10-K

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, 2013

o 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 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 o 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 o 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 o

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 o No o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act):Yes o 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, 2013 was $8,044,593.

There were 277,098,547 shares of the Registrant’s $0.001 par value common stock outstanding as of April 11, 2014.

Documents incorporated by reference:

None

TURBINE TRUCK ENGINES, INC.

FORM 10-K INDEX

Part I		3
Item 1.	Description of Business	3
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	8
Item 2.	Description of Property	8
Item 3.	Legal Proceedings	8
Item 4.	Mine Safety Disclosure	8
Part II		9
Item 5.	Market for Common Equity and Related Stockholder Matters	9
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 8.	Financial Statements and Supplementary Data	17
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	18
Item 9A(T).	Controls and Procedures	18
Item 9B.	Other information	18
Part III		19
Item 10.	Directors, Executive Officers and Corporate Governance	19
Item 11.	Executive Compensation	20
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	22
Item 13.	Certain Relationships and Related Transactions, and Director Independence	23
Item 14.	Principal Accountant Fees and Services	23
Item 15.	Exhibits and Financial Statement Schedules	24
	Signatures	25
	Certifications

2

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. The Company is currently pursuing several different lines of business, including (a) the continued development of the Detonation Cycle Gas Turbine Engine” (“DCGT”); (b) the commercialization of a new hydrogen generation process for use in multiple industries; and (c) the development of a gas to liquid process based upon patents held by Robert Scraggs.

The development of the DCGT Engine has been at the core of the Company’s business for many years. 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 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.

The Company has a number of agreements regarding the development and manufacture of the DCGT Engine over the last few years that have terminated of their own accord, but which the Company classifies as “on hold”, pending the successful completion the testing of the 6th generation prototype that is a condition precedent to the development of the engine which would serve as a platform for these companies to work off of. Upon the successful completion of the testing of the 6th generation prototype, the Company intends revisit these strategic alliances and potential joint ventures

The Company, through AbM Engineering, completed the 6th generation prototype in June 2011 and is continuing the testing thereof, subject to the receipt of adequate funding.

OTHER AGREEMENTS

The Company entered into various strategic alliances with foreign companies during 2009 and 2010. Any changes during the year ended December 31, 2013, have been disclosed in the Company’s 8-K filing dated April 3, 2013, with the SEC. These changes do not warrant further disclosure to these financial statements. 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 parties that they would be willing to discuss reinstituting 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 begin.

3

PRODUCT STATUS

THE DCGT ENGINE

To date, our DCGT Engine is not yet marketable, but we have completed initial testing of the 6th generation prototype. The Company continues to demonstrate the engine to investors and potential joint venture partners. Over the course of the last few years, the Company has entered into numerous strategic alliances and potential joint ventures for the development of the engine; however, those agreements have been placed on hold pending the successful completion of the testing on the 6th generation prototype. The prototype was completed in June 2011, and preliminary testing has been completed. Additional testing and modification of the 6th generation prototype was completed in the last quarter of 2012 by AbM Engineering, who continues to perform modifications and comprehensive testing, which will continue, on a schedule which is dependent upon adequate funding being received by the Company. Costs incurred for the prototype, if any, was included research and development costs in the Statements of Operations. February 2014 the announcement by President Obama, for the Environmental Protection Agency ("EPA") and National Highway Traffic Safety Administration ("NHTSA") to create new fuel-efficiency CAFE standards and greenhouse gas reductions by March 2016 for both heavy and medium-duty trucks, This announcement has caused Turbine Truck Engines to receive numerous inquiries and renewed interest about its Detonation Cycle Gas Turbine ("DCGT").

Once the Company has demonstrated that it can produce an engine with the power output and efficiencies required of the marketplace, the Company will revisit the prior agreements, as they have indicated that they remain interested. The Company continues to pursue funding to bring the engine to full commercialization.

OUR PRODUCTS AND BUSINESS LINES

Detonation Cycle Gas Turbine Engine

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 the research firm of AbM Engineering and potential Strategic Alliance partners to continue the development and testing of our 6th generation 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.

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’s completed the design and prototype of a 540 hp engine for use in highway trucks. Through the course of the development of the engine, the company has expanded its focus to the utilization of the technology to power generation applications which are easier to commercialize, due to the inherent issues arising in the integration into existing systems. The Company is currently testing the 6th generation prototype, 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. The continued pursuit of the technology for use in highway trucks will not continue to be pursued until we have made significantly more progress on the 6th generation prototype.

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, the Company has determined to focus on the power generation applications of the engine at this time.

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 has and 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.

4

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 valve-less combustion chambers are located on opposite sides of the rotor directing combustion gases toward the turbine. The chambers are connected by a valve-less 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 six working prototypes over the course of the last 20 years, culminating in the development of the 6th generation prototype engine , which consists of two 7-inch, 8-pound turbine wheels mounted on a single shaft, driven by 4 horizontally opposed combustion chambers producing an estimated 70 horsepower at 20,000 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.

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 that when completed, the EIC process is projected to have the following characteristics:

● 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 synthetic 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

5

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

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 $0 (2013) and $0 (2012) on research and development.

TTE and Alpha entered into that certain License Agreement dated December 31, 2001, pursuant to which TTE had accrued debt to Alpha in the amount of $1,508,250 as of the date of the Agreement. The Company entered into a Debt Settlement Agreement dated April 27, 2012 with Alpha.

Pursuant to the terms of the Agreement, Alpha accepted 250,000 shares of the company common stock in full settlement of the Debt and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment was due January 1, 2013.

As of December 31, 2013, the Company had accrued $50,000 of royalty fees related to this agreement.

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

HYDROGEN GENERATORS

The HUE hydrogen generator provides a unique marketable hydrogen generator, unlike anything currently in the commercial market. Hydrogen (H2) is an ideal fuel for combustion — it burns easily and efficiently at very high temperatures and emits pure water vapor (H2O) as its only by-product. But the gas is a difficult fuel to work with. Existing methods for transporting and storing hydrogen (namely high-pressure compression and liquefaction) are complex, inefficient, and expensive. It’s also the smallest molecule in existence and tends naturally to leak; only exacerbating these problems.

In contrast, Methanol (CH4O, also known as methyl alcohol or wood alcohol) is abundant, widely accessible, easy to handle, and inexpensive. Utilizing a gas reformation process employing a proprietary chemical catalyst and a unique low temperature pyrolytic reaction, HUE’s extraordinary generator converts common methanol into clean-burning hydrogen gas for immediate on-site use. The process removes all harmful emissions except for food grade carbon dioxide, which can be captured and sold to the food and beverage industry.

The hydrogen generator can be used in a wide range of residential and commercial applications. It is also ideal for use in industrial equipment such as boilers, steam generators, and dryers. On-demand hydrogen generation eliminates the need for operators to have expensive high pressure storage tanks and infrastructure while still providing the many environmental benefits of using hydrogen fuel. Operators additionally have seen savings of 30% to 60% of their energy costs as compared to using electricity or heavy oils do to the same job.

The Company entered into a Cooperation Agreement (the “Agreement”) with Hydrogen Union Energy Co., Ltd. (“HUE”) for the purpose of the joint development of the hydrogen generator. Under the terms of the Agreement, HUE was to provide hydrogen generators at cost to the Company for demonstration purposes. Once the Company purchased the first H2 generator and paid 90% of the purchase price, the Company would be given first refusal to act as agent for any future business relating to hydrogen generators with HUE’s technology in North America. The Company was to pay the cost of production of a 200 cubic meter H2 generator at 10,000,000 TWD ($328,000 USD as of December 31, 2011) for up to two machines.

6

On July 3, 2012, the Company entered into a Joint Venture Agreement with ENERGY TECHNOLOGY SERVICES CO. LTD., an international company incorporated in Taiwan (“ETS”) for the purpose of the engaging both parties in the manufacture, leasing and /or sale of ETS’s hydrogen generator burning systems (the “Equipment”) in Asia, which Agreement was subsequently amended December 6, 2013. Under the Joint Venture, the Company was to purchase and own all the Equipment, and ETS was to provide for the manufacturing and on-time delivery and installation of the Equipment, to order. Additionally, TTE had agreed to pay ETS 2.5 million CAD over a one (1) year period upon certification of the H2 Generator in China, and receipt of five (5) confirmed orders for additional machines. Thereupon, TTE would receive a full transfer of the H2 technology.

A total of CAN $300,000 was advanced under the Loan Agreement with 2367416 Ontario, Inc, and was delivered to ETS, as the initial payment on the first machine to be delivered under a purchase order agreement for a Hydrogen Production Burner System (HPBS). Despite positive initial reports from ETS during the manufacturing of the Equipment, they did not deliver the machine as promised under the Agreement. The Company has declared ETS to be in default of their obligations and is currently negotiating with ETS for the refund of the CAD$300,000 advance which is expected to be refunded by December 31, 2014. The Company received approximately CAD$50,000 from ETS subsequent to December 31, 2013 and this amount was used to pay down the loan from 2367416 Ontario, Inc.

The Company is now in negotiations directly with HUE to provide us with the equipment necessary to fulfill our business plan. HUE has agreed verbally to sell us the rights to the technology for 1.5 million US for the H2 generator upon the completion and certification of the generator. We are currently working to formalize this agreement and expect to do so in the second quarter of 2014.

The Company is continuing its pursuit of additional joint ventures and distributorship relationships to facilitate the expansion of this business line.

GAS TO LIQUID

Is an Electromagnetic Methanol Reactor System which produces Methanol in fewer steps. At lower costs, and by a more environmentally acceptable technique than the present state-of-the-art process, and is not captive to major industrial areas of pipeline gas supply.

By the Scragg Process, the methane gas contained in natural gas is conveyed into an electromagnetic combustion and condensing chamber and combined with oxygen which has been passed through an electromagnetic field and preatomized. The atomized oxygen combines stoichiometric ally with the methane gas in an exothermic reaction to produce Methanol gas. The Methanol gas is then condensed in the reactor to form liquid Methanol.

The Scragg Process works on the basis that hydrocarbons are highly combustible substances which burn when vigorously oxidized to form carbon dioxide and water: however. If the oxidation is performed gently a number of Intermediate compounds may be formed. The mild oxidation of hydrocarbons is achieved by either inserting an oxygen atom into the molecule or by removing two hydrogen atoms from the molecule.

The Company (“TTE”) entered into a Binding Letter of Intent (the “Agreement”) dated January 23, 2013 with BluGen, Inc., a California corporation (“BluGen”) for the purpose of setting the basis for the joint development of a natural gas to Methanol technology (“GTM Technology”). Under the terms of the Agreement, BluGen will work with TTE, and the inventor, Robert Scragg to recreate and expand upon the original designs created by Mr. Scragg and to re-develop a lab version and control system, among other things. These items are to be completed under a timetable that has been agreed upon by the parties.

The parties have agreed to establish, at later date, a Joint Venture, wherein TTE will have 51% interest and BluGen will have a 49% interest, and into which the commercial application of the technology will be developed.

PATENTS AND LICENSE

To date there are no patents or patents pending for the Hydrogen Generator. However, in the future HUE and the Company propose to share in patent applications and approvals on any part of the Hydrogen Generator that is able to be patented.

The Scraggs process for converting Methane to Methanol was patented on Feb. 15, 1983 under US Patent # 4,374,288. The patent has expired, however the process will be protected under Trade Secrets law.

7

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 as to the DCGT Engine, 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.

The Company has identified a handful of competitors, including Air-Gas, that manufacture hydrogen generators. There are however, three main types of hydrogen generators, those that (a) convert methane to hydrogen through a catalyst; (b) convert water through electrolysis; and (c) convert methanol through catalysis. There are commercialized units for each method, however, to our knowledge; there are no commercialized units, like the HUE generator that produce hydrogen on demand, without the safety issues involved with storage and transportation. In that regard, the Company considers itself uniquely positioned to provide the market with a hydrogen generator that is uniquely different than its competitors.

Methanex Corp. is the world’s largest producer of Methanol and will be our main competitor. The Scraggs process will enable production of methanol on a much smaller scale, there are many companies working on this process however to date none have proved viable.

The current state-of-the-art method of producing Methanol involves a low pressure process of preparing synthesis gas by steam reforming or partial oxidation of a gaseous hydrocar.bon feedstock or by direct combination of carbon dioxide with purified hydrogen rich gases. Typically, naptha or a natural gas feedstock is disulfurized, preheated and mixed with a superheated steam, and then reacted over a conventional catalyst in a multi-tubular reformer. After cooling, the synthesis gas is compressed to the required pressure and passed into a hot-wall converter over a low pressure Methanol synthesis catalyst at a temperature ranging from 250 to 270 degrees centigrade. The crude Methanol that is formed is condensed and separated from the uncondensed gases which are recycled with makeup synthesis gas and fed back into the converter. Historically, plants using the aforementioned process are, by necessity located in heavy industrial centers which permit the production of large quantities of hydrogen, carbon monoxide and/or carbon dioxide gases and are captive to pipeline gas supply. Depending upon the location of the plant, high transportation expenses can offset any cost savings resulting from increased production volumes of Methanol.

EMPLOYEES

We presently have one full-time employee. 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 funds available for operations. 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 office buildings and one storage/demonstration facility from J.K. Schmale. The lease agreement is currently being extended on a month to month basis. 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. MINE SAFETY DISLCOSURE

None

8

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 2013
First Quarter (January 1, 2013 through March 31, 2013)	$	0.0175	$	0.0054
Second Quarter (April 1, 2013 through June 30, 2013)	$	0.014	$	0.0027
Third Quarter (July 1, 2013 through September 30, 2013)	$	0.0219	$	0.031
Fourth Quarter (October 1, 2013 through December 31, 2013)	$	0.0153	$	0.007
FISCAL 2012
First Quarter (January 1, 2012 through March 31, 2012)	$	0.2099	$	0.085
Second Quarter (April 1, 2012 through June 30, 2012)	$	0.148	$	0.048
Third Quarter (July 1, 2012 through September 30, 2012)	$	0.075	$	0.032
Fourth Quarter (October 1, 2012 through December 31, 2012)	$	0.035	$	0.0114

On April 8, 2014, the closing bid price of the Company’s Common Stock as reported by the OTCBB was $0.05 and there were approximately 461 shareholders of record.

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, 2013, 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.

9

During November 2013, the Company issued 5,000,000 shares of common stock to a qualified investor for loan costs valued at $0.005 per share for a total of $25,000.

During November 2013, the Company issued 1,993,334 shares of common stock to a qualified investor for cash valued at $0.005 per share for a total of $9,967.

During November 2013, the Company issued 100,000 shares of common stock to a qualified investor for services valued at $0.015 per share for a total of $1,500.

During November 2013, the Company issued 1,500,000 shares of common stock to a qualified investor for the conversion of debt valued at $0.0049 per share for a total of $7,350.

During December 2013, the Company issued 1,700,000 shares of common stock to a qualified investor for the conversion of debt valued at $0.0056 per share for a total of $9,520.

During December 2013, the Company issued 700,000 shares of common stock to a qualified investor for cash valued at $0.005 per share for a total of $3,500.

During December 2013, the Company issued 4,000,000 shares of common stock to a qualified investor for loan costs valued at $0.005 per share for a total of $20,000.

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.

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.

10

For the year ended December 31, 2013 compared to the year ended December 31, 2012:

Research and Development Costs – During the years ended December 31, 2013 and 2012, research and development costs totaled $0 and $0, respectively.

Operating Costs – During the years ended December 31, 2013 and 2012, operating costs totaled $447,981 and $818,532, respectively. The decrease of $370,551 was mainly attributable to a $324,000 decrease in consulting expense.

Interest (Income) Expense - Net - During the years ended December 31, 2013 and 2012 net interest expense totaled $303,048 and $165,826, respectively. The increase of $137,222 was primarily due to the amortization of the debt discounts related to the Company issuing additional debt in 2013.

The change in the fair value of derivative liability was $136,406 for the year ended December 31, 2013 as compared to ($21,608) for the year ended December 31, 2012. The overall change of $158,014 was due to the decrease in the Company’s stock price.

The net loss for the years ended December 31, 2013 and 2012 was ($887,672) and ($1,160,250), respectively. The decrease of $272,578 was mainly attributable to the decrease in operating costs.

Liquidity and capital resources

As shown in the accompanying financial statements, for the years ended December 31, 2013 and 2012 and since November 27, 2000 (date of inception) through December 31, 2013, the Company has had net losses of $887,672, $1,160,250 and $18,419,080, respectively. As of December 31, 2013, the Company has not emerged from the 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, 2013 we raised cash of approximately $4,195,375 net of issuance costs, through private placements of common stock financings and $1,213,385 through the issuance of convertible notes payable and notes payable. Additionally, we have raised net proceeds from stockholder advances of $110,498.

Since our inception through December 31, 2013 we have incurred $3,882,494 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, 2013, we had an accumulated deficit of $18,419,080 and working capital deficit of $212,739.

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.

11

On July 3, 2012, the Company entered into a Joint Venture Agreement with ENERGY TECHNOLOGY SERVICES CO. LTD., an international company incorporated in Taiwan (“ETS”) for the purpose of the engaging both parties in the manufacture, leasing and /or sale of ETS’s hydrogen generator burning systems (the “Equipment”) in Asia, which Agreement was subsequently amended December 6, 2013. Under the Joint Venture, the Company was to purchase and own all the Equipment, and ETS was to provide for the manufacturing and on-time delivery and installation of the Equipment, to order. Additionally, TTE had agreed to pay ETS 2.5 million CAD over a one (1) year period upon certification of the H2 Generator in China, and receipt of five (5) confirmed orders for additional machines. Thereupon, TTE would receive a full transfer of the H2 technology.

A total of CAN $300,000 was advanced under the Loan Agreement with 2367416 Ontario, Inc, and was delivered to ETS, as the initial payment on the first machine to be delivered under a purchase order agreement for a Hydrogen Production Burner System (HPBS). Despite positive initial reports from ETS during the manufacturing of the Equipment, they did not deliver the machine as promised under the Agreement. The Company has declared ETS to be in default of their obligations and is currently negotiating with ETS for the refund of the CAD$300,000 advance which is expected to be refunded by December 31, 2014. The Company received approximately CAD$50,000 from ETS subsequent to December 31, 2013 and this amount was used to pay down the loan from 2367416 Ontario, Inc.

The Company is now in negotiations directly with HUE to provide us with the equipment necessary to fulfill our business plan. HUE has agreed verbally to sell us the rights to the technology for 1.5 million US for the H2 generator upon the completion and certification of the generator. We are currently working to formalize this agreement and expect to do so in the second quarter of 2014.

On April 24, 2012 (the “Closing date”), the Company issued a convertible promissory note for $278,000. The lender funded $75,000 to the Company, and the lender at their discretion may fund additional amounts to the Company. The note matures one year from the closing date. If the Company pays the note within 90 days of the closing date, the interest rate is 0%. If the note is not paid within 90 days of the closing date, a one-time interest charge of 5% will be applied to the unpaid principal amount. The conversion option price associated with the note is the lesser of $0.10 or 70% of the lowest trade price in the 25 trading days previous to any conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $75,000 and $100,415, respectively. The debt discount will be amortized over the life of the note, and the Company recognized $44,008 of interest expense related to amortization through 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In April 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $62,225, respectively. The debt discount will be amortized over the life of the note, and the Company recognized approximately $6,800 of interest expense related to amortization during 2013. As of December 31, 2013, the Company has converted $42,500 of debt into 5,538,855 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In July 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $48,384, respectively. As of December 31, 2013, the Company has converted $42,500 of debt into 12,880,124 shares of common stock and $1,300 of accrued interest into 565,217 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $15,650 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

12

In October 2012, the Company issued a convertible promissory note for $27,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of July 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $27,500 and $28,950, respectively. As of December 31, 2013, the Company has converted $27,500 of debt into 10,200,000 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $19,955 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In February 2013, the Company issued a convertible promissory note for $32,500. The note pays interest at 8% per annum, and principal and accrued interest was due in November 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of approximately $32,500 and $53,900, respectively. The debt discount was amortized over the life of the note, and the Company recognized $32,500 of interest expense related to amortization during 2013 and approximately $15,000 of interest expenses as a pre-payment penalty. This note was fully repaid as of December 31, 2013. The derivative liability has been adjusted to fair value each reporting period, with unrealized gain (loss) reflected in other income and expense.

On July 30, 2013, the Company signed an Agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the initial sum of CAN $450,000 and a maximum of CAN $10,000,000 in accordance with the terms of the Agreement. The financing to be provided is to be funded in tranches, and will have terms between three (3) and five (5) years, with each tranche being separately negotiated. As a part of the loan costs, 236 shall be issued restricted common stock equal to the issued and outstanding common shares of the Company at the time of the initial advance, with such shares being subject to a Lock Up/Leak Out Agreement to be negotiated between the parties. These shares are considered an additional cost in obtaining the financing and the value of these shares at the commitment date is recorded as a contra equity and amortized over five years.

The initial advance of CAN $450,000 is covered by a Loan Agreement dated June 19, 2013, and was signed on July 30, 2013 (the “Loan Agreement”), which provides that (a) the interest rate shall be 20% per annum; and (b) CAN $90,000 shall be withheld by lender in interest rate reserve account for the payment of the first years interest. The total of CAN $300,000 under the Loan Agreement was received during the three months ended September 30, 2013 and delivered to Energy Technology Services Co., Ltd., (ETS) as the initial payment on the first machine to be delivered under a purchase order agreement. As of December 31, 2013, the Company has recorded $374,636 as a note payable and $285,799 as construction in progress.

During the year ended December 31, 2013, the Company, as part of the above agreement, is required to issue 124,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company has issued 82,666,666 shares to 236 with the remaining 41,333,334 to be issued when the remaining CAN $150,000 is funded and recorded $992,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $908,219. The Company recorded a common stock payable of $330,667 related to the shares not yet issued at December 31, 2013.

13

On August 1, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.02 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,225 and $100,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $91,671.

On August 22, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $50,000 to pay off a convertible note the Company owed. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 13,157,895 shares of restricted common stock to 236. These shares are valued at $0.01 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $48,385 and $131,579 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $122,134.

On October 20, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,555 and $40,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $38,422.

On December 3, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $20,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 4,000,000 shares of restricted common stock to 236. These shares are valued at $0.015 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $19,953 and $60,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $59,079.

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 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.

14

The Company may receive proceeds in the future from the exercise of warrants and options outstanding as of December 31, 2013 in accordance with the following schedule:

	Approximate Number of Shares		Approximate Proceeds*
2006 Non-Plan Options and Warrants		6,655,413	$	1,606,533

___________________

* 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 ASC Topic 708 – Compensation – Stock Compensation. Stock-based compensation cost recognized during the years ended December 31, 2013 and 2012 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.

15

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.

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.

The Company entered into various loan agreements with a Canadian company. In accordance with the loan agreements, the Company issued shares of common stock to the Canadian company as additional costs in obtaining the financing. These shares have been accounted for as contra-equity deferred non-cash debt issuance costs and they are being amortized as interest expense over the life of the notes which are five years. Foreign currency translation gains and losses, when material, have been recorded as other comprehensive income in the statement of changes in stockholders’ deficit.

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.

16

ITEM 8. FINANCIAL STATEMENTS

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Financial Statements

For the Years Ended December 31, 2013 and 2012,

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

through December 31, 2013

Contents

Report of Independent Registered Public Accounting Firms	F-1
Financial Statements:
Balance Sheets	F-2
Statements of Operations	F-3
Statements of Changes in Stockholders’ Deficit	F-4
Statements of Cash Flows	F-18
Notes to Financial Statements	F-20

17

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Paisley, Florida

We have audited the accompanying balance sheets of Turbine Truck Engines, Inc. (a development stage enterprise) (“the Company”) as of December 31, 2013 and 2012 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended and the period from November 27, 2000 (Date of Inception) through December 31, 2013. 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 audit.

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 audit 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 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 audit 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, 2013 and 2012 and the results of its operations and its cash flows for the years then ended and the period from November 27, 2000 (Date of Inception) through December 31, 2013 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 $887,672 and $1,160,250 during the years ended December 31, 2013 and 2012, respectively, and has an accumulated deficit of $18,419,080 since inception and has a working capital deficit of $212,739 as of December 31, 2013. 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.

Warren Averett, LLC

Tampa, Florida

April 15, 2014

F-1

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Balance Sheets

	December 31,			December 31,
	2013			2012
ASSETS
CURRENT ASSETS:
Cash	$	3,423		$	6,293
Prepaid expenses		55,786			10,705
Construction in process		285,799
Total Current Assets		345,008			16,998
Furniture and equipment, net of accumulated depreciation of $57,208 (2013) and $52,381 (2012)		12,711			17,538
TOTAL ASSETS	$	357,719		$	34,536
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable, including related party payables of $12,220 (2013) and $12,220 (2012)	$	146,143		$	118,098
Accrued interest		24,241			20,684
Accrued payroll taxes		1,871			5,512
Convertible notes, net		10,356			96.767
Note payable		375,136			500
Total Current Liabilities		557,747			241,561
LONG-TERM LIABILITIES:
Derivative liability		6,702			123,272
Accrued expenses - long term		67,500			66,100
Accrued payroll - long term		503,696			372,628
Accrued royalty fees		50,000			25,000
Note payable		116,610			-
Note payable to related party		3,331			3,331
Total Long-Term Liabilities		747,839			590,331
STOCKHOLDERS’ DEFICIT
Series A Convertible Preferred Stock; $0.001 par value; 1,000,000 shares authorized; 500,000 (2013) and 500,000 (2012) shares issued and outstanding		500			500
Common stock; $0.001 par value; 499,000,000 shares authorized; 268,465,696 (2013) and 69,169,111 (2012) shares issued and outstanding		268,464			69,168
Additional paid in capital		18,329,773			16,913,769
Common stock payable		342,067			20,000
Prepaid consulting services paid with common stock		(37,993	)		(57,385	)
Receivable for common stock		(212,000	)		(212,000	)
Deferred noncash offering costs		(1,219,598	)		-
Deficit accumulated during development stage		(18,419,080	)		(17,531,408	)
Total Stockholders’ Deficit		(947,867	)		(797,356	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	357,719		$	34,536

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

F-2

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Statements of Operations

	For the Years Ended December 31,						Period November 27, 2000 (Date of Inception) through December 31,
	2013			2012			2013
Research and development costs	$	-		$	-		$	3,882,494
Operating costs		447,981			818,532			13,138,604
		447,981			818,532			17,021,098
OTHER EXPENSE (INCOME)
Change in fair value of derivative liability		136,643			(21,608	)		113,291
Loss on investment		-			197,500			197,500
Interest expense		303,048			165,826			1,087,191
TOTAL OTHER EXPENSE (INCOME)		439,691			341,718			1,397,982
NET LOSS	$	(887,672	)	$	(1,160,250	)	$	(18,419,080	)
NET LOSS PER COMMON SHARE, BASIC	$	(0.01	)	$	(0.02	)	$	(0.54	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC		154,930,954			65,849,823			34,210,916

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

F-3

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2013 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2013

	Preferred Stock				Common Stock						Additional Paid in			Deficit Accumulated During Development			Deferred Non-Cash Offering			Common Stock		Prepaid Consulting Services Paid for with Common		Subscription
	Shares		Amount		Shares			Amount			Capital			Stage			Costs			Payable		Stock		Receivable			Total
Issuance of common stock for option to acquire license and stock subscription receivable, December 2000		-		-		10,390,000		$	10,390									-			-		-	$	(390	)	$	10,000
Net loss for the period														$	(4,029	)												(4,029	)
Balance, December 31, 2000						10,390,000			10,390						(4,029	)									(390	)		5,971
Issuance of common stock for cash, February 2001*						10,000			10		$	4,990																5,000
Issuance of common stock for cash, March 2001*						10,000			10			4,990																5,000
Issuance of common stock for cash, August 2001*						10,000			10			4,990																5,000
Issuance of common stock for cash, September 2001*						55,000			55			27,445																27,500
Payment for common stock issued under subscription receivable																									300			300
Net loss															31,789													(31,789	)
Balance, December 31, 2001						10,475,000			10,475			42,415			(35,818	)									(90	)		16,982
Issuance of common stock for cash, January 2002*						5,000			5			2,495																2,500
Issuance of common stock for cash, February 2002*						10,000			10			4,990																5,000
Issuance of common stock for cash, April 2002*						25,000			25			12,475																12,500
Issuance of common stock for cash, May 2002*						65,000			65			32,435																32,500
Issuance of common stock for cash, June 2002*						70,000			70			34,930													(2,500	)		32,500
Issuance of common stock for cash, August 2002*						10,000			10			4,990																5,000
Issuance of common stock for cash, October 2002*						10,000			10			4,990																5,000
Issuance of common stock to acquire licensing agreement, July 2002*						5,000,000			5,000			2,495,000																2,500,000
Shares returned to treasury by founding stockholder, July 2002						(5,000,000	)		(5.000	)		5,000
Net loss															(2,796,768	)												(2,796,768	)
Balance, December 31, 2002						10,670,000			10,670			2,639,720			(2,832,586	)									(2,590	)		(184,786	)
Issuance of common stock for cash, February 2003*						207,000			207			103,293																103,500
Issuance of common stock for cash, September 2003*						30,000			30			14,970																15,000
Issuance of common stock for services, September 2003*						290,000			290			144,710					$	(74,850	)									70,150
Payment for common stock issued under subscription agreement																									2,500			2,500
Offering costs for private placement offering												(33,774	)															(33,774	)
Net loss															(190,567	)												(190,567	)
Balance, December 31, 2003						11,197,000			11,197			2,868,919			(3,023,153	)		(74,850	)						(90	)		(217,977	)
Issuance of notes payable with beneficial conversion feature												19,507																19,507
Issuance of common stock for services, September 2004 ($2.00 per share)						20,000			20			39,980																40,000
Conversion of notes payable, August 2004 ($2.00 per share)						31,125			31			62,219																62,250
Issuance of common stock for cash, September 2004 ($2.00 per share)						25,025			25			50,025																50,050
Issuance of common stock for cash, October 2004 ($2.00 per share)						1,000			1			1,999																2,000
Issuance of common stock for cash, November 2004 ($2.00 per share)						3,500			4			6,996																7,000
Issuance of common stock for cash, December 2004 ($2.00 per share)						3,000			3			5,997																6,000
Amortization of offering costs related to Form SB-2 filing												(10,159	)															(10,159	)
Amortization of stock for services related to Form SB-2 offering												(6,317	)					6,317
Contribution from shareholder												18,256																18,256
Net loss															(282,009	)												(282,009	)
Balance, December 31, 2004						11,280,650			11,281			3,057,422			(3,305,162	)		(68,533	)						(90	)		(305,082	)

* Commonstock issued at $.50 per share.

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

F-4

	Preferred Stock				Common Stock				Additional Paid in			Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares		Amount		Shares		Amount		Capital			Stage			Costs		Payable		Stock			Receivable			Total
Issuance of common stock for services, January 2005 ($2.00 per share)		-		-		80,000		80		159,920			-			-		-		-			-			160,000
Issuance of common stock in satisfaction of a note payable, February 2005 ($2.00 per share)						125,000		125		249,875																250,000
Issuance of common stock for cash, February 2005 ($2.00 per share)						3,200		3		6,397																6,400
Issuance of common stock for cash, March 2005 ($2.00 per share)						1,500		1		2,999																3,000
Amortization of offering costs related to Form SB-2 filing										(31,216	)															(31,216	)
Amortization of stock for services related to Form SB-2 offering										(19,413	)					19,413
Issuance of common stock for services, April 2005 ($2.00 per share)						5,000		5		9,995																10,000
Capital contribution from stockholder, May 2005										170,000																170,000
Issuance of common stock for cash, May 2005 ($2.00 per share)						15,550		16		31,084																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)						9,100		9		18,191																18,200
Issuance of common stock for services, June 2005 ($1.70 per share)						100,000		100		169,900										(170,000	)
Capital contribution from stockholder, June 2005										450																450
Issuance of common stock for cash, August 2005 ($1.00 per share)						5,000		5		4,995																5000
Issuance of common stock for services, July 2005 ($1.00 per share)						40,000		40		39,960										(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		25		24,975																25,000
Issuance of common stock for cash, November ($1.00 per share)						20,000		20		19,980																20,000
Issuance of common stock for cash, December ($1.00 per share)						5,000		5		4,995																5000
Net loss													(1,068,738	)												(1,068,738	)
Balance, December 31, 2005						11,715,000		11,715		3,920,509			(4,373,900	)						(21,667	)		(90	)		(463,433	)

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

F-5

	Preferred Stock				Common Stock				Additional Paid in		Deficit Accumulated During Development		Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares		Amount		Shares		Amount		Capital		Stage		Costs		Payable		Stock			Receivable		Total
Issuance of common stock for cash, January ($1.00 per share)						65,000		65		64,935													65,000
Issuance of common stock for cash, February ($1.00 per share)						1,500		2		1,498													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		2		1,673													1,675
Issuance of common stock for cash, April ($1.00 per share)						5,000		5		4,995													5,000
Issuance of common stock for services, May ($1.00 per share)						10,000		10		9,990													10,000
Issuance of common stock for services, May ($1.15 per share)						10,000		10		11,490													11,500
Issuance of common stock for cash, June ($.80 per share)						15,000		15		11,985													12,000
Issuance of common stock and warrants for cash, June ($.50 per share)						200,000		200		99,800													100,000
Issuance of common stock for services, June ($1.15 per share)						150,000		150		172,350								(172,500	)
Issuance of common stock for services, July ($1.10 per share)						109,091		109		119,891								(120,000	)
Issuance of common stock for services, July ($.50 per share)						30,000		30		14,970								(5,000	)				10,000
Issuance of common stock for settlement of debt, August ($.85 per share)						125,253		125		106,341													106,466
Issuance of common stock for services, August ($.81 per share)						10,000		10		8,065													8,075
Issuance of common stock and warrants for cash, September ($.50 per share)						167,200		167		83,433													83,600
Issuance of common stock for services, September ($.50 per share)						210,000		210		104,790								(12,500	)				92,500
Issuance of common stock for services, September ($.74 per share)						10,000		10		7,385													7,395
Issuance of common stock in settlement of a payable, September ($4.16 per share)						100,000		100		416,567													416,667
Issuance of options to employees, directors and consultants, September										78,355													78,355
The accompanying notes are an integral part of the financial statements.
Issuance of common stock for services, October ($0.50, per shares)		-		-		30,000		30		14,970		-		-		-					-		15,000
Issuance of options to employees, directors and consultants, October										155,185													155,185
Issuance of common stock for cash, October ($0.50 per share)						16,000		16		7,984													8,000

Issuance of common stock for services, October ($0.67, per shares)	15,000	15	9,985							10,000
Issuance of common stock for services, November ($0.50, per shares)	188,000	188	93,812			(80,000	)			14,000
Issuance of common stock for cash, November ($0.50 per share)	100,000	100	49,900							50,000
Issuance of common stock for cash, November ($0.60 per share)	2,833	3	1,697							1,700
Net loss				(1,465,077	)					(1,465,077	)
Balance December 31, 2006	13,286,552	13,287	5,572,555	(5,838,977	)	(207,111	)	(90	)	(460,336	)

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

F-6

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital		Stage			Costs		Payable		Stock			Receivable			Total
Issuance of options to consultants, January								155,188															155,188
Issuance of common stock for cash, January ($0.50 per share)				26,000		26		12,974															13,000
Issuance of common stock for exercise of options, January ($0.50 per share)				300,000		300		149,700												(150,000	)
Issuance of common stock for services, January ($0.66, per shares)				50,000		50		32,950									(33,000	)
Issuance of common stock for services, January ($0.51, per shares)				10,000		10		5,090															5,100
Issuance of common stock for exercise of options, February ($0.50 per share)				100,000		100		49,900												(15,000	)		35,000
Issuance of common stock for exercise of options, February ($0.60 per share)				20,000		20		11,980												(12,000	)
Issuance of common stock for cash, February ($0.23 per share)				239,130		239		54,761															55,000
Issuance of common stock for services, February ($0.87, per shares)				50,000		50		43,200															43,250
Issuance of common stock for services, February ($0.72, per shares)				20,000		20		14,280															14,300
Issuance of common stock for cash, February ($0.23 per share)				558,696		559		127,941															128,500
Issuance of common stock for services, March ($0.65, per shares)				25,000		25		16,225															16,250
Issuance of common stock for services, March ($0.70, per shares)				25,000		25		17,475									(17,500	)
Issuance of common stock for exchange of fixed assets, April ($0.50, per share)				2,000		2		998															1,000
Issuance of common stock for cash, May ($0.25, per share)				24,000		24		5,976															6,000
Issuance of common stock for cash, June ($0.25, per share)				26,000		26		6,474															6,500
Issuance of common stock for services, June ($0.43, per share)				75,000		75		32,175															32,250
Issuance of common stock for exchange of fixed assets, June ($0.50 per share)				8,000		8		3,992															4,000
Issuance of common stock for services, June ($0.44, per share)				100,000		100		43,900															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)				72,000		72		17,928															18,000
Issuance of common stock for services, August ($0.55, per share)				160,000		160		87,840															88,000
Issuance of common stock for services, August ($0.50, per share)				3,000		3		1,497															1,500
Issuance of common stock for services, August ($0.38, per share)				28,600		28		10,839															10,867
Issuance of common stock and warrants for cash, August ($0.25, per share)				270,000		270		67,230															67,500
Issuance of common stock for services, September ($0.50, per share)				1,300,000		1,300		648,700									(650,000	)
Issuance of common stock for cash, September ($0.25, per share)				164,000		164		40,836															41,000
Issuance of common stock for cash, September ($0.30, per share)				26,666		26		7,973															7,999
Issuance of common stock for cash, September ($0.37, per share)				54,243		53		19,646															19,699
Issuance of options & warrants to employees & consultants, September								108,470															108,470
Issuance of common stock for services, October ($0.25, per share)				6,000		6		1,494															1,500
Issuance of common stock for services, October ($0.56, per share)				2,700		3		1,497															1,500
Issuance of common stock for cash, October ($0.50, per share)				55,000		55		27,445															27,500
Issuance of common stock for cash, October ($0.53, per share)				1,905		2		998															1,000
Issuance of common stock for cash, November ($0.28, per share)				125,291		125		34,956															35,081
Issuance of common stock for cash, November ($0.32, per share)				1,563		1		499															500
Issuance of common stock for cash, November ($0.37, per share)				40,000		40		14,760															14,800
Issuance of common stock for cash, November ($0.68, per share)				25,000		25		16,850															16,875
Issuance of common stock for cash, December ($0.25, per share)				68,000		68		16,932															17,000
Payment on receivable for common stock																				10,000			10,000
Net loss										(2,470,352	)												(2,470,352	)
Balance December 31, 2007				17,349,346	$	17,347	$	7,484,124	$	(8,309,329	)	$	-		-	$	(17,500	)	$	(90	)	$	(992,448	)

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

F-7

	Preferred Stock				Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares		Amount		Shares		Amount		Capital		Stage			Costs		Payable		Stock			Receivable			Total
Issuance of common stock and warrants for cash, January ($0.15, per shares)		-		-		200,000		200		29,800		-			-		-		-			-			30,000
Issuance of common stock for services, February ($0.38, per shares)						160,000		160		60,640															60,800
Issuance of common stock for services, February ($0.26, per shares)						12,000		12		3,108															3,120
Issuance of common stock for services, April ($0.12, per share)						210,000		210		24,990									(20,000	)					5,200
Issuance of common stock for services, May ($0.20, per share)						350,000		350		69,650									(61,600	)					8,400
Issuance of common stock for cash, May ($0.10, per share)						145,000		145		14,355															14,500
Issuance of common stock for cash, June ($0.10, per share)						334,000		334		33,066															33,400
Issuance of common stock for cash, June ($0.085, per share)						150,000		150		12,600															12,750
Issuance of common stock for cash, June ($0.08, per share)						25,000		25		1,975															2,000
Issuance of common stock for services, June ($0.16, per share)						300,000		300		47,700									(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															25,000
Issuance of common stock for cash, July ($0.10, per share)						379,500		380		37,571															37,951
Issuance of common stock for services, July ($0.15, per share)						30,000		30		4,470															4,500
Issuance of common stock for cash, August ($0.10, per share)						101,000		101		9,999															10,100
Issuance of common stock for cash, September ($0.10, per share)						369,000		369		36,531															36,900
Issuance of common stock for cash, September ($0.08, per share)						306,250		306		24,194															24,500
Issuance of common stock for cash, October ($0.08, per share)						3,750		4		296															300
Issuance of common stock for cash, October ($0.09, per share)						40,000		40		3,560															3,600
Issuance of common stock for cash, October ($0.10, per share)						27,000		27		2,673															2,700
Issuance of common stock for cash, November ($0.08, per share)						12,500		13		987															1,000
Issuance of common stock for cash, November ($0.10, per share)						32,400		32		3,208															3,240
Issuance of common stock for services, December ($0.071, per share)						12,500		13		875															888
Issuance of common stock for cash, December ($0.08, per share)						161,250		161		12,739															12,900
Issuance of common stock for cash, December ($0.10, per share)						27,300		27		2,603															2,630
Issuance of common stock for services, December ($0.09, per share)						10,000		10		890															900
Issuance of common stock for services, December ($0.13, per share)						500,000		500		64,500									(65,000	)
Issuance of common stock for services, December ($0.17, per share)						12,500		13		2,112															2,125
Issuance of common stock for services, December ($0.1954, per share)						100,000		100		19,435															19,535
Issuance of common stock for conversion of notes, December ($0.08, per share)						26,297		26		1,974															2,000
Issuance of common stock for conversion of notes, December ($0.07, per share)						270,468		270		19,730															20,000
Issuance of common stock for conversion of notes, December ($0.10, per share)						202,703		203		14,797															15,000
Issuance of warrants for services, December										29,578															29,578
Net loss												(982,677	)												(982,677	)
Balance December 31, 2008						21,859,764		21,858		8,099,730		(9,292,006	)						(101,333	)		(167,090	)		(1,438,841	)

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

F-8

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development	Deferred Non-Cash Offering	Common Stock	Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital		Stage	Costs	Payable	Stock			Receivable	Total
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)				255,965		256		14,744									15,000
Issuance of common stock for cash, January ($0.50, per share)				200		1		98									99
Issuance of common stock for cash, January ($0.07, per share)				294,999		295		20,355									20,650
Issuance of common stock for cash, January ($0.08, per share)				12,500		12		988									1,000
Issuance of common stock for cash, January ($0.10, per share)				255,000		255		25,245									25,500
Issuance of common stock for conversion of notes, February ($0.06, per share)				166,739		167		9,833									10,000
Issuance of common stock for conversion of notes, February ($0.09, per share)				221,984		222		19,778									20,000
Issuance of common stock for cash, February ($0.07, per share)				526,927		527		36,358									36,885
Issuance of common stock for cash, February ($0.10, per share)				110,500		110		10,940									11,050
Issuance of common stock for services, March ($0.11, per share)				300,000		300		32,700					(33,000	)
Issuance of common stock for conversion of notes, March ($0.07, per share)				137,768		138		9,862									10,000
Issuance of common stock for conversion of notes, March ($0.08, per share)				316,241		316		24,684									25,000
Issuance of common stock for cash, March ($0.07, per share)				289,286		289		19,961									20,250
Issuance of common stock for cash, March ($0.10, per share)				10,000		10		990									1,000
Value of the beneficial conversion feature for the issuance of convertible debt								149,750									149,750
Issuance of warrants for services, January								36,644									36,644
Issuance of common stock for services, April ($0.09, per share)				20,000		20		1,780									1,800
Issuance of common stock for services, April ($0.10, per share)				510,000		510		50,490					(50,000	)			1,000
Issuance of common stock for cash, April ($0.07, per share)				274,999		275		18,975									19,250
Issuance of common stock for cash, April ($0.10, per share)				29,500		30		2,920									2,950
Issuance of common stock for conversion of notes, April ($0.07, per share)				511,979		512		34,488									35,000
Issuance of common stock for conversion of notes, April ($0.06, per share)				158,897		159		9,841									10,000
Issuance of common stock for conversion of notes, May ($0.06, per share)				399,617		399		24,601									25,000
Issuance of common stock for services, May ($0.09, per share)				60,000		60		5,090									5,150
Issuance of common stock for cash, May ($0.07, per share)				77,000		77		5,313									5,390
Issuance of common stock for conversion of notes, June ($0.06, per share)				381,098		381		24,619									25,000
Issuance of common stock for conversion of notes, June ($0.07, per share)				934,516		935		54,065									55,000
Issuance of common stock and warrants for cash, June ($0.07, per share)				582,142		582		40,168									40,750

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

F-9

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development	Deferred Non-Cash Offering	Common Stock	Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital		Stage	Costs	Payable	Stock			Receivable	Total
Issuance of common stock for cash, June ($0.08, per share)				420,000		420		34,562									34,982
Issuance of common stock for cash, July ($0.07, per share)				976,250		976		67,361									68,337
Issuance of common stock for cash, July ($0.065, per share)				215,500		216		13,792									14,008
Issuance of common stock for cash, July ($0.10, per share)				20,000		20		1,980									2,000
Issuance of common stock for cash, July ($0.26, per share)				3,846		4		996									1,000
Issuance of common stock for conversion of notes, July ($0.065, per share)				153,941		154		9,846									10,000
Issuance of common stock for cash, August ($0.07, per share)				130,000		130		8,970									9,100
Issuance of common stock for cash, August ($0.085, per share)				58,822		59		4,941									5,000
Issuance of common stock and warrants for cash, August ($0.10, per share)				1,480,000		1,480		146,520									148,000
Issuance of common stock for cash, August ($0.11, per share)				10,000		10		1,090									1,100
Issuance of common stock for cash, August ($0.12, per share)				100,000		100		11,900									12,000
Issuance of common stock for cash, August ($0.24, per share)				152,498		153		36,447									36,600
Issuance of common stock for cash, August ($0.26, per share)				140,384		140		36,360									36,500
Issuance of common stock for cash, August ($0.28, per share)				16,785		17		4,683									4,700
Issuance of common stock for cash, August ($0.30, per share)				164,000		164		49,036									49,200
Issuance of common stock for cash, August ($0.33, per share)				6,363		6		2,094									2,100
Issuance of common stock for services, August ($0.09, per share)				1,200,000		1,200		106,800					(108,000	)
Issuance of common stock for services, August ($0.25, per share)				100,000		100		24,900					(25,000	)
Issuance of common stock for services, August ($0.10, per share)				50,000		50		4,950					(5,000	)
Issuance of common stock for services, August ($0.16, per share)				100,000		100		15,900					(16,000	)
Issuance of common stock for cash, September ($0.10, per share)				20,000		20		1,980									2,000
Issuance of common stock for cash, September ($0.20, per share)				40,000		40		7,960									8,000
Issuance of common stock for cash, September ($0.22, per share)				286,361		286		62,714									63,000
Issuance of common stock for cash, September ($0.23, per share)				126,086		126		28,874									29,000
Issuance of common stock for cash, September ($0.235, per share)				29,787		30		6,970									7,000

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

F-10

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering	Common Stock	Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital		Stage			Costs	Payable	Stock			Receivable			Total
Issuance of common stock for cash, September ($0.25, per share)				46,000		46		11,454													11,500
Issuance of common stock for cash, September ($0.26, per share)				84,230		84		21,816													21,900
Issuance of common stock for cash, September ($0.30, per share)				21,333		21		6,379													6,400
Issuance of common stock for cash, September ($0.325, per share)				1,230		1		399													400
Issuance of common stock for cash, September ($0.33, per share)				67,000		67		22,043													22,110
Issuance of common stock for cash, September ($0.375, per share)				10,000		10		3,740													3,750
Issuance of common stock for services, September ($0.47, per share)				100,000		100		46,900													47,000
Issuance of common stock for services, September ($0.61, per share)				500,000		500		304,500							(305,000	)
Issuance of common stock for services, September ($0.50, per share)				5,000		5		2,495							(2,500	)
Issuance of common stock and exercise of warrants for a reduction in a payable, September ($0.10, per share)				350,000		350		34,650													35,000
Issuance of common stock options, July								40,706													40,706
Issuance of common stock for cash, October ($0.22, per share)				11,363		11		2,489													2,500
Issuance of common stock for cash, October ($0.18, per share)				246,107		246		44,054													44,300
Issuance of common stock for cash, October ($0.17, per share)				25,882		26		4,374													4,400
Issuance of common stock for cash, November ($0.18, per share)				98,775		99		17,681													17,780
Issuance of common stock for cash, November ($0.20, per share)				167,500		168		33,332													33,500
Issuance of common stock for cash, December ($0.19 per share)				2,500		3		472													475
Issuance of common stock for cash, December ($0.16, per share)				100,000		100		15,900										(16,000	)
Issuance of common stock for cash, December ($0.17, per share)				5,882		6		994										(1,000	)
Issuance of common stock for cash, December ($0.18, per share)				102,111		102		18,278										(12,000	)		6,380
Issuance of common stock for cash, December ($0.20, per share)				10,000		10		1,990													2,000
Issuance of common stock for cash, December ($0.30, per share)				1,100,000		1,100		328,900													330,000
Issuance of common stock for services, October ($0.42, per share)				100,000		100		41,900													42,000
Issuance of common stock for services, December ($0.38, per share)				345,000		345		130,755							(5,700	)					125,400
Issuance of common stock for conversion of notes, December ($0.1284, per share)				1,495,327		1,495		190,505													192,000
Value of the beneficial conversion feature for the issuance of convertible debt								100,921													100,921
Issuance of warrants								10,161													10,161
Payment on stock subscription receivable																		90			90
Net loss										(2,271,917	)										(2,271,917	)
Balance December 31, 2009				39,693,484	$	39,692	$	10,914,424	$	(11,563,923	)				(79,908	)		(196,000	)		(885,715	)

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

F-11

	Preferred Stock		Common Stock				Additional Paid in			Deficit Accumulated During Development	Deferred Non-Cash Offering	Common Stock	Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital			Stage	Costs	Payable	Stock			Receivable			Total
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)				135,000		135		20,115												20,250
Issuance of common stock for cash, February ($0.16, per share)				318,420		318		50,629												50,947
Issuance of common stock for cash, February ($0.17, per share)				159,647		160		26,980												27,140
Issuance of common stock for cash, February ($0.18, per share)				10,000		10		1,790												1,800
Issuance of common stock for cash, February ($0.23, per share)				553,261		553		126,697												127,250
Issuance of common stock for settlement of accounts payable, February ($0.261, per share)				121,212		120		31,504												31,624
Issuance of common stock for cash, February ($0.30, per share)				101,000		101		30,199												30,300
Issuance of common stock for cash, February ($0.333, per share)				100,000		100		33,233												33,333
Issuance of common stock for cash, February ($0.42, per share)				33,000		33		13,827												13,860
Issuance of common stock for services, February ($0.475, per share)				14,000		14		6,636						(6,650	)
Issuance of common stock for services, February ($0.575, per share)				20,000		20		11,480						(11,500	)
Issuance of common stock for cash, March ($0.18, per share)				10,000		10		1,790												1,800
Issuance of common stock for cash, March ($0.21, per share)				4,761		5		995												1,000
Issuance of common stock for cash, March ($0.28, per share)				357,142		357		99,643									(100,000	)
Issuance of common stock for cash, March ($0.294, per share)				6,803		7		1,993												2,000
Issuance of common stock for cash, March ($0.30, per share)				152,666		153		45,647												45,800
Issuance of common stock for cash, March ($0.35, per share)				6,000		6		2,094												2,100
Issuance of common stock for cash, March ($0.37, per share)				13,514		14		4,986												5,000
Issuance of common stock for cash, March ($0.38, per share)				50,000		50		18,950												19,000
Issuance of common stock for cash, March ($0.39, per share)				1,025		1		399												400
Issuance of common stock for cash, March ($0.40, per share)				3,000		3		1,197												1,200
Issuance of common stock for settlement of accounts payable, March ($0.269 per share)				80,000		80		21,420												21,500
Issuance of common stock for settlement of accounts payable, March ($0.53, per share)				3,774		4		1,996												2,000
Issuance of common stock for services, March ($0.485, per share)				150,000		150		72,600												72,750
Issuance of common stock for services, March ($0.49, per share)				600,000		600		293,400						(294,000	)
Write off uncollectible stock subscription receivable, March								(155,000	)								155,000
Value of the beneficial conversion feature for the issuance of convertible debt								248,889												248,889
Issuance of common stock for cash, April ($0.34, per share)				40,000		40		13,560												13,600
Issuance of common stock for cash, April ($0.36, per share)				24,000		24		8,568												8,592

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

F-12

	Preferred Stock		Common Stock						Additional Paid in			Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares			Amount			Capital			Stage			Costs		Payable		Stock			Receivable			Total
Issuance of common stock for cash, April ($0.39, per share)				1,795			2			698																700
Issuance of common stock for cash, April ($0.42, per share)				3,570			4			1,496																1,500
Issuance of common stock for cash, April ($0.43, per share)				2,500			2			1,073																1,075
Issuance of common stock for cash, April ($0.44, per share)				7,955			8			3,492																3,500
Issuance of common stock for cash, April ($0.45, per share)				10,000			10			4,490																4,500
Issuance of common stock for services, April ($0.49, per share)				55,000			55			26,895																26,950
Issuance of common stock for cash, May ($0.35, per share)				28,572			29			9,971																10,000
Issuance of common stock for cash, May ($0.40, per share)				14,000			14			5,586																5,600
Issuance of common stock for cash, May ($0.44, per share)				116,500			116			51,144																51,260
Issuance of common stock for cash, June ($0.28, per share)				25,000			25			6,975																7,000
Issuance of common stock for cash, June ($0.30, per share)				11,000			11			3,289																3,300
Issuance of common stock for cash, June ($0.31, per share)				1,000			1			309																310
Issuance of common stock for cash, June ($0.32, per share)				3,750			4			1,196																1,200
Issuance of common stock for services, June ($0.38, per share)				150,000			150			56,850																57,000
Issuance of common stock for services, June ($0.41, per share)				100,000			100			40,400																40,500
Payment received for stock subscription receivable, June																							100,000			100,000
Issuance of common stock for cash, July ($0.21, per share)				76,190			76			15,924																16,000
Issuance of common stock for conversion of notes, July ($0.24, per share)				207,727			208			49,792																50,000
Issuance of common stock for cash, August ($0.19, per share)				65,788			66			12,434																12,500
Issuance of common stock for conversion of notes, August ($0.19, per share)				393,288			393			74,607																75,000
Issuance of common stock for cash, August ($0.20, per share)				22,500			23			4,477																4,500
Issuance of common stock for cash, September ($0.17, per share)				1,500,000			1,500			253,500																255,000
Issuance of common stock for conversion of notes, September ($0.18, per share)				269,472			269			49,731																50,000
Forfeiture of common stock issued for services, September				(600,000	)		(600	)		(293,400	)									294,000
Common stock commitment at $0.25 - $0.27																		274,000		(193,596	)					80,404
																										3,500
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																3,600
Issuance of common stock for cash, October ($0.19, per share)				52,632			53			9,947																10,000
Issuance of common stock for cash, November ($0.14, per share)				2,000			2			278																280
Issuance of common stock for cash, November ($0.15, per share)				1,333			1			199																200
Issuance of common stock for cash, December ($0.104, per share)				10,000			10			1,030																1,040
Issuance of common stock for conversion of notes, October ($0.155, per share)				258,732			259			39,741																40,000
Issuance of common stock for conversion of notes, November ($0.156, per share)				244,059			244			37,756																38,000
Issuance of common stock for services, November ($0.23, per share)				5,000			5			1,145																1,150
Issuance of common stock for services, December ($0.15, per share)				2,500			2			373																375
Issuance of warrants for services, December										97,714																97,714
Net loss													(2,569,223	)												(2,569,223	)
Balance December 31, 2010				45,844,161			45,843			12,526,812			(14,133,147	)		0	$	274,000	$	(193,596	)	$	(12,000	)	$	(1,492,089	)

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

F-13

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock			Prepaid Consulting Services Paid for with Common			Subscription
	Shares	Amount	Shares		Amount		Capital		Stage			Costs		Payable			Stock			Receivable			Total
Issuance of common stock for settlement of accounts payable, January ($0.15, per share)				443,667		444		66,106																66,550
Issuance of common stock for services, January ($0.15, per share)				2,500		3		373																376
Issuance of common stock for accrued payroll, January ($0.10, per share)				150,000		150		14,850																15,000
Issuance of common stock for services, January ($0.24, per share)				300,000		300		71,700							(72,000	)
Issuance of common stock for cash, February ($0.10, per share)				401,000		401		39,699																40,100
Issuance of common stock for services, February ($0.25, per share)				700,000		700		174,300							(175,000	)
Issuance of common stock for services, February ($0.27, per share)				100,000		100		26,900							(27,000	)
Issuance of common stock for cash, March ($0.10, per share)				997,000		997		98,703																99,700
Value of the beneficial conversion feature for the issuance of convertible debt								7,000																7,000
Issuance of common stock for conversion of note, March ($0.15, per share)				166,667		167		24,833																25,000
Issuance of common stock for cash, April ($0.10, per share)				260,000		260		25,740																26,000
Issuance of common stock for cash, April ($0.14, per share)				71,428		71		9,929																10,000
Issuance of common stock for conversion of note, April ($0.15, per share)				166,667		167		24,833																25,000
Issuance of common stock for cash, April ($0.17, per share)				82,353		82		13,918																14,000
Issuance of common stock for services, April ($0.27, per share)				65,000		65		17,972																18,037
Issuance of common stock for services, April ($0.15, per share)				3,000,000		3,000		447,000																450,000
Issuance of common stock for cash, April ($0.13, per share)				106,154		106		13,694																13,800
Issuance of common stock for cash, June ($0.10, per share)				6,000		6		594																600
Issuance of common stock for services, June ($0.13, per share)				250,000		250		32,250																32,500
Issuance of common stock for cash, June ($0.18, per share)				2,000		2		358																360
Issuance of common stock for cash, July ($0.10, per share)				200,000		200		19,800																20,000
Issuance of common stock for services, July ($0.14, per share)				250,000		250		34,750																35,000
Issuance of common stock subscription, July																					(200,000	)		(200,000	)
Issuance of common stock for settlement of accounts payable, July ($0.14, per share)				169,734		170		23,593																23,763
Issuance of common stock for cash, August ($0.08, per share)				130,000		130		10,270																10,400
Issuance of common stock for cash, September ($0.10, per share)				9,615		10		990																1,000
Issuance of common stock for cash, September ($0.18, per share)				2,000		2		358																360
Issuance of warrants for services, September								104,778																104,778
Issuance of common stock for services, October ($0.05, per share)				50,000		50		2,450																2,500
Issuance of common stock for cash, October ($0.10, per share)				50,000		50		4,950																5,000
Issuance of common stock for settlement of accounts payable, October ($0.10, per share)				578,000		578		57,222																57,800
Issuance of common stock for services, October ($0.10, per share)				850,000		850		84,150																85,000
Issuance of common stock for services, October ($0.14, per share)				100,000		100		13,900																14,000
Issuance of common stock for services, October ($0.20, per share)				1,000,000		1,000		199,000																200,000
Issuance of warrants for services, October								83,847																83,847
Commitment for common stock for cash, November ($0.05 per share)															3,650									3,650
Amortization of stock for services																		110,868						110,868
Net loss										(2,238,011	)													(2,238,011	)
Balance December 31, 2011				56,503,946	$	56,503	$	14,277,622	$	(16,371,158	)		0	$	3,650		$	(82,728	)	$	(212,000	)	$	(2,328,111	)

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

F-14

	Preferred Stock				Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering		Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares		Amount		Shares		Amount		Capital		Stage			Costs		Payable		Stock			Receivable			Total
Issuance of common stock for cash, January ($0.05, per share)						173,000		173		8,477															8,650
Issuance of common stock for cash, January ($0.06, per share)						66,666		67		3,933															4,000
Issuance of common stock for cash, January ($0.04, per share)						25,000		25		975															1,000
Issuance of common stock for cash, January ($0.03, per share)						4,000,000		4,000		116,000															120,000
Issuance of common stock for cash, January ($0.10, per share)						1,395,000		1,395		138,105															139,500
Issuance of common stock for cash, January ($0.112, per share)						589,285		589		65,411															66,000
Issuance of common stock for services, February ($0.13, per share)						850,000		850		109,650															110,500
Issuance of common stock for services, March ($0.13, per share)						500,000		500		64,500															65,000
Issuance of common stock for cash, February ($0.05, per share)						100,000		100		4,900															5,000
Issuance of common stock for services, February ($0.17, per share)						200,000		200		33,800															34,000
Issuance of preferred stock for accrued payroll, March ($0.67, per share)		500,000		500						334,785															335,285
Issuance of common stock for cash, April ($0.10, per share)						45,000		45		4,455															4,500
Issuance of common stock for debt, April ($0.12, per share)						250,000		250		1,508,000															1,508,250
Issuance of common stock for services, April ($0.13, per share)						500,000		500		64,500															65,000
Issuance of common stock for services, April ($0.14, per share)						100,000		100		13,400															13,500
Issuance of common stock for cash, April ($0.05, per share)						440,000		440		21,560															22,000
Issuance of common stock for cash, May ($0.09, per share)						7,777		8		692															700
Issuance of common stock for cash, May ($0.10, per share)						20,000		20		1,980															2,000
Issuance of common stock for conversion of debt, June ($0.03, per share)						807,273		807		21,393															22,200
Issuance of common stock for conversion of debt, June ($0.04, per share)						519,019		519		21,481															22,000
Issuance of common stock for conversion of debt, October ($0.01, per share)						845,070		845		11,155															12,000
Issuance of common stock for conversion of debt, December ($0.01, per share)						1,132,075		1,132		10,868															12,000
Issuance of common stock for services, December ($0.01, per share)						100,000		100		1,100															1,200
Value of the beneficial conversion feature for the issuance of convertible debt										75,027															75,027
Amortization of prepaid services																	16,350		25,343						41,693
Net loss												(1,160,250	)												(1,160,250	)
Balance December 31, 2012		500,000		500		69,169,111	$	69,168	$	16,913,769	$	(17,531,408	)		-	$	20,000	$	(57,385	)	$	(212,000	)	$	(797,356	)

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

F-15

	Preferred Stock		Common Stock				Additional Paid in		Deficit Accumulated During Development	Deferred Non-Cash Offering			Common Stock			Prepaid Consulting Services Paid for with Common	Subscription
	Shares	Amount	Shares		Amount		Capital		Stage	Costs			Payable			Stock	Receivable		Total
Issuance of common stock for cash, January ($0.01, per share)				2,000,000		2,000		18,000												20,000
Issuance of common stock for conversion of debt, February ($0.059, per share)				2,542,373		2,542		12,458												15,000
Issuance of common stock for conversion of debt, March ($0.006, per share)				1,000,000		1,000		4,600												5,600
Issuance of common stock for conversion of debt, March ($0.003, per share)				3,233,333		3,233		6,467												9,700
Issuance of common stock for conversion of debt, March ($0.004, per share)				1,500,000		1,500		3,750												5,250
Issuance of common stock for relief of common stock payable, March ($0.005, per share)				4,000,000		4,000		16,000						(20,000	)					-
Issuance of common stock for cash, March ($0.01, per share)				2,500,000		2,500		22,500										10,000		25,000
Issuance of common stock for conversion of debt, April ($0.0042, per share)				3,571,429		3,571		11,429												15,000
Issuance of common stock for conversion of debt, April ($0.0035, per share)				7,200,000		7,200		18,000												25,200
Issuance of common stock for conversion of debt, May ($0.0023, per share)				4,173,913		4,174		5,426												9,600
Issuance of common stock for conversion of debt, May ($0.0021, per share)				3,800,000		3,800		4,180												7,980
Issuance of common stock for conversion of debt, May ($0.0018, per share)				5,222,222		5,222		4,178												9,400
Issuance of common stock for conversion of debt, June ($0.00161, per share)				3,900,000		3,900		2,379												6,279
Issuance of common stock for conversion of debt, June ($0.0015, per share)				5,200,000		5,200		2,600												7,800
Issuance of common stock for cash, June ($0.005, per share)				5,000,000		5,000		20,000												25,000
Issuance of common stock for cash, July ($0.003, per share)				5,000,001		5,000		10,001												15,000
Issuance of common stock for conversion of debt, July ($0.00189, per share)				4,200,000		4,200		3,738												7,938
Issuance of common stock for cash, July ($0.0035, per share)				2,857,143		2,857		7,143												10,000
Issuance of common stock for cash, July ($0.005, per share)				3,900,000		3,900		15,600												19,500
Issuance of common stock for cash, July ($0.01, per share)				200,000		200		1,800												2,000
Issuance of common stock for cash, August ($0.0025, per share)				1,000,000		1,000		1,500												2,500
Issuance of common stock for loan costs, August ($0.008, per share)				41,333,333		41,333		289,333			(330,667	)								-
Issuance of common stock for cash, August ($0.0058, per share)				3,448,276		3,448		16,552												20,000
Issuance of common stock for cash, August ($0.01, per share)				30,000		30		270												300
Issuance of common stock for conversion of debt, August ($0.0021, per share)				8,000,000		8,000		8,800												16,800
Issuance of common stock for loan costs, September ($0.008, per share)				41,333,333		41,333		289,333			(330,667	)								-
Issuance of common stock for loan costs, September ($0.01, per share)				13,157,895		13,158		118,421			(131,579	)								-

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

F-16

	Preferred Stock				Common Stock				Additional Paid in		Deficit Accumulated During Development			Deferred Non-Cash Offering			Common Stock		Prepaid Consulting Services Paid for with Common			Subscription
	Shares		Amount		Shares		Amount		Capital		Stage			Costs			Payable		Stock			Receivable			Total
Issuance of common stock for loan costs, September ($0.02, per share)						5,000,000		5,000		95,000					(100,000	)										-
Issuance of common stock for conversion of debt, November ($0.0049, per share)						1,500,000		1,500		5,850																7,350
Issuance of common stock for cash, November ($0.005, per share)						1,993,334		1,993		7,973																9,967
Issuance of common stock for loan costs, November ($0.008, per share)						5,000,000		5,000		35,000					(40,000	)										-
Issuance of common stock for services, November ($0.015, per share)						100,000		100		1,400																1,500
Issuance of common stock for conversion of debt, December ($0.0056, per share)						1,700,000		1,700		7,820																9,520
Issuance of common stock for cash, December ($0.005, per share)						700,000		700		2,800																3,500
Issuance of common stock for loan costs, December ($0.015, per share)						4,000,000		4,000		56,000					(60,000	)										-
Cash received for subscription recivable																							(10,000	)		-
Commitment to issue 41,333,334 shares as loan costs for $0.008 per share															(330,667	)		330,667								-
Amortization of deferred non-cash offering costs															103,982											103,982
Amortization of services paid for with common stock																				19,392						19,392
Commitment to issue shares for services at $0.012 per share in January																		5,400								5,400
Commitment to issue shares for services at $0.005 per share in September																		1,000								1,000
Commitment to issue shares for services at $0.005 per share in December																		5,000								5,000
Relief of derivative liability through conversion of shares										289,703																289,703
Net loss												(887,672	)													(887,672	)
Balance December 31, 2013		500,000		500		268,465,696	$	268,464	$	18,329,773	$	(18,419,080	)		(1,219,598	)	$	342,067	$	(37,993	)	$	(212,000	)	$	(947,867	)

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

F-17

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statements of Cash Flows

	For the Years Ended December 31,						Period November 27, 2000 (Date of Inception) through December 31,
	2013			2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(887,672	)	$	(1,160,250	)	$	(18,419,080	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock and long-term debt issued for acquisition of license agreement		-			-			2,735,649
Common stock issued for services and amortization of common stock issued for services		46,292			330,893			5,417,975
Loss on deposit		-			197,500			197,500
Contribution from shareholder		-			-			188,706
Unrealized loss (gain) on derivative liability		136,643			(21,608	)		115,035
Amortization of beneficial conversion feature		-			-			539,876
Amortization of deferred loan costs		-			-			24,750
Amortization of deferred offering costs		103,982			-			103,982
Write off of deferred offering costs		-			-			119,393
Write off of deferred non cash offering costs		-			-			49,120
Gain on disposal of fixed assets		-			-			(1,965	)
Depreciation		4,827			4,518			60,291
Amortization of agency fee					-			100,000
Amortization of discount on notes payable		115,797			146,603			296,258
Decrease (increase) in prepaid expenses		41,981			(3,587	)		31,276
Increase (decrease) in:
Accounts payable		28,045			1,808			354,981
Accrued expenses		1,400			(5,000	)		301,906
Accrued payroll		127,427			126,569			855,852
Accrued royalty fees		25,000			25,000			1,768,167
Accrued interest		6,957			7,429			29,341
Net cash used by operating activities		(249,321	)		(350,125	)		(5,130,997	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of agency fee rights		-			-			(100,000	)
Issuance of notes receivable from stockholders		-			-			(23,000	)
Deposit for Global Hydrogen Energy Corp.		-			(197,500	)		(197,500	)
Repayment of notes receivable from stockholders		-			-			22,095
Advances to related party		-			-			805
Proceeds from sale of fixed assets		-			-			2,500
Purchase of fixed assets		-			(15,000	)		(68,538	)
Net cash used by investing activities		-			(212,500	)		(363,638	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of stockholder advances		-			(5,000	)		(162,084	)
Advances from stockholders		-			1,430			272,582
Increase in deferred offering costs		-			-			(194,534	)
Proceeds from issuance of common stock		138,766			373,350			4,389,909
Proceeds from exercise of options		-			-			45,000
Debt issuance costs		-			-			(19,750	)
Repayment of convertible notes payable		(43,200	)		-			(66,200	)
Proceeds from issuance of notes payable		118,385			-			118,385
Proceeds from issuance of convertible notes payable		32,500			187,500			1,114,750
Net cash provided by financing activities		246,451			557,280			5,498,058
Net (decrease) increase in cash		(2,870	)		(5,345	)		3,423
Cash, beginning of period		6,293			11,638			-
Cash, end of period	$	3,423		$	6,293		$	3,423

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

F-18

	For the Years Ended December 31,				Period November 27, 2000 (Date of Inception) through December 31,
	2013		2012		2013
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	21,272	$	12,832	$	55,581
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Subscription receivable for issuance of common stock	$	-	$	-	$	29,090
Option to acquire license for issuance of common stock	$	-	$	-	$	10,000
Deferred offering costs netted against issuance of common stock under private placement	$	-	$	-	$	33,774
Deferred offering costs netted against issuance of common stock	$	-	$	-	$	41,735
Value of beneficial conversion feature of notes payable	$	-	$	-	$	19,507
Deferred non-cash offering costs in connection with private placement	$	-	$	-	$	74,850
Application of amount due from shareholder against related party debt	$	-	$	-	$	8,099
Amortization of offering costs related to stock for services	$	-	$	-	$	25,730
Settlement of notes payable in exchange for prepaid services	$	-	$	-	$	356,466
Common stock issued in exchange for prepaid services	$	5,400	$	110,500	$	2,460,064
Common stock issued in exchange for accrued royalties	$	-	$	1,301,500	$	1,718,167
Common stock issued for accruals	$	-	$	206,750	$	206,750
Receivable issued for exercise of common stock options	$	-	$	-	$	367,000
Common stock issued in exchange for fixed assets	$	-	$	-	$	5,000
Acquisition of agency fee intangible through accrued expenses	$	-	$	-	$	900,000
Beneficial conversion fetaure on convertible notes	$	-	$	-	$	531,561
Conversion of convertible debt to equity (64,083,422 shares since inception)	$	155,017	$	-	$	927,017
Conversion of convertible debt to equity (3,303,437 shares since inception)	$	-	$	66,500	$	66,500
Common stock issued for accounts payable	$	-	$	-	$	208,838
Common stock issued for accrued payroll	$	-	$	-	$	15,000
Preferred stock issued for accrued payroll	$	-	$	335,285	$	335,285
Common stock payable for prepaid services	$	-	$	245,000	$	245,000
Issuance of common stock to employees	$	-	$	-	$	274,000
Common stock issued for accrued expenses	$	-	$	-	$	29,400
Derivative liability and debt discount	$	45,070	$	187,500	$	275,070
Write off uncollectible stock subscription receivable	$	-	$	-	$	155,000
Write off of intangible asset and agency fee payable	$	-	$	-	$	900,000
Conversion of accrued interest to common stock	$	3,400	$	1,700	$	5,100
Construction in progress financed with noted payable	$	285,799	$	-	$	285,799
Deferred loan costs paid with common stock	$	992,913	$	-	$	992,913
Deferred loan costs paid with common stock payable	$	330,667	$	-	$	330,667
Common stock issued to extinguish derivative liability	$	289,704	$	-	$	289,704
Prepaid Interest Reserve	$	87,062	$	0	$	87,062

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

F-19

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2013 and 2012,

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

through December 31, 2013

1. Background Information

Turbine Truck Engines, Inc. (the “Company”) is a development stage enterprise that was incorporated in the state of Delaware on November 27, 2000, and converted to a Nevada corporation in 2008. To date, the Company’s activities have been limited to raising capital, organizational matters, and the structuring of its business plan. The corporate headquarters is located in Paisley, Florida.

We are currently working on the development of three (3) separate revolutionary technologies: (a) Detonation Cycle Gas Turbine Engine (DCGT); (b) Hydrogen Production Burner System (HPBS); and (c) the Gas To Methanol Technology (GTM)

Effective August 29, 2013, the Company amended its Articles of Incorporation filed with the Nevada Secretary of State, to reflect the Board of Directors adoption of a resolution, consented to by those holding a majority of the common shareholder votes, which increased the authorized common stock of the company to 499,000,000 shares of common stock, having a par value of $0.001.

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended December 31, 2013 and since November 27, 2000 (date of inception) through December 31, 2013, the Company had a net loss of $887,672 and $18,419,080, respectively. As of December 31, 2013, the Company has not emerged from the development stage and has a working capital deficit of $212,739. 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. 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. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

The significant accounting policies followed are:

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.

F-20

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2013 and 2012. Insurance coverage was $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. At December 31, 2013 and 2012, there were no amounts held in interest bearing accounts.

The Company’s financial instruments include cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of cash, accounts payable and accrued liabilities approximate their fair value, due to the short-term nature of these items. The carrying amount of notes payable approximates their fair value due to the use of market rates of interest and maturity schedules for similar issues. The derivative liability is recorded at fair value (see Note 10).

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.

The Company evaluates the recoverability of its long-lived assets or asset groups whenever adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related assets may be less than previously anticipated. If the net book value of the related assets exceed the undiscounted future cash flows of the assets, the carrying amount would be reduced to the present value of their expected future cash flows and an impairment loss would be recognized. There have been no impairment losses in any of the periods presented.

Research and development costs are charged to operations when incurred and are included in operating expenses. The amounts charged for the year ended December 31, 2013 and 2012 and the period November 27, 2000 (date of inception) to December 31, 2013 amounted to $0, $0 and $3,882,494, respectively.

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending on the classification of the assets or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The principal types of temporary differences between assets and liabilities for financial statements and tax return purposes are set forth in Note 8.

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits at December 31, 2013 or 2012 and since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

The Company entered into various loan agreements with a Canadian company. In accordance with the loan agreements, the Company issued shares of common stock to the Canadian company as additional costs in obtaining the financing. These shares have been accounted for as contra-equity deferred non-cash debt issuance costs and they are being amortized as interest expense over the life of the notes which are five years. Foreign currency translation gains and losses, when material, have been recorded as other comprehensive income in the statement of changes in stockholders’ deficit.

F-21

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. Common stock equivalents for the years ended December 31, 2013 and 2012 were anti-dilutive due to the net losses sustained by the Company during these periods. For the years ended December 31, 2013 and 2012 potentially dilutive common stock options and warrants of 6,655,413 and 5,405,413 have been excluded from dilutive earnings per share due to the Company’s losses in all periods presented. Additionally, convertible notes payable were convertible into approximately 1,630,000 shares of common stock based on the conversion price at December 31, 2013. Potential common shares from convertible preferred stock are excluded from the computation of diluted earnings per share of 500,000 shares.

The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

There were no grants awarded in 2013 and 2012.

The Company issues common stock and common stock options and warrants to consultants for various services. For these transactions, the Company follows the guidance in FASB ASC Topic 505. Costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measureable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instrument is reached or (ii) the date at which the counterparty’s performance is complete. For the periods ended December 31, 2013 and 2012, the Company recognized approximately $46,300 and $331,000, respectively, in consulting expenses (see Note 7).

In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The Company had a derivative liability associated with an embedded conversion option that is included as a level 2 input (see Note 10).

F-22

Recent accounting pronouncements

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s financial statements.

4. Option to Acquire License

In July 2002, the Company exercised its option to obtain a license to commercially exploit certain turbine truck engine technology owned by Alpha. The original agreement required the Company to complete and file a registration statement with the Securities and Exchange Commission (SEC) and once the public offering was filed and declared effective by the SEC, Alpha was to grant the license in exchange for 10,000,000 shares of common stock of the Company and other licensing considerations as follows:

● Licensing fee – $250,000 licensing note payable on August 23, 2005 or agreement is terminated;

● Minimum royalties – $250,000 due minimum royalty payment each year once licensing note is settled; this amount has been reduced to $25,000 per year effective January 1, 2012;

● Royalties – eight percent of net sales after manufacturing and sales commence; and

● Contract fees for design and engineering services.

In July 2002, Alpha modified the agreement to allow the Company to acquire the license agreement in advance of completing its registration statement and accepted a note as payment for the licensing fee and for the issuance of 5,000,000 shares of common stock in lieu of the original 10,000,000 shares. The value of these shares was based on $0.50 per share, which was the issuance price for common stock under the Company’s private placement offering. In August 2003 and 2004, the agreement was further amended to extend the term of the note and to establish that minimum royalty payments shall begin after the note is settled.

The Company entered into a Debt Settlement Agreement (the “Agreement”) dated April 27, 2012 with Alpha Engines Corporation (“Alpha”). The Company and Alpha entered into a License Agreement dated December 31, 2001, pursuant to which the Company has accrued royalties and other payables to Alpha in the amount of $1,508,250 as of the date of the Agreement. Pursuant to the terms of the Agreement, Alpha agreed to accept 250,000 shares of the company common stock in full settlement of the above royalties and other payables and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment being due January 1, 2013. On April 27, 2012, the Company recorded the difference between the fair value of the common stock issued to Alpha and the settlement of the accrued royalties and other payables as a capital contribution from Alpha to the Company, which is included in additional paid-in capital at December 31, 2012. As of December 31, 2013 and 2012, the Company has accrued $50,000 and $25,000 of royalty fees related to this agreement, respectively.

Alpha owns the patents to a new gas turbine engine system called Detonation Cycle Gas Turbine Engine (DCGT). Alpha is in the business of licensing the use of its DCGT technology for many different applications, including the manufacture of heavy duty highway truck engines. Alpha and CNF Transportation (formerly Consolidated Freightways, Inc.) have an agreement to form and finance a potential 50/50 joint venture after the demonstration of a highway truck engine for the manufacture and marketing of heavy duty highway truck engines, both for the fleet of CNF Transportation and exclusive sales to the highway trucking industry. CNF Transportation is a large, over the road freight hauling company and manufacturer of heavy duty highway trucks. Upon the receipt of its licensing agreement with Alpha, the Company has assumed Alpha’s right to enter into this joint venture.

The Company has recognized $3,882,494 of research and development expense since inception related to the license agreement, as the license is exclusively for the development, manufacturing and sales of the DCGT and has no future economic benefit relative to other research and development projects.

F-23

5. Furniture and equipment

Furniture and equipment at December 31 consist of the following:

	2013		2012
Furniture and fixtures	$	1,505	$	1,505
Equipment		18,091		18,091
Automobile		15,000		15,000
Leasehold improvements		35,323		35,323
		69,919		69,919
Less accumulated depreciation and amortization		57,208		52,381
	$	12,711	$	17,538

On July 3, 2012, the Company entered into a Joint Venture Agreement with ENERGY TECHNOLOGY SERVICES CO. LTD., an international company incorporated in Taiwan (“ETS”) for the purpose of the engaging both parties in the manufacture, leasing and /or sale of ETS’s hydrogen generator burning systems (the “Equipment”) in Asia, which Agreement was subsequently amended December 6, 2013. Under the Joint Venture, the Company was to purchase and own all the Equipment, and ETS was to provide for the manufacturing and on-time delivery and installation of the Equipment, to order. Additionally, TTE had agreed to pay ETS 2.5 million CAD over a one (1) year period upon certification of the H2 Generator in China, and receipt of five (5) confirmed orders for additional machines. Thereupon, TTE would receive a full transfer of the H2 technology.

A total of CAN $300,000 was advanced under the Loan Agreement with 2367416 Ontario, Inc, and was delivered to ETS, as the initial payment on the first machine to be delivered under a purchase order agreement for a Hydrogen Production Burner System (HPBS). Despite positive initial reports from ETS during the manufacturing of the Equipment, they did not deliver the machine as promised under the Agreement. The Company has declared ETS to be in default of their obligations and is currently negotiating with ETS for the refund of the CAD$300,000 advance which is expected to be refunded by December 31, 2014. The Company received approximately CAD$50,000 from ETS subsequent to December 31, 2013 and this amount was used to pay down the loan from 2367416 Ontario, Inc.

The Company is now in negotiations directly with HUE to provide us with the equipment necessary to fulfill our business plan. HUE has agreed verbally to sell us the rights to the technology for 1.5 million US for the H2 generator upon the completion and certification of the generator. We are currently working to formalize this agreement and expect to do so in the second quarter of 2014.

6. Options and warrants

The Company’s 2008 Incentive Compensation Plan (the 2008 Plan) authorizes up to 5,000,000 shares of common stock to employees or consultants, unless contained in the written award approved by the Board of Directors. The Company granted 1,600,000 options to consultants under this plan during the year ended December 31, 2011.

F-24

During the year ended December 31, 2011, the Company adopted the 2011 Incentive Compensation Plan (the 2011 Plan) which superseded the 2008 Plan. As a result, there are no future options are to be issued from the Company’s 2008 Plan.

The Company’s 2011 Plan authorizes up to 5,000,000 shares of common stock to persons employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2011 Plan for services related to raising capital or promotional activities. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors. During 2013 and 2012, the Company did not grant any common stock warrants to consultants, directors and employees, respectively, related to the Plan. As of December 31, 2013, 4,150,000 shares are available under the Plan for future grants.

The fair value of each option under the 2008 and 2011 Incentive Compensation Plans were estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table. Expected volatility is based on the Company’s historical market price at consistent points in periods equal to the expected life of the options. The expected term of options granted is based on the Company’s historical experience. The risk-free interest rate for the periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimates forfeitures; both at the date of grant as well as throughout the requisite service period, based on the Company’s historical experience and future expectations.

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2013, based on the Company’s closing stock price of $0.014 was $0. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2012, based on the Company’s closing stock price of $0.012 was $0. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

There were no warrants issued during the years ended December 31, 2013 and 2012.

The following table represents our stock option and warrant activity for the years ended December 31, 2013:

	Shares		Range of Exercise Prices		Weighted Average Grant Date Fair Value
Outstanding and Exercisable
Outstanding at December 31, 2011		5,405,413	$	0.10 – 2.00
Options and warrants granted		0	$
Options and warrants cancelled or expired		0	$
Outstanding at December 31, 2012		5,405,413	$	0.10 – 2.00
Options and warrants granted		1,250,000	$	0.05	$	0.05
Options and warrants cancelled or expired		0
Outstanding at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2012		5,405,413	$	0.10 – 2.00

F-25

The following table summarizes information about options and warrants outstanding and exercisable as of December 31, 2013:

	Outstanding Options and Warrants					Exercisable Options and Warrants
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Life	Weighted Average Price		Weighted Average Remaining Life	Number Exercisable		Weighted Average Price
$ 0.1$0.05 – $2.00		6,655,413	2.27 Years	$	0.24	2.27 Years		6,655,413	$	0.24

Net cash proceeds from the exercise of options and warrants were $0 for each of the years ended December 31, 2013 and 2012, respectively. During 2013 and 2012, the Company recognized $0 and $0 in compensation expense related to stock option grants. As of December 31, 2013 unrecognized compensation expense related to common stock options was approximately $37,000, which is expected to be recognized over a weighted average period of 2 years.

During the year ended December 31, 2012, the Company’s Board of Directors approved an increase of common stock authorized to be issued to 499,000,000 shares.

7. Commitments and Contingencies

The Company leased its corporate headquarters on a month-to-month basis. For each of the years ended December 31, 2013 and 2012, rent expense was approximately $25,000 and $25,000, respectively.

During 2012, the Company issued common stock for various consulting services. The fair value of the services recorded was based on the fair value of the Company’s stock price at the commitment date for the respective services. The Company issued 2,250,000 shares of common stock at prices ranging between $0.01 and $0.13 per share, and recognized approximately $331,000 in consulting or professional expenses related to these agreements during 2012. All shares of common stock related to the above consulting services were issued and became fully vested during 2012.

On January 12, 2012, the Company entered into an “Investment Intent” agreement with Energy Technology Services Company, Ltd. Pursuant to the agreement, both parties agreed to form a company, Global Hydrogen Energy (“GHE”). The Company has the option to purchase ten percent of the shares of GHE for $450,000, and another option to purchase up to 20% of all shares of GHE. As of December 31, 2012, GHE has not been formed, and the Company’s good faith cash deposit of $197,500 has been written off as a loss on investment, which is included in the accompanying statements of operations.

In October 2011, the Company entered into employment agreements with terms that commence on October 1, 2011 and run through a range of dates with the latest being September 2014. These agreements have a cumulative annual salary of approximately $156,000 annually and cumulative grants of fully vested stock issuances of 850,000 shares of stock. Upon signing the employment agreements, all unearned stock compensation from the previous employment agreements was recognized in full, as the employees were not required to forfeit their previous granted shares of common stock. At the October 1, 2011 grant date, the Company recognized approximately $279,000 in stock-based compensation related to the above grants of common stock, and grants made during 2010. Additionally, the employees were granted 850,000 fully vested common stock options, with an exercise price of $0.25 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the October 1, 2011 grant date.

F-26

In January 2013, the Company entered into employment agreements with terms that commence on January 1, 2013 and run through December 31, 2013. These agreements have a cumulative annual salary of approximately $104,000 annually and cumulative grants of fully vested stock issuances of 450,000 shares of stock. At the January 1, 2013 grant date, the Company recognized approximately $1,350 in stock-based compensation related to the above grants of common stock made during 2013. Additionally, the employees were entitled to receive a bonus of 1,250,000 common stock options, with an exercise price of $0.05 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the January 1, 2013. These employment agreements were not renewed upon their expiration on December 31, 2013.

On January 23, 2013 the Company entered into a Letter of Intent with BluGen, Inc., a California corporation (“BluGen”) for the purpose of setting the basis for the joint development of a natural gas to Methanol technology (“GTM Technology”). Under the terms of the Agreement, BluGen will work with TTE, and the inventor, Robert Scragg to recreate and expand upon the original designs created by Mr. Scragg and to re-develop a lab version and control system, among other things. These items are to be completed under a timetable that has been agreed upon by the parties. The Parties have agreed to establish at a later date, a joint venture, wherein the Company will have a 15% interest and BluGen will have a 49% interest, and into which the commercial application of the technology will be developed. There has been no activity at the date of this filing.

On May 28, 2013, the Company entered into Lease Agreement dated with Fujian Xinchang Leather Company Limited, a Chinese company (“Fujian”), whose address is Jinjiang City, Fujian, China Ying Lin Zhenxin Chang Industrial Park (the “Plant”) for the lease of a Hydrogen boiler combustion equipment system (the “Equipment”) to be installed at their Plant. The Unit price for the Equipment is RMB 4,800,000 Yuan (approximately $800,000 US). The term of the Lease is seven (7) years, and renews on an annual basis if not terminated. Once installation and proven energy efficiency are established, Fujian will post the performance bond of RMB 1 million Yuan and rental payments shall commence, and be paid monthly thereafter. Any termination of the Lease within the first six (6) years will entitle the Company to take possession of the entire performance bond. As of December 31, 2013, there has not been any payments made on this lease.

The Company has entered into various other agreements that have been disclosed in previous 10K and 10Q filings. These agreements have been put on hold but will be further pursued as adequate funding is generated.

8. Notes Payable

On July 30, 2013, the Company signed an Agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the initial sum of CAN $450,000 and a maximum of CAN $10,000,000 in accordance with the terms of the Agreement. The financing to be provided is to be funded in tranches, and will have terms between three (3) and five (5) years, with each tranche being separately negotiated. As a part of the loan costs, 236 shall be issued restricted common stock equal to the issued and outstanding common shares of the Company at the time of the initial advance, with such shares being subject to a Lock Up/Leak Out Agreement to be negotiated between the parties. These shares are considered an additional cost in obtaining the financing and the value of these shares at the commitment date is recorded as a contra equity and amortized over five years.

The initial advance of CAN $450,000 is covered by a Loan Agreement dated June 19, 2013, and was signed on July 30, 2013 (the “Loan Agreement”), which provides that (a) the interest rate shall be 20% per annum; and (b) CAN $90,000 shall be withheld by lender in interest rate reserve account for the payment of the first years interest. The total of CAN $300,000 under the Loan Agreement was received during the three months ended September 30, 2013 and delivered to Energy Technology Services Co., Ltd., (ETS) as the initial payment on the first machine to be delivered under a purchase order agreement. As of December 31, 2013, the Company has recorded $374,636 as a note payable and $285,799 as construction in progress.

F-27

During the year ended December 31, 2013, the Company, as part of the above agreement, is required to issue 124,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company has issued 82,666,666 shares to 236 with the remaining 41,333,334 to be issued when the remaining CAN $150,000 is funded and recorded $992,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $908,219. The Company recorded a common stock payable of $330,667 related to the shares not yet issued at December 31, 2013.

On August 1, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.02 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,225 and $100,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $91,671.

On August 22, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $50,000 to pay off a convertible note the Company owed. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 13,157,895 shares of restricted common stock to 236. These shares are valued at $0.01 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $48,385 and $131,579 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $122,134.

On October 20, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,555 and $40,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $38,422.

On December 3, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $20,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 4,000,000 shares of restricted common stock to 236. These shares are valued at $0.015 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $19,953 and $60,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $59,079.

9. Convertible Notes and Derivative liability

In April 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $62,225, respectively. The debt discount will be amortized over the life of the note, and the Company recognized approximately $6,800 of interest expense related to amortization during 2013. As of December 31, 2013, the Company has converted $42,500 of debt into 5,538,855 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

F-28

In July 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $48,384, respectively. As of December 31, 2013, the Company has converted $42,500 of debt into 12,880,124 shares of common stock and $1,300 of accrued interest into 565,217 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $15,650 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In October 2012, the Company issued a convertible promissory note for $27,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of July 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $27,500 and $28,950, respectively. As of December 31, 2013, the Company has converted $27,500 of debt into 10,200,000 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $19,955 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

On April 24, 2012 (the “Closing date”), the Company issued a convertible promissory note for $278,000. The lender funded $75,000 to the Company, and the lender at their discretion may fund additional amounts to the Company. The note matures one year from the closing date. If the Company pays the note within 90 days of the closing date, the interest rate is 0%. If the note is not paid within 90 days of the closing date, a one-time interest charge of 5% will be applied to the unpaid principal amount. The conversion option price associated with the note is the lesser of $0.10 or 70% of the lowest trade price in the 25 trading days previous to any conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $75,000 and $100,415, respectively. The debt discount will be amortized over the life of the note, and the Company recognized $44,008 of interest expense related to amortization through 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In February 2013, the Company issued a convertible promissory note for $32,500. The note pays interest at 8% per annum, and principal and accrued interest was due in November 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of approximately $32,500 and $53,900, respectively. The debt discount was amortized over the life of the note, and the Company recognized $32,500 of interest expense related to amortization during 2013 and approximately $15,000 of interest expenses as a pre-payment penalty. This note was fully repaid as of December 31, 2013. The derivative liability has been adjusted to fair value each reporting period, with unrealized gain (loss) reflected in other income and expense.

For the year ended December 31, 2013, the unrealized loss on the above derivatives was $136,643.

Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2013 and 2012 related to the above derivative liability are as follows:

	Fair Value Measurements at December 31, 2013 (1)						Fair Value Measurements at December 31, 2012(1)
	Using Level 2			Total			Using Level 2			Total
Liabilities:
Derivative liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)
Total liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)

___________________

(1) The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of December 31, 2013 or 2012.

F-29

The Company’s derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes Option Pricing Model to value the derivative liabilities utilizing observable inputs such as the Company’s common stock price, the exercise price of the warrants, and expected volatility, which is based on historical volatility. The Black-Scholes model employs the market approach in determining fair value.

10. Income Taxes

Deferred taxes are recorded for all existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there was no net deferred tax benefit or expense for the years ended December 31, 2013, 2012 or the period November 27, 2000 (Date of Inception) through December 31, 2013.

There is no current or deferred income tax expense or benefit allocated to continuing operations for the years ended December 31, 2013 or 2012 or the period November 27, 2000 (Date of inception) through December 31, 2013.

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:

	2013			2012
Tax expense (benefit) at U.S. statutory rate	$	(301,800	)	$	(394,500	)
State income tax expense (benefit), net of federal benefit		(32,300	)		(42,200	)
Effect of non-deductible expenses		51,800			(7,900	)
Other		2,040			-
Change in valuation allowance		280,260			444,600
	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 are as follows:

	2013			2012
Deferred tax assets (liability), noncurrent:
Depreciation	$	1,900			2,000
License agreement		158,400			237,600
Capitalized start up costs		5,097,800			4,906,000
Net operating loss		649,700			560,700
Stock compensation		105,900			109,400
Accrued expenses		233,760			174,500
Contribution carryover		2,700			2,700
Debt issuance		-			2,100
Amortization expense and beneficial conversion features		-			(25,100	)
Valuation allowance		(6,250,160	)		(5,969,900	)
	$	-		$	-

Change in valuation allowance:

	2013
Balance, December 31, 2012	$	(5,969,900	)
Increase in valuation allowance		(280,260	)
Balance, December 31, 2013		(6,250,160	)

F-30

Since management of the Company believes that it is more likely than not that the net deferred tax assets will not provide future benefit, the Company has established a 100 percent valuation allowance on the net deferred tax assets as of December 31, 2013 and 2012.

As of December 31, 2013, the Company had federal and state net operating loss carry-forwards totaling approximately $1,801,300 which begin expiring in 2022.

We are subject to income tax audits by the Internal Revenue Service and the State of Florida for the years 2009 – 2011.

11. Related Party Transactions

During the year ended December 31, 2003, the Company signed a note payable with a related party in the amount of $15,000. The balance at December 31, 2013 and 2012 is $1,901. This note payable was unsecured, non-interest bearing and has no specific repayment terms, however, payment is not expected prior to December 31, 2014.

As of December 31, 2013 and 2012, accounts payable included $12,220 for various accounting services, due to the Company’s Chief Accounting Officer who is also a director of the Company.

On March 15, 2012, the Board of Directors resolved to issue 500,000 shares of Series A Convertible Preferred shares to Michael Rouse, the Company’s President and CEO, in exchange for $335,285 of unpaid and accrued salary.

During the year ended December 31, 2012, the Company’s CEO advanced the Company $1,430 with no specific terms of repayment and no stated interest rate.

The Company entered into a Debt Settlement Agreement (the “Agreement”) dated April 27, 2012 with Alpha Engines Corporation (“Alpha”). The Company and Alpha entered into a License Agreement dated December 31, 2001, pursuant to which the Company has accrued royalties and other payables to Alpha in the amount of $1,508,250 as of the date of the Agreement. Pursuant to the terms of the Agreement, Alpha agreed to accept 250,000 shares of the company common stock in full settlement of the above royalties and other payables and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment being due January 1, 2013. On April 27, 2012, the Company recorded the difference between the fair value of the common stock issued to Alpha and the settlement of the accrued royalties and other payables as a capital contribution from Alpha to the Company, which is included in additional paid-in capital at December 31, 2012.

The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.

12. Series A Convertible Preferred Stock

On March 16, 2012, the Company created the Series A Convertible Preferred Stock (“Series A”). The Series A has the following features:

● Par value is $.001.

● 1,000,000 shares authorized.

● Voting rights on each matter submitted to common shareholders; 306 votes per each share of preferred stock held.

● Convertible after 6 months from the above date on a ratio of one-to-one into common shares at the option of the preferred share holder.

During the year ended December 31, 2012, the Company issued 500,000 shares of Series A Convertible Preferred Stock to the Company’s CEO in exchange for accrued payroll of $335,285.

13. Subsequent Events

Subsequent to the year ended December 31, 2013, the Company issued 1,479,000 shares of common stock for the conversion of a note payable and related accrued interest of $10,353 through February 4, 2014.

Subsequent to the year ended December 31, 2013, the Company issued 7,155,352 shares of common stock for cash of $55,849 to investors.

F-31

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A(T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ending December 31, 2013 covered by this Annual Report on Form 10-K. Based upon such evaluation, the Chief Executive Officer and acting Chief Financial Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act. This conclusion by the Company’s Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after December 31, 2013.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rue 13a-15(f) and 15d – 15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2013 under the criteria set forth in the Internal Control – Integrated Framework.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that material weaknesses exist due to a lack of formalized controls and procedures as well as a lack of segregation of duties, as well as the absence of an independent audit committee chair, resulting from the Company’s limited resources.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None

18

Part III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Set forth below is certain information concerning the directors and executive officers of the Company.

Name	Age	Position
Michael Rouse	57	President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer And Principal Financial Officer)
Phyllis J. Rouse	55	Vice President, Secretary, Treasurer and Director
Rebecca McDonald	47	Chief Accounting Officer
John R. Dickinson	47	Audit Committee Member

Biographies

Michael Rouse is the founder of the Company and currently serves as its Chairman and Chief Executive Officer. Mr. Rouse is Vice President of Cox-Rouse Construction & Development Corporation, a commercial real estate developer located in Deland, Florida. Mr. Rouse is a commercial building contractor and developer, and licensed commercial aircraft pilot. Mr. Rouse was President of M&D Aircraft Leasing and Skydive Palatka, a successful parachute center, from October 1995 to June 2002, until he sold Skydive Palatka. He received his schooling in Management Training at United States Steel Corporation in 1975; Computer Programming at Daytona Beach Community College in 1993; and Science, Art and Drafting at Valpraiso Industrial Arts School in 1973. He is a former Production Manager for United States Steel, and General Manager of Freefall Express, Inc., an airplane leasing company, from 1989 to 1990.

Phyllis J. Rouse serves as the Company’s Vice President, Secretary, Treasurer and as a Director. From 1997 to present, Mrs. Rouse is a public school administrator at Yulee Elementary School in Yulee, Florida. She has extensive administrative experience and training in accountability for all budgets, curriculum, student performance, personnel, facilities, discipline, while supervising over 70 personnel and 650 students on a daily basis. Mrs. Rouse is the sister-in-law of Michael Rouse.

Rebecca A. McDonald, is a Certified Public Accountant with over 18 years experience in accounting, information systems and taxation. She has been the owner and Vice President of the Certified Public Accounting firm of Dickinson & McDonald since January 2005. A CPA firm servicing central Florida, Dickinson & McDonald provides personal and confidential services including bookkeeping, financial statement preparation, corporate, individual, estate and trust tax preparation. From July 1996 to January 2005 she was a Senior Accountant with Cohen, Smith & Company, P.A. Ms. McDonald is a graduate of the University of Central Florida with a Bachelor of Science in Business Administration with a major in Accounting. She is a member of the Florida Institute of Certified Public Accountants.

John R. Dickinson, CPA serves as an independent member of the Company’s Audit Committee. Mr. Dickinson has spent over nineteen years in public accounting, including four years with the seventh largest CPA firm in the United States. During his career, he has gained extensive knowledge in individual and corporate taxation, financial reporting, and accounting information systems. His diverse background includes the performance of financial statement audits; litigation support services; mergers and acquisitions; business valuations; general business consulting; and tax compliance. After noticing a need for quality CPA firms in the Central Florida marketplace, Mr. Dickinson started a full service CPA firm in 2003. The firm has experienced significant growth since inception and is currently servicing a wide range of industries including construction, distribution, medical, insurance, individuals, litigation, manufacturing, technology, transportation, and non-profits. He is a Certified Public Accountant, and is a member of the Florida Institute of Certified Public Accountants. He is also very active in his community including the finance committee chairman of the DeLand First Presbyterian Church, treasurer of the Neighborhood Center, and sat on the board of directors for Hugh Ash Manor. In addition, he is a YMCA basketball coach, and member of the DeLand Quarterback Club.

Mr. Dickinson is a Cum Laud graduate of Geneva College with a Bachelor of Science degree in Business Administration and Accounting. Mr. Dickinson also attended Stetson University to obtain additional credit hours to meet Florida CPA licensing requirements.

19

AUDIT COMMITTEE

The Audit Committee consists of Michael Rouse, John R. Dickinson, CPA and Rebecca McDonald, Chief Accounting Officer. The Audit Committee selects the independent auditors; reviews the results and scope of the audit and other services provided by the Company’s independent auditors and reviews and evaluate the Company’s internal control functions. The board of directors has determined that John Dickinson is the audit committee “financial expert”; as such term is defined under federal securities law, and is independent. Mr. Dickinson is an expert by virtue of: (i) education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions; (ii) experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions; (iii) experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; and (iv) other relevant experience.

CODE OF ETHICS

We have adopted a code of ethics meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrong doing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions of the code of ethics.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth information concerning the aggregate compensation paid or to be paid by the Company to its executive officers.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation ($)		All Other Compensation ($)		Total ($)
Michael Rouse, President,	2013	$	52,000		0	$	0		0		0		0		0	$	52,000
CEO, Chairman of the Board (1)	2012	$	52,000		0		335,285		0		0		0		0	$	387,285
Phyllis J. Rouse Vice President,	2013	$	52,000		0	$	0		0		0		0		0	$	52,000
Secretary, Treasurer and Director (2)	2012	$	52,000		0	$	0		0		0		0		0	$	52,000

________________

(1)	For the year ended December 31, 2013 and 2012, per Mr. Rouses’ employment agreement, his annual salary was $52,000.
(2)	For the year ended December 31, 2013 and 2012, per Ms. Rouses’ employment agreement, her annual salary was $52,000.

20

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2013

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)

Option Exercise Price ($)

Option Expiration Date

Number of Shares of Stock That Have Not Vested (#)

Market Value of Shares of Stock That Have Not Vested ($)

Equity Incentive Plan Awards: Number of Unearned Shares or Other Rights That Have Not Vested (#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Other Rights That Have Note Vested ($)

Michael Rouse, President, CEO, Chairman of the Board

400,000

400,000

0*

$

0.25

10/1/2016

0*

0*

0*

0*

Phyllis Rouse, Vice President, Secretary, Treasurer and Director

1,550,000

1,550,000

0*

$

0.05 - $0.25

7/9/2014 - 12/31/2017

0*

0*

0*

0*

___________________

* All options and stock awards are fully vested and earned at the date of grant.

DIRECTOR COMPENSATION

Directors receive no compensation for serving on the Board.

The following table summarizes compensation paid to all of our non-employee directors:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
not applicable

21

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders		0	$	0.00		0
Equity compensation plans not approved by security holders		6,655,413	$	0.24		317,569

The Company’s 2008 Incentive Compensation Plan (the “2008 Plan”) authorizes up to 5,000,000 shares of common stock to any person employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2008 Plan for services related to capital raising or promotional activities. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors. During the year ended December 31, 2011, the Company adopted the 2011 Incentive Compensation Plan (the “2011 Plan”) which superseded the 2008 Plan. As a result, there are no future options to be issued from the Company’s 2008 Plan.

The Company’s 2011 Plan authorizes up to 5,000,000 shares of common stock to any person employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2011 Plan for services related to raising capital or promotional activities. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors.

The following table sets forth certain information as of December 31, 2013, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.

Name of Beneficial Owner	Number of Shares Beneficially Owned		Percentage of Outstanding Common Stock Owned
Michael Rouse		5,418,555		2.02	%
Alpha Engines Corporation (1)		2,812,752		1.05	%
Phyllis J. Rouse (2)		950,000		0.35	%
2367416 Ontario, Inc.		109,824,561		40.91	%
All directors and executive officers as a group (4 persons)		119,005,868		44.33	%

___________________

1.	Robert L. and Barbara J. Scragg are majority shareholders of Alpha, the Licensor of our company. Alpha Engines has granted Michael Rouse a proxy to vote all of its beneficially owned shares of the Company’s common stock.
2.	Phyllis J. Rouse is the sister-in-law of Michael Rouse.

22

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

During 2013 we were billed by our accountants, Warren Averett LLC approximately $89,000 for audit and review fees associated with our 10-K and 10-Q filings.

During 2012 we were billed by our accountants, Warren Averett LLC approximately $72,600 for audit and review fees associated with our 10-K and 10-Q filings.

Tax Fees

During 2013 we were billed by our accountants, Warren Averett LLC $0 for tax work.

During 2012 we were billed by our accountants, Warren Averett LLC $0 for tax work.

All Other Fees

During 2013 we were billed by our accountants, Warren Averett LLC $0 for other work.

During 2012 we were billed by our accountants, Warren Averett LLC $0 for other work.

Board of Directors Pre-Approval Process, Policies and Procedures

Our principal auditors have performed their audit procedures in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed our Board of Directors of the scope and nature of each service provided. With respect to the provisions of services other than audit, review, or attest services, our principal accountants brought such services to the attention of our Board of Directors prior to commencing such services.

23

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Regulation Number	Exhibit
31.1	Rule 13a-14(a) Certification
31.2	Rule 13a-14(a) Certification
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS **	XBRL Instance Document
101.SCH **	XBRL Taxonomy Extension Schema Document
101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

24

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TURBINE TRUCK ENGINES, INC.
Dated: April 15, 2014	By:	/s/ Michael Rouse
		Chief Executive Officer, Chief Financial Officer and Chairman of the Board (Principal Executive Officer and Principal Financial Officer)
Dated: April 15, 2014	By:	/s/ Rebecca A. McDonald
		Principal Accounting Officer

25

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

AND RULE 13A-14 OF THE EXCHANGE ACT OF 1934

CERTIFICATION

I, Michael Rouse, certify that:

1. I have reviewed this annual report on Form 10-K of Turbine Truck Engines, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: April 15, 2014	By:	/s/ Michael Rouse
		Michael Rouse
		Chief Executive Officer and Chairman of the Board (Principal Executive Officer and Principal Financial Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

AND RULE 13A-14 OF THE EXCHANGE ACT OF 1934

CERTIFICATION

I, Rebecca A. McDonald, certify that:

1. I have reviewed this annual report on Form 10-K of Turbine Truck Engines, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: April 15, 2014	By:	/s/ Rebecca A. McDonald
		Rebecca A. McDonald
		Principal Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Turbine Truck Engines, Inc., (the "Company") on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael Rouse, Chief Executive Officer and Chairman of the Board of the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: April 15, 2014	By:	/s/ Michael Rouse
		Michael Rouse
		Chief Executive Officer and Chairman of the Board (Principal Executive Officer and Principal Financial Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Turbine Truck Engines, Inc., (the "Company") on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Rebecca A. McDonald, Principal Accounting Officer of the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: April 15, 2014	By:	/s/ Rebecca A. McDonald
		Rebecca A. McDonald
		Principal Accounting Officer

XML

Income Taxes (Details 2) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Change in valuation allowance
Balance, December 31, 2012	$ (5,969,900)
Increase in valuation allowance	(280,260)	(444,600)
Balance, December 31, 2013	$ (6,250,160)	$ (5,969,900)

XML

Commitments and Contingencies (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Commitments And Contingencies Details Narrative
Rent expense	$ 25,000	$ 25,000
Common stock at prices ranging between $0.01 and $0.13		331,000

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Taxes Tables

Schedule of provision for income taxes

The items causing this difference are as follows:

	2013			2012
Tax expense (benefit) at U.S. statutory rate	$	(301,800	)	$	(394,500	)
State income tax expense (benefit), net of federal benefit		(32,300	)		(42,200	)
Effect of non-deductible expenses		51,800			(7,900	)
Other		2,040			-
Change in valuation allowance		280,260			444,600
	$	-		$	-

Schedule of deferred tax assets and liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 are as follows:

	2013			2012
Deferred tax assets (liability), noncurrent:
Depreciation	$	1,900			2,000
License agreement		158,400			237,600
Capitalized start up costs		5,097,800			4,906,000
Net operating loss		649,700			560,700
Stock compensation		105,900			109,400
Accrued expenses		233,760			174,500
Contribution carryover		2,700			2,700
Debt issuance		-			2,100
Amortization expense and beneficial conversion features		-			(25,100	)
Valuation allowance		(6,250,160	)		(5,969,900	)
	$	-		$	-

Schedule of valuation allowance

Change in valuation allowance:

	2013
Balance, December 31, 2012	$	(5,969,900	)
Increase in valuation allowance		(280,260	)
Balance, December 31, 2013		(6,250,160	)

XML

Series A Convertible Preferred Stock (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2012
Series Convertible Preferred Stock Details Narrative
Series A preferred stock issued to CEO in exchange for payroll, shares	500,000
Series A preferred stock issued to CEO in exchange for payroll, amount	$ 335,285

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Income Taxes Details
Tax expense (benefit) at U.S. statutory rate	$ (301,800)	$ (394,500)
State income tax expense (benefit), net of federal benefit	(32,300)	(42,200)
Effect of non-deductible expenses	51,800	(7,900)
Other	2,040
Change in valuation allowance	280,260	444,600
Provision for income taxes, Total

XML

Going Concern

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended December 31, 2013 and since November 27, 2000 (date of inception) through December 31, 2013, the Company had a net loss of $887,672 and $18,419,080, respectively. As of December 31, 2013, the Company has not emerged from the development stage and has a working capital deficit of $212,739. 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. 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. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

XML

Furniture and Equipment (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Furniture and equipment, gross	$ 69,919	$ 69,919
Less accumulated depreciation and amortization	57,208	52,381
Furniture and equipment, net	12,711	17,538
Furniture and Fixtures [Member]
Furniture and equipment, gross	1,505	1,505
Equipment [Member]
Furniture and equipment, gross	18,091	18,091
Automobiles [Member]
Furniture and equipment, gross	15,000	15,000
Leasehold Improvements [Member]
Furniture and equipment, gross	$ 35,323	$ 35,323

XML

Option to Acquire License (Details Narrative) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Option To Acquire License Details Narrative
Accrued royalty fees	$ 50,000	$ 25,000

XML

Options and Warrants (Details) (USD $)		12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013 Stock Options and Warrants [Member]	Dec. 31, 2012 Stock Options and Warrants [Member]	Dec. 31, 2013 Stock Options and Warrants [Member] Minimum [Member]	Dec. 31, 2012 Stock Options and Warrants [Member] Minimum [Member]	Dec. 31, 2011 Stock Options and Warrants [Member] Minimum [Member]	Dec. 31, 2013 Stock Options and Warrants [Member] Maximum [Member]	Dec. 31, 2012 Stock Options and Warrants [Member] Maximum [Member]	Dec. 31, 2011 Stock Options and Warrants [Member] Maximum [Member]
Outstanding at December 31, 2011, shares		5,405,413	5,405,413
Options and warrants granted, shares		1,250,000	0
Options and warrants cancelled or expired, shares		0	0
Outstanding at December 31, 2012, shares		6,655,413	5,405,413
Exercisable at December 31, 2012, shares		5,405,413
Exercisable at December 31, 2013, shares		6,655,413	5,405,413
Outstanding at December 31, 2011, Range of Exercise Prices	$ 0.24			$ 0.05	$ 0.10	$ 0.10	$ 2.00	$ 2.00	$ 2.00
Options and warrants granted, Range of Exercise Prices		$ 0.05
Outstanding at December 31, 2012, Range of Exercise Prices	$ 0.24			$ 0.05	$ 0.10	$ 0.10	$ 2.00	$ 2.00	$ 2.00
Exercisable at December 31, 2012, Range of Exercise Prices				$ 0.05	$ 0.10		$ 2.00	$ 2.00
Exercisable at December 31, 2013, Range of Exercise Prices				$ 0.05	$ 0.10		$ 2.00	$ 2.00
Options and warrants granted, Weighted Average Grant Date Fair Value		$ 0.05

XML

Options and Warrants (Details 1) (USD $)	Dec. 31, 2013
Options And Warrants Details 1
Number Outstanding	6,655,413
Weighted Average Remaining Contractual Life (in years)	2 years 3 months 7 days
Weighted Average Exercise Price	$ 0.24
Exercisable Weighted Average Remaining Contractual Life (in years)	2 years 3 months 7 days
Number Exercisable	6,655,413
Number Exercisable Weighted Average Exercise Price	$ 0.24

XML

Background Information

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

1. Background Information

Turbine Truck Engines, Inc. (the “Company”) is a development stage enterprise that was incorporated in the state of Delaware on November 27, 2000, and converted to a Nevada corporation in 2008. To date, the Company’s activities have been limited to raising capital, organizational matters, and the structuring of its business plan. The corporate headquarters is located in Paisley, Florida.

We are currently working on the development of three (3) separate revolutionary technologies: (a) Detonation Cycle Gas Turbine Engine (DCGT); (b) Hydrogen Production Burner System (HPBS); and (c) the Gas To Methanol Technology (GTM)

Effective August 29, 2013, the Company amended its Articles of Incorporation filed with the Nevada Secretary of State, to reflect the Board of Directors adoption of a resolution, consented to by those holding a majority of the common shareholder votes, which increased the authorized common stock of the company to 499,000,000 shares of common stock, having a par value of $0.001.

XML

Options and Warrants (Details Narrative) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Options And Warrants Details Narrative
Shares available under Plan for future grants	4,150,000
Closing stock price	$ 0.014
Net cash proceeds from exercise of options and warrants	$ 0	$ 0
Compensation expense related to stock option grants	0	0
unrecognized compensation expense	$ 37,000
Common stock authorized to be issued		499,000,000

XML

Income Taxes (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012
Percentage of valuation allowance on net deferred tax assets	100.00%	100.00%
Federal and State Jurisdiction [Member]
Net operating loss carry-forwards for federal and state	$ 1,801,300
Expiration federal and state net operating loss	2022

XML

Balance Sheets (USD $)	Dec. 31, 2013	Dec. 31, 2012
CURRENT ASSETS:
Cash	$ 3,423	$ 6,293
Prepaid expenses	55,786	10,705
Construction in process	285,799
Total Current Assets	345,008	16,998
Furniture and equipment, net of accumulated depreciation of $57,208 (2013) and $52,381 (2012)	12,711	17,538
TOTAL ASSETS	357,719	34,536
CURRENT LIABILITIES:
Accounts payable, including related party payables of $12,220 (2013) and $12,220 (2012)	146,143	118,098
Accrued interest	24,241	20,684
Accrued payroll taxes	1,871	5,512
Convertible notes, net	10,356	96,767
Note payable	375,136	500
Total Current Liabilities	557,747	241,561
LONG-TERM LIABILITIES:
Derivative liability	6,702	123,272
Accrued expenses - long term	67,500	66,100
Accrued payroll - long term	503,696	372,628
Accrued royalty fees	50,000	25,000
Note payable	116,610
Note payable to related party	3,331	3,331
Total Long-Term Liabilities	747,839	590,331
STOCKHOLDERS' DEFICIT
Series A Convertible Preferred Stock; $0.001 par value; 1,000,000 shares authorized; 500,000 (2013) and 500,000 (2012) shares issued and outstanding	500	500
Common stock; $0.001 par value; 499,000,000 shares authorized; 268,465,696 (2013) and 69,169,111 (2012) shares issued and outstanding	268,464	69,168
Additional paid in capital	18,329,773	16,913,769
Common stock payable	342,067	20,000
Prepaid consulting services paid with common stock	(37,993)	(57,385)
Receivable for common stock	(212,000)	(212,000)
Deferred non-cash offering costs	(1,219,598)
Deficit accumulated during development stage	(18,419,080)	(17,531,408)
Total Stockholders' Deficit	(947,867)	(797,356)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 357,719	$ 34,536

XML

Statements of Cash Flows (USD $)	12 Months Ended		157 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (887,672)	$ (1,160,250)	$ (18,419,080)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock and long-term debt issued for acquisition of license agreement			2,735,649
Common stock issued for services and amortization of common stock issued for services	46,292	330,893	5,417,975
Loss on deposit		197,500	197,500
Contribution from shareholder			188,706
Unrealized loss (gain) on derivative liability	136,643	(21,608)	115,035
Amortization of beneficial conversion feature			539,876
Amortization of deferred loan costs			24,750
Amortization of deferred offering costs	103,982		103,982
Write off of deferred offering costs			119,393
Write off of deferred non cash offering costs			49,120
Gain on disposal of fixed assets			(1,965)
Depreciation	4,827	4,518	60,291
Amortization of agency fee			100,000
Amortization of discount on notes payable	115,797	146,603	296,258
Decrease (increase) in prepaid expenses	41,981	(3,587)	31,276
Increase (decrease) in:
Accounts payable	28,045	1,808	354,981
Accrued expenses	1,400	(5,000)	301,906
Accrued payroll	127,427	126,569	855,852
Accrued royalty fees	25,000	25,000	1,768,167
Accrued interest	6,957	7,429	29,341
Net cash used by operating activities	(249,321)	(350,125)	(5,130,997)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment of agency fee rights			(100,000)
Issuance of notes receivable from stockholders			(23,000)
Deposit for Global Hydrogen Energy Corp.		(197,500)	(197,500)
Repayment of notes receivable from stockholders			22,095
Advances to related party			805
Proceeds from sale of fixed assets			2,500
Purchase of fixed assets		(15,000)	(68,538)
Net cash used by investing activities		(212,500)	(363,638)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of stockholder advances		(5,000)	(162,084)
Advances from stockholders		1,430	272,582
Increase in deferred offering costs			(194,534)
Proceeds from issuance of common stock	138,766	373,350	4,389,909
Proceeds from exercise of options			45,000
Debt issuance costs			(19,750)
Repayment of convertible notes payable	(43,200)		(66,200)
Proceeds from issuance of notes payable	118,385		118,385
Proceeds from issuance of convertible notes payable	32,500	187,500	1,114,750
Net cash provided by financing activities	246,451	557,280	5,498,058
Net (decrease) increase in cash	(2,870)	(5,345)	3,423
Cash, beginning of period	6,293	11,638
Cash, end of period	3,423	6,293	3,423
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	21,272	12,832	55,581
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Subscription receivable for issuance of common stock			29,090
Option to acquire license for issuance of common stock			10,000
Deferred offering costs netted against issuance of common stock under private placement			33,774
Deferred offering costs netted against issuance of common stock			41,735
Value of beneficial conversion feature of notes payable			19,507
Deferred non-cash offering costs in connection with private placement			74,850
Application of amount due from shareholder against related party debt			8,099
Amortization of offering costs related to stock for services			25,730
Settlement of notes payable in exchange for prepaid services			356,466
Common stock issued in exchange for prepaid services	5,400	110,500	2,460,064
Common stock issued in exchange for accrued royalties		1,301,500	1,718,167
Common stock issued for accruals		206,750	206,750
Receivable issued for exercise of common stock options			367,000
Common stock issued in exchange for fixed assets			5,000
Acquisition of agency fee intangible through accrued expenses			900,000
Beneficial conversion feature on convertible notes			531,561
Conversion of convertible debt to equity (64,083,422 shares since inception)	155,017		927,017
Conversion of convertible debt to equity (3,303,437 shares since inception)		66,500	66,500
Common stock issued for accounts payable			208,838
Common stock issued for accrued payroll			15,000
Preferred stock issued for accrued payroll		335,285	335,285
Common stock payable for prepaid services		245,000	245,000
Issuance of common stock to employees			274,000
Common stock issued for accrued expenses			29,400
Derivative liability and debt discount	45,070	187,500	275,070
Write off uncollectible stock subscription receivable			155,000
Write off of intangible asset and agency fee payable			900,000
Conversion of accrued interest to common stock	3,400	1,700	5,100
Construction in process financed with a note payable	285,799		285,799
Deferred loan costs paid with common stock	992,913		992,913
Deferred loan costs paid with common stock payable	330,667		330,667
Common stock issued to extinguish derivative liability	289,704		289,704
Prepaid Interest Reserve	$ 87,062	$ 0	$ 87,062

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Convertible Notes and Derivative liability (Details) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Liabilities:
Derivative liabilities	$ (6,702)	$ (123,272)
Total liabilities	(6,702)	(123,272)
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities:
Derivative liabilities	(6,702)	(123,272)
Total liabilities	$ (6,702)	$ (123,272)

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Furniture and Equipment (Tables)

12 Months Ended

Dec. 31, 2013

Furniture And Equipment Tables

Schedule of furniture and equipment

Furniture and equipment at December 31 consist of the following:

	2013		2012
Furniture and fixtures	$	1,505	$	1,505
Equipment		18,091		18,091
Automobile		15,000		15,000
Leasehold improvements		35,323		35,323
		69,919		69,919
Less accumulated depreciation and amortization		57,208		52,381
	$	12,711	$	17,538

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Convertible Notes and Derivative liability (Details Narrative) (USD $)	12 Months Ended
	Dec. 31, 2013
Unrealized loss on derivative	$ 136,643
Convertible promissory note one [Member]
Interest expense related to amortization	6,800
Convertible note converted into common stock, shares	5,538,855
Convertible note converted into common stock, value	42,500
Convertible promissory note two [Member]
Interest expense related to amortization	15,650
Convertible note converted into common stock, shares	12,880,124
Convertible note converted into common stock, value	42,500
Conveted accrued interest into common stock, shares	565,217
Conveted accrued interest into common stock, value	1,300
Convertible promissory note three [Member]
Interest expense related to amortization	19,955
Convertible note converted into common stock, shares	10,200,000
Convertible note converted into common stock, value	27,500
Convertible promissory note four [Member]
Interest expense related to amortization	44,008
Convertible promissory note five [Member]
Interest expense related to amortization	32,500
Interest expenses as pre-payment penalty	$ 15,000

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Convertible Notes and Derivative liability (Tables)

12 Months Ended

Dec. 31, 2013

Convertible Notes And Derivative Liability Tables

Schedule of fair value liabilities measured on recurring basis

Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2013 and 2012 related to the above derivative liability are as follows:

	Fair Value Measurements at December 31, 2013 (1)						Fair Value Measurements at December 31, 2012(1)
	Using Level 2			Total			Using Level 2			Total
Liabilities:
Derivative liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)
Total liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)

___________________

(1) The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of December 31, 2013 or 2012.

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Statements of Cash Flows (Parenthetical)	157 Months Ended
	Dec. 31, 2013
Statements Of Cash Flows Parenthetical
Conversion of convertible debt to equity (in shares)	64,083,422
Conversion of convertible debt to equity (in shares)	3,303,437

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Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2013	Dec. 31, 2012
CURRENT ASSETS:
Furniture and equipment, accumulated depreciation (in dollars)	$ 57,208	$ 52,381
CURRENT LIABILITIES:
Related party payables, included in accounts payable (in dollars)	$ 12,220	$ 12,220
STOCKHOLDERS' DEFICIT
Series A convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Series A convertible preferred stock, shares authorized	1,000,000	1,000,000
Series A Convertible Preferred stock, shares issued	500,000	500,000
Series A Convertible Preferred stock, shares outstanding	500,000	500,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	499,000,000	499,000,000
Common stock, shares issued	268,465,696	69,169,111
Common stock, shares outstanding	268,465,696	69,169,111

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Income Taxes

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

10. Income Taxes

Deferred taxes are recorded for all existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there was no net deferred tax benefit or expense for the years ended December 31, 2013, 2012 or the period November 27, 2000 (Date of Inception) through December 31, 2013.

There is no current or deferred income tax expense or benefit allocated to continuing operations for the years ended December 31, 2013 or 2012 or the period November 27, 2000 (Date of inception) through December 31, 2013.

The provision for income taxes is different from that which would be obtained by applying the statutory federal income tax rate to income before income taxes. The items causing this difference are as follows:

	2013			2012
Tax expense (benefit) at U.S. statutory rate	$	(301,800	)	$	(394,500	)
State income tax expense (benefit), net of federal benefit		(32,300	)		(42,200	)
Effect of non-deductible expenses		51,800			(7,900	)
Other		2,040			-
Change in valuation allowance		280,260			444,600
	$	-		$	-

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 are as follows:

	2013			2012
Deferred tax assets (liability), noncurrent:
Depreciation	$	1,900			2,000
License agreement		158,400			237,600
Capitalized start up costs		5,097,800			4,906,000
Net operating loss		649,700			560,700
Stock compensation		105,900			109,400
Accrued expenses		233,760			174,500
Contribution carryover		2,700			2,700
Debt issuance		-			2,100
Amortization expense and beneficial conversion features		-			(25,100	)
Valuation allowance		(6,250,160	)		(5,969,900	)
	$	-		$	-

Change in valuation allowance:

	2013
Balance, December 31, 2012	$	(5,969,900	)
Increase in valuation allowance		(280,260	)
Balance, December 31, 2013		(6,250,160	)

Since management of the Company believes that it is more likely than not that the net deferred tax assets will not provide future benefit, the Company has established a 100 percent valuation allowance on the net deferred tax assets as of December 31, 2013 and 2012.

As of December 31, 2013, the Company had federal and state net operating loss carry-forwards totaling approximately $1,801,300 which begin expiring in 2022.

We are subject to income tax audits by the Internal Revenue Service and the State of Florida for the years 2009 – 2011.

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Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2013	Apr. 11, 2014	Jun. 30, 2013
Document And Entity Information
Entity Registrant Name	TURBINE TRUCK ENGINES INC
Entity Central Index Key	0001138978
Document Type	10-K
Document Period End Date	Dec. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		277,098,547
Entity Public Float			$ 8,044,593
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2013

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Related Party Transactions

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

11. Related Party Transactions

During the year ended December 31, 2003, the Company signed a note payable with a related party in the amount of $15,000. The balance at December 31, 2013 and 2012 is $1,901. This note payable was unsecured, non-interest bearing and has no specific repayment terms, however, payment is not expected prior to December 31, 2014.

As of December 31, 2013 and 2012, accounts payable included $12,220 for various accounting services, due to the Company’s Chief Accounting Officer who is also a director of the Company.

On March 15, 2012, the Board of Directors resolved to issue 500,000 shares of Series A Convertible Preferred shares to Michael Rouse, the Company’s President and CEO, in exchange for $335,285 of unpaid and accrued salary.

During the year ended December 31, 2012, the Company’s CEO advanced the Company $1,430 with no specific terms of repayment and no stated interest rate.

The Company entered into a Debt Settlement Agreement (the “Agreement”) dated April 27, 2012 with Alpha Engines Corporation (“Alpha”). The Company and Alpha entered into a License Agreement dated December 31, 2001, pursuant to which the Company has accrued royalties and other payables to Alpha in the amount of $1,508,250 as of the date of the Agreement. Pursuant to the terms of the Agreement, Alpha agreed to accept 250,000 shares of the company common stock in full settlement of the above royalties and other payables and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment being due January 1, 2013. On April 27, 2012, the Company recorded the difference between the fair value of the common stock issued to Alpha and the settlement of the accrued royalties and other payables as a capital contribution from Alpha to the Company, which is included in additional paid-in capital at December 31, 2012.

The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties.

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Statements of Operations (USD $)	12 Months Ended		157 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Statements Of Operations
Research and development costs			$ 3,882,494
Operating costs	447,981	818,532	13,138,604
Total operating costs and expenses	447,981	818,532	17,021,098
OTHER EXPENSE (INCOME)
Change in fair value of derivative liability	136,643	(21,608)	113,291
Loss on investment		197,500	197,500
Interest expense	303,048	165,826	1,087,191
TOTAL OTHER EXPENSE (INCOME)	439,691	341,718	1,397,982
NET LOSS	$ (887,672)	$ (1,160,250)	$ (18,419,080)
NET LOSS PER COMMON SHARE, BASIC	$ (0.01)	$ (0.02)	$ (0.54)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC	154,930,954	65,849,823	34,210,916

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Furniture and Equipment

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

5. Furniture and equipment

Furniture and equipment at December 31 consist of the following:

	2013		2012
Furniture and fixtures	$	1,505	$	1,505
Equipment		18,091		18,091
Automobile		15,000		15,000
Leasehold improvements		35,323		35,323
		69,919		69,919
Less accumulated depreciation and amortization		57,208		52,381
	$	12,711	$	17,538

On July 3, 2012, the Company entered into a Joint Venture Agreement with ENERGY TECHNOLOGY SERVICES CO. LTD., an international company incorporated in Taiwan (“ETS”) for the purpose of the engaging both parties in the manufacture, leasing and /or sale of ETS’s hydrogen generator burning systems (the “Equipment”) in Asia, which Agreement was subsequently amended December 6, 2013. Under the Joint Venture, the Company was to purchase and own all the Equipment, and ETS was to provide for the manufacturing and on-time delivery and installation of the Equipment, to order. Additionally, TTE had agreed to pay ETS 2.5 million CAD over a one (1) year period upon certification of the H2 Generator in China, and receipt of five (5) confirmed orders for additional machines. Thereupon, TTE would receive a full transfer of the H2 technology.

A total of CAN $300,000 was advanced under the Loan Agreement with 2367416 Ontario, Inc, and was delivered to ETS, as the initial payment on the first machine to be delivered under a purchase order agreement for a Hydrogen Production Burner System (HPBS). Despite positive initial reports from ETS during the manufacturing of the Equipment, they did not deliver the machine as promised under the Agreement. The Company has declared ETS to be in default of their obligations and is currently negotiating with ETS for the refund of the CAD$300,000 advance which is expected to be refunded by December 31, 2014. The Company received approximately CAD$50,000 from ETS subsequent to December 31, 2013 and this amount was used to pay down the loan from 2367416 Ontario, Inc.

The Company is now in negotiations directly with HUE to provide us with the equipment necessary to fulfill our business plan. HUE has agreed verbally to sell us the rights to the technology for 1.5 million US for the H2 generator upon the completion and certification of the generator. We are currently working to formalize this agreement and expect to do so in the second quarter of 2014.

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Option to Acquire License

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

4. Option to Acquire License

In July 2002, the Company exercised its option to obtain a license to commercially exploit certain turbine truck engine technology owned by Alpha. The original agreement required the Company to complete and file a registration statement with the Securities and Exchange Commission (SEC) and once the public offering was filed and declared effective by the SEC, Alpha was to grant the license in exchange for 10,000,000 shares of common stock of the Company and other licensing considerations as follows:

● Licensing fee – $250,000 licensing note payable on August 23, 2005 or agreement is terminated;

● Minimum royalties – $250,000 due minimum royalty payment each year once licensing note is settled; this amount has been reduced to $25,000 per year effective January 1, 2012;

● Royalties – eight percent of net sales after manufacturing and sales commence; and

● Contract fees for design and engineering services.

In July 2002, Alpha modified the agreement to allow the Company to acquire the license agreement in advance of completing its registration statement and accepted a note as payment for the licensing fee and for the issuance of 5,000,000 shares of common stock in lieu of the original 10,000,000 shares. The value of these shares was based on $0.50 per share, which was the issuance price for common stock under the Company’s private placement offering. In August 2003 and 2004, the agreement was further amended to extend the term of the note and to establish that minimum royalty payments shall begin after the note is settled.

The Company entered into a Debt Settlement Agreement (the “Agreement”) dated April 27, 2012 with Alpha Engines Corporation (“Alpha”). The Company and Alpha entered into a License Agreement dated December 31, 2001, pursuant to which the Company has accrued royalties and other payables to Alpha in the amount of $1,508,250 as of the date of the Agreement. Pursuant to the terms of the Agreement, Alpha agreed to accept 250,000 shares of the company common stock in full settlement of the above royalties and other payables and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment being due January 1, 2013. On April 27, 2012, the Company recorded the difference between the fair value of the common stock issued to Alpha and the settlement of the accrued royalties and other payables as a capital contribution from Alpha to the Company, which is included in additional paid-in capital at December 31, 2012. As of December 31, 2013 and 2012, the Company has accrued $50,000 and $25,000 of royalty fees related to this agreement, respectively.

Alpha owns the patents to a new gas turbine engine system called Detonation Cycle Gas Turbine Engine (DCGT). Alpha is in the business of licensing the use of its DCGT technology for many different applications, including the manufacture of heavy duty highway truck engines. Alpha and CNF Transportation (formerly Consolidated Freightways, Inc.) have an agreement to form and finance a potential 50/50 joint venture after the demonstration of a highway truck engine for the manufacture and marketing of heavy duty highway truck engines, both for the fleet of CNF Transportation and exclusive sales to the highway trucking industry. CNF Transportation is a large, over the road freight hauling company and manufacturer of heavy duty highway trucks. Upon the receipt of its licensing agreement with Alpha, the Company has assumed Alpha’s right to enter into this joint venture.

The Company has recognized $3,882,494 of research and development expense since inception related to the license agreement, as the license is exclusively for the development, manufacturing and sales of the DCGT and has no future economic benefit relative to other research and development projects.

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Options and Warrants (Tables)

12 Months Ended

Dec. 31, 2013

Options And Warrants Tables

Schedule of stock option and warrant activity

The following table represents our stock option and warrant activity for the years ended December 31, 2013:

	Shares		Range of Exercise Prices		Weighted Average Grant Date Fair Value
Outstanding and Exercisable
Outstanding at December 31, 2011		5,405,413	$	0.10 – 2.00
Options and warrants granted		0	$
Options and warrants cancelled or expired		0	$
Outstanding at December 31, 2012		5,405,413	$	0.10 – 2.00
Options and warrants granted		1,250,000	$	0.05	$	0.05
Options and warrants cancelled or expired		0
Outstanding at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2012		5,405,413	$	0.10 – 2.00

Schedule of options and warrants outstanding and exercisable

The following table summarizes information about options and warrants outstanding and exercisable as of December 31, 2013:

	Outstanding Options and Warrants					Exercisable Options and Warrants
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Life	Weighted Average Price		Weighted Average Remaining Life	Number Exercisable		Weighted Average Price
$ 0.1$0.05 – $2.00		6,655,413	2.27 Years	$	0.24	2.27 Years		6,655,413	$	0.24

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Series A Convertible Preferred Stock

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

12. Series A Convertible Preferred Stock

On March 16, 2012, the Company created the Series A Convertible Preferred Stock (“Series A”). The Series A has the following features:

● Par value is $.001.

● 1,000,000 shares authorized.

● Voting rights on each matter submitted to common shareholders; 306 votes per each share of preferred stock held.

● Convertible after 6 months from the above date on a ratio of one-to-one into common shares at the option of the preferred share holder.

During the year ended December 31, 2012, the Company issued 500,000 shares of Series A Convertible Preferred Stock to the Company’s CEO in exchange for accrued payroll of $335,285.

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Notes Payable

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

8. Notes Payable

On July 30, 2013, the Company signed an Agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the initial sum of CAN $450,000 and a maximum of CAN $10,000,000 in accordance with the terms of the Agreement. The financing to be provided is to be funded in tranches, and will have terms between three (3) and five (5) years, with each tranche being separately negotiated. As a part of the loan costs, 236 shall be issued restricted common stock equal to the issued and outstanding common shares of the Company at the time of the initial advance, with such shares being subject to a Lock Up/Leak Out Agreement to be negotiated between the parties. These shares are considered an additional cost in obtaining the financing and the value of these shares at the commitment date is recorded as a contra equity and amortized over five years.

The initial advance of CAN $450,000 is covered by a Loan Agreement dated June 19, 2013, and was signed on July 30, 2013 (the “Loan Agreement”), which provides that (a) the interest rate shall be 20% per annum; and (b) CAN $90,000 shall be withheld by lender in interest rate reserve account for the payment of the first years interest. The total of CAN $300,000 under the Loan Agreement was received during the three months ended September 30, 2013 and delivered to Energy Technology Services Co., Ltd., (ETS) as the initial payment on the first machine to be delivered under a purchase order agreement. As of December 31, 2013, the Company has recorded $374,636 as a note payable and $285,799 as construction in progress.

During the year ended December 31, 2013, the Company, as part of the above agreement, is required to issue 124,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company has issued 82,666,666 shares to 236 with the remaining 41,333,334 to be issued when the remaining CAN $150,000 is funded and recorded $992,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $908,219. The Company recorded a common stock payable of $330,667 related to the shares not yet issued at December 31, 2013.

On August 1, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.02 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,225 and $100,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $91,671.

On August 22, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $50,000 to pay off a convertible note the Company owed. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 13,157,895 shares of restricted common stock to 236. These shares are valued at $0.01 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $48,385 and $131,579 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $122,134.

On October 20, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $23,555 and $40,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $38,422.

On December 3, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $20,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 4,000,000 shares of restricted common stock to 236. These shares are valued at $0.015 which was the share price at commitment date. As of December 31, 2013, the Company recorded a note payable in the amount of $19,953 and $60,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at December 31, 2013 was $59,079.

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Options and Warrants

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

6. Options and warrants

The Company’s 2008 Incentive Compensation Plan (the 2008 Plan) authorizes up to 5,000,000 shares of common stock to employees or consultants, unless contained in the written award approved by the Board of Directors. The Company granted 1,600,000 options to consultants under this plan during the year ended December 31, 2011.

During the year ended December 31, 2011, the Company adopted the 2011 Incentive Compensation Plan (the 2011 Plan) which superseded the 2008 Plan. As a result, there are no future options are to be issued from the Company’s 2008 Plan.

The Company’s 2011 Plan authorizes up to 5,000,000 shares of common stock to persons employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2011 Plan for services related to raising capital or promotional activities. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors. During 2013 and 2012, the Company did not grant any common stock warrants to consultants, directors and employees, respectively, related to the Plan. As of December 31, 2013, 4,150,000 shares are available under the Plan for future grants.

The fair value of each option under the 2008 and 2011 Incentive Compensation Plans were estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table. Expected volatility is based on the Company’s historical market price at consistent points in periods equal to the expected life of the options. The expected term of options granted is based on the Company’s historical experience. The risk-free interest rate for the periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimates forfeitures; both at the date of grant as well as throughout the requisite service period, based on the Company’s historical experience and future expectations.

The aggregate intrinsic value of options outstanding and exercisable at December 31, 2013, based on the Company’s closing stock price of $0.014 was $0. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2012, based on the Company’s closing stock price of $0.012 was $0. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

There were no warrants issued during the years ended December 31, 2013 and 2012.

The following table represents our stock option and warrant activity for the years ended December 31, 2013:

	Shares		Range of Exercise Prices		Weighted Average Grant Date Fair Value
Outstanding and Exercisable
Outstanding at December 31, 2011		5,405,413	$	0.10 – 2.00
Options and warrants granted		0	$
Options and warrants cancelled or expired		0	$
Outstanding at December 31, 2012		5,405,413	$	0.10 – 2.00
Options and warrants granted		1,250,000	$	0.05	$	0.05
Options and warrants cancelled or expired		0
Outstanding at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2013		6,655,413	$	0.05 – 2.00
Exercisable at December 31, 2012		5,405,413	$	0.10 – 2.00

The following table summarizes information about options and warrants outstanding and exercisable as of December 31, 2013:

	Outstanding Options and Warrants					Exercisable Options and Warrants
Range of Exercise Price	Number Outstanding		Weighted Average Remaining Life	Weighted Average Price		Weighted Average Remaining Life	Number Exercisable		Weighted Average Price
$ 0.1$0.05 – $2.00		6,655,413	2.27 Years	$	0.24	2.27 Years		6,655,413	$	0.24

Net cash proceeds from the exercise of options and warrants were $0 for each of the years ended December 31, 2013 and 2012, respectively. During 2013 and 2012, the Company recognized $0 and $0 in compensation expense related to stock option grants. As of December 31, 2013 unrecognized compensation expense related to common stock options was approximately $37,000, which is expected to be recognized over a weighted average period of 2 years.

During the year ended December 31, 2012, the Company’s Board of Directors approved an increase of common stock authorized to be issued to 499,000,000 shares.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

7. Commitments and Contingencies

The Company leased its corporate headquarters on a month-to-month basis. For each of the years ended December 31, 2013 and 2012, rent expense was approximately $25,000 and $25,000, respectively.

During 2012, the Company issued common stock for various consulting services. The fair value of the services recorded was based on the fair value of the Company’s stock price at the commitment date for the respective services. The Company issued 2,250,000 shares of common stock at prices ranging between $0.01 and $0.13 per share, and recognized approximately $331,000 in consulting or professional expenses related to these agreements during 2012. All shares of common stock related to the above consulting services were issued and became fully vested during 2012.

On January 12, 2012, the Company entered into an “Investment Intent” agreement with Energy Technology Services Company, Ltd. Pursuant to the agreement, both parties agreed to form a company, Global Hydrogen Energy (“GHE”). The Company has the option to purchase ten percent of the shares of GHE for $450,000, and another option to purchase up to 20% of all shares of GHE. As of December 31, 2012, GHE has not been formed, and the Company’s good faith cash deposit of $197,500 has been written off as a loss on investment, which is included in the accompanying statements of operations.

In October 2011, the Company entered into employment agreements with terms that commence on October 1, 2011 and run through a range of dates with the latest being September 2014. These agreements have a cumulative annual salary of approximately $156,000 annually and cumulative grants of fully vested stock issuances of 850,000 shares of stock. Upon signing the employment agreements, all unearned stock compensation from the previous employment agreements was recognized in full, as the employees were not required to forfeit their previous granted shares of common stock. At the October 1, 2011 grant date, the Company recognized approximately $279,000 in stock-based compensation related to the above grants of common stock, and grants made during 2010. Additionally, the employees were granted 850,000 fully vested common stock options, with an exercise price of $0.25 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the October 1, 2011 grant date.

In January 2013, the Company entered into employment agreements with terms that commence on January 1, 2013 and run through December 31, 2013. These agreements have a cumulative annual salary of approximately $104,000 annually and cumulative grants of fully vested stock issuances of 450,000 shares of stock. At the January 1, 2013 grant date, the Company recognized approximately $1,350 in stock-based compensation related to the above grants of common stock made during 2013. Additionally, the employees were entitled to receive a bonus of 1,250,000 common stock options, with an exercise price of $0.05 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the January 1, 2013. These employment agreements were not renewed upon their expiration on December 31, 2013.

On January 23, 2013 the Company entered into a Letter of Intent with BluGen, Inc., a California corporation (“BluGen”) for the purpose of setting the basis for the joint development of a natural gas to Methanol technology (“GTM Technology”). Under the terms of the Agreement, BluGen will work with TTE, and the inventor, Robert Scragg to recreate and expand upon the original designs created by Mr. Scragg and to re-develop a lab version and control system, among other things. These items are to be completed under a timetable that has been agreed upon by the parties. The Parties have agreed to establish at a later date, a joint venture, wherein the Company will have a 15% interest and BluGen will have a 49% interest, and into which the commercial application of the technology will be developed. There has been no activity at the date of this filing.

On May 28, 2013, the Company entered into Lease Agreement dated with Fujian Xinchang Leather Company Limited, a Chinese company (“Fujian”), whose address is Jinjiang City, Fujian, China Ying Lin Zhenxin Chang Industrial Park (the “Plant”) for the lease of a Hydrogen boiler combustion equipment system (the “Equipment”) to be installed at their Plant. The Unit price for the Equipment is RMB 4,800,000 Yuan (approximately $800,000 US). The term of the Lease is seven (7) years, and renews on an annual basis if not terminated. Once installation and proven energy efficiency are established, Fujian will post the performance bond of RMB 1 million Yuan and rental payments shall commence, and be paid monthly thereafter. Any termination of the Lease within the first six (6) years will entitle the Company to take possession of the entire performance bond. As of December 31, 2013, there has not been any payments made on this lease.

The Company has entered into various other agreements that have been disclosed in previous 10K and 10Q filings. These agreements have been put on hold but will be further pursued as adequate funding is generated.

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Convertible Notes and Derivative liability

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

9. Convertible Notes and Derivative liability

In April 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $62,225, respectively. The debt discount will be amortized over the life of the note, and the Company recognized approximately $6,800 of interest expense related to amortization during 2013. As of December 31, 2013, the Company has converted $42,500 of debt into 5,538,855 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In July 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $48,384, respectively. As of December 31, 2013, the Company has converted $42,500 of debt into 12,880,124 shares of common stock and $1,300 of accrued interest into 565,217 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $15,650 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In October 2012, the Company issued a convertible promissory note for $27,500. The note pays interest at 8% per annum, and principal and accrued interest was due on the maturity date of July 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $27,500 and $28,950, respectively. As of December 31, 2013, the Company has converted $27,500 of debt into 10,200,000 shares of common stock. As of December 31, 2013 the discount related to the note was fully amortized and the Company recognized $19,955 of interest expense related to amortization in 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

On April 24, 2012 (the “Closing date”), the Company issued a convertible promissory note for $278,000. The lender funded $75,000 to the Company, and the lender at their discretion may fund additional amounts to the Company. The note matures one year from the closing date. If the Company pays the note within 90 days of the closing date, the interest rate is 0%. If the note is not paid within 90 days of the closing date, a one-time interest charge of 5% will be applied to the unpaid principal amount. The conversion option price associated with the note is the lesser of $0.10 or 70% of the lowest trade price in the 25 trading days previous to any conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $75,000 and $100,415, respectively. The debt discount will be amortized over the life of the note, and the Company recognized $44,008 of interest expense related to amortization through 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense.

In February 2013, the Company issued a convertible promissory note for $32,500. The note pays interest at 8% per annum, and principal and accrued interest was due in November 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of approximately $32,500 and $53,900, respectively. The debt discount was amortized over the life of the note, and the Company recognized $32,500 of interest expense related to amortization during 2013 and approximately $15,000 of interest expenses as a pre-payment penalty. This note was fully repaid as of December 31, 2013. The derivative liability has been adjusted to fair value each reporting period, with unrealized gain (loss) reflected in other income and expense.

For the year ended December 31, 2013, the unrealized loss on the above derivatives was $136,643.

Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2013 and 2012 related to the above derivative liability are as follows:

	Fair Value Measurements at December 31, 2013 (1)						Fair Value Measurements at December 31, 2012(1)
	Using Level 2			Total			Using Level 2			Total
Liabilities:
Derivative liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)
Total liabilities	$	(6,702	)	$	(6,702	)	$	(123,272	)	$	(123,272	)

(1) The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of December 31, 2013 or 2012.

The Company’s derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes Option Pricing Model to value the derivative liabilities utilizing observable inputs such as the Company’s common stock price, the exercise price of the warrants, and expected volatility, which is based on historical volatility. The Black-Scholes model employs the market approach in determining fair value.

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Notes Payable (Details Narrative) (USD $)	Dec. 31, 2013
Note payable	$ 374,636
Construction in progress	285,799
Sares of restricted common stock	124,000,000
Shares issued	82,666,666
Deferred non-cash debt issuance costs	992,000
Remaining shares to be issued	41,333,334
Balance of deferred non cash debt issuance costs	908,219
Common stock payable	330,667
Ontario Inc [Member]
Note payable	23,225
Deferred non-cash debt issuance costs	100,000
Balance of deferred non cash debt issuance costs	91,671
Ontario Inc one [Member]
Note payable	48,385
Deferred non-cash debt issuance costs	131,579
Balance of deferred non cash debt issuance costs	122,134
Ontario Inc Two [Member]
Note payable	23,555
Deferred non-cash debt issuance costs	40,000
Balance of deferred non cash debt issuance costs	38,422
Ontario Inc Three [Member]
Note payable	19,953
Deferred non-cash debt issuance costs	60,000
Balance of deferred non cash debt issuance costs	$ 59,079

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2013

Significant Accounting Policies Policies

Cash

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2013 and 2012. Insurance coverage was $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. At December 31, 2013 and 2012, there were no amounts held in interest bearing accounts.

The Company’s financial instruments include cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of cash, accounts payable and accrued liabilities approximate their fair value, due to the short-term nature of these items. The carrying amount of notes payable approximates their fair value due to the use of market rates of interest and maturity schedules for similar issues. The derivative liability is recorded at fair value (see Note 10).

Furniture and equipment

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.

The Company evaluates the recoverability of its long-lived assets or asset groups whenever adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related assets may be less than previously anticipated. If the net book value of the related assets exceed the undiscounted future cash flows of the assets, the carrying amount would be reduced to the present value of their expected future cash flows and an impairment loss would be recognized. There have been no impairment losses in any of the periods presented.

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expenses. The amounts charged for the year ended December 31, 2013 and 2012 and the period November 27, 2000 (date of inception) to December 31, 2013 amounted to $0, $0 and $3,882,494, respectively.

Income Tax

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending on the classification of the assets or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The principal types of temporary differences between assets and liabilities for financial statements and tax return purposes are set forth in Note 8.

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits at December 31, 2013 or 2012 and since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Earnings Per Share

The Company entered into various loan agreements with a Canadian company. In accordance with the loan agreements, the Company issued shares of common stock to the Canadian company as additional costs in obtaining the financing. These shares have been accounted for as contra-equity deferred non-cash debt issuance costs and they are being amortized as interest expense over the life of the notes which are five years. Foreign currency translation gains and losses, when material, have been recorded as other comprehensive income in the statement of changes in stockholders’ deficit. 

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. Common stock equivalents for the years ended December 31, 2013 and 2012 were anti-dilutive due to the net losses sustained by the Company during these periods. For the years ended December 31, 2013 and 2012 potentially dilutive common stock options and warrants of 6,655,413 and 5,405,413 have been excluded from dilutive earnings per share due to the Company’s losses in all periods presented. Additionally, convertible notes payable were convertible into approximately 1,630,000 shares of common stock based on the conversion price at December 31, 2013. Potential common shares from convertible preferred stock are excluded from the computation of diluted earnings per share of 500,000 shares.

Share based compensation

The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

There were no grants awarded in 2013 and 2012.

Equity policy

The Company issues common stock and common stock options and warrants to consultants for various services. For these transactions, the Company follows the guidance in FASB ASC Topic 505. Costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measureable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instrument is reached or (ii) the date at which the counterparty’s performance is complete. For the periods ended December 31, 2013 and 2012, the Company recognized approximately $46,300 and $331,000, respectively, in consulting expenses (see Note 7).

Fair Value Measurement

In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The Company had a derivative liability associated with an embedded conversion option that is included as a level 2 input (see Note 10).

Recent accounting pronouncements

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s financial statements.

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Going Concern (Detail Narrative) (USD $)	1 Months Ended	12 Months Ended													157 Months Ended
	Dec. 31, 2000	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2007	Dec. 31, 2006	Dec. 31, 2005	Dec. 31, 2004	Dec. 31, 2003	Dec. 31, 2002	Dec. 31, 2001	Dec. 31, 2013
Going Concern Detail Narrative
Net loss	$ 4,029	$ 887,672	$ 1,160,250	$ 2,238,011	$ 2,569,223	$ 2,271,917	$ 982,677	$ 2,470,352	$ 1,465,077	$ 1,068,738	$ 282,009	$ 190,567	$ 2,796,768	$ 31,789	$ 18,419,080
Working capital deficit		$ 212,739													$ 212,739

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Related Party Transactions (Details Narrative) (USD $)			12 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2012 Chief Executive Officer [Member]
Note payable to related party	$ 15,000
Notes payable outstanding balance	1,901	1,901
Accounts payable included due to Chief Accounting Officer	12,220	12,220
Proceeds from related party advances			$ 1,430

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Statement of Changes in Stockholder's Deficit (USD $)	Preferred Stock	Common Stock	Additional Paid-In Capital	Deficit Accumulated During Development Stage	Deferred Non-Cash Offering Costs	Common Stock Payable	Prepaid Consulting Services Paid for with Common Stock	Subscription Receivable	Total
Beginning Balance, Amount at Nov. 26, 2000
Beginning Balance, Shares at Nov. 26, 2000
Issuance of common stock for option to acquire license and stock subscription receivable, December 2000, Shares		10,390,000
Issuance of common stock for option to acquire license and stock subscription receivable, December 2000, Amount		10,390						(390)	10,000
Net loss				(4,029)	0	0	0		(4,029)
Ending Balance, Amount at Dec. 31, 2000		10,390		(4,029)				(390)	5,971
Ending Balance, Shares at Dec. 31, 2000		10,390,000
Issuance of common stock for cash, February 2001*, Shares		10,000
Issuance of common stock for cash, February 2001*, Amount		10	4,990						5,000
Issuance of common stock for cash, March 2001*, Shares		10,000
Issuance of common stock for cash, March 2001*, Amount		10	4,990						5,000
Issuance of common stock for cash, August 2001*, Shares		10,000
Issuance of common stock for cash, August 2001*, Amount		10	4,990						5,000
Issuance of common stock for cash, September 2001*, Shares		55,000
Issuance of common stock for cash, September 2001*, Amount		55	27,445						27,500
Payment for common stock issued under subscription receivable								300	300
Net loss				31,789					(31,789)
Ending Balance, Amount at Dec. 31, 2001		10,475	42,415	(35,818)				(90)	16,982
Ending Balance, Shares at Dec. 31, 2001		10,475,000
Issuance of common stock for cash, January 2002*, Shares		5,000
Issuance of common stock for cash, January 2002*, Amount		5	2,495						2,500
Issuance of common stock for cash, February 2002*, Shares		10,000
Issuance of common stock for cash, February 2002*, Amount		10	4,990						5,000
Issuance of common stock for cash, April 2002*, Shares		25,000
Issuance of common stock for cash, April 2002*, Amount		25	12,475						12,500
Issuance of common stock for cash, May 2002*, Shares		65,000
Issuance of common stock for cash, May 2002*, Amount		65	32,435						32,500
Issuance of common stock for cash, June 2002*, Shares		70,000
Issuance of common stock for cash, June 2002*, Amount		70	34,930					(2,500)	32,500
Issuance of common stock for cash, August 2002*, Shares		10,000
Issuance of common stock for cash, August 2002*, Amount		10	4,990						5,000
Issuance of common stock for cash, October 2002*, Shares		10,000
Issuance of common stock for cash, October 2002*, Amount		10	4,990						5,000
Issuance of common stock to acquire licensing agreement, July 2002*, Shares		5,000,000
Issuance of common stock to acquire licensing agreement, July 2002*, Amount		5,000	2,495,000						2,500,000
Shares returned to treasury by founding stockholder, July 2002, Shares		(5,000,000)
Shares returned to treasury by founding stockholder, July 2002, Amount		(5,000)	5,000
Net loss				(2,796,768)					(2,796,768)
Ending Balance, Amount at Dec. 31, 2002		10,670	2,639,720	(2,832,586)				(2,590)	(184,786)
Ending Balance, Shares at Dec. 31, 2002		10,670,000
Issuance of common stock for cash, February 2003*, Shares		207,000
Issuance of common stock for cash, February 2003*, Amount		207	103,293						103,500
Issuance of common stock for cash, September 2003*, Shares		30,000
Issuance of common stock for cash, September 2003*, Amount		30	14,970						15,000
Issuance of common stock for services, September 2003*, Shares		290,000
Issuance of common stock for services, September 2003*, Amount		290	144,710		(74,850)				70,150
Payment for common stock issued under subscription agreement								2,500	2,500
Offering costs for private placement offering			(33,774)						(33,774)
Net loss				(190,567)					(190,567)
Ending Balance, Amount at Dec. 31, 2003		11,197	2,868,919	(3,023,153)	(74,850)			(90)	(217,977)
Ending Balance, Shares at Dec. 31, 2003		11,197,000
Issuance of notes payable with beneficial conversion feature			19,507						19,507
Issuance of common stock for services, September 2004 ($2.00 per share), Shares		20,000
Issuance of common stock for services, September 2004 ($2.00 per share), Amount		20	39,980						40,000
Conversion of notes payable, August 2004 ($2.00 per share), Shares		31,125
Conversion of notes payable, August 2004 ($2.00 per share), Amount		31	62,219						62,250
Issuance of common stock for cash, September 2004 ($2.00 per share), Shares		25,025
Issuance of common stock for cash, September 2004 ($2.00 per share), Amount		25	50,025						50,050
Issuance of common stock for cash, October 2004 ($2.00 per share), Shares		1,000
Issuance of common stock for cash, October 2004 ($2.00 per share), Amount		1	1,999						2,000
Issuance of common stock for cash, November 2004 ($2.00 per share), Shares		3,500
Issuance of common stock for cash, November 2004 ($2.00 per share), Amount		4	6,996						7,000
Issuance of common stock for cash, December 2004 ($2.00 per share), Shares		3,000
Issuance of common stock for cash, December 2004 ($2.00 per share), Amount		3	5,997						6,000
Amortization of offering costs related to Form SB-2 filing			(10,159)						(10,159)
Amortization of stock for services related to Form SB-2 offering			(6,317)		6,317
Contribution from shareholder			18,256						18,256
Net loss				(282,009)					(282,009)
Ending Balance, Amount at Dec. 31, 2004		11,281	3,057,422	(3,305,162)	(68,533)			(90)	(305,082)
Ending Balance, Shares at Dec. 31, 2004		11,280,650
Amortization of offering costs related to Form SB-2 filing			(31,216)						(31,216)
Amortization of stock for services related to Form SB-2 offering			(19,413)		19,413
Issuance of common stock for services, January 2005 ($2.00 per share), Shares		80,000
Issuance of common stock for services, January 2005 ($2.00 per share), Amount		80	159,920	0		0			160,000
Issuance of common stock in satisfaction of a note payable, February 2005 ($2.00 per share), Shares		125,000
Issuance of common stock in satisfaction of a note payable, February 2005 ($2.00 per share), Amount		125	249,875						250,000
Issuance of common stock for cash, February 2005 ($2.00 per share), Shares		3,200
Issuance of common stock for cash, February 2005 ($2.00 per share), Amount		3	6,397						6,400
Issuance of common stock for cash, March 2005 ($2.00 per share), Shares		1,500
Issuance of common stock for cash, March 2005 ($2.00 per share), Amount		1	2,999						3,000
Issuance of common stock for services, April 2005 ($2.00 per share), Shares		5,000
Issuance of common stock for services, April 2005 ($2.00 per share), Amount		5	9,995						10,000
Capital contribution from stockholder, May 2005			170,000						170,000
Issuance of common stock for cash, May 2005 ($2.00 per share), Shares		15,550
Issuance of common stock for cash, May 2005 ($2.00 per share), Amount		16	31,084						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), Shares		9,100
Issuance of common stock for cash, June 2005 ($2.00 per share), Amount		9	18,191						18,200
Issuance of common stock for services, June 2005 ($1.70 per share), Shares		100,000
Issuance of common stock for services, June 2005 ($1.70 per share), Amount		100	169,900				(170,000)
Capital contribution from stockholder, June 2005			450						450
Issuance of common stock for cash, August 2005 ($1.00 per share), Shares		5,000
Issuance of common stock for cash, August 2005 ($1.00 per share), Amount		5	4,995						5,000
Issuance of common stock for services, July 2005 ($1.00 per share), Shares		40,000
Issuance of common stock for services, July 2005 ($1.00 per share), Amount		40	39,960				(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), Shares		25,000
Issuance of common stock for cash, October ($1.00 per share), Amount		25	24,975						25,000
Issuance of common stock for cash, November ($1.00 per share), Shares		20,000
Issuance of common stock for cash, November ($1.00 per share), Amount		20	19,980						20,000
Issuance of common stock for cash, December ($1.00 per share), Shares		5,000
Issuance of common stock for cash, December ($1.00 per share), Amount		5	4,995						5,000
Net loss				(1,068,738)					(1,068,738)
Ending Balance, Amount at Dec. 31, 2005		11,715	3,920,509	(4,373,900)			(21,667)	(90)	(463,433)
Ending Balance, Shares at Dec. 31, 2005		11,715,000
Amortization of prepaid services paid for with common stock							204,556		204,556
Issuance of common stock for cash, January ($1.00 per share), Shares		65,000
Issuance of common stock for cash, January ($1.00 per share), Amount		65	64,935						65,000
Issuance of common stock for cash, February ($1.00 per share), Shares		1,500
Issuance of common stock for cash, February ($1.00 per share), Amount		2	1,498						1,500
Issuance of common stock for cash, March ($1.00 per share), Shares		1,675
Issuance of common stock for cash, March ($1.00 per share), Amount		2	1,673						1,675
Issuance of common stock for cash, April ($1.00 per share), Shares		5,000
Issuance of common stock for cash, April ($1.00 per share), Amount		5	4,995						5,000
Issuance of common stock for services, May ($1.00 per share), Shares		10,000
Issuance of common stock for services, May ($1.00 per share), Amount		10	9,990						10,000
Issuance of common stock for services, May ($1.15 per share), Shares		10,000
Issuance of common stock for services, May ($1.15 per share), Amount		10	11,490						11,500
Issuance of common stock for cash, June ($.80 per share), Shares		15,000
Issuance of common stock for cash, June ($.80 per share), Amount		15	11,985						12,000
Issuance of common stock and warrants for cash, June ($.50 per share), Shares		200,000
Issuance of common stock and warrants for cash, June ($.50 per share), Amount		200	99,800						100,000
Issuance of common stock for services, June ($1.15 per share), Shares		150,000
Issuance of common stock for services, June ($1.15 per share), Amount		150	172,350				(172,500)
Issuance of common stock for services, July ($1.10 per share), Shares		109,091
Issuance of common stock for services, July ($1.10 per share), Amount		109	119,891				(120,000)
Issuance of common stock for services, July ($.50 per share), Shares		30,000
Issuance of common stock for services, July ($.50 per share), Amount		30	14,970				(5,000)		10,000
Issuance of common stock for settlement of debt, August ($.85 per share), Shares		125,253
Issuance of common stock for settlement of debt, August ($.85 per share), Amount		125	106,341						106,466
Issuance of common stock for services, August ($.81 per share), Shares		10,000
Issuance of common stock for services, August ($.81 per share), Amount		10	8,065						8,075
Issuance of common stock and warrants for cash, September ($.50 per share), Shares		167,200
Issuance of common stock and warrants for cash, September ($.50 per share), Amount		167	83,433						83,600
Issuance of common stock for services, September ($.50 per share), Shares		210,000
Issuance of common stock for services, September ($.50 per share), Amount		210	104,790				(12,500)		92,500
Issuance of common stock for services, September ($.74 per share), Shares		10,000
Issuance of common stock for services, September ($.74 per share), Amount		10	7,385						7,395
Issuance of common stock in settlement of a payable, September ($4.16 per share), Shares		100,000
Issuance of common stock in settlement of a payable, September ($4.16 per share), Amount		100	416,567						416,667
Issuance of options to employees, directors and consultants, September			78,355						78,355
Issuance of common stock for services, October ($0.50, per shares), Shares		30,000
Issuance of common stock for services, October ($0.50, per shares), Amount		30	14,970						15,000
Issuance of options to employees, directors and consultants, October			155,185						155,185
Issuance of common stock for cash, October ($0.50 per share), Shares		16,000
Issuance of common stock for cash, October ($0.50 per share), Amount		16	7,984						8,000
Issuance of common stock for services, October ($0.67, per shares), Shares		15,000
Issuance of common stock for services, October ($0.67, per shares), Amount		15	9,985						10,000
Issuance of common stock for services, November ($0.50, per shares), Shares		188,000
Issuance of common stock for services, November ($0.50, per shares), Amount		188	93,812				(80,000)		14,000
Issuance of common stock for cash, November ($0.50 per share), Shares		100,000
Issuance of common stock for cash, November ($0.50 per share), Amount		100	49,900						50,000
Issuance of common stock for cash, November ($0.60 per share), Shares		2,833
Issuance of common stock for cash, November ($0.60 per share), Amount		3	1,697						1,700
Issuance of common stock for cash, October ($0.50, per share), Shares		16,000
Issuance of common stock for cash, October ($0.50, per share), Amount		16	7,984						8,000
Net loss				(1,465,077)					(1,465,077)
Ending Balance, Amount at Dec. 31, 2006		13,287	5,572,555	(5,838,977)			(207,111)	(90)	(460,336)
Ending Balance, Shares at Dec. 31, 2006		13,286,552
Amortization of prepaid services paid for with common stock							890,111		890,111
Issuance of common stock for cash, October ($0.50 per share), Shares		55,000
Issuance of common stock for cash, October ($0.50 per share), Amount		55	27,445						27,500
Issuance of options to consultants, January			155,188						155,188
Issuance of common stock for cash, January ($0.50 per share), Shares		26,000
Issuance of common stock for cash, January ($0.50 per share), Amount		26	12,974						13,000
Issuance of common stock for exercise of options, January ($0.50 per share), Shares		300,000
Issuance of common stock for exercise of options, January ($0.50 per share), Amount		300	149,700					(150,000)
Issuance of common stock for services, January ($0.66, per shares), Shares		50,000
Issuance of common stock for services, January ($0.66, per shares), Amount		50	32,950				(33,000)
Issuance of common stock for services, January ($0.51, per shares), Shares		10,000
Issuance of common stock for services, January ($0.51, per shares), Amount		10	5,090						5,100
Issuance of common stock for exercise of options, February ($0.50 per share), Shares		100,000
Issuance of common stock for exercise of options, February ($0.50 per share), Amount		100	49,900					(15,000)	35,000
Issuance of common stock for exercise of options, February ($0.60 per share), Shares		20,000
Issuance of common stock for exercise of options, February ($0.60 per share), Amount		20	11,980					(12,000)
Issuance of common stock for cash, February ($0.23 per share), Shares		239,130
Issuance of common stock for cash, February ($0.23 per share), Amount		239	54,761						55,000
Issuance of common stock for services, February ($0.87, per shares), Shares		50,000
Issuance of common stock for services, February ($0.87, per shares), Amount		50	43,200						43,250
Issuance of common stock for services, February ($0.72, per shares), Shares		20,000
Issuance of common stock for services, February ($0.72, per shares), Amount		20	14,280						14,300
Issuance of common stock for cash, February ($0.23 per share), Shares		558,696
Issuance of common stock for cash, February ($0.23 per share), Amount		559	127,941						128,500
Issuance of common stock for services, March ($0.65, per shares), Shares		25,000
Issuance of common stock for services, March ($0.65, per shares), Amount		25	16,225						16,250
Issuance of common stock for services, March ($0.70, per shares), Shares		25,000
Issuance of common stock for services, March ($0.70, per shares), Amount		25	17,475				(17,500)
Issuance of common stock for exchange of fixed assets, April ($0.50, per share), Shares		2,000
Issuance of common stock for exchange of fixed assets, April ($0.50, per share), Amount		2	998						1,000
Issuance of common stock for cash, May ($0.25, per share), Shares		24,000
Issuance of common stock for cash, May ($0.25, per share), Amount		24	5,976						6,000
Issuance of common stock for cash, June ($0.25, per share), Shares		26,000
Issuance of common stock for cash, June ($0.25, per share), Amount		26	6,474						6,500
Issuance of common stock for services, June ($0.43, per share), Shares		75,000
Issuance of common stock for services, June ($0.43, per share), Amount		75	32,175						32,250
Issuance of common stock for exchange of fixed assets, June ($0.50 per share), Shares		8,000
Issuance of common stock for exchange of fixed assets, June ($0.50 per share), Amount		8	3,992						4,000
Issuance of common stock for services, June ($0.44, per share), Shares		100,000
Issuance of common stock for services, June ($0.44, per share), Amount		100	43,900						44,000
Issuance of common stock and warrants for cash, July ($0.25, per share), Shares		72,000
Issuance of common stock and warrants for cash, July ($0.25, per share), Amount		72	17,928						18,000
Issuance of common stock for services, August ($0.55, per share), Shares		160,000
Issuance of common stock for services, August ($0.55, per share), Amount		160	87,840						88,000
Issuance of common stock for services, August ($0.50, per share), Shares		3,000
Issuance of common stock for services, August ($0.50, per share), Amount		3	1,497						1,500
Issuance of common stock for services, August ($0.38, per share), Shares		28,600
Issuance of common stock for services, August ($0.38, per share), Amount		28	10,839						10,867
Issuance of common stock and warrants for cash, August ($0.25, per share), Shares		270,000
Issuance of common stock and warrants for cash, August ($0.25, per share), Amount		270	67,230						67,500
Issuance of common stock for services, September ($0.50, per share), Shares		1,300,000
Issuance of common stock for services, September ($0.50, per share), Amount		1,300	648,700				(650,000)
Issuance of common stock for cash, September ($0.25, per share), Shares		164,000
Issuance of common stock for cash, September ($0.25, per share), Amount		164	40,836						41,000
Issuance of common stock for cash, September ($0.30, per share), Shares		26,666
Issuance of common stock for cash, September ($0.30, per share), Amount		26	7,973						7,999
Issuance of common stock for cash, September ($0.37, per share), Shares		54,243
Issuance of common stock for cash, September ($0.37, per share), Amount		53	19,646						19,699
Issuance of options & warrants to employees & consultants, September			108,470						108,470
Issuance of common stock for services, October ($0.25, per share), Shares		6,000
Issuance of common stock for services, October ($0.25, per share), Amount		6	1,494						1,500
Issuance of common stock for services, October ($0.56, per share), Shares		2,700
Issuance of common stock for services, October ($0.56, per share), Amount		3	1,497						1,500
Issuance of common stock for cash, October ($0.50, per share), Shares		55,000
Issuance of common stock for cash, October ($0.50, per share), Amount		55	27,445						27,500
Issuance of common stock for cash, October ($0.53, per share), Shares		1,905
Issuance of common stock for cash, October ($0.53, per share), Amount		2	998						1,000
Issuance of common stock for cash, November ($0.28, per share), Shares		125,291
Issuance of common stock for cash, November ($0.28, per share), Amount		125	34,956						35,081
Issuance of common stock for cash, November ($0.32, per share), Shares		1,563
Issuance of common stock for cash, November ($0.32, per share), Amount		1	499						500
Issuance of common stock for cash, November ($0.37, per share), Shares		40,000
Issuance of common stock for cash, November ($0.37, per share), Amount		40	14,760						14,800
Issuance of common stock for cash, November ($0.68, per share), Shares		25,000
Issuance of common stock for cash, November ($0.68, per share), Amount		25	16,850						16,875
Issuance of common stock for cash, December ($0.25, per share), Shares		68,000
Issuance of common stock for cash, December ($0.25, per share), Amount		68	16,932						17,000
Payment on receivable for common stock								10,000	10,000
Issuance of common stock for cash, January ($0.50, per share), Shares		26,000
Issuance of common stock for cash, January ($0.50, per share), Amount		26	12,974						13,000
Issuance of common stock for cash, February ($0.23, per share), Shares		239,130
Issuance of common stock for cash, February ($0.23, per share), Amount		239	54,761						55,000
Net loss				(2,470,352)					(2,470,352)
Ending Balance, Amount at Dec. 31, 2007		17,347	7,484,124	(8,309,329)			(17,500)	(90)	(992,448)
Ending Balance, Shares at Dec. 31, 2007		17,349,346
Amortization of prepaid services paid for with common stock							110,767		110,767
Issuance of common stock and warrants for cash, January ($0.15, per shares), Shares		200,000
Issuance of common stock and warrants for cash, January ($0.15, per shares), Amount		200	29,800		0	0	0	0	30,000
Issuance of common stock for services, February ($0.38, per shares), Shares		160,000
Issuance of common stock for services, February ($0.38, per shares), Amount		160	60,640						60,800
Issuance of common stock for services, February ($0.26, per shares), Shares		12,000
Issuance of common stock for services, February ($0.26, per shares), Amount		12	3,108						3,120
Issuance of common stock for services, April ($0.12, per share), Shares		210,000
Issuance of common stock for services, April ($0.12, per share), Amount		210	24,990				(20,000)		5,200
Issuance of common stock for services, May ($0.20, per share), Shares		350,000
Issuance of common stock for services, May ($0.20, per share), Amount		350	69,650				(61,600)		8,400
Issuance of common stock for cash, May ($0.10, per share), Shares		145,000
Issuance of common stock for cash, May ($0.10, per share), Amount		145	14,355						14,500
Issuance of common stock for cash, June ($0.10, per share), Shares		334,000
Issuance of common stock for cash, June ($0.10, per share), Amount		334	33,066						33,400
Issuance of common stock for cash, June ($0.085, per share), Shares		150,000
Issuance of common stock for cash, June ($0.085, per share), Amount		150	12,600						12,750
Issuance of common stock for cash, June ($0.08, per share), Shares		25,000
Issuance of common stock for cash, June ($0.08, per share), Amount		25	1,975						2,000
Issuance of common stock for services, June ($0.16, per share), Shares		300,000
Issuance of common stock for services, June ($0.16, per share), Amount		300	47,700				(48,000)
Value of the beneficial conversion feature for the issuance of convertible debt			25,000						25,000
Issuance of common stock for cash, July ($0.10, per share), Shares		379,500
Issuance of common stock for cash, July ($0.10, per share), Amount		380	37,571						37,951
Issuance of common stock for services, July ($0.15, per share), Shares		30,000
Issuance of common stock for services, July ($0.15, per share), Amount		30	4,470						4,500
Issuance of common stock for cash, August ($0.10, per share), Shares		101,000
Issuance of common stock for cash, August ($0.10, per share), Amount		101	9,999						10,100
Issuance of common stock for cash, September ($0.10, per share), Shares		369,000
Issuance of common stock for cash, September ($0.10, per share), Amount		369	36,531						36,900
Issuance of common stock for cash, September ($0.08, per share), Shares		306,250
Issuance of common stock for cash, September ($0.08, per share), Amount		306	24,194						24,500
Issuance of common stock for cash, October ($0.08, per share), Shares		3,750
Issuance of common stock for cash, October ($0.08, per share), Amount		4	296						300
Issuance of common stock for cash, October ($0.09, per share), Shares		40,000
Issuance of common stock for cash, October ($0.09, per share), Amount		40	3,560						3,600
Issuance of common stock for cash, October ($0.10, per share), Shares		27,000
Issuance of common stock for cash, October ($0.10, per share), Amount		27	2,673						2,700
Issuance of common stock for cash, November ($0.08, per share), Shares		12,500
Issuance of common stock for cash, November ($0.08, per share), Amount		13	987						1,000
Issuance of common stock for cash, November ($0.10, per share), Shares		32,400
Issuance of common stock for cash, November ($0.10, per share), Amount		32	3,208						3,240
Issuance of common stock for services, December ($0.071, per share), Shares		12,500
Issuance of common stock for services, December ($0.071, per share), Amount		13	875						888
Issuance of common stock for cash, December ($0.08, per share), Shares		161,250
Issuance of common stock for cash, December ($0.08, per share), Amount		161	12,739						12,900
Issuance of common stock for cash, December ($0.10, per share), Shares		27,300
Issuance of common stock for cash, December ($0.10, per share), Amount		27	2,603						2,630
Issuance of common stock for services, December ($0.09, per share), Shares		10,000
Issuance of common stock for services, December ($0.09, per share), Amount		10	890						900
Issuance of common stock for services, December ($0.13, per share), Shares		500,000
Issuance of common stock for services, December ($0.13, per share), Amount		500	64,500				(65,000)
Issuance of common stock for services, December ($0.17, per share), Shares		12,500
Issuance of common stock for services, December ($0.17, per share), Amount		13	2,112						2,125
Issuance of common stock for services, December ($0.1954, per share), Shares		100,000
Issuance of common stock for services, December ($0.1954, per share), Amount		100	19,435						19,535
Issuance of common stock for conversion of notes, December ($0.08, per share), Shares		26,297
Issuance of common stock for conversion of notes, December ($0.08, per share), Amount		26	1,974						2,000
Issuance of common stock for conversion of notes, December ($0.07, per share), Shares		270,468
Issuance of common stock for conversion of notes, December ($0.07, per share), Amount		270	19,730						20,000
Issuance of common stock for conversion of notes, December ($0.10, per share), Shares		202,703
Issuance of common stock for conversion of notes, December ($0.10, per share), Amount		203	14,797						15,000
Issuance of warrants for services, December			29,578						29,578
Net loss				(982,677)					(982,677)
Ending Balance, Amount at Dec. 31, 2008		21,858	8,099,730	(9,292,006)			(101,333)	(167,090)	(1,438,841)
Ending Balance, Shares at Dec. 31, 2008		21,859,764
Amortization of prepaid services paid for with common stock							571,625		571,625
Issuance of common stock for cash, January ($0.50 per share), Shares		200
Issuance of common stock for cash, January ($0.50 per share), Amount		1	98						99
Issuance of common stock for services, September ($0.50, per share), Shares		5,000
Issuance of common stock for services, September ($0.50, per share), Amount		5	2,495				(2,500)
Issuance of common stock for cash, September ($0.25, per share), Shares		46,000
Issuance of common stock for cash, September ($0.25, per share), Amount		46	11,454						11,500
Issuance of common stock for cash, September ($0.30, per share), Shares		21,333
Issuance of common stock for cash, September ($0.30, per share), Amount		21	6,379						6,400
Issuance of common stock for cash, June ($0.08, per share), Shares		420,000
Issuance of common stock for cash, June ($0.08, per share), Amount		420	34,562						34,982
Value of the beneficial conversion feature for the issuance of convertible debt			250,671						250,671
Issuance of common stock for cash, July ($0.10, per share), Shares		20,000
Issuance of common stock for cash, July ($0.10, per share), Amount		20	1,980						2,000
Issuance of common stock for cash, September ($0.10, per share), Shares		20,000
Issuance of common stock for cash, September ($0.10, per share), Amount		20	1,980						2,000
Issuance of common stock for conversion of notes, January ($0.06, per share), Shares		255,965
Issuance of common stock for conversion of notes, January ($0.06, per share), Amount		256	14,744						15,000
Issuance of common stock for cash, January ($0.50, per share), Shares		200
Issuance of common stock for cash, January ($0.50, per share), Amount		1	98						99
Issuance of common stock for cash, January ($0.07, per share), Shares		294,999
Issuance of common stock for cash, January ($0.07, per share), Amount		295	20,355						20,650
Issuance of common stock for cash, January ($0.08, per share), Shares		12,500
Issuance of common stock for cash, January ($0.08, per share), Amount		12	988						1,000
Issuance of common stock for cash, January ($0.10, per share), Shares		255,000
Issuance of common stock for cash, January ($0.10, per share), Amount		255	25,245						25,500
Issuance of common stock for conversion of notes, February ($0.06, per share), Shares		166,739
Issuance of common stock for conversion of notes, February ($0.06, per share), Amount		167	9,833						10,000
Issuance of common stock for conversion of notes, February ($0.09, per share), Shares		221,984
Issuance of common stock for conversion of notes, February ($0.09, per share), Amount		222	19,778						20,000
Issuance of common stock for cash, February ($0.07, per share), Shares		526,927
Issuance of common stock for cash, February ($0.07, per share), Amount		527	36,358						36,885
Issuance of common stock for cash, February ($0.10, per share), Shares		110,500
Issuance of common stock for cash, February ($0.10, per share), Amount		110	10,940						11,050
Issuance of common stock for services, March ($0.11, per share), Shares		300,000
Issuance of common stock for services, March ($0.11, per share), Amount		300	32,700				(33,000)
Issuance of common stock for conversion of notes, March ($0.07, per share), Shares		137,768
Issuance of common stock for conversion of notes, March ($0.07, per share), Amount		138	9,862						10,000
Issuance of common stock for conversion of notes, March ($0.08, per share), Shares		316,241
Issuance of common stock for conversion of notes, March ($0.08, per share), Amount		316	24,684						25,000
Issuance of common stock for cash, March ($0.07, per share), Shares		289,286
Issuance of common stock for cash, March ($0.07, per share), Amount		289	19,961						20,250
Issuance of common stock for cash, March ($0.10, per share), Shares		10,000
Issuance of common stock for cash, March ($0.10, per share), Amount		10	990						1,000
Issuance of warrants for services, January			36,644						36,644
Issuance of common stock for services, April ($0.09, per share), Shares		20,000
Issuance of common stock for services, April ($0.09, per share), Amount		20	1,780						1,800
Issuance of common stock for services, April ($0.10, per share), Shares		510,000
Issuance of common stock for services, April ($0.10, per share), Amount		510	50,490				(50,000)		1,000
Issuance of common stock for cash, April ($0.07, per share), Shares		274,999
Issuance of common stock for cash, April ($0.07, per share), Amount		275	18,975						19,250
Issuance of common stock for cash, April ($0.10, per share), Shares		29,500
Issuance of common stock for cash, April ($0.10, per share), Amount		30	2,920						2,950
Issuance of common stock for conversion of notes, April ($0.07, per share), Shares		511,979
Issuance of common stock for conversion of notes, April ($0.07, per share), Amount		512	34,488						35,000
Issuance of common stock for conversion of notes, April ($0.06, per share), Shares		158,897
Issuance of common stock for conversion of notes, April ($0.06, per share), Amount		159	9,841						10,000
Issuance of common stock for conversion of notes, May ($0.06, per share), Shares		399,617
Issuance of common stock for conversion of notes, May ($0.06, per share), Amount		399	24,601						25,000
Issuance of common stock for services, May ($0.09, per share), Shares		60,000
Issuance of common stock for services, May ($0.09, per share), Amount		60	5,090						5,150
Issuance of common stock for cash, May ($0.07, per share), Shares		77,000
Issuance of common stock for cash, May ($0.07, per share), Amount		77	5,313						5,390
Issuance of common stock for conversion of notes, June ($0.06, per share), Shares		381,098
Issuance of common stock for conversion of notes, June ($0.06, per share), Amount		381	24,619						25,000
Issuance of common stock for conversion of notes, June ($0.07, per share), Shares		934,516
Issuance of common stock for conversion of notes, June ($0.07, per share), Amount		935	54,065						55,000
Issuance of common stock and warrants for cash, June ($0.07, per share), Shares		582,142
Issuance of common stock and warrants for cash, June ($0.07, per share), Amount		582	40,168						40,750
Issuance of common stock for cash, July ($0.07, per share), Shares		976,250
Issuance of common stock for cash, July ($0.07, per share), Amount		976	67,361						68,337
Issuance of common stock for cash, July ($0.065, per share), Shares		215,500
Issuance of common stock for cash, July ($0.065, per share), Amount		216	13,792						14,008
Issuance of common stock for cash, July ($0.26, per share), Shares		3,846
Issuance of common stock for cash, July ($0.26, per share), Amount		4	996						1,000
Issuance of common stock for conversion of notes, July ($0.065, per share), Shares		153,941
Issuance of common stock for conversion of notes, July ($0.065, per share), Amount		154	9,846						10,000
Issuance of common stock for cash, August ($0.07, per share), Shares		130,000
Issuance of common stock for cash, August ($0.07, per share), Amount		130	8,970						9,100
Issuance of common stock for cash, August ($0.085, per share), Shares		58,822
Issuance of common stock for cash, August ($0.085, per share), Amount		59	4,941						5,000
Issuance of common stock and warrants for cash, August ($0.10, per share), Shares		1,480,000
Issuance of common stock and warrants for cash, August ($0.10, per share), Amount		1,480	146,520						148,000
Issuance of common stock for cash, August ($0.11, per share), Shares		10,000
Issuance of common stock for cash, August ($0.11, per share), Amount		10	1,090						1,100
Issuance of common stock for cash, August ($0.12, per share), Shares		100,000
Issuance of common stock for cash, August ($0.12, per share), Amount		100	11,900						12,000
Issuance of common stock for cash, August ($0.24, per share), Shares		152,498
Issuance of common stock for cash, August ($0.24, per share), Amount		153	36,447						36,600
Issuance of common stock for cash, August ($0.26, per share), Shares		140,384
Issuance of common stock for cash, August ($0.26, per share), Amount		140	36,360						36,500
Issuance of common stock for cash, August ($0.28, per share), Shares		16,785
Issuance of common stock for cash, August ($0.28, per share), Amount		17	4,683						4,700
Issuance of common stock for cash, August ($0.30, per share), Shares		164,000
Issuance of common stock for cash, August ($0.30, per share), Amount		164	49,036						49,200
Issuance of common stock for cash, August ($0.33, per share), Shares		6,363
Issuance of common stock for cash, August ($0.33, per share), Amount		6	2,094						2,100
Issuance of common stock for services, August ($0.09, per share), Shares		1,200,000
Issuance of common stock for services, August ($0.09, per share), Amount		1,200	106,800				(108,000)
Issuance of common stock for services, August ($0.25, per share), Shares		100,000
Issuance of common stock for services, August ($0.25, per share), Amount		100	24,900				(25,000)
Issuance of common stock for services, August ($0.10, per share), Shares		50,000
Issuance of common stock for services, August ($0.10, per share), Amount		50	4,950				(5,000)
Issuance of common stock for services, August ($0.16, per share), Shares		100,000
Issuance of common stock for services, August ($0.16, per share), Amount		100	15,900				(16,000)
Issuance of common stock for cash, September ($0.20, per share), Shares		40,000
Issuance of common stock for cash, September ($0.20, per share), Amount		40	7,960						8,000
Issuance of common stock for cash, September ($0.22, per share), Shares		286,361
Issuance of common stock for cash, September ($0.22, per share), Amount		286	62,714						63,000
Issuance of common stock for cash, September ($0.23, per share), Shares		126,086
Issuance of common stock for cash, September ($0.23, per share), Amount		126	28,874						29,000
Issuance of common stock for cash, September ($0.235, per share), Shares		29,787
Issuance of common stock for cash, September ($0.235, per share), Amount		30	6,970						7,000
Issuance of common stock for cash, September ($0.26, per share), Shares		84,230
Issuance of common stock for cash, September ($0.26, per share), Amount		84	21,816						21,900
Issuance of common stock for cash, September ($0.325, per share), Shares		1,230
Issuance of common stock for cash, September ($0.325, per share), Amount		1	399						400
Issuance of common stock for cash, September ($0.33, per share), Shares		67,000
Issuance of common stock for cash, September ($0.33, per share), Amount		67	22,043						22,110
Issuance of common stock for cash, September ($0.375, per share), Shares		10,000
Issuance of common stock for cash, September ($0.375, per share), Amount		10	3,740						3,750
Issuance of common stock for services, September ($0.47, per share), Shares		100,000
Issuance of common stock for services, September ($0.47, per share), Amount		100	46,900						47,000
Issuance of common stock for services, September ($0.61, per share), Shares		500,000
Issuance of common stock for services, September ($0.61, per share), Amount		500	304,500				(305,000)
Issuance of common stock and exercise of warrants for a reduction in a payable, September ($0.10, per share), Shares		350,000
Issuance of common stock and exercise of warrants for a reduction in a payable, September ($0.10, per share), Amount		350	34,650						35,000
Issuance of common stock options, July			40,706						40,706
Issuance of common stock for cash, October ($0.22, per share), Shares		11,363
Issuance of common stock for cash, October ($0.22, per share), Amount		11	2,489						2,500
Issuance of common stock for cash, October ($0.18, per share), Shares		246,107
Issuance of common stock for cash, October ($0.18, per share), Amount		246	44,054						44,300
Issuance of common stock for cash, October ($0.17, per share), Shares		25,882
Issuance of common stock for cash, October ($0.17, per share), Amount		26	4,374						4,400
Issuance of common stock for cash, November ($0.18, per share), Shares		98,775
Issuance of common stock for cash, November ($0.18, per share), Amount		99	17,681						17,780
Issuance of common stock for cash, November ($0.20, per share), Shares		167,500
Issuance of common stock for cash, November ($0.20, per share), Amount		168	33,332						33,500
Issuance of common stock for cash, December ($0.19 per share), Shares		2,500
Issuance of common stock for cash, December ($0.19 per share), Amount		3	472						475
Issuance of common stock for cash, December ($0.16, per share), Shares		100,000
Issuance of common stock for cash, December ($0.16, per share), Amount		100	15,900					(16,000)
Issuance of common stock for cash, December ($0.17, per share), Shares		5,882
Issuance of common stock for cash, December ($0.17, per share), Amount		6	994					(1,000)
Issuance of common stock for cash, December ($0.18, per share), Shares		102,111
Issuance of common stock for cash, December ($0.18, per share), Amount		102	18,278					(12,000)	6,380
Issuance of common stock for cash, December ($0.20, per share), Shares		10,000
Issuance of common stock for cash, December ($0.20, per share), Amount		10	1,990						2,000
Issuance of common stock for cash, December ($0.30, per share), Shares		1,100,000
Issuance of common stock for cash, December ($0.30, per share), Amount		1,100	328,900						330,000
Issuance of common stock for services, October ($0.42, per share), Shares		100,000
Issuance of common stock for services, October ($0.42, per share), Amount		100	41,900						42,000
Issuance of common stock for services, December ($0.38, per share), Shares		345,000
Issuance of common stock for services, December ($0.38, per share), Amount		345	130,755				(5,700)		125,400
Issuance of common stock for conversion of notes, December ($0.1284, per share), Shares		1,495,327
Issuance of common stock for conversion of notes, December ($0.1284, per share), Amount		1,495	190,505						192,000
Issuance of warrants			10,161						10,161
Payment on stock subscription receivables								90	90
Net loss				(2,271,917)					(2,271,917)
Ending Balance, Amount at Dec. 31, 2009		39,692	10,914,424	(11,563,923)			(79,908)	(196,000)	(885,715)
Ending Balance, Shares at Dec. 31, 2009		39,693,484
Amortization of prepaid services paid for with common stock							98,058		98,058
Issuance of common stock for cash, February ($0.23 per share), Shares		553,261
Issuance of common stock for cash, February ($0.23 per share), Amount		553	126,697						127,250
Value of the beneficial conversion feature for the issuance of convertible debt			248,889						248,889
Issuance of warrants for services, December			97,714						97,714
Issuance of common stock for cash, October ($0.18, per share), Shares		20,000
Issuance of common stock for cash, October ($0.18, per share), Amount		20	3,580						3,600
Issuance of common stock for cash, October ($0.17, per share), Shares		20,589
Issuance of common stock for cash, October ($0.17, per share), Amount		21	3,479						3,500
Payment on stock subscription receivables								29,000	29,000
Issuance of common stock for cash, February ($0.15, per share), Shares		135,000
Issuance of common stock for cash, February ($0.15, per share), Amount		135	20,115						20,250
Issuance of common stock for cash, February ($0.16, per share), Shares		318,420
Issuance of common stock for cash, February ($0.16, per share), Amount		318	50,629						50,947
Issuance of common stock for cash, February ($0.17, per share), Shares		159,647
Issuance of common stock for cash, February ($0.17, per share), Amount		160	26,980						27,140
Issuance of common stock for cash, February ($0.18, per share), Shares		10,000
Issuance of common stock for cash, February ($0.18, per share), Amount		10	1,790						1,800
Issuance of common stock for settlement of accounts payable, February ($0.261, per share), Shares		121,212
Issuance of common stock for settlement of accounts payable, February ($0.261, per share), Amount		120	31,504						31,624
Issuance of common stock for cash, February ($0.30, per share), Shares		101,000
Issuance of common stock for cash, February ($0.30, per share), Amount		101	30,199						30,300
Issuance of common stock for cash, February ($0.333, per share), Shares		100,000
Issuance of common stock for cash, February ($0.333, per share), Amount		100	33,233						33,333
Issuance of common stock for cash, February ($0.42, per share), Shares		33,000
Issuance of common stock for cash, February ($0.42, per share), Amount		33	13,827						13,860
Issuance of common stock for services, February ($0.475, per share), Shares		14,000
Issuance of common stock for services, February ($0.475, per share), Amount		14	6,636				(6,650)
Issuance of common stock for services, February ($0.575, per share), Shares		20,000
Issuance of common stock for services, February ($0.575, per share), Amount		20	11,480				(11,500)
Issuance of common stock for cash, March ($0.18, per share), Shares		10,000
Issuance of common stock for cash, March ($0.18, per share), Amount		10	1,790						1,800
Issuance of common stock for cash, March ($0.21, per share), Shares		4,761
Issuance of common stock for cash, March ($0.21, per share), Amount		5	995						1,000
Issuance of common stock for cash, March ($0.28, per share), Shares		357,142
Issuance of common stock for cash, March ($0.28, per share), Amount		357	99,643					(100,000)
Issuance of common stock for cash, March ($0.294, per share), Shares		6,803
Issuance of common stock for cash, March ($0.294, per share), Amount		7	1,993						2,000
Issuance of common stock for cash, March ($0.30, per share), Shares		152,666
Issuance of common stock for cash, March ($0.30, per share), Amount		153	45,647						45,800
Issuance of common stock for cash, March ($0.35, per share), Shares		6,000
Issuance of common stock for cash, March ($0.35, per share), Amount		6	2,094						2,100
Issuance of common stock for cash, March ($0.37, per share), Shares		13,514
Issuance of common stock for cash, March ($0.37, per share), Amount		14	4,986						5,000
Issuance of common stock for cash, March ($0.38, per share), Shares		50,000
Issuance of common stock for cash, March ($0.38, per share), Amount		50	18,950						19,000
Issuance of common stock for cash, March ($0.39, per share), Shares		1,025
Issuance of common stock for cash, March ($0.39, per share), Amount		1	399						400
Issuance of common stock for cash, March ($0.40, per share), Shares		3,000
Issuance of common stock for cash, March ($0.40, per share), Amount		3	1,197						1,200
Issuance of common stock for settlement of accounts payable, March ($0.269 per share), Shares		80,000
Issuance of common stock for settlement of accounts payable, March ($0.269 per share), Amount		80	21,420						21,500
Issuance of common stock for settlement of accounts payable, March ($0.53, per share), Shares		3,774
Issuance of common stock for settlement of accounts payable, March ($0.53, per share), Amount		4	1,996						2,000
Issuance of common stock for services, March ($0.485, per share), Shares		150,000
Issuance of common stock for services, March ($0.485, per share), Amount		150	72,600						72,750
Issuance of common stock for services, March ($0.49, per share), Shares		600,000
Issuance of common stock for services, March ($0.49, per share), Amount		600	293,400				(294,000)
Write off uncollectible stock subscription receivable, March			(155,000)					155,000
Issuance of common stock for cash, April ($0.34, per share), Shares		40,000
Issuance of common stock for cash, April ($0.34, per share), Amount		40	13,560						13,600
Issuance of common stock for cash, April ($0.36, per share), Shares		24,000
Issuance of common stock for cash, April ($0.36, per share), Amount		24	8,568						8,592
Issuance of common stock for cash, April ($0.39, per share), Shares		1,795
Issuance of common stock for cash, April ($0.39, per share), Amount		2	698						700
Issuance of common stock for cash, April ($0.42, per share), Shares		3,570
Issuance of common stock for cash, April ($0.42, per share), Amount		4	1,496						1,500
Issuance of common stock for cash, April ($0.43, per share), Shares		2,500
Issuance of common stock for cash, April ($0.43, per share), Amount		2	1,073						1,075
Issuance of common stock for cash, April ($0.44, per share), Shares		7,955
Issuance of common stock for cash, April ($0.44, per share), Amount		8	3,492						3,500
Issuance of common stock for cash, April ($0.45, per share), Shares		10,000
Issuance of common stock for cash, April ($0.45, per share), Amount		10	4,490						4,500
Issuance of common stock for services, April ($0.49, per share), Shares		55,000
Issuance of common stock for services, April ($0.49, per share), Amount		55	26,895						26,950
Issuance of common stock for cash, May ($0.35, per share), Shares		28,572
Issuance of common stock for cash, May ($0.35, per share), Amount		29	9,971						10,000
Issuance of common stock for cash, May ($0.40, per share), Shares		14,000
Issuance of common stock for cash, May ($0.40, per share), Amount		14	5,586						5,600
Issuance of common stock for cash, May ($0.44, per share), Shares		116,500
Issuance of common stock for cash, May ($0.44, per share), Amount		116	51,144						51,260
Issuance of common stock for cash, June ($0.28, per share), Shares		25,000
Issuance of common stock for cash, June ($0.28, per share), Amount		25	6,975						7,000
Issuance of common stock for cash, June ($0.30, per share), Shares		11,000
Issuance of common stock for cash, June ($0.30, per share), Amount		11	3,289						3,300
Issuance of common stock for cash, June ($0.31, per share), Shares		1,000
Issuance of common stock for cash, June ($0.31, per share), Amount		1	309						310
Issuance of common stock for cash, June ($0.32, per share), Shares		3,750
Issuance of common stock for cash, June ($0.32, per share), Amount		4	1,196						1,200
Issuance of common stock for services, June ($0.38, per share), Shares		150,000
Issuance of common stock for services, June ($0.38, per share), Amount		150	56,850						57,000
Issuance of common stock for services, June ($0.41, per share), Shares		100,000
Issuance of common stock for services, June ($0.41, per share), Amount		100	40,400						40,500
Payment received for stock subscription receivable, June								100,000	100,000
Issuance of common stock for cash, July ($0.21, per share), Shares		76,190
Issuance of common stock for cash, July ($0.21, per share), Amount		76	15,924						16,000
Issuance of common stock for conversion of notes, July ($0.24, per share), Shares		207,727
Issuance of common stock for conversion of notes, July ($0.24, per share), Amount		208	49,792						50,000
Issuance of common stock for cash, August ($0.19, per share), Shares		65,788
Issuance of common stock for cash, August ($0.19, per share), Amount		66	12,434						12,500
Issuance of common stock for conversion of notes, August ($0.19, per share), Shares		393,288
Issuance of common stock for conversion of notes, August ($0.19, per share), Amount		393	74,607						75,000
Issuance of common stock for cash, August ($0.20, per share), Shares		22,500
Issuance of common stock for cash, August ($0.20, per share), Amount		23	4,477						4,500
Issuance of common stock for cash, September ($0.17, per share), Shares		1,500,000
Issuance of common stock for cash, September ($0.17, per share), Amount		1,500	253,500						255,000
Issuance of common stock for conversion of notes, September ($0.18, per share), Shares		269,472
Issuance of common stock for conversion of notes, September ($0.18, per share), Amount		269	49,731						50,000
Forfeiture of common stock issued for services, September, Shares		(600,000)
Forfeiture of common stock issued for services, September, Amount		(600)	(293,400)				294,000
Common stock commitment at $0.25 - $0.27						274,000	(193,596)		80,404
Issuance of common stock for cash, October ($0.19, per share), Shares		52,632
Issuance of common stock for cash, October ($0.19, per share), Amount		53	9,947						10,000
Issuance of common stock for cash, November ($0.14, per share), Shares		2,000
Issuance of common stock for cash, November ($0.14, per share), Amount		2	278						280
Issuance of common stock for cash, November ($0.15, per share), Shares		1,333
Issuance of common stock for cash, November ($0.15, per share), Amount		1	199						200
Issuance of common stock for cash, December ($0.104, per share), Shares		10,000
Issuance of common stock for cash, December ($0.104, per share), Amount		10	1,030						1,040
Issuance of common stock for conversion of notes, October ($0.155, per share), Shares		258,732
Issuance of common stock for conversion of notes, October ($0.155, per share), Amount		259	39,741						40,000
Issuance of common stock for conversion of notes, November ($0.156, per share), Shares		244,059
Issuance of common stock for conversion of notes, November ($0.156, per share), Amount		244	37,756						38,000
Issuance of common stock for services, November ($0.23, per share), Shares		5,000
Issuance of common stock for services, November ($0.23, per share), Amount		5	1,145						1,150
Issuance of common stock for services, December ($0.15, per share), Shares		2,500
Issuance of common stock for services, December ($0.15, per share), Amount		2	373						375
Net loss				(2,569,223)					(2,569,223)
Ending Balance, Amount at Dec. 31, 2010		45,843	12,526,812	(14,133,147)	0	274,000	(193,596)	(12,000)	(1,492,089)
Ending Balance, Shares at Dec. 31, 2010		45,844,161
Issuance of common stock for cash, June ($0.10, per share), Shares		6,000
Issuance of common stock for cash, June ($0.10, per share), Amount		6	594						600
Value of the beneficial conversion feature for the issuance of convertible debt			7,000						7,000
Issuance of common stock for cash, July ($0.10, per share), Shares		200,000
Issuance of common stock for cash, July ($0.10, per share), Amount		200	19,800						20,000
Issuance of common stock for cash, September ($0.10, per share), Shares		9,615
Issuance of common stock for cash, September ($0.10, per share), Amount		10	990						1,000
Issuance of common stock for cash, October ($0.10, per share), Shares		50,000
Issuance of common stock for cash, October ($0.10, per share), Amount		50	4,950						5,000
Issuance of common stock for cash, February ($0.10, per share), Shares		401,000
Issuance of common stock for cash, February ($0.10, per share), Amount		401	39,699						40,100
Issuance of common stock for cash, March ($0.10, per share), Shares		997,000
Issuance of common stock for cash, March ($0.10, per share), Amount		997	98,703						99,700
Issuance of common stock for services, April ($0.10, per share), Shares		260,000
Issuance of common stock for services, April ($0.10, per share), Amount		260	25,740						26,000
Issuance of common stock for settlement of accounts payable, January ($0.15, per share), Shares		443,667
Issuance of common stock for settlement of accounts payable, January ($0.15, per share), Amount		444	66,106						66,550
Issuance of common stock for services, January ($0.15, per share), Shares		2,500
Issuance of common stock for services, January ($0.15, per share), Amount		3	373						376
Issuance of common stock for accrued payroll, January ($0.10, per share), Shares		150,000
Issuance of common stock for accrued payroll, January ($0.10, per share), Amount		150	14,850						15,000
Issuance of common stock for services, January ($0.24, per share), Shares		300,000
Issuance of common stock for services, January ($0.24, per share), Amount		300	71,700			(72,000)
Issuance of common stock for services, February ($0.25, per share), Shares		700,000
Issuance of common stock for services, February ($0.25, per share), Amount		700	174,300			(175,000)
Issuance of common stock for services, February ($0.27, per share), Shares		100,000
Issuance of common stock for services, February ($0.27, per share), Amount		100	26,900			(27,000)
Issuance of common stock for conversion of note, March ($0.15, per share), Shares		166,667
Issuance of common stock for conversion of note, March ($0.15, per share), Amount		167	24,833						25,000
Issuance of common stock for cash, April ($0.14, per share), Shares		71,428
Issuance of common stock for cash, April ($0.14, per share), Amount		71	9,929						10,000
Issuance of common stock for conversion of note, April ($0.15, per share), Shares		166,667
Issuance of common stock for conversion of note, April ($0.15, per share), Amount		167	24,833						25,000
Issuance of common stock for cash, April ($0.17, per share), Shares		82,353
Issuance of common stock for cash, April ($0.17, per share), Amount		82	13,918						14,000
Issuance of common stock for services, April ($0.27, per share), Shares		65,000
Issuance of common stock for services, April ($0.27, per share), Amount		65	17,972						18,037
Issuance of common stock for services, April ($0.15, per share), Shares		3,000,000
Issuance of common stock for services, April ($0.15, per share), Amount		3,000	447,000						450,000
Issuance of common stock for cash, April ($0.13, per share), Shares		106,154
Issuance of common stock for cash, April ($0.13, per share), Amount		106	13,694						13,800
Issuance of common stock for services, June ($0.13, per share), Shares		250,000
Issuance of common stock for services, June ($0.13, per share), Amount		250	32,250						32,500
Issuance of common stock for cash, June ($0.18, per share), Shares		2,000
Issuance of common stock for cash, June ($0.18, per share), Amount		2	358						360
Issuance of common stock for services, July ($0.14, per share), Shares		250,000
Issuance of common stock for services, July ($0.14, per share), Amount		250	34,750						35,000
Issuance of common stock subscription, July								(200,000)	(200,000)
Issuance of common stock for settlement of accounts payable, July ($0.14, per share), Shares		169,734
Issuance of common stock for settlement of accounts payable, July ($0.14, per share), Amount		170	23,593						23,763
Issuance of common stock for cash, August ($0.08, per share), Shares		130,000
Issuance of common stock for cash, August ($0.08, per share), Amount		130	10,270						10,400
Issuance of common stock for cash, September ($0.18, per share), Shares		2,000
Issuance of common stock for cash, September ($0.18, per share), Amount		2	358						360
Issuance of warrants for services, September			104,778						104,778
Issuance of common stock for services, October ($0.05, per share), Shares		50,000
Issuance of common stock for services, October ($0.05, per share), Amount		50	2,450						2,500
Issuance of common stock for settlement of accounts payable, October ($0.10, per share), Shares		578,000
Issuance of common stock for settlement of accounts payable, October ($0.10, per share), Amount		578	57,222						57,800
Issuance of common stock for services, October ($0.10, per share), Shares		850,000
Issuance of common stock for services, October ($0.10, per share), Amount		850	84,150						85,000
Issuance of common stock for services, October ($0.14, per share), Shares		100,000
Issuance of common stock for services, October ($0.14, per share), Amount		100	13,900						14,000
Issuance of common stock for services, October ($0.20, per share), Shares		1,000,000
Issuance of common stock for services, October ($0.20, per share), Amount		1,000	199,000						200,000
Issuance of warrants for services, October			83,847						83,847
Commitment for common stock for cash, November ($0.05 per share)						3,650			3,650
Amortization of stock for services							110,868		110,868
Net loss				(2,238,011)					(2,238,011)
Ending Balance, Amount at Dec. 31, 2011		56,503	14,277,622	(16,371,158)	0	3,650	(82,728)	(212,000)	(2,328,111)
Ending Balance, Shares at Dec. 31, 2011		56,503,946
Issuance of common stock for cash, May ($0.10, per share), Shares		20,000
Issuance of common stock for cash, May ($0.10, per share), Amount		20	1,980						2,000
Issuance of common stock for cash, January ($0.10, per share), Shares		1,395,000
Issuance of common stock for cash, January ($0.10, per share), Amount		1,395	138,105						139,500
Issuance of common stock for cash, April ($0.10, per share), Shares		45,000
Issuance of common stock for cash, April ($0.10, per share), Amount		45	4,455						4,500
Issuance of common stock for cash, January ($0.05, per share), Shares		173,000
Issuance of common stock for cash, January ($0.05, per share), Amount		173	8,477						8,650
Issuance of common stock for cash, January ($0.06, per share), Shares		66,666
Issuance of common stock for cash, January ($0.06, per share), Amount		67	3,933						4,000
Issuance of common stock for cash, January ($0.04, per share), Shares		25,000
Issuance of common stock for cash, January ($0.04, per share), Amount		25	975						1,000
Issuance of common stock for cash, January ($0.03, per share), Shares		4,000,000
Issuance of common stock for cash, January ($0.03, per share), Amount		4,000	116,000						120,000
Issuance of common stock for cash, January ($0.112, per share), Shares		589,285
Issuance of common stock for cash, January ($0.112, per share), Amount		589	65,411						66,000
Issuance of common stock for services, February ($0.13, per share), Shares		850,000
Issuance of common stock for services, February ($0.13, per share), Amount		850	109,650						110,500
Issuance of common stock for services, March ($0.13, per share), Shares		500,000
Issuance of common stock for services, March ($0.13, per share), Amount		500	64,500						65,000
Issuance of common stock for cash, February ($0.05, per share), Shares		100,000
Issuance of common stock for cash, February ($0.05, per share), Amount		100	4,900						5,000
Issuance of common stock for services, February ($0.17, per share), Shares		200,000
Issuance of common stock for services, February ($0.17, per share), Amount		200	33,800						34,000
Issuance of preferred stock for accrued payroll, March ($0.67, per share), Shares	500,000
Issuance of preferred stock for accrued payroll, March ($0.67, per share), Amount	500		334,785						335,285
Issuance of common stock for debt, April ($0.12, per share), Shares		250,000
Issuance of common stock for debt, April ($0.12, per share), Amount		250	1,508,000						1,508,250
Issuance of common stock for services, April ($0.13, per share), Shares		500,000
Issuance of common stock for services, April ($0.13, per share), Amount		500	64,500						65,000
Issuance of common stock for services, April ($0.14, per share), Shares		100,000
Issuance of common stock for services, April ($0.14, per share), Amount		100	13,400						13,500
Issuance of common stock for cash, April ($0.05, per share), Shares		440,000
Issuance of common stock for cash, April ($0.05, per share), Amount		440	21,560						22,000
Issuance of common stock for cash, May ($0.09, per share), Shares		7,777
Issuance of common stock for cash, May ($0.09, per share), Amount		8	692						700
Issuance of common stock for conversion of debt, June ($0.03, per share), Shares		807,273
Issuance of common stock for conversion of debt, June ($0.03, per share), Amount		807	21,393						22,200
Issuance of common stock for conversion of debt, June ($0.04, per share), Shares		519,019
Issuance of common stock for conversion of debt, June ($0.04, per share), Amount		519	21,481						22,000
Issuance of common stock for conversion of debt, October ($0.01, per share), Shares		845,070
Issuance of common stock for conversion of debt, October ($0.01, per share), Amount		845	11,155						12,000
Issuance of common stock for conversion of debt, December ($0.01, per share), Shares		1,132,075
Issuance of common stock for conversion of debt, December ($0.01, per share), Amount		1,132	10,868						12,000
Issuance of common stock for services, December ($0.01, per share), Shares		100,000
Issuance of common stock for services, December ($0.01, per share), Amount		100	1,100						1,200
Amortization of prepaid services						16,350	25,343		41,693
Net loss				(1,160,250)					(1,160,250)
Ending Balance, Amount at Dec. 31, 2012	500	69,168	16,913,769	(17,531,408)		20,000	(57,385)	(212,000)	(797,356)
Ending Balance, Shares at Dec. 31, 2012	500,000	69,169,111
Issuance of common stock for cash, January ($0.01, per share), Shares		2,000,000
Issuance of common stock for cash, January ($0.01, per share), Amount		2,000	18,000						20,000
Issuance of common stock for conversion of debt, February ($0.059, per share), Shares		2,542,373
Issuance of common stock for conversion of debt, February ($0.059, per share), Amount		2,542	12,458						15,000
Issuance of common stock for conversion of debt, March ($0.006, per share), Shares		1,000,000
Issuance of common stock for conversion of debt, March ($0.006, per share), Amount		1,000	4,600						5,600
Issuance of common stock for conversion of debt, March ($0.003, per share), Shares		3,233,333
Issuance of common stock for conversion of debt, March ($0.003, per share), Amount		3,233	6,467						9,700
Issuance of common stock for conversion of debt, March ($0.004, per share), Shares		1,500,000
Issuance of common stock for conversion of debt, March ($0.004, per share), Amount		1,500	3,750						5,250
Issuance of common stock for relief of common stock payable, March ($0.005, per share), Shares		4,000,000
Issuance of common stock for relief of common stock payable, March ($0.005, per share), Amount		4,000	16,000			(20,000)
Issuance of common stock for cash, March ($0.01, per share), Shares		2,500,000
Issuance of common stock for cash, March ($0.01, per share), Amount		2,500	22,500					10,000	25,000
Issuance of common stock for conversion of debt, April ($0.0042, per share), Shares		3,571,429
Issuance of common stock for conversion of debt, April ($0.0042, per share), Amount		3,571	11,429						15,000
Issuance of common stock for conversion of debt, April ($0.0035, per share), Shares		7,200,000
Issuance of common stock for conversion of debt, April ($0.0035, per share), Amount		7,200	18,000						25,200
Issuance of common stock for conversion of debt, May ($0.0023, per share), Shares		4,173,913
Issuance of common stock for conversion of debt, May ($0.0023, per share), Amount		4,174	5,426						9,600
Issuance of common stock for conversion of debt, May ($0.0021, per share), Shares		3,800,000
Issuance of common stock for conversion of debt, May ($0.0021, per share), Amount		3,800	4,180						7,980
Issuance of common stock for conversion of debt, May ($0.0018, per share), Shares		5,222,222
Issuance of common stock for conversion of debt, May ($0.0018, per share), Amount		5,222	4,178						9,400
Issuance of common stock for conversion of debt, June ($0.00161, per share), Shares		3,900,000
Issuance of common stock for conversion of debt, June ($0.00161, per share), Amount		3,900	2,379						6,279
Issuance of common stock for conversion of debt, June ($0.0015, per share), Shares		5,200,000
Issuance of common stock for conversion of debt, June ($0.0015, per share), Amount		5,200	2,600						7,800
Issuance of common stock for cash, June ($0.005, per share), Shares		5,000,000
Issuance of common stock for cash, June ($0.005, per share), Amount		5,000	20,000						25,000
Issuance of common stock for cash, July ($0.003, per share), Shares		5,000,001
Issuance of common stock for cash, July ($0.003, per share), Amount		5,000	10,001						15,000
Issuance of common stock for conversion of debt, July ($0.00189, per share), Shares		4,200,000
Issuance of common stock for conversion of debt, July ($0.00189, per share), Amount		4,200	3,738						7,938
Issuance of common stock for cash, July ($0.0035, per share), Shares		2,857,143
Issuance of common stock for cash, July ($0.0035, per share), Amount		2,857	7,143						10,000
Issuance of common stock for cash, July ($0.005, per share), Shares		3,900,000
Issuance of common stock for cash, July ($0.005, per share), Amount		3,900	15,600						19,500
Issuance of common stock for cash, July ($0.01, per share), Shares		200,000
Issuance of common stock for cash, July ($0.01, per share), Amount		200	1,800						2,000
Issuance of common stock for cash, August ($0.0025, per share), Shares		1,000,000
Issuance of common stock for cash, August ($0.0025, per share), Amount		1,000	1,500						2,500
Issuance of common stock for loan costs, August ($0.008, per share), Shares		41,333,333
Issuance of common stock for loan costs, August ($0.008, per share), Amount		41,333	289,333		(330,667)
Issuance of common stock for cash, August ($0.0058, per share), Shares		3,448,276
Issuance of common stock for cash, August ($0.0058, per share), Amount		3,448	16,552						20,000
Issuance of common stock for cash, August ($0.01, per share), Shares		30,000
Issuance of common stock for cash, August ($0.01, per share), Amount		30	270						300
Issuance of common stock for conversion of debt, August ($0.0021, per share), Shares		8,000,000
Issuance of common stock for conversion of debt, August ($0.0021, per share), Amount		8,000	8,800						16,800
Issuance of common stock for loan costs, September ($0.008, per share), Shares		41,333,333
Issuance of common stock for loan costs, September ($0.008, per share), Amount		41,333	289,333		(330,667)
Issuance of common stock for loan costs, September ($0.01, per share), Shares		13,157,895
Issuance of common stock for loan costs, September ($0.01, per share), Amount		13,158	118,421		(131,579)
Issuance of common stock for loan costs, September ($0.02, per share), Shares		5,000,000
Issuance of common stock for loan costs, September ($0.02, per share), Amount		5,000	95,000		(100,000)
Issuance of common stock for conversion of debt, November ($0.0049, per share), Shares		1,500,000
Issuance of common stock for conversion of debt, November ($0.0049, per share), Amount		1,500	5,850						7,350
Issuance of common stock for cash, November ($0.005, per share), Shares		1,993,334
Issuance of common stock for cash, November ($0.005, per share), Amount		1,993	7,973						9,967
Issuance of common stock for loan costs, November ($0.008, per share), Shares		5,000,000
Issuance of common stock for loan costs, November ($0.008, per share), Amount		5,000	35,000		(40,000)
Issuance of common stock for services, November ($0.015, per share), Shares		100,000
Issuance of common stock for services, November ($0.015, per share), Amount		100	1,400						1,500
Issuance of common stock for conversion of debt, December ($0.0056, per share), Shares		1,700,000
Issuance of common stock for conversion of debt, December ($0.0056, per share), Amount		1,700	7,820						9,520
Issuance of common stock for cash, December ($0.005, per share), Shares		700,000
Issuance of common stock for cash, December ($0.005, per share), Amount		700	2,800						3,500
Issuance of common stock for loan costs, December ($0.015, per share), Shares		4,000,000
Issuance of common stock for loan costs, December ($0.015, per share), Amount		4,000	56,000		(60,000)
Cash received for subscription recivable								(10,000)
Commitment to issue 41,333,334 shares as loan costs for $0.008 per share					(330,667)	330,667
Amortization of deferred non-cash offering costs					103,982				103,982
Amortization of services paid for with common stock							19,392		19,392
Commitment to issue shares for services at $0.012 per share in January						5,400			5,400
Commitment to issue shares for services at $0.005 per share in September						1,000			1,000
Commitment to issue shares for services at $0.005 per share in December						5,000			5,000
Relief of derivative liability through conversion of shares			289,703						289,703
Net loss				(887,672)					(887,672)
Ending Balance, Amount at Dec. 31, 2013	$ 500	$ 268,464	$ 18,329,773	$ (18,419,080)	$ (1,219,598)	$ 342,067	$ (37,993)	$ (212,000)	$ (947,867)
Ending Balance, Shares at Dec. 31, 2013	500,000	268,465,696							82,666,666

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

3. Significant Accounting Policies

The significant accounting policies followed are:

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.

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. We have never experienced any losses related to these balances. All of our non-interest bearing cash balances were fully insured at December 31, 2013 and 2012. Insurance coverage was $250,000 per depositor at each financial institution, and our non-interest bearing cash balances may again exceed federally insured limits. At December 31, 2013 and 2012, there were no amounts held in interest bearing accounts.

The Company’s financial instruments include cash, accounts payable, accrued liabilities and notes payable. The carrying amounts of cash, accounts payable and accrued liabilities approximate their fair value, due to the short-term nature of these items. The carrying amount of notes payable approximates their fair value due to the use of market rates of interest and maturity schedules for similar issues. The derivative liability is recorded at fair value (see Note 10).

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.

The Company evaluates the recoverability of its long-lived assets or asset groups whenever adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related assets may be less than previously anticipated. If the net book value of the related assets exceed the undiscounted future cash flows of the assets, the carrying amount would be reduced to the present value of their expected future cash flows and an impairment loss would be recognized. There have been no impairment losses in any of the periods presented.

Research and development costs are charged to operations when incurred and are included in operating expenses. The amounts charged for the year ended December 31, 2013 and 2012 and the period November 27, 2000 (date of inception) to December 31, 2013 amounted to $0, $0 and $3,882,494, respectively.

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending on the classification of the assets or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The principal types of temporary differences between assets and liabilities for financial statements and tax return purposes are set forth in Note 8.

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits at December 31, 2013 or 2012 and since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

The Company entered into various loan agreements with a Canadian company. In accordance with the loan agreements, the Company issued shares of common stock to the Canadian company as additional costs in obtaining the financing. These shares have been accounted for as contra-equity deferred non-cash debt issuance costs and they are being amortized as interest expense over the life of the notes which are five years. Foreign currency translation gains and losses, when material, have been recorded as other comprehensive income in the statement of changes in stockholders’ deficit.

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. Common stock equivalents for the years ended December 31, 2013 and 2012 were anti-dilutive due to the net losses sustained by the Company during these periods. For the years ended December 31, 2013 and 2012 potentially dilutive common stock options and warrants of 6,655,413 and 5,405,413 have been excluded from dilutive earnings per share due to the Company’s losses in all periods presented. Additionally, convertible notes payable were convertible into approximately 1,630,000 shares of common stock based on the conversion price at December 31, 2013. Potential common shares from convertible preferred stock are excluded from the computation of diluted earnings per share of 500,000 shares.

The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).

There were no grants awarded in 2013 and 2012.

The Company issues common stock and common stock options and warrants to consultants for various services. For these transactions, the Company follows the guidance in FASB ASC Topic 505. Costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measureable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instrument is reached or (ii) the date at which the counterparty’s performance is complete. For the periods ended December 31, 2013 and 2012, the Company recognized approximately $46,300 and $331,000, respectively, in consulting expenses (see Note 7).

In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities. The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The Company had a derivative liability associated with an embedded conversion option that is included as a level 2 input (see Note 10).

Recent accounting pronouncements

Other recent accounting pronouncements issued by the FASB (including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s financial statements.

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Significant Accounting Policies (Detail Narrative) (USD $)	12 Months Ended		157 Months Ended
	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2013
Significant Accounting Policies Detail Narrative
Research and development costs			$ 3,882,494
Potentially dilutive common stock options and warrants	6,655,413	5,405,413
Convertible notes payable, shares	1,630,000		1,630,000
Consulting expenses	$ 46,300	$ 331,000

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Income Taxes (Details 1) (USD $)	Dec. 31, 2013	Dec. 31, 2012
Deferred tax assets (liability), noncurrent:
Depreciation	$ 1,900	$ 2,000
License agreement	158,400	237,600
Capitalized start up costs	5,097,800	4,906,000
Net operating loss	649,700	560,700
Stock compensation	105,900	109,400
Accrued expenses	233,760	174,500
Contribution carryover	2,700	2,700
Debt issuance		2,100
Amortization expense and beneficial conversion features		(25,100)
Valuation allowance	(6,250,160)	(5,969,900)
Deferred tax assets, total

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Subsequent Events

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

13. Subsequent Events

Subsequent to the year ended December 31, 2013, the Company issued 1,479,000 shares of common stock for the conversion of a note payable and related accrued interest of $10,353 through February 4, 2014.

Subsequent to the year ended December 31, 2013, the Company issued 7,155,352 shares of common stock for cash of $55,849 to investors.