Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 20, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | CYCLONE POWER TECHNOLOGIES INC | |
Entity Central Index Key | 1,442,711 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 5,292,794,585 | |
Trading Symbol | CYPW | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS | ||
Cash | $ 29,742 | |
Other current assets | 193 | 193 |
Total current assets | 29,935 | 193 |
PROPERTY AND EQUIPMENT | ||
Furniture, fixtures, and equipment | 302,770 | 302,770 |
Accumulated depreciation | (243,439) | (236,938) |
Net property and equipment | 59,331 | 65,832 |
OTHER ASSETS | ||
Patents, trademarks and copyrights | 394,980 | 394,980 |
Accumulated amortization | (312,735) | (304,807) |
Net patents, trademarks and copyrights | 82,245 | 90,173 |
Other assets | 7,660 | 7,660 |
Total other assets | 89,905 | 97,833 |
Total Assets | 179,171 | 163,858 |
CURRENT LIABILITIES | ||
Bank overdraft | 52 | |
Accounts payable and accrued expenses | 1,731,688 | 2,057,068 |
Accounts payable and accrued expenses-related parties | 1,046,720 | 880,225 |
Notes and other loans payable-current portion | 428,793 | 494,795 |
Derivative liabilities | 2,049,000 | 1,424,001 |
Notes and other loans payable-related parties | 363,665 | 399,873 |
Capitalized lease obligations-current portion | 5,522 | 5,522 |
Contract Liability and license deposits | 178,826 | 173,826 |
Total current liabilities | 5,804,214 | 5,435,362 |
NON-CURRENT LIABILITIES | ||
Notes and other loans payable-net of current portion | 1,500 | 1,500 |
Total non-current liabilities | 1,500 | 1,500 |
Total Liabilities | 5,805,714 | 5,436,862 |
Commitments and contingencies (See Note 13) | ||
STOCKHOLDERS' DEFICIT | ||
Common stock, $.0001 par value, 6,000,000,000 shares authorized, 5,292,794,585 and 2,859,645,298 shares, issued and outstanding June 30, 2018 and December 31, 2017, respectively. | 529,278 | 285,963 |
Additional paid-in capital | 57,968,309 | 57,377,491 |
Treasury Stock, 317,000 shares, at June 30, 2018 and December 31, 2017, respectively, at cost. | (3,000) | (3,000) |
Series A preferred stock subscription | 249,500 | |
Accumulated deficit | (64,399,662) | (62,962,497) |
Total stockholders' deficit-Cyclone Power Technologies Inc. | (5,655,575) | (5,302,043) |
Non-controlling interest in consolidated subsidiary | 29,032 | 29,039 |
Total Stockholders' Deficit | (5,626,543) | (5,273,004) |
Total Liabilities and Stockholders' Deficit | 179,171 | 163,858 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value | ||
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, value |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 6,000,000,000 | 6,000,000,000 |
Common stock, shares issued | 5,292,794,585 | 2,859,645,298 |
Common stock, shares outstanding | 5,292,794,585 | 2,859,645,298 |
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 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||||
Income Statement [Abstract] | |||||||
REVENUES | |||||||
COST OF GOODS SOLD | |||||||
Gross profit | |||||||
OPERATING EXPENSES | |||||||
Advertising and promotion | 7,460 | 6,472 | 11,270 | 6,652 | |||
General and administrative | 237,700 | 219,828 | 400,662 | 537,383 | |||
Research and development | 84,546 | 56,242 | 166,489 | 96,918 | |||
Total operating expenses | 329,706 | 282,542 | 578,421 | 640,953 | |||
Operating loss | (329,706) | (282,542) | (578,421) | (640,953) | |||
OTHER (EXPENSE) INCOME | |||||||
Other income (expense) | 136,000 | 138,419 | (70,934) | ||||
Derivative (expense) -notes payable | (468,000) | (84,000) | (892,968) | (407,467) | |||
Interest (expense) | (35,845) | (136,049) | (104,201) | (186,023) | |||
Total other (expense) | (367,845) | (220,049) | (858,750) | (664,424) | |||
Loss before income taxes | (697,551) | (502,591) | (1,437,171) | (1,305,377) | |||
Income taxes | |||||||
Net loss | $ (697,551) | $ (502,591) | $ (1,437,171) | $ (1,305,377) | |||
Net loss per common share, basic and diluted | $ 0 | [1] | $ 0 | $ 0 | [1] | $ 0 | [1] |
Weighted average number of common shares outstanding | 5,292,794,585 | 1,669,513,344 | 4,072,426,766 | 1,589,583,513 | |||
[1] | Net loss per share less than $0.00 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Jun. 30, 2017 |
Income Statement [Abstract] | ||
Net loss per share | $ 0 | $ 0 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,437,171) | $ (1,305,377) |
Adjustments to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | 14,429 | 26,784 |
Issuance of restricted common stock, options and warrants for services | 549 | 6,829 |
Amortization of derivative debt discount | 30,764 | 92,382 |
Loss on debt paid with common stock | 70,934 | |
Loss from derivative liability conversion-notes payable | 892,968 | 400,701 |
Changes in operating assets and liabilities: | ||
(Increase) in inventory | (488) | |
Increase in accounts payable and accrued expenses | 143,468 | 414,086 |
Increase in accounts payable and accrued expenses-related parties | 166,495 | 167,500 |
Increase in contract liability | 5,000 | |
Net cash used in operating activities | (183,498) | (126,649) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Net cash used in investing activities | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes and loans payable | 5,000 | 124,650 |
Payment of notes and loans payable | (5,000) | |
(Decrease) increase in cash overdraft | (52) | 16,883 |
Payment of related party notes and loans payable | (52,200) | (32,693) |
Increase in related party notes and loans payable | 15,992 | 17,218 |
Proceeds from series A preferred stock subscription | 249,500 | |
Net cash provided by financing activities | 213,240 | 126,058 |
Net increase (decrease) in cash | 29,742 | (591) |
Cash, beginning of period | 591 | |
Cash, end of period | 29,742 | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Payment of interest in cash | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Issuance of 571,047,619 shares of Common stock for accrued liability settlement | 134,754 | |
Issuance of 1,862,101,668 shares of Common stock for debt and interest settlement | 222,143 | |
Issuance of 100,000,000 shares of Common stock for liability settlement | 49,066 | |
Issuance of 44,476,071 shares of Common stock for debt and interest settlement | 34,246 | |
Issuance of 70,000,000 shares of Common stock for liability settlement | 123,000 | |
Issuance of 6,637,000 shares of Common stock for services | $ 5,096 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Accrued Liability Settlement [Member] | ||
Common stock issued, shares | 571,047,619 | |
Debt and Interest Settlement [Member] | ||
Common stock issued, shares | 1,862,101,668 | |
Liability Settlement [Member] | ||
Common stock issued, shares | 100,000,000 | |
Debt and Interest Settlement One [Member] | ||
Common stock issued, shares | 44,476,071 | |
Liability Settlement One [Member] | ||
Common stock issued, shares | 70,000,000 | |
Common Stock For Services [Member] | ||
Common stock issued, shares | 6,637,000 |
Organizational and Significant
Organizational and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018, the company had a 95% controlling interest in Cyclone Performance. Effective July 24, 2018, the company sold 76% of its equity for $15,000, and retains a 19% interest. In 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. As of June 30, 2018 there was no activity in this company. 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 condensed consolidated financial statements include the accounts of the Company and the accounts of our 95% owned subsidiary Cyclone Performance LLC and 100% of Emerging Power Solutions Inc. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments, consisting of normal journal entries considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. Complete financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017, as filed with the Securities and Exchange Commission as part of the Company’s Form 10-K. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018. 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 condensed 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. The financial statements presented for the six months ended June 30, 2018 and 2017 are unaudited. C. CASH The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. At June 30, 2018, and December 31, 2017 the Company had no cash equivalents. D. COMPUTATION OF LOSS PER SHARE 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 June 30, 2018 and 2017, total anti-dilutive shares related to the common stock options plan amounted to approximately 14.3 million and 14.9 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 quarter end common stock price, for the six months ended June 30, 2018 and 2017, approximately an additional 14.5 billion and 2.5 billion 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 2015 through 2017. F. REVENUE RECOGNITION In May 2014, ASC 606 was issued related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard became effective for the Company’s fiscal year beginning January 1, 2018. The adoption of ASC 606 did not have an impact on our financial position or results of operations, as the Company does not have any revenue. 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. 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 the quarterly fair values and changing values of financial instruments as of January 1, 2018 through June 30, 2018 is as follows: Derivative Liabilities Balance, January 1, 2018 $ 1,424,001 Additions - Conversions (267,969 ) Deletions - Fair Value Adjustment –loss 892,968 Balance, June 30, 2018 $ 2,049,000 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 six and three months ended June 30, 2018 and 2017 were $166,489, $96,918, $84,546 and $56,242, 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 Intangible assets, consisting primarily of patents, are deemed to be critical for the furtherance of our business objectives and our engine products. There have been no impairments of our intangible assets, as we are developing our products and obtaining new contracts based on the engine and associated technology patents. 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. P. RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the Financial Accounting Standards Board (“FASB”) issued amended accounting guidance that changes the accounting for leases and requires expanded disclosures about leasing activities. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Lessor accounting will remain largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018, and early application is permitted. The Company’s adoption of this guidance did not result in a material adjustment to the financial statements. From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon required dates of adoption. Q. CONCENTRATION OF RISK The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and accounts receivable to be the two assets 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. As of June 30, 2018, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through June 30, 2018. The company had no accounts receivable at June 30, 2018 and December 31, 2017. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 - GOING CONCERN As shown in the accompanying consolidated financial statements, the Company sustained substantial operating and other losses and expenses of approximately $1.4 million for the six months ended June 30, 2018 and $2.1 million for the year ended December 31, 2017. The cumulative deficit since inception is approximately $64.4 million. The Company has a working capital deficit at June 30, 2018 of approximately $5.8 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 condensed 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 stock subscriptions, debt, advance contract payments (contract liability) and advances from and deferred payments to related parties. |
Inventory, Net
Inventory, Net | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory, Net | NOTE 3 – INVENTORY, NET Initiated in 2016, based on our revised R&D company business model, inventory principally consists of raw material to develop an engine. Under our prior business model, inventory consisted of raw material engine parts, work in process engines, labor and overhead, net of realization, valuation and obsolescence reserves. In the aggregate inventory is stated at the lower of cost or market. All inventory was fully reserved at June 30, 2018. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
Property and Equipment, Net | NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following: June 30, 2018 December 31, 2017 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 (243,439 ) (236,938 ) Net property and equipment $ 59,331 $ 65,832 Depreciation expense for the six months ended June 30, 2018 and 2017 was $6,501 and $14,060, respectively. Depreciation expense for the three months ended June 30, 2018 and 2017 was $2,282 and $6,715, respectively. |
Patents, Trademarks and Copyrig
Patents, Trademarks and Copyrights | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017, were $82,245 and $90,173, respectively. There were no capitalized additions to patents, trademarks and copyrights during the six months ended June 30, 2018 and the year ended December 31, 2017. For the six months ended June 30, 2018 and the year ended December 31, 2017, the Company recorded net charges of $0 and $62,857, respectively, included in general and administrative expenses, for various expired patents; the basic patents for the Cyclone technology are still protected. As of June 30, 2018, 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 unpaid maintenance fees. Patents, trademarks and copyrights are amortized over the life of the intellectual property which is 15 years. Amortization expenses for the six months ended June 30, 2018 and 2017 were $7,928 and $12,724, respectively. Amortization expenses for the three months ended June 30, 2018 and 2017 were $3,964 and $6,362, respectively |
Notes and Other Loans Payable
Notes and Other Loans Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes and Other Loans Payable | NOTE 6 – NOTES AND OTHER LOANS PAYABLE A. THIRD PARTY A summary of non-related notes and other loans payable is as follows: June 30, 2018 December 31, 2017 12% convertible notes payable, maturing at various dates from November 2013 through October 2017 (A) $ 72,948 $ 61,196 10% convertible note payable, monthly payments commencing in December 2013 through July 2014 (B) 19,963 19,963 10% convertible notes payable maturing at various dates from May 2016 through February 2017 (C) 76,000 76,000 10% convertible notes payable, maturing at various dates from December 2016 through January 2017 (D) - 26,192 10% convertible notes payable maturing at various dates from February 2016 through August 2016 (E) 112,200 140,658 12% convertible notes payable, maturing at various dates from April 2016 through May 2016 (F) 12,832 35,936 10% note payable, maturing Feb 3, 2017 50,000 50,000 Various notes payable, maturing 2017 and 2018 (G) 72,650 72,650 6 % note payable, maturing Oct 12, 2019, (I) 1,500 1,500 Various notes payable, maturing 2017 and 2018 12,200 12,200 Total non-third-party notes –net of discount 430,293 496,295 Less-Current Portion 428,793 494,795 Total non-current third-party notes $ 1,500 $ 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 are 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 June 30, 2018, 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 June 30, 2018, the Company held 202 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. These notes are 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 are 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 are various interest rates. These notes are in default. B. RELATED PARTIES A summary of related party notes and other loans payable is as follows: June 30, 2018 December 31, 2017 6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A) $ 143,210 $ 161,005 6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101. 82,046 101,546 12% non-collateralized loans from officer and shareholder, payable on demand 12,138 21,044 Accrued Interest 126,271 116,278 Total current related party notes, inclusive of accrued interest $ 363,665 $ 399,873 (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. |
Related Party Transactions - De
Related Party Transactions - Deferred Compensation | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and December 31, 2017, are $823,995 and $687,500 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. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Preferred Stock | NOTE 8 – PREFERRED STOCK At June 30, 2018 and December 31, 2017, the Series A Preferred Stock had 750,000 shares authorized and no shares issued and outstanding. In the first quarter of 2018, the company has a signed binding letter of intent (“LOI”) by an investor to provide $5 million to the company for additional development of the Cyclone Engines. The payment of the $5 million is scheduled through 2020. The consideration is to be the issuance of Preferred A shares, convertible into effectively an undiluted 20% of the Common shares of the company at the completion of funding. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Stock Transactions | NOTE 9 – STOCK TRANSACTIONS The Company authorized an increase of Common Stock to 6 Billion shares in the last quarter of 2017. This increase in the amount of authorized share capital is a requirement by debt covenants to cover old 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 six months ended June 30, 2018, the Company: a- Amortized (based on vesting) $549 of common stock options for employee services. b- Issued approximately 1,862 million shares of common stock pursuant to conversions of approximately $222,000 of notes payable, accrued interest and related liabilities. c- The Company issued 571 million shares of common stock valued at approximately $135,000 for accrued liabilities for consulting services. In the first quarter of 2018, the company has a signed binding LOI from an investor to provided $5 million to the company. The consideration is to be the issuance of Preferred A shares, convertible into effectively an undiluted 20% of the Common shares of the company at the complete funding estimated through 2020. To date $259,500 has been funded by the investor. |
Stock Options and Warrants
Stock Options and Warrants | 6 Months Ended |
Jun. 30, 2018 | |
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, for the six months ended June 30, 2018, the company issued 900,000 common stock options, valued at $180 (pursuant to the Black Scholes valuation model) that are exercisable into shares of common stock at an average exercise price of $.0002 and with a maturity life of 10 years. For the six months ended June 30, 2018, the amortization of stock options was $350, and the unamortized balance was $272. As of June 30, 2018, the intrinsic value on all options was zero. A summary of the common stock options for the period from December 31, 2017 through June 30, 2018 follows: Number Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance, December 31, 2017 13,400,000 $ 0.064 5.8 Options issued 900,000 .0002 9.9 Options expired - - - Balance, June 30, 2018 14,300,000 $ 0.060 5.6 The vested and exercisable options at period end follows: Exercisable/ Vested Options Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance June 30, 2018 12,950,000 $ .055 5.3 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: Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Risk free interest rate 2.39-2.63 % 1.5-1.5 % Expected volatility 130-132 % 122-134 % Expected term 3 3 Expected dividend yield 0 % 0 % Average value per options and warrants $ .0002 $ 0009-.0015 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 As of June 30, 2018, and December 31, 2017, there were no common stock warrants outstanding. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 11 – INCOME TAXES In December 2017, a 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 six months ended June 30, 2018 and 2017 are as follows: Six Months ended June 30, 2018 Six Months ended June 30, 2017 Tax benefit at U.S. statutory rate $ 77,848 21 % $ 247,704 34 % State taxes, net of federal benefit 14,828 4 29,142 4 Change in valuation allowance (92,676 ) (25 ) (276,846 ) (38 ) $ - - $ - The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at March 31 2018 and December 31, 2017 consisted of the following: Deferred Tax Assets June 30, 2018 December 31, 2017 Net Operating Loss Carry-forward $ 11,165,972 $ 10,951,258 Deferred Tax Liabilities – Accrued Officers’ Salaries (1,052,119 ) (987,056 ) Net Deferred Tax Assets 10,113,853 9,964,202 Valuation Allowance (10,113,853 ) (9,964,202 ) Total Net Deferred Tax Assets $ - $ - As of June 30, 2018, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $17.5 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 | 6 Months Ended |
Jun. 30, 2018 | |
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 for each of the six months ended June 30, 2018 and 2017 were $33,966 and $32,522, respectively. Occupancy costs for each of the three months ended June 30, 2018 and 2017 were $16,983 and $16,622, respectively. B .CAPITAL LEASE OBLIGATIONS The company is in default on its remaining capital lease obligation to 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 capital 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 capital 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 capital 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 capital lease liability. The balance of capitalized lease obligations payable at June 30, 2018 was $5,522, which is due during 2018. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
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 Subsidiaries
Consolidated Subsidiaries | 6 Months Ended |
Jun. 30, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Consolidated Subsidiaries | NOTE 14 –CONSOLIDATED SUBSIDIARIES In 2012, the Company established a 100% owned subsidiary (renamed) Cyclone Performance LLC (CP). 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 June 30, 2018, the cumulative unallocated losses to the non-controlling interests of this subsidiary are approximately $1,000 and are to be recovered by the parent from future subsidiary profits if they materialize. Effective July 24 2018, the Company has a signed agreement to sell 76% of its investment in CP for $15,000 and retain 19%. The 5% of CP equity owned by corporate officers is also to be sold. This agreement was closed and fully funded August 2, 2018. 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. As of June 30, 2018, there was no activity in this company. |
Receivables, Contract Liability
Receivables, Contract Liability and Backlog | 6 Months Ended |
Jun. 30, 2018 | |
Receivables Contract Liability And Backlog | |
Receivables, Contract Liability and Backlog | NOTE 15 – RECEIVABLES, CONTRACT LIABILITY AND BACKLOG As of June 30, 2018, 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 contract liability. As of June 30, 2018, 3 other customers have $56,950 of advances as deposits on contracts for engines to be delivered. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE 16 – DERIVATIVE FINANCIAL INSTRUMENTS The Company had 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 June 30, 2018, the Company has outstanding stock options and convertible debt that upon exercise could exceed the number of shares authorized. In the six months ended June 30, 2018, the Company recorded a non-cash charge of approximately $0.9 million of derivative losses related to adjusting the derivative liability to fair value. At June 30, 2018, the derivative related fair value of debt and related convertible liabilities was approximately $2.0 million. The company also amortized to interest expense $30,764 of derivative debt discount. 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). 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. Volatility expected term and risk-free interest rates that had been used to estimate the fair value of derivative liabilities are indicated in the table below. Six Months ended June 30, 2018 Six Months ended June 30, 2017 Volatility 477-615 % 121-277 % Risk Free Rate 1.73-1.93 % 1.0-1.24 % Expected Term (years) .25 .25-1.0 Dividend Rate 0 % 0 % |
Litigation
Litigation | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018, 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 June 30, 2018, 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 capital leases from Marlin Business Bank. This amount includes $11,379 of unpaid 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 capital 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 capital 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 capital lease liability. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 18 – SUBSEQUENT EVENTS In the third quarter of 2018, the Company engaged in the following transactions: Pursuant to the binding letter of intent by an investor to provide $5 million to the company for additional development of the Cyclone Engines the Company has met all its milestones and has received $10,000 in the third quarter of 2018. Effective July 24 2018, the Company had a signed agreement to sell 76% of its investment in CP for $15,000 and retain 19%. As of June 30, 2018, $5,000 had been received and the balance was received on August 2 2018. The 5% of CP equity owned by corporate officers was also sold. |
Organizational and Significan26
Organizational and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018, the company had a 95% controlling interest in Cyclone Performance. Effective July 24, 2018, the company sold 76% of its equity for $15,000, and retains a 19% interest. In 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. As of June 30, 2018 there was no activity in this company. 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 condensed consolidated financial statements include the accounts of the Company and the accounts of our 95% owned subsidiary Cyclone Performance LLC and 100% of Emerging Power Solutions Inc. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments, consisting of normal journal entries considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. Complete financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2017, as filed with the Securities and Exchange Commission as part of the Company’s Form 10-K. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018. 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 condensed 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. The financial statements presented for the six months ended June 30, 2018 and 2017 are unaudited. |
Cash | C. CASH The Company considers all highly-liquid, temporary cash investments with an original maturity of three months or less to be cash equivalents. At June 30, 2018, and December 31, 2017 the Company had no cash equivalents. |
Computation of Loss Per Share | D. COMPUTATION OF LOSS PER SHARE 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 June 30, 2018 and 2017, total anti-dilutive shares related to the common stock options plan amounted to approximately 14.3 million and 14.9 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 quarter end common stock price, for the six months ended June 30, 2018 and 2017, approximately an additional 14.5 billion and 2.5 billion 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 2015 through 2017. |
Revenue Recognition | F. REVENUE RECOGNITION In May 2014, ASC 606 was issued related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard became effective for the Company’s fiscal year beginning January 1, 2018. The adoption of ASC 606 did not have an impact on our financial position or results of operations, as the Company does not have any revenue. |
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. |
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 the quarterly fair values and changing values of financial instruments as of January 1, 2018 through June 30, 2018 is as follows: Derivative Liabilities Balance, January 1, 2018 $ 1,424,001 Additions - Conversions (267,969 ) Deletions - Fair Value Adjustment –loss 892,968 Balance, June 30, 2018 $ 2,049,000 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 six and three months ended June 30, 2018 and 2017 were $166,489, $96,918, $84,546 and $56,242, 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 Intangible assets, consisting primarily of patents, are deemed to be critical for the furtherance of our business objectives and our engine products. There have been no impairments of our intangible assets, as we are developing our products and obtaining new contracts based on the engine and associated technology patents. 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. |
Recent Accounting Pronouncements | P. RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the Financial Accounting Standards Board (“FASB”) issued amended accounting guidance that changes the accounting for leases and requires expanded disclosures about leasing activities. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Lessor accounting will remain largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018, and early application is permitted. The Company’s adoption of this guidance did not result in a material adjustment to the financial statements. From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon required dates of adoption. |
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 accounts receivable to be the two assets 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. As of June 30, 2018, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through June 30, 2018. The company had no accounts receivable at June 30, 2018 and December 31, 2017. |
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 Significan27
Organizational and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Fair Value of Financial Instrument | The summary of the quarterly fair values and changing values of financial instruments as of January 1, 2018 through June 30, 2018 is as follows: Derivative Liabilities Balance, January 1, 2018 $ 1,424,001 Additions - Conversions (267,969 ) Deletions - Fair Value Adjustment –loss 892,968 Balance, June 30, 2018 $ 2,049,000 |
Schedule of Estimated Useful Lives of Property and Equipment | 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 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and Equipment, Net | Property and equipment consist of the following: June 30, 2018 December 31, 2017 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 (243,439 ) (236,938 ) Net property and equipment $ 59,331 $ 65,832 |
Notes and Other Loans Payable (
Notes and Other Loans Payable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Non-related Party Notes and Other Loans Payable | A summary of non-related notes and other loans payable is as follows: June 30, 2018 December 31, 2017 12% convertible notes payable, maturing at various dates from November 2013 through October 2017 (A) $ 72,948 $ 61,196 10% convertible note payable, monthly payments commencing in December 2013 through July 2014 (B) 19,963 19,963 10% convertible notes payable maturing at various dates from May 2016 through February 2017 (C) 76,000 76,000 10% convertible notes payable, maturing at various dates from December 2016 through January 2017 (D) - 26,192 10% convertible notes payable maturing at various dates from February 2016 through August 2016 (E) 112,200 140,658 12% convertible notes payable, maturing at various dates from April 2016 through May 2016 (F) 12,832 35,936 10% note payable, maturing Feb 3, 2017 50,000 50,000 Various notes payable, maturing 2017 and 2018 (G) 72,650 72,650 6 % note payable, maturing Oct 12, 2019, (I) 1,500 1,500 Various notes payable, maturing 2017 and 2018 12,200 12,200 Total non-third-party notes –net of discount 430,293 496,295 Less-Current Portion 428,793 494,795 Total non-current third-party notes $ 1,500 $ 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 are 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 June 30, 2018, 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 June 30, 2018, the Company held 202 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. These notes are 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 are 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 are 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: June 30, 2018 December 31, 2017 6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A) $ 143,210 $ 161,005 6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101. 82,046 101,546 12% non-collateralized loans from officer and shareholder, payable on demand 12,138 21,044 Accrued Interest 126,271 116,278 Total current related party notes, inclusive of accrued interest $ 363,665 $ 399,873 (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) | 6 Months Ended |
Jun. 30, 2018 | |
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, 2017 through June 30, 2018 follows: Number Outstanding Weighted Avg. Exercise Price Weighted Avg. Remaining Contractual Life (Years) Balance, December 31, 2017 13,400,000 $ 0.064 5.8 Options issued 900,000 .0002 9.9 Options expired - - - Balance, June 30, 2018 14,300,000 $ 0.060 5.6 |
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 June 30, 2018 12,950,000 $ .055 5.3 |
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: Six Months Ended June 30, 2018 Six Months Ended June 30, 2017 Risk free interest rate 2.39-2.63 % 1.5-1.5 % Expected volatility 130-132 % 122-134 % Expected term 3 3 Expected dividend yield 0 % 0 % Average value per options and warrants $ .0002 $ 0009-.0015 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 six months ended June 30, 2018 and 2017 are as follows: Six Months ended June 30, 2018 Six Months ended June 30, 2017 Tax benefit at U.S. statutory rate $ 77,848 21 % $ 247,704 34 % State taxes, net of federal benefit 14,828 4 29,142 4 Change in valuation allowance (92,676 ) (25 ) (276,846 ) (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 March 31 2018 and December 31, 2017 consisted of the following: Deferred Tax Assets June 30, 2018 December 31, 2017 Net Operating Loss Carry-forward $ 11,165,972 $ 10,951,258 Deferred Tax Liabilities – Accrued Officers’ Salaries (1,052,119 ) (987,056 ) Net Deferred Tax Assets 10,113,853 9,964,202 Valuation Allowance (10,113,853 ) (9,964,202 ) Total Net Deferred Tax Assets $ - $ - |
Derivative Financial Instrume32
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Liabilities at Fair Value | Volatility expected term and risk-free interest rates that had been used to estimate the fair value of derivative liabilities are indicated in the table below. Six Months ended June 30, 2018 Six Months ended June 30, 2017 Volatility 477-615 % 121-277 % Risk Free Rate 1.73-1.93 % 1.0-1.24 % Expected Term (years) .25 .25-1.0 Dividend Rate 0 % 0 % |
Organizational and Significan33
Organizational and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Cash equivalents | |||||
Antidilutive securities excluded from computation of earnings per share | 14,300,000 | 14,900,000 | |||
Conversion of debt shares converted | 14,500,000,000 | 2,500,000,000 | |||
Research and development expense | $ 84,546 | $ 56,242 | $ 166,489 | $ 96,918 | |
July 24, 2018 [Member] | |||||
Equity method investment, ownership percentage | 76.00% | 76.00% | |||
Equity method investment sold carrying amount | $ 15,000 | ||||
Percentage of ratain interest | 19.00% | 19.00% | |||
Cyclone Performance LLC [Member] | |||||
Equity method investment, ownership percentage | 95.00% | 95.00% |
Organizational and Significan34
Organizational and Significant Accounting Policies - Schedule of Fair Value of Financial Instrument (Details) - Fair Value, Inputs, Level 3 [Member] | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Derivative liabilities, Beginning of Period | $ 1,424,001 |
Derivative liabilities, Additions | |
Derivative liabilities, Conversions | (267,969) |
Derivative liabilities, Deletions | |
Fair Value Adjustment - loss | 892,968 |
Derivative liabilities, End of Period | $ 2,049,000 |
Organizational and Significan35
Organizational and Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details) | 6 Months Ended |
Jun. 30, 2018 | |
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 ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||
Income (loss) from operating and other losses and expenses | $ 697,551 | $ 502,591 | $ 1,437,171 | $ 1,305,377 | $ 2,100,000 |
Accumulated deficit | 64,399,662 | 64,399,662 | $ 62,962,497 | ||
Working capital deficit | $ 5,800,000 | $ 5,800,000 |
Property and Equipment, Net (De
Property and Equipment, Net (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
PROPERTY AND EQUIPMENT | ||||
Depreciation expense | $ 2,282 | $ 6,715 | $ 6,501 | $ 14,060 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Property and equipment gross | $ 302,770 | $ 302,770 |
Accumulated depreciation | (243,439) | (236,938) |
Net property and equipment | 59,331 | 65,832 |
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 Copyr39
Patents, Trademarks and Copyrights (Details Narrative) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)PatentsInteger | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Net patents, trademarks and copyrights | $ 82,245 | $ 82,245 | $ 90,173 | ||
Patents, trademarks and copyrights capitalized | 0 | 0 | |||
Retirement of patents | $ 0 | $ 62,857 | |||
Number of patents | Patents | 3 | ||||
Number of expired patents | Integer | 8 | ||||
Finite-lived intangible asset, useful life | 15 years | ||||
Amortization expenses | $ 3,964 | $ 6,362 | $ 7,928 | $ 12,724 |
Notes and Other Loans Payable -
Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | |
Total non third party notes - net of discount | $ 430,293 | $ 496,295 | |
Less-Current Portion | 428,793 | 494,795 | |
Total non-current third party notes | 1,500 | 1,500 | |
12% Convertible Notes Payable [Member] | |||
Total non third party notes - net of discount | [1] | 72,948 | 61,196 |
10% Convertible Note Payable One [Member] | |||
Total non third party notes - net of discount | [2] | 19,963 | 19,963 |
10% Convertible Notes Payable Two [Member] | |||
Total non third party notes - net of discount | [3] | 76,000 | 76,000 |
10% Convertible Notes Payable Three [Member] | |||
Total non third party notes - net of discount | [4] | 26,192 | |
10% Convertible Notes Payable Four [Member] | |||
Total non third party notes - net of discount | [5] | 112,200 | 140,658 |
12% Convertible Notes Payable One [Member] | |||
Total non third party notes - net of discount | [6] | 12,832 | 35,936 |
10% Note Payable [Member] | |||
Total non third party notes - net of discount | 50,000 | 50,000 | |
Various Notes Payable [Member] | |||
Total non third party notes - net of discount | [7] | 72,650 | 72,650 |
6% Note Payable [Member] | |||
Total non third party notes - net of discount | 1,500 | 1,500 | |
Various Notes Payable One [Member] | |||
Total non third party notes - net of discount | $ 12,200 | $ 12,200 | |
[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 are included in accounts payable and accrued liabilities In 2018 the company negotiated a reduced settlement for $150,000 via the issuance of company stock. | ||
[3] | Notes issued net of discount from derivative liabilities (fully amortized). At June 30, 2018, 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 June 30, 2018, the Company held 202 million shares in reserve to cover the potential conversion of this note into common stock pursuant to debt covenants. These notes are 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 are 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 $62,000 of notes to be paid in 6,000,000 shares of restricted company common stock Other notes are various interest rates. These notes are in default. |
Notes and Other Loans Payable41
Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) (Parenthetical) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Reduction in litigation settlement | $ 150,000 | |
Conversion of debt shares converted | 1,862,000,000 | |
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% |
Payments for legal settlements | $ 175,000 | $ 175,000 |
Reduction in litigation settlement | $ 150,000 | $ 150,000 |
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 | 202,000,000 | |
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% |
Payments for legal settlements | $ 150,000 | $ 150,000 |
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 |
Interest paid | $ 62,000 | $ 62,000 |
Restricted common stock, shares | 6,000,000 | 6,000,000 |
6% Note Payable [Member] | ||
Note payable maturity date | Oct. 12, 2019 | Oct. 12, 2019 |
Original discount rate | 6.00% | 6.00% |
Various Notes Payable One [Member] | ||
Convertible notes payable, maturity date description | maturing 2017 and 2018 | maturing 2017 and 2018 |
Notes and Other Loans Payable42
Notes and Other Loans Payable - Schedule of Related Party Notes and Other Loans Payable (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | |
Total current related party notes, inclusive of accrued interest | $ 363,665 | $ 399,873 | |
6% Demand Loans Per Operations Agreement With Schoell Marine Inc [Member] | |||
Total current related party notes, inclusive of accrued interest | [1] | 143,210 | 161,005 |
6% Non-collateralized Loans from Officer and Shareholder [Member] | |||
Total current related party notes, inclusive of accrued interest | 82,046 | 101,546 | |
12% Non-collateralized Loans from Officer and Shareholder [Member] | |||
Total current related party notes, inclusive of accrued interest | 12,138 | 21,044 | |
Accrued Interest [Member] | |||
Total current related party notes, inclusive of accrued interest | $ 126,271 | $ 116,278 | |
[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 Payable43
Notes and Other Loans Payable - Schedule of Related Party Notes and Other Loans Payable (Details) (Parenthetical) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
6% Demand Loans Per Operations Agreement With Schoell Marine Inc [Member] | ||
Debt instrument note bears an interest rate | 6.00% | 6.00% |
6% Non-collateralized Loans from Officer and Shareholder [Member] | ||
Debt instrument note bears an interest rate | 6.00% | 6.00% |
Original principal balance | $ 157,101 | $ 157,101 |
12% Non-collateralized Loans from Officer and Shareholder [Member] | ||
Debt instrument note bears an interest rate | 12.00% | 12.00% |
Related Party Transactions - 44
Related Party Transactions - Deferred Compensation (Details Narrative) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Related Party Transactions [Abstract] | ||
Accounts payable and accrued expenses - related parties | $ 823,955 | $ 687,500 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
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 |
Additional development cost | $ 5,000,000 | |
Development cost description | The payment of the $5 million is scheduled through 2020. | |
Percentage of convertible common shares | 20.00% | |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Voting control percentage | 51.00% | |
Preferred stock shares convertible with common stock | 1,000 |
Stock Transactions (Details Nar
Stock Transactions (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
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 | $ 549 | ||
Conversion of debt shares converted | 1,862,000,000 | ||
Number of common stock pursuant to conversion of notes payable, accrued liabilities and related interest | $ 222,000 | ||
Stock issued during period, shares, issued for services | 571,000,000 | ||
Stock issued during period, value, issued for services | $ 135,000 | ||
Proceeds from issuance of preferred stock | 249,500 | ||
Series A Preferred Stock [Member] | |||
Proceeds from issuance of preferred stock | $ 5,000,000 | ||
Preferred stock conversion percentage into common shares | 20.00% | ||
Amount funded by the investor | $ 259,500 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based compensation arrangement by share-based payment award, options, grants in period, gross | 900,000 | |
Share-based compensation arrangement by share-based payment award, options, grants in period value | $ 180 | |
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price | $ 0.0002 | |
Stock options issued during period, maturity life | 10 years | |
Amortization of stock options | $ 350 | |
Unamortized balance | 272 | |
Intrinsic value on options | $ 0 | |
Common stock warrants outstanding |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Common Stock Options (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Number Outstanding, Balance beginning | shares | 13,400,000 |
Number Outstanding, Options issued | shares | 900,000 |
Number Outstanding, Options Expired | shares | |
Number Outstanding, Balance ending | shares | 14,300,000 |
Weighted Avg Exercise Price, Balance beginning | $ / shares | $ 0.064 |
Weighted Avg Exercise Price, Options issued | $ / shares | 0.0002 |
Weighted Avg Exercise Price, Options Expired | $ / shares | |
Weighted Avg Exercise Price, Balance ending | $ / shares | $ 0.060 |
Weighted Avg Remaining Contractual Life (Years), Beginning Balance | 5 years 9 months 18 days |
Weighted Avg Remaining Contractual Life (Years), Options issued | 9 years 10 months 25 days |
Weighted Avg Remaining Contractual Life (years), Ending Balance | 5 years 7 months 6 days |
Stock Options and Warrants - 49
Stock Options and Warrants - Schedule of Vested and Exercisable Options (Details) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Exercisable/Vested Options Outstanding | shares | 12,950,000 |
Weighted Avg Exercise Price | $ / shares | $ .055 |
Weighted Avg Remaining Contractual Life (Years) | 5 years 3 months 19 days |
Stock Options and Warrants - 50
Stock Options and Warrants - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Expected term, minimum | 3 years | 3 years |
Expected dividend yield | 0.00% | 0.00% |
Average value per options and warrants | $ 0.0002 | |
Minimum [Member] | ||
Risk free interest rate | 2.39% | 1.50% |
Expected volatility | 130.00% | 122.00% |
Average value per options and warrants | $ .0009 | |
Maximum [Member] | ||
Risk free interest rate | 2.63% | 1.50% |
Expected volatility | 132.00% | 134.00% |
Average value per options and warrants | $ 0.0015 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | |
Dec. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
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 | 35.00% | 21.00% | 34.00% |
Available net operating loss, percentage | 80.00% | ||
Operating loss carryforwards | $ 17,500,000 | ||
Operating loss carryforwards expiration date | 2,031 | ||
Minimum [Member] | |||
Percentage that carry forwards will expire unused | 50.00% |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |||||
Tax benefit at U.S. statutory rate | $ 77,848 | $ 247,704 | |||
Tax benefit at U.S. statutory rate, Percent | 35.00% | 21.00% | 34.00% | ||
State taxes, net of federal benefit | $ 14,828 | $ 29,142 | |||
State taxes, net of federal benefit, Percent | 4.00% | 4.00% | |||
Change in valuation allowance | $ (92,676) | $ (276,846) | |||
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 ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Income Tax Disclosure [Abstract] | ||
Net Operating Loss Carry-forward | $ 11,165,972 | $ 10,951,258 |
Deferred Tax Liabilities - Accrued Officers' Salaries | (1,052,119) | (987,056) |
Net Deferred Tax Assets | 10,113,853 | 9,964,202 |
Valuation Allowance | (10,113,853) | (9,964,202) |
Total Net Deferred Tax Assets |
Lease Obligations (Details Narr
Lease Obligations (Details Narrative) | Oct. 13, 2017USD ($) | May 08, 2016USD ($) | Aug. 31, 2016USD ($) | Jun. 30, 2018USD ($)ft² | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)ft² | Jun. 30, 2017USD ($) |
Area of warehouse and office | ft² | 6,000 | 6,000 | ||||||
Original lease annual rent | $ 60,000 | |||||||
Monthly current lease increasing rate, percentage | 3.00% | 3.00% | ||||||
Occupancy costs | $ 16,983 | $ 16,622 | $ 33,966 | $ 32,522 | ||||
Judgement plus accrued interest for non payment of a capital leases 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 capital leases 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 capital leases amount | $ 7,266 | |||||||
Past due lease payments, accelerated lease payments, late charges and other fees | 4,177 | |||||||
Accrued expenses | $ 7,266 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
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 Subsidiaries (Deta
Consolidated Subsidiaries (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended |
Dec. 31, 2012 | Jun. 30, 2018 | |
Cumulative unallocated losses to non-controlling interest of subsidiary | $ 1,000 | |
July 24, 2018 [Member] | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 19.00% | |
Equity method investment, ownership percentage | 76.00% | |
Equity method investment sold carrying amount | $ 15,000 | |
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% | |
Corporate Officers [Member] | July 24, 2018 [Member] | ||
Noncontrolling interest, ownership percentage by noncontrolling owners | 5.00% | |
Cyclone Performance LLC [Member] | ||
Percentage of ownership in consolidated subsidiary | 100.00% | |
Equity method investment, ownership percentage | 95.00% |
Receivables, Contract Liabili57
Receivables, Contract Liability and Backlog (Details Narrative) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Customer advance and deposits | $ 56,950 |
Combilift Agreement [Member] | |
Backlog for prototype engines purchased | 400,000 |
Deferred revenue | $ 100,000 |
Derivative Financial Instrume58
Derivative Financial Instruments (Details Narrative) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)Integer | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Derivative losses related to adjusting the derivative liability | $ 468,000 | $ 84,000 | $ 892,968 | $ 407,467 | |
Derivative Liability | $ 2,049,000 | 2,049,000 | $ 1,424,001 | ||
Amortization of derivative debt discount | $ 30,764 | $ 92,382 | |||
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 Instrume59
Derivative Financial Instruments - Schedule of Derivative Liabilities at Fair Value (Details) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Expected Term (years) | 2 months 30 days | |
Dividend Rate | 0 | 0 |
Minimum [Member] | ||
Volatility | 477.00% | 121.00% |
Risk Free Rate | 1.73% | 1.00% |
Expected Term (years) | 2 months 30 days | |
Maximum [Member] | ||
Volatility | 615.00% | 277.00% |
Risk Free Rate | 1.93% | 124.00% |
Expected Term (years) | 1 year |
Litigation (Details Narrative)
Litigation (Details Narrative) - USD ($) | Oct. 13, 2017 | May 08, 2016 | Aug. 31, 2016 | Sep. 30, 2017 | Jun. 30, 2018 |
Litigation settlement amount | $ 175,000 | $ 150,000 | |||
Reduction in litigation settlement | $ 150,000 | ||||
Marlin Business Bank [Member] | |||||
Litigation settlement amount | $ 37,278 | ||||
Unpaid 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 | ||||
Unpaid lease payments, accelerated lease payments, late charges and other fees | 4,177 | ||||
Accrued expenses | $ 7,266 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Jul. 24, 2018 | Jun. 30, 2018 |
Received from investment | $ 5,000 | |
Subsequent Event [Member] | ||
Equity method investment, ownership percentage | 76.00% | |
Equity method investment sold carrying amount | $ 15,000 | |
Percentage of retain interest | 19.00% | |
Subsequent Event [Member] | Corporate Officers [Member] | ||
Equity method investment, ownership percentage | 5.00% | |
custom:ThirdQuaterOfTwoThousandEighteenMember | ||
Additional development cost | 5,000,000 | |
Recognised milestones amount | $ 10,000 |