Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | May 15, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CYCLONE POWER TECHNOLOGIES INC | |
Entity Central Index Key | 1,442,711 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filer | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 850,000 | |
Entity Common Stock, Shares Outstanding | 5,292,794,570 | |
Trading Symbol | CYPW | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 591 | |
Inventory, net | 26,667 | |
Other current assets | 193 | 193 |
Total current assets | 193 | 27,451 |
PROPERTY AND EQUIPMENT | ||
Furniture, fixtures, and equipment | 302,770 | 302,770 |
Accumulated depreciation | (236,938) | (209,498) |
Net property and equipment | 65,832 | 93,272 |
OTHER ASSETS | ||
Patents, trademarks and copyrights | 394,980 | 394,980 |
Accumulated amortization | (304,807) | (216,502) |
Net patents, trademarks and copyrights | 90,173 | 178,478 |
Other assets | 7,660 | 7,862 |
Total other assets | 97,833 | 186,340 |
Total Assets | 163,858 | 307,063 |
CURRENT LIABILITIES | ||
Bank overdraft | 52 | |
Accounts payable and accrued expenses | 2,057,068 | 1,472,851 |
Accounts payable and accrued expenses-related parties | 880,225 | 545,225 |
Notes and other loans payable-current portion net of discount of $30,764 | 494,795 | 512,642 |
Derivative liabilities | 1,424,001 | 754,000 |
Notes and other loans payable-related parties | 399,873 | 393,760 |
Capitalized lease obligations-current portion | 5,522 | 14,312 |
Deferred revenue and license deposits | 173,826 | 323,826 |
Total current liabilities | 5,435,362 | 4,016,616 |
NON CURRENT LIABILITIES | ||
Capitalized lease obligations-net of current portion | 25,536 | |
Notes and other loans payable-net of current portion | 1,500 | |
Total non-current liabilities | 1,500 | 25,536 |
Total Liabilities | 5,436,862 | 4,042,152 |
Commitments and contingencies | ||
STOCKHOLDERS’ DEFICIT | ||
Common stock, $.0001 par value, 6,000,000,000 shares authorized, 2,859,645,298 and 1,517,400,273, shares issued and outstanding at December 31, 2017, and December 31, 2016, respectively. | 285,963 | 151,737 |
Additional paid-in capital | 57,377,491 | 56,915,794 |
Treasury Stock 317,000 shares, at December 31, 2017, and December 31, 2016 respectively, at cost. | (3,000) | (3,000) |
Accumulated deficit | (62,962,497) | (60,828,659) |
Total stockholders’ deficit - Cyclone Power Technologies Inc. | (5,302,043) | (3,764,128) |
Non controlling interest in consolidated subsidiaries | 29,039 | 29,039 |
Total Stockholders’ Deficit | (5,273,004) | (3,735,089) |
Total Liabilities and Stockholders’ Deficit | 163,858 | 307,063 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS’ DEFICIT | ||
Preferred stock, value | ||
Series B Preferred Stock [Member] | ||
STOCKHOLDERS’ DEFICIT | ||
Preferred stock, value |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes payable debt discount | $ 30,764 | $ 30,764 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 |
Common stock, shares issued | 2,859,645,298 | 1,517,400,273 |
Common stock, shares outstanding | 2,859,645,298 | 1,517,400,273 |
Treasury stock, shares | 317,000 | 317,000 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 750,000 | 750,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | ||
REVENUES | |||
Engine sales and design revenue | $ 150,000 | ||
License revenue | 25,000 | ||
Total revenue | 175,000 | ||
COST OF GOODS SOLD | 138 | ||
Gross profit | 174,862 | ||
OPERATING EXPENSES | |||
Advertising and promotion expenses | 7,438 | 8,166 | |
General and administrative | |||
Retirement of patents | 62,857 | 69,782 | |
Other general and administrative | 1,062,871 | 897,924 | |
Total general and administrative | 1,125,728 | 967,706 | |
Research and development | |||
Inventory reserve provision | 125,900 | ||
Other research and development | 238,682 | 478,299 | |
Total research and development | 238,682 | 604,199 | |
Total operating expenses | 1,371,848 | 1,580,071 | |
Operating loss | (1,196,986) | (1,580,071) | |
Other income (expense) | |||
Other income and (expense) | 168,702 | (8,883) | |
Change in fair value of derivative liability | (728,144) | (370,518) | |
Interest (expense) | (377,410) | (141,450) | |
Total other income (expense) | (936,852) | (520,852) | |
Loss before income taxes | (2,133,838) | (2,100,923) | |
Income taxes | |||
Net loss | $ (2,133,838) | $ (2,100,923) | |
Net loss per common share, basic and diluted | $ 0 | [1] | $ 0 |
Weighted average number of common shares outstanding | 1,720,378,311 | 1,416,738,836 | |
[1] | Net loss per share less than $0.00 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) | Dec. 31, 2017$ / shares |
Income Statement [Abstract] | |
Net loss per share | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Preferred Stock A [Member] | Preferred Stock B [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Prepaid Expenses Via Common Stock [Member] | Preferred Stock Subscription Receivable [Member] | Accumulated Deficit [Member] | Stockholders' (Deficit) Cyclone Power Tech. Inc. [Member] | Noncontrolling Interest In Consol. Subsidiaries [Member] | Total |
Balance at Dec. 31, 2015 | $ 138,864 | $ 56,621,826 | $ (3,000) | $ (58,727,736) | $ (1,970,046) | $ 29,039 | $ (1,941,007) | ||||
Balance, shares at Dec. 31, 2015 | 1,000 | 1,388,669,532 | |||||||||
Issuance of options for employee services | 2,526 | 2,526 | 2,526 | ||||||||
Repayment of liabilities in common stock | $ 12,573 | 228,359 | 240,932 | 240,932 | |||||||
Repayment of liabilities in common stock, shares | 125,730,741 | ||||||||||
Loss on debt paid with common stock | 57,383 | 57,383 | 57,383 | ||||||||
Issuance of common stock for services | $ 300 | 5,700 | 6,000 | $ 6,000 | |||||||
Issuance of common stock for services, shares | 3,000,000 | 3,000,000 | |||||||||
Repayment of debt and interest with common stock | |||||||||||
Repayment of debt and interest with common stock, shares | 5,500,000,000 | ||||||||||
Net loss | (2,100,923) | (2,100,923) | $ (2,100,923) | ||||||||
Balance at Dec. 31, 2016 | $ 151,737 | 56,915,794 | (3,000) | (60,828,659) | (3,764,128) | 29,039 | (3,735,089) | ||||
Balance, shares at Dec. 31, 2016 | 1,000 | 1,517,400,273 | |||||||||
Issuance of options for employee services | 3,153 | 3,153 | 3,153 | ||||||||
Repayment of liabilities in common stock | $ 48,458 | 198,917 | 247,375 | 247,375 | |||||||
Repayment of liabilities in common stock, shares | 484,583,333 | ||||||||||
Issuance of common stock for services | $ 5,000 | ||||||||||
Issuance of common stock for services, shares | 6,400,000 | ||||||||||
Repayment of debt and interest with common stock | $ 85,131 | 255,168 | 340,299 | $ 587,000 | |||||||
Repayment of debt and interest with common stock, shares | 851,291,692 | 1,335,900,000 | |||||||||
Services paid with common stock | $ 637 | 4,459 | 5,096 | $ 5,096 | |||||||
Services paid with common stock, shares | 6,370,000 | ||||||||||
Net loss | (2,133,838) | (2,133,838) | (2,133,838) | ||||||||
Balance at Dec. 31, 2017 | $ 285,963 | $ 57,377,491 | $ (3,000) | $ (62,962,497) | $ (5,302,043) | $ 29,039 | $ (5,273,004) | ||||
Balance, shares at Dec. 31, 2017 | 1,000 | 2,859,645,298 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,133,838) | $ (2,100,923) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 52,888 | 68,357 |
Provision for inventory reserve | 125,900 | |
Issuance of restricted common stock, options and warrants for services | 3,153 | 2,526 |
Loss from derivative liability-conversion notes payable | 70,934 | 57,383 |
Amortization of derivative debt discount | 61,617 | 11,680 |
Change in fair value of derivative liability | 728,144 | 370,518 |
Expenses paid with common stock | 123,066 | 6,000 |
Write-off of expired patents | 62,857 | 69,782 |
Changes in operating assets and liabilities: | ||
Decrease in inventory | 26,667 | 170,941 |
Decrease in other current assets | 202 | 594 |
Increase (decrease) in cash overdraft | 52 | (3,221) |
Increase in accounts payable and accrued expenses | 646,741 | 554,744 |
Increase in accounts payable and accrued expenses-related parties | 335,000 | 335,000 |
Increase (decrease) in deferred revenue and deposits | (150,000) | 175,700 |
Net cash used in operating activities | (172,517) | (155,019) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net cash used by investing activities | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payment of capitalized lease obligations | (10,041) | |
Proceeds from notes and loans payable | 165,813 | 94,725 |
Repayment of notes and loans payable | (1,500) | |
Proceeds from related party notes and loans payable | 39,834 | 87,141 |
Repayment of related party notes and loans payable | (33,721) | (14,715) |
Net cash provided by financing activities | 171,926 | 155,610 |
Net (decrease) increase in cash | (591) | 591 |
Cash, beginning of period | 591 | |
Cash, end of period | 591 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Payment of interest in cash | ||
Payment of income tax in cash | ||
NON CASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of 484,583,333 shares of Common stock for liabilities | 247,375 | |
Issuance of 6,370,000 shares of Common stock for services | 5,096 | |
Issuance of 851,291,692 shares of Common stock for debt and interest repayment | 340,299 | |
Issuance of 20,313,416 shares of Common stock for repayment of related party payables | 6,000 | |
Issuance of 125,730,741 shares of Common stock for liabilities | $ 240,932 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 30, 2017 | |
Liabilities [Member] | ||
Common stock issued, shares | 484,583,333 | |
Services [Member] | ||
Common stock issued, shares | 6,370,000 | |
Debt and Interest Settlement [Member] | ||
Common stock issued, shares | 851,291,692 | |
Related Party Payables [Member] | ||
Common stock issued, shares | 20,313,416 | |
Liabilities One [Member] | ||
Common stock issued, shares | 125,730,741 |
Organizational and Significant
Organizational and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organizational and Significant Accounting Policies | NOTE 1 – ORGANIZATIONAL AND SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION AND OPERATIONS Cyclone Power Technologies, Inc. (the “Company”, “our,” “Cyclone”) is the successor entity to the business of Cyclone Technologies LLLP (the “LLLP”), a limited liability limited partnership formed in Florida in September 2004. The LLLP was the original developer and intellectual property holder of the Cyclone engine technology. Initiated in 2017, the Company’s current business model, is to be primarily a research and development engineering company whose main purpose is to develop, commercialize, market and license its Cyclone engine technology. Engines and related systems will be outsourced for manufacturing but the company will invoice customers. Our prior business model also included engine manufacturing. In 2012, the Company established Cyclone Performance LLC (“Cyclone Performance”) f/k/a Cyclone-TeamSteam USA, LLC. The purpose of Cyclone Performance is to build, test and run various vehicles and vessels utilizing the Company’s engine. As of December 31, 2017 and 2016, the company had a 95% controlling interest in Cyclone Performance. In 2010, the Company established a subsidiary WHE Generation Corp. f/k/a, Cyclone-WHE LLC (the “WHE Subsidiary”, “WheGen”), to market the waste heat recovery systems for all Cyclone engine models. As of September 30, 2014 the Company had sold most of its ownership and the balance was sold in the second quarter of 2016. B. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. Effective September 30, 2014, Cyclone sold most of its investment in the WHE Subsidiary and as of December 31, 2016 retained approximately a 2 million share non controlling (below 20%) interest in the WHE Subsidiary. This investment was deconsolidated on September 30, 2014 and the remaining investment was sold in the second quarter of 2016. The Company prepares its consolidated financial statements in conformity with account principles generally accepted in the United States (“U.S. GAAP”). The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates. C. CASH Cash includes cash on hand and cash in banks. At December 31, 2017 and 2016, the Company maintained cash balances at one financial institution. D. COMPUTATION OF LOSS PER SHARE Net loss per share is computed by dividing the loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is not presented as the conversion of the preferred stock and exercise of outstanding stock options and warrants would have an anti-dilutive effect. As of December 31, 2017 and 2016, total anti-dilutive shares related to the common stock options plan amounted to approximately 13.4 million and 14.5 million shares, respectively. On a pro-forma basis if the convertible debt and related interest and penalties were converted at respective conversion rates and applied discounts at the year end common stock price, for the years ended December 31 2017 and 2016 an additional 5.5 billion and 658 million shares would be issuable, respectively. E. INCOME TAXES Income taxes are accounted for under the asset and liability method as stipulated by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “ Income Taxes In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2017, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. Interest related to the unrecognized tax benefits is not recognized in the consolidated financial statements as a component of income taxes. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2013 through 2017. F. REVENUE RECOGNITION The Company’s revenue recognition policies are in compliance with ASC 605, “ Revenue Recognition – Multiple Element Arrangements Revenue Recognition It is the Company’s intention when it has royalty revenue from its contracts to record royalty revenue periodically when earned, as reported in sales statements from customers. The Company does not have any royalty revenue to date. G. WARRANTY PROVISIONS Current contracts do not require warranty assistance subsequent to acceptance of the “deliverable R&D prototype” by the customer. For products that the Company will sell in the future, warranty costs are anticipated to be borne by the manufacturing vendor. H. INVENTORY Inventory is recorded at the lower of cost or market. Based on our revised R&D company business model, commencing in 2016, costs include only material to develop a completed engine for sale. In our former business model costs include material, labor and allocated overhead to manufacture a completed engine. These costs are periodically evaluated to determine if they have a net realizable value. If the net realizable value is lower than the carrying amount, a reserve is provided. All inventory was fully reserved at December 31, 2017 and most of the inventory was reserved at December 31, 2016. I. FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, “ Fair Value Measurements and Disclosures Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, as of the reporting date. Level 3 — Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date. The summary of annual fair values and changing values of financial instruments as of January 1, 2015 through December 31, 2017 is as follows: Derivative Liabilities Balance, December 31, 2015 $ 383,482 Additions - Conversion - Deletions - Fair Value Adjustment –loss 370,518 Balance, December 31, 2016 754,000 Additions 116,615 Conversions (174,758 ) Deletions - Fair Value Adjustment –loss 728,144 Balance, December 31, 2017 $ 1,424,001 The table above is based on Level 3 hierarchy using the Stochastic Process Forecasting Model valuation methodology Please refer to Note 16 for disclosure and assumptions used to calculate the fair value of the derivative liabilities. J. RESEARCH AND DEVELOPMENT Research and development activities for product development are expensed as incurred. Costs for the years ended December 31, 2017 and 2016 were $238,682 and $604,199, respectively. K. STOCK BASED COMPENSATION The Company applies the fair value method of ASC 718, “ Share Based Payment L. COMMON STOCK OPTIONS AND PURCHASE WARRANTS The Company accounts for common stock options and purchase warrants at fair value in accordance with ASC 815-40, “ Derivatives and Hedging”. Share Based Payment”. The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “ Equity Based payments to Non-employees” M. ORIGINAL ISSUE DEBT DISCOUNT The original issue discount (OID) related to notes payable is amortized by the effective interest method over the repayment period of the notes. The unamortized OID is represented as a reduction of the amount of the notes payable. N. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows: Years Display equipment for trade shows 3 Leasehold improvements and furniture and fixtures 10 – 15 Shop equipment 7 Computers 3 Expenditures for maintenance and repairs are charged to operations as incurred. O. IMPAIRMENT OF LONG LIVED ASSETS The Company continually evaluates the carrying value of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. To date, the Company has not recognized any impairment charges. P. RECENT ACCOUNTING PRONOUNCEMENTS Recent FASB issuances: In May 2014, and subsequently modified, the FASB issued ASC 606 Revenue from Contracts with Customers as guidance on the recognition of respective revenue from contracts Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The principle sections of the guidance related to: 1. Determine if there is a contract. 2. Identify the performance obligations 3. Establish the contract price 4. Allocate the contract price to the various phases of the contract The implementation guidance permits two methods: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). Commencing in 2018 the company will adopt the guidance and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ equity upon adoption of the new standard is not expected to be material and changes pursuant to continued application of ASC 606 is not expected to be significant. In March 2016, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This addresses the accounting for share-based payment transactions and includes the recognition of the income tax effects of awards that vest or settle as income tax expense and clarification of the presentation of certain components of share-based awards in the statement of cash flows. We are still in the process of evaluating the effect of adoption on our financial statements and the effective date of application is 2018. In March 2016, the FASB issued ASU 2017-06, “ Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force) Q. CONCENTRATION OF RISK The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and to be the only asset most likely to subject the Company to concentrations of credit risk. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure. The company has no accounts receivable at December 31, 2017 As of December 31, 2017, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through December 31,2017. The Company purchases raw material and components from multiple sources, none of which may be considered a principal or material supplier. If necessary, the Company could replace these suppliers with minimal effect on its business operations. R. DERIVATIVE FINANCIAL INSTRUMENTS Accounting and reporting standards for derivative instruments and for hedging activities were codified by ASC Topic 815, Derivatives and Hedging |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 - GOING CONCERN As shown in the accompanying consolidated financial statements, the Company incurred substantial operating and other losses and expenses of approximately $2.1 million for the year ended December 31, 2017, and $2.1 million for the year ended December 31, 2016. The cumulative deficit since inception is approximately $63.0 million. The Company has a working capital deficit at December 31, 2017 of approximately $5.4 million. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on management’s plans which include implementation of its business model to generate revenue from development contracts, licenses and product sales, and continuing to raise funds through debt or equity raises. The Company will also likely continue to rely upon related-party debt or equity financing. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company is currently raising working capital to fund its operations via debt, advance contract payments (deferred revenue) and advances from and deferred payments to related parties. |
Inventory, Net
Inventory, Net | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory, Net | NOTE 3 – INVENTORY, NET Inventory principally consists of raw material. to develop an engine at the lower of cost or market. Inventory, net consists of: December 31, 2017 December 31, 2016 Raw materials $ 0 $ 26,667 Total $ 0 $ 26,667 We provide estimated provisions for the realization, valuation and obsolescence of our inventories, including adjustments to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging and usage reports and margin analyses in determining our provision estimate. |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Property and Equipment, Net | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment consists of the following: December 31, 2017 December 31, 2016 Display equipment for trade shows $ 6,270 $ 6,270 Leasehold improvements and furniture and fixtures 93,922 93,922 Equipment and computers 202,578 202,578 Total 302,770 302,770 Accumulated depreciation (236,938 ) (209,498 ) Net property and equipment $ 65,832 $ 93,272 Depreciation expense for the years ended December 31, 2017, and 2016 was $27,440 and $33,269, respectively. |
Patents, Trademarks and Copyrig
Patents, Trademarks and Copyrights | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents, Trademarks and Copyrights | NOTE 5 – PATENTS, TRADEMARKS AND COPYRIGHTS Patents, trademarks and copyrights consist of legal fees paid to file and perfect these claims. The net balances as of December 31, 2017, and 2016 were $90,173 and $178,478, respectively. There were no capitalized additions to patents, trademarks and copyrights during the years ended December 31, 2017, and 2016. In 2017, and 2016 the Company recorded net charges of $62,857 and $69,782, respectively, included in general and administrative expenses, for various international expired patents; the basic US patents for the Cyclone technology are still protected. As of December 31, 2017, the Company had 3 active and 8 expired patents issued on its technology both in the U.S. and internationally. Pursuant to new US Patent Office regulations, upon approval, expired patents can be reinstated upon payment of past maintenance fees. Patents, trademarks and copyrights are amortized over the life of the intellectual property which is 15 years. Amortization expenses for the years ended December 31, 2017, and 2016 were $25,448 and $35,088, respectively. Future annual patent amortizations are: 2018 $ 15,472 2019 15,472 2020 15,472 2021 15,472 2022 11,337 Thereafter 16,948 $ 90,173 |
Notes and Other Loans Payable
Notes and Other Loans Payable | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Notes and Other Loans Payable | NOTE 6 – NOTES AND OTHER LOANS PAYABLE A. Third PARTIES A summary of non-related party notes and other loans payable is as follows: December 31, 2017 December 31, 2016 12% convertible notes payable, maturing at various dates from November 2013 through October 2017 (A)JMJ $ 61,196 $ 42,951 10% convertible note payable, monthly payments commencing in December 2013 through July 2014 (B) TONQ 19,963 19,963 10% convertible notes payable maturing at various dates from May 2016 through February 2017 (C) LG 76,000 76,000 10% convertible notes payable, maturing at various dates from December 2016 through January 2017 (D)GEL 26,192 29,303 10% convertible notes payable maturing at various dates from February 2016 through August 2016 (E)UNION 140,658 116,200 12% convertible notes payable, maturing at various dates from April 2016 through May 2016 (F)JSJ 35,936 85,000 10% note payable, maturing Feb 3, 2017 50,000 50,000 Various notes payable, maturing 2017 and 2018 (G) (white) 72,650 34,000 6% note payable, maturing Oct 12 2019 1,500 - 10% note payable maturing January 26, 2017 - 46,000 Various notes payable, maturing 2017 and 2018 12,200 6,500 Demand note - 6,725 Total third party notes –net of discount 496,295 512,642 Less-Current Portion 494,795 512,642 Total non-current third party notes $ 1,500 $ - (A) Notes issued net of 10% original discount (fully amortized). This note is in default. (B) Note issued net of original discount (fully amortized). Effective May 8, 2016, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. In 2018 The company negotiated a reduced settlement for $150,000 via the issuance of company stock. (C) Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held approximately 97 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. (D) Notes issued net of discount (fully amortized). This note is in default. (E) Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held 761.9 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. (F) Notes issued net of discount from derivative liabilities (fully amortized). The Company is subject to litigation judgment of approximately $150,000, plus subsequent penalty interest for non–payment. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. The company negotiated the settlement of the debt, interest and penalties via the conversion of company stock. (G) Interest on $62,000 of notes to be paid in 6,000,000 shares of restricted company common stock. Other notes at various interest rates These notes are in default. B. RELATED PARTIES A summary of related party notes and other loans payable is as follows: December 31, 2017 December 31, 2016 6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A) $ 161,005 $ 169,751 6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101. 101,546 107,842 12% non-collateralized loans from officer and shareholder, payable on demand 21,044 21,044 Accrued Interest 116,278 95,123 Total current related party notes, inclusive of accrued interest $ 399,873 $ 393,760 (A) This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. In June 2016 Schoell Marine forgave $710,272 of principle and accrued interest on the note. |
Related Party Transactions - De
Related Party Transactions - Deferred Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions - Deferred Compensation | NOTE 7 – RELATED PARTY TRANSACTIONS-Deferred Compensation Included in accounts payable and accrued expenses - related parties as of December 31, 2017, and December 31, 2016 are $687,500 and $412,500, respectively, of accrued and deferred officers’ salaries compensation for the President and the CTO which may be paid as funds are available. These are non-interest bearing and due on demand. In June 2016, the principle officers of the company forgave $612,500 of deferred compensation. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Preferred Stock | NOTE 8 – PREFERRED STOCK At December 31, 2017 and 2016 the Series A Preferred Stock had 750,000 shares authorized and no shares issued and outstanding. The Series B Preferred Stock is majority voting stock and is held by the two co-founders of the Company. Ownership of the Series B Preferred Stock shares assures the holders thereof a 51% voting control over the common stock of the Company. The 1,000 Series B Preferred Stock shares are convertible on a one-for-one basis with the common stock in the instance the Company is merged, sold or otherwise dissolved. |
Stock Transactions
Stock Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Stock Transactions | NOTE 9 – STOCK TRANSACTIONS The Company authorized an increase of Common Stock to 6 Billion shares in the fourth quarter of 2017. This is a requirement by debt covenants to maintain a sufficient authorized number of shares to satisfy conversion of legacy convertible debt. This is required as the stock price has fallen and shares have to be available at 4 times the conversion rate. During the year ended December 31, 2017, the Company: a- Amortized (based on vesting) $3,153 of common stock options for employee services. b- Issued approximately 1,335.9 million shares of common stock pursuant to conversions of approximately $587,000 of notes payable, accrued liabilities and related interest c- Issued 6.4 million shares of common stock valued at approximately $5,000 for services During the year ended December 31, 2016, the Company: a- Issued 125,730,741 shares of restricted common stock valued at $298,315 for payment of $240,932 of liabilities and incurred a $57,383 loss on this debt payment. b- Amortized (based on vesting) $2,526 of common stock options for employee services. c- Issued 3,000,000 shares of common stock valued at $6,000 for services In the first quarter of 2018, the Company entered into an agreement with an investor to provide up to $5 million to the Company, and the Company will issue Preferred A shares, which will be convertible into shares of the Company’s Common Stock representing approximately 20% of the Company’s outstanding Common stock at the completion of funding. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Warrants | NOTE 10 – STOCK OPTIONS AND WARRANTS A. COMMON STOCK OPTIONS Per the employment contracts with certain officers, the Company issued 1,800,000 common stock options, valued at $3,690 (pursuant to the Black Scholes valuation model) that are exercisable into shares of common stock at an average exercise price of $.0021 and with a maturity life of 10 years. For the years ended December 31, 2017, and December 31, 2016 the amortization of stock options was $2,526 and $2,526, respectively. The unamortized balance at December 31 2017 was $641. A summary of the common stock options for the period from December 31, 2015 through December 31, 2017 follows: Number Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance, December 31, 2015 12,380,000 $ 0.123 5.8 Options issued 1,800,000 .0021 9.6 Options cancelled (150,000 ) (..98 ) - Balance, December 31, 2016 14,030,000 $ 0.096 5.3 Options issued 1,800,000 .0008 9.6 Options expired (2,430,000 ) (.203 ) Balance, December 31, 2017 13,400,000 $ .064 5.8 The vested and exercisable options at period end follows: Exercisable/ Vested Options Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance December 31, 2017 12,050,000 $ .059 5.5 The fair value of new stock options, re-priced stock options, new purchase warrants and re-priced purchase warrants granted using the Black-Scholes option pricing model was calculated using the following assumptions: Year Ended December 31, 2017 Year Ended December 31, 2016 Risk free interest rate 1.5%-1.98% .71%-1.4% Expected volatility 121% - 134% 136% - 139% Expected term 3 3 Expected dividend yield 0 % 0 % Average value per options and warrants $ .0003 -$.0015 $ .0019 -$.0024 Expected volatility is based on historical volatility of the Company’s common stock price. Short Term U.S. Treasury rates were utilized at the risk free interest rate. The expected term of the options and warrants was calculated using the alternative simplified method newly codified as ASC 718 “ Accounting for Stock Based Compensation, B. COMMON STOCK WARRANTS During the year ended December 31, 2017, 500,000 warrants with an average exercise price of $.08 expired. A summary of outstanding vested warrant activity for the period from December 31, 2015 to December 31, 2017 follows: Number Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Common Stock Warrants Balance, December 31, 2015 1,125,000 $ .0042 2.05 Warrants expired (625,000 ) (.011 ) Balance, December 31, 2016 500,000 $ .08 .67 Warrants expired (500,000 ) (.08 ) Balance, December 31, 2017 0 $ 0.0 .- All warrants were vested and exercisable as of the date issued. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 – INCOME TAXES In December 2017, new tax known as Tax Cut and Jobs Act of 2017 was enacted. The new tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward, a deemed repatriation transition tax, and changes to allow net operating losses to be carried forward indefinitely. In addition, net operating losses arising after December 31, 2017 will be limited to the lesser of the available net operating loss or 80% of the pre-net operating loss taxable income. In accordance with ASC 740, the impact of a change in tax law is recorded in the period of enactment. A reconciliation of the differences between the effective income tax rates and the statutory federal tax rates for the years ended December 31, 2017 and 2016 are as follows: Year ended December 31, 2017 Year ended December 31, 2016 Tax benefit at U.S. statutory rate $ 240,997 21 % $ 470,466 34 % State taxes, net of federal benefit 45,904 4 55,349 4 Change in valuation allowance (286,901 ) (25 ) (525,818 ) (38 ) - - - The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2017 and December 31, 2016 consisted of the following: Deferred Tax Assets December 31, 2017 December 31, 2016 Net Operating Loss Carry-forward $ 10,951,258 $ 10,577,607 Deferred Tax Liabilities – Accrued Officers’ Salaries (987,056 ) (900,306 ) Net Deferred Tax Assets 9,964,202 9,677,301 Valuation Allowance (9,964,202 ) (9,677,301 ) Total Net Deferred Tax Assets $ - $ - As of December 31, 2017, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $17 million that may be offset against future taxable income through 2031. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax asset has been reported in the financial statements because the Company believes there is a 50% or greater chance the carry forwards will expire unused. Accordingly, the potential tax benefits of the loss carry forwards are offset by a valuation allowance of the same amount. |
Lease Obligations
Lease Obligations | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Lease Obligations | NOTE 12- LEASE OBLIGATIONS A. LEASE ON FACILITIES The Company leases a 6,000 square foot warehouse and office facility located at 601 NE 26th Court in Pompano Beach, Florida. The original lease was at an annual rent of $60,000. The lease period ended December 2016 and the current lease is monthly with a 3% rate increase. Occupancy costs, inclusive of late charges, for the years ended December 31, 2017, and 2016 were $71,082 and $64,100, respectively. B .CAPITALIZED LEASE OBLIGATIONS Total lease payments made for the year ended December 31, 2017 were $0. The company is in default on its remaining capitalized lease with Leaf Capital Funding, LLC. Effective October 13, 2017 the Company was subject to a summary judgment of $ 37,278 plus attorney fees for non-payment of 3 capitalized leases from Marlin Business Bank. This amount is including $11,379 of past due lease payments, accelerated lease payments, late charges and other fees. The $37,278 has been reflected in accrued expenses with an appropriate reduction of the capitalized lease liability. In the third quarter of 2017, the Company recognized a summary judgment of $7,266 plus accrued interest for non-payment of a capitalized lease from Navitas Lease Corp. This amount is including $4,177 of past due lease payments, accelerated lease payments, interest expense, late charges and other fees. The $7,266 has been reflected in accrued liabilities with an appropriate reduction of the capitalized lease liability. The balance of capitalized lease obligations payable at December 31, 2017 and December 31, 2016 was $5,522 and $5,522, respectively. Future lease payments are: 2018 $ 5,522 $ 5,522 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 – COMMITMENTS AND CONTINGENCIES The Company has employment agreements with Harry Schoell, Chairman and CTO (previously, CEO), at $150,000 per year and Frankie Fruge, President, at $120,000 per year; (collectively, the “Executives”). These agreements provide for a term of three (3) years from their Effective Date (July 2007 with automatically renewing successive one year periods starting on the end of the second anniversary of the Effective Date. If the Executive is terminated “without cause” or pursuant to a “change in control” of the Company, as both defined in the respective agreements, the Executive shall be entitled to (i) any unpaid Base Salary accrued through the effective date of termination, (ii) the Executive’s Base Salary at the rate prevailing at such termination through 12 months from the date of termination or the end of his Term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to the Executive were he/she not terminated, during the 12 months following his or her termination. |
Consolidated Subsidiary
Consolidated Subsidiary | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Consolidated Subsidiary | NOTE 14 –CONSOLIDATED SUBSIDIARY In 2012, the Company established a 100% owned subsidiary (renamed) Cyclone Performance LLC. The purpose of Cyclone Performance is to build, test and run a vehicle utilizing the Company’s engine. In the last quarter of 2012, the Company sold a 5% equity investment to an unrelated investor for $30,000. Subsequent to December 31, 2012, this 5% equity investment was acquired by a corporate officer of the Company. Losses of the subsidiary are currently fully borne by the Company, as there is no guarantee of future profits or positive cash flow of the subsidiary. As of December 31, 2017, the cumulative unallocated losses to the non-controlling interests of this subsidiary of $953 are to be recovered by the parent from future subsidiary profits if they materialize. |
Receivables, Deferred Revenue a
Receivables, Deferred Revenue and Backlog | 12 Months Ended |
Dec. 31, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Receivables, Deferred Revenue and Backlog | NOTE 15 – RECEIVABLES, DEFERRED REVENUE AND BACKLOG As of December 31, 2017, total backlog for prototype engines to be delivered was $400,000 from the Combilift agreement, of which $100,000 has been paid and has been recorded as deferred revenue. As of December 31, 2017, the Company has $56,950 of advances as deposits on three (3) contracts for engines to be delivered to customers. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS Prior to 2016, the Company entered into convertible note agreements (subject to derivative accounting treatment). The conversion prices into common stock ranged from a discount of 30% to 45% of the lowest closing prices in the 10 to 20 trading days prior to the conversion. Under provisions of ASC Topic 815-40, this conversion feature triggered derivative accounting treatment because the convertible note was convertible into an indeterminable number of shares of common stock. The fair value of the embedded conversion option was required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the condensed consolidated statements of operation. As of December 31, 2017, the Company has outstanding stock options and convertible debt that upon exercise could exceed the number of shares authorized. In the year ended December 31, 2017, the Company recorded a $147,233 non-cash charge to interest expense (reflective of debt discount amortization), and $728,144 of derivative loss related to adjusting the derivative liability to fair value. At December 31, 2017, the derivative related fair value of debt was $1,424,001. The significant increase in the derivative loss was the inclusion of default judgments, default and accrued interest in the fair market debt calculation. In the year ended December 31, 2016, the Company recorded a $174,043 non-cash charge to interest expense (reflective of debt discount amortization), an increase of $0 in additional paid in capital pursuant to conversion of convertible notes to common stock, and a $56,702 of derivative gain related to adjusting the derivative liability to fair value. At December 31, 2016, the derivative related fair value of debt was $754,000. The Company calculates the estimated fair values of the liabilities for derivative instruments at each quarter-end using the Stochastic Process Forecasting models (Monte Carlo simulations). Volatility, expected term and risk free interest rates used to estimate the fair value of derivative liabilities are indicated in the table below. The volatility was based on historical volatility, the expected term is equal to the remaining term of the debt and the risk free rate is based upon rates for treasury securities with the same term. Year Ended December 31, 2017 Year Ended December 31, 2016 Volatility 71%- 91 % 103%- 343 % Risk Free Rate .02% - .28 % .01% - .28 % Expected Term (years) 0 – 1.05 0 – 1.05 Dividend Rate 0 % 0 % |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Litigation | NOTE 17 – LITIGATION Effective May 8, 2016, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest Tonaquint Inc. filed and received a judgment and the Company is negotiating a reduced settlement. As at December 31 2017, outstanding interest, default interest and default judgment penalties are included in accrued liabilities. In 2018, the Company negotiated a reduced settlement for $150,000 via the issuance Company stock. In August 2016, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received a judgment and the Company entered into a settlement agreement for conversion of judgment based on value and conversions of original note on January 9, 2017. As at December 31, 2017, outstanding interest, default interest and default judgment penalties for debt are included in accrued liabilities. Effective October 13, 2017 the Company was subject to a summary judgment of $ 37,278 plus attorney fees for non-payment of 3 capitalized leases from Marlin Business Bank. This amount is including $11,379 of past due lease payments, accelerated lease payments, late charges and other fees. The $37,278 has been reflected in accrued expenses with an appropriate reduction of the capitalized lease liability. In the third quarter of 2017, the Company recognized a summary judgment of $7,266 plus accrued interest for non-payment of a capitalized lease from Navitas Lease Corp. This amount is including $4,177 of past due lease payments, accelerated lease payments, interest expense, late charges and other fees. The $7,266 has been reflected in accrued liabilities with an related reduction to the capitalized lease liability. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18 – SUBSEQUENT EVENTS In the first quarter of 2018, the Company engaged in the following transactions: a- The issuance of approximately 571 million shares of common stock in settlement of an accrued liability for services in the amount of approximately $135,000. b- The issuance of approximately 1,862 million shares of common stock pursuant of conversion of approximately $208,000 of notes payable and related interest. As of May 24, 2018, an investor provided $199,500 for additional development of the Cyclone Engines as part of a binding letter of intent for $5 million. The consideration is to be the issuance of Preferred A shares, which represents 20% ownership of the Company at the completion of funding. The funds are to be paid over a 2-year period upon reaching various milestones. On February 1, 2018 the Company executed a consulting agreement known as “Bornstein Consulting Agreement dated February 1, 2018” to render such advice, consultation, information, and services to the Directors and/or Officers of the Company regarding public company financials and audit for the Company. Specifically, the Consultant shall be the lead for the company in dealing with the auditors and the company to completely manage the audit process, manage its timing, conference calls, all document flow and any other items required to complete the audit and public reporting. Additionally, Consultant will be able to work with Company and other Consultants to complete budgets, forecasting and going forward projections for the company, as well as assisting in documents used to help with acquisitions and mergers and capital raising. In the May 2018, the Company established a wholly owned subsidiary, Emerging Power Solutions Inc., whose purpose is to provide alternative power solutions for various industries based on the application of the Cyclone Engine. |
Organizational and Significan27
Organizational and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | A. ORGANIZATION AND OPERATIONS Cyclone Power Technologies, Inc. (the “Company”, “our,” “Cyclone”) is the successor entity to the business of Cyclone Technologies LLLP (the “LLLP”), a limited liability limited partnership formed in Florida in September 2004. The LLLP was the original developer and intellectual property holder of the Cyclone engine technology. Initiated in 2017, the Company’s current business model, is to be primarily a research and development engineering company whose main purpose is to develop, commercialize, market and license its Cyclone engine technology. Engines and related systems will be outsourced for manufacturing but the company will invoice customers. Our prior business model also included engine manufacturing. In 2012, the Company established Cyclone Performance LLC (“Cyclone Performance”) f/k/a Cyclone-TeamSteam USA, LLC. The purpose of Cyclone Performance is to build, test and run various vehicles and vessels utilizing the Company’s engine. As of December 31, 2017 and 2016, the company had a 95% controlling interest in Cyclone Performance. In 2010, the Company established a subsidiary WHE Generation Corp. f/k/a, Cyclone-WHE LLC (the “WHE Subsidiary”, “WheGen”), to market the waste heat recovery systems for all Cyclone engine models. As of September 30, 2014 the Company had sold most of its ownership and the balance was sold in the second quarter of 2016. |
Principles of Consolidation and Basis of Presentation | B. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION The consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. Effective September 30, 2014, Cyclone sold most of its investment in the WHE Subsidiary and as of December 31, 2016 retained approximately a 2 million share non controlling (below 20%) interest in the WHE Subsidiary. This investment was deconsolidated on September 30, 2014 and the remaining investment was sold in the second quarter of 2016. The Company prepares its consolidated financial statements in conformity with account principles generally accepted in the United States (“U.S. GAAP”). The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates. |
Cash | C. CASH Cash includes cash on hand and cash in banks. At December 31, 2017 and 2016, the Company maintained cash balances at one financial institution. |
Computation of Loss Per Share | D. COMPUTATION OF LOSS PER SHARE Net loss per share is computed by dividing the loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is not presented as the conversion of the preferred stock and exercise of outstanding stock options and warrants would have an anti-dilutive effect. As of December 31, 2017 and 2016, total anti-dilutive shares related to the common stock options plan amounted to approximately 13.4 million and 14.5 million shares, respectively. On a pro-forma basis if the convertible debt and related interest and penalties were converted at respective conversion rates and applied discounts at the year end common stock price, for the years ended December 31 2017 and 2016 an additional 5.5 billion and 658 million shares would be issuable, respectively. |
Income Taxes | E. INCOME TAXES Income taxes are accounted for under the asset and liability method as stipulated by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “ Income Taxes In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2017, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. Interest related to the unrecognized tax benefits is not recognized in the consolidated financial statements as a component of income taxes. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2013 through 2017. |
Revenue Recognition | F. REVENUE RECOGNITION The Company’s revenue recognition policies are in compliance with ASC 605, “ Revenue Recognition – Multiple Element Arrangements Revenue Recognition It is the Company’s intention when it has royalty revenue from its contracts to record royalty revenue periodically when earned, as reported in sales statements from customers. The Company does not have any royalty revenue to date. |
Warranty Provisions | G. WARRANTY PROVISIONS Current contracts do not require warranty assistance subsequent to acceptance of the “deliverable R&D prototype” by the customer. For products that the Company will sell in the future, warranty costs are anticipated to be borne by the manufacturing vendor. |
Inventory | H. INVENTORY Inventory is recorded at the lower of cost or market. Based on our revised R&D company business model, commencing in 2016, costs include only material to develop a completed engine for sale. In our former business model costs include material, labor and allocated overhead to manufacture a completed engine. These costs are periodically evaluated to determine if they have a net realizable value. If the net realizable value is lower than the carrying amount, a reserve is provided. All inventory was fully reserved at December 31, 2017 and most of the inventory was reserved at December 31, 2016. |
Fair Value of Financial Instruments | I. FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820, “ Fair Value Measurements and Disclosures Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date. Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, as of the reporting date. Level 3 — Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date. The summary of annual fair values and changing values of financial instruments as of January 1, 2015 through December 31, 2017 is as follows: Derivative Liabilities Balance, December 31, 2015 $ 383,482 Additions - Conversion - Deletions - Fair Value Adjustment –loss 370,518 Balance, December 31, 2016 754,000 Additions 116,615 Conversions (174,758 ) Deletions - Fair Value Adjustment –loss 728,144 Balance, December 31, 2017 $ 1,424,001 The table above is based on Level 3 hierarchy using the Stochastic Process Forecasting Model valuation methodology Please refer to Note 16 for disclosure and assumptions used to calculate the fair value of the derivative liabilities. |
Research and Development | J. RESEARCH AND DEVELOPMENT Research and development activities for product development are expensed as incurred. Costs for the years ended December 31, 2017 and 2016 were $238,682 and $604,199, respectively. |
Stock Based Compensation | K. STOCK BASED COMPENSATION The Company applies the fair value method of ASC 718, “ Share Based Payment |
Common Stock Options and Purchase Warrants | L. COMMON STOCK OPTIONS AND PURCHASE WARRANTS The Company accounts for common stock options and purchase warrants at fair value in accordance with ASC 815-40, “ Derivatives and Hedging”. Share Based Payment”. The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “ Equity Based payments to Non-employees” |
Original Issue Debt Discount | M. ORIGINAL ISSUE DEBT DISCOUNT The original issue discount (OID) related to notes payable is amortized by the effective interest method over the repayment period of the notes. The unamortized OID is represented as a reduction of the amount of the notes payable. |
Property and Equipment | N. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows: Years Display equipment for trade shows 3 Leasehold improvements and furniture and fixtures 10 – 15 Shop equipment 7 Computers 3 Expenditures for maintenance and repairs are charged to operations as incurred. |
Impairment of Long Lived Assets | O. IMPAIRMENT OF LONG LIVED ASSETS The Company continually evaluates the carrying value of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. To date, the Company has not recognized any impairment charges. |
Recent Accounting Pronouncements | P. RECENT ACCOUNTING PRONOUNCEMENTS Recent FASB issuances: In May 2014, and subsequently modified, the FASB issued ASC 606 Revenue from Contracts with Customers as guidance on the recognition of respective revenue from contracts Revenue recognition will depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The principle sections of the guidance related to: 1. Determine if there is a contract. 2. Identify the performance obligations 3. Establish the contract price 4. Allocate the contract price to the various phases of the contract The implementation guidance permits two methods: retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). Commencing in 2018 the company will adopt the guidance and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’ equity upon adoption of the new standard is not expected to be material and changes pursuant to continued application of ASC 606 is not expected to be significant. In March 2016, the FASB issued ASU 2017-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This addresses the accounting for share-based payment transactions and includes the recognition of the income tax effects of awards that vest or settle as income tax expense and clarification of the presentation of certain components of share-based awards in the statement of cash flows. We are still in the process of evaluating the effect of adoption on our financial statements and the effective date of application is 2018. In March 2016, the FASB issued ASU 2017-06, “ Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments (a consensus of the FASB Emerging Issues Task Force) |
Concentration of Risk | Q. CONCENTRATION OF RISK The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and to be the only asset most likely to subject the Company to concentrations of credit risk. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure. The company has no accounts receivable at December 31, 2017 As of December 31, 2017, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through December 31,2017. The Company purchases raw material and components from multiple sources, none of which may be considered a principal or material supplier. If necessary, the Company could replace these suppliers with minimal effect on its business operations. |
Derivative Financial Instruments | R. DERIVATIVE FINANCIAL INSTRUMENTS Accounting and reporting standards for derivative instruments and for hedging activities were codified by ASC Topic 815, Derivatives and Hedging |
Organizational and Significan28
Organizational and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Fair Value of Financial Instrument | The summary of annual fair values and changing values of financial instruments as of January 1, 2015 through December 31, 2017 is as follows: Derivative Liabilities Balance, December 31, 2015 $ 383,482 Additions - Conversion - Deletions - Fair Value Adjustment –loss 370,518 Balance, December 31, 2016 754,000 Additions 116,615 Conversions (174,758 ) Deletions - Fair Value Adjustment –loss 728,144 Balance, December 31, 2017 $ 1,424,001 |
Schedule of Estimated Useful Lives of Property and Equipment | Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows: Years Display equipment for trade shows 3 Leasehold improvements and furniture and fixtures 10 – 15 Shop equipment 7 Computers 3 |
Inventory, Net (Tables)
Inventory, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory, Net | Inventory, net consists of: December 31, 2017 December 31, 2016 Raw materials $ 0 $ 26,667 Total $ 0 $ 26,667 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment, Net | Property and equipment consists of the following: December 31, 2017 December 31, 2016 Display equipment for trade shows $ 6,270 $ 6,270 Leasehold improvements and furniture and fixtures 93,922 93,922 Equipment and computers 202,578 202,578 Total 302,770 302,770 Accumulated depreciation (236,938 ) (209,498 ) Net property and equipment $ 65,832 $ 93,272 |
Patents, Trademarks and Copyr31
Patents, Trademarks and Copyrights (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Future Amortization Expenses for Patents | Future annual patent amortizations are: 2018 $ 15,472 2019 15,472 2020 15,472 2021 15,472 2022 11,337 Thereafter 16,948 $ 90,173 |
Notes and Other Loans Payable (
Notes and Other Loans Payable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Non-related Party Notes and Other Loans Payable | A summary of non-related party notes and other loans payable is as follows: December 31, 2017 December 31, 2016 12% convertible notes payable, maturing at various dates from November 2013 through October 2017 (A)JMJ $ 61,196 $ 42,951 10% convertible note payable, monthly payments commencing in December 2013 through July 2014 (B) TONQ 19,963 19,963 10% convertible notes payable maturing at various dates from May 2016 through February 2017 (C) LG 76,000 76,000 10% convertible notes payable, maturing at various dates from December 2016 through January 2017 (D)GEL 26,192 29,303 10% convertible notes payable maturing at various dates from February 2016 through August 2016 (E)UNION 140,658 116,200 12% convertible notes payable, maturing at various dates from April 2016 through May 2016 (F)JSJ 35,936 85,000 10% note payable, maturing Feb 3, 2017 50,000 50,000 Various notes payable, maturing 2017 and 2018 (G) (white) 72,650 34,000 6% note payable, maturing Oct 12 2019 1,500 - 10% note payable maturing January 26, 2017 - 46,000 Various notes payable, maturing 2017 and 2018 12,200 6,500 Demand note - 6,725 Total third party notes –net of discount 496,295 512,642 Less-Current Portion 494,795 512,642 Total non-current third party notes $ 1,500 $ - (A) Notes issued net of 10% original discount (fully amortized). This note is in default. (B) Note issued net of original discount (fully amortized). Effective May 8, 2016, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. In 2018 The company negotiated a reduced settlement for $150,000 via the issuance of company stock. (C) Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held approximately 97 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. (D) Notes issued net of discount (fully amortized). This note is in default. (E) Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held 761.9 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. (F) Notes issued net of discount from derivative liabilities (fully amortized). The Company is subject to litigation judgment of approximately $150,000, plus subsequent penalty interest for non–payment. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. The company negotiated the settlement of the debt, interest and penalties via the conversion of company stock. (G) Interest on $62,000 of notes to be paid in 6,000,000 shares of restricted company common stock. Other notes at various interest rates These notes are in default. |
Schedule of Related Party Notes and Other Loans Payable | A summary of related party notes and other loans payable is as follows: December 31, 2017 December 31, 2016 6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A) $ 161,005 $ 169,751 6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101. 101,546 107,842 12% non-collateralized loans from officer and shareholder, payable on demand 21,044 21,044 Accrued Interest 116,278 95,123 Total current related party notes, inclusive of accrued interest $ 399,873 $ 393,760 (A) This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Common Stock Options | A summary of the common stock options for the period from December 31, 2015 through December 31, 2017 follows: Number Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance, December 31, 2015 12,380,000 $ 0.123 5.8 Options issued 1,800,000 .0021 9.6 Options cancelled (150,000 ) (..98 ) - Balance, December 31, 2016 14,030,000 $ 0.096 5.3 Options issued 1,800,000 .0008 9.6 Options expired (2,430,000 ) (.203 ) Balance, December 31, 2017 13,400,000 $ .064 5.8 |
Schedule of Vested and Exercisable Options | The vested and exercisable options at period end follows: Exercisable/ Vested Options Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance December 31, 2017 12,050,000 $ .059 5.5 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of new stock options, re-priced stock options, new purchase warrants and re-priced purchase warrants granted using the Black-Scholes option pricing model was calculated using the following assumptions: Year Ended December 31, 2017 Year Ended December 31, 2016 Risk free interest rate 1.5%-1.98% .71%-1.4% Expected volatility 121% - 134% 136% - 139% Expected term 3 3 Expected dividend yield 0 % 0 % Average value per options and warrants $ .0003 -$.0015 $ .0019 -$.0024 |
Schedule of Outstanding Vested Warrant Activity | A summary of outstanding vested warrant activity for the period from December 31, 2015 to December 31, 2017 follows: Number Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Common Stock Warrants Balance, December 31, 2015 1,125,000 $ .0042 2.05 Warrants expired (625,000 ) (.011 ) Balance, December 31, 2016 500,000 $ .08 .67 Warrants expired (500,000 ) (.08 ) Balance, December 31, 2017 0 $ 0.0 .- |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the differences between the effective income tax rates and the statutory federal tax rates for the years ended December 31, 2017 and 2016 are as follows: Year ended December 31, 2017 Year ended December 31, 2016 Tax benefit at U.S. statutory rate $ 240,997 21 % $ 470,466 34 % State taxes, net of federal benefit 45,904 4 55,349 4 Change in valuation allowance (286,901 ) (25 ) (525,818 ) (38 ) - - - |
Schedule of Deferred Tax Assets and Liabilities | The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2017 and December 31, 2016 consisted of the following: Deferred Tax Assets December 31, 2017 December 31, 2016 Net Operating Loss Carry-forward $ 10,951,258 $ 10,577,607 Deferred Tax Liabilities – Accrued Officers’ Salaries (987,056 ) (900,306 ) Net Deferred Tax Assets 9,964,202 9,677,301 Valuation Allowance (9,964,202 ) (9,677,301 ) Total Net Deferred Tax Assets $ - $ - |
Lease Obligations (Tables)
Lease Obligations (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments for Capital Leases | Future lease payments are: 2018 $ 5,522 $ 5,522 |
Derivative Financial Instrume36
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | The volatility was based on historical volatility, the expected term is equal to the remaining term of the debt and the risk free rate is based upon rates for treasury securities with the same term. Year Ended December 31, 2017 Year Ended December 31, 2016 Volatility 71%- 91 % 103%- 343 % Risk Free Rate .02% - .28 % .01% - .28 % Expected Term (years) 0 – 1.05 0 – 1.05 Dividend Rate 0 % 0 % |
Organizational and Significan37
Organizational and Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity method investment, ownership percentage | 95.00% | 20.00% |
Number of shares retains for noncontrolling interest | 2,000,000 | |
Antidilutive securities excluded from computation of earnings per share | 13,400,000 | 14,500,000 |
Conversion of debt shares converted | $ 5,500,000,000 | $ 658,000,000 |
Research and development expense | $ 238,682 | $ 604,199 |
Cyclone Performance LLC [Member] | ||
Equity method investment, ownership percentage | 95.00% | 95.00% |
Organizational and Significan38
Organizational and Significant Accounting Policies - Schedule of Fair Value of Financial Instrument (Details) - Fair Value, Inputs, Level 3 [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative liabilities, Beginning of Period | $ 754,000 | $ 383,482 |
Derivative liabilities, Additions | 116,615 | |
Derivative liabilities, Conversion | (174,758) | |
Derivative liabilities, Deletions | ||
Fair Value Adjustment -loss | 728,144 | 370,518 |
Derivative liabilities, End of Period | $ 1,424,001 | $ 754,000 |
Organizational and Significan39
Organizational and Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Display Equipment For Trade Shows [Member] | |
Property and equipment estimated useful lives | 3 years |
Leasehold Improvements and Furniture and Fixtures [Member] | Minimum [Member] | |
Property and equipment estimated useful lives | 10 years |
Leasehold Improvements and Furniture and Fixtures [Member] | Maximum [Member] | |
Property and equipment estimated useful lives | 15 years |
Shop Equipment [Member] | |
Property and equipment estimated useful lives | 7 years |
Computers [Member] | |
Property and equipment estimated useful lives | 3 years |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Income (loss) from operating and other losses and expenses | $ 2,133,838 | $ 2,100,923 |
Accumulated deficit | 62,962,497 | $ 60,828,659 |
Working capital deficit | $ 5,400,000 |
Inventory, Net - Schedule of In
Inventory, Net - Schedule of Inventory, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw material | $ 0 | $ 26,667 |
Total | $ 26,667 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 27,440 | $ 33,269 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment gross | $ 302,770 | $ 302,770 |
Accumulated depreciation | (236,938) | (209,498) |
Net property and equipment | 65,832 | 93,272 |
Display Equipment For Trade Shows [Member] | ||
Property and equipment gross | 6,270 | 6,270 |
Leasehold Improvements and Furniture and Fixtures [Member] | ||
Property and equipment gross | 93,922 | 93,922 |
Equipment and Computers [Member] | ||
Property and equipment gross | $ 202,578 | $ 202,578 |
Patents, Trademarks and Copyr44
Patents, Trademarks and Copyrights (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($)PatentsInteger | Dec. 31, 2016USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Net patents, trademarks and copyrights | $ 90,173 | $ 178,478 |
Patents, trademarks and copyrights capitalized | ||
Retirement of patents | $ 62,857 | 69,782 |
Number of patents | Patents | 3 | |
Number of expired patents | Integer | 8 | |
Finite-lived intangible asset, useful life | 15 years | |
Amortization expenses | $ 25,448 | $ 35,088 |
Patents, Trademarks and Copyr45
Patents, Trademarks and Copyrights - Schedule of Future Amortization Expenses for Patents (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 15,472 | |
2,019 | 15,472 | |
2,020 | 15,472 | |
2,021 | 15,472 | |
2,022 | 11,337 | |
Thereafter | 16,948 | |
Net patents, trademarks and copyrights | $ 90,173 | $ 178,478 |
Notes and Other Loans Payable46
Notes and Other Loans Payable (Details Narrative) | 1 Months Ended |
Jun. 30, 2016USD ($) | |
Schoell Marine [Member] | |
Principle and accrued interest | $ 710,272 |
Notes and Other Loans Payable -
Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Total third party notes-current portion | $ 496,295 | $ 512,642 | |
Less-Current Portion | 494,795 | 512,642 | |
Total non-current third party | 1,500 | ||
12% Convertible Notes Payable [Member] | |||
Total third party notes-current portion | [1] | 61,196 | 42,951 |
10% Convertible Note Payable One [Member] | |||
Total third party notes-current portion | [2] | 19,963 | 19,963 |
10% Convertible Notes Payable Two [Member] | |||
Total third party notes-current portion | [3] | 76,000 | 76,000 |
10% Convertible Notes Payable Three [Member] | |||
Total third party notes-current portion | [4] | 26,192 | 29,303 |
10% Convertible Notes Payable Four [Member] | |||
Total third party notes-current portion | [5] | 140,658 | 116,200 |
12% Convertible Notes Payable One [Member] | |||
Total third party notes-current portion | [6] | 35,936 | 85,000 |
10% Note Payable [Member] | |||
Total third party notes-current portion | 50,000 | 50,000 | |
Various Notes Payable [Member] | |||
Total third party notes-current portion | [7] | 72,650 | 34,000 |
6% Note Payable [Member] | |||
Total third party notes-current portion | 1,500 | ||
10% Note Payable One [Member] | |||
Total third party notes-current portion | 46,000 | ||
Various Notes Payable One [Member] | |||
Total third party notes-current portion | 12,200 | 6,500 | |
Demand Note [Member] | |||
Total third party notes-current portion | $ 6,725 | ||
[1] | Notes issued net of 10% original discount (fully amortized). This note is in default. | ||
[2] | Note issued net of original discount (fully amortized). Effective May 8, 2016, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. In 2018 The company negotiated a reduced settlement for $150,000 via the issuance and sale proceeds of company stock. | ||
[3] | Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held approximately 97 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. | ||
[4] | Notes issued net of discount (fully amortized). This note is in default. | ||
[5] | Notes issued net of discount from derivative liabilities (fully amortized). At December 31, 2017, the Company held 761.9 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. This note is in default. | ||
[6] | Notes issued net of discount from derivative liabilities (fully amortized). The Company is subject to litigation judgment of approximately $150,000, plus subsequent penalty interest for non-payment. Unpaid interest, default penalties and default interest is included in accounts payable and accrued liabilities. The company negotiated the settlement of the debt, interest and penalties via the conversion of company stock. | ||
[7] | Interest on $62,000 of notes to be paid in 6,000,000 shares of restricted company common stock. Other notes at various interest rates These notes are in default. |
Notes and Other Loans Payable48
Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Conversion of debt shares converted | 1,335,900,000 | 5,500,000,000 |
Restricted common stock, shares | 125,730,741 | |
12% Convertible Notes Payable [Member] | ||
Convertible notes payable, maturity date description | November 2013 through October 2017 | November 2013 through October 2017 |
Original discount rate | 12.00% | 12.00% |
10% Convertible Note Payable One [Member] | ||
Convertible notes payable, maturity date description | December 2013 through July 2014 | December 2013 through July 2014 |
Original discount rate | 10.00% | 10.00% |
10% Convertible Notes Payable Two [Member] | ||
Convertible notes payable, maturity date description | May 2016 through February 2017 | May 2016 through February 2017 |
Original discount rate | 10.00% | 10.00% |
10% Convertible Notes Payable Two [Member] | Derivative Liabilities [Member] | ||
Conversion of debt shares converted | 97,000,000 | |
10% Convertible Notes Payable Three [Member] | ||
Convertible notes payable, maturity date description | December 2016 through January 2017 | December 2016 through January 2017 |
Original discount rate | 10.00% | 10.00% |
10% Convertible Notes Payable Four [Member] | ||
Convertible notes payable, maturity date description | February 2016 through August 2016 | February 2016 through August 2016 |
Original discount rate | 10.00% | 10.00% |
10% Convertible Notes Payable Four [Member] | Derivative Liabilities [Member] | ||
Conversion of debt shares converted | 761,900,000 | |
12% Convertible Notes Payable One [Member] | ||
Convertible notes payable, maturity date description | April 2016 through May 2016 | April 2016 through May 2016 |
Original discount rate | 12.00% | 12.00% |
10% Note Payable [Member] | ||
Note payable maturity date | Feb. 3, 2017 | Feb. 3, 2017 |
Original discount rate | 10.00% | 10.00% |
Various Notes Payable [Member] | ||
Convertible notes payable, maturity date description | maturing 2017 and 2018 | maturing 2017 and 2018 |
6% Note Payable [Member] | ||
Note payable maturity date | Oct. 12, 2019 | Oct. 12, 2019 |
Original discount rate | 6.00% | 6.00% |
10% Note Payable One [Member] | ||
Convertible notes payable, maturity date description | maturing January 26, 2017 | maturing January 26, 2017 |
Original discount rate | 10.00% | 10.00% |
Various Notes Payable One [Member] | ||
Convertible notes payable, maturity date description | maturing 2017 and 2018 | maturing 2017 and 2018 |
10% Convertible Note Payable [Member] | Derivative Liabilities [Member] | ||
Payments for legal settlements | $ 175,000 | $ 175,000 |
Convertible Notes Payable [Member] | Derivative Liabilities [Member] | ||
Payments for legal settlements | 150,000 | 150,000 |
Notes Payable [Member] | ||
Interest paid | $ 62,000 | $ 62,000 |
Restricted common stock, shares | 6,000,000 | 6,000,000 |
Notes and Other Loans Payable49
Notes and Other Loans Payable - Schedule of Related Party Notes and Other Loans Payable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | |
Total current related party notes, inclusive of accrued interest | $ 399,873 | $ 393,760 | |
6% Percent Demand Loans Per Operations Agreement With Schoell Marine Inc [Member] | |||
Total current related party notes, inclusive of accrued interest | [1] | 161,005 | 169,751 |
6% Percent Non-collateralized Loans from Officer and Shareholder [Member] | |||
Total current related party notes, inclusive of accrued interest | 101,546 | 107,842 | |
12% Percent Non-collateralized Loans from Officer and Shareholder [Member] | |||
Total current related party notes, inclusive of accrued interest | 21,044 | 21,044 | |
Accrued Interest [Member] | |||
Total current related party notes, inclusive of accrued interest | $ 116,278 | $ 95,123 | |
[1] | This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. |
Notes and Other Loans Payable50
Notes and Other Loans Payable - Schedule of Related Party Notes and Other Loans Payable (Details) (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Original principal balance | $ 157,101 | $ 157,101 |
Schoell Marine [Member] | ||
Debt instrument note bears an interest rate | 6.00% | 6.00% |
6% Percent Non-collateralized Loans from Officer and Shareholder [Member] | ||
Debt instrument note bears an interest rate | 6.00% | 6.00% |
Officer and Shareholder [Member] | ||
Debt instrument note bears an interest rate | 12.00% | 12.00% |
Related Party Transactions- Def
Related Party Transactions- Deferred Compensation (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2016 |
Related Party Transactions [Abstract] | |||
Accounts payable and accrued expenses - related parties | $ 687,500 | $ 412,500 | |
Deferred compensation | $ 612,500 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Voting control percentage | 51.00% | |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 750,000 | 750,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Preferred stock shares convertible with common stock | 1,000 |
Stock Transactions (Details Nar
Stock Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 |
Conversion of stock, description | This is required as the stock price has fallen and shares have to be available at 4 times the conversion rate. | |
Amortized common stock options based on vesting | $ 3,153 | $ 2,526 |
Conversion of debt shares converted | 1,335,900,000 | 5,500,000,000 |
Number of common stock pursuant to conversion of notes payable, accrued liabilities and related interest | $ 587,000 | |
Stock issued during period, shares, issued for services | 6,400,000 | 3,000,000 |
Stock issued during period, value, issued for services | $ 5,000 | $ 6,000 |
Number of restricted common stock | 125,730,741 | |
Number of restricted common stock, value | $ 298,315 | |
Payment of debt | 240,932 | |
Loss on payment of debt | $ 57,383 | |
Series A Preferred Stock [Member] | ||
Proceeds from issuance of preferred stock | $ 5,000,000 | |
Preferred stock conversion percentage into common shares | 20.00% |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 1,800,000 | 1,800,000 |
Share-based compensation arrangement by share-based payment award, options, grants in period value | $ 3,690 | |
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price (in dollars per share) | $ .0008 | $ .0021 |
Stock options issued during period, maturity life | 10 years | |
Amortization of stock options | $ 2,526 | $ 2,526 |
Unamortized balance | $ 641 | |
Number of warrants | 500,000 | |
Average exercise price of warrants | $ 0.08 |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Common Stock Options (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number Outstanding, Balance beginning | 14,030,000 | 12,380,000 |
Number Outstanding, Options issued | 1,800,000 | 1,800,000 |
Number Outstanding, Options Expired | (2,430,000) | |
Number Outstanding, Cancelled | (150,000) | |
Number Outstanding, Balance ending | 13,400,000 | 14,030,000 |
Weighted Avg Exercise Price, Balance beginning | $ 0.096 | $ .123 |
Weighted Avg Exercise Price, Options issued | .0008 | .0021 |
Weighted Avg Exercise Price, Options Expired | (0.203) | |
Weighted Avg Exercise Price, Cancelled-old | (0.98) | |
Weighted Avg Exercise Price, Balance ending | $ .064 | $ 0.096 |
Weighted Avg Remaining Contractual Life (Years), Beginning Balance | 5 years 3 months 19 days | 5 years 9 months 18 days |
Weighted Avg Remaining Contractual Life (Years), Options issued | 9 years 7 months 6 days | 9 years 7 months 6 days |
Weighted Avg Remaining Contractual Life (years), Ending Balance | 5 years 9 months 18 days | 5 years 3 months 19 days |
Stock Options and Warrants - 56
Stock Options and Warrants - Schedule of Vested and Exercisable Options (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Exercisable/Vested Options Outstanding | shares | 12,050,000 |
Weighted Avg Exercise Price | $ / shares | $ 0.059 |
Weighted Avg Remaining Contractual Life (Years) | 5 years 6 months |
Stock Options and Warrants - 57
Stock Options and Warrants - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Risk free interest rate, minimum | 1.50% | 0.71% |
Risk free interest rate, maximum | 1.98% | 1.40% |
Expected volatility, minimum | 121.00% | 136.00% |
Expected volatility, maximum | 134.00% | 139.00% |
Expected term, minimum | 3 years | 3 years |
Expected dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Average value per options and warrants | $ 0.0003 | $ 0.0019 |
Maximum [Member] | ||
Average value per options and warrants | $ 0.0015 | $ 0.0024 |
Stock Options and Warrants - 58
Stock Options and Warrants - Schedule of Outstanding Vested Warrant Activity (Details) - Warrant [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number Outstanding, Balance | 500,000 | 1,125,000 |
Number Outstanding, Warrants expired | (500,000) | (625,000) |
Number Outstanding, Balance | 0 | 500,000 |
Weighted Average Exercise Price, Balance | $ 0.08 | $ .0042 |
Weighted Average Exercise Price, Warrants expired | (.08) | (0.11) |
Weighted Average Exercise Price, Balance | $ 0 | $ 0.08 |
Weighted Average Remaining Contractual Life (Years), Beginning Balance | 2 years 18 days | |
Weighted Average Remaining Contractual Life (years), Ending Balance | 8 months 2 days |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income tax examination, description | The new tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward, a deemed repatriation transition tax, and changes to allow net operating losses to be carried forward indefinitely. | ||
Income tax federal statutory rate | 21.00% | 21.00% | 34.00% |
Available net operating loss, percentage | 80.00% | ||
Operating loss carryforwards | $ 17,000,000 | $ 17,000,000 | |
Operating loss carryforwards expiration date | 2,031 | ||
Minimum [Member] | |||
Percentage that carry forwards will expire unused | 50.00% | 50.00% |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Tax benefit at U.S. statutory rate | $ 240,997 | $ 470,466 | |
Tax benefit at U.S. statutory rate, Percent | 21.00% | 21.00% | 34.00% |
State taxes, net of federal benefit | $ 45,904 | $ 55,349 | |
State taxes, net of federal benefit, Percent | 4.00% | 4.00% | |
Change in valuation allowance | $ (286,901) | $ (525,818) | |
Change in valuation allowance, Percent | (25.00%) | (38.00%) | |
Income Tax Expense (Benefit) | |||
Income Tax Expense (Benefit), Percent | 0.00% | 0.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Net Operating Loss Carry-forward | $ 10,951,258 | $ 10,577,607 |
Deferred Tax Liabilities - Accrued Officers' Salaries | (987,056) | (900,306) |
Net Deferred Tax Assets | 9,964,202 | 9,677,301 |
Valuation Allowance | (9,964,202) | (9,677,301) |
Total Net Deferred Tax Assets |
Lease Obligations (Details Narr
Lease Obligations (Details Narrative) | Oct. 13, 2017USD ($) | May 08, 2016USD ($) | Aug. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)ft² | Dec. 31, 2016USD ($) |
Area of warehouse and office | ft² | 6,000 | |||||
Original lease annual rent | $ 60,000 | |||||
Monthly current lease increasing rate, percentage | 3.00% | |||||
Occupancy costs | $ 71,082 | $ 64,100 | ||||
Lease payments | 0 | |||||
Judgement plus accrued interest for non payment of a capitalized lease amount | $ 175,000 | $ 150,000 | ||||
Capital lease obligations | $ 5,522 | $ 5,522 | ||||
Marlin Business Bank [Member] | ||||||
Judgement plus accrued interest for non payment of a capitalized lease amount | $ 37,278 | |||||
Past due lease payments, accelerated lease payments, late charges and other fees | 11,379 | |||||
Accrued expenses | $ 37,278 | |||||
Navitas Lease Corp [Member] | ||||||
Judgement plus accrued interest for non payment of a capitalized lease amount | $ 7,266 | |||||
Past due lease payments, accelerated lease payments, late charges and other fees | 4,177 | |||||
Accrued expenses | $ 7,266 |
Lease Obligations - Schedule of
Lease Obligations - Schedule of Future Minimum Lease Payments for Capital Leases (Details) | Dec. 31, 2017USD ($) |
Leases [Abstract] | |
2,018 | $ 5,522 |
Total | $ 5,522 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Employment agreements, initial term of employment | 3 years |
Automatic renewing period of employment agreements | 1 year |
Harry Schoell Chairman and CTO [Member] | |
Employment agreements, officer salary | $ 150,000 |
Frankie Fruge COO [Member] | |
Employment agreements, officer salary | $ 120,000 |
Consolidated Subsidiary (Detail
Consolidated Subsidiary (Details Narrative) - USD ($) | 3 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2017 | |
Cumulative unallocated losses to non-controlling interest of subsidiary | $ 953 | |
Unrelated Investor [Member] | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 5.00% | |
Proceeds from issuance or sale of equity | $ 30,000 | |
Corporate Officer[Member] | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 5.00% | |
Cyclone Performance LLC [Member] | ||
Percentage of ownership in consolidated subsidiary | 100.00% |
Receivables, Deferred Revenue66
Receivables, Deferred Revenue and Backlog (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Customer advance and deposits | $ 56,950 |
Combilift Agreement [Member] | |
Backlog for prototype engines purchased | 400,000 |
Deferred revenue | $ 100,000 |
Derivative Financial Instrume67
Derivative Financial Instruments (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($)Integer | Dec. 31, 2016USD ($) | |
Interest expense | $ 147,233 | $ 174,043 |
Derivative losses related to adjusting the derivative liability | 728,144 | 370,518 |
Derivative Liability | $ 1,424,001 | 754,000 |
Adjustments to additional paid in capital | 0 | |
Loss on derivative instruments | $ 56,702 | |
Minimum [Member] | ||
Debt instrument convertible price | 30.00% | |
Debt instrument trading days | Integer | 10 | |
Maximum [Member] | ||
Debt instrument convertible price | 45.00% | |
Debt instrument trading days | Integer | 20 |
Derivative Financial Instrume68
Derivative Financial Instruments - Schedule of Derivative Liabilities at Fair Value (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Dividend Rate | 0.00% | 0.00% |
Minimum [Member] | ||
Volatility | 71.00% | 103.00% |
Risk Free Rate | 0.02% | 0.01% |
Expected Term (years) | 0 years | 0 years |
Maximum [Member] | ||
Volatility | 91.00% | 343.00% |
Risk Free Rate | 0.28% | 0.28% |
Expected Term (years) | 1 year 18 days | 1 year 18 days |
Litigation (Details Narrative)
Litigation (Details Narrative) - USD ($) | Oct. 13, 2017 | May 08, 2016 | Aug. 31, 2016 | Sep. 30, 2017 | Dec. 31, 2017 |
Litigation settlement amount | $ 175,000 | $ 150,000 | |||
Marlin Business Bank [Member] | |||||
Litigation settlement amount | $ 37,278 | ||||
Past due lease payments, accelerated lease payments, late charges and other fees | 11,379 | ||||
Accrued expenses | $ 37,278 | ||||
Navitas Lease Corp [Member] | |||||
Litigation settlement amount | $ 7,266 | ||||
Past due lease payments, accelerated lease payments, late charges and other fees | 4,177 | ||||
Accrued expenses | $ 7,266 | ||||
2018 [Member] | |||||
Reduction in litigation settlement | $ 150,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | May 24, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Number of shares issued during period for services | 6,400,000 | 3,000,000 | ||
Shares converted into debt | 1,335,900,000 | 5,500,000,000 | ||
Shares converted into debt, value | $ 587,000 | |||
Subsequent Event [Member] | ||||
Number of shares issued during period for services | 571,000,000 | |||
Accured liability | $ 135,000 | |||
Shares converted into debt | 1,862,000,000 | |||
Shares converted into debt, value | $ 208,000 | |||
Recognised milestones amount | $ 199,500 | |||
Additional development cost | $ 5,000,000 | |||
Percentage of convertible common shares | 20.00% |