The Company capitalizes applicable direct and indirect costs incurred in the Company’s manufacturing operations to bring its products to a sellable state.  The inventory as of June 30, 2012 consisted of raw materials amounting to $113,052 and work-in-process amounting to $306,096.  Inventory is reviewed quarterly to determine the need for an excess and obsolete inventory reserve.  As of June 30, 2012 and December 31, 2011, the reserve amounted to $63,004 and $47,171, respectively.

Fixed Assets

Fixed Assets

Fixed assets are recorded at cost.  Depreciation is on a straight line basis over the shorter of the estimated useful lives or the related lease for leasehold improvements.  Leasehold improvements for space leased on a month-to-month basis are expensed when incurred.  Expenditures for renewals and betterments are capitalized.  Expenditures for minor items, repairs and maintenance are charged to operations as incurred.  Any gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

Intangible Assets

Intangible Assets

Intangible assets consist of costs associated with the application and acquisition of the Company’s patents and trademarks.  Patent application costs are capitalized and amortized over the estimated useful life of the patent, which generally approximates its legal life.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset, including its ultimate disposition.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Fair value is determined based on discounted cash flows or appraised values, depending on the nature of the assets.   For the six months ended June 30, 2012 no assets were impaired. For the six months ended June 30, 2011, the Company impaired assets totaling $13,382.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, accounts payable and accrued expenses are reasonable estimates of their fair value due to their short maturity.

Revenue Recognition

Revenue Recognition

Revenue is recognized when all of the following conditions are satisfied:   (1) there is persuasive evidence of an arrangement; (2) the service or product has been provided to the customer; (3) the sale price to be paid by the customer is fixed or determinable; and (4) the collection of the sale price is reasonably assured.  Amounts billed and/or collected prior to satisfying our revenue recognition policy are reflected as customer deposits.

For research and development contracts, we recognize revenue using the proportional effort method based upon the relationship of cost incurred to date to the total estimated cost to complete the contract.  Cost elements include direct labor, materials, overhead, and outside contractor costs. The excess of amounts billed on a milestone basis versus the amounts recorded as revenue on a proportional effort basis is classified as deferred revenue. We provide for any loss that we expect to incur on these agreements when the loss is probable.

The Company’s top customer accounted for approximately 64% of revenues for the three and six months ended June 30, 2012, and this customer’s accounts receivable balance amounted to 62% of the total accounts receivable as of June 30, 2012.

Research and Development Costs

Research and Development Costs

All costs related to research and development are expensed when incurred, unless these costs have an alternative future value to research and development, in which case they are capitalized.  Research and development costs consist of expenses to enhance the WindTamer® wind turbine design, and costs associated with the development of the Company’s Power on Demand system and the Mobile Renewable Power Station.  Specifically, these costs consist of labor, materials, and consulting.

Warranty Costs

Warranty Costs

The Company’s standard warranty on each Power on Demand system, wind turbine, and solar system sold protects against defects in design, material, and workmanship under normal use for varying periods, based upon the product sold.  Several warranties have specific additional terms and conditions.  The Company provides for estimated cost of warranties at the time the revenue is recognized.  Factors that affect the warranty reserve are projected cost of repair and/or replacement, component life cycles, manufacturer’s warranty on component parts, and limited historical data. These estimates are reviewed quarterly and are updated as new information becomes available. The impact of any change in estimates will be taken into account when analyzing future warranty reserve requirements.

Stock-Based Compensation

Stock-Based Compensation

The Company accounts for stock option awards granted under the Company’s Equity Incentive Plan in accordance with ASC 718. Under ASC 718, compensation expense related to stock-based payments is recorded over the requisite service period based on the grant date fair value of the awards.  Compensation previously recorded for unvested stock options that are forfeited is reversed upon forfeiture.  The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option’s expected term and the price volatility of the underlying stock.

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50.  Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant’s or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.

Basic and Diluted Loss Per Share

Basic and Diluted Loss Per Share

Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period.  Diluted earnings per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been issued.  In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potentially issued common shares would be anti-dilutive.

As of June 30, 2012, there were 517,400 stock options and 1,699,250 warrants outstanding which, upon exercise, could dilute future earnings.

Reclassifications

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9 – Commitments and Contingencies

Employment Agreements

As of June 30, 2012, the Company has employment agreements in place with five members of senior management.  The terms of the agreements are for three years, with the Company’s option to extend employment for a fourth year.  Annual compensation required under the agreements includes base salary aggregating $872,000, as well as annual bonuses based upon achieving certain performance milestones.  All of these agreements contain severance provisions in the event of termination of the employee without cause that require continued payment of the annual salary through the term of the agreement but for a minimum period of at least two years.  The agreements expire at varying times over the period from November 14, 2012 through March 1, 2013.

Operating Lease

On August 20, 2009, the Company entered into a lease for office space in Geneseo, New York requiring a monthly rental payment of $1,400, which commenced on November 1, 2009 and expired October 31, 2011 with a two year renewal option.  In June 2010, the Company relocated its headquarters from Geneseo, New York to Rochester, New York into a larger location.  Inventory, warehousing, and assembly space at the Geneseo facility was neither large enough, nor flexible enough, to allow for continued growth, and therefore management determined that it was prudent to move to a location that could accommodate both manufacturing and assembly growth, as well as to house research and development activities and administrative office space.  On January 27, 2011, the Company signed an agreement and mutual release with the landlord of the Geneseo facility, which provided for the issuance of 1,500 shares of the Company’s common stock as settlement for the early termination of the lease.

In October 2010, we executed a lease for the Rochester facility.  The lease term is from August 2010 through July 2015.  The first year of the lease term requires monthly base rent payments of $5,396, payable in cash or in the Company’s common stock. The base rent increases by 3% on August 1st of the each year of the lease.  The Company also is required to pay its proportionate share of real estate taxes and common area maintenance costs for the Rochester facility.

Annual commitments by year under the Company’s lease agreements are as follows:

	Rental Commitment
2012	$	67,528
2013	$	69,554
2014	$	71,641
2015	$	42,513

Our landlord entered into a lease with a third party that will occupy certain of the space at our existing Rochester facility. We are negotiating with our landlord.

Warranty

The Company entered into a number of sales orders for Power on Demand systems, solar installations, and wind turbine units.  Certain of these sales orders required deposits of the agreed-upon portion of the purchase price upon acceptance of the sales order.  The advance payments received as of June 30, 2012 amounted to $64,710 (the December 31, 2011 total was $112,218) and have been included in customer deposits.  We expect to install the systems and units associated with these deposits during the next two quarters, as we obtain permits and zoning approvals from customers’ town officials, obtain New York State Energy Research Development Authority (“NYSERDA”) approvals, complete site assessments, and continue product evaluation. The sales orders included product warranties of varying periods, depending on the product sold, against defects in materials and workmanship. The Company provides for estimated cost of warranties at the time the revenue is recognized and has established a corresponding warranty reserve.  Factors that affect the balance required in the warranty reserve are projected cost of repair and/or replacement, component life cycles, manufacturer’s warranty on parts and components, and limited historical data. These estimates are reviewed quarterly and are updated as new information becomes available. The impact of any change in warranty cost estimates will be taken into account when analyzing future warranty reserve requirements. As of June 30, 2012 and December 31, 2011, the warranty reserve totals $140,074 and $135,606 respectively. The following table summarizes the activity in the accrued warranty account:

	June 30, 2012			December 31, 2011
Balance as of beginning of year	$	135,606		$	50,690
Warranty costs accrued		32,816			118,935
Settlements made		(28,348	)		(34,019	)
Total accrued warranty costs	$	140,074		$	135,606

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Warrants

6 Months Ended

Jun. 30, 2012

Warrants and Rights Note Disclosure [Abstract]

Warrants

Note 7 – Warrants

Management has valued warrants at their date of issue utilizing the Black-Scholes option pricing model.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the warrants depending on the date of the issue and their expected life.  The expected life of warrants used was based on the term of the warrant.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  The following weighted-average assumptions were utilized in the fair value calculations for warrants granted:

	Six Months Ended			Six Months Ended
	June 30, 2012			June 30, 2011
Expected dividend yield		0	%		0	%
Expected stock price volatility		97-98	%		97-98	%
Risk-free interest rate		2.32-3.03	%		3.95-4.24	%
Expected life of warrants	7.8-9.9 years			8.8-9.9 years

The following table summarizes the status of the Company’s warrants granted:

	Number of Shares Remaining Warrants		Weighted Average Exercise Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2012		1,651,250	$	5.61
Warrants granted during 2012		48,000	$	10.00
Warrants expired/cancelled during 2012		0
Outstanding at June 30,2012		1,699,250	$	5.73		8.04	$	0
Exercisable at June 30, 2012		1,087,500	$	5.00		7.83	$	0

All share and per share data have been adjusted to give effect to the one-for-twenty reverse stock split in December 2011,

as described in Note 5 to these unaudited financial statements.

The weighted average fair value of warrants issued during six months ended June 30, 2012 and 2011 was $10.00.  During the six months ended June 30, 2012 and 2011, no warrants vested, none expired or were cancelled.   No warrants have been exercised for the six months ended June 30, 2012 and 2011.

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Consulting Agreement

6 Months Ended

Jun. 30, 2012

Consulting Agreement [Abstract]

Consulting Agreement

Note 8 – Consulting Agreements

On May 24, 2010, the Company entered into an agreement with an individual to become a technical consultant, and to assist in further optimization of the Company’s ducted wind turbines. This individual is currently a professor of senior aircraft design and performance courses at the Clarkson University, in Potsdam, New York, the location of one of the Company’ s wind turbine test sites.  Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company.  In conjunction with the agreement, the individual received 10,000 stock options, vesting over a one-year period.  For the six months ended June 30, 2011, the Company expensed $6,746 relating to these options. As of December 31, 2011, all expenses associated with this stock option grant had been recognized.

On October 11, 2010, the Company entered into an agreement with an individual to become a technical consultant, and to assist further in the development of the Company’s ducted wind turbines. This individual is currently an associate professor of architectural engineering and an adjunct professor of mechanical and nuclear engineering at the Pennsylvania State University in University Park, Pennsylvania. Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company. In conjunction with the agreement, the individual received 5,500 stock options vesting over a three-year period. The Company expensed $9,632 relating to these options for the six months ended June 30, 2012, as compared to $7,822 for the six months ended June 30, 2011.

On July 30, 2012, the Company entered into an agreement with an individual to become a technical consultant and to assist in the further development of the Company’s intelligent microgrid system. The individual is currently a professor of electrical engineering at Rochester Institute of Technology in Rochester, NY.  Payment for services is on an hourly basis at an agreed upon rate for work performed for the Company. In conjunction with the agreement, the individual is eligible to receive up to 20,000 shares of restricted stock based upon the completion of certain performance milestones.

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 –Income Taxes

The Company filed its 2010 New York State corporate income tax return during March 2011, which generated a tax credit for being a Qualified Emerging Technology Company. In January of 2012, the Company received payment for this tax credit, which is reflected in results for the six months ended June 30, 2012.

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Stock Based Compensation (Details Textual) (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Nov. 15, 2012
Stock Based Compensation (Textual)
Equity Incentive Plan provided for the issuance common stock, shares	1,550,000		800,000
Number of shares are available for grant as Incentive Stock Options	50,000
Exercise price for options award in percentage	100.00%
Options vest from date of grant	1 to 3 years
Compensation costs for options and shares granted	$ 428,826	$ 934,753
Reverse stock split			One for twenty
Company expensed relating to stock options	426,730	409,011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	175,000	60,400
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	140,400
Cancellation of stock option	22,000	20,250
Stock options exercised	0	0			0
Weighted average fair value of options granted	$ 2.04	$ 4.40
Number of shares vested and scheduled to vest	55,969					169,368
Expenses related to restricted stock awards	$ 698,690	$ 525,636	$ 594,498	$ 104,192

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Debt (Tables)

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Annual maturities of debt

2012	(7/1/2012-12/31/2012)	$	5,610
2013		$	11,688
2014		$	11,782
2015		$	9,540
2016		$	6,629

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Going Concern (Details) (USD $)	1 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended		48 Months Ended
	Jul. 31, 2012	Mar. 31, 2012	Apr. 30, 2010	Jun. 30, 2012	Mar. 31, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Dec. 31, 2009	Dec. 31, 2010
Going Concern (Textual)
Company raised amount through multiple private placement								$ 3,200,000		$ 4,100,000
Proceed from sale of common stock	75,000	240,000		480,000
Number of common stock and warrant sold	5	16		32
Incurred cumulative net loss				(22,112,691)		(22,112,691)		(20,271,855)
Stock options exercised						0	0		0
Amount yielded by company from the exercise of stock options									1,670,000
Line of credit with First Niagara Bank			1,000,000
Numbe of officiers provided guarantees			2
Numbe of shareholders secured facility by guarantee			1
Non cash gain on debt					$ 1,000,000

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Commitments and Contingencies (Details Textual) (USD $)	1 Months Ended		6 Months Ended
	Oct. 30, 2010	Aug. 31, 2009	Jun. 30, 2012	Dec. 31, 2011	Jan. 27, 2011
Commitments and Contingencies (Textual)
Number of members of senior management under employment agreements			5
Terms of employment agreements			3 years
Extended period of employment agreement at company option			4 years
Aggregate base salary of annual compensation required under the agreements			$ 872,000
Minimum term of employment agreement			2 years
Agreements expiring period	August 2010 through July 2015		November 14, 2012 through March 1, 2013
Monthly base rental payment	5,396	1,400
Lease expiration date		Oct. 31, 2011
Renewal option		2 years
Issuance of shares of common stock as settlement for the early termination of the lease					1,500
Percentage increase in base rent	3.00%
Advance payments received for sale order			64,710	112,218
Warranty reserve			$ 140,074	$ 135,606

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Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Operating activities
Net loss	$ (1,840,836)	$ (1,685,290)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization and depreciation expense	61,502	40,583
Stock-based compensation	428,826	934,753
Financing fees- issuance of warrants, non-cash	108,132	156,047
Stock issued for services and rent	251,854	146,631
Extinguishment of line of credit debt	0	(1,000,000)
Impairment of assets	0	13,382
Changes in operating assets and liabilities:
(Increase) in trade accounts receivable	(269,926)	(2,053)
(Increase) in prepaid expenses and other current assets	(33,139)	(116,286)
Decrease/(increase) in inventory	119,976	(35,279)
Decrease in customer deposits	(47,508)	(30,059)
Increase in deferred revenue	146,919	0
Increase in accrued warranty costs	4,468	0
Increase/(decrease) in trade accounts payable and accrued liabilities	27,505	(43,001)
Net cash provided by/(used in) operating activities	(1,042,227)	(1,620,572)
Investing Activities
Acquisition of fixed assets	(20,062)	(30,228)
Net cash used in investing activities	(20,062)	(30,228)
Financing activities
Proceeds from issuance of common stock	720,000	1,172,500
Payments of long term debt	(5,763)	0
Net cash provided by financing activities	714,237	1,172,500
(Decrease)/increase in cash	(348,052)	(478,300)
Cash – beginning of period	371,132	584,085
Cash – end of period	23,080	105,785
Supplemental Information:
Income Taxes Paid/(Tax credits received)	(159,220)	0
Interest Paid	$ 1,341	$ 12,421

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Debt

6 Months Ended

Jun. 30, 2012

Debt Disclosure [Abstract]

Debt

Note 4 – Debt

In April 2010, the Company established a $1.0 million line of credit with First Niagara Bank to provide the Company with liquidity.  The facility was secured by the guarantees of two officers of the Company and one shareholder of the Company. The line of credit interest rate was at prime rate, plus 0%, but at no time would the applicable interest rate be less than 3.25%.

The borrowings under the loan agreement were secured by limited guarantees provided by two of our officers, William Schmitz and Molly Hedges, and one of our shareholders, Michael Hughes.  The guarantees were supported by cash collateral accounts maintained by the individuals at First Niagara Bank. Additionally, Gerald Brock, a former director of the Company, granted the guarantors the right to sell 1,000,000 of his shares of our common stock in the event they were required to pay under the guarantees.  Mr. Brock pledged his 1,000,000 shares of the Company’s common stock owned by him as security for his obligations to the guarantors.

In connection with the guarantees, the Company issued to Mr. Brock and the guarantors warrants to purchase an aggregate of 1,450,000 shares of our common stock at $5.00 per share.  The warrants have a term of 10 years, with a six-month incremental vesting schedule in tranches of 25% of the shares under each warrant from the date of issue. As of June 30, 2012, all of these warrants have vested.

On February 26, 2011, the Company received a notice of potential opportunity to cure default from First Niagara Bank, which included a demand payment for interest due of $10,976 as of February 23, 2011 under the Company’s loan agreement.  The notice provided that if the events of default were not cured by March 4, 2011, First Niagara Bank, at its sole discretion, could accelerate or demand payment in full of the obligations and take all enforcement actions or otherwise implement remedies under the applicable loan agreements.  The default was not cured by the Company by March 4, 2011.  Pursuant to the loan agreement, the interest rate under the line of credit had increased by 6% to 9.25% as of the date of the notice.  On March 12, 2011, the Company received a demand notice from First Niagara Bank, demanding payment for full indebtedness to the bank including line of credit principal and interest of $1,012,421, and credit card debt of $25,351 by no later than March 17, 2011.  On March 17, 2011, the Company received written notification from the guarantors of the loan agreement that the guarantors were required by the lender, and did, on March 17, 2011, repay the $1.0 million principal balance of the Company’s working capital revolving line of credit with the Lender.  The Company has no liability to the guarantors as a result of the repayment by the guarantors of the line of credit, and accordingly, the Company recorded a $1.0 million gain on the extinguishment of the line of credit debt during the three months ending March 31, 2011.  Other than accrued interest and applicable fees, which have been fully repaid, the Company had no liability under the line of credit.

On August 24, 2011, the Company purchased equipment for $44,748, financed with a loan from Canandaigua National Bank.  The loan is guaranteed by William Schmitz, our CEO, has a 60-month term, and carries a 4.99% annual interest rate.  Monthly payments are $844. On October 14, 2011, the Company leased office equipment for $9,068, financed with a loan from Canon Financial Services, Inc.  The loan, with monthly payments of $279, has a 6.76% annual interest rate and a 36 month term.  The end of term purchase option calls for a payment of the equipment’s fair market value.

Annual maturities of debt are as follows:

2012	(7/1/2012-12/31/2012)	$	5,610
2013		$	11,688
2014		$	11,782
2015		$	9,540
2016		$	6,629

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Long Lived Assets (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Property and equipment
Equipment	$ 264,861	$ 244,799
Furniture and fixtures	38,950	38,950
Software	71,625	71,625
Product Tooling	51,373	51,373
Total property and equipment before accumulated depreciation	426,809	406,747
Less accumulated depreciation	(219,235)	(158,889)
Total property and equipment	207,574	247,858
Intangible assets
Patents	34,862	34,862
Trademark	4,525	4,525
Total intangible assets before accumulated amortization	39,387	39,387
Less accumulated amortization	(7,518)	(6,362)
Total intangible assets	$ 31,869	$ 33,025

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Consulting Agreements (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Consulting Agreement on May 24, 2010 [Member]
Consulting Agreements (Textual)
Restricted stock eligible under consulting agreement	10,000
Vesting period	1 year
Expenses associated with this stock option granted in regard of consulting agreement		$ 6,746
Consulting Agreement on October 11, 2010 [Member]
Consulting Agreements (Textual)
Restricted stock eligible under consulting agreement	5,500
Vesting period	3 years
Expenses associated with this stock option granted in regard of consulting agreement	9,632	$ 7,822
Consulting Agreement on July 30, 2012 [Member] | Restricted Stock [Member]
Consulting Agreements (Textual)
Restricted stock eligible under consulting agreement	20,000

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Long Lived Assets (Tables)

6 Months Ended

Jun. 30, 2012

Long Lived Assets [Abstract]

Summary of Company’s long-lived assets

	June 30, 2012			December 31, 2011
Property and equipment
Equipment	$	264,861		$	244,799
Furniture and fixtures		38,950			38,950
Software		71,625			71,625
Product Tooling		51,373			51,373
Total property and equipment before accumulated depreciation		426,809			406,747
Less accumulated depreciation		(219,235	)		(158,889	)
Total property and equipment	$	207,574		$	247,858

Intangible assets
Patents	$	34,862		$	34,862
Trademark		4,525			4,525
Total intangible assets before accumulated amortization		39,387			39,387
Less accumulated amortization		(7,518	)		(6,362	)
Total intangible assets	$	31,869		$	33,025