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EX-31.2 - RULE 13A-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER - Novo Integrated Sciences, Inc.dex312.htm
EX-32.1 - CERTIFICATION OF CHIEF EXECUTIVE OFFICER - Novo Integrated Sciences, Inc.dex321.htm
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 10-K

 

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2010

 

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

For the transition period from             , 20    , to             , 20    .

Commission File Number 333-109118

 

 

Turbine Truck Engines, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada   59-3691650

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

46600 Deep Woods Road, Paisley Florida 32767

(Address of Principal Executive Offices)

(386) 943-8358

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(g) of the Act:

 

$.001 par value preferred stock

   Over the Counter Bulletin Board

$.001 par value common stock

   Over the Counter Bulletin Board

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405) during the preceding 12 months.    Yes  ¨    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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

 

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

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

The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2010 was $14,555,992.

There were 47,941,827 shares of the Registrant’s $0.001 par value common stock outstanding as of March 18, 2011.

 

 

Documents incorporated by reference: none

 

 

 


Table of Contents

TURBINE TRUCK ENGINES, INC.

FORM 10-K INDEX

 

Part I        3   
Item 1.  

Description of Business

     3   
Item 1A.  

Risk Factors

     10   
Item 1B.  

Unresolved Staff Comments

     10   
Item 2.  

Description of Property

     10   
Item 3.  

Legal Proceedings

     10   
Item 4.  

Reserved

     10   
Part II        11   
Item 5.  

Market for Common Equity and Related Stockholder Matters

     11   
Item 6.  

Selected Financial Data

     13   
Item 7.  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

     13   
Item 7A.  

Quantitative and Qualitative Disclosures About Market Risk

     16   
Item 8.  

Financial Statements and Supplementary Data

     16   
Item 9.  

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

     39   
Item 9A(T).  

Controls and Procedures

     39   
Item 9B.  

Other information

     40   
Part III        40   
Item 10.  

Directors, Executive Officers and Corporate Governance

     40   
Item 11.  

Executive Compensation

     41   
Item 12.  

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

     41   
Item 13.  

Certain Relationships and Related Transactions, and Director Independence

     42   
Item 14.  

Principal Accountant Fees and Services

     42   
Item 15.  

Exhibits and Financial Statement Schedules

     42   
 

Signatures

     43   
 

Certifications

  

 

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TURBINE TRUCK ENGINES, INC.

This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about Turbine Truck Engines Inc.’s industry, management beliefs, and assumptions made by management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.

PART I

 

ITEM 1. DESCRIPTION OF BUSINESS

Turbine Truck Engines, Inc. was incorporated in Delaware on November 27, 2000. On February 20, 2008, the Company was re-domiciled to the State of Nevada. On December 15, 2000, we acquired the option rights for an exclusive License from Alpha Engines Corporation (“Alpha”) for manufacturing and marketing heavy duty highway truck engines utilizing Alpha’s “Detonation Cycle Gas Turbine Engine” (“DCGT”) technology embodied in U.S. Patent No. 6,000,214 and other proprietary technology and rights owned by Alpha including Marketing Survey Data in the highway trucking industry. We exercised our option and acquired the licensing rights on July 22, 2002. Alpha has completed the design and prototype of a 540 hp engine for use in highway trucks.

AbM AGREEMENT

The Company entered into a contractual agreement (the “Agreement”) dated July 1, 2008 with AbM Engineering, LLC for the purpose of the continued development and testing of the current 540 horsepower DCGT engine developed by Alpha and a 70 horsepower/50kw generator combination. AbM is currently working in a collaborative effort with AMEC’s engineers to modify and test other DCGT engine applications.

Under our Agreement with Alpha, they will continue to consult and advise with AbM Engineering on future development of the 540 horsepower DCGT highway truck engine prototype at AbM’s facilities in Daytona Beach, Florida. We receive ongoing status reports of their progress but do not participate in the design, construction and/or testing of the engine. This new energy efficient detonation cycle gas turbine can be designed and manufactured as a new or replacement engine for all heavy duty trucks that utilize engines ranging from 300 to 1,000 horsepower.

It was our initial intention to solely target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine, however, based on the opportunities presented to the Company in China, the Company now intends to expand that goal by the licensing of other applications of the DCGT engine technology as deemed necessary and appropriate to further the development and commercialization of the engine for different applications.

 

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AMEC AGREEMENT

The Company entered into a Strategic Alliance Agreement dated January 21, 2009 with Aerospace Machinery & Electric Co. Ltd., a Chinese corporation (“AMEC”) for the purpose of providing a framework for the collaboration between the two companies on the development and commercialization of the DCGT specifically for application opportunities in the Peoples Republic of China. The terms of the Agreement call for AMEC and TTE to collaborate on modifying and applying the DCGT engine technology to, among other things, create two new engine sizes: a 150hp engine for automobiles and a 400hp engine for buses. The Agreement also provides that the parties anticipate that, pursuant to AMEC’s participation and performance under this Agreement, that they will enter into a Joint Venture agreement in the future whereby TTE will grant AMEC the exclusive rights to manufacture market and sell the DCGT engines in China.

The AMEC Agreement provides that each Company will work independently and collectively, at their own expense, in a friendly competitive manner towards the modification of the DCGT to see who can make the best design or give the best innovative ideas to the DCGT engines, with Michael Rouse, the Company’s CEO being the final decision maker on the ultimate design questions. Robert L Scragg, the inventor and patent holder has filed for patent protection in China under the PCT (Patent Cooperation Treaty). In conjunction with the Agreement, the parties also executed a Confidentiality Agreement.

As of December 31, 2010, AMEC has completed their comprehensive investigation of the DCGT technology and believes the technology can be commercialized for a heavy duty truck application and has notified the Company that it is moving forward with acquiring the right private and governmental funding partners and securing the best divisions of Aerospace to facilitate the project. AMEC provided the Company with an introduction to Beijing Royal Aerospace Facilities Co., Ltd., a PRC corporation (“Beijing Royal”), a private Chinese Company, for the purpose of proceeding forward.(SEE BELOW)

TIANJIN AGREEMENT

The Company entered into a Strategic Alliance Agreement dated August 10, 2009 with Tianjin Out Sky Technology, Co. Ltd., a Chinese corporation (“TIANJIN”). The Company entered into the Agreement for the purpose of collaborating on the engineering, technical development and commercialization of the DCGT for motorcycle engine applications; and for the subsequent manufacturing, marketing and sale of the DCGT engines in China once commercial market potential has been achieved.

The Tianjin Agreement provides in material part that the Company will (a) provide TIANJIN with milestones and get them up to speed on the current status of the development; (b) file for patent protection in China under the Patent Cooperation Treaty; and (c) file for a new engine application with the World Intellectual Property Organization. In addition, the Company and TIANJIN intend to form a joint venture whereby TIANJIN will be licensed to manufacture market and sell DCGT motorcycle engines in China.

TIANJIN and the Company have agreed to work in good faith towards modifying the engine for motorcycle engine applications. TIANJIN committed to fund up to 10 million US dollars over the 18 months commencing with the execution of the Tiangin Agreement for project development costs and working with the Company’s development partners to aid in the development of a viable motorcycle application for the DCGT. TIANJIN’s Agreement also called for the purchase of up to 5% of the Company’s common stock on the open market.

As of December 31, 2010 TIANJIN and their engineering team have been working at their own expense and have submitted Phase One design drawings for a motorcycle DCGT engine to the Company. The Company is currently reviewing the designs. After designs are approved, the next phase involves the development of a working prototype that achieves efficiencies meeting the applications requirements. There is no formal timeline for this phase, however, it is proceeding as anticipated. Funding under this agreement would be predicated upon achievement of a working prototype.

 

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GUOHAO AGREEMENT

The Company entered into a LOI Joint Venture Agreement dated September 7, 2009 with GENES GUOHAO TECHNOLOGY, Co., Ltd., a Chinese corporation (“GUOHAO”) for the purpose of providing a framework for the collaboration between the two companies on the modification of the DCGT engine for coal fired power generation engine applications. The terms of the Agreement call for GUOHAO to fully fund the project and devote all available resources towards the development of the new fuel source and to work in collaboration with all of the Company’s development partners in the design modifications, construction, and testing for a dry coal slurry fuel for the DCGT. Upon completion, GUOHAO will form a new corporation to Joint Venture with TURBINE. TURBINE, in return will then license the DCGT to the new entity for a 49% ownership interest. The Joint Venture, the terms of which are to be determined at a later date, will license the entity to manufacture and sell the DCGT coal fired engines in Mongolia. As contemplated under the LOI, as of December 31, 2010 ABM engineering has conducted research into the use of coal slurries as a fuel source for the DCGT. ABM is set to complete the research upon receipt of further funding from GUOHAO. The research phase is projected to last 6 months, whereupon completion, ABM intends to conduct preliminary testing to demonstrate its viability. The Company believes that progress under this LOI is going according to schedule.

BEIJING ROYAL AGREEMENT

The Company entered into a Cooperative Agreement dated April 27, 2010 with Beijing Royal Aerospace Facilities Co., Ltd., a PRC corporation (“Beijing Royal”), for the purpose of providing a framework for the collaboration between the two companies on the development and commercialization of the Detonation Cycle Gas Turbine Engine (“DGCT”) specifically for application to heavy duty trucks, with Beijing Royal to be the Company’s exclusive development partner with respect to 300 – 600 HP DCGT in the People’s Republic of China. The terms of the agreement replace the terms of the agreement dated January 21, 2009 with Aerospace Machinery and Electric Co., Ltd. The terms of the agreement call for the Company to complete the design plan for the 540 HP DCGT engine within three (3) months and submit it to Beijing Royal for further submission to PRC regulatory authorities for review and approval. The parties have agreed to execute a more detailed joint development contract upon the approval of the DCGT project by PRC regulatory authorities to specify the details of their cooperation on the development of the DCGT. The Beijing Royal Agreement further provides that all documentation provided by the Company to Beijing Royal at this stage shall be solely for the purpose of making a funding application, and that any further use shall be by agreement of the parties only. The intellectual properties jointly developed under the Agreement would be owned by both parties equally. As of December 31, 2010, no funding application has yet been made under this Agreement.

KINGTEC AGREEMENT

The Company entered into a Share Purchase Agreement in May 2010 with Hua Tec Enterprise Co. LTD, an international company incorporated in the Independent State of Samoa. HUA TEC owns all of the issued and outstanding shares of Guandong Kingtec Electrical Co., LTD, a wholly foreign owned enterprise established under the laws of the People’s Republic of China. Kingtec is primarily engaged in the business of manufacturing and selling automobile starters, generators and other accessories in the People’s Republic of China. The closing of this purchase agreement is contingent upon certain conditions as outlined in the agreement, the terms of which are currently being negotiated.

FALCON POWER AGREEMENT

The Company has also entered into a Strategic Alliance Agreement dated June 18, 2010, with Falcon Power Co., Ltd., a Taiwan limited by share company for the purpose of collaborating on the engineering, technical development and commercialization of the Detonation Cycle Gas Turbine Engine (“DCGT”) and the Hydrogen Generator specifically for application opportunities in Taiwan, China and other markets. The terms of the Agreement call for Falcon and TTE to collaborate on modifying and applying the DCGT engine technology to integrate with Falcon’s Hydrogen Generator, for the purpose of allowing Falcon to be able to design a suitable device for the anticipated Joint Venture.

 

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The Company also entered into an Exclusive Agency Agreement with Falcon Power Co., Ltd. dated June 18, 2010. This Agreement grants TTE the exclusive right to resell Falcons’ Products in the State of New York, State of Florida, State of Oklahoma and State of Colorado. As part of this Agreement the company was to pay an Agency fee to Falcon in the amount of $1,000,000, with $100,000 due within three days of the agreement and the reminder to be paid within three months following execution of the agreement. During the year ended December 31, 2010 the Company paid $100,000 of the Agency fee, which has been included as an agency fee on the accompanying balance sheet and will be amortized over the five year term of the Agreement. The remaining $900,000 of the Agency fee was to be paid from future product sales, however, in October 2010, the Agreement was amended and the Company became obligated to pay the $900,000 Agency fee in cash on June 18, 2011. As of December 31, 2010, the Company has recorded an agency fee intangible of approximately $943,000 related to these agreements.

Amortization related to these agreements was approximately $57,000 for the year ended December 31, 2010. Further amortization expense related to these agreements for the years 2011 to 2014 will be approximately $209,000 annually, and approximately $107,000 in 2015.

The Company also entered into a Share Subscription Agreement (the “Agreement”) dated July 6, 2010 with Falcon Power Co., Ltd., a Taiwan limited by share company (“Falcon”) wherein the Company and Falcon each agree to subscribe to each other’s common stock. Pursuant to the terms of the Agreement, on the Closing Date, Falcon and the Company will each subscribe to the common shares of the other, with each company purchasing One Million Five Hundred Thousand Dollars US (US $1,500,000) worth of restricted shares. The Closing Date shall be set by mutual agreement of the parties. The shares will be subject to a restriction on resale for a period of three (3) years. As of the filing date, the sale has not been consummated and no closing date has been set.

PRODUCT STATUS

To date, we have no marketable product but have completed initial testing of the 5th generation prototype. The Company has started demonstrating the engine to investors, has entered into a number of Strategic Alliance Agreements to expand the utilization of the engine, and has begun demonstrating it to potential joint venture partners. The contract with Alpha has been completed and comprehensive testing and development of the 5th generation prototype is now moving forward at AbM Engineering’s facilities. We are currently finalizing plans with ABM to construct our 6th generation prototype. We expect for it to be built by late 1Q 2011 and testing to start in 2Q 2011.

The agreements with GUOHAO, TIANJIN, and BEIJING ROYAL are based on the company building, testing, and demonstrating a prototype that will meet the efficiencies required to commercialize the engine for their respective products. Once the company has demonstrated that it can produce an engine with the power output and efficiencies required, the time line set in the original agreements for the respective companies to fulfill their agreements and fund the company to bring the engine to full commercialization for that product will start at that time.

GOLDEN GATE

In June 2008, the Company issued a Convertible Debenture to Golden Gate Investors, Inc. (the “holder”) in the principal amount of $1,000,000, dated June 6, 2008, pursuant to Rule 506 promulgated by the Securities and Exchange Commission, for the purpose of accessing necessary funding to continue operations.

Pursuant to the terms of the Debenture, the related Securities Purchase Agreement, Secured Promissory Note and Stock Pledge Agreement, each executed in connection therewith, the Company issued $1,000,000 Convertible Debenture (the “Debenture”) for the payment by Golden Gate of $100,000 in cash and the execution and delivery by Golden Gate of a $900,000 Secured Promissory Note of even date (the “Note”), bearing interest at 8% per annum. As of December 31, 2010, the Company has $255,000 available to draw on the Convertible Debenture.

 

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The Debenture bears interest at 7.75% per annum, payable monthly, maturing June 30, 2012, and was secured by a Continuing Personal Guaranty, whereby the Company’s Chief Executive Officer and majority shareholder guaranteed the Company’s obligations for a period of eight months. Originally, the Debenture Holder was entitled to convert into common stock of the company at the conversion price equal to the lesser of (i) $0.50, or (ii) 80% of the average of the 3 lowest Volume Weighted Average Prices during the 20 Trading Days prior to Holder’s election to convert, as such terms are defined in the Debenture. Effective January 15, 2010, the agreement was amended with the Holder and the conversion price has a $0.15 fixed floor price that limits the number of common shares that can be issued upon conversion to a fixed amount. The Holder can only convert that amount of the Debenture that has actually been paid for by either cash at closing or principal pre-payments made on the Promissory Note.

Golden Gate’s secured Promissory Note is payable at the rate of 8% per annum with interest, payable monthly and provides for the prepayment of the Note in an amount not less than $200,000 upon the triggering of certain events. It matures on June 30, 2012. During 2010, the Company has drawn $250,000 in proceeds related to the note and converted $253,000 in convertible notes into 1,373,278 common shares. For financial statement purposes, the Securities Purchase Agreement and the Convertible Promissory Note have been netted, as the Company has the legal right of offset.

OUR PRODUCT

Our product is slated to be a new energy-efficient, Detonation Cycle Gas Turbine Engine (“DCGT”) for heavy-duty highway trucks as well as other potential applications. To date, we have no marketable product and will rely on AbM & AMEC and our Strategic Alliance partners to continue the development and testing of a 540 horsepower prototype that will conform to our licensed application. Since our inception, we have continued to raise capital to bring this patented technology closer to where it can be utilized in a common market. The application demanding the most change is the highway trucking market.

Detonation refers to an instant burning of a fuel-air mixture producing an explosion. Cycle refers to the explosion happening in one chamber and then in another chamber, repeating over and over again. Gas is the fuel which is in a gaseous state. Turbine is a rotating wheel or disk connected to a shaft spinning in one direction. This combined process along with the Electromagnetic Isothermal Combustion “(EIC”) process creates the high efficiency, low emission engine that we intend to bring to market.

Alpha has completed the design and prototype of a 540 hp engine for use in highway trucks. Therefore compliance with state and federal regulators will not be a factor until we have an engineered prototype in a test vehicle here in the United States. Alpha completed all research and development in 1997, which resulted in a patent being issued in 1999. Alpha has completed the design for the truck engine. We need to complete the prototype and test an engine that meets our needs using the existing proven technology; however, this takes a considerable amount of money.

Under our Agreement with Alpha, they will continue to consult and advise with AbM Engineering on future development of this 540 horsepower DCGT highway truck engine prototype at AbM’s facilities in Daytona Beach, Florida. We receive ongoing status reports of their progress but do not participate in the design, construction and/or testing of the engine. This new energy efficient detonation cycle gas turbine can be designed and manufactured as a new or replacement engine for all heavy duty trucks that utilize engines ranging from 300 to 1,000 horsepower.

It was our initial intention solely to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine, however, based on the agreements with the Chinese company’s discussed above, the Company now intends to expand that goal by the licensing of other applications of the DCGT engine technology as deemed necessary and appropriate to further the development and commercialization of the engines.

PATENTS AND LICENSE

Patent #6000214 is a novel patent with a 20-year life from the filing date of December 16, 1997. The patent was based on research and development beginning in 1984, which included the design, construction, and testing of four (4) working prototypes. The patent attorneys were Schoemaker & Mattare Ltd. The inventor will file additional patents to protect any new developments in the engine technology. We will have access to any new patent filings on the highway truck engines as provided for in our licensing agreement.

 

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This patent in its simplicity makes it very unique. A detonation cycle gas turbine engine includes a turbine rotor contained in a housing. The exhaust ports of respective valveless combustion chambers are located on opposite sides of the rotor directing combustion gases toward the turbine. The chambers are connected by a valveless manifold fed with fuel and oxidizer. When combustible gases are detonated by an igniter in one of the combustion chambers, the back pressure from the detonation shuts off the fuel and oxidizer flow to that chamber and redirects the fuel and oxidizer to the opposite chamber, where detonation occurs. The process repeats cyclically. Power is taken off the rotor shaft mechanically or electrically.

The invention utilizes a water wheel as the turbine wheel which has blades that are positively displaced through a blade race by the rapid expansion of gases exiting from combustion chambers via nozzles, rather than pistons or gas turbines.

Our engine has a blower, rather than a compressor, to supply less air per horsepower hour than required by existing gas turbines or piston engines, thereby producing less exhaust gases per horsepower hour.

The blower supplies low pressure air via a single manifold to two combustion chambers simultaneously thereby requiring less work to complete a detonation cycle, resulting in higher thermo mechanical efficiencies than gas turbines or piston engines.

The engine manifolds, combustion chambers, and ignition system has the capability of cyclically detonating fuel-air mixtures without using valves. The engine uses a fuel pump and vaporizers to gasify wet fuels prior to mixing with combustion air in the manifolds to produce complete combustion of all fuel-air mixtures in the detonation process. The engine uses a plasma arc ignition, a visibly constant illuminating plasma flame between two electrodes to detonate fuel-air mixtures and does not require critical ignition timing.

Low pressure air and fuel mixtures are detonated instantaneously–in less than one millisecond–producing high velocity shock waves that kinetically compress inert gases resulting in higher working pressures than the pressures produced in constant pressure heating utilized in gas turbine engines, and Otto and Diesel cycle piston engines.

The detonation cycle engine uses less working fluid and produces less exhaust gas per horsepower hour than Brayton cycle turbines and Otto or Diesel cycle piston engines.

Alpha has developed four working prototypes as described below:

 

  1. First engine was developed in 1987. The engine consisted of one 8-inch diameter, 26-pound turbine wheel, driven by two horizontally opposed combustion chambers. The engine produced 78 horsepower at 12,500 rpm.

 

  2. The second engine was developed in 1989. The engine consisted of two 5-inch diameter, 11-pound turbine wheels mounted on a single shaft, driven by four horizontally opposed combustion chambers. The engine produced 130 horsepower at 14,000 rpm.

 

  3. The third engine was developed in 1991. The engine consisted of two 7-inch diameter, 19.6 pound turbine wheels mounted on a single shaft, driven by four horizontally opposed combustion chambers. The engine produced 256 horsepower at 8,300 rpm.

 

  4. The fourth engine was developed in 1997. The engine consists of four 6-inch diameter, 12 pound turbine wheels mounted on a single shaft, driven by eight horizontally opposed combustion chambers. The engine produces 130 horsepower at 8,400 rpm. This engine is currently used for demonstration and can be seen by appointment.

 

  5. With current data derived from testing previous prototypes, Alpha has designed a 540 horsepower engine that can power a highway truck. Preliminary design concepts estimate the engine will have six 15-inch diameter, 20-pound turbine wheels mounted on a single shaft, driven by 12 horizontally opposed combustion chambers producing 540 horsepower at 3,000 rpm.

The DCGT includes an Electromagnetic Isothermal Combustion (“EIC”) process that powers the engine. The EIC process produces complete combustion of fuel-oxidizer mixtures in cyclic detonations that negate unwanted nitrogen oxide and carbon monoxide emissions. The high pressure gases produced by the detonations drive a unique turbine producing shaft horsepower.

 

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The EIC process enables the DCGT to operate with blower air at low static pressure, negating the necessity of compressing and preheating fuel-oxidizer mixtures prior to combustion. By eliminating the compression of fuel-oxidizer mixtures, the DCGT achieves higher thermal efficiencies in a simplified mechanical structure. The DCGT has the following proprietary and competitive advantages over current diesel, gasoline and gas turbine engines:

 

   

Air cooled - less than 2 pounds per horsepower

 

   

Fewer moving parts - less maintenance

 

   

Flex-fuel and mixed fuels capability

 

   

Operates on all hydrocarbon fuels, hydrogen and syn fuels

 

   

Cold start capability with any fuels

 

   

Burns 30% less fuel “Greenhouse exhaust gases”

 

   

Less nitrogen oxides and carbon monoxide exhaust emissions

 

   

Less hydrocarbon exhaust emissions

 

   

No lube oil, filters or pumps

Alpha has completed basic research, exploratory development, and advanced development with the design, construction and testing of four experimental prototype engines.

Our new energy efficient detonation cycle gas turbine can be designed and manufactured as a new or replacement engine for all heavy duty trucks that utilize engines ranging from 300 to 1,000 horsepower. We are currently exploring additional applications.

We will not require governmental approval until such time as the engine is placed in vehicles for use. Our engine will meet the new more stringent tailpipe emission requirements set forth by the Environmental Protection Agency (“EPA”).

Research and development of our engine was completed in 1997 with patents obtained in 1999. Through testing, we hope to be able to comply with existing and future environmental laws. We intend to supply our fuel efficient, lower emission engine to a marketplace that must comply with more stringent governmental regulations. In each of the last two years, the Company has spent $208,565 (2010) and $108,958 (2009) on research and development.

We acquired our license from Alpha on July 22, 2002. The material terms of the license agreement, as amended, are as follows:

 

  1. $250,000 licensing note payable August 23, 2005 or agreement is terminated

 

  2. Eight percent (8%) of net sales royalty payment after manufacturing and sales commence

 

  3. $250,000 minimum royalty payment each year after licensing note is settled

 

  4. Additional contract fees will be paid to Alpha for design and engineering services.

During the year ended December 31, 2006, the Company issued 125,000 shares of common stock in satisfaction of the $250,000 note payable to Alpha and the accrual of minimum royalty fees began. In addition, during the year ended December 31, 2006, the Company paid $416,667 of royalty fees through the issuance of 100,000 shares of common stock. As of December 31, 2010, the Company has accrued $1,051,500 of royalty fees related to this agreement.

Other than being the licensor and a principal shareholder, we have no affiliation with Alpha.

 

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COMPETITION

The Company has identified seven (7) major engine manufacturers, including Ford, Caterpillar, Cummins, Detroit Diesel, Mack Trucks, Navistar International and Volvo Truck that each manufacture heavy duty truck engines, both gasoline and diesel, which are likely to be the major competitors to our company once our product is ready for market. To the Company’s knowledge, at this time, none of the Company’s major competitors are working on the development of a turbine engine that would be in direct competition to the Company’s engine, and although we would be competing with them for customers, the Company believes that the technological differences between its product and those that are currently on the market, will provide the Company with a market niche that it can expand upon, even in the face of such established competitors.

EMPLOYEES

We presently have four full-time employees. Staffing levels will be determined as we progress and grow. We also plan to add several employees to our staff. The level of employees is primarily contingent on the level of success of an offering. Our board of directors will determine the compensation of all new employees based upon job description.

 

ITEM 1A. RISK FACTORS

Not applicable.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

 

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases a 55 acre parcel located outside Paisley, Florida with two home/office buildings and one storage/demonstration facility from J.K. Schmale. The lease agreement is for one year expiring 12/31/2011 with an option to extend the lease for an additional 1 year term. Base rent is $25,000 per year and the lease agreement contains an option to purchase the property and all buildings located on the property.

 

ITEM 3. LEGAL PROCEEDINGS

As of the date of this Report, neither we nor any of our officers or directors is involved in any litigation either as plaintiffs or defendants. As of this date, there is not any threatened or pending litigation against us or any of our officers or directors.

 

ITEM 4. RESERVED

 

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PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Since the August 2004 closing of the Company’s initial public offering, the Company’s Common Stock has traded in the over-the-counter market on the National Association of Securities Dealers, Inc. OTC Bulletin Board System (“OTCBB”) under the symbol “TTEG.” The following table sets forth the range of high and low closing bid quotations of the Common Stock as reported by the OTCBB for each fiscal quarter for the past two fiscal years. High and low bid quotations reflect inter-dealer prices without adjustment for retail mark-ups, markdowns or commissions and may not necessarily represent actual transactions.

 

     Bid Prices  
     High      Low  

FISCAL 2010

     

First Quarter (January 1, 2010 through March 31, 2010)

   $ 0.60       $ 0.32   

Second Quarter (April 1, 2010 through June 30, 2010)

   $ 0.65       $ 0.33   

Third Quarter (July 1, 2010 through September 30, 2010)

   $ 0.35       $ 0.18   

Fourth Quarter (October 1, 2010 through December 31, 2010)

   $ 0.25       $ 0.12   

FISCAL 2009

     

First Quarter (January 1, 2009 through March 31, 2009)

   $ 0.21       $ 0.07   

Second Quarter (April 1, 2009 through June 30, 2009)

   $ 0.10       $ 0.07   

Third Quarter (July 1, 2009 through September 30, 2009)

   $ 0.77       $ 0.08   

Fourth Quarter (October 1, 2009 through December 31, 2009)

   $ 0.46       $ 0.33   

On March 18, 2011 the closing bid price of the Company’s Common Stock as reported by the OTCBB was $0.19 and there were approximately 408 shareholders of record.

 

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DIVIDENDS

We have not paid any cash dividends on our common or preferred stock and do not anticipate paying any such cash dividends in the foreseeable future. Earnings, if any, will be retained to finance future growth. We may issue shares of our common stock and preferred stock in private or public offerings to obtain financing, capital or to acquire other businesses that can improve our performance and growth. Issuance and or sales of substantial amounts of common stock could adversely affect prevailing market prices in our common stock.

Common Stock

During the year ended December 31, 2010, there was no modification of any instruments issued herein for the fourth quarter, defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.

During October 2010, the Company issued 20,589 shares of common stock to a qualified investor for $0.17 per share for a total of $3,500.

During October 2010, the Company issued 20,000 shares of common stock to a qualified investor for $0.18 per share for a total of $3,600.

During October 2010, the Company issued 52,632 shares of common stock to qualified investors for $0.19 per share for a total of $10,000.

During November 2010, the Company issued 2,000 shares of common stock to a qualified investor for $0.14 per shares for a total of $280.

During November 2010, the Company issued 1,333 shares of common stock to a qualified investor for $0.15 per share for a total of $200.

During December 2010, the Company issued 10,000 shares of common stock to qualified investors for $0.104 per share for a total of $1,040.

During November 2010, the Company issued 5,000 shares of common stock to a qualified investor for services valued at $0.23 per share for a total of $1,150.

During December 2010, the Company issued 2,500 shares of common stock to a qualified investor for services valued at $0.15 per share for a total of $375.

During October 2010, the Company issued 258,732 shares of common stock to a qualified investor for $0.155 per share for a total of $40,000.*

During November 2010, the Company issued 244,059 shares of common stock to a qualified investor for $0.156 per share for a total of $38,000.*

 

* Relates to debt that was converted to common stock.

The sale and issuance of securities above was deemed to be exempt from registration under the Securities Act of 1933, as amended, by virtue of Rule 506 of Regulation D promulgated there under.

 

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ITEM 6. SELECTED FINANCIAL DATA

Not required.

 

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.

The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.

For the year ended December 31, 2010 compared to the year ended December 31, 2009:

Research and Development Costs – During the years ended December 31, 2010 and 2009, research and development costs totaled $208,565 and $108,958, respectively. The increase of $99,607 was mainly attributable to additional costs incurred for the testing of the DCGT engine in 2010.

Operating Costs – During the years ended December 31, 2010 and 2009, operating costs totaled $2,121,168 and $1,871,243, respectively. The increase of $249,925 was mainly attributable to a $360,340 increase in payroll expenses due to additional employees, a $197,981 increase in Professional Fees (Accounting, Legal, Public Relations, and Marketing), a $65,732 increase in Travel and Lodging fees related to the Kingtec agreement and an increase of $117,287 in stock based compensation. These increases in expenses were offset by the $482,855 decrease in consulting expenses.

Interest (Income) Expense - Net - During the years ended December 31, 2010 and 2009 net interest expense totaled $239,490 and $291,716, respectively. The decrease of $52,226 was primarily due to the Company issuing less convertible debentures to Golden Gate Investors, Inc. of $250,000 in 2010 and $395,000 in 2009.

The net loss for the years ended December 31, 2010 and 2009 was ($2,569,223) and ($2,271,917), respectively. The increase of $297,306 was mainly attributable to the increase in research and development expenses, operating costs and interest expenses.

Liquidity and capital resources

As shown in the accompanying financial statements, for the years ended December 31, 2010 and 2009 and since November 27, 2000 (date of inception) through December 31, 2010, the Company has had net losses of $2,569,223, $2,271,917 and $14,133,147, respectively. As of December 31, 2010, the Company has not emerged from the

 

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development stage. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to begin operations and to achieve a level of profitability. However, there can be no assurance that the Company will be able to raise capital or begin operations to achieve a level of profitability to continue as a going concern. Since inception, the Company has financed its activities principally from the sale of public equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements.

As previously mentioned, since inception, we have financed our operations largely from the sale of common stock. From inception through December 31, 2010 we raised cash of approximately $3,442,000 net of issuance costs, through private placements of common stock financings and $745,000 through the issuance of convertible notes payable. Additionally, we have raised net proceeds from stockholder advances of approximately $109,000.

Since our inception through December 31, 2010 we have incurred $3,735,715 of research and development costs. These expenses were principally related to the acquisition of a license agreement in July 2002 in the amount of $2,735,649, which was expensed to research and development costs for the DCGT technology and general and administrative expenses.

We have incurred significant net losses and negative cash flows from operations since our inception. As of December 31, 2010, we had an accumulated deficit of $14,133,147 and working capital deficit of $844,979.

We anticipate that cash used in product development and operations, especially in the marketing, production and sale of our products, will increase significantly in the future.

On June 6, 2008, the Company issued a 7 3/4 Convertible Debenture to Golden Gate Investors, Inc. in the principal amount of $1,000,000, pursuant to Rule 506 promulgated by the Securities and Exchange Commission, for the purpose of accessing necessary funding to continue operations.

Pursuant to the terms of the Debenture, the related Securities Purchase Agreement, secured Promissory Note and Stock Pledge Agreement, each executed in connection therewith, the Company issued $1,000,000 Convertible Debenture (the “Debenture”) for the payment by Golden Gate of $100,000 in cash and the execution and delivery by Golden Gate of a $900,000 Secured Promissory Note of even date (the “Note”), bearing interest at 8% per annum.

The Debenture bears interest at 7.75% per annum, payable monthly, maturing June 30, 2012, and is secured by a Continuing Personal Guaranty by Michael H. Rouse, the Company’s CEO. Originally, the Holder was entitled to convert into common stock of the company at the conversion price equal to the lesser of (i) $0.50, or (ii) 80% of the average of the 3 lowest Volume Weighted Average Prices during the 20 Trading Days prior to Holder’s election to convert, as such terms are defined in the Debenture. Effective January 15, 2010 the agreement was amended with the Holder and the conversion price having a $0.15 fixed floor price that limits the number of common shares upon conversion of a fixed amount. The Holder can only convert that amount of the Debenture that has actually been paid for by either cash at closing or principal pre-payments made on the Promissory Note.

Golden Gate’s secured Promissory Note is payable at the rate of 8% per annum, payable monthly and provides that for the prepayment of the Note in an amount not less than $200,000 monthly upon the happening of certain events. It matures on June 30, 2012. During 2010 and since inception, the Company has drawn $250,000 and $745,000, respectively, in proceeds related to the note. During 2010 and since inception, the Holder has converted $253,000 and $722,000 in convertible notes into 1,373,278 and 7,006,818 common shares, respectively.

Provided certain conditions are met, pursuant to the terms of the Securities Purchase Agreement executed between the parties, Golden Gate or its assigns has the right to enter into 4 additional Debentures with the Company upon similar terms. The Company incurred no additional expenses in this matter and the Company is utilizing the proceeds for its on-going working capital needs.

We will be dependent upon our existing cash, together with anticipated net proceeds from a public offering and future debt issuances and private placements of common stock and potential license fees, to finance our planned operations through the next 12 months. We will continue to proceed in the design and testing phase of the DCGT

 

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engine during the next 12 months and will require additional funding to continue operations. Based on our anticipated growth, we plan to add several employees to our staff.

Additional capital may not be available when required or on favorable terms. If adequate funds are not available, we may be required to significantly reduce or refocus our operations or to obtain funds through arrangements that may require us to relinquish rights to certain or potential markets, either of which could have a material adverse effect on our business, financial condition and results of operations. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in ownership dilution to our existing stockholders.

The Company may receive proceeds in the future from the exercise of warrants and options outstanding as of December 31, 2010 in accordance with the following schedule:

 

     Approximate
Number of
Shares
     Approximate
Proceeds*
 

2006 Non-Plan Options and Warrants

     3,215,413       $ 1,479,090   

 

* Based on weighted average exercise price.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies and Estimates

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

We believe that the following critical policies affect our more significant judgments and estimates used in preparation of our financial statements.

We account for stock option grants in accordance with US GAAP. Stock-based compensation cost recognized during the years ended December 31, 2010 and 2009 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on their relative grant date fair values estimated in accordance with US GAAP. The Company recognizes compensation expenses on a straight-line basis over the requisite service period.

Determination of the fair values of stock option grants at the grant date requires judgment, including estimating the expected term of the relevant grants and the expected volatility of the Company’s stock. Additionally, management must estimate the amount of stock option grants that are expected to be forfeited. The expected term of options granted represents the period of time that the options are expected outstanding and is based on historical experience of similar grants, giving consideration to the contractual terms of the grants, vesting schedules and expectations of future employee behavior. The expected volatility is based upon our historical market price at consistent points in a period equal to the expected life of the options. Expected forfeitures are based on historical experience and expectations of future employee behavior.

Furniture and equipment are recorded at cost and depreciated on a declining balance and straight-line basis over their estimated useful lives, principally two to seven years. Accelerated methods are used for tax depreciation. Maintenance and repairs are charged to operations when incurred. Betterments and renewals are capitalized. When furniture and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations.

 

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The Company has incurred deferred offering costs in connection with raising additional capital through the sale of its common stock. These costs are capitalized and charged against additional paid-in capital when common stock is issued. If there is no issuance of common stock, the costs incurred are charged to operations.

Research and development costs are charged to operations when incurred and are included in operating expenses.

New Accounting Pronouncements

For a description of recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial statements, see “Note 3: Significant Accounting Polices: Recent Accounting Standards” in Part II, Item 8 of this Form 10-K.

 

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

 

ITEM 8. FINANCIAL STATEMENTS

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Financial Statements

For the Years Ended December 31, 2010 and 2009,

and the Period November 27, 2000 (Date of Inception)

through December 31, 2010

Contents

 

Report of Independent Registered Public Accounting Firm

     16   

Financial Statements:

  

Balance Sheets

     18   

Statements of Operations

     19   

Statements of Changes in Stockholders’ Deficit

     20-27   

Statements of Cash Flows

     28-29   

Notes to Financial Statements

     30-38   

Report of Independent Registered Public Accounting Firm

Board of Director’s and Stockholders

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

DeLand, Florida

We have audited the accompanying balance sheets of Turbine Truck Engines, Inc. (a development stage enterprise) (“the Company”) as of December 31, 2010 and 2009 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2010 and 2009 and the period from November 27, 2000 (Date of Inception) through December 31, 2010. These financial statements are the responsibility of the management of Turbine Truck Engines, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the

 

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circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we expressed no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Turbine Truck Engines, Inc. as of December 31, 2010 and 2009 and the results of its operations and its cash flows for the years ended December 31, 2010 and 2009 and the period from November 27, 2000 (Date of Inception) through December 31, 2010 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company incurred a net loss of $2,569,223 during the year ended December 31, 2010 and has an accumulated deficit of $14,133,147 since inception and has a working capital deficit of $844,979 as of December 31, 2010. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Pender Newkirk & Company LLP

Certified Public Accountants

Tampa, Florida

March 30, 2011

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Balance Sheets

 

     December 31,
2010
    December 31,
2009
 

Assets

    

Current assets:

    

Cash

   $ 128,264      $ 603,601   

Prepaid expenses

     108,891        10,000   
                

Total current assets

     237,155        613,601   
                

Agency fee- intangible, net of accumulated amortization of $57,368 (2010) and $0 (2009)

     942,632     

Furniture and equipment, net of accumulated depreciation of $44,025 (2010) and $42,271 (2009)

     7,285        8,199   
                
   $ 1,187,072        621,800   
                

Liabilities and Stockholders’ Deficit

    

Current liabilities:

    

Accounts payable

   $ 162,281      $ 139,520   

Accrued agency fee

     900,000     

Accrued interest

     14,718        14,349   

Accrued payroll

     4,635        51,231   

Note payable

     500        500   
                

Total current liabilities

     1,082,134        205,600   

Accrued expenses – long term

     273,250        269,250   

Accrued payroll – long term

     270,376        229,178   

Accrued royalty fees

     1,051,500        801,500   

Convertible note payable net of unamortized discount of $0 (2010) and $2,914 (2009)

       86   

Note payable to related party

     1,901        1,901   
                

Total liabilities

     2,679,161        1,507,515   

Stockholders’ deficit:

    

Preferred stock; $0.001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding

    

Common stock; $0.001 par value; 99,000,000 shares authorized; 45,844,161 (2010) and 39,693,484 (2009) shares issued and outstanding

     45,842        39,692   

Additional paid in capital

     12,526,812        10,914,424   

Deficit accumulated during development stage

     (14,133,147 )     (11,563,923 )

Common stock payable

     274,000     

Prepaid consulting services paid with common stock

     (193,596 )     (79,908 )

Receivable for common stock

     (12,000 )     (196,000 )
                

Total stockholders’ deficit

     (1,492,089 )     (885,715 )
                
   $ 1,187,072      $ 621,800   
                

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

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Statements of Operations

 

     Years Ended December 31,     Period
November 27,
2000 (Date of
Inception) through
December 31,

2010
 
     2010     2009    

Research and development costs

   $ 208,565      $ 108,958      $ 3,735,715   

Operating costs

     2,121,168        1,871,243        9,794,655   
                        
     2,329,733        1,980,201        13,530,370   

Interest (income) expense

     239,490        291,716        602,777   
                        

Net loss

   $ (2,569,223 )   $ (2,271,917 )   $ (14,133,147 )
                        

Net loss per share

   $ (0.06 )   $ (0.08 )   $ (0.82 )
                        

Weighted average number of common shares outstanding

     43,256,282        29,573,293        17,315,409   
                        

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

 

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Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2010 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2010

 

     Common Stock           Deficit
Accumulated
During
Development
Stage
 
     Shares     Amount     Additional Paid
in Capital
   

Issuance of common stock for option to acquire license and stock subscription receivable, December 2000

     10,390,000      $ 10,390       

Net loss for the period

         $ (4,029 )
                                

Balance, December 31, 2000

     10,390,000        10,390          (4,029 )

Issuance of common stock for cash, February 2001*

     10,000        10      $ 4,990     

Issuance of common stock for cash, March 2001*

     10,000        10        4,990     

Issuance of common stock for cash, August 2001*

     10,000        10        4,990     

Issuance of common stock for cash, September 2001*

     55,000        55        27,445     

Payment for common stock issued under subscription receivable

        

Net loss

           31,789   
                                

Balance, December 31, 2001

     10,475,000        10,475        42,415        (35,818 )

Issuance of common stock for cash, January 2002*

     5,000        5        2,495     

Issuance of common stock for cash, February 2002*

     10,000        10        4,990     

Issuance of common stock for cash, April 2002*

     25,000        25        12,475     

Issuance of common stock for cash, May 2002*

     65,000        65        32,435     

Issuance of common stock for cash, June 2002*

     70,000        70        34,930     

Issuance of common stock for cash, August 2002*

     10,000        10        4,990     

Issuance of common stock for cash, October 2002*

     10,000        10        4,990     

Issuance of common stock to acquire licensing agreement, July 2002*

     5,000,000        5,000        2,495,000     

Shares returned to treasury by founding stockholder, July 2002

     (5,000,000 )     (5.000 )     5,000     

Net loss

           (2,796,768 )
                                

Balance, December 31, 2002

     10,670,000        10,670        2,639,720        (2,832,586 )

Issuance of common stock for cash, February 2003*

     207,000        207        103,293     

Issuance of common stock for cash, September 2003*

     30,000        30        14,970     

Issuance of common stock for services, September 2003*

     290,000        290        144,710     

Payment for common stock issued under subscription agreement

        

Offering costs for private placement offering

         (33,774 )  

Net loss

           (190,567 )
                                

Balance, December 31, 2003

     11,197,000        11,197        2,868,919        (3,023,153 )

Issuance of notes payable with beneficial conversion feature

         19,507     

Issuance of common stock for services, September 2004 ($2.00 per share)

     20,000        20        39,980     

Conversion of notes payable, August 2004 ($2.00 per share)

     31,125        31        62,219     

Issuance of common stock for cash, September 2004 ($2.00 per share)

     25,025        25        50,025     

Issuance of common stock for cash, October 2004 ($2.00 per share)

     1,000        1        1,999     

Issuance of common stock for cash, November 2004 ($2.00 per share)

     3,500        4        6,996     

Issuance of common stock for cash, December 2004 ($2.00 per share)

     3,000        3        5,997     

Amortization of offering costs related to Form SB-2 filing

         (10,159 )  

Amortization of stock for services related to Form SB-2 offering

         (6,317 )  

Contribution from shareholder

         18,256     

Net loss

           (282,009 )
                                

Balance, December 31, 2004

     11,280,650        11,281        3,057,422        (3,305,162 )

 

* Common stock issued at $.50 per share.

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

 

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     Deferred
Non-Cash
Offering
Costs
    Common
Stock
Payable
     Prepaid
Consulting
Services Paid
for with
Common
Stock
     Subscription
Receivable
    Total  

Issuance of common stock for option to acquire license and stock subscription receivable, December 2000

           $ (390 )   $ 10,000   

Net loss for the period

               (4,029 )
                                          

Balance, December 31, 2000

             (390 )     5,971   

Issuance of common stock for cash, February 2001*

               5,000   

Issuance of common stock for cash, March 2001*

               5,000   

Issuance of common stock for cash, August 2001*

               5,000   

Issuance of common stock for cash, September 2001*

               27,500   

Payment for common stock issued under subscription receivable

             300        300   

Net loss

               (31,789 )
                                          

Balance, December 31, 2001

             (90 )     16,982   

Issuance of common stock for cash, January 2002*

               2,500   

Issuance of common stock for cash, February 2002*

               5,000   

Issuance of common stock for cash, April 2002*

               12,500   

Issuance of common stock for cash, May 2002*

               32,500   

Issuance of common stock for cash, June 2002*

             (2,500 )     32,500   

Issuance of common stock for cash, August 2002*

               5,000   

Issuance of common stock for cash, October 2002*

               5,000   

Issuance of common stock to acquire licensing agreement, July 2002*

               2,500,000   

Shares returned to treasury by founding stockholder, July 2002

            

Net loss

               (2,796,768 )
                                          

Balance, December 31, 2002

             (2,590 )     (184,786 )

Issuance of common stock for cash, February 2003*

               103,500   

Issuance of common stock for cash, September 2003*

               15,000   

Issuance of common stock for services, September 2003*

   $ (74,850 )             70,150   

Payment for common stock issued under subscription agreement

             2,500        2,500   

Offering costs for private placement offering

               (33,774 )

Net loss

               (190,567 )
                                          

Balance, December 31, 2003

     (74,850 )           (90 )     (217,977 )

Issuance of notes payable with beneficial conversion feature

               19,507   

Issuance of common stock for services, September 2004 ($2.00 per share)

               40,000   

Conversion of notes payable, August 2004 ($2.00 per share)

               62,250   

Issuance of common stock for cash, September 2004 ($2.00 per share)

               50,050   

Issuance of common stock for cash, October 2004 ($2.00 per share)

               2,000   

Issuance of common stock for cash, November 2004 ($2.00 per share)

               7,000   

Issuance of common stock for cash, December 2004 ($2.00 per share)

               6,000   

Amortization of offering costs related to Form SB-2 filing

               (10,159 )

Amortization of stock for services related to Form SB-2 offering

     6,317             

Contribution from shareholder

               18,256   

Net loss

               (282,009 )
                                          

Balance, December 31, 2004

     (68,533 )           (90 )     (305,082 )

 

21


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2010 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2010

 

     Common Stock            Deficit
Accumulated
During
Development
Stage
 
     Shares      Amount      Additional
Paid in
Capital
   

Issuance of common stock for services, January 2005 ($2.00 per share)

     80,000         80         159,920     

Issuance of common stock in satisfaction of a note payable, February 2005 ($2.00 per share)

     125,000         125         249,875     

Issuance of common stock for cash, February 2005 ($2.00 per share)

     3,200         3         6,397     

Issuance of common stock for cash, March 2005 ($2.00 per share)

     1,500         1         2,999     

Amortization of offering costs related to Form SB-2 filing

           (31,216 )  

Amortization of stock for services related to Form SB-2 offering

           (19,413 )  

Issuance of common stock for services, April 2005 ($2.00 per share)

     5,000         5         9,995     

Capital contribution from stockholder, May 2005

           170,000     

Issuance of common stock for cash, May 2005 ($2.00 per share)

     15,550         16         31,084     

Write off of stock for services related to Form SB-2 filing

          

Issuance of common stock for cash, June 2005 ($2.00 per share)

     9,100         9         18,191     

Issuance of common stock for services, June 2005 ($1.70 per share)

     100,000         100         169,900     

Capital contribution from stockholder, June 2005

           450     

Issuance of common stock for cash, August 2005 ($1.00 per share)

     5,000         5         4,995     

Issuance of common stock for services, July 2005 ($1.00 per share)

     40,000         40         39,960     

Amortization of prepaid services paid for with common stock

          

Write off prepaid services paid for with common stock due to terminated agreement

          

Issuance of common stock for cash, October ($1.00 per share)

     25,000         25         24,975     

Issuance of common stock for cash, November ($1.00 per share)

     20,000         20         19,980     

Issuance of common stock for cash, December ($1.00 per share)

     5,000         5         4,995     

Net loss

             (1,068,738 )
                                  

Balance, December 31, 2005

     11,715,000         11,715         3,920,509        (4,373,900 )

Issuance of common stock for cash, January ($1.00 per share)

     65,000         65         64,935     

Issuance of common stock for cash, February ($1.00 per share)

     1,500         2         1,498     

Amortization of prepaid services paid for with common stock

          

Issuance of common stock for cash, March ($1.00 per share)

     1,675         2         1,673     

Issuance of common stock for cash, April ($1.00 per share)

     5,000         5         4,995     

Issuance of common stock for services, May ($1.00 per share)

     10,000         10         9,990     

Issuance of common stock for services, May ($1.15 per share)

     10,000         10         11,490     

Issuance of common stock for cash, June ($.80 per share)

     15,000         15         11,985     

Issuance of common stock and warrants for cash, June ($.50 per share)

     200,000         200         99,800     

Issuance of common stock for services, June ($1.15 per share)

     150,000         150         172,350     

Issuance of common stock for services, July ($1.10 per share)

     109,091         109         119,891     

Issuance of common stock for services, July ($.50 per share)

     30,000         30         14,970     

Issuance of common stock for settlement of debt, August ($.85 per share)

     125,253         125         106,341     

Issuance of common stock for services, August ($.81 per share)

     10,000         10         8,065     

Issuance of common stock and warrants for cash, September ($.50 per share)

     167,200         167         83,433     

Issuance of common stock for services, September ($.50 per share)

     210,000         210         104,790     

Issuance of common stock for services, September ($.74 per share)

     10,000         10         7,385     

Issuance of common stock in settlement of a payable, September ($4.16 per share)

     100,000         100         416,567     

Issuance of options to employees, directors and consultants, September

           78,355     

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

 

22


Table of Contents
     Deferred
Non-Cash
Offering
Costs
     Common
Stock
Payable
     Prepaid
Consulting
Services Paid
for with
Common
Stock
    Subscription
Receivable
    Total  

Issuance of common stock for services, January 2005 ($2.00 per share)

               160,000   

Issuance of common stock in satisfaction of a note payable, February 2005 ($2.00 per share)

               250,000   

Issuance of common stock for cash, February 2005 ($2.00 per share)

               6,400   

Issuance of common stock for cash, March 2005 ($2.00 per share)

               3,000   

Amortization of offering costs related to Form SB-2 filing

               (31,216 )

Amortization of stock for services related to Form SB-2 offering

     19,413             

Issuance of common stock for services, April 2005 ($2.00 per share)

               10,000   

Capital contribution from stockholder, May 2005

               170,000   

Issuance of common stock for cash, May 2005 ($2.00 per share)

               31,100   

Write off of stock for services related to Form SB-2 filing

     49,120                49,120   

Issuance of common stock for cash, June 2005 ($2.00 per share)

               18,200   

Issuance of common stock for services, June 2005 ($1.70 per share)

         $ (170,000 )    

Capital contribution from stockholder, June 2005

               450   

Issuance of common stock for cash, August 2005 ($1.00 per share)

               5000   

Issuance of common stock for services, July 2005 ($1.00 per share)

           (40,000 )    

Amortization of prepaid services paid for with common stock

           26,833          26,833   

Write off prepaid services paid for with common stock due to terminated agreement

           161,500          161,500   

Issuance of common stock for cash, October ($1.00 per share)

               25,000   

Issuance of common stock for cash, November ($1.00 per share)

               20,000   

Issuance of common stock for cash, December ($1.00 per share)

               5000   

Net loss

               (1,068,738 )
                                          

Balance, December 31, 2005

           (21,667 )     (90     (463,433 )

Issuance of common stock for cash, January ($1.00 per share)

               65,000   

Issuance of common stock for cash, February ($1.00 per share)

               1,500   

Amortization of prepaid services paid for with common stock

           204,556          204,556   

Issuance of common stock for cash, March ($1.00 per share)

               1,675   

Issuance of common stock for cash, April ($1.00 per share)

               5,000   

Issuance of common stock for services, May ($1.00 per share)

               10,000   

Issuance of common stock for services, May ($1.15 per share)

               11,500   

Issuance of common stock for cash, June ($.80 per share)

               12,000   

Issuance of common stock and warrants for cash, June ($.50 per share)

               100,000   

Issuance of common stock for services, June ($1.15 per share)

           (172,500 )    

Issuance of common stock for services, July ($1.10 per share)

           (120,000 )    

Issuance of common stock for services, July ($.50 per share)

           (5,000 )       10,000   

Issuance of common stock for settlement of debt, August ($.85 per share)

               106,466   

Issuance of common stock for services, August ($.81 per share)

               8,075   

Issuance of common stock and warrants for cash, September ($.50 per share)

               83,600   

Issuance of common stock for services, September ($.50 per share)

           (12,500 )       92,500   

Issuance of common stock for services, September ($.74 per share)

               7,395   

Issuance of common stock in settlement of a payable, September ($4.16 per share)

               416,667   

Issuance of options to employees, directors and consultants, September

               78,355   

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

 

23


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2010 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2010

 

     Common Stock                
      Shares      Amount      Additional
Paid in
Capital
     Deficit
Accumulated
During
Development
Stage
 

Issuance of common stock for services, October ($0.50, per shares)

     30,000         30         14,970      

Issuance of options to employees, directors and consultants, October

           155,185      

Issuance of common stock for cash, October ($0.50 per share)

     16,000         16         7,984      

Issuance of common stock for services, October ($0.67, per shares)

     15,000         15         9,985      

Issuance of common stock for services, November ($0.50, per shares)

     188,000         188         93,812      

Issuance of common stock for cash, November ($0.50 per share)

     100,000         100         49,900      

Issuance of common stock for cash, November ($0.60 per share)

     2,833         3         1,697      

Net loss

              (1,465,077 )
                                   

Balance December 31, 2006

     13,286,552         13,287         5,572,555         (5,838,977 )

Issuance of options to consultants, January

           155,188      

Issuance of common stock for cash, January ($0.50 per share)

     26,000         26         12,974      

Issuance of common stock for exercise of options, January ($0.50 per share)

     300,000         300         149,700      

Issuance of common stock for services, January ($0.66, per shares)

     50,000         50         32,950      

Issuance of common stock for services, January ($0.51, per shares)

     10,000         10         5,090      

Issuance of common stock for exercise of options, February ($0.50 per share)

     100,000         100         49,900      

Issuance of common stock for exercise of options, February ($0.60 per share)

     20,000         20         11,980      

Issuance of common stock for cash, February ($0.23 per share)

     239,130         239         54,761      

Issuance of common stock for services, February ($0.87, per shares)

     50,000         50         43,200      

Issuance of common stock for services, February ($0.72, per shares)

     20,000         20         14,280      

Issuance of common stock for cash, February ($0.23 per share)

     558,696         559         127,941      

Issuance of common stock for services, March ($0.65, per shares)

     25,000         25         16,225      

Issuance of common stock for services, March ($0.70, per shares)

     25,000         25         17,475      

Issuance of common stock for exchange of fixed assets, April ($0.50, per share)

     2,000         2         998      

Issuance of common stock for cash, May ($0.25, per share)

     24,000         24         5,976      

Issuance of common stock for cash, June ($0.25, per share)

     26,000         26         6,474      

Issuance of common stock for services, June ($0.43, per share)

     75,000         75         32,175      

Issuance of common stock for exchange of fixed assets, June ($0.50 per share)

     8,000         8         3,992      

Issuance of common stock for services, June ($0.44, per share)

     100,000         100         43,900      

Amortization of prepaid services paid for with common stock

           

Issuance of common stock and warrants for cash, July ($0.25, per share)

     72,000         72         17,928      

Issuance of common stock for services, August ($0.55, per share)

     160,000         160         87,840      

Issuance of common stock for services, August ($0.50, per share)

     3,000         3         1,497      

Issuance of common stock for services, August ($0.38, per share)

     28,600         28         10,839      

Issuance of common stock and warrants for cash, August ($0.25, per share)

     270,000         270         67,230      

Issuance of common stock for services, September ($0.50, per share)

     1,300,000         1,300         648,700      

Issuance of common stock for cash, September ($0.25, per share)

     164,000         164         40,836      

Issuance of common stock for cash, September ($0.30, per share)

     26,666         26         7,973      

Issuance of common stock for cash, September ($0.37, per share)

     54,243         53         19,646      

Issuance of options & warrants to employees & consultants, September

           108,470      

Issuance of common stock for services, October ($0.25, per share)

     6,000         6         1,494      

Issuance of common stock for services, October ($0.56, per share)

     2,700         3         1,497      

Issuance of common stock for cash, October ($0.50, per share)

     55,000         55         27,445      

Issuance of common stock for cash, October ($0.53, per share)

     1,905         2         998      

Issuance of common stock for cash, November ($0.28, per share)

     125,291         125         34,956      

Issuance of common stock for cash, November ($0.32, per share)

     1,563         1         499      

Issuance of common stock for cash, November ($0.37, per share)

     40,000         40         14,760      

Issuance of common stock for cash, November ($0.68, per share)

     25,000         25         16,850      

Issuance of common stock for cash, December ($0.25, per share)

     68,000         68         16,932      

Net loss

              (2,470,352 )
                                   

Balance December 31, 2007

     17,349,346       $ 17,347       $ 7,484,124       $ (8,309,329 )

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

 

24


Table of Contents
     Deferred
Non-Cash
Offering
Costs
     Common
Stock
Payable
     Prepaid
Consulting
Services Paid
for with
Common
Stock
    Subscription
Receivable
    Total  

Issuance of common stock for services, October ($0.50, per shares)

               15,000   

Issuance of options to employees, directors and consultants, October

               155,185   

Issuance of common stock for cash, October ($0.50 per share)

               8,000   

Issuance of common stock for services, October ($0.67, per shares)

               10,000   

Issuance of common stock for services, November ($0.50, per shares)

           (80,000 )       14,000   

Issuance of common stock for cash, November ($0.50 per share)

               50,000   

Issuance of common stock for cash, November ($0.60 per share)

               1,700   

Net loss

               (1,465,077 )
                                          

Balance December 31, 2006

           (207,111 )     (90 )     (460,336 )

Issuance of options to consultants, January

               155,188   

Issuance of common stock for cash, January ($0.50 per share)

               13,000   

Issuance of common stock for exercise of options, January ($0.50 per share)

             (150,000 )  

Issuance of common stock for services, January ($0.66, per shares)

           (33,000 )    

Issuance of common stock for services, January ($0.51, per shares)

               5,100   

Issuance of common stock for exercise of options, February ($0.50 per share)

             (15,000 )     35,000   

Issuance of common stock for exercise of options, February ($0.60 per share)

             (12,000 )  

Issuance of common stock for cash, February ($0.23 per share)

               55,000   

Issuance of common stock for services, February ($0.87, per share)

               43,250   

Issuance of common stock for services, February ($0.72, per share)

               14,300   

Issuance of common stock for cash, February ($0.23 per share)

               128,500   

Issuance of common stock for services, March ($0.65, per shares)

               16,250   

Issuance of common stock for services, March ($0.70, per shares)

           (17,500 )    

Issuance of common stock for exchange of fixed assets, April ($0.50, per share)

               1,000   

Issuance of common stock for cash, May ($0.25, per share)

               6,000   

Issuance of common stock for cash, June ($0.25, per share)

               6,500   

Issuance of common stock for services, June ($0.43, per share)

               32,250   

Issuance of common stock for exchange of fixed assets, June ($0.50 per share)

               4,000   

Issuance of common stock for services, June ($0.44, per share)

               44,000   

Amortization of prepaid services paid for with common stock

           890,111          890,111   

Issuance of common stock and warrants for cash, July ($0.25, per share)

               18,000   

Issuance of common stock for services, August ($0.55, per share)

               88,000   

Issuance of common stock for services, August ($0.50, per share)

               1,500   

Issuance of common stock for services, August ($0.38, per share)

               10,867   

Issuance of common stock and warrants for cash, August ($0.25, per share)

               67,500   

Issuance of common stock for services, September ($0.50, per share)

           (650,000 )    

Issuance of common stock for cash, September ($0.25, per share)

               41,000   

Issuance of common stock for cash, September ($0.30, per share)

               7,999   

Issuance of common stock for cash, September ($0.37, per share)

               19,699   

Issuance of options & warrants to employees & consultants, September

               108,470   

Issuance of common stock for services, October ($0.25, per share)

               1,500   

Issuance of common stock for services, October ($0.56, per share)

               1,500   

Issuance of common stock for cash, October ($0.50, per share)

               27,500   

Issuance of common stock for cash, October ($0.53, per share)

               1,000   

Issuance of common stock for cash, November ($0.28, per share)

               35,081   

Issuance of common stock for cash, November ($0.32, per share)

               500   

Issuance of common stock for cash, November ($0.37, per share)

               14,800   

Issuance of common stock for cash, November ($0.68, per share)

               16,875   

Issuance of common stock for cash, November ($0.25, per share)

               17,000   

Payment on receivable for common stock

             10,000        10,000   

Net loss

               (2,470,352 )
                                          

Balance December 31, 2007

   $            $ (17,500 )   $ (90 )   $ (992,448 )

 

25


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2010 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2010

 

     Common Stock              
     Shares     Amount     Additional
Paid in
Capital
    Deficit
Accumulated
During
Development
Stage
 

Issuance of common stock and warrants for cash, January ($0.15, per shares)

     200,000        200        29,800     

Issuance of common stock for services, February ($0.38, per shares)

     160,000        160        60,640     

Issuance of common stock for services, February ($0.26, per shares)

     12,000        12        3,108     

Issuance of common stock for services, April ($0.12, per share)

     210,000        210        24,990     

Issuance of common stock for services, May ($0.20, per share)

     350,000        350        69,650     

Issuance of common stock for cash, May ($0.10, per share)

     145,000        145        14,355     

Issuance of common stock for cash, June ($0.10, per share)

     334,000        334        33,066     

Issuance of common stock for cash, June ($0.085, per share)

     150,000        150        12,600     

Issuance of common stock for cash, June ($0.08, per share)

     25,000        25        1,975     

Issuance of common stock for services, June ($0.16, per share)

     300,000        300        47,700     

Amortization of prepaid services paid for with common stock

        

Value of the beneficial conversion feature for the issuance of convertible debt

         25,000     

Issuance of common stock for cash, July ($0.10, per share)

     379,500        380        37,571     

Issuance of common stock for services, July ($0.15, per share)

     30,000        30        4,470     

Issuance of common stock for cash, August ($0.10, per share)

     101,000        101        9,999     

Issuance of common stock for cash, September ($0.10, per share)

     369,000        369        36,531     

Issuance of common stock for cash, September ($0.08, per share)

     306,250        306        24,194     

Issuance of common stock for cash, October ($0.08, per share)

     3,750        4        296     

Issuance of common stock for cash, October ($0.09, per share)

     40,000        40        3,560     

Issuance of common stock for cash, October ($0.10, per share)

     27,000        27        2,673     

Issuance of common stock for cash, November ($0.08, per share)

     12,500        13        987     

Issuance of common stock for cash, November ($0.10, per share)

     32,400        32        3,208     

Issuance of common stock for services, December ($0.071, per share)

     12,500        13        875     

Issuance of common stock for cash, December ($0.08, per share)

     161,250        161        12,739     

Issuance of common stock for cash, December ($0.10, per share)

     27,300        27        2,603     

Issuance of common stock for services, December ($0.09, per share)

     10,000        10        890     

Issuance of common stock for services, December ($0.13, per share)

     500,000        500        64,500     

Issuance of common stock for services, December ($0.17, per share)

     12,500        13        2,112     

Issuance of common stock for services, December ($0.1954, per share)

     100,000        100        19,435     

Issuance of common stock for conversion of notes, December ($0.08, per share)

     26,297        26        1,974     

Issuance of common stock for conversion of notes, December ($0.07, per share)

     270,468        270        19,730     

Issuance of common stock for conversion of notes, December ($0.10, per share)

     202,703        203        14,797     

Issuance of warrants for services, December

         29,578     

Net loss

           (982,677 )
                                

Balance December 31, 2008

     21,859,764        21,858        8,099,730        (9,292,006 )

Amortization of prepaid services paid for with common stock

        

Issuance of common stock for conversion of notes, January ($0.06, per share)

     255,965        256        14,744     

Issuance of common stock for cash, January ($0.50, per share)

     200        1        98     

Issuance of common stock for cash, January ($0.07, per share)

     294,999        295        20,355     

Issuance of common stock for cash, January ($0.08, per share)

     12,500        12        988     

Issuance of common stock for cash, January ($0.10, per share)

     255,000        255        25,245     

Issuance of common stock for conversion of notes, February ($0.06, per share)

     166,739        167        9,833     

Issuance of common stock for conversion of notes, February ($0.09, per share)

     221,984        222        19,778     

Issuance of common stock for cash, February ($0.07, per share)

     526,927        527        36,358     

Issuance of common stock for cash, February ($0.10, per share)

     110,500        110        10,940     

Issuance of common stock for services, March ($0.11, per share)

     300,000        300        32,700     

Issuance of common stock for conversion of notes, March ($0.07, per share)

     137,768        138        9,862     

Issuance of common stock for conversion of notes, March ($0.08, per share)

     316,241        316        24,684     

Issuance of common stock for cash, March ($0.07, per share)

     289,286        289        19,961     

Issuance of common stock for cash, March ($0.10, per share)

     10,000        10        990     

Value of the beneficial conversion feature for the issuance of convertible debt

         149,750     

Issuance of warrants for services, January

         36,644     

Issuance of common stock for services, April ($0.09, per share)

     20,000        20        1,780     

Issuance of common stock for services, April ($0.10, per share)

     510,000        510        50,490     

Issuance of common stock for cash, April ($0.07, per share)

     274,999        275        18,975     

Issuance of common stock for cash, April ($0.10, per share)

     29,500        30        2,920     

Issuance of common stock for conversion of notes, April ($0.07, per share)

     511,979        512        34,488     

Issuance of common stock for conversion of notes, April ($0.06, per share)

     158,897        159        9,841     

Issuance of common stock for conversion of notes, May ($0.06, per share)

     399,617        399        24,601     

Issuance of common stock for services, May ($0.09, per share)

     60,000        60        5,090     

Issuance of common stock for cash, May ($0.07, per share)

     77,000        77        5,313     

Issuance of common stock for conversion of notes, June ($0.06, per share)

     381,098        381        24,619     

Issuance of common stock for conversion of notes, June ($0.07, per share)

     934,516        935        54,065     

Issuance of common stock and warrants for cash, June ($0.07, per share)

     582,142        582        40,168     

Issuance of common stock for cash, June ($0.08, per share)

     420,000        420        34,562     

Issuance of common stock for cash, July ($0.07, per share)

     976,250        976        67,361     

Issuance of common stock for cash, July ($0.065, per share)

     215,500        216        13,792     

Issuance of common stock for cash, July ($0.10, per share)

     20,000        20        1,980     

Issuance of common stock for cash, July ($0.26, per share)

     3,846        4        996     

Issuance of common stock for conversion of notes, July ($0.065, per share)

     153,941        154        9,846     

Issuance of common stock for cash, August ($0.07, per share)

     130,000        130        8,970     

Issuance of common stock for cash, August ($0.085, per share)

     58,822        59        4,941     

Issuance of common stock and warrants for cash, August ($0.10, per share)

     1,480,000        1,480        146,520     

Issuance of common stock for cash, August ($0.11, per share)

     10,000        10        1,090     

Issuance of common stock for cash, August ($0.12, per share)

     100,000        100        11,900     

Issuance of common stock for cash, August ($0.24, per share)

     152,498        153        36,447     

Issuance of common stock for cash, August ($0.26, per share)

     140,384        140        36,360     

Issuance of common stock for cash, August ($0.28, per share)

     16,785        17        4,683     

Issuance of common stock for cash, August ($0.30, per share)

     164,000        164        49,036     

Issuance of common stock for cash, August ($0.33, per share)

     6,363        6        2,094     

Issuance of common stock for services, August ($0.09, per share)

     1,200,000        1,200        106,800     

Issuance of common stock for services, August ($0.25, per share)

     100,000        100        24,900     

Issuance of common stock for services, August ($0.10, per share)

     50,000        50        4,950     

Issuance of common stock for services, August ($0.16, per share)

     100,000        100        15,900     

Issuance of common stock for cash, September ($0.10, per share)

     20,000        20        1,980     

Issuance of common stock for cash, September ($0.20, per share)

     40,000        40        7,960     

Issuance of common stock for cash, September ($0.22, per share)

     286,361        286        62,714     

Issuance of common stock for cash, September ($0.23, per share)

     126,086        126        28,874     

Issuance of common stock for cash, September ($0.235, per share)

     29,787        30        6,970     

Issuance of common stock for cash, September ($0.25, per share)

     46,000        46        11,454     

Issuance of common stock for cash, September ($0.26, per share)

     84,230        84        21,816     

Issuance of common stock for cash, September ($0.30, per share)

     21,333        21        6,379     

Issuance of common stock for cash, September ($0.325, per share)

     1,230        1        399     

Issuance of common stock for cash, September ($0.33, per share)

     67,000        67        22,043     

Issuance of common stock for cash, September ($0.375, per share)

     10,000        10        3,740     

Issuance of common stock for services, September ($0.47, per share)

     100,000        100        46,900     

Issuance of common stock for services, September ($0.61, per share)

     500,000        500        304,500     

Issuance of common stock for services, September ($0.50, per share)

     5,000        5        2,495     

Issuance of common stock and exercise of warrants for a reduction in a payable, September ($0.10, per share)

     350,000        350        34,650     

Issuance of common stock options, July

         40,706     

Issuance of common stock for cash, October ($0.22, per share)

     11,363        11        2,489     

Issuance of common stock for cash, October ($0.18, per share)

     246,107        246        44,054     

Issuance of common stock for cash, October ($0.17, per share)

     25,882        26        4,374     

Issuance of common stock for cash, November ($0.18, per share)

     98,775        99        17,681     

Issuance of common stock for cash, November ($0.20, per share)

     167,500        168        33,332     

Issuance of common stock for cash, December ($0.19 per share)

     2,500        3        472     

Issuance of common stock for cash, December ($0.16, per share)

     100,000        100        15,900     

Issuance of common stock for cash, December ($0.17, per share)

     5,882        6        994     

Issuance of common stock for cash, December ($0.18, per share)

     102,111        102        18,278     

Issuance of common stock for cash, December ($0.20, per share)

     10,000        10        1,990     

Issuance of common stock for cash, December ($0.30, per share)

     1,100,000        1,100        328,900     

Issuance of common stock for services, October ($0.42, per share)

     100,000        100        41,900     

Issuance of common stock for services, December ($0.38, per share)

     345,000        345        130,755     

Issuance of common stock for conversion of notes, December ($0.1284, per share)

     1,495,327        1,495        190,505     

Value of the beneficial conversion feature for the issuance of convertible debt

         100,921     

Issuance of warrants

         10,161     

Payment on stock subscription receivable

        

Net loss

           (2,271,917 )
                                

Balance December 31, 2009

     39,693,484      $ 39,692      $ 10,914,424      $ (11,563,923 )

Payment on stock subscription receivables

        

Amortization of prepaid services paid for with common stock

        

Issuance of common stock for cash, February ($0.15, per share)

     135,000        135        20,115     

Issuance of common stock for cash, February ($0.16, per share)

     318,420        318        50,629     

Issuance of common stock for cash, February ($0.17, per share)

     159,647        160        26,980     

Issuance of common stock for cash, February ($0.18, per share)

     10,000        10        1,790     

Issuance of common stock for cash, February ($0.23, per share)

     553,261        553        126,697     

Issuance of common stock for settlement of accounts payable, February ($0.261, per share)

     121,212        120        31,504     

Issuance of common stock for cash, February ($0.30, per share)

     101,000        101        30,199     

Issuance of common stock for cash, February ($0.333, per share)

     100,000        100        33,233     

Issuance of common stock for cash, February ($0.42, per share)

     33,000        33        13,827     

Issuance of common stock for services, February ($0.475, per share)

     14,000        14        6,636     

Issuance of common stock for services, February ($0.575, per share)

     20,000        20        11,480     

Issuance of common stock for cash, March ($0.18, per share)

     10,000        10        1,790     

Issuance of common stock for cash, March ($0.21, per share)

     4,761        5        995     

Issuance of common stock for cash, March ($0.28, per share)

     357,142        357        99,643     

Issuance of common stock for cash, March ($0.294, per share)

     6,803        7        1,993     

Issuance of common stock for cash, March ($0.30, per share)

     152,666        153        45,647     

Issuance of common stock for cash, March ($0.35, per share)

     6,000        6        2,094     

Issuance of common stock for cash, March ($0.37, per share)

     13,514        14        4,986     

Issuance of common stock for cash, March ($0.38, per share)

     50,000        50        18,950     

Issuance of common stock for cash, March ($0.39, per share)

     1,025        1        399     

Issuance of common stock for cash, March ($0.40, per share)

     3,000        3        1,197     

Issuance of common stock for settlement of accounts payable, March ($0.269 per share)

     80,000        80        21,420     

Issuance of common stock for settlement of accounts payable, March ($0.53, per share)

     3,774        4        1,996     

Issuance of common stock for services, March ($0.485, per share)

     150,000        150        72,600     

Issuance of common stock for services, March ($0.49, per share)

     600,000        600        293,400     

Write off uncollectible stock subscription receivable, March

         (155,000 )  

Value of the beneficial conversion feature for the issuance of convertible debt

         248,889     

Issuance of common stock for cash, April ($0.34, per share)

     40,000        40        13,560     

Issuance of common stock for cash, April ($0.36, per share)

     24,000        24        8,568     

Issuance of common stock for cash, April ($0.39, per share)

     1,795        2        698     

Issuance of common stock for cash, April ($0.42, per share)

     3,570        4        1,496     

Issuance of common stock for cash, April ($0.43, per share)

     2,500        2        1,073     

Issuance of common stock for cash, April ($0.44, per share)

     7,955        8        3,492     

Issuance of common stock for cash, April ($0.45, per share)

     10,000        10        4,490     

Issuance of common stock for services, April ($0.49, per share)

     55,000        55        26,895     

Issuance of common stock for cash, May ($0.35, per share)

     28,572        29        9,971     

Issuance of common stock for cash, May ($0.40, per share)

     14,000        14        5,586     

Issuance of common stock for cash, May ($0.44, per share)

     116,500        116        51,144     

Issuance of common stock for cash, June ($0.28, per share)

     25,000        25        6,975     

Issuance of common stock for cash, June ($0.30, per share)

     11,000        11        3,289     

Issuance of common stock for cash, June ($0.31, per share)

     1,000        1        309     

Issuance of common stock for cash, June ($0.32, per share)

     3,750        4        1,196     

Issuance of common stock for services, June ($0.38, per share)

     150,000        150        56,850     

Issuance of common stock for services, June ($0.41, per share)

     100,000        100        40,400     

Payment received for stock subscription receivable, June

        

Issuance of common stock for cash, July ($0.21, per share)

     76,190        76        15,924     

Issuance of common stock for conversion of notes, July ($0.24, per share)

     207,727        208        49,792     

Issuance of common stock for cash, August ($0.19, per share)

     65,788        66        12,434     

Issuance of common stock for conversion of notes, August ($0.19, per share)

     393,288        393        74,607     

Issuance of common stock for cash, August ($0.20, per share)

     22,500        23        4,477     

Issuance of common stock for cash, September ($0.17, per share)

     1,500,000        1,500        253,500     

Issuance of common stock for conversion of notes, September ($0.18, per share)

     269,472        269        49,731     

Forfeiture of common stock issued for services, September

     (600,000 )     (600 )     (293,400 )  

Common stock commitment at $0.25 - $0.27

        

Issuance of common stock for cash, October ($0.17, per share)

     20,589        21        3,479     

Issuance of common stock for cash, October ($0.18, per share)

     20,000        20        3,580     

Issuance of common stock for cash, October ($0.19, per share)

     52,632        53        9,947     

Issuance of common stock for cash, November ($0.14, per share)

     2,000        2        278     

Issuance of common stock for cash, November ($0.15, per share)

     1,333        1        199     

Issuance of common stock for cash, December ($0.104, per share)

     10,000        10        1,030     

Issuance of common stock for conversion of notes, October ($0.155, per share)

     258,732        259        39,741     

Issuance of common stock for conversion of notes, November ($0.156, per share)

     244,059        244        37,756     

Issuance of common stock for services, November ($0.23, per share)

     5,000        5        1,145     

Issuance of common stock for services, December ($0.15, per share)

     2,500        2        373     

Issuance of warrants for services, December

         97,714     

Net loss

           (2,569,223 )
                                

Balance December 31, 2010

     45,844,161      $ 45,843      $ 12,526,812      $ (14,133,147 )
                                

 

26


Table of Contents
     Deferred
Non-Cash
Offering
Costs
     Common
Stock
Payable
     Prepaid
Consulting
Services Paid
for with
Common Stock
    Subscription
Receivable
    Total  

Issuance of common stock and warrants for cash, January ($0.15, per share)

               30,000   

Issuance of common stock for services, February ($0.38, per shares)

               60,800   

Issuance of common stock for services, February ($0.26, per share)

               3,120   

Issuance of common stock for services, April ($0.12, per share)

           (20,000       5,200   

Issuance of common stock for services, May ($0.20, per share)

           (61,600       8,400   

Issuance of common stock for cash, May ($0.10, per share)

               14,500   

Issuance of common stock for cash, June ($0.10, per share)

               33,400   

Issuance of common stock for cash, June ($0.085, per share)

               12,750   

Issuance of common stock for cash, June ($0.08, per share)

               2,000   

Issuance of common stock for services, June ($0.16, per share)

           (48,000    

Amortization of prepaid services paid for with common stock

           110,767          110,767   

Value of the beneficial conversion feature for the issuance of convertible debt

               25,000   

Issuance of common stock for cash, July ($0.10, per share)

               37,951   

Issuance of common stock for services, July ($0.15, per share)

               4,500   

Issuance of common stock for cash, August ($0.10, per share)

               10,100   

Issuance of common stock for cash, September ($0.10, per share)

               36,900   

Issuance of common stock for cash, September ($0.08, per share)

               24,500   

Issuance of common stock for cash, October ($0.08, per share)

               300   

Issuance of common stock for cash, October ($0.09, per share)

               3,600   

Issuance of common stock for cash, October ($0.10, per share)

               2,700   

Issuance of common stock for cash, November ($0.08, per share)

               1,000   

Issuance of common stock for cash, November ($0.10, per share)

               3,240   

Issuance of common stock for services, December ($0.071, per share)

               888   

Issuance of common stock for cash, December ($0.08, per share)

               12,900   

Issuance of common stock for cash, December ($0.10, per share)

               2,630   

Issuance of common stock for services, December ($0.09, per share)

               900   

Issuance of common stock for services, December ($0.13, per share)

           (65,000    

Issuance of common stock for services, December ($0.17, per share)

               2,125   

Issuance of common stock for services, December ($0.1954, per share)

               19,535   

Issuance of common stock for conversion of notes, December ($0.08, per share)

               2,000   

Issuance of common stock for conversion of notes, December ($0.07, per share)

               20,000   

Issuance of common stock for conversion of notes, December ($0.07, per share)

               15,000   

Issuance of warrants for services, December

               29,578   

Net loss

               (982,677
                                          

Balance December 31, 2008

           (101,333     (167,090     (1,438,841

Amortization of prepaid services paid for with common stock

           571,625          571,625   

Issuance of common stock for conversion of notes, January ($0.06, per share)

               15,000   

Issuance of common stock for cash, January ($0.50, per share)

               99   

Issuance of common stock for cash, January ($0.07, per share)

               20,650   

Issuance of common stock for cash, January ($0.08, per share)

               1,000   

Issuance of common stock for cash, January ($0.10, per share)

               25,500   

Issuance of common stock for conversion of notes, February ($0.06, per share)

               10,000   

Issuance of common stock for conversion of notes, February ($0.09, per share)

               20,000   

Issuance of common stock for cash, February ($0.07, per share)

               36,885   

Issuance of common stock for cash, February ($0.10, per share)

               11,050   

Issuance of common stock for services, March ($0.11, per share)

           (33,000    

Issuance of common stock for conversion of notes, March ($0.07, per share)

               10,000   

Issuance of common stock for conversion of notes, March ($0.08, per share)

               25,000   

Issuance of common stock for cash, March ($0.07, per share)

               20,250   

Issuance of common stock for cash, March ($0.10, per share)

               1,000   

Value of the beneficial conversion feature for the issuance of convertible debt

               149,750   

Issuance of warrants for services, January

               36,644   

Issuance of common stock for services, April ($0.09, per share)

               1,800   

Issuance of common stock for services, April ($0.10, per share)

           (50,000       1,000   

Issuance of common stock for cash, April ($0.07, per share)

               19,250   

Issuance of common stock for cash, April ($0.10, per share)

               2,950   

Issuance of common stock for conversion of notes, April ($0.07, per share)

               35,000   

Issuance of common stock for conversion of notes, April ($0.06, per share)

               10,000   

Issuance of common stock for conversion of notes, May ($0.06, per share)

               25,000   

Issuance of common stock for services, May ($0.09, per share)

               5,150   

Issuance of common stock for cash, May ($0.07, per share)

               5,390   

Issuance of common stock for conversion of notes, June ($0.06, per share)

               25,000   

Issuance of common stock for conversion of notes, June ($0.07, per share)

               55,000   

Issuance of common stock and warrants for cash, June ($0.07, per share)

               40,750   

Issuance of common stock for cash, June ($0.08, per share)

               34,982   

Issuance of common stock for cash, July ($0.07, per share)

               68,337   

Issuance of common stock for cash, July ($0.065, per share)

               14,008   

Issuance of common stock for cash, July ($0.10, per share)

               2,000   

Issuance of common stock for cash, July ($0.26, per share)

               1,000   

Issuance of common stock for conversion of notes, July ($0.065, per share)

               10,000   

Issuance of common stock for cash, August ($0.07, per share)

               9,100   

Issuance of common stock for cash, August ($0.085, per share)

               5,000   

Issuance of common stock and warrants for cash, August ($0.10, per share)

               148,000   

Issuance of common stock for cash, August ($0.11, per share)

               1,100   

Issuance of common stock for cash, August ($0.12, per share)

               12,000   

Issuance of common stock for cash, August ($0.24, per share)

               36,600   

Issuance of common stock for cash, August ($0.26, per share)

               36,500   

Issuance of common stock for cash, August ($0.28, per share)

               4,700   

Issuance of common stock for cash, August ($0.30, per share)

               49,200   

Issuance of common stock for cash, August ($0.33, per share)

               2,100   

Issuance of common stock for services, August ($0.09, per share)

           (108,000    

Issuance of common stock for services, August ($0.25, per share)

           (25,000    

Issuance of common stock for services, August ($0.10, per share)

           (5,000    

Issuance of common stock for services, August ($0.16, per share)

           (16,000    

Issuance of common stock for cash, September ($0.10, per share)

               2,000   

Issuance of common stock for cash, September ($0.20, per share)

               8,000   

Issuance of common stock for cash, September ($0.22, per share)

               63,000   

Issuance of common stock for cash, September ($0.23, per share)

               29,000   

Issuance of common stock for cash, September ($0.235, per share)

               7,000   

Issuance of common stock for cash, September ($0.25, per share)

               11,500   

Issuance of common stock for cash, September ($0.26, per share)

               21,900   

Issuance of common stock for cash, September ($0.30, per share)

               6,400   

Issuance of common stock for cash, September ($0.325, per share)

               400   

Issuance of common stock for cash, September ($0.33, per share)

               22,110   

Issuance of common stock for cash, September ($0.375, per share)

               3,750   

Issuance of common stock for services, September ($0.47, per share)

               47,000   

Issuance of common stock for services, September ($0.61, per share)

           (305,000    

Issuance of common stock for services, September ($0.50, per share)

           (2,500    

Issuance of common stock and exercise of warrants for a reduction in a payable, September ($0.10, per share)

               35,000   

Issuance of common stock options, July

               40,706   

Issuance of common stock for cash, October ($0.22, per share)

               2,500   

Issuance of common stock for cash, October ($0.18, per share)

               44,300   

Issuance of common stock for cash, October ($0.17, per share)

               4,400   

Issuance of common stock for cash, November ($0.18, per share)

               17,780   

Issuance of common stock for cash, November ($0.20 per share)

               33,500   

Issuance of common stock for cash, December ($0.19, per share)

               475   

Issuance of common stock for cash, December ($0.16, per share)

             (16,000 )  

Issuance of common stock for cash, December ($0.17, per share)

             (1,000 )  

Issuance of common stock for cash, December ($0.18, per share)

             (12,000 )     6,380   

Issuance of common stock for cash, December ($0.20, per share)

               2,000   

Issuance of common stock for cash, December ($0.30, per share)

               330,000   

Issuance of common stock for services, October ($0.42, per share)

               42,000   

Issuance of common stock for services, December ($0.38, per share)

           (5,700 )       125,400   

Issuance of common stock for conversion of notes, December ($0.1284, per share)

               192,000   

Value of the beneficial conversion feature for the issuance of convertible debt

               100,921   

Issuance of warrants

               10,161   

Payment on stock subscription receivable

             90        90   

Net loss

               (2,271,917
                                          

Balance, December 31, 2009

           (79,908     (196,000     (885,715

Payment on stock subscription receivables

             29,000        29,000   

Amortization of prepaid services paid for with common stock

           98,058          98,058   

Issuance of common stock for cash, February ($0.15, per share)

               20,250   

Issuance of common stock for cash, February ($0.16, per share)

               50,947   

Issuance of common stock for cash, February ($0.17, per share)

               27,140   

Issuance of common stock for cash, February ($0.18, per share)

               1,800   

Issuance of common stock for cash, February ($0.23, per share)

               127,250   

Issuance of common stock for settlement of accounts payable, February ($0.261, per share)

               31,624   

Issuance of common stock for cash, February ($0.30, per share)

               30,300   

Issuance of common stock for cash, February ($0.333, per share)

               33,333   

Issuance of common stock for cash, February ($0.42, per share)

               13,860   

Issuance of common stock for services, February ($0.475, per share)

           (6,650    

Issuance of common stock for services, February ($0.575, per share)

           (11,500    

Issuance of common stock for cash, March ($0.18, per share)

               1,800   

Issuance of common stock for cash, March ($0.21, per share)

               1,000   

Issuance of common stock for cash, March ($0.28, per share)

             (100,000  

Issuance of common stock for cash, March ($0.294, per share)

               2,000   

Issuance of common stock for cash, March ($0.30, per share)

               45,800   

Issuance of common stock for cash, March ($0.35, per share)

               2,100   

Issuance of common stock for cash, March ($0.37, per share)

               5,000   

Issuance of common stock for cash, March ($0.38, per share)

               19,000   

Issuance of common stock for cash, March ($0.39, per share)

               400   

Issuance of common stock for cash, March ($0.40, per share)

               1,200   

Issuance of common stock for settlement of accounts payable, March ($0.269 per share)

               21,500   

Issuance of common stock for settlement of accounts payable, March ($0.53, per share)

               2,000   

Issuance of common stock for services, March ($0.485, per share)

               72,750   

Issuance of common stock for services, March ($0.49, per share)

           (294,000    

Write off uncollectible stock subscription receivable, March

             155,000     

Value of the beneficial conversion feature for the issuance of convertible debt

               248,889   

Issuance of common stock for cash, April ($0.34, per share)

               13,600   

Issuance of common stock for cash, April ($0.36, per share)

               8,592   

Issuance of common stock for cash, April ($0.39, per share)

               700   

Issuance of common stock for cash, April ($0.42, per share)

               1,500   

Issuance of common stock for cash, April ($0.43, per share)

               1,075   

Issuance of common stock for cash, April ($0.44, per share)

               3,500   

Issuance of common stock for cash, April ($0.45, per share)

               4,500   

Issuance of common stock for services, April ($0.49, per share)

               26,950   

Issuance of common stock for cash, May ($0.35, per share)

               10,000   

Issuance of common stock for cash, May ($0.40, per share)

               5,600   

Issuance of common stock for cash, May ($0.44, per share)

               51,260   

Issuance of common stock for cash, June ($0.28, per share)

               7,000   

Issuance of common stock for cash, June ($0.30, per share)

               3,300   

Issuance of common stock for cash, June ($0.31, per share)

               310   

Issuance of common stock for cash, June ($0.32, per share)

               1,200   

Issuance of common stock for services, June ($0.38, per share)

               57,000   

Issuance of common stock for services, June ($0.41, per share)

               40,500   

Payment received for stock subscription receivable, June

             100,000        100,000   

Issuance of common stock for cash, July ($0.21, per share)

               16,000   

Issuance of common stock for conversion of notes, July ($0.24, per share)

               50,000   

Issuance of common stock for cash, August ($0.19, per share)

               12,500   

Issuance of common stock for conversion of notes, August ($0.19, per share)

               75,000   

Issuance of common stock for cash, August ($0.20, per share)

               4,500   

Issuance of common stock for cash, September ($0.17, per share)

               255,000   

Issuance of common stock for conversion of notes, September ($0.18, per share)

               50,000   

Forfeiture of common stock issued for services, September

           294,000       

Common stock commitment at $0.25 - $0.27

        274,000         (193,596 )       80,404   

Issuance of common stock for cash, October ($0.17, per share)

               3,500   

Issuance of common stock for cash, October ($0.18, per share)

               3,600   

Issuance of common stock for cash, October ($0.19, per share)

               10,000   

Issuance of common stock for cash, November ($0.14, per share)

               280   

Issuance of common stock for cash, November ($0.15, per share)

               200   

Issuance of common stock for cash, December ($0.104, per share)

               1,040   

Issuance of common stock for conversion of notes, October ($0.155, per share)

               40,000   

Issuance of common stock for conversion of notes, November ($0.156, per share)

               38,000   

Issuance of common stock for services, November ($0.23, per share)