10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal years ended December 31, 2015 and 2014

Or

[  ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from              to

Commission file number 000-54449

Cyclone Power Technologies, Inc.

(Exact name of registrant as specified in its charter)

Florida	26-0519058
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
601 NE 26th Ct, Pompano Beach, Florida	33064
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number (954) 943-8721

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

Title of each class	Name of each exchange on which registered
None	None

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

Common Stock, $0.0001 par value

(Title of class)

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

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 [X] No

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 a 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. [X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [  ] No

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

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

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the closing price of such shares on the last business day of the registrant’s most recently completed fiscal year was approximately $2,100,000.

The number of shares outstanding of the registrant’s common stock as of Dec. 31, 2016 is 1,517,400,273

DOCUMENTS INCORPORATED BY REFERENCE—NONE

TABLE OF CONTENTS

FORM 10-K

		Page
	Part I
Item 1.	BUSINESS	3
Item 1A.	RISK FACTORS	7
Item 1B.	UNRESOLVED STAFF COMMENTS	7
Item 2.	PROPERTIES	8
Item 3.	LEGAL PROCEEDINGS	8
Item 4.	MINE SAFETY DISCLOSURES	8
	Part II
Item 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	8
Item 6.	SELECTED FINANCIAL DATA	9
Item 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	9
Item 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	14
Item 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	14
Item 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	14
Item 9A.	CONTROLS AND PROCEDURES	14
Item 9B.	OTHER INFORMATION	15
	Part III
Item 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	16
Item 11.	EXECUTIVE COMPENSATION	20
Item 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	24
Item 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	25
Item 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES	25
	Part IV
Item 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	26
	SIGNATURES	31

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Part I

Item 1. Business

Summary

Cyclone Power Technologies, a Florida corporation (OTCQB: CYPW) (the “Company,” “Cyclone,” or “we,” “our” is a clean-tech innovation company based in Pompano Beach, Florida. We were incorporated onJuly 5, 2007__. Our mission is to develop power technologies that lead to more efficient and diverse utilization of energy resources, less dependence on fossil fuels, and a cleaner environment.

Since 2006, we have completed multiple prototype stages and received 33 patents on the Cyclone Engine, an external heat engine that generates mechanical power by expanding super-heated steam rapidly inside its cylinders. This steam expansion pushes pistons and turns a shaft. Hot water is then expelled into a condenser to cool and return to the external heat source to repeat the process in a closed loop. This is a Rankine cycle, which is how nuclear and coal-fired power plants produce electricity.

What makes the Cyclone Engine different from power plants is size. Cyclone Engines are compact systems that can be used for distributed power generation (i.e., a small electric home generator that also co-generates hot water and space heating) and transportation applications. Unlike power plants that use turbines which are difficult to build cost-effectively and run efficiently in small sizes, we are designing our engines to be easy to manufacture, high performance, compact piston engines.

What makes the Cyclone Engine different from piston steam engines of the past is efficiency. Based on current testing, we are able to convert up to approximately 33% of the energy content of fuel into usable power. This is approximately a 400% improvement over historical steam engines and on par with today’s small diesel engines. We are able to achieve such high thermal efficiencies because we have figured out how to run our engines without using lubricating oil which carbonizes at high temperatures. Without that limitation we are able to utilize steam heated to the same temperature and pressures as used by large power plants. High temperature = high efficiency; and high pressure = high power density.

What makes the Cyclone Engine more useful than diesel engines is fuel diversity. As an external heat engine that uses steam to create mechanical power, how that steam is created is of little consequence. We can use traditional fossil or bio-fuels in our patented, clean-burning combustion chamber. We can integrate our engine with gasifiers that dispose biomass and bio-waste. We can capture exhaust heat from furnaces or other engines. We can even use solar thermal collectors to harness the energy of the sun.

The market opportunities for Cyclone Engines are vast. We estimate that our technology addresses a market potential of roughly $100+ billion, and touches virtually all areas of power generation and transportation, as well as the production of U.S bio-fuels, natural gas and coal.

We currently have three engines in development addressing markets that present what we believe to be the best and most immediate opportunities:

● Our Mark 1 and Mark 3 model engines address the alternative energy markets to provide an external combustion engine able to burn various fuels providing power for usable mechanical and/or electric power. Our business model is to subcontract the manufacturing of these models and sell them to commercial customers and vertical partners starting in 2017.

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● Transportation and Equipment: Our Mark 5 model engine is a powerful, multi-fuel and clean burning demonstrator for the automotive, marine and off-road equipment markets. Our business model is to secure strong development partners in these sectors to provide program funding and support to allow us to complete a heavy equipment and vehicle integration in 2017.

● Portable / Mobile Power: Our S-2 model engine was developed and accepted under a contract with the U.S. Army as a portable, multi-fuel power generator for vehicles and forward operating bases. We have licensed this technology to Falck Schmidt Defense Systems (“FSDS”) of Denmark , a worldwide military supplier. They will take the unit to a trial for military compliance.

The advantages of our technology have been widely recognized. We first caught the public eye as Popular Science Magazine’s Invention of the Year in 2008, and since then, we have secured engine development contracts with Raytheon, the U.S. Army, Phoenix Power Group (waste-to-energy), Combilift (European equipment manufacturer). FSDS (military supplier) and Integrated Biomass Energy System, FZ-LLC (“IBES”), a United Arab Emirates corporation . We have formed working relationships with other major defense and industrial groups, and teaming agreements with multiple “vertical” development partners that manufacture and distribute furnaces, gasifiers, electric generators and other synergistic technologies.

Business Objectives

Our business objective is to design and develop engines that we can manufacture through sub-contracted parties for direct sale to customers, which include Original Equipment Manufacturers (OEMs) of different clean combustion / heat technologies (such as biomass gasifiers and pyrolysis, methane and natural gas, wood pellet furnaces, solar collectors and similar items), and OEM’s in the equipment / transportation sectors. We also license our technology to manufacturers and other producers of specialized applications.

Based on our business model, our revenue has or will come from:

● Development and engineering fees from customers, partners and licensees;

● Direct sales revenue from engines we manufacture through sub contractors;

● Up-front license fees and on-going royalties based on sales by our licensees.

● Direct sales of Cyclone powered generators to distributors..

Development Status of Technology

Our products are in development, however, prototypes of several different models and sizes are near completion. The following lists each of the Cyclone Engines and products that we have in development:

Model	Size	Uses	Stage
Mark 1	5 HP	Power generation –all fuels and heat sources	Preproduction units (10) in field testing
Mark 3	25 HP	Auxiliary power for military, biomass to power, portable power	Preproduction units (15) at OEM’s
Mark 5	100 HP	Transportation, commercial power, military	Beta Prototype (2)
Combustion Chamber		Waste fuels, biomass to power, for :transportation, commercial power, military	Preproduction units (25)

(1)	“Pre Production Unit” refers to an engine in the process of being engineered for manufacturing at OEM’s
(2)	Beta Prototype” refers to a second generation prototype engine, which has undergone significant testing at Cyclone’s facility.

Our engines are currently in customer field testing, and there is no guarantee that they will successfully meet customer expectations when completed.

4

Research and Development Activities

As a technology research and development company, much of our annual expenses are dedicated towards R&D, including labor costs, material costs, tooling and equipment and other expenses required to run our business. Our R&D expenditures for 2015 and 2014 were $467,610 and $1,018,552, respectively.

We actively pursue development agreements with customers, whereby we will develop an engine, design plans or other products to spec at the customer’s full or partial expense. Sometimes these arrangements are part of a more expansive license agreement.

Prototyping and Manufacturing

We currently contract with multiple suppliers for the production of many of our prototype parts, which we design and then assemble and test at our facility. In 2014, we acquired the machinery to produce in-house a greater portion of this prototype manufacturing work, which we believe has saved us considerable time and money. For production of prototypes we have contracted with one or more manufacturers that have the expertise, machinery, tooling and other capital assets required to commercialize and manufacture in mass production our engines.

Competitive Business Conditions

We believe that our technology, which is a small-scale heat-regenerative, Rankine cycle external combustion engine, has little direct competition. However, depending on the industry in which these engines are applied, indirect competitors utilizing different technologies do exist.

Currently, there are several companies which have developed and commercialized other types of external heat engines, such as Stirling engines. Stirling engines are similar to our technology and are used in overlapping applications (such as solar thermal power generation), however; the two engine technologies have several major differences, including size, power-density, and adaptability to fluctuations in heat and load. Based on preliminary testing and analysis, we believe that our engine technology may be superior to the Stirling engines in these aspects; and thus, has more applications in waste heat and mobile uses (i.e., cars, trucks and ships). We have not yet commercialized our engine technology, and these claims are still to be proven. Also, several Stirling engine companies such as Infinia Corp. have greater capital resources than we do, which could help establish their technology in the marketplace quicker than we can.

Other technologies that may be indirectly competitive with our engines are lithium-ion batteries and hydrogen fuel cells. Batteries are useful for some applications where limited sustained power (torque) and operating time is needed, however, they are just “fuel tanks” which allow for power that is generated elsewhere (i.e., a coal-fired power plant) to be saved and transported. The 100hp Cyclone engine we are currently developing, which would produce approximately 50kW of electric output, weighs just 125lbs, is 2 ft in diameter and height, and is expected to cost 10 times less to produce. Once again, these claims are based on our current beliefs and developmental testing, as we have not yet produced commercial products.

Patents and IP Protection

We currently have the following patents issued or allowed on our engine technology:

Active U.S. Patents
U.S. No. 7,080,512 B2	Heat Regenerative Engine
U.S. No. 7,407,382 B2	Steam Generator in a Heat Regenerative Engine
U.S. No. 7,856,822 B2	Heat Regenerative Engine
U.S. No. 7,856,823 B2	Pre-Heater Coil in a Heat Regenerative Engine

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Active Foreign Patents/Applications - Heat Regenerative Engine

European Patent No. 1809865

Australian Patent No. 2005284864

Brazilian Application No. P10515305-0

Canadian Patent No. 2577585

Chinese Patent No. ZL200580030436.4

Japanese Patent No. 4880605

Mexican Patent No. 285078

Russian Patent No. 2357091

South African Patent No. 2007/02947

Indonesian Patent No. IDP0024346*

Indian Patent Application No. 1949/DELNP/2007

Pursuant to new US Patent Office regulations, upon approval, expired patents can be reestablished from inception. We have also taken advantage of reissues to include changes and broaden the patents. We pursue a rigorous patent strategy, pursuant to which (and subject to our available cash resources) we file patents in the U.S. for our engines, their individual components, and other innovations and inventions we develop. We also pursue patents internationally in countries where we believe we may have manufacturing or sales opportunities and/or competition. Despite these efforts, we cannot make assurances that our patents will not infringe on other patents throughout the world, that other groups will not try to infringe on our patents, and if either of these were to occur, that we would have the resources to defend our rights. If this were to occur, it could have a material adverse effect on our business.

We require all customers, suppliers and other partners to execute Non-Disclosure Agreements. We also require our employees and certain contractors to sign agreements that assign to us any innovations or discoveries they develop while working for us or working with our technology. Our license agreements contain similar assignment provisions. We feel that these efforts are satisfactory in protecting our technology with respect to people and companies with which we have direct business relationships.

Sources and availability of raw material

We purchase raw materials and components from multiple sources, none of which may be considered a principal or material supplier. If necessary we could replace these suppliers with minimal effect on our business operations.

Dependence on one or a few major customers

We have contracts for development and licensing of our engine technology: Combi-Lift LTD. (a global materials handling and lift equipment manufacturer based in Ireland), FSDS (global military products manufacturing and supplier) IBES (a producer of biomass furnace electric systems) and G2E (a solar engineering company for Mexico and South America). We have formed working relationships with other major industrial groups, and teaming agreements with manufacturers. Q2 Power Inc. has been formally notified to cure contract breaches.

Because of the diversification of applications, uses and business models, and the current stage of our development / product sales cycle, we do not believe that the loss of the licensee or development partner would have a material adverse impact on our current or future operations. Additionally, we are actively pursuing other licensees and development partners in other product categories.

6

Governmental regulation

Our Products. Power systems are subject to extensive statutory and regulatory requirements that directly or indirectly impose standards governing emissions and noise. Our engines, when they will ultimately be installed in power systems, will be subject to compliance with all current emissions standards imposed by the EPA, state regulatory agencies in the United States, including CARB, and other regulatory agencies around the world and established for power systems utilized in applications such as electric generators or off-highway industrial equipment. EPA and CARB regulations imposed on engines utilized in industrial off-highway equipment generally serve to restrict emissions, with a primary focus on oxides of nitrogen, particulate matter and hydrocarbons. Emission regulations for engines utilized in off-highway industrial equipment vary based upon the use of the equipment into which the engine is incorporated (such as stationary power generation or mobile off-highway industrial equipment), and the type of fuel used to drive the power system. Further, applicable emission thresholds differ based upon the gross power of an engine utilized in industrial off-highway equipment. Additionally, most emissions thresholds are designed for gasoline and diesel-powered “spark-ignited” internal combustion engines, and not external combustion engines like Cyclone’s engines. In 2015, Cyclone received EPA and CARB certifications for all fuels 25HP and below for power generation.

Our markets can be positively or negatively impacted by the effects of governmental and regulatory matters. We are affected not only by energy policy, laws, regulations and incentives of governments in the markets into which we sell, but also by rules, regulations and costs imposed by utilities. Utility companies or governmental entities could place barriers on the installation of our product or the interconnection of the product with the electric grid. Further, utility companies may charge additional fees to customers who install on-site power generation, thereby reducing the electricity they take from the utility, or for having the capacity to use power from the grid for back-up or standby purposes. These types of restrictions, fees or charges could hamper the ability to install or effectively use our products or increase the cost to our potential customers for using our systems in the future. This could make our systems less desirable, thereby adversely affecting our revenue and profitability potential. In addition, utility rate reductions can make our products less competitive which would have a material adverse effect on our future operations. These costs, incentives and rules are not always the same as those faced by technologies with which we compete. However, rules, regulations, laws and incentives could also provide an advantage to our distributed generation solutions as compared with competing technologies if we can achieve required compliance at a lower cost when our engines are commercialized. Additionally, reduced emissions and higher fuel efficiency could help our future customers combat the effects of global warming. Accordingly, we may benefit from increased government regulations that impose tighter emission and fuel efficiency standards. Cyclone has already received EPA and CARB emissions certification for generators any fuel 25 horsepower and under.

Our Operations. Our operations are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. We may be required to incur significant costs to comply with such laws and regulations in the future, and any failure to comply with such laws or regulations could have a material adverse effect upon our ability to do business.

Because of our work with the military, we have registered with the U.S. Department of State under its International Trafficking in Arms Regulations (ITAR). We do not believe we develop, sell or export any covered munitions under these Regulations, but have registered the company in an abundance of precaution.

Employees. As of December 31, 2016, we had 6 full-time employees including management, and one part-time employee. We consider our relations with our employees to be good. None of our employees are covered under any labor union or collective bargaining agreement. As needed we contract with specialized labor and consultants to control costs.

Item 1A. Risk Factors

Not required for smaller reporting companies.

Item 1B. Unresolved Staff Comments

None.

7

Item 2. Properties

We currently operate in a 6,000 sf leased warehouse facility at an annual rate of $ 63,600. Our address is 601 NE 26th Ct., Pompano Beach, FL 33064. The lease expires Dec 2016, with a one (1) year option that contains a 2% rate increase in our rent. We believe these facilities are in good condition, but we still may need to expand our operating space further as our research and development efforts expand.

In September 2014, as part of the spinoff of the Q2 Power Inc. subsidiary (fka Cyclone WHE-Gen), Q2 Power, Inc. retained our Joint Operations and sublease agreement with Precision CNC. Q2 Power’s rent expense, prior to its spinoff, was $13,957 for approximately 2,500 sf of office and warehouse space at its new facility in Lancaster, Ohio.

Item 3. Legal Proceedings

Effective May 8, 2015, the Company is subject to a default judgment in Dallas Texas of approximately $175,000 plus interest for non-payment of convertible debt and interest, attorney fees and court costs. The Company is negotiating a reduced settlement. Judgement entered in 160^th District Court of Dallas county, Texas, Case No: DC-15-00829, on April 3, 2015, between the Company and JSJ Investments Inc. for default of convertible note.

In August 2015, the Company is subject to a default judgement $166,000 plus interest for non- payment of a convertable warrant true up. The Company is seeking to arrange a reduced settlement. Judgement entered in United States District Court of Utah, Central Division, case No: 215-cv-00536-PMW, on May 17, 2016, between the Company and Tonaquint Inc. for default of true up on a convertible warrant.

Item 4. Mine Safety Disclosures

None.

PART II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is currently traded on the OTC Pink sheets. The following table represents the high and low bid information for our common stock for each quarterly period within the two most recent fiscal years, as regularly quoted on the OTCPK. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions, and may not necessarily represent actual transactions.

According to the records of our transfer agent and NOBO listing, as of March 31, 2015, there were approximately 4,000 shareholders of record of our common stock, and two shareholders of record of our Series B Preferred Stock.

Year Ended December 31, 2015

	High Bid Price		Low Bid Price
First Quarter	$	0.0021	$	0.0002
Second Quarter		0.0090		0.0002
Third Quarter		0.0023		0.0005
Fourth Quarter		0.0030		0.0007

Year ended December 31, 2014

	High Bid Price		Low Bid Price
First Quarter	$	0.0400	$	0.0200
Second Quarter		0.0240		0.0040
Third Quarter		0.0065		0.0012
Fourth Quarter		0.0029		0.0012

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Dividend Policy.

We have not paid any dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. We intend to retain any earnings to finance the growth of our business. We cannot assure you that we will ever pay cash dividends. Whether we pay cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, capital requirements and any other factors that the Board of Directors decides are relevant. See Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 6. Selected Financial Data

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This report contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:

● the ability to successfully complete commercialization of our technology;

● changes in existing and potential relationships with customers and collaborative partners;

● the ability to retain certain members of management;

● our expectations regarding general and administrative expenses;

● our expectations regarding cash availability and balances, capital requirements, anticipated revenue and expenses, including infrastructure and patent expenditures;

● other factors detailed from time to time in filings with the SEC.

In addition, in this registration, we use words such as “anticipate,” “believe,” “plan,” “expect,” “future,” “intend,” and similar expressions to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this registration. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this registration may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statement.

Overview

We are engaged in the research and development of all-fuel, eco-friendly engine technologies. Several prototypes of these engines are current beta tested, pre-production tested or nearing completion with 2 models currently in limited production . While we started to generate revenue from its operations as early as 2008, it has not had material or consistent revenue in each of the last two fiscal years. For us to maintain and expand our operations through the next 12 months, we will seek license and development agreements that provide up-front or progress payment revenue to us. We will also will continue to pursue raising capital by means of equity or debt offerings.

In 2015, the TARDAC (S2) engine was delivered, on time, and accepted, by the U.S. Army. This contract was for approximately $1.4 million. We have licensed this S2 technology to FSDS, to take it to TRL9 for military compliance. We have received $150,000 with another $75,000 due on delivery for 2 S2 systems.

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In 2017, with additional resources, our R&D team will also move towards completion of the Mark 5 project. This engine is to be delivered to Combilift for clean-burning material lift equipment, and used in our land speed record (LSR) streamliner to attempt a run for the fastest steam car on earth. With respect to the Combilift contract, we are forecasting an additional $300,000 in revenue from the delivery of two Mark 5 engines to this customer. We are also pursuing other R&D contracts that both support and build-off of these two engine programs, inclusive of marine power applications.

Financing Transactions.

In 2015, We financed our operations through funds generated from a $50,000 note payable and an increase in trade accounts payables, accrued liabilities and payables and debt to related parties of approximately $940,000.00.

In 2014, we financed our in 2014 through revenue generated from the final payment of the U.S. Army Contract, as well as multiple debt transactions, which are typically convertible into common stock at 30 - 44% discounts to market. None of these notes were secured or contained any warrants. Additionally, we received approximately $.5 million, from the Whe-Gen sale/license. Also, we incurred an increase in trade accounts payables , accrued liabilities and payables and debt to related parties of approximately $827,000.00.

Corporate Structural Actions. We will continue to take decisive steps to mature our structure and operations to attract funding from investors with long range horizons and strategic partners who can add value from multiple directions. This type of funding is different from the convertible notes we used to finance us over the last few years.

In the second quarter of 2015, to strengthening our balance and capital structure, management forgave a total of $1.36 million of deferred salaries and debt. This action was meant to reduce liabilities and demonstrate management’s strong faith in our future.

Stock for Services and Contracts. During the year ended December 31, 2015, we amortized (based on vesting) $2,526 of common stock options for employee services.

Research & Development. We invest considerably in the development of our technology. Over the years, these investments have led to over 30 patents and substantial progress towards the commercialization of our engine technology. For 2015, our R&D expenses were $467,610.

Commitments for Capital and Operational Expenditures. Should additional funding be secured, we could increase the number of skilled and unskilled employees on payroll, including the recruitment of high level executive management and additional engineers and mechanical staff.

Critical Accounting Policies. Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which requires management to make estimates, assumptions and related expectations. Management believes that these estimates, assumptions and related expectations upon which we depend at the time are reasonable based upon information then available. These estimates, assumptions and related expectations affect the reported amounts of the balance sheet and income statement for the timeframe of the financial statements presented. To the degree that there are significant variances between these estimates and assumptions and actual results, there would be an effect on the financial statements. GAAP mandates specific accounting treatment in numerous situations and does not require management’s estimates and judgment in its application. Alternative accounting treatments, where available, based on management’s estimates and judgments would not produce a materially different result. The following should be read in conjunction with our consolidated financial statements and related notes.

Intangible assets, consisting primarily of patents, are deemed to be critical for the furtherance of our business objectives and our engine products. Impairment is not currently reflective, as we are developing our products and obtaining new contracts based on these engine and associated technology patents.

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We review inventory for engine manufacturing on an ongoing basis for obsolescence as engine designs are revised, with resultant charges to R&D.

For purposes of valuing stock based compensation, we use market prices of our common stock as of the time of issuance. We use the Black Scholes valuation method for valuing our stock based compensation from common stock options. This method requires us to make estimates and assumptions regarding stock prices, stock volatility, dividend yields, expected exercise term and risk-free interest rates.

Our audited consolidated financial statements include our accounts and our 95% owned subsidiary, Cyclone Performance, and the activity through deconsolidation as of at September 30, 2014, of our former 74% owned subsidiary Q 2 power Inc. (fka Cyclone-WHE). We have eliminated all material inter-company transactions and balances in our consolidated financial statements. The accompanying audited consolidated financial statements have been prepared in accordance with GAAP in the United States for financial information. In our management’s opinion, all adjustments considered necessary for a fair presentation of financial statements have been included and such adjustments are of a normal recurring nature.

Off-Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for facilitating off-balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

Results of Operations

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Revenues

Our revenues declined $329,027, or 100%, to $0 for the year ended December 31, 2015 compared to $329,027 for the comparable period in 2014. The lack of revenues was due to current contracts on a completed contract basis versus prior milestone basis. Our 2014 revenues included $140,527 from the successful fulfillment of the final milestone under the U.S. Army contract, and $175,000 from the income recognition of the license agreement with Q2 Power.

Gross Profit

Our gross profit declined $240,220, or 100%, to $0 for the year ended December 31, 2015 compared to $240,220 for the comparable period in 2014. The decrease is due to no sales in 2015. Our 2014 Cost of Goods Sold included approximately $88,000 related to the U.S. Army contract.

Operating Expenses

Our operating expenses decreased $1,890,075, or 63%, to $1,128,147 for the year ended December 31, 2015 compared to $3,018,222 for the comparable period in 2014. The majority of the decrease was due to lower research and development expenses of $550,942 (54%) that were attributable the spin off in 2014 of the WHE engine as well as a reduction in staff and the 2014 loss on retirement of R&D equipment. This was partially offset by a $112,000 2015 inventory reserve. General and administrative expenses were lower by $1,237,049 (65%) due to reduced staffing and related expenses, lower stock based payments for services and cost controls reflective of funding considerations. Advertising and promotion expenses were $102,084 or 93% lower reflective of the 2014 $ 85,583 loss on the retirement of demonstration equipment.

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Operating Loss

Our operating losses decreased $1,649,855, or 59%, to $1,128,147 for the year ended December 31, 2015 compared to $2,778,002 for the comparable period in 2014.

Other Income (Expense)

Net other expense for the year ended December 31, 2015 was ($342,156) primarily attributable to interest expense. Net other expense for the year ended December 31 2014 of $(2,176,423) was inclusive of interest expense of $1,327,102, losses related to derivative liability of $147,680 and realization loss provisions on the valuation of WHE Gen investment and note receivable of $706,756.

Net Income and Earnings per Share

Our net loss decreased $3,484,122, or 70%, to $1,470,303 for the year ended December 31, 2015 compared to $4,954,425 for the comparable period in 2014. The decrease is due to the factors set forth above. The resulting net loss per weighted average share for 2015 and 2014 was ($0.00) and ($0.01), respectively.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

Revenues

Our revenues decreased $323,355, or 45%, to $329,027 for the year ended December 31, 2014 compared to $715,382 for the comparable period in 2014. Revenues for 2014 included $140,527 from the successful fulfillment of the final milestone under the U.S. Army contract, and $175,000 from the income recognition of the license agreement with Q2 Power.

Our revenue for 2013 included $502,882 from the successful fulfillment of two milestones under the U.S. Army Contract, $150,000 from the successful fulfillment of a key milestone of our amended license agreement with Phoenix Power Group, and recognition of $62,500 from our termination of our license agreement with Great Wall Power Systems in China.

Gross Profit

Gross profit for the years ended December 31, 2014 and 2013 was $240,220 and $ 150,496, respectively, an increase of $89,924 or 60% .. Included in 2014 Cost of Goods Sold was approximately $88,000 related to the Army contract. . Included in the 2013 Cost of Goods Sold was $380,422 related to the Army contract and $184,464 related to the Phoenix Power Group license revenue.

Operating Expenses

Operating Expenses for the year ended December 31, 2014 were $3,018,222 as compared to $2,884,300 for the same period in the previous year, an increase of $133,922 or 4.6%. The majority of the increase was due to higher research and development expenses of $245,757 (32 %) that were attributable the pre-spin off in 2014 of the WHE engine testing. General and administrative expenses were lower by $209,952 (10%) due to reduced staffing and related expenses, lower stock based payments for services and cost controls reflective of funding considerations.

Operating Loss

The operating losses for the years ended December 31, 2014 and 2013 were $2,778,002 and $2,733,804, respectively, a higher loss of $44,198 or 1.6%, due to the factors outlined above.

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Other Income (Expense)

Net other (expense) for the year ended December 31 2014 was ($2,176,423), versus net expense of ($1,057,739) for the compable period of the prior year, a higher loss of $1,118,684 or 106%. Net other expense for the year ended December 31 2014 of $(2,176,423) was inclusive of interest expense of $1,327,102, losses related to derivative liability of $147,680 and realization loss provisions on the valuation of WHE Gen investment and note receivable of $706,756.

The net other expense for the year ended December 31, 2013 of $1,057,739 was primarily attributable to interest expense of $923,939.

Net Income and Earnings per Share.

The net loss for the year ended December 31, 2014 was $4,954,425, as compared to $3,791,543 for the same period in the previous year, a higher loss of $1,162,882 (31%) due to the factors outlined above. The resulting net loss per weighted average share for 2014 and 2013 was ($0.01) and ($0.00), respectively.

Liquidity and Capital Resources

Our working capital deficiency decreased by $346,970 or 13%, to $2,272,018 for the year ended December 31, 2015 compared $2,618,988 for the comparable period in 2014. The reduction is primarily due to officers foregiveness of accrued salaries of $655,225 and foregiveness of $710,272 of accrued rent, lease payments and related interest due an officer’s company partially offset by higher payable and accruals of $342,541

 For the year ended December 31, 2015, funds were primarily used by the net loss of ($1,470,303) and an increase of $46,465 in inventory. Funds were provided by debt proceeds of $50,000, an increase in accounts payable and accrued liabilities of $483,129, and an increase in related party payables and debt of $457,564. Non cash charges were $174,043 for amortization of derivative debt discounts, an $192,000 inventory reserve provision and $75,574 of depreciation and intangible amortization.

For the year ended December 31, 2014, funds were primarily used by the net loss of ($4,954,425). Funds were provided by $515,000 proceeds of notes and loans, a $530,235 increase in trade payables and accruals and a $196,977 increase in related party payables and accruals. Net cash flow from the deconsolidation of the Whe Gen subsidiary and the loss provisions on the investment realization were approximately $1.0 million. Non cash charges were $949,841 of amortization of debt discounts, $126,575 for issuance of restricted common stock, options and warrants for services, an $80,000 inventory reserve provision and a $147,680 loss on notes payable derivative liability.

Cash Flow Management Plan

Through 2016, we collected contract progress payments and contract deposits of $170,000, and collected approximately $100,000 in traditional, non derivative related debt. In the second quarter of 2016, in recognition of the declining market value and low market volume, we sold all of our investment in Q 2 Power Technologies for $44,000.

In 2016, we have submitted approximately $3 million in grant (or grant-type) applications and proposals with various government offices, which could provide non-dilutive funding for our development.

Our auditors have issued a going concern opinion for the years ended December 31, 2014 and 2015. Management is optimistic, however, that revenue can be generated and funding can be secured to maintain operations and development at the current pace.

With respect to our Land Speed Record vehicle, we believe that this asset will be useful for marketing can also generate marketing funding for us. We have had interest from corporations and private investors in sponsoring or outright purchasing the vehicle, either of which could provide substantial financial support to us.

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Recent Accounting Pronouncements

Our significant accounting policies are described in Note 1 to the accompanying financial statements, and above in “Critical Accounting Policies”.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements at this time.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Not required for smaller reporting companies.

Item 8. Financial Statements and Supplementary Data

Financial statements required by this Item 8 are included at the end of this report as listed on Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

a) Dismissal of Independent Registered Accounting Firm

On July 26,2016, we terminated the engagement of Mallah Furman & Company, P.A.(“MF”) as our independent registered accounting firm. This action effectively dismissed MF as our independent registered accounting firm for the fiscal year ending December 31, 2014 and 2015. MF’s reports on our consolidated financial statements for the fiscal year ended December 31, 2013 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the report included an explanatory paragraph relating to an uncertainty as to our ability to continue as a going concern. Furthermore, since December 31, 2013, there have been no disagreements with MF on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to MF’s satisfaction, would have caused MF to make reference to the subject matter of the disagreement in connection with its reports on our consolidated financial statements for such periods.

Except as noted in this paragraph, since January 1, 2014, there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation SK.

(b) Engagement of New Independent Registered Accounting Firm

On July 25, 2016, we appointed Anton & Chia,, LLP (A&C) as our new independent registered accounting firm with respect to the fiscal years ended December 31, 2015 and 2014. In addition, we engaged A&C to review the quarterly financial statements of March 31, 2015, June 30, 2015, and September 30, 2015.

Since July, 2016, neither us nor anyone acting on our behalf consulted A&C, with respect to any of the matters or reportable events set forth in Item 304(a)(2)(i) and (ii) of Regulation SK.

Item 9A. Controls and Procedures

Disclosure Controls

None.

Item 9A. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our President (Chief Executive Officer) and Chief Financial Officer, of the effectiveness of our financial disclosures, controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2015 and 2014.

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A material weakness can be defined as an insufficiency of internal controls that may result in a more than remote likelihood that a material misstatement will not be prevented, detected or corrected in a company’s financial statements.

Based upon that evaluation, our President (Chief Executive Officer) and Chief Financial Officer concluded that our disclosure controls and procedures were not effective, based on the following deficiencies:

- Weaknesses in Accounting and Finance Personnel: We have a small accounting staff and we do not have the robust employee resources and expertise needed to meet complex and intricate GAAP and SEC reporting requirements of a U.S. public company. Additionally, numerous adjustments and proposed adjustments have been noted by our auditors. This is deemed by management to be a material weakness in preparing financial statements.

- We have written accounting policies and control procedures, but we do not have sufficient staff to implement the related controls. Management had determined that this lack of the implantation of segregation of duties, as required by our written procedures, represents a material weakness in our internal controls.

- Internal control has as its core a basic tenant of segregation of duties. Due to our limited size and economic constraints, we are not able to segregate for control purposes various asset control and recording duties and functions to different employees. This lack of segregation of duties had been evaluated by management, and has been deemed to be a material control deficiency.

We have determined that the above internal control weaknesses and deficiencies could result in a reasonable possibility for interim financial statements that material misstatements will not be prevented or detected on a timely basis by our internal controls.

Changes in Internal Control Over Financial Reporting and Procedures.

Management is currently evaluating what steps can be taken to address these material weaknesses. As a growing small business, we continuously devote resources to the improvement of our internal control over financial reporting. Due to budget constraints, the staffing size, proficiency and specific expertise in the accounting department is below requirements for the operation. We are anticipating correcting deficiencies as funds become available.

Item 9B. Other Information

None.

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Part III

Item 10. Directors, Executive Officers and Corporate Governance

The names, ages, positions and dates appointed of our current directors and executive officers are set forth in the table below:

Name	Age	Position	Date of Appointment
Harry Schoell	74	Chairman and Chief Technology Officer	June 2004*
Frankie Fruge	72	Director and President	June 2004
Bruce Schames	70	Chief Financial Officer	April 2010
James Hasson	76	Director	June 2014
Dennis Dudzik	65	Director	June 2014

* Mr. Schoell originally served as our Chairman and Chief Executive Officer. In October 2012, he transitioned from CEO to our Chief Technology Officer (CTO).

Harry Schoell, Chairman and Chief Technology Officer, is a life-long entrepreneur and inventor. He is a native Floridian, born in Miami, and a third generation inventor and engineer. Mr. Schoell has worked for years to realize his dream to create an environmentally-friendly engine, and has 30 patents issued and allowed to date on the Schoell Cycle heat regenerative external combustion engine, now called the Cyclone Engine.

Mr. Schoell is well versed in all facets of manufacturing procedures, including, appropriate foundry protocol, castings, machining, production design and manufacturing, and plastic and fiberglass laminates. He also has experience in designing, inventing and building unique boat hull designs and patented marine propulsion systems, through Schoell Marine, a company he founded in 1966 and still exists today.

Mr. Schoell built Schoell Marine and its reputation based on his original ideas, trained engineers, and prototype and production specialists – the same as he is doing now for Cyclone. Over these 40+ years, his efforts resulted in over 40 specialized patents and patent applications, including a Jet Drive System, a trimmable surface drive, a “Ground Effect Craft”, and a lightweight internal engine that he designed and built in 1990. Mr. Schoell belongs to SAE (Society of Automotive Engineers), the ASME (American Society of Marine Engineers), and The Society of Naval Architects and Marine Engineers.

Mr. Schoell’s qualifications to be a director of the Company, in addition to his business background (as described above), include his intimate involvement in the development of the Cyclone Engine as well as the business plan for its commercialization. Mr. Schoell has no other Board of Directors affiliations with public companies other than with the Company. He is a director of Schoell Marine, Inc.

Frankie Fruge serves as our President and Director. She has been with us since our inception in 2004 in the role of General Partner and Director of Administration. Ms. Fruge oversees our daily operations and financial matters.

Ms. Fruge has been working with Mr. Schoell since 1995, serving in multiple administrative, operational and financial positions with Schoell Marine. Between 1999 and 2003, Ms. Fruge was President of Propulsion Systems, Inc., a company that developed and sold marine surface drives, and then CFO of Pulse Drive Inc., between 2003 and 2005, a company also in the marine propulsion field.

Prior to her career in marine-based engine technology, Ms. Fruge spent over 10 years as an operating engineer for several oil refinery companies in Louisiana, including Conoco, and eight years as an auditor for Ernst & Ernst (the predecessor company to Ernst & Young). Ms. Fruge is also a certified industrial firefighter, is Chairman of the Board of the International Association for Advancement of Steam Power, Corp. (a 501c3) and is a former board member of the Steam Automobile Club of America. on the Board of the Steam Automobile Club of America.

Ms. Fruge’s qualification to be a director of us, in addition to her general business background (as described above), include her extensive hands-on engineering experience. Ms. Fruge has no other Board of Directors affiliations.

Bruce Schames serves as our CFO. He has been a CPA since 1971, representing both public and private clients in his own practice since 2001. Prior to that, Mr. Schames served as CFO of East Coast Beverage Corp. (OTCBB: ECBV), Medcom USA (NASDAQ: EMED), Financial Reporting Manager for Dole Fresh Fruit Co., and in various accounting and reporting capacities of NYSE companies. Mr. Schames received his BBA from Baruch College of the City University of N.Y., and an MBA from the University of Southern California.

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James Hasson Since 1994 he has been President and owner of Hypex, Inc., a company that designs and builds machinery for the pharmaceutical, medical device, aerospace, food and other specialized industries. and has additionally presided over three acquisitions and three start-ups. Previously, Mr. Hasson was President and CEO of Citisteel USA, Inc., where he managed over 300 people and led the company to over $100 million in annual revenue; President and CEO of Magnetic Metals Corp., a$50 million manufacturing business; and Vice President and General Manager of the manufacturing division of LaSalle Steel Company, with over $200 million in sales. Mr. Hasson holds a BS in Mechanical Engineering from Drexel University, an AS in Mechanical Engineering from Pennsylvania State University.

Dennis Dudzik is the founder and President of the International Association for the Advancement of Steam Power (IAASP), a leading global non-profit organization dedicated to the advancement and commercialization of modern steam power. In his professional capacity for URS Corporation, Mr. Dudzik is the Program and Contract Manager for Integrated Resource Plan services to Los Angeles Department of Water and Power (LADWP), and Program and Contract Manager for major power project environmental and engineering services contracts for the Sacramento Municipal Utility District (SMUD). He has held key management roles in over a dozen major electric generation, transmission, and substation projects over the last 12 years. Mr. Dudzik served as the Contract Manager for the construction contracts for the 30 MW Ormesa Geothermal Power Project, the 125 MW NCPA Combustion Turbine Project, and provided permitting services for the 47 MW COLMAC Power Project, as well as numerous other California power projects. He also is a Professional Engineer.

Board Leadership Structure and Role in Risk Oversight

We have not adopted a formal policy on whether the Chairman and Chief Executive Officer positions should be separate or combined. Mr. Schoell served as our Chief Executive Officer and Chairman since inception in 2004 until 2012 when he was appointed as our Chief Technology Officer. No one currently serves as our CEO.

Our Board of Directors is primarily responsible for overseeing our risk management processes. The Board of Directors receives and reviews periodic reports from management, auditors, legal counsel, and others, as considered appropriate regarding our assessment of risks. The Board of Directors focuses on the most significant risks facing us and our general risk management strategy, and also ensures that risks undertaken by us are consistent with the Board’s appetite for risk. While the Board oversees our risk management, management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks we face and that our board leadership structure supports this approach.

We do not have an Audit Committee, however, we have hired a CPA consultant to assist with the filing of the Super 10K. We expect to add members to this committee in the near future. The Audit Committee is responsible for monitoring and reviewing our financial statements and internal controls over financial reporting. In addition, they recommend the selection of the independent auditors and consult with management and our independent auditors prior to the presentation of financial statements to shareholders and the filing of our forms 10-Q and 10-K. Our Board will choose new committee members who qualify as “audit committee financial experts” as defined under the federal securities laws. The Audit Committee’s responsibilities are set forth in our Charter of Corporate Governance, a copy of which is currently available from us and is posted on our website.

We do not have a Compensation Committee, Nominating Committee or other committees at this time. We expect to create such committees in the future.

Director Independence

Our Board of Directors has adopted the definition of “independence” as described under the Sarbanes Oxley Act of 2002 (Sarbanes-Oxley) Section 301, Rule 10A-3 under the Securities Exchange Act of 1934 (the Exchange Act) and NASDAQ Rules 4200 and 4350. Our Board of Directors has determined that Messers, Hasson and Dudzik currently meet the independence requirements.

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Board of Advisors

From time to time, we add members to our Board of Advisors. These individuals are comprised of distinguished scientists, engineers and businessmen whose experience, knowledge and counsel help in the development of us and our technology. These Board of Advisor members may be compensated for their time in restricted shares of common stock. Advisors do not have voting or observatory powers over the Board of Directors or management. Our CTO interacts with these advisors from time to time on matters related to our technological development. There are no formalized Board of Advisor meetings, and members have no other special powers or functions. Each individual on the Board works part-time with us as requested. Currently, the Board of Advisors is comprised of:

George Nutz is technology consultant with almost 50 years of experience working with external combustion and steam engines. He is the founder of Millennium Engineering Systems and Millennium Energy Systems, through which he has provided engineering guidance and expertise to multiple external combustion engine projects over the last twenty years.

Prior to consulting, Mr. Nutz was a staff research engineer at MIT Instrumentation Laboratory, part of the Department of Aeronautics and Astronautics. While in residence, he designed hardware and control systems, as well as steam cycles and applications. He represented MIT-IL at the Department of Transportation Clean Air / External Combustion hearings, and wrote several proposal papers outlining a working steam system. During this time he also became involved with steam automobile and steamboat groups and worked on boiler and engine designs/modifications, including being part of the MIT team designing and building a steam powered automobile for Saab for the MIT-Caltech “Clean Air Car Race”.

Prior to his time at MIT, Mr. Nutz spent nine years at Bendix Aerospace designing gyro and guidance equipment and test platforms, and working with optics and sensors. He served in the U.S. Air Force and received his mechanical engineering degree from the New Jersey Institute of Technology in 1959.

Other Key, Non-Executive Personnel

Karl Petersen, currently consults for us and was our Vice President of Engineering through March 2014. He has over 45 years of experience in product development, engineering, manufacturing, and quality systems. He currently works directly with our engineering team to assist in the commercialization of its external combustion engine technology. Previously, Mr. Petersen ran Petersen Product Development in Boise, ID, which provided mechanical, chemical and manufacturing process development for clients that include Caterpillar and John Deere. Prior to that Mr. Petersen spent over 25 years in various engineering and management positions at Preco (purchased by Vansco Electronics in 2005), which provided critical product development for Caterpillar and AGCO. He also served several Lockheed divisions as a Senior Mechanical Engineer. Having worked on steam systems since the 1960’s, Mr. Petersen has built numerous engines throughout his career and has vast knowledge of their mechanical and thermodynamic operations.

Allen Brown, currently consults for us and was our Senior Engineering Fellow through March 2014. He is an engineer whose experience spans over 56 years in the marine industry where he has developed propulsion, hydraulic, electrical and exhaust systems for some of the best known names in the business. Over the years, Mr. Brown has served as: Director of Product Development for Cigarette Racing Team, President and CEO of Cougar Marine, which built powerboats that won 33 consecutive offshore races including 12 World and National Championships, Director of Product Development for Stainless Marine, Project Engineer for Gentry Transatlantic on the “Gentry Eagle,” a 113’ mega-yacht that held the transatlantic speed crossing record, Product Development Consultant for Teleflex Marine, and General Manager of Donzi Marine.

Compensation to Advisors

We have compensated our Board of Advisors’ members with shares of restricted common stock and stock options for their past services rendered on behalf of us, and reserve the right to issue additional shares, stock options or cash in the future. Both Allen Brown and Karl Petersen received salaries for their services which are performed at our facility.

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Family Relationships

There are no family relationships among our directors and executive officers.

Code of Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to our directors, officers and all employees. The code of business conduct and ethics may be obtained free of charge on our website, or by writing to us, Attn: Chief Financial Officer, 601 NE 26th Ct., Pompano Beach, FL 33064.

Compliance with Section 16(a) of the Exchange Act

Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) during twelve months ended December 31, 2015 and December 31, 2014, we are not aware of any person that failed to file on a timely basis, as disclosed in the aforementioned Forms, reports required by Section 16(a) of the Exchange Act during the years ended December 31, 2015 and December 31, 2014.

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Item 11. Executive Compensation

Summary Compensation Table

The following table sets forth certain information concerning the annual and long-term compensation of our Chief Executive Officer and our other executive officers during the last two fiscal years.

Current Officers Name & Principal Position	Year		Salary ($)			Bonus ($)		Stock Awards (S)		All Other Compensation ($)		Option Awards ($)		Total ($)
Harry Schoell		2015	$	150,000	(1)		0		0		0	$	525	$	150,525
Chairman & CTO		2014		150,000	(1)		0		0		0		1,113		151,113
Frankie Fruge		2015	$	125,000	(2)		0		0		0	$	525	$	125,525
Director & President		2014		125,000	(2)		0		0		0		1,113		126,113
Bruce Schames		2015	$	72,000	(3)		0		0		0	$	525	$	72,525
CFO		2014		72,000	(3)		0		0		0		1,113		73,113
Christopher Nelson		2015	$	0	(4)		0		0		0	$	0	$	0
Former President & General Counsel		2014		54,167	(4)		0		0		0		0		54,167

(1)	All of Mr. Schoell’s salary in 2015 and 2014 has been deferred until determined by the Board of Directors that we can afford to pay such salary. In March 2014, Mr. Schoell converted $844,844 of deferred salary to 10,560,550 shares of common stock and in 2015 Mr. Schoell forgave $325,000 of accrued salary.
(2)	All of Ms. Fruge’s salary in 2015 and 2014 has been deferred until determined by the Board of Directors that we can afford to pay such salary. In March 2014, Ms. Fruge converted $638,740 of deferred salary to 7,984,250 shares of common stock and in 2015 Ms. Fruge forgave $287,500 of accrued salary.
(3)	As of December 31, 2015, Mr. Schames had $72,725 of deferred salary, which will be paid when determined by the Board of Directors that we can afford to pay such salary. In March 2014, Mr. Schames converted $55,292 of deferred salary to 691,152 shares of common stock and in 2015 Mr. Schames forgave $42,725 of accrued salary.
(4)	Mr. Nelson resigned as President as of July 17, 2014 and assumed the position of President of the WheGen deconsolidated subsidiary. In March 2014, he converted $86,197 of deferred salary to 1,077,464 shares of common stock.

Employment Agreements

Harry Schoell. Mr. Schoell has an employment agreement with us providing for a base salary of $150,000 per year plus standard benefits. This compensation is currently being deferred until we have sufficient revenue to support its payment, and to date, he has not received any cash compensation under his agreement. Mr. Schoell converted $20,000 of deferred salary to common stock in 2010, and $24,000 to common stock in 2013 at current market prices. Mr. Schoell also converted 1.5 million shares of our common stock to a 2.5% equity interest in Cyclone Performance LLC in 2012. In 2014 Mr. Schoell converted $844,844 of unpaid deferred salary into 10,560,550 shares of common stock , and in 2015 Mr. Schoell forgave $325,000 of accrued salary. As of December 31, 2015, Mr. Schoell had $ 75,000 in unpaid, deferred salary due to him.

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Mr. Schoell’s employment agreement commenced June 30, 2007, and was amended on January 1, 2011. Mr. Schoell received 500,000 common stock options in 2007 pursuant to the original agreement, and is to receive 600,000 options per year pursuant to the amendment. If Mr. Schoell is terminated for “cause,” he shall receive any unpaid base salary due to him as of the date of termination. If he is terminated without “cause” or upon a change in control, he shall receive (i) any unpaid base salary accrued through the effective date of termination, (ii) his base salary at the rate prevailing at such termination through 12 months from the date of termination or the end of his term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to him were he not terminated, during the 12 months following his, termination. Upon termination without cause, all of his stock options shall vest immediately.

Frankie Fruge. Ms. Fruge has an Employment Agreement with us providing for a base salary of $125,000 per year plus standard benefits. This compensation is currently being deferred, and to date, she has not received any cash compensation under her agreement. Ms. Fruge converted $6,000 of deferred salary to common stock in 2010, and $24,000 salary to common stock in 2013. She also converted 1.5 million shares of our stock into 2.5% equity interest in Cyclone Performance LLC in 2012.

In 2014 Ms. Fruge converted $738,740 of unpaid deferred salary into 7,984,250 shares of common stock and in 2015 Ms. Fruge forgave $287,500 of accrued salary. As of December 31, 2015, Ms. Fruge had $62,500 in unpaid, deferred salary due to her.

Ms. Fruge’s employment agreement commenced June 30, 2007, and was amended on January 1, 2011. Ms. Fruge received 500,000 common stock options in 2007 pursuant to the original agreement, and is to receive 600,000 options per year pursuant to the amendment. If Ms. Fruge is terminated for “cause,” she shall receive any unpaid base salary due to her as of the date of termination. If she is terminated without “cause” or upon a change in control, she shall receive (i) any unpaid base salary accrued through the effective date of termination, (ii) her base salary at the rate prevailing at such termination through 12 months from the date of termination or the end of her term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to her were she not terminated, during the 12 months following her termination. Upon termination without cause, all of her stock options shall vest immediately.

Bruce Schames. Mr. Schames has an agreement with us providing for annual cash compensation of $60,000, $12,000 in restricted common stock and 600,000 common stock options. His year-to-year contract began June 1, 2010. Either Mr. Schames or us may terminate his employment on 60 days’ notice. If we terminate other than for “cause,” he shall receive his base compensation due through the date of termination plus a good faith repayment plan for any deferred and unpaid compensation. If Mr. Schames leaves or is terminated for “cause,” he shall not be paid any deferred compensation and any unvested options shall terminate immediately. “Cause” is defined as gross negligence or willful misconduct that injures or may reasonably injure us. Mr. Schames converted $55,292 of deferred salary to 691,152 shares of our common stock in 2014 and in 2015 Mr. Schames forgave $42,725 of accrued salary. As of December 31, 2015, Mr. Schames had $72,725 in unpaid deferred salary due to him.

Christopher Nelson. In July 2014, Mr. Nelson terminated his employment as our President, as he assumed the position as President of the Whe Gen, the deconsolidated subsidiary. He had an Employment Agreement with us providing for a base salary of $130,000 per year plus standard benefits, and 600,000 common stock options per year. In 201 he converted $86,197 of deferred salary into 1,077,464 shares of our common stock.

Mr. Nelson’s agreement was for three years from August 2011, and is automatically renewed for successive one-year periods unless either party provides notice of a desire not to renew at least 90 days prior to the agreement’s anniversary date. If Mr. Nelson is terminated for “cause,” he shall receive any unpaid base salary due to him as of the date of termination. If he is terminated without “cause” or upon a change in control, he shall receive (i) any unpaid base salary accrued through the effective date of termination, (ii) his base salary at the rate prevailing at such termination through 12 months from the date of termination or the end of his term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to him were he not terminated, during the 12 months following his termination. Upon termination without cause, all of his stock options shall vest immediately.

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Outstanding Equity Awards at December 31, 2015

The following table sets forth information concerning all stock option grants held by our named executive officers as of December 31, 2015. All outstanding equity awards are options to purchase shares of common stock.

All Option Awards

					Number				Exercise or Base Price of		Grant Date Fair Value of Stock in				Number
	Option		Number		Exercisable		Number		Option		Option		Option		Exercisable	Number
Name and	Grant		Granted		Date		Un-exercisable		Awards		Awards		Expiration		Date	Un-exercisable
Position	Date		(1) (2)		Vested		Date Expires		($/Share)		($) (3)		Date		Vested	Date Expires
Harry Schoell		6/30/2007		250,000		250,000		0		0.25		0.25		6/30/2017	6/30/2008	6/30/2017
Chairman & Chief		6/30/2007		125,000		125,000		0		0.35		0.25		6/30/2017	6/30/2008	6/30/2017
Technology Officer		6/30/2007		125,000		125,000		0		0.45		0.25		6/30/2017	6/30/2008	6/30/2017
And former CEO		12/30/2010		100,000		100,000		0		0.12		0.12		12/31/2015	12/31/2011	12/31/2015
		4/15/2011		50,000		50,000		0		0.22		0.22		4/15/2016	4/15/2012	4/15/2016
		6/30/2011		50,000		50,000		0		0.30		0.30		6/30/2016	6/30/2012	6/30/2016
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021	9/30/2012	12/22/2021
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021	12/22/2012	12/22/2021
		3/31/2012		150,000		150,000		0		0.18		0.18		3/31/2022	3/31/2013	3/31/2022
		6/30/2012		150,000		150,000		0		0.15		0.15		6/30/2022	6/30/2013	6/30/2022
		9/28/2012		150,000		150,000		0		0.13		0.13		9/30/2022	9/30/2013	9/30/2022
		12/31/2012		150,000		150,000		0		0.08		0.08		12/31/2022	12/31/2013	12/31/2022
		3/31/2013		150,000		150,000		0		0.08		0.08		3/31/2023	3/31/2014	3/31/2023
		6/30/2014		150,000		150,000		0		0.0045		0.0045		6/30/2024	6/30/2015	6/30/2024
		9/30/2014		150,000		150,000		0		0.0012		0.0012		9/30/2024	9/30/2015	9/30/2024
		12/31/2014		150,000		150,000		0		0.0017		0.0017		12/31/2024	12/31/2015	12/31/2024
		03/31/15		150,000~		150,000		0		0.0003		0.0003		03/31/25	03/31/16	03/31/25
		06/30/15		150,000		0		150,000		0.0007		0.0007		06/30/25	06/30/16	06/30/25
		09/30/15		150,000		0		150,000		0.0009		0.0009		09/30/25	09/30/16	09/30/25
		12/31/15		150,000		0		150,000		0.0016		0.0016		12/31/25	12/30/116	12/31/25
Frankie Fruge		6/30/2007		250,000		250,000		0		0.25		0.25		6/30/2017	6/30/2008	6/30/2017
Director & President		6/30/2007		125,000		125,000		0		0.35		0.25		6/30/2017	6/30/2008	6/30/2017
		6/30/2007		125,000		125,000		0		0.45		0.25		6/30/2017	6/30/2008	6/30/2017
		12/30/2010		100,000		100,000		0		0.12		0.12		12/31/2015	12/31/2011	12/31/2015
		4/15/2011		50,000		50,000		0		0.22		0.22		4/15/2016	4/15/2012	4/15/2016
		6/30/2011		50,000		50,000		0		0.30		0.30		6/30/2016	6/30/2012	6/30/2016
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021	9/30/2012	12/22/2021
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021	12/22/2012	12/22/2021
		3/31/2012		150,000		150,000		0		0.18		0.18		3/31/2022	3/31/2013	3/31/2022
		6/30/2012		150,000		150,000		0		0.15		0.15		6/30/2022	6/30/2013	6/30/2022

22

					Number				Exercise or Base Price of		Grant Date Fair Value of Stock
	Option		Number		Exercisable		Number		Option		in Option		Option		Number		Number
Name and	Grant		Granted		Date		Un-exercisable		Awards		Awards		Expiration		Exercisable		Un-exercisable
Position	Date		(1) (2)		Vested		Date Expires		($/Share)		($) (3)		Date		Date Vested		Date Expires
		9/28/2012		150,000		150,000		0		0.13		0.13		9/30/2022		9/30/2013		9/30/2022
		12/31/2012		150,000		150,000		0		0.08		0.08		12/31/2022		12/31/2013		12/31/2022
		3/31/2013		150,000		150,000		0		0.08		0.08		3/31/2023		3/31/2014		3/31/2023
		6/30/2014		150,000		150,000		0		0.0045		0.0045		6/30/2024		6/30/2015		6/30/2024
		9/30/2014		150,000		150,000		0		0.0012		0.0012		9/30/2024		9/30/2015		9/30/2024
		12/31/2014		150,000		150,000		0		0.0017		0.0017		12/31/2024		12/31/2015		12/31/2024
		6/30/2014		150,000		150,000		0		0.0045		0.0045		6/30/2024		6/30/2015		6/30/2024
		9/30/2014		150,000		150,000		0		0.0012		0.0012		9/30/2024		9/30/2015		9/30/2024
		12/31/2014		150,000		150,000		0		0.0017		0.0017		12/31/2024		12/31/2015		12/31/2024
		03/31/15		150,000~		150,000		0		0.0003		0.0003		03/31/25		03/31/16		03/31/25
		06/30/15		150,000		0		150,000		0.0007		0.0007		06/30/25		06/30/16		06/30/25
		09/30/15		150,000		0		150,000		0.0009		0.0009		09/30/25		09/30/16		09/30/25
		12/31/15		150,000		0		150,000		0.0016		0.0016		12/31/25		12/30/116		12/31/25
Bruce Schames		4/4/2010		100,000		100,000		0		0.15		0.15		4/5/2012		4/5/2011		4/5/2012
CFO		6/29/2010		150,000		150,000		0		0.10		0.10		6/30/2020		6/30/2011		6/30/2020
		9/29/2010		150,000		150,000		0		0.09		0.09		9/30/2020		9/30/2011		9/30/2020
		12/30/2010		150,000		150,000		0		0.12		0.12		12/31/2020		12/31/2011		12/31/2020
		12/30/2010		75,000		75,000		0		0.12		0.12		12/31/2015		12/31/2011		12/31/2015
		3/31/2011		150,000		150,000		0		0.33		0.33		3/31/2021		3/31/2012		3/31/2021
		4/15/2011		20,000		20,000		0		0.22		0.22		4/15/2016		4/15/2012		4/15/2016
		6/30/2011		20,000		20,000		0		0.30		0.30		6/30/2016		6/30/2012		6/30/2016
		6/30/2011		150,000		150,000		0		0.29		0.29		6/30/2021		6/30/2012		6/30/2021
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021		9/30/2012		12/22/2021
		12/22/2011		150,000		150,000		0		0.19		0.19		12/22/2021		12/22/2012		12/22/2021
		3/31/2012		150,000		150,000		0		0.18		0.18		3/31/2022		3/31/2013		3/31/2022
		6/30/2012		150,000		150,000		0		0.15		0.15		6/30/2022		6/30/2013		6/30/2022
		9/30/2012		150,000		150,000		0		0.13		0.13		9/30/2022		9/30/2013		9/30/2022
		12/31/2012		150,000		150,000		0		0.08		0.08		12/31/2022		12/31/2013		12/31/2022
		3/31/2013		150,000		150,000		0		0.08		0.08		3/31/2023		3/31/2014		3/31/2023
		6/30/2014		150,000		150,000		0		0.0045		0.0045		6/30/2024		6/30/2015		6/30/2024
		9/30/2014		150,000		150,000		0		0.0012		0.0012		9/30/2024		9/30/2015		9/30/2024
		12/31/2014		150,000		150,000		0		0.0017		0.0017		12/31/2024		12/31/2015		12/31/2024
		6/30/2014		150,000		150,000		0		0.0045		0.0045		6/30/2024		6/30/2015		6/30/2024
		9/30/2014		150,000		150,000		0		0.0012		0.0012		9/30/2024		9/30/2015		9/30/2024
		12/31/2014		150,000		150,000		0		0.0017		0.0017		12/31/2024		12/31/2015		12/31/2024
		03/31/15		150,000~		150,000		0		0.0003		0.0003		03/31/25		03/31/16		03/31/25
		06/30/15		150,000		0		150,000		0.0007		0.0007		06/30/25		06/30/16		06/30/25
		09/30/15		150,000		0		150,000		0.0009		0.0009		09/30/25		09/30/16		09/30/25
		12/31/15		150,000		0		150,000		0.0016		0.0016		12/31/25		12/30/116		12/31/25
James Hasson-Director		-		-		-		-		-		-		-		-		-
Dennis Dudzik - Director		-		-		-		-		-		-		-		-		-

23

* Refers to options that were re-priced, as authorized by the Board of Directors on June 30, 2013.

(1)	Any performance conditions with respect to the listed options have been satisfied, and therefore, each such option has been earned.
(2)	Each of the listed options vest one year from the date of grant.
(3)	We determined the grant date fair value of stock option awards using the methodology set forth in Footnote 10 to our Consolidated Financial Statements for the years ended December 31, 2015 and 2014.

Option Exercise and Stock Vesting

During 2015, none of the above named executive officers exercised any options, and 3 million executive officer and director options vested.

Compensation of the Board of Directors

The following table sets forth compensation to our non-employee directors during the year ended December 31, 2015 and 2014.

Name	Fees earned or paid in cash ($)	Option awards ($)	Stock Awards ($)	Nonqualified deferred compensation earnings ($)	All other compensation ($)	Total ($)
James Hasson	-	-	-	-	-	-
Dennis Dudzik	-	-	-	-	-	-

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth information regarding the beneficial ownership of our Common Stock and Series B Preferred Stock by each of our named Executive Officers and Board of Directors, and each shareholder who is known by us to own beneficially five percent (5%) or more of the outstanding stock of such class as of March 31, 2016. On March 31, 2016, there were 1,327,937,275 shares of common and 1,000 shares of Series B Preferred stock issued and outstanding.

Name and Address	Common Shares Beneficially Owned			%			Series B Pref. Shares Beneficially Owned			%
Harry Schoell, Chairman & Chief Technology Officer 601 NE 26th Ct. Pompano Beach, FL 33064		50,315,970	(1)		3.60	%		797			80	%
Frankie Fruge, President & Director 601 NE 26th Ct. Pompano Beach, FL 33064		19,834,206	(2)		1.42	%		203			20	%
Bruce Schames, CFO 601 NE 26th Ct. Pompano Beach, FL 3306		4,178,175	(3)		.30	%		-			-
James Hasson Director 601 NE 26th Ct. Pompano Beach, FL 33064		-			-			-			-
Dennis Dudzik Director 601 NE 26th Ct. Pompano Beach, FL 33064		-			-			-			-
All Executive Officers as a Group (5 persons)		74,328,351			5.32	%		-			-
TOTALS:		72,328,351			5.32	%		1,000	*		100	%

24

*	The 1,000 shares of Series B Preferred stock provide their holders a majority vote on all matters brought before the common stock shareholders.
(1)	Mr. Schoell’s total includes 2,350,000 vested common stock options, but excludes 450,000 unvested options awarded in 2015.
(2)	Ms. Fruge’s total includes 2,350,000 vested common stock options, but excludes 450,000 unvested options awarded in 2015.
(3)	Mr. Schames’ total includes 3,065,000 vested common stock options, but excludes 450,000 unvested options awarded in 2015.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Our Board of Directors (excluding any interested director) is charged with reviewing and approving all related-person transactions, and a special committee of our Board of Directors is established to negotiate the terms of such transactions. In considering related-person transactions, our Board of Directors considers all relevant available facts and circumstances.

We have an Operations Agreement dated July 2, 2007, with Schoell Marine, a company owned by Harry Schoell, providing office facility rental and equipment leasing, based upon cost and going market rates. At December 31, 2015, we owed to Schoell Marine $164,658, which is recorded as related party debt. The debt is callable at the discretion of Mr. Schoell. Through December 2015 we rented office space from Schoell Marine under this agreement at approximately $12.00/sf, which we believe to be at market rates.

As of December 31, 2015, we also had recorded $137,500 of accrued and deferred officer’s salaries to Mr. Schoell and Ms. Fruge, In 2014 $1,483,584 of previous deferred salary was converted to 18,544,800 shares of our common stock in 2014 and in 2015 $612,500 of deferred salary was forgiven. The accrued deferred salary can be paid to the officers if and when funds are available. These funds are accounted for as non-interest bearing notes due on demand.

In 2013, Mr. Schoell acquired a 5% equity stake in the Whe Gen subsidiary in exchange for 5 million shares of our common stock. In 2012, Mr. Schoell and Ms. Fruge each acquired a 2.5% equity interest in Cyclone Performance LLC for 1.5 million shares of our stock each.

Item 14. Principal Accountant Fees and Services

The following table shows what, Anton & Chia LLP, our independent auditing firm, billed for audit and other services for the years ended December 31, 2015, 2014. For 2013 and for the first three quarters of 2014, our independent auditing firm was Mallah Furman LLC.

	Year Ended December 31, 2015		Year Ended December 31, 2014
Audit Fees –Anton & Chia, LLP	$	47,500	$	47,500
Audit Fees –Mallah Furman		-		75,463
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-
		-		-
Total	$	47,500	$	122,963

25

Audit Fees—This category includes the audit of our annual financial statements, review of financial statements included in our Form 10-Q Quarterly Reports and services that are normally provided by the independent auditors in connection with engagements for those years.

Audit-Related Fees —N/A

Tax Fees—N/A

Other Fees- This category reflects analysis of the accounting for the Advent business and contract acquisition.

Overview —Our Audit Committee reviews and, in its sole discretion pre-approves, our independent auditors’ annual engagement letter including proposed fees and all audit and non-audit services provided by the independent auditors. Accordingly, all services described under “Audit Fees,” “Audit-Related Fees,” “Tax Fees” and “Other Fees” were pre-approved by our Audit Committee. The Audit Committee may not engage the independent auditors to perform the non-audit services proscribed by law or regulation. Our Audit Committee may delegate pre-approval authority to a member of the Board of Directors, and authority delegated in such manner must be reported at the next scheduled meeting of the Board of Directors.

Part IV

Item 15. Exhibits and Financial Statement Schedules

(a) Financial Statements

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2015, and 2014	F-2
Consolidated Statements of Operations for the years ended December 31, 2015, and 2014	F-3
Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2015 and 2014	F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2015, and 2014	F-5
Notes to Consolidated Audited Financial Statements	F-6
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2015, June 30, 2015 and March 31, 2015	F-22
Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2015	F-23
Unaudited Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2015	F-24
Unaudited Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2015	F-25
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31 2015,six months ended June 30, 2015, and nine months ended September 30 2015	F-26
Notes to Unaudited Condensed Consolidated Financial Statements	F-27

26

(b) Exhibits

Exhibit No.	Description
3.1 *	Articles of Incorporation, dated June 14, 2007
3.2 *	Certificate of Domestication, dated June 14, 2007
3.3 *	Articles of Amendment to Articles of Incorporation containing Certificates of Designation for Series A Convertible Preferred Stock and Series B Preferred Stock, dated July 17, 2011
3.4 *	Articles of Amendment to Articles of Incorporation, dated July 27, 2007
3.5 *	Articles of Amendment to Articles of Incorporation, dated July 24, 2009
3.6 *	Articles of Amendment to Articles of Incorporation, dated March 30, 2010
3.7 *	Articles of Amendment to Articles of Incorporation, dated April 28, 2010
3.8*	By-Laws of Cyclone Power Technologies, Inc.
3.09*	Written Consent of the Shareholders in lieu of a Meeting, dated December 19, 2013 Amendment to the
3.10*	Articles of Incorporation of the Company, dated January 31, 2014
10.1 *	Employment Agreement, dated June 30, 2007, between the Company and Frankie Fruge
10.2 *	Employment Agreement, dated June 30, 2007, between the Company and Harry Schoell
10.3 *	Common Stock Purchase Warrant, dated July 30, 2009, between the Company and Phoenix Power Group, LLC
10.4 *	Cyclone Power Technologies’ 2010 Stock Option Plan
10.5 *	Employment Agreement, dated August 1, 2011, between the Company and Christopher Nelson
10.6 *	Employment Agreement, dated June 10, 2010, between the Company and Bruce Schames
10.7 *	Operations Agreement, dated July 2, 2007, between the Company and Schoell Marine, Inc.
10.8 *	Systems Application License Agreement, dated July 30, 2009, between the Company and Phoenix Power Group LLC
10.9 *	Technology License Agreement, dated December 11, 2009, between the Company and Great Wall Alternative Power Systems, Ltd.
10.10*	Amended and Restated technology License Agreement, dated Jun 15, 2011, between the Company and Renovalia Energy, S.A.
10.11 *	Subcontractor Contract for Development of a Rankine Cycle Engine, dated December 20, 2010, between the Company and Advent Power Systems, Inc.
10.12 *	Technology License Agreement, dated March 24, 2006, between the Company and Advent Power Systems, Inc., including Amendments thereto.
10.13 *	Letter of Understanding, dated March 1, 2011, between the Company and TopLine Energy Systems, LLC
10.14 *	Security Agreement, dated August 1, 2007, between the Company and Schoell Marine, Inc.
10.15 *	Systems Application License Agreement, dated September 12, 2011, between the Company and Combilift.
10.16*†	Cyclone Power Technologies, Inc. 2012 Stock Option Plan
10.161*†	Asset Purchase Agreement, dated December 20, 2011, between Cyclone Power Technologies, Inc. and Advent Power Systems, Inc.
10.17*	Private Placement Purchase Agreement, by and between Cyclone Power Technologies, Inc. and GEM Global Yield Fund Limited, dated July 6, 2012
10.18*	Form of Securities Purchase Agreement, signed between the Company and Brio Capital LP and Gemini Master Fund Ltd.
10.19*	Form of Promissory Note signed between the Company and Brio Capital LP and Gemini Master Fund Ltd.
10.20*	Form Common Stock Purchase Warrant signed between the Company and Brio Capital LP and Gemini Master Fund Ltd.
10.21*	$500,000 Promissory by and between Cyclone Power Technologies, Inc and JMJ Financial, dated April 3, 2013

27

10.22*	Securities Purchase Agreement, dated May 31, 2013, by and between Cyclone Power Technologies, Inc. and Tonaquint, Inc.
10.23*	Convertible Promissory Note, dated May 31, 2013, by and between Cyclone Power Technologies, Inc. and Tonaquint, Inc.
10.24*	Warrant to Purchase Shares of Common Stock, dated May 31, 2013, by and between Cyclone Power Technologies, Inc. and Tonaquint, Inc.
10.25††	Securities Purchase Agreement by and between the Company and TCA, with an effective date of September 1, 2013.
10.25.1††	Amended and Restated Systems Application License Agreement between the Cyclone Power Technologies, Inc. and Phoenix Power Group LLC, dated September 30, 2013 and finalized on October 7, 2013.
10.26*	Senior Secured Redeemable Debenture by and between the Company and TCA, with an effective date of September 1, 2013.
10.27*	Security Agreement by and between the Company and TCA, effective f September 1, 2013.
10.28*	Security Agreement by and between the Subsidiaries and TCA, with an effective date of September 1, 2013.
10.29*	Guaranty Agreement by and between the Subsidiaries and TCA, with an effective date of September 1, 2013.
10.30*	Securities Purchase Agreement by and between the Company and LG, with a signing date of November 21, 2013.
10.31*	Convertible Promissory Note by and between the Company and LG, with a signing date of November 21, 2013.
10.32*	Securities Purchase Agreement by and between the Company and GEL, with a signing date of December 3, 2013.
10.33*	10% Convertible Redeemable Promissory Note by and between the Company and GEL, with a signing date of December 3, 2013.
10.34*	Securities Purchase Agreement by and between the Company and Peak One, dated December 17, 2013.
10.35*	Debenture by and between the Company and Peak One, issued December 17, 2013.
10.36*	Registration Rights Agreement by and between the Company and Peak One, issued December 17, 2013.
10.37*	Debt Purchase Agreement by and between the Union Capital LLC, TCA Global Credit Master Fund, LP and the Company, dated February 28, 2014.
10.38*	10% Convertible Redeemable Note by and between the Company and Union Capital LLC, issued February 28, 2014.3

28

10.39**	Draw on JMJ note 10.21* of $50,000 issued, June 23, 2014.
10.40**	Resignation of President, Christopher Nelson, July 17, 2014.
10.41**	Resignation of Board Member, Joel Myersohn, July 17, 2014.
10.42**	Note Payable 2 year simple interest $50,000 at 6% between the Company and A. Nikitina, issued January 6, 2015.
10.43**	Legal Judgment by JSJ $175,000 for inability to convert note, May 8, 2015.
10.44**	Resignation of Board Member, Lew Jaffee, July 31, 2015.
10.45**	Warehouse lease agreement for one year with EZCP for 601 building, December 11, 2015.
10.46**	License agreement with mergered 3R and IBES, February 14, 2016.
10.47**	License agreement with G2E, May 1, 2016.
10.48**	Development agreement with FSDS and appendex, June 15, 2016.
10.49**	Engagement of Anton & Chia LLP as new auditors June 17, 2016.
10.50**	Promissory note, 2 months term, simple interest $4,000 at 4% between the Company and Chad Tendrich, issued July 6, 2016.
10.51**	Legal Judgment by Tonaquint for $166,000 plus interest for non- payment of a convertable warrant true up, July 13, 2016.
10.52**	Convertible promissory note 6 months term, simple interest $46,000 at 10% between the Company and Chad Tendrich, issued July 26, 2016.
10.53**	Promissory note 6 week term interest payable in stock, $27,000, between the Company and S D White issued Sept. 1,2016.
10.54**	Increase in authorized common shares to 4 billion from 2 billion-September 6 2016.
21 *	Subsidiaries of the Company
31.1	Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the Chief Executive Officer or Principal Executive Officer as stated under Florida Law Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed incorporated by reference into any other filing under the Security Act of 1933, as amended, or by the Security Exchange Act of 1934, as amended.)

29

32.2	Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This exhibit shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 as amended or otherwise subject to the liability of that section. Further, this exhibit shall not be deemed incorporated by reference into any other filing under the Security Act of 1933, as amended, or by the Security Exchange Act of 1934, as amended.)
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.

The certification attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Cyclone Power Technologies, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

* Previously filed.

** Attached herewith.

† These two exhibits were previous filed using the same Exhibit 10.16 number in error.

†† These two exhibits were previous filed using the same Exhibit 10.25 number in error.

30

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.

Cyclone Power Technologies, Inc.
By:	/S/ HARRY SCHOELL
	Harry Schoell
	Chairman and Chief Technical Officer
Dated:	March 20, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/S/ HARRY SCHOELL
	Harry Schoell
	Chairman and Chief Technical Officer
Dated:	March 20, 2017
By:	/S/ FRANKIE FRUGE
	Frankie Fruge
	President, (principal executive officer) and Director
Dated:	March 20, 2017

By:	/S/ BRUCE SCHAMES
	Bruce Schames
	Chief Financial Officer
	(principal accounting and financial officer)
Dated:	March 20, 2017

31

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Cyclone Power Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Cyclone Power Technologies, Inc. (the “Company”) as of December 31, 2015 and 2014 and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with 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 consolidated financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits 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 Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits include examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Our audits also include assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2015 and 2014 and the consolidated results of its operations, changes in its stockholders’ deficit, and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has recurring losses from operations, negative cash flows from operations, and a stockholders’ deficit. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Anton & Chia, LLP

Newport Beach, California

March 16, 2017

F-1

CYCLONE POWER TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2015, AND 2014

	2015			2014
ASSETS
CURRENT ASSETS
Cash	$	-		$	278
Inventory, net		323,508			469,043
Other current assets		587			16,076
Total current assets		324,095			485,397
PROPERTY AND EQUIPMENT
Property and equipment, net.		126,520			163,166
OTHER ASSETS
Patents, trademarks and copyrights, net		283,368			348,191
Other assets		8,062			2,762
Total other assets		291,430			350,953
Total Assets	$	742,045		$	999,516
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Bank overdraft	$	3,221		$	-
Accounts payable and accrued expenses		1,159,133			816,592
Accounts payable and accrued expenses-related parties		210,225			530,450
Notes and other loans payable-current portion		357,737			302,157
Derivative liabilities		383,482			440,184
Notes and other loans payable-related parties		321,334			880,317
Capitalized lease obligations-current portion		12,950			12,058
Deferred revenue and license deposits		148,031			122,627
Total current liabilities		2,596,113			3,104,385
NON CURRENT LIABILITIES
Capitalized lease obligations-net of current portion		36,939			45,642
Notes and other loans payable-net of current portion		50,000			-
Total non-current liabilities		86,939			45,642
Total Liabilities		2,683,052			3,150,027
Commitments and contingencies
STOCKHOLDERS’ DEFICIT
Series B preferred stock, $.0001 par value, 1,000 shares authorized, 1,000 shares issued and outstanding at December 31, 2015 and December 31, 2014, respectively.		-			-
Common stock, $.0001 par value, 4,000,000,000 shares authorized, 1,388,669,532, and 861,315,576 shares issued and outstanding at December 31, 2015, and December 31, 2014 respectively.		138,864			86,129
Additional paid-in capital		56,621,826			55,026,213
Treasury Stock 317,000, and 0, shares, at December 31, 2015, and December 31, 2014 respectively, at cost.		(3,000	)		-
Prepaid expenses with common stock		-			(28,459	)
Stock subscription receivable		-			(6,000	)
Accumulated deficit		(58,727,736	)		(57,257,441	)
Total stockholders’ deficit - Cyclone Power Technologies Inc.		(1,970,046	)		(2,179,558	)
Non controlling interest in consolidated subsidiaries		29,039			29,047
Total Stockholders’ Deficit		(1,941,007	)		(2,150,511	)
Total Liabilities and Stockholders’ Deficit	$	742,045		$	999,516

The accompanying notes are an integral part of these consolidated financial statements

F-2

CYCLONE POWER TECHNOLOGIES, INC .

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR YEARS ENDED DECEMBER 31 2015, AND 2014

	2015			2014
REVENUES
Engine sales and design revenue	$	-		$	154,027
WheGen-License revenue		-			175,000
Total revenue		-			329,027
COST OF GOODS SOLD		-			88,807
Gross profit		-			240,220
OPERATING EXPENSES
Advertising and promotion
Retirement of demonstration equipment		-			85,583
Other advertising and promotion expenses		7,434			23,935
Total advertising and promotion		7,434			109,518
General and administrative
Retirement of patents & trademarks		28,530			8,602
Other general and administrative		624,573			1,881,550
Total general and administrative		653,103			1,890,152
Research and development
Retirement of equipment		-			93,053
Inventory reserve provision		192,000			80,000
Other research and development		275,610			845,499
Total research and development		467,610			1,018,552
Total operating expenses		1,128,147			3,018,222
Operating loss		(1,128,147	)		(2,778,002	)
OTHER (EXPENSE) INCOME
Other income (expense)
Loss provisions on Whe Gen subsidiary deconsolidation		-			(706,756	)
Other income and (expense)		(50,000	)		5,115
Derivative income (expense) -notes payable		56,702			(147,680	)
Interest expense		(348,858	)		(1,327,102	)
Total other expense		(342,156	)		(2,176,423	)
Loss before income taxes		(1,470,303	)		(4,954,425	)
Income taxes		-			-
Net loss	$	(1,470,303	)	$	(4,954,425	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.01	)
Weighted average number of common shares outstanding		1,189,240,307			396,105,362

The accompanying notes are an integral part of these consolidated financial statements

F-3

CYCLONE POWER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2015

																	Prepaid									Stockholders’			Non
																	Expenses			Preferred						(Deficit)			Controlling
	Preferred										Additional						via			Stock						Cyclone			Interest			Total
	Stock B				Common Stock						Paid In			Treasury			Common			Subscription			Accumulated			Power			In Consol.			Stockholders’
	Shares		Value		Shares			Value			Capital			Stock			Stock			Receivable			(Deficit)			Tech. Inc.			Subsidiaries			(Deficit)
Balance, December 31, 2013		1,000	$	-		272,679,942		$	27,268		$	48,644,132		$	(1,706,217	)	$	(595,980	)	$	(6,000	)	$	(52,474,269	)	$	(6,111,067	)	$	818,943		$	(5,292,124	)
Amortization of expenses prepaid with common stock		-		-		-			-			-			-			421,687			-			-			421,687			-			421,687
Issuance of restricted shares for OID interest		-		-		357,142			36			10,678			-			-			-			-			10,714			-			10,714
						-			-
Issuance of restricted shares and options for employee and outside services		-		-		6,250,000			625			125,950			-			-			-			-			126,575			-			126,575
Sale of common stock		-		-		8,219,298			821			109,179			-			-			-			-			110,000			-			110,000
Repayment of debt and interest with common stock		-		-		496,323,413			49,631			1,093,016			-			-			-			-			1,142,647			-			1,142,647
Repayment of liabilities in common stock		-		-		40,450,000			4,045			130,088			-			-			-			-			134,133			-			134,133
Settlement of stock warrant liability		-		-		15,000,000			1,500			48,000			-			-			-			-			49,500			-			49,500
Conversion of officer salaries into common stock		-		-		20,313,416			2,031			666,281			-			-			-			-			668,312			-			668,312
Forgiveness of officers accrued salaries		-		-		-			-			956,762			-			-			-			-			956,762			-			956,762
Application of derivative liability for conversion of debt via common stock		-		-		-			-			1,013,163			-			-			-			-			1,013,163			-			1,013,163
Conversion of common stock warrants-cashless exercise		-		-		4,722,365			472			(472	)		-			-			-			-			-			-			-
Deconsolidation of Whe Gen subsidiary		-		-		-			-			2,443,506			-			145,834			-			171,253			2,760,593			(789,896	)		1,970,697
Cancellation of treasury stock		-		-		(3,000,000	)		(300	)		(209,700	)		210,000			-			-			-			-			-			-
Repayment of shares loaned by stockholder		-		-		-			-			(4,370	)		1,496,217			-			-			-			1,491,847			-			1,491,847
Net loss year ended December 31, 2014		-		-		-			-			-			-			-			-			(4,954,425	)		(4,954,425	)		-			(4,954,425	)
Balance, December 31, 2014		1,000		-		861,315,576			86,129			55,026,213			-			(28,459	)		(6,000	)		(57,257,441	)		(2,179,559	)		29,047			(2,150,512	)
Issuance of options for employee services		-		-		-			-			2,526			-			-			-			-			2,526			-			2,526
Forgiveness of officers accrued salaries		-		-		-			-			655,225			-			-			-			-			655,225			-			655,225
Foregiveness of accrued rent, interest & other expenses due an officer’s company		-		-		-			-			710,272			-			-			-			-			710,272			-			710,272
Forgiveness of employees accrued salaries		-		-		-			-			18,970			-			-			-			-			18,970			-			18,970
Repayment of debt and interest with common stock		-		-		424,853,956			42,485			88,370			-			-			-			-			130,855			-			130,855
		-		-		-			-			-			-			-			-			-			-			-			-
Repayment of liabilities in common stock		-		-		92,500,000			9,250			57,250			-			-			-			-			66,500			-			66,500
Loss on debt paid with common stock		-		-		-			-			50,000			-			-			-			-			50,000			-			50,000
Cancellation of stock subscription receivable		-		-		-			-			-			(3,000	)		-			3,000			-			-			-			-
Write-off of stock subscription receivable		-		-		-			-			-			-			-			3,000			-			3,000			-			3,000
Repayment of shares loaned by stockholder		-		-		10,000,000			1,000			13,000			-			-			-			-			14,000			-			14,000
																											-			-			-
Allocation of loses of subsidiaries to non controlling interests		-		-		-			-			-			-			-			-			8			8			(8	)		-
Amortization of expenses prepaid with common stock		-		-		-			-			-			-			28,459			-			-			28,459			-			28,459
Net loss year ended December 31, 2015		-		-		-			-			-			-			-			-			(1,470,303	)		(1,470,303	)		-			(1,470,303	)
Balance, December 31, 2015		1,000		-		1,388,669,532		$	138,864		$	56,621,826		$	(3,000	)	$	-		$	-		$	(58,727,736	)	$	(1,970,047	)	$	29,039		$	(1,941,008	)

The accompanying notes are an integral part of these consolidated financial statements

F-4

CYCLONE POWER TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR YEARS ENDED DECEMBER 31 2015, AND 2014

	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,470,303	)	$	(4,954,425	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		75,574			68,869
Loss provisions on deconsolidation of Whe Gen subsidiary		-			706,756
Provision for inventory reserve		192,000			80,000
Issuance of restricted common stock, options and warrants for services		2,526			126,575
Issuance of restricted common stock in settlement of common stock warrants		-			49,500
(Gain) loss from derivative liability-notes payable		(56,702	)		147,680
Amortization of derivative debt discount		174,043			949,841
Loss on debt conversion via common stock		50,000			-
Original issue discount paid with stock		-			10,714
Write-off of former Whe Gen subsidiary and other trademarks		-			8,602
Write-off of stock subscription receivables		3,000			-
Amortization of prepaid expenses and interest via common stock & warrants		28,459			421,687
Amortization of original issue discount		-			68,964
Write-off of expired patents		25,894			-
Write-off of fixed assets		-			178,636
Loss on debt converson via common stock-net
Changes in operating assets and liabilities:
Decrease in accounts receivable		-			150,000
(Increase) decrease in inventory		(46,465	)		12,054
Decrease in other current assets		15,576			31,444
Increase  in other assets		(5,387	)		(19,999	)
Cash overdraft		3,221			-
Increase in accounts payable and accrued expenses		483,129			530,235
Increase in accounts payable and accrued expenses-related parties		306,275			196,977
Increase in deferred revenue and deposits		25,404			6,505
Net cash used by operating activities		(193,756	)		(792,570	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures incurred for patents, trademarks and copyrights		-			(21,460	)
Expenditures for property and equipment		-			(35,464	)
Deconsolidaion of Whe Gen subsidiary net assets		-			336,816
Net cash used by investing activities		-			279,892
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capitalized lease obligations		(7,811	)		(6,124	)
Proceeds from notes and loans payable		50,000			515,000
Repayment of notes and loans payable		-			(120,615	)
Proceeds from sale of common stock, net of direct offering costs		-			110,000
Proceeds from Whe Gen debt financing		-			350,000
Increase in related party notes and loans payable-net		151,289			84,148
Net cash provided by financing activities		193,478			932,409
Net increase in cash		(278	)		(17,085	)
Cash, beginning of period		278			17,363
Cash, end of period	$	-		$	278
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Payment of interest in cash	$	14,491		$	38,084
Payment of income tax  in cash	$	-		$	-
NON CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 92,500,000 shares of Common stock for accrued expenses	$	66,500		$	-
Issuance of 424,853,956 shares of Common stock for debt and interest repayment	$	130,856		$	-
Issuance of 20,313,416 shares of Common stock for repayment of related party payables	$	-		$	668,312
Issuance of 40,450,000 shares of Common stock for liabilities	$	-		$	134,133
Issuance of 496,323,413 shares of Common stock for debt and interest repayment	$	-		$	1,142,647
Application of derivative liabilities for conversion of debt via common stock	$	-		$	1,013,163
Value of shares repaid to stockholder	$	14,000		$	1,491,847
Forgiveness of deferred officers' salaries	$	655,225		$	956,762
Forgiveness of accrued rent, interest and other expenses due officer's company	$	710,272		$	-

The accompanying notes are an integral part of these consolidated financial statements

F-5

CYCLONE POWER TECHNOLOGIES, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015 AND 2014

NOTE 1 – ORGANIZATIONAL AND SIGNIFICANT ACCOUNTING POLICIES

A. ORGANIZATION AND OPERATIONS

Cyclone Power Technologies, Inc. (the “Company”, “our,” “Cyclone”) is the successor entity to the business of Cyclone Technologies LLLP (the “LLLP”), a limited liability limited partnership formed in Florida in September 2004. The LLLP was the original developer and intellectual property holder of the Cyclone engine technology. The Company is primarily a research and development engineering company whose main purpose is to develop, commercialize, market and license its Cyclone engine technology.

In 2010, the Company established a subsidiary WHE Generation Corp. f/k/a, Cyclone-WHE LLC (the “WHE Subsidiary”, “WheGen”), to market the waste heat recovery systems for all Cyclone engine models. As of September 30, 2014 the Company has sold most of its ownership. The former subsidiary is currently non consolidated since the investment is below the 20% equity (see Note 15) .. In 2012, the Company established Cyclone Performance LLC (“Cyclone Performance”) f/k/a Cyclone-TeamSteam USA, LLC. The purpose of Cyclone Performance is to build, test and run various vehicles and vessels utilizing the Company’s engine. As of December 31, 2015 and 2014, the Company had a 95% controlling interest in Cyclone Performance.

B. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the consolidated financial statements. Effective September 30, 2014, Cyclone sold most of its investment in the WHE Subsidiary and as of December 31, 2014 retains approximately a 2 million share non controlling (below 20%) interest in the WHE Subsidiary. This investment was deconsolidated on September 30, 2014 and is currently recorded on the cost basis (see Note 15). The consolidated statements of operations and cash flows for the year ended December 31 2014 include the accounts of the WHE Gen through September 30, 2014.

The Company prepares its consolidated financial statements in conformity with account principles generally accepted in the United States (“U.S. GAAP”). The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

The consolidated financial statements presented for the quarters ended March, June and September 31, 2015 are unaudited.

C. CASH

Cash includes cash on hand and cash in banks. At December 31, 2015 and 2014, the Company maintained cash balances at one financial institution.

D. COMPUTATION OF INCOME (LOSS) PER SHARE

Net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is not presented as the conversion of the preferred stock and exercise of outstanding stock options and warrants would have an anti-dilutive effect. As of December 31, 2015 and 2014, total anti-dilutive shares amounted to approximately 13.5 million and 14.7 million shares, respectively.

F-6

E. INCOME TAXES

Income taxes are accounted for under the asset and liability method as stipulated by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2015, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. Interest related to the unrecognized tax benefits is not recognized in the consolidated financial statements as a component of income taxes. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2012 through 2015.

F. REVENUE RECOGNITION

The Company’s revenue recognition policies are in compliance with ASC 605, “Revenue Recognition – Multiple Element Arrangements”, and Staff Accounting Bulletin (“SAB”) 104, Revenue Recognition. Revenue is recognized at the date of shipment of engines and systems, engine prototypes, engine designs or other deliverables to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Revenue from contracts for multiple deliverables and milestone method recognition are evaluated and allocated as appropriate. The Company has determined that the milestone method of revenue recognition (ASC 605-28) was appropriate for two of the Company’s contracts which specifically enumerate approved work effort milestones required for remuneration – the Company’s contract with the U.S. Army / TARDEC and the Amended and Restated Technology Application License Agreement with Phoenix Power Group LLC. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue on the consolidated balance sheets. Final delivery of the U.S. Army contract was completed in the second quarter of 2014 and the Phoenix Power Group contract was transferred to the WHE subsidiary as part of the separation agreement (see Note 15). The Company does not allow its customers to return prototype products. Current contracts do not require the Company to provide any warranty assistance after the “deliverable” has been accepted.

It is the Company’s intention when it has royalty revenue from its contracts to record royalty revenue periodically when earned, as reported in sales statements from customers. The Company does not have any royalty revenue to date.

G. WARRANTY PROVISIONS

Current contracts do not require warranty assistance subsequent to acceptance of the “deliverable R&D prototype” by the customer. For products that the Company will sell in the future, warranty costs are anticipated to be borne by the manufacturing vendor.

F-7

H. INVENTORY

Inventory is recorded at the lower of cost or market. Costs include material, labor and allocated overhead to manufacture a completed engine. These costs are periodically evaluated to determine if they have a net realizable value. If the net realizable value is lower than the carrying amount, a reserve is provided.

I. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, “Fair Value Measurements and Disclosures” requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses, and loans payable approximate their fair market value based on the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels. The three levels of the fair value hierarchy are defined as follows:

Level 1	—	Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date.
Level 2	—	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, as of the reporting date.
Level 3	—	Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

The summary of annual fair values and changing values of financial instruments as of January 1, 2014 through December 31 2014 and January 1, 2015 through December 31, 2015 is as follows:

Instrument	Beginning of Period		Change			End of  Period		Level		Valuation Methodology
Derivative liabilities 2014	$	484,479	$	(44,295	)	$	440,184		3	Stochastic Process  Forecasting Model
Derivative liabilities 2015	$	440,184	$	(56,706	)	$	383,482		3	Stochastic Process  Forecasting Model

Please refer to Note 17 for disclosure and assumptions used to calculate the fair value of the derivative liabilities.

J. RESEARCH AND DEVELOPMENT

Research and development activities for product development are expensed as incurred. Costs for the years ended December 31, 2015 and 2014 were $467,610 and $1,018,552, respectively.

K. STOCK BASED COMPENSATION

The Company applies the fair value method of ASC 718, “Share Based Payment”, in accounting for its stock based compensation. This standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price for the Company’s common stock as of the date in which the obligation for payment of services is incurred.

L. COMMON STOCK OPTIONS AND PURCHASE WARRANTS

The Company accounts for common stock options and purchase warrants at fair value in accordance with ASC 815-40, “Derivatives and Hedging”. The Black-Scholes option pricing valuation method (“BSM option pricing model”) is used to determine fair value of these warrants consistent with ASC 718, “Share Based Payment”. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates.

F-8

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “Equity Based payments to Non-employees”.

M. ORIGINAL ISSUE DEBT DISCOUNT

The original issue discount (OID) related to notes payable is amortized by the effective interest method over the repayment period of the notes. The unamortized OID is represented as a reduction of the amount of the notes payable.

N. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows:

	Years
Display equipment for trade shows		3
Leasehold improvements and furniture and fixtures		10 - 15
Shop equipment		7
Computers		3

Expenditures for maintenance and repairs are charged to operations as incurred.

O. IMPAIRMENT OF LONG LIVED ASSETS

The Company continually evaluates the carrying value of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. To date, the Company has not recognized any impairment charges.

P. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This provides guidance for companies to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This adoption has no impact on the financial reporting by the Company.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We adopted the provisions of ASU 2015-03 effective January 1, 2016. The adoption of ASU 2015-03 did not have a material impact our consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases. This was provide guidance to increase transparency and comparability among companies by requiring most leases be included on the balance sheet and by expanding disclosure requirements. We are still in the process of evaluating the effect of adoption on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This addresses the accounting for share-based payment transactions and includes the recognition of the income tax effects of awards that vest or settle as income tax expense and clarification of the presentation of certain components of share-based awards in the statement of cash flows. We are still in the process of evaluating the effect of adoption on our consolidated financial statements and the effective date of application is 2018.

F-9

ASU No. 2015-17, “Balance Sheet Classification of Deferred Assets”, was issued by the FASB in November 2015, This required management to provide a classification of all deferred taxes as noncurrent assets or noncurrent liabilities. This ASU is effective for annual periods beginning after December 15, 2016. The Company does not anticipate this ASU will have a material impact to the Company’s consolidated financial position, results of operations or cash flows.

Q. CONCENTRATION OF RISK

The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and accounts receivable to be the two assets most likely to subject the Company to concentrations of credit risk. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure.

As of December 31, 2015, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through December 31,2015. The Company purchases raw material and components from multiple sources, none of which may be considered a principal or material supplier. If necessary, the Company could replace these suppliers with minimal effect on its business operations.

R. DERIVATIVE FINANCIAL INSTRUMENTS

Accounting and reporting standards for derivative instruments and for hedging activities were codified by ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”). It requires that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income (loss) depending on the purpose of the derivatives and whether they qualify and have been designated for hedge accounting treatment. The Company has derivative liabilities pursuant to convertible debt and common stock warrants, and has recognized net expenses on the consolidated statements of operations. The Company does not have any derivative instruments for which it has applied hedge accounting treatment.

NOTE 2 - GOING CONCERN

As shown in the accompanying consolidated financial statements, the Company incurred substantial operating and other losses and expenses of approximately $1.5 million for the year ended December 31, 2015, and $5.0 million for the year ended December 31, 2014. The cumulative deficit since inception is approximately $58.7 million, which is comprised of $26.4 million attributable to actual operating losses (which were paid in cash, stock for services and other equity instruments) and net other expenses, and $32.3 million in non-cash derivative liability accounting which was a result of the conversion of the Company’s Series A Convertible Preferred Stock in 2011, the retirement of a common stock purchase warrant in 2012, and the change in fair value of derivatives associated with notes payable for the years ended December 31, 2013, 2014 and 2015. The Company has a working capital deficit at December 31, 2015 of approximately $2.3 million. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on management’s plans which include implementation of its business model to generate revenue from development contracts, licenses and product sales, and continuing to raise funds through debt or equity raises. The Company will also likely continue to rely upon related-party debt or equity financing.

F-10

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company is currently raising working capital to fund its operations via debt, advance contract payments (deferred revenue) and advances from and deferred payments to related parties.

NOTE 3 – INVENTORY, NET

Inventory principally consists of raw material engine parts, work in process engines, labor and overhead, net of realization, valuation and obsolescence reserves. In the aggregate it is stated at the lower of cost or market.

	December 31, 2015		December 31, 2014
Raw materials	$	323,508	$	323,121
Work in process		0		145,922
Total	$	323,508	$	469,043

We provide estimated provisions for the realization, valuation and obsolescence of our inventories, including adjustments to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging and usage reports and margin analyses in determining our provision estimate.

NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	December 31,  2015			December 31,  2014
Display equipment for trade shows	$	6,270		$	9,648
Leasehold improvements and furniture and fixtures		93,922			93,922
Equipment and computers		204,377			209,276
Total		304,569			312,846
Accumulated depreciation		(178,049	)		(149,680	)
Net property and equipment	$	126,520		$	163,166

Depreciation expense for the years ended December 31, 2015, and 2014 was $36,645, and $29,434, respectively.

NOTE 5 – PATENTS, TRADEMARKS AND COPYRIGHTS

Patents, trademarks and copyrights consist of legal fees paid to file and perfect these claims. The net balances as of December 31, 2015, and 2014 were $283,368 and, $348,191, respectively. For the years ended December 31, 2015, and 2014 the Company capitalized $0, and $34,464, respectively, of expenditures related to these assets. In 2015, the Company recorded a net charge of $ 25,894 included in general and administrative expenses, for 6 expired international patents; the basic patents for the Cyclone technology is still protected. In 2014 the Company wrote off various trademarks for a net charge of $5,091.

As of December 31, 2015, the Company had 15 patents issued on its technology both in the U.S. and internationally. Pursuant to new US Patent Office regulations, upon approval, expired patents can be reestablished from inception.

Patents, trademarks and copyrights are amortized over the life of the intellectual property which is 15 years. Amortization expenses for the years ended December 31, 2015, and 2014 were $38,929 and $39,435 respectively.

F-11

NOTE 6 – NOTES AND OTHER LOANS PAYABLE

A. NON-RELATED PARTIES

A summary of non-related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
12% convertible notes payable, net of discounts of $8,536 and $8,390 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from November 2013 through September 2016 (A)	$	34,558	$	70,378
10% convertible note payable, net of discount of $0 and December 31, 2015 and December 31, 2014, respectively, monthly payments commencing in December 2013 through July 2014 (B)		19,963		19,963
10% convertible notes payable, net of discount of $40,614 and $43,207 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from May 2015 through February 2016 (C)		72,793		59,386
10% convertible notes payable, net of discount of $20,343 and $80 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from December 2015 through January 2016 (D)		29,223		40,657
10% convertible note payable, net of discount of $0 and $89,995 at December 31, 2015 and December 31, 2014 respectively, maturing at various dates from February 2015 through August 2015 ( E )		116,200		52,005
12% convertible notes payable, net of discount of $0 and $25,232 at December 31, 2015 and December 31, 2014 , respectively, maturing at various dates from April 2015 through May 2015 ( F )		85,000		59,768
10% note payable, $0 discount, maturing Feb. 3 2017		50,000		-
Total non related party notes –net of discounts		407,737		302,157
Less-Current Portion		357,737		-
Total non-current non related party notes –net of discount (accrued interest is included in accrued expenses)	$	50,000	$	302,157

(A)	Unamortized discount from derivative liabilities at December 31, 2015 is $46,762. The notes are in default.
(B)	Unamortized discount from derivative liabilities at December 31, 2015 is $31,001. This note is in default Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received judgment and Company is negotiating a reduced settlement.
(C)	Unamortized discount from derivative liabilities at December 31, 2015 is $85,871. The notes are in default.
(D)	Unamortized discount from derivative liabilities at December 31, 2015 is $54,838. This note is in default.
(E)	Unamortized discount from derivative liabilities at December 31, 2015 is $144,124. The notes are in default.
(F)	Unamortized discount from derivative liabilities at December 31, 2015 is $78,244. The notes are in default August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received judgment and Company is seeking to arrange a settlement.

F-12

B. RELATED PARTIES

A summary of related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A)	$	117,734	$	498,454
6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101.		103,328		67,221
12% non-collateralized loans from officer and shareholder, payable on demand		20,178		15,516
Accrued Interest		80,094		299,126
Total current related party notes, inclusive of accrued interest	$	321,334	$	880,317

(A) This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. The note was secured by a UCC-1 filing on the Company’s patents and patent applications, which expired and has not been renewed. For the years December 31, 2015 and 2014, $0 and $8,100 of principal was paid on the note balance, respectively.

In June 2015, Schoell Marine forgave $710,272 of principle and accrued interest on the note.

During the last quarter of 2014, the Company’s Chairman and co-founder loaned 10 million shares of Company common stock, valued at approximately $14,000, which were reissued pursuant to various debt covenants. These shares have been presented as value of shares loaned by stockholder in the accompanying consolidated balance sheets. These shares were returned to the Chairman in March 2015.

During 2013, the Company’s Chairman and co-founder loaned approximately 37.4 million shares of Company common stock, valued at approximately $1.5 million, as reserve treasury shares pursuant to various debt covenants. These shares have been presented as the value of shares loaned by stockholder in the accompanying consolidated balance sheets. These shares were returned to the Chairman in March 2014.

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NOTE 7 – RELATED PARTY TRANSACTIONS

A. LEASE ON FACILITIES

The Company leases a 6,000 square foot warehouse and office facility located at 601 NE 26th Court in Pompano Beach, Florida. The lease, which is part of the Company’s Operations Agreement with Schoell Marine, provides for the Company to pay an annual rent of $60,000. Schoell Marine sold the building in December of 2015 and the lease was transferred to the new owner. The lease period ends December 2016 with a 1 year renewal at the company’s option, and a 2% rate increase. Occupancy costs for the years ended December 31, 2015, and 2014 were $ 60,000 and $62,964, respectively.  

B. DEFERRED COMPENSATION

Included in accounts payable and accrued expenses - related parties as of December 31, 2015, and December 31, 2014 are $137,500, and $475,000, respectively, of accrued and deferred officers’ salaries compensation which may be paid as funds are available. These are non-interest bearing and due on demand.

In June 2015, the principle officers of the Company forgave $612,500 of deferred compensation.

In January 2014, four of the Company’s executive management converted $668,312 in deferred salary into 20,313,416 shares of restricted common stock, and forgave $956,762 in deferred salary as contributed capital. This forgiveness of deferred salary was recorded as additional paid in capital in the accompanying consolidated balance sheet at December 31, 2014.

NOTE 8 – PREFERRED STOCK

The Series B Preferred Stock is majority voting stock and is held by the two co-founders of the Company. Ownership of the Series B Preferred Stock shares assures the holders thereof a 51% voting control over the common stock of the Company. The 1,000 Series B Preferred Stock shares are convertible on a one-for-one basis with the common stock in the instance the Company is merged, sold or otherwise dissolved.

NOTE 9 – STOCK TRANSACTIONS

During the year ended December 31, 2015, the Company:

a-	Issued 92,500,000 shares of restricted common stock valued at $116,500 for payment of $66,500 of liabilities and incurred a $50,000 loss on this debt payment.
b-	Amortized (based on vesting) $2,526 of common stock options for employee services.
c-	Issued 424,853,956 shares of common stock valued at $130,855 as repayment of debt and related interest expense.
d-	Repaid a loan of 10,000,000 shares of stock from the Company’s Chairman and co-founder. which had been reissued pursuant to various debt covenants that had to be covered with stock.

During the year ended December 31, 2014, the Company:

a-	Issued 4,722,365 shares of common stock in a cashless exercise of warrants.
b-	Amortized (based on vesting) $10,400 of common stock options for employee services.
c-	Issued 496,323,413 shares of common stock valued at $1,142,647 as repayment of debt and related interest expense. .
d-	Issued 20,313,416 shares of restricted common stock, valued at $668,312 in conversion accrued officers salaries. Additionally, $956,762 of accrued officers salaries were forgiven.
e-	Sold 8,219,298 shares of common stock for $111,829
g-	Issued 6,250,000 shares of restricted common stock, valued at $116,175 for services

F-14

NOTE 10 – STOCK OPTIONS AND WARRANTS

A. COMMON STOCK OPTIONS

Per the employment contracts with certain officers, the company issued 1,800,000 common stock options, valued at $405 (pursuant to the Black Scholes valuation model) ) that are exercisable into shares of common stock at an average exercise price of $.0009 and with a maturity life of 10 years. For the years ended December 31, 2015, and December 31, 2014 the amortization of stock options was $ 2,526 and $10,400, respectively. The unamortized balance at December 31 2015 was $1,232.

A summary of the common stock options for the period from December 31, 2013 through December 31, 2015 follows:

	Number Outstanding			Weighted Avg. Exercise Price			Weighted Avg. Remaining Contractual Life (Years)
Balance, December 31, 2013		9,740,000		$	0.129			5.5
Options issued		1,350,000			.002			9.8
Options exercised		-			-			-
Options cancelled		-			-			-
Cancelled-old		-
Balance, December 31, 2014		11,090,000		$	0.123			6.0
Options issued		1,800,000			0.0009			9.6
Options exercised		-			-
Options cancelled		(510,000	)		(.12	)		-
Cancelled-old		-
Balance, December 31, 2015		12,380,000		$	0.11			5.8

The vested and exercisable options at period end follows:

	Exercisable/ Vested Options Outstanding		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (Years)
Balance December 31, 2015		10,580,000	$	.128		5.1
Additional vesting by March 31, 2016		450,000		.0003		9.0

The fair value of new stock options, re-priced stock options, new purchase warrants and re-priced purchase warrants granted using the Black-Scholes option pricing model was calculated using the following assumptions:

F-15

	Year Ended December 31, 2015			Year Ended December 31, 2014
Risk free interest rate		.89 % -1.31	%		.67 % -1.32	%
Expected volatility		102% - 131	%		63% - 89	%
Expected term		3			2-4
Expected dividend yield		0	%		0	%
Average value per options and warrants		$ .0003 -$.0016			$ .001 - $ .017

expected volatility is based on historical volatility of the Company’s common stock price. Short Term U.S. Treasury rates were utilized at the risk free interest rate. The expected term of the options and warrants was calculated using the alternative simplified method newly codified as ASC 718 “Accounting for Stock Based Compensation,” which defined the expected life as the average of the contractual term of the options and warrants and the weighted average vesting period for all issuances.

B. COMMON STOCK WARRANTS

During the year ended December 31, 2015, 2,508,692 warrants with an average exercise price of $.148 expired.

A summary of outstanding vested warrant activity for the period from December 31, 2013 to December 31, 2015 follows:

	Number Outstanding			Weighted Average  Exercise Price			Weighted  Average  Remaining  Contractual  Life (Years)
Common Stock Warrants
Balance, December 31, 2013		16,097,798		$	0.057			2.85
Warrants exercised-cashless		(9,037,230	)		(0.017	)
Warrants issued		2,838,048			0.111			3.92
Warrants expired		(2,861,251	)		(.166	)
Warrants cancelled		(3,403,673	)		(.011	)
Warrants re-priced:
Cancelled – old		(1,190,625	)		(0.020	)
Re-Priced		1,190,625			0.011
Balance, December 31, 2014		3,633,692		$	0.074			0.89
Warrants exercised-cashless
Warrants issued
Warrants expired		(2,508,692	)		(.148	)
Warrants cancelled
Warrants re-priced:
Cancelled – old
Re-Priced
Balance, December 31, 2015		1,125,000		$	0042			2.05

All warrants were vested and exercisable as of the date issued.

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NOTE 11 – INCOME TAXES

A reconciliation of the differences between the effective income tax rates and the statutory federal tax rates for the years ended December 31, 2015 and 2014 are as follows:

	Year ended December 31, 2015					Year ended December 31, 2014
Tax benefit at U.S. statutory rate	$	235,276		34	%	$	1,361,148		34	%
State taxes, net of federal benefit		27,679		4			160,135		4
Change in valuation allowance		(262,955	)	(38	)		(1,521,283	)	(38	)
		-		-			-

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2015 and December 31, 2014 consisted of the following:

Deferred Tax Assets	December 31, 2015			December 31, 2014
Net Operating Loss Carry-forward	$	9,924,492		$	9,410,367
Deferred Tax Liabilities		(795,805	)		(382,260	)
Net Deferred Tax Assets		9,128,687			9,028,107
Valuation Allowance		(9,128,687	)		(9,028,107	)
Total Net Deferred Tax Assets	$	-		$	-

As of December 31, 2015, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $21.4 million that may be offset against future taxable income through 2035. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax asset has been reported in the financial statements because the Company believes there is a 50% or greater chance the carry forwards will expire unused. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.

NOTE 12 –LEASE OBLIGATIONS

A. CAPITALIZED LEASE OBLIGATIONS

At December 31, 2014, the Company acquired $37,158 of equipment via capitalized leases at interest rates ranging from 6.9% to 10.0%. In December 2013, the Company acquired $8,408 of equipment via capitalized lease obligations at an interest rate of 15.5%. Total lease payments made for the year ended December 31, 2015 were $7,811. The balance of capitalized lease obligations payable at December 31, 2015, and December 31, 2014 were $49,889 ,and $57,700, respectively. Future lease payments are:

2016	$	12,950
2017		14,382
2018		11,984
2019		8,551
2020		2,022
	$	49,889

B. LEASE ON ADDITIONAL FACILITIES

In August, 2015, the Company terminated the lease for 2,000 square feet of additional space. The related lease expense for the years ended December 31, 2015 ,and 2014 was $10,424, and $18,129, respectively.

F-17

Commencing January 2014, the WHE Generation Corp. accrued $1,000 in monthly rent (inclusive of utilities, taxes and shared office assistance) to Precision CNC as part of the joint facility / manufacturing arrangement, and effective July 2014 rent increased to $2,500 per month. The rent expense for the nine months ended September 30. 2014 (up until deconsolidation) recorded by WHE-Gen was $ 13,957.

NOTE 13 – COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with Harry Schoell, Chairman and CTO (previously, CEO), at $150,000 per year and Frankie Fruge, President, at $120,000 per year; (collectively, the “Executives”). These agreements provide for a term of three (3) years from their Effective Date (July 2007 with automatically renewing successive one year periods starting on the end of the second anniversary of the Effective Date. If the Executive is terminated “without cause” or pursuant to a “change in control” of the Company, as both defined in the respective agreements, the Executive shall be entitled to (i) any unpaid Base Salary accrued through the effective date of termination, (ii) the Executive’s Base Salary at the rate prevailing at such termination through 12 months from the date of termination or the end of his Term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to the Executive were he/she not terminated, during the 12 months following his or her termination.

Christopher Nelson, former President and General Counsel, resigned his positions effective July 17, 2014 as President and General Counsel of the Company and elected to forgo any salary and benefits subsequent to May 31 2014 from Cyclone Power Technologies Inc. Effective July 31, 2014, Mr. Nelson signed an employment agreement with WHE-Generation Corp. as the Chief Executive Officer. For the period through December 31, 2014, $70,165 was recorded as officer compensation by WHE-Generation Corp.

NOTE 14 –CONSOLIDATED SUBSIDIARY

In 2012, the Company established a 100% owned subsidiary (renamed) Cyclone Performance LLC. The purpose of Cyclone Performance is to build, test and run a vehicle utilizing the Company’s engine. In the last quarter of 2012, the Company sold a 5% equity investment to an unrelated investor for $30,000. Subsequent to December 31, 2012, this 5% equity investment was acquired by a corporate officer of the Company. Losses of the subsidiary are currently fully borne by the Company, as there is no guarantee of future profits or positive cash flow of the subsidiary. As of December 31, 2015, the cumulative unallocated losses to the non-controlling interests of this subsidiary of $953 are to be recovered by the parent from future subsidiary profits if they materialize.

NOTE 15 – DECONSOLIDATION OF WHE SUBSIDIARY

The Company sold most of its 73.72% investment in the WHE subsidiary to a company formed by Cyclone’s former President and a Board of Director member and effective September 30, 2014 under separation and stock repurchase agreements dated July 17, 2014 and September 30, 2014, respectively. Under the agreements, as of December 31, 2014, the Company retained approximately a 2.1 million share non-controlling investment (below 20%) The WHE subsidiary has been deconsolidated due to the loss of control. The difference between the fair value of the retained investment in the subsidiary and its carrying amount at the date of the transaction was of $2,443,506, is recorded in Additional Paid in Capital and its remaining investment in the WHE subsidiary was recorded at the fair value of the WHE common stock held by the Company, which was $556,756 as of September 30, 2014. The Company provided an allowance for the full $556,756 due to the uncertainty of investment being realized. This is included in Other income/( expense) on the December 31, 2014 Income Statement.

As part of the separation agreement Whe Gen paid to the company $350,000, and is to pay $150,000 for the remainder of the company’s investment sold. Due to the continued cumulative losses of Whe Gen, the Company provided an allowance for uncollectable accounts for the full $150,000 amount due. This provision is included in Other income/( expense) on the December 31, 2014 Income Statement.

F-18

Whe Gen also paid to TCA Global Master Credit Fund LP, the Company’s senior secured creditor, approximately $78,000 to fully retire that debenture and release all of the Company’s assets from its security interest. Whe Gen also paid to the Company an additional $24,000 in reimbursements, and transferred back to Cyclone 3,000,000 shares of treasury stock in Cyclone (valued at $210,000). Whe Gen also assumed a $50,000 liability, deferred revenue of approximately $10,000 and accepted the responsibility to complete an engine delivery contract (previously recorded as $290,000 deferred revenue by the Company) . The Company forgave an intercompany receivable of approximately $85,000. Additionally, the Company satisfied a liability of $17,550 via transferring 65,000 shares of its WheGen shares.

To raise funds pursuant to the separation agreement, Whe Generation Corp. in the “Seed” Round of financing commencing in July 2014, issued $ 350,000 of 6% convertible debt, maturing in 12 months, which were subsequently converted into common stock at $.12 per share as of September 30, 2014. In the common stock “A” funding WHE Generation Corp. raised $1,314,360 of common stock sales at $.27 per share as of September 30, 2014.

In connection with the Agreement, the Company and WheGen also amended its 2010 License Agreement (the “License”) to provide the Company with an initial non refundable license fee of $175,000 and on-going 5% royalties from Whe Gens sale of engines utilizing the licensed technology. This License is 20 years with two 10-year extensions. It is worldwide in territory and exclusive for the specific applications of stationary waste heat recovery (WHR) and waste-to-power (WtP).

The total losses of the WheGen subsidiary for the nine months ended September 30, 2014, for the year ended December 31, 2013 and cumulatively since inception were $696,831 and $157,266, and $ 854,097 respectively. These losses were fully borne by the Company and are included in net loss in the consolidated statements of operations.

In 2015, Whe Gen gave the company 625,000 of Whe Gen common stock in settlement of the $150,000 receivable noted above. In the second quarter of 2016, the company sold its total investment of approximately 2.7 million Whe Gen shares and at which time the Company recorded a gain of $44,000, the amount paid for the shares by a third party.

NOTE 16 – RECEIVABLES, DEFERRED REVENUE AND BACKLOG

As of December 31, 2015, total backlog for prototype engines to be delivered was $400,000 from the Combilift agreement, of which $100,000 has been paid and has been recorded as deferred revenue. In 2015 another customer advanced $25,000 as a deposit towards progress payments on a $80,000 contract for engines currently estimated to be delivered in 2017.

NOTE 17 – DERIVATIVE FINANCIAL INSTRUMENTS

Pursuant to additional financing, in the years ended December 31, 2015 and 2014 the Company entered into convertible note agreements (subject to derivative accounting treatment) in the aggregate amounts of $0, and $855,800, respectively The conversion prices into common stock ranged from a discount of 30% to 45% of the lowest closing prices in the 10 to 20 trading days prior to the conversion. Under provisions of ASC Topic 815-40, this conversion feature triggered derivative accounting treatment because the convertible note was convertible into an indeterminable number of shares of common stock. The fair value of the embedded conversion option was required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the consolidated statements of operation.

The Company recorded derivative liabilities of $0 and $810,527 with a discount offset against the underlying loan, during the years ended December 31, 2015 and 2014, respectively.

In the year ended December 31, 2015, the Company recorded a $174,043 non-cash charge to interest expense (reflective of debt discount amortization), an increase of $0 in additional paid in capital pursuant to conversion of convertible notes to common stock, and a $56,702 of derivative gain related to adjusting the derivative liability to fair value. At December 31, 2015, the derivative related fair value of debt was $383,482.

F-19

In the year ended December 31, 2014, the Company recorded a $935,128 non-cash charge to interest expense (reflective of debt discount amortization), an increase of $1,0013,062 in additional paid in capital pursuant to conversion of convertible notes to common stock, and $147,680 of derivative loss related to adjusting the derivative liability to fair value. At December 31, 2014, the derivative related fair value of debt was $440,184.

The Company calculates the estimated fair values of the liabilities for derivative instruments at each quarter-end using the BSM option pricing model and Stochastic Process Forecasting models (Monte Carlo simulations). Volatility, expected term and risk free interest rates used to estimate the fair value of derivative liabilities are indicated in the table below. The volatility was based on historical volatility, the expected term is equal to the remaining term of the debt and the risk free rate is based upon rates for treasury securities with the same term.

	Year Ended December 31, 2015		Year Ended December 31, 2014
Volatility		103%- 343%		96% - 276%
Risk Free Rate		.01% - .28%		.02% - 1.07%
Expected Term (years)		0 – 1.05		0 –4.2
Dividend Rate		0%		0%

NOTE 18 – LITIGATION

Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received a judgment and the Company is negotiating a reduced settlement. As at December 31 2015, outstanding interest, default interest and default judgment penalties are included in accrued liabilities.

In August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received a judgment and the Company is seeking to arrange a settlement. As at December 31, 2015, outstanding interest, default interest and default judgment penalties are included in accrued liabilities.

In 2014 Penton Learning Center filed a small claim for cancellation of exhibitor space against Cyclone. Penton and Cyclone reached a $4,500 settlement in 2015 and it was paid in full in 2015.

In 2015 Silest filed a small claim for rent due on storage facility against Cyclone (included in accounts payable). Silest and Cyclone reached a settlement and paid in full in 2016.

NOTE 19 – SUBSEQUENT EVENTS

In the second and third quarters of 2016, the Company engaged in the following transactions:

a-	The Company issued 3 million shares of common stock value at $5,700 for services.
b-	The company issued approximately 45.7 million shares of common stock valued at approximately $82,000 pursuant to the final settlement of a liability.
c-	The Company has placed purchase orders for the pre production manufacturing of 5 Mark 3 engines to test application and integration with customers’ systems.
d-	In recognition of the declining market value and low market volume, the company sold all of its investment in Q 2 Power Technologies for $44,000.
e-	The Company issued 80,000 million shares of common stock valued at $216,000 pursuant to the conversion of a liability.

Effective September 1, 2016, the company raised the authorized common stock to 4,000,000,000 shares pursuant to debt conversion requirements. This authorized share increase was retroactively reflected on the December 31, 2015 and 2014 Balance Sheets.

F-20

G2E, S.A.P.I. de C.V. ( of Mexico) has signed a Systems Application Agreement and an Engineering Development Agreement with Cyclone Power Technologies. These agreements will formulate over the next 6 months a beta Solar site that will be developed using Cyclone’s solar panels, Cyclone’s Thermal Storage Unit and the Cyclone engine to produce 24/7 electrical power from the energy of Solar. The Systems Application License Agreement allows G2E the rights to build and sell the solar systems, excluding military, in Latin America, New Zealand, and Australia.

3R Denmark (“3R”) has accepted and approved their Mark 3, 25HP Cyclone Engine and is ready for integration with their Boiler Systems for combined heat and power (CHP). 3R DENMARK has a distribution agreement to use the Cyclone Power Engines for the specific uses of fuel to power in their unique boiler system being manufactured in China. In September 2016, 3R merged into Integrated Biomass Energy System, FZ-LLC (“IBES”) a United Arab Emirates corporation .

Through 2016, the company collected contract progress payments and contract deposits of $170,000.

Through 2016, the company received funds of approximately $100,000 from traditional, non derivative related debt.

In June 2016 Falck Schmidt Defense Systems (“FSDS”) of Denmark has signed an exclusive Engineering Development Agreement which provides for the development of a militarized 10 Kw auxiliary power unit (APU) for worldwide military applications. FSDS will be the exclusive worldwide distributor for both military and aerospace power applications, FSDS is to purchase engines from the company or will pay a license or royalty fee for manufacture. Additionally the contract employs the company as a R&D arm of FSDS.

F-21

CYCLONE POWER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2015, JUNE 30, 2015 AND MARCH 31, 2015

(UNAUDITED)

	September 30, 2015			June 30, 2015			March 31, 2015
ASSETS
CURRENT ASSETS
Cash	$	-		$	-		$	7
Inventory, net		455,510			515,460			514,801
Other current assets		712			837			962
Total current assets		456,222			516,297			515,770
PROPERTY AND EQUIPMENT
Furniture, fixtures, and equipment		312,846			312,846			312,846
Accumulated depreciation		(177,247	)		(168,174	)		(158,927	)
Net property and equipment		135,599			144,672			153,919
OTHER ASSETS
Patents, trademarks and copyrights		579,067			579,067			579,067
Accumulated amortization		(260,119	)		(250,413	)		(240,707	)
Net patents, trademarks and copyrights		318,948			328,654			338,360
Other assets		2,761			2,761			2,761
Total other assets		321,709			331,415			341,121
Total Assets	$	913,530		$	992,384		$	1,010,810
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Cash overdraft	$	3,026		$	1,228		$	-
Accounts payable and accrued expenses		1,107,811		$	1,037,541			989,124
Accounts payable and accrued expenses-related parties		126,475			42,725			614,200
Notes and other loans payable-current portion		341,201			325,225			271,555
Derivative liabilities		451,590			450,995			457,838
Notes and other loans payable-related parties		284,003			247,335			906,656
Capitalized lease obligations-current portion		12,826			12,646			12,205
Deferred revenue and license deposits		148,030			147,627			122,627
Total current liabilities		2,474,962			2,265,322			3,374,205
NON CURRENT LIABILITIES
Capitalized lease obligations-net of current portion		38,143			39,800			44,125
Notes and other loans payable-net of current portion		50,000			50,000			50,000
Total non-current liabilities		88,143			89,800			94,125
Total Liabilities		2,563,105			2,355,122			3,468,330
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Series B preferred stock, $.0001 par value, 1,000 shares authorized, 1,000 shares issued and outstanding at March 31, 2015 June 30, 2015 and September 30, 2015, respectively.		-			-			-
Common stock, $.0001 par value, 4,000,000,000 shares authorized, 1,327,937, 1,327,937 and 1,388,669,532 shares issued and outstanding at March 31, 2015, June 30, 2015  and Seot. 30,2015, respectively.		138,865			132,792			231,792
Additional paid-in capital		56,621,427			56,617,055			55,231,719
Stock subscription receivable		(6,000	)		(6,000	)		(6,000	)
Accumulated deficit		(58,432,914	)		(58,135,632	)		(57,845,078	)
Total stockholders' deficit-Cyclone Power Technologies Inc.		(1,678,622	)		(1,391,785	)		(2,387,567	)
Non controlling interest in consolidated subsidiaries		29,047			29,047			29,047
Total Stockholders' Deficit		(1,649,575	)		(1,362,738	)		(2,358,520	)
Total Liabilities and Stockholders' Deficit	$	913,530		$	992,384		$	1,109,810

The accompanying notes are an integral part of these condensed consolidated financial statements

F-22

CYCLONE POWER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31
	2015			2014
REVENUES	$	-		$	-
COST OF GOODS SOLD		-			27,000
Gross profit		-			(27,000	)
OPERATING EXPENSES
Advertising and promotion		254			7,605
General and administrative		271,579			437,739
Research and development		106,927			124,180
Total operating expenses		378,760			569,524
Operating loss		(378,760	)		(596,524	)
OTHER (EXPENSE) INCOME
Other (expense)		(50,000	)
Derivative (expense) -notes payable		(17,654	)		(55,158	)
Interest (expense)		(141,223	)		(445,351	)
Total other (expense)		(208,877	)		(500,509	)
Loss before income taxes		(587,637	)		(1,097,033	)
Income taxes		-			-
Net loss	$	(587,637	)	$	(1,097,033	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding		972,124,660			261,282,936

 See accompanying notes to the condensed consolidated financial statements

F-23

CYCLONE POWER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Six Months Ended June 30,						Three Months Ended June 30,
	2015			2014			2015			2014
REVENUES	$	-		$	140,527		$	-		$	140,527
COST OF GOODS SOLD		-			85,877			-			58,877
Gross margin		-			54,650			-			81,650
OPERATING EXPENSES
Advertising and promotion		434			13,170			180			5,565
General and administrative		401,014			980,516			129,435			542,777
Research and development		188,164			316,817			81,237			192,637
Total operating expenses		589,612			1,310,503			210,852			740,979
Operating loss		(589,612	)		(1,255,853	)		(210,852	)		(659,329	)
OTHER (EXPENSE) INCOME
Other income (expense)		(50,000	)		-			-			-
Derivative  (expense)  -notes payable		(10,811	)		(179,509	)		6,843			(124,351	)
Interest (expense)		(227,854	)		(851,975	)		(86,631	)		(406,624	)
Total other (expense)		(288,665	)		(1,031,484	)		(79,788	)		(530,975	)
Loss before income taxes		(878,277	)		(2,287,337	)		(290,640	)		(1,190,304	)
Income taxes		-			-			-			-
Net loss	$	(878,277	)	$	(2,287,337	)	$	(290,640	)	$	(1,190,304	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding, basic and diluted		1,082,119,889			291,288,247			1,327,937,290			353,877,991

See accompanying notes to the condensed consolidated financial statements

F-24

CYCLONE POWER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	Nine Months Ended Sept. 30,						Three Months Ended Sept. 30,
	2015			2014			2014			2014
REVENUES
Engine sales and design revenue	$	-		$	140,527		$	-		$	-
Whe Gen license revenue					175,000						175,000
Total revenue		-			315,527			-			175,000
COST OF GOODS SOLD		-			85,877			-			-
Gross margin		-			229,650			-			175,000
OPERATING EXPENSES
Advertising and promotion		2,934			19,390			2,500			6,220
General and administrative		526,241			1,606,575			125,227			626,059
Research and development		291,769			713,237			103,605			396,420
Total operating expenses		820,944			2,339,202			231,332			1,028,699
Operating loss		(820,944	)		(2,109,552	)		(231,332	)		(853,699	)
OTHER (EXPENSE) INCOME
Other income (expense)		(50,000	)		(706,756	)		-			(706,756	)
Derivative (expense) -notes payable		(11,406	)		(148,289	)		(595	)		31,220
Interest (expense)		(293,123	)		(1,133,133	)		(65,269	)		(281,158	)
Total other (expense)		(354,529	)		(1,988,178	)		(65,864	)		(956,694	)
Loss before income taxes		(1,175,473	)		(4,097,730	)		(297,196	)		(1,810,393	)
Income taxes		-			-			-			-
Net loss	$	(1,175,473	)	$	(4,097,730	)	$	(297,196	)	$	(1,810,393	)
Net loss per common share, basic and diluted	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding, basic and diluted		1,145,656,355			335,841,941			1,346,156,963			525,746,233

See accompanying notes to the condensed consolidated financial statements

F-25

CYCLONE POWER TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Three Months Ended						Six Months Ended						Nine Months Ended
	March 31,						June 30,						September 30,
	2015			2014			2015			2014			2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(587,637	)	$	(1,097,033	)	$	(878,277	)	$	(2,287,337	)	$	(1,175,473	)	$	(4,097,730	)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization		19,078			17,284			38,031			34,569			56,810			54,864
Loss provisions on deconsolidation of Whe Gen subsidiary		—			—			—			—			—			706,756
Provision for Inventory reserve		—			—			—			—			—			80,000
Issuance of restricted common stock, options and warrants for services		62,084			54,572			62,953			109,759			63,377			109,579
Issuance of restricted common stock in settlement of common stock warrants		—			—			—			—			—			49,500
Loss on debt paid with common stock		50,000			—			50,000			—			50,000			—
Amortization of prepaid interest expenses via common stock & warrants		28,459			—			28,459			—			28,459			—
Loss from derivative liability-notes payable		17,654			55,158			10,811			179,509			11,406			148,289
Interest paid with common stock		11,372			—			11,371			—			12,394			—
Amortization of derivative debt discount		78,861			297,929			132,531			602,805			157,507			816,308
Original issue discount paid with stock		—			10,714			—			10,714			—			10,714
Amortization of prepaid expenses via common stock & warrants		—			177,435			—			324,854			—			434,724
Amortization of original issue discount		—			14,095			—			37,385			—			47,652
Changes in operating assets and liabilities:
(Increase) decrease in inventory		(45,759	)		(99,764	)		(46,417	)		(15,608	)		13,533			(30,521	)
Increase in other current assets		15,116			12,358			15,240			22,169			15,365			(36,731	)
Increase in bank overdraft		—			—			1,228			—			3,027			—
Increase in accounts payable and accrued expenses		177,782			126,577			226,286			300,091			315,437			567,266
Increase in accounts payable and accrued expenses-related parties		83,750			102,674			186,470			199,232			361,522			183,539
Increase in deferred revenue and deposits		—			255			25,000			255			25,403			6,505
Net cash used by operating activities		(89,240	)		(327,746	)		(136,314	)		(481,603	)		(61,233	)		(949,286	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures incurred for patents, trademarks and copyrights		—			—			—			(10,610	)		—			(19,465	)
Expenditures for property and equipment		—			—			—			—			—			(34,913	)
Deconsolidation of Whe Gen subsidiary, Net assets		—			110,000			—			110,000			—			436,816
Net cash used by investing activities		—			110,000			—			99,390			—		$	(382,438	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capitalized leases		(1,370	)		(1,569	)		(5,254	)		(3,482	)		(6,731	)		(4,779	)
Proceeds from notes and loans payable		50,000			240,000			50,000			440,000			50,000			515,000
Repayment of notes and loans payable		—			(38,615	)		—			(38,615	)		—			(38,615	)
Proceeds from Whe Gen debt financing		—			—			—			—			—			350,000
Increase in related party notes and loans payable-net		40,339			7,626			91,290			9,884			17,686			24,199
Net cash provided by financing activities		88,969			207,442			136,036			407,787			60,955		$	845,805
Net (decrease) increase in cash		(271	)		(10,304	)		(278	)		25,574			(278	)		288,957
Cash, beginning of period		278			17,363			278			17,363			278			17,363
Cash, end of period	$	7		$	7,059		$	—		$	42,937		$	—		$	306,320
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Payment of interest in cash	$	10,869		$	25,121		$	11,372		$	38,084		$	13,836		$	46,055
NON CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 40,000,000 shares of Common stock for liability settlement	$	14,000		$	—		$	14,000		$	—		$	14,000		$	—
Issuance of 5,250,000 shares of Common stock pursuant to prior year common stock price guarantees	$	52,500		$	—		$	52,500		$	—		$	52,500		$	—
Issuance of 328,161,744 shares of Common stock for debt repayment	$	109,462		$	—		$	109,462		$	—		$	—		$	—
Issuance of 35,959,970 shares of Common stock for debt interest	$	11,372		$	—		$	11,372		$	—		$	—		$	—
Issuance of 328,707,198 shares of Common stock for debt repayment	$	—		$	—		$	—		$	—		$	118,462		$	—
Issuance of 42,146,758 shares of Common stock for debt interest	$	—		$	—		$	—		$	—		$	12,392		$	—
Issuance of 20,313,416 shares of Common stock for repayment of related party payables	$	—		$	668,312		$	—		$	668,312		$	—		$	668,312
Issuance of 2,050,000 shares of Common stock for accrued expenses	$	—		$	—		$	—		$	93,000		$	—		$	93,000
Issuance of 1,750,000 shares of Common stock for accrued expenses	$	—		$	75,000		$	—		$	—		$	—		$	—
Issuance of 399,038,505 shares of Common stock for debt repayment	$	—		$	—		$	—		$	—		$	—		$	1,048,232
Issuance of 9,989,872 shares of Common stock for debt interest	$	—		$	—		$	—		$	—		$	—		$	32,322
Issuance of 117,424,952 shares of Common stock for debt repayment	$	—		$	—		$	—		$	740,872		$	—		$	—
Issuance of 3,190,859 shares of Common stock for debt interest	$	—		$	—		$	—		$	25,507		$	—		$	—
Issuance of 21,567,656 shares of Common stock for debt repayment	$	—		$	285,317		$	—		$	—		$	—		$	—
Issuance of 983,859 shares of Common stock for debt interest	$	—		$	12,616		$	—		$	—		$	—		$	—
Value of shares repaid to stockholder	$	—		$	1,496,217		$	—		$	1,496,217		$	—		$	1,496,217
Foregiveness of deferred officer's salaries	$	—		$	—		$	655,225		$	956,762		$	655,225		$	956,762
Foregiveness of accrued rent, interest & other expenses due officer's company	$	—		$	—		$	710,272		$	—		$	710,272		$	—
conversion of convertible debt	$	—		$	—		$	—		$	—		$	—		$	954,641
Cancellation of treasury stock	$	—		$	—		$	—		$	—		$	—		$	210,000

The accompanying notes are an integral part of these consolidated financial statements

F-26

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

A. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The unaudited consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. We follow the same accounting policies in preparation of interim reports as we do in our annual reports.

Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. We suggest that these financial statements be read in conjunction with the financial statements and notes thereto included in the above annual reports for the years ended December 31, 2015 and December 31, 2014

The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

NOTE 2 - GOING CONCERN

As shown in the accompanying condensed consolidated financial statements, the Company incurred substantial operating and other losses and expenses of approximately $4.1 million for the nine months ended September 30, and the cumulative deficit since inception to September 30, 2015 is approximately $ 58.4 million,. The Company has a working capital deficit at September 30, 2015 of approximately $2 million. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The ability of the Company to continue as a going concern is dependent on management’s plans which include continuation of its business model to generate revenue from development contracts, licenses and product sales, and continuing to raise funds through debt and advances from strategic partners and deferred payments to related parties.

NOTE 2 – RELATED PARTY TRANSACTIONS

In June 2015, Company’s officers forgave $655,225 in accrued salaries and the Chairman of the Board forgave an additional $710,272 in accrued rent, interest and other expenses. These expenses are recorded as salary, rent, interest, etc. and the forgiveness is record as additional paid in capital. In addition, cumulatively, for the nine months ended September 30, 2015, related party debt, accounts payable, and accruals increased $379,208.

F-27

Results of Operations (unaudited)

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014

Revenue. The Company had no revenues in the quarters ended March 31 2015 and March 31, 2014.

Gross Margin. In the quarter ended March 31, 2015, the company has no gross margin and in the quarter ended March 31, 2014, the Company had a $27,000 charge to cost of goods sold, for a variance of $27,000 or 100%. The 2014 charge was reflective of estimated additional costs on the US Army contract.

Operating Expenses. Operating expenses incurred for the quarter ended March 31, 2015 were $378,760 as compared to $569,524 for the same period in the previous year, a reduction of $190,764 or 33%. The majority of the decrease was due to a reduction in General and Administrative expenses of $166,160 (38%): lower stock issuance for services, timing of patent maintenance fees and the 2014 resignation of former company president. Research and Development expenses were lower by $17,253 or 14%, reflective of the sale and spin-off of the Whe Gen subsidiary.

Operating Loss. The operating losses for the quarters ended March 31, 2015 and 2014 were $378,760 and $596,524, respectively, a reduced loss of $217,764 or 36%, due to the factors outlined above.

Other Expense. Other expense for the quarter ended March 31, 2015 was $208,877 versus $ 500,509 for the same period in the prior year, a reduction of $291,632 or 58%. , The 2015 other expenses included $62,362 of interest expense, $78,861 of derivative accounting related interest charges and a loss of $50,000 from debt settled with common stock.

Net other expenses for the quarter ended March 31, 2014 was $500,509, due to $147,422 of interest expense attributable to increase debt levels, derivative accounting related interest charges of $ 297,929 and derivative related expenses of $55,158 adjusting debt to fair value.

Net Loss and Loss per Share. The net loss for the quarter ended March 31, 2015 was $587,637, compared to a net loss of $1,097,033 for the same period in the previous year. The decreased loss of $509,396 or 46% is related to the other factors outlined above. The net loss per weighted average share was $0.00 for both the current quarter and prior quarter.

Liquidity and Capital Resources

At March 31, 2015, the net working capital deficiency was $2,858,435 as compared to a deficiency of $2,618,988 at December 31, 2014, an increase of $239,447 or 9.1%.

For the three months ended March 31, 2015, cash decreased by $271. This is reflective of funds used by the net loss of $587,637 and the $45,759 increase in inventory. Funds were provided by debt proceeds of $50,000, higher accounts payable and accrued expenses of $177,782 and an increase of $83,750 in related party payables and accrued expenses. Non-cash charges for the three months were from the issuance of common stock, warrants and options for services of $62,084, amortization of prepaid expenses paid with common stock of $28,459, $78,861 of derivative debt discount amortization, and a $50,000 loss recognized by settling debt with common stock.

For the three months ended March 31, 2014, cash decreased by $10,304. This is reflective of funds used by the net loss of $1,097,033 and the $99,764 increase in inventory. Funds were provided by the sale of common stock of $110,000, debt proceeds of $240,000, higher accounts payable and accrued expenses of $126,577 and an increase of $102,674 in related party payables and accrued expenses. Non-cash charges for the three months were from the issuance of common stock, warrants and options for services of $54,572, amortization of prepaid expenses paid with common stock of $177,435, derivative expenses related to debt valuation of $55,158 and $297,929 of derivative debt discount amortization (charged as interest expense).

32

Results of Operations (unaudited)

Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014

Revenue. The company had no revenue for the three months ended June 30, 2015 versus $140,527 in the same period of the previous year, a variance of $ 140,520 or 100%. The revenue in the quarter ended June 30, 2014 was from the successful completion of the US Army Contract.

Gross Margin. The company had no gross margin in the three months ended June 30 215 versus a gross profit for the quarter ended June 30, 2014 of $81,650, a variance of $ 81,650 or 100%. The 2014 gross margin is primarily attributable to the completion of the US Army contract.

Operating Expenses. Operating expenses incurred for the quarter ended June 30, 2015 were $ 210,882 as compared to $740,979 for the same period in the previous year, an decrease of $569,524 or 72%. The decrease was due to a decrease in Research and Development expenses of $111,400 or 58%, reflective of the sale and spin off of the Whe GEN subsidiary and reduction in engine development associated costs. Also, General and Administrative expenses decreased by $ 413,342 (76%) primarily from lower professional and consulting expenses, stock issued for services and timing of patent maintenance fees.

Operating Loss. The operating losses for the quarters ended June 30, 2015 and 2014 were $ 210,852 and $659,329 respectively, a decreased loss of $448,477 or 68%, due to the factors outlined above.

Other Income (Expense) Net other expense for the quarter ended June 30, 2015 was $79,788 versus $ 530,975 for the same period in the previous year, a reduction of $451,187 or 85% , The 2015 expenses are primarily due to interest expense of $32,961 and derivative accounting related interest charges of $53,670.

Net other expense for the quarter ended June 30, 2014 was $530,975, which included $101,748 of debt related interest derivative accounting related interest charges of $304,876 and derivative related expenses of $124,351 adjusting debt to fair value.

Net Loss and Loss per Share. The net loss for the quarter ended June 30, 2015 was $ 290,640 compared to a net loss of $1,190,304 for the same period in the previous year, a decreased loss of $899,664 or 76% related to the factors outlined above. The net loss per weighted average share was $0.00 for both the current quarter and the prior quarter.

Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014

Revenue. The company had no revenue for the six months ended June 30, 2015 compared to $140,527 in the comparable period of the previous year, a variance of $140,527 or 100% . The 2014 revenue was from the successful completion of the US Army Contract.

Gross Margin. The company had no gross margin in the six months ended June 30 2015 versus a gross margin for the six months ended June 30, 2014 of $54,650, a variance of $54,650 or 100% The 2014 gross margin was attributable to the completion of the US Army contract.

Operating Expenses. Operating expenses incurred for the six months ended June 30, 2015 were $ 589,612 as compared to $1,310,503 for the same period in the previous year, a decrease of $720,891 or 55%. General and Administrative expenses decreased by $579,502 (59%) from lower professional, consulting and outside services and the resignation of the former President attributable to the Whe Gen spinoff. The reduction in Research and development expenses of $128,653 or 41%, is reflective of the Whe Gen spinoff and the 2014 delivery S-2 engine (Army contract in 2014).

33

Operating Loss. The operating losses for the six months ended June 30, 2015 and 2014 were $ 589,612 and $1,255,853, respectively, a lower loss of $666,241 or 53%, due to the factors outlined above.

Other Income (Expense) Net other expense for the six months ended June 30, 2015 was $288,665 versus $1,031,484 for the comparable period of the previous year, a reduction of $742,819 or 72%. The 2015 expenses included $227,854 of interest expense( inclusive of $ 132,531 derivative accounting related interest adjusting debt) and a loss of $50,000 from debt settled with common stock.

Net other expense for the six months ended June 30, 2014 was $1,031,484, due to $249,170 of interest expense related to debt levels, derivative accounting related interest charges of $602,805 and derivative related expenses of $179,509 adjusting debt to fair value.

Net Loss and Loss per Share. The net loss for the six months ended June 30, 2015 was $ 878,277 as compared to a net loss of $2,287,337, for the same period in the previous year, a decreased loss of $1,409,060 or 62%. The net loss per weighted average share was $0.00 and $0.01 for both the current six months and prior six months, respectively.

Liquidity and Capital Resources

At June 30, 2015, the net working capital deficiency was $1,749,025 as compared to a deficiency of as compared to a deficiency of $2,618,988 at December 31, 2014, a favorable variance of $869,963 or 33%.

For the six months ended June 30, 2015, cash decreased by $278. This is reflective of funds used by the net loss of $878,277 and the $46,417 increase in inventory. Funds were provided by debt proceeds of $50,000, higher accounts payable and accrued expenses of $226,286 and an increase of $277,760 in related party debt payables and accrued expenses. Non-cash charges for the six months were from the issuance of common stock, warrants and options for services of $62,953, amortization of prepaid expenses paid with common stock of $28,459, $132,531 of derivative debt discount amortization, and a $50,000 loss recognized by settling debt with common stock.

At the end of the second quarter, Company’s officers forgave $655,225 in accrued salaries and the Chairman of the Board forgave an additional $710,272 in accrued rent, interest and other expenses, which was record as additional paid in capital.

For the six months ended June 30, 2014, cash increased by $25,574. Funds were provided by the sale of common stock of $110,000, debt proceeds of $440,000, higher accounts payable and accrued expenses of $300,091 and an increase of $199,232 in related party payables and accrued expenses. Funds were used by the net loss of $2,287,337 and debt repayment of $38,615. Non-cash charges for the six months were from the issuance of common stock, warrants and options for services of $109,759, amortization of prepaid expenses paid with common stock of $324,854, derivative expenses related to debt valuation of $179,509 and $602,805 of derivative debt discount amortization (charged as interest expense).

Results of Operations (unaudited)

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Revenue. The company had no revenue for the three months ended Sept. 30, 2015 compared to $175,000 in the comparable period of the previous year, an unfavorable variance of $175,000 or 100% . The revenue in the quarter ended September 30, 2014 was from the licensing agreement with its former subsidiary Whe Gen.

Gross Margin. The company had no gross margin in the three months ended Sept. 30 2015 as compared to $175,000 for the quarter ended September 30, 2014, an unfavorable variance of $175,000 or 100%. The 2014 gross margin was attributable to the Whe Gen license.

34

Operating Expenses. Operating expenses incurred for the quarter ended Sept. 30, 2015 were $231,332 as compared to $1,028,699 for the same period in the previous year, an decrease of $622,367 or 73%. The decrease was due to a decrease in Research and Development expenses of $292,815 or 74 %, reflective of the sale of the Whe GEN subsidiary and a reduction in spending for WHE engine development. Also, General and Administrative expenses decreased by $500,832 (80%) primarily from lower professional and consulting expenses, stock issued for services, timing of patent maintenance fees and funds related spending reductions.

Operating Loss. The operating losses for the quarters ended September 30, 2015 and 2014 were $ 231,332 and $853,699, respectively, an decreased loss of $ 622,367 or 73%, due to the factors outlined above.

Other Income (Expense) Net other expense for the quarter ended Sept. 30, 2015 was $65,864 versus $956,694 of net other expense for the comparable period of the previous year, a favorable variance of $890,830 or 93% . For the three months ended September 31,2015, the other expense included $40,293 of interest expense, and $24,976 of derivative accounting related interest charges.

Net other expense for the quarter ended September 30, 2014, included a loss provision of $706,756 on the realization of securities and notes received pursuant to the sale and separation of the Whe Gen subsidiary, $47,100 of interest expense and $ 234,048 of derivative related interest expense adjusting debt to fair value.

Net Loss and Loss per Share.

The net loss for the quarter ended September 30, 2015 was $297,196, compared to a net loss of $2,287,337 for the same period in the previous year. The favorable variance of $1,513,197 or 84 % primarily relates to the 2014 realization loss provision on the sale of the Whe Gen subsidiary. The net income per weighted average share was $0.00 for the quarter ended September 30, 2015 and the net loss per weighted average share was $0.01 for the prior comparable quarter.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Revenue. The company had no revenue for the nine months ended Sept. 30, 2015 versus $315,527 for the nine months ended September 30, 2014, an unfavorable variance of $315,527 or 100%. The revenue for the nine months ended September 30, 2014 was from the successful completion of the US Army Contract of $140,527 and $175,000 from the Whe Gen license.

Gross Margin. The company had no gross margin in the nine months ended Sept. 30, 2015 versus a gross margin for the nine months ended September 30, 2014 of $229,650, a reduction of $229,650 or 100%. The 2014 gross margin was inclusive of profit on the Army contract of $54,650 and the Whe Gen license of $175,000.

Operating Expenses. Operating expenses incurred for the nine months ended September 30, 2015 were $820,944 as compared to $2,339,202 for the same period in the previous year, a decrease of $1,518,258 or 65%. General and Administrative expenses decreased by $1,080,334 (67%) from lower professional and consulting expenses, stock issued for services, timing of patent maintenance fees and spending reductions due to lack of funds. Research and Development expenses decreased of $421,468 or 59 %, reflective of the sale of the Whe GEN subsidiary and reduction in WHE engine development spending.

Operating Loss. The operating losses for the nine months ended September 30, 2015 and 2014 were $820,944 and $2,109,552, respectively, a lower loss of $1,288,608 or 61%, due to the factors outlined above.

Other Income (Expense) ) Net other expense for the nine months ended Sept. 30, 2015 was $354,529 versus a net loss of $1,988,178 for the nine months ended September 30, 2014, a favorable variance of $1,633,649 or 82 %.

The 2015 expense included to $293,123 of interest expense (inclusive of $157,507 derivative accounting related interest adjusting debt) and a loss of $50,000 from debt settled with common stock.

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Net other expense for the nine months ended September 30, 2014 included, included a loss provision of $706,756 on the realization of securities and notes received pursuant to the sale and separation of the Whe Gen subsidiary, interest expense of $1,133,133 (inclusive of $836,852 derivative accounting related interest adjusting debt levels) and $148,289 of debt related derivative expenses.

Net Loss and Loss per Share. The net loss for the nine months ended September 30, 2015 was $1,175,473, compared to a net loss of $4,097,730 for the same period in the previous year. The lower loss of $2,922,257 or 71% primarily relates to 2014 realization loss provision on the sale and separation of the Whe Gen subsidiary, decreased interest expense of $840,101 and lower General and Administrative and Research and Development costs. The net loss per weighted average share was $0.00 for the nine months ended September 31 2015 and $0.01 for the prior years comparable nine months.

Liquidity and Capital Resources

At Sept. 30, 2015, the net working capital deficiency was $2,018,740 as compared to a deficiency of as compared to a deficiency of $2,618,988 at December 31, 2014, a variance of $600,248 or 23%.

For the nine months ended September 30, 2015, cash decreased by $278. Funds were used by the net loss of $1,175,473. Funds were provided by debt proceeds of $50,000, higher accounts payable and accrued expenses of $315,437 and an increase of $379,208 in related party debt payables and accrued expenses. Non-cash charges for the nine months were from the issuance of common stock, warrants and options for services of $63,377, amortization of prepaid expenses paid with common stock of $28,459,.$157,507 of derivative debt discount amortization, and a $50,000 loss recognized by settling debt with common stock.

At the end of the second quarter, the Company’s officers forgave $655,225 in accrued salaries and the Board Chairman forgave an additional $710,272 in accrued rent, interest and other expenses, due his company. This was record as additional paid in capital.

For the nine months ended September 30, 2014, cash increased by $288,957. Funds were provided by debt proceeds of $515,000, higher accounts payable and accrued expenses of $567,266, an increase of $183,539 in related party payables and accrued expenses . The sale and deconsolidation of the Whe Gen subsidiary also provided $686,816 in net funds. Funds were used by the net loss of $4,097,730 and debt repayment of $38,615. Non-cash charges for the nine months were from: the issuance of common stock, warrants and options for services of $109,579, amortization of prepaid expenses paid with common stock of $434,724, derivative expenses related to debt valuation of $148,289, $836,853 of derivative debt discount amortization (charged as interest expense), an $80,000 inventory valuation reserve and a $706,756 realization provision on the securities and note received pursuant to the Whe Gen sale.

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EX-10.39

 

 

 

 

 

 

 

 

 

EX-10.40

CHRISTOPHER NELSON

1182 CANOE POINT

DELRAY BEACH, FL 33444

July 17, 2014

Cyclone Power Technologies Inc.

Attn: Frankie Fruge / Board of Directors

601 NE 26^th Ct.

Pompano Beach, FL 33480

Dear Ms. Fruge:

I hereby tender my resignation as President of cyclone Power Technologies, Inc. effective as of 5.:00pm EDT on July 17, 2014. I acknowledge that the last day for which I was on the cyclone payroll for receipt of salary was May 31, 2014. I am owed no salary from June 1 through July 17, 2014.

Thank you.

Sincerely,

Christopher Nelson

EX-10.41

I, Joel D. Mayersohn, hereby resign from the Board of Directors from Cyclone Power

Technologies, Inc.

Dated: July 17, 2014

Joel D. Mayersohn

EX-10.42

NOTE AGREEMENT

This loan agreement (the “Agreement”) is entered into on this 16th day of September, 2015 by and between Alevtina Niketina, place of residence 2636 Black Wolf Rwn Ln, Raleigh, NC 27604 (hereinafter referred to as the “Lender”), and Cyclone Power Technologies Inc., a company duly organized and validly existing under the laws of the State of Florida, United States, with a registered office at 601 NE 26^th Court, Pompano Beach, FL 33064, (hereinafter the “Borrower”), represented by the board member/President Frankie Fruge.

The Borrower and the Lender hereinafter collectively referred to as “Parties” and individually as a “Party”

WHEREAS

The Borrower is established as a public company with its legal seat and registered in the State of Florida in the United States;

The Lender wishes to finance activities of the Borrower by extending an interest bearing loan,

NOW, THEREFORE, the Parties have agreed in the following:

1. Loan amounts and disbursement. The Lenders herewith undertake to allocate to the Borrower the loans as following:

Lender	Total loan amount (USD)
Alevtina Niketina	$	50,000.00

The Lender shall transfer the respective loan amount to the bank account of the Borrower at Professional Bank. within 5 business days as of the date hereof:

Beneficiary: Cyclone Power Technologies Inc., Operating Account

Beneficiary Bank: Professional Bank

ROUTING #: 067016574

Bank Account: 2017203

Transfer Details: Loan

2. Loan Term and Interest: The Loan allocated to the Borrower as per this Agreement shall be an interest bearing loan with a term of Twenty Four (24) months, at an interest rate of 10% per annum.

3. Repayment of the Loan: The Parties herewith agree that that the loan extended to the Borrower shall be called for repayment Twenty Four (24) months from the signing of this agreement and the Borrower shall repay the Loan to the Lender by issuing a relevant resolution of the Shareholders. The Borrower shall repay the Loans within the term and in the amount set forth in this Agreement. Principal and Interest payment is due and payable in accordance with the following schedule.

i

3.1.	Principal shall be paid in full no later than with the final payment. February 28, 217. Interest payments shall be paid monthly.
3.2.	Upon execution of this Agreement, Lender shall provide payment instructions to the Borrower. There shall be a five-day grace period permitted for the scheduled payment.
3.3	Interest payment will begin February 28, 2015.

4. Default, Governing Law and Dispute Resolution: This Agreement shall be governed by and construed in accordance with the laws of Florida.

4.1.	The Parties shall make every attempt to resolve disputes arising from this Agreement through amicable negotiation.
4.2.	Should amicable negotiations fail to resolve the dispute, the borrower or lender shall be free to bring suit in any court of competent jurisdiction. Borrower hereby waives presentment and all demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. Time of payment may be extended in writing by the Lender only. Should payment not be made when due or in the event of default, Borrower shall pay to Lender the costs of collection, including reasonable attorney fees.
4.3.	In the event of default, the amount of principal and interest outstanding shall automatically convert to common stock in Cyclone Power Technologies Inc. in the amount of the previous 20 day stock closing average and stock certificates evidencing ownership shall be promptly delivered. The Lender shall notify Borrower of his intention to hold ownership or file suit for repayment of the principal and interest within 10 days of default.
4.4	In the event the client does not agree with Section 4.3 in the case of default, the company offers collateral in the property located 601 NE 26th Court, Pompano Beach, FL 33064 and the Cyclone patent portfolio.

5. No Assignment

The Lender shall not assign this Agreement or any of its/his/her rights or obligations under this Agreement to any person unless otherwise specified in this Agreement.

ii

6. Counterparts of the Agreement

This Agreement has been executed in two (2) identical counterparts, one (1) for each Party.

Borrower:	Lender/Investor:
Cyclone Power Technologies Inc.
	Alevtina Niketina
Frankie Fruge, President/Director
	DATE: 01/16/15
DATE: 2/1/15

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EX-10.43

 

 

 

 

 

EX-10.44

Resignation

Lewis Jaffe

Director

July 31, 2015

Cyclone Power Technologies, Inc.

601 NE 26^th Court

Pompano Beach, FL 33064

RE: Resignation

Please accept my resignation as Director of Cyclone Power Technologies, Inc. effective Immediately.

Kindest Regards

Lewis Jaffe

EX-10.45

 

 

 

 

 

  

EX-10.46

SYSTEMS APPLICATION/DISTRIBUTOR/MANUFACTURE AGREEMENT

THIS SYSTEMS APPLICATION DISTRIBUTOR/MANUFACTURE AGREEMENT (“Agreement”) is entered into as of February 14, 2016 (the “Effective Date”) by and between:

Cyclone Power Technologies, Inc., a Florida Corporation, having its offices located at 601 NE 26th Court, Pompano Beach, Florida 33064 (“Cyclone”).

and

3R Denmark., a corporation formed in Denmark, having its offices located CVR, Nr.: 37147494 Sallerup Gade 25, 4750 Lundby, Denmark (“3R’).

RECITALS

WHEREAS, Cyclone has developed and patented a heat-regenerative external combustion engine system called the Schoell Cycle Engine, which it has full rights and authority to grant Distributor Agreement for applications that include wood/biomass fuel furnace integration for combined heat and power (as that term is defined below); and

WHEREAS, 3R is a systems integrator and manufacturer for wood/biomass fuel furnace integration for combined heat and power (the “Equipment”, as further defined below), and 3R wishes to obtain a Systems Application Agreement for the Cyclone engine technology to use with and in its Equipment and to manufacture the Cyclone Engine for their use only subject to the terms and conditions set forth more fully in this Agreement; and

WHEREAS, this Agreement contains: I Specific Terms, and II Standard Terms and Conditions, which together comprise the full agreement of the parties hereto.

NOW THEREFORE, for good and valuable consideration, and subject to the terms, conditions, representations and warranties contained more fully herein, the parties agree as follows:

I. SPECIFIC DISTRIBUTOR AGREEMENT TERMS

Technology:	Cyclone’s heat regenerative, Schoell-cycle external combustion engine system (the “Cyclone Engine”). “Technology” is further defined in Section 1 of the Standard Terms and Conditions.
Distributor & Manufacturer Agreement Products:	Cyclone Heat Regenerative Schoell Cycle Engines (the “Engine”)
Application:	3R may use the Engine specifically for the Equipment, which shall be defined as wood/biomass fuel furnace for combined heat and power and manufacture the engine for this purpose only for sales and usage in China and Africa. Sales and usage outside China and Africa, the Cyclone engine has to be purchased from Cyclone until the China manufacturing facility can demonstrate quality control for a period of 16 consecutive months and coinciding with the longevity of maintenance in the field of the product.

Initials:________________

1

Exclusivity:	Cyclone grants exclusive rights to 3R for the Engine, and its designs and specifications, for the specific Application of the Equipment (as set forth above) for a period of ten years as long as minimums are met and non- exclusive thereafter. The start of the first year will commence upon the delivery to 3R of the first Mark 3 Beta Engine for integration with 3R Technology Equipment.
Intellectual Property:	Cyclone and 3R will honor each other’s patents and confidentiality. 3R will post Cyclone’s patent numbers on all products it produces with the Engine. Each party agrees not to engage in any activity or business that will be in competition with the other if such activity would violate any confidentiality, exclusivity or patent rights of the other party. Additional IP representations are included in the Standard Terms of this Distributor Agreement.
Territory:	Worldwide for Systems, Africa and China for engines manufactured in China.
Distributor Agreement Term:	10 years exclusive as long as minimums are met, non-exclusive thereafter, to be renewed every 10 years.
Royalty Fees:	3R shall pay to Cyclone a Royalty fee on each engine 3 R or its partners Manufacture. The Royalty will be $125 USD for Mark 3 (25 HP constant duty cycle), and $500 USD for Mark 7 (300 HP constant duty cycle). The Royalty due will increase annually with the % of inflation for the United States.
Minimums:	For 2017 and 2018 then in July of 2018 we will negotiate new minimums. 200 annual minimum units for Mark 3 in year 2017. 200 annual minimum units for Mark 3, 100 annual minimum for Mark 7, in year 2017.
Distributor Fees:	3R shall pay $80,000 for rights. $25,000 has already been received $5,000 while signing this agreement, and $50,000 when Mark 3 is integrated in 3R boiler system which proof of business is done. This can take no longer than 90 days from day of delivery in Denmark. If final business is not successful then the Mark 3 engine is to be returned to Cyclone.

Initials:________________

2

Development Fees: 3R will pay for the rights and the delivery of any Cyclone Engine outside of the Mark 3. Each Engine (“Development Fee”) will be negotiated in a separate agreement. All Development Fees once paid to Cyclone are non- refundable. The Development Fees shall be based as follows:

- Upon signing of the Development Agreement.

- Upon completion of drawings.

- Upon the assembly of the engine and prior to shipment.

- Upon successful testing of the beta Engine by 3R, to be no longer than 1 month from date of delivery to 3 R.

Beta Engine:	Cyclone shall deliver to 3R one (1) Mark 3 Engine (the “Delivery”). This Engine shall be pre-production prototypes, tested at Cyclone to run at stated horse power standards set forth in a Specifications Sheet attached to this Agreement. Terms of acceptance testing and proof of concept integration of the Engine shall also be set forth on the attached Specifications Sheet.
Sales Price:	Cyclone will manufacture Engines for 3R, and ship such Engines to 3R for sales outside of China and Africa. The price to be paid for each Engine shall be determined between Cyclone and 3R based on volume and other factors. No royalties are paid on these engines.

Cyclone Contacts:

Technology:	Harry Schoell, CEO, Tel: 954-943-8721, Harry@cyclonepower.com
Operational/ Legal:	Frankie Fruge, Tel: 954-943-8721, Frankie@cyclonepower.com

3R Contacts:

Technology: Jan Lange, JL@trer.dk, 45 5373 6482

Operational/Legal: Thor Arendal, ta@trer.dk 45 5373 6480

Initials: ________________

3

STANDARD TERMS AND CONDITIONS

1. Grant of Distributor

1.1 Cyclone grants to Distributor an Agreement to use the Cyclone Technology solely for use by the Distributor in the specific Equipment Applications and in the Territory set forth in the Specific Agreement Terms (the “Agreement”). 3R may not manufacture or have manufactured the Cyclone Products for uses other than its identified Applications, and may not sell the Cyclone Products separately from its Application systems, except as specifically set forth in the Distributorship section of the Specific Terms of this Agreement.

1.2 This Agreement may not be transferred or Sub-Distributor Agreement to a third party by 3 R without the prior written consent of Cyclone, which consent may not be unreasonably delayed or withheld. If 3R transfers or Sub-Distributor Agreements its interests within this Agreement to a third party, then such third party will be bound to the requirements and provisions of this Agreement to the same degree as 3R. This Agreement to use the Cyclone Technology will automatically expire upon termination of this Agreement.

1.3 The definition of “Technology” in the Specific Distributor Agreement Terms shall be further defined to mean: Cyclone’s proprietary technology related to its heat regenerative, external combustion engine and shall include any information, inventions, innovations, discoveries, improvements, ideas, know-how, show-how, developments, methods, designs, reports, charts, drawings, diagrams, analyses, concepts, technology, records, brochures, instructions, manuals, programs, expertise, inventions whether or not reduced to practice or the subject of a patent application, test-protocols, test results, descriptions, parts lists, bills of materials, documentation whether in written or electronic format, prototypes, molds, models, assemblies, and any similar intellectual property and information, whether or not protected or protectable by patent or copyright, any related research and development information, inventions, trade secrets, and technical data in the possession of Cyclone that is useful or is needed in the assembly or manufacture of the Distributor Agreement Products and that the Cyclone has the right to provide to 3R and has so provided to 3R. This includes without limitation, U.S. Patent #7,080,512, entitled Heat Regenerative Engine, other patents issued and/or pending US and foreign, all patents that may be issued under this patent application and their divisions, continuations, continuation-in-parts, reissues, reexaminations, inventor’s certificates, utility models, patents of addition, extensions, as well as certain research and development information, inventions, know-how, and technical data that relate to and/or are disclosed in said patent application, and any other patent applications, patents divisions, continuations, continuation-in-parts, reissues, reexaminations, inventor’s certificates, utility models, patents of addition, extensions that may issue or be filed that relate to said Distributor Agreement Product and/or said patent application.

1.3 The Term of this Distributor Agreement is set forth in the Specific Terms, and will take effect on the Effective Date and will continue in force and effect unless at least 90 days prior to the expiration of the initial or any renewal/additional term, as the case may be, either party gives written notice to the other party hereto that such renewal is not to occur. If such notice is given, this Agreement will terminate at the end of the then current term and all rights and Distributor Agreements under this Agreement will revert to Cyclone at the end of the current term.

Initials: ________________

4

2. Fees and Sales Price

2.1 3R will pay to Cyclone the Distributor Fees as set forth in the Specific Terms.

2.2 3R will pay to Cyclone the Sales Price at the rate and on the schedules specified in the Specific Distributor Agreement Terms, or any addendums or amendments, or any applicable Purchase Order and Invoice. Payment shall be made as invoiced. All Sales payments shall be paid in immediately available U.S. funds. This only applies to Engines as identified in the Specific Terms.

2.3 3R will pay to Cyclone the Royalty Fees as set forth in the Specific Terms.

3. Reports and Audit.

3.1 3R will provide Cyclone with a written report on a quarterly basis detailing the finished units of Products it has sold in the previous three-month period, including quantity, model type and customer name, address, and country where sold. These engines will be identified by a pre- established unique series of engine numbers in addition to the patent numbers. These reports are necessary for Cyclone to monitor Distributor sales performance for purposes of establishing quotas in the later years of this Agreement, in addition to international patent and IP protection purposes.

4. Representations and Warranties.

4.1 Cyclone represents and warrants to 3R that Cyclone is the owner of the Systems Application Distributor Agreement Technology, and that Cyclone has the right to grant the Systems Application Distributor Agreement to 3R hereunder.

4.2 Cyclone represents and warrants that Cyclone is not involved in any suits, litigation or other claims contesting the validity or ownership of any of the Systems Application Distributor Agreement Technology, the Patents or Patent applications, and knows of no such claims at this time pending or anticipated.

4.3 EXCEPT AS SET FORTH IN SECTION 8, BELOW, THIS SECTION IS CYCLONE’S ONLY WARRANTIES CONCERNING THE SYSTEMS APPLICAITON DISTRIBUTOR AGREEMENT PRODUCTS, DISTRIBUTOR AGREEMENT TECHNOLOGY AND PATENTS, AND IS MADE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED.

4.4 3R and Cyclone each represent and warrant to the other that it has full power and authority to enter into this Agreement.

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4.5 3R and Cyclone each represent and warrant to the other that neither the execution nor delivery of this Agreement, nor the consummation of the transactions contemplated herein, will constitute a violation or breach of the warranting party’s constituent documents or violate, conflict with, result in any breach of any material provisions of or constitute a default under any other contract or commitment made by it, any law, rule or regulation, or any order, judgment or decree, applicable to or involving it.

4.6 3R and Cyclone each represent, covenant and agree to the other that it will comply with all applicable international, federal, state and local laws, regulations or other requirements, and agrees to indemnify the other party against any liability arising from its violation of or noncompliance with laws or regulations while using the Systems Application Distributor Agreement Technology.

4.7 3R and Cyclone each represent and warrant to the other that no order, consent, filings or other authorization or approval of or with any court, public board or governmental body is required for the execution, delivery and performance of this Agreement by it.

4.8 3R represents to Cyclone that neither it nor its affiliated companies are currently or previously involved in any litigation or threatened litigation concerning patent infringement, unauthorized use of intellectual property, breach of a Systems Application Distributor Agreement, or other similar claims.

4.9 3R represents to Cyclone that no events specific to 3R have occurred, or to its knowledge are pending, that have impaired or may impair materially the financial condition or viability of the 3R, or otherwise make the performance of its financial and operational duties hereunder impossible or impractical.

5. Identification of Infringers

5.1 3R will, without delay, inform Cyclone of any known infringement, unauthorized use, misappropriation, ownership claim, threatened infringement or other such claim (collectively, an “Infringement”) by a third party with respect to the Systems Application Distributor Agreement Products, and/or the Systems Application Distributor Agreement Technology, and will provide Cyclone with any evidence available to 3R of such Infringement. 3R acknowledges and agrees that Cyclone, in its sole and absolute discretion, will decide what action should be taken with respect to any such disclosed Infringement, whether or not litigation should be pursued against an alleged infringer, the jurisdiction in which any such litigation should be pursued, whether or not litigation should be settled or pursued to final resolution against an alleged infringer, and the terms of settlement. 3R agrees that it shall be responsible to contribute to the costs of all enforcement to protect the Patented Systems Application Distributor Agreement Technology if the claimed infringement involves products similar or competitive to the 3R’s wood/biomass CHP products. In such case, 3R shall contribute to all expenses incurred in any action that Cyclone decides should be taken to protect the Systems Application Distributor Agreement Technology from Infringement or to defend any claim against Cyclone or the Systems Application Distributor Agreement Technology for Infringement relating (“Infringement Action”), including all attorney, paralegal, accountant or other professional fees from the notice of such Action through all trial and appellate levels. Contribution by 3R shall not exceed twenty five percent (25%) of Distributor Fees paid or due under this Agreement. The parties shall cooperate with each other and provide all advice and assistance reasonably requested by each other in pursuit of such Infringement matters.

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5.1.1 Cyclone will, without delay, inform 3R of any known infringement, unauthorized use, misappropriation, ownership claim, threatened infringement or other such claim by a third party with respect to the 3R Products, and/or Patented Technology, and will provide 3R with any evidence available to Cyclone of such Infringement.

5.2 Each party will execute all necessary and proper documents, take such actions as is reasonably necessary to allow the other party to institute and prosecute such infringement actions and will otherwise use its commercially reasonable efforts to cooperate in the institution and prosecution of such actions. Each party prosecuting any such infringement actions will keep the other party reasonably informed as to the status of such actions. Any award paid by third parties as a result of such an Infringement action (whether by way of settlement or otherwise) will be applied first to reimburse the parties for all costs and expenses incurred by the parties with respect to such action on a pro rata basis in relation to the amount of costs and expenses so incurred by such party and, if after such reimbursement any funds will remain from such award, the parties will allocate such remaining funds between themselves in the same proportion as they have agreed in writing to bear the expenses of instituting and maintaining such action.

6. Improvements

6.1 3R will timely inform Cyclone, in writing, of any improvements, changes, advances and/or modifications to the Systems Application Distributor Agreement Products or Systems Application Distributor Agreement Technology (hereinafter “3R’s Improvements”), and the purpose(s) therefor, made by 3R. Any and all such improvements, changes, advances and/or modifications to the Distributor Agreement Products or Distributor Agreement Technology made by 3R (“3R Improvements”) shall become the property of Cyclone and 3R hereby assigns all of its right, title and interest in and to such 3R Improvements to Cyclone regardless if developed or invented by 3R or Cyclone or any of their employees or affiliates. Further, Cyclone will own the entire right, title and interest in any and all patent applications resulting from or relating to any and all improvements and/or modifications to the Systems Application Distributor Agreement Products or the Systems Application Distributor Agreement Technology, whether filed in the United States or countries other than the United States, related to said improvements and/or modifications; and in and to any and all patents which may be issued/granted on any and all said applications and any and all reissues thereof. To the extent that improvements made by other non-affiliates to the Systems Application Distributor Agreement Technology would improve the 3R’s Systems Application Distributor Agreement Products, such improvements shall be made part of this Systems Application Distributor Agreement. The 3R shall retain ownership of all improvements and intellectual property related to its Equipment.

6.2 3R covenants and agrees for itself and for its successors and assigns that, at Cyclone’s request, it will cause to be executed and delivered any applications, affidavits, assignments, and other instruments as may be deemed necessary or desirable to secure for or vest in Cyclone, its successors, legal representatives, or assigns, all right, title, and interest in and to any application, patent, or other right or property covered by this Section, including the right to apply for and obtain patents in foreign countries under the provisions of the International Convention; and 3R hereby requests and authorizes the United States Commissioner of Patents and Trademarks to issue any and all United States patents granted on the 3R Improvements, all divisions, reissues, and continuations thereof to Cyclone as owner of the entire right, title, and interest in and to the same, and authorize appropriately empowered officials of foreign countries to issue any letters patent granted on any patents and all divisions, reissues, and continuations thereof to Cyclone as owner of the entire right, title, and interest in and to the same.

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6.3 3R will not contest the validity or enforceability of any patents that issue from or as a result of any of the patents or patent applications for the Systems Application Distributor Agreement Technology or any continuations, divisional or continuations-in-part of such applications unless such patents or patent applications infringe on the 3R patents and patent applications. 3R will not assert as a defense in any litigation with respect to Systems Application Distributor Agreement Products that any patents that issue from or as a result of any of the patent applications (including any continuations, divisional, or continuations-in-part of such applications) are invalid or unenforceable, unless a court holding denotes such a result.

6.4 Cyclone has and will continue to have sole and absolute discretion to make decisions with respect to the procurement and prosecution of the patents and patent applications for the Systems Application Distributor Agreement Technology, including the right to abandon any such patent application. Cyclone’s abandonment of or any failure to obtain or maintain an issued patent originating from any of the patents or patent applications will not relieve or release 3R from its obligation to pay the Distributor Agreement Fees and Sales Prices provided in this Agreement, provided Cyclone can show that suitable rights to exclude competitors from practicing the Systems Application Distributor Agreement Technology are still in place to provide 3R a valuable right under the Systems Application Distributor Agreement in the Territory. Similarly, a holding or decision by a court of law that any such issued patent is invalid or unenforceable will not relieve or release 3R from its obligation to pay the Distributor Agreement Fees and Sales Price provided in this Agreement, pursuant to the same requirement of rights to exclude noted above. If any of such events occur, 3R must continue to pay any Systems Application Distributor Agreement Fees, Royalties, and Sales Price due during the Term. If Cyclone cannot show that suitable rights to exclude competitors from practicing the Systems Application Distributor Agreement Technology are still in place in the Territory after abandonment, invalidation, or unenforceability has occurred or been held by a court, then 3R may terminate this Agreement.

7. Default

7.1 If either party is in default of any material obligation under this Agreement, then the non- breaching party may give written notice thereof to the breaching party to cure the breach. If within 60 days after the date of such notice such default is not cured, then this Agreement will automatically terminate at the discretion of the non-breaching party and all rights and Systems Application Distributor Agreements under this Agreement will revert to the beneficial owner thereof prior to execution of the Agreement.

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7.2 This Agreement will terminate immediately if 3R is dissolved or liquidated. This Agreement will also terminate immediately absent an adequate written assurance of future performance if: (i) any bankruptcy or insolvency proceedings under any federal, national, or state bankruptcy or insolvency code or similar law, whether voluntary or involuntary, is properly commenced by or against 3R; or (ii) 3R becomes insolvent, is unable to pay debts as they come due or ceases to so pay, or makes an assignment for the benefit of creditors; or (iii) a trustee or receiver is appointed for any or all of 3R’s assets; or (iv) 3R does not make sales of the Engines in any three (3) month period after the first full year of the commercialization of the Engines.

7.3 Immediately after the expiration or termination of this Agreement for any reason:

(a) All rights of 3R granted hereunder will terminate and automatically revert to Cyclone, and 3R will discontinue all assembly and/or manufacturing of the Systems Application Distributor Agreement Technology and will no longer have the right to manufacture, sell or put into use the Systems Application Distributor Agreement Technology or any variation or simulation thereof for any purpose whatsoever;

(b) 3R will be permitted to sell and dispose of its remaining inventory of Engines on hand or in process on the date of such termination or expiration, for a period of one hundred twenty (120) days following the date of such expiration or termination (the “Sale Period”). 3R expressly agrees that it will not market or sell/use any Distributor Agreement Product after the end of the Sale Period;

(c) All sums owed by 3R to Cyclone will become due and payable immediately;

(d) 3R will not, following expiration or termination of the this Agreement, use Confidential Information to manufacture or sell Distributor Agreement Products anywhere in the world; and

(e) 3R retains no rights whatsoever to any of Cyclone’s Distributor Agreement Technology.

(f) These restrictions on 3R shall survive in perpetuity the termination of this Agreement including after the expiration of Cyclone’s Patents. In such case, 3R may not manufacture or sell Engines that would have been in violation of Cyclone’s patent rights without negotiating and paying to Cyclone a reasonable royalty.

7.4 Notwithstanding the foregoing, or any other provisions of this Agreement to the contrary, Sections 4, 5, 6, 7 and 9 will survive the expiration or termination of this Agreement.

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8. Risk of Loss

8.1 Both parties will acquire and maintain at their sole cost and expense throughout the term of this Agreement, and for a period of five (5) years following the termination or expiration of this Agreement, any and all Insurance as required to sale or manufacture under this Agreement including but not limited to: Comprehensive General Liability Insurance, including product liability, advertiser’s liability (1986 ISO form of advertising injury rider), contractual liability and property coverage, including property of others, (hereinafter collectively, “Comprehensive Insurance”) underwritten by an insurance company qualified to cover liability associated with activities in the Territory of this Agreement (with respect to Cyclone, in the U.S., or such other territory where it manufactures the engines). This insurance coverage will provide liability protection of not less than $2,000,000 combined single limit for personal injury and property damage including products/completed operations coverage (on a per occurrence basis) with the other party named as an additional insured party on the general liability coverage and as loss payee on the property coverage, and the policy will purport to provide adequate protection for 3R and Cyclone against any and all claims, demands, causes of action or damages, including attorney’s fees, arising out of this Agreement including, but not limited to, any alleged defects in, or any use of, the Distributor Agreement Products or the Distributor Agreement Technology. Copies to be supplied as required.

8.2 In the event of cancellation of any insurance required to be carried by a party under this Agreement, the other party will be notified thirty (30) days prior to cancellation of same. Should the cancellation be due to dissolution or like problems with the insurance company, then the insured party shall have a suitable amount of time to secure suitable insurance coverage, not to exceed sixty (60) days after notice of cancellation occurs. Should the cancellation be due to failure to pay premiums or like financial problems of 3R then Cyclone will have the right to terminate this Agreement if 3R does not secure proper insurance coverage at the end of the above-noted thirty (30) day notification period.

8.3 Risk of loss shall be attributed to the parties as follows:

(a) Cyclone shall be responsible for losses resulting from faulty design of its component of the Distributor Agreement Products, faulty manufacturing of engine parts for the Distributor Agreement Products delivered to 3R, faulty assembly of the Distributor Agreement Products (to the extent performed by Cyclone on behalf of 3R), and incorrect information about the Technology or Distributor Agreement Products delivered to 3R that is reasonably and prudently relied upon by 3R.

(b) 3R shall be responsible for faulty assembly of the Distributor Agreement Products (to the extent performed by 3R and not based on incorrect information supplied by Cyclone), faulty installation of the Distributor Agreement Products into 3R’s wood/biomass fuel CHP equipment, and all operation, use, customer training and maintenance of the Distributor Agreement Products once installed in the 3R’s wood/biomass fuel CHP equipment (provided the loss is not shown to result from one of Cyclone’s responsibilities in Section 8.3(a) above).

(c) 3R assumes sole responsibility for any commitments, obligations, or representations made by it in connection with the use, sale, manufacture, importation, offer to sell, distribution, operation, etc., of its wood/biomass fuel CHP equipment , and Cyclone will have no liability to 3R, or any third parties, with respect to economic and/or personal injury, including wrongful death, caused by or resulting from the use of the 3R’s wood/biomass fuel CHP equipment by 3R, its agents, employees, or customers, subject to the provisions of this Section 8.3.

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8.4 3R agrees to indemnify, defend and hold harmless Cyclone, its shareholders, officers, directors, employees, consultants, affiliates, successors and assigns from and against any and all expenses, damages, proceedings, direct or consequential claims, liabilities, suits, actions, causes of action of any character or nature, penalties, fines, judgments or expenses (including all attorneys’ fees), arising out of, or related to 3R’s responsibilities in Section 8.3 above, and/or 3R’s performance or breach of this Agreement.

8.5 Cyclone agrees to indemnify, defend and hold harmless 3R, its shareholders, officers, directors, employees, affiliates, successors and assigns from and against any and all expenses, damages, proceedings, direct or consequential claims, liabilities, suits, actions, causes of action of any character or nature, penalties, fines, judgments or expenses (including all attorneys’ fees), arising out of, or related to Cyclone’s responsibilities in Section 8.3, above.

8.6 The indemnity provisions of this Section 8 will survive the expiration or termination of this Agreement.

8.7 BOTH PARTIES ACKNOWLEDGE THAT IN NO EVENT WILL ONE PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGE, LOSS OR EXPENSE, EVEN IF BOTH PARTIES HAVE BEEN ADVISED OF THEIR POSSIBLE EXISTENCE.

9. Confidentiality

9.1 Confidential Information means information in oral, electronic, and/or written form that (a) relates to the Systems Application Distributor Agreement Technology, including, without limitation past, present and future research, development, business activities, products, and services, and (b) has been identified, either orally, electronic, or in writing, as confidential by either party. Confidential Information shall also mean information provided by either of the parties to the other regarding its technology, systems engineering, business and marketing plans, and any other materials identified, either orally, electronic, or in writing.

9.2 The receiving party may use the Confidential Information only for the purpose of producing the Distributor Agreement Products or as otherwise indicated or contemplated by this Agreement. The receiving party will not, at any time, use the Confidential Information in any other fashion, form, or manner for any other purpose.

9.3 The receiving party agrees not to disclose the Confidential Information in any manner to anyone other than persons within its organization who have a need to know for the purpose set forth above and who have acknowledged in writing the obligations hereunder and have agreed to abide by the terms hereof. Under no circumstances will the receiving party disclose the Confidential Information to any third party, unless authorized by the disclosing party.

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9.4 Any Confidential Information in whatever form is the property of the disclosing party and will remain so at all times. The receiving party may not copy any Confidential Information for any purpose without the express prior written consent of the disclosing party, and if consent is granted, any such copies will retain such proprietary rights notices as appear on the original thereof. Any copies of the Confidential Information that the disclosing party may have permitted the other party to make, or other written materials incorporating Confidential Information, will be the sole property of the disclosing party and must be returned to it or destroyed upon the first to occur of (a) termination or expiration of this Agreement or (b) request by the disclosing party.

9.5 Nothing in this Section will prohibit or limit the receiving party’s use of information it can demonstrate is (i) previously known to the receiving party, (ii) independently developed by the receiving party, (iii) acquired by the receiving party from a third party not under similar nondisclosure obligations to the disclosing party, or (iv) which is or becomes part of the public domain through no breach by the receiving party of this Agreement.

9.6 The receiving party acknowledges that the Confidential Information disclosed and/or made available to it hereunder is owned solely by the disclosing party and that the threatened or actual breach of this Agreement would cause irreparable injury to the disclosing party, for which monetary damages would be inadequate. Accordingly, the receiving party agrees that the disclosing party is entitled to an immediate injunction enjoining any such breach or threatened breach of this Agreement, subsequent to the posting of a suitable bond with the court of pertinent jurisdiction. The receiving party agrees to be responsible for all costs, including reasonable attorneys’ fees, incurred by the disclosing party in any action enforcing the terms of this Section.

9.7 The receiving party will promptly advise the disclosing party in writing of any unauthorized use or disclosure of Confidential Information of which the receiving party becomes aware and will provide reasonable assistance to the disclosing party to terminate such unauthorized use or disclosure.

9.8 This confidentiality section shall supersede all prior agreements pertaining to confidential information between Cyclone and 3R or a preceding person or entity working to initiate and/or negotiate the terms of this Agreement.

10. Miscellaneous

10.1 Nothing contained in this Agreement will be construed as conferring by implication, estoppel, or otherwise, upon any party Systems Application Distributor Agreement hereunder, any Systems Application Distributor Agreement or other right under any patent except the Systems Application Distributor Agreement and rights expressly granted herein.

10.2 3R will conspicuously mark directly on each Systems Application Distributor Agreement Product it manufactures or sells that the Systems Application Distributor Agreement Product is covered by the Cyclone’s patent, including the numbers and other identifying information for which will be provided to 3R.

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10.3 All notices required by this Agreement will be in writing and sent by certified mail, return receipt requested, by hand or overnight courier, to the addresses set forth on the initial page, with copies to the Legal Contacts set forth in the Specific Systems Application Distributor Agreement Terms, unless either party will at any time by notice in writing designate a different address. Notice will be effective three days after the date officially recorded as having been deposited in the mail or upon receipt by hand delivery or the next day by overnight courier.

10.4 3R shall not assign, convey, encumber, or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of Cyclone, which consent shall not be unreasonably delayed or withheld, and any such purported assignment will be invalid.

10.5 No term of this Agreement will be deemed waived, and no breach of this Agreement excused, unless the waiver or consent is in writing signed by the party granting such waiver or consent.

10.6 If any term or provision of this Agreement is determined to be illegal or unenforceable, such term or provision will be deemed stricken or reduced to a legally enforceable construction, and all other terms and provisions will remain in full force and effect.

10.7 This Agreement represents the entire agreement of the parties replacing any earlier agreements concerning the same matters. It may only be modified by a subsequent writing signed by the parties hereto.

10.8 Each party is acting as an independent contractor and not as an agent of the other party. Nothing contained in this Agreement will be construed to confer any authority upon either party to enter into any commitment or agreement binding upon the other party.

10.9 This Agreement, including its formation, all of the parties’ respective rights and duties in connection herewith and all disputes that might arise from or in connection with this Agreement or its subject matter, will be governed by and construed in accordance with the laws of the State of Florida, the United States of America, without giving effect to that State’s conflict of laws rules. If any controversy, dispute or disagreement arises from this Agreement, the parties agree to first attempt to settle such by arbitration in accordance with the rules of the American Arbitration Association. In such case, the decision of the arbitrator or arbitrators shall be binding and final, and may be entered as a judgment and enforced by any court having jurisdiction. The prevailing party in any action shall be entitled to receive reimbursement for reasonable attorneys’ fees, court/arbitration costs, and disbursements incurred in connection with such controversy, dispute or disagreement. Should the need arise to determine any reimbursement issues, the parties will be subject to the exclusive jurisdiction of courts located in Broward County, Florida, and their applicable courts of appeal, each party agreeing to such jurisdiction exclusively.

IN WITNESS WHEREOF, the parties have caused this Systems Application Distributor Agreement, comprised of these Specific Systems Application Distributor Agreement Terms and the Standard Terms and Conditions to be executed by their duly authorized officers on the respective dates hereinafter set forth.

CYCLONE POWER TECHNOLOGIES, INC.

Company: 3R Denmark

By:	Company:
Name:
Date:	By:
	Name:
	Date

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SPECIFICATIONS SHEET FOR DELIVERY OF MARK 3 [TO BE DISCUSSED]

Beta Engines: Cyclone will deliver to 3R one (1) Beta Engines, materially conforming to the following specifications, unless the parties subsequently amend these specifications in writing:

Mark 3 block, high/low pressure pump, fuel control to hook to 3R

Use: to integrate into their wood/biomass furnace to produce power

Required HP (gross): 25 HP

Required Temperature and Pressure for engine to run at rated HP: 1000 PSI and 1000 °F

Required operating RPM range: up to 3600 RPM

Alignment: to operate vertically.

Other: ship to Denmark

Beta Engines endurance testing:

Run at Cyclone for a minimum of 5 hours prior to delivery to 3R.

Acceptance Testing: 3R will use the Beta delivery engine to test usability of the engine in its equipment (Acceptance Testing). Integration of the engine with 3R equipment will be done by 3R engineers, with reasonable assistance from Cyclone.

Required Cyclone Engineer at 3R facility: All expenses including travel paid by 3R and $500 USD per day from departure to arrival in Florida.

Commercialization of Engines: Cyclone will manufacture engines through one or more of its contractors for use only by 3R outside of China and Africa, which will then be shipped to 3R in China for assembly and integration with their wood/biomass furnace integration for combined heat and power systems. 3R will manufacture the Cyclone engine for their systems for sells in China and Africa.

Safety and insurance certifications (i.e., UL) for the engines required by 3R for its specific use, and in the geographic territories in which it operates, shall be the responsibility of 3R.

System level modifications and certifications for 3R equipment shall be the responsibility of 3R (with Cyclone’s reasonable assistance).

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EX-10.47

Cyclone Power Technologies, Inc.

601 NE 26^th Court

Pompano Beach, FL 33064

Phone: 954-943-8721 Fax: 954-788-6565

www.cyclonepower.com

ENGINEERING DEVELOPMENT AGREEMENT

THIS AGREEMENT, is made this May 1, 2016, by and between CYCLONE POWER TECHNOLOGIES, INC., a Florida corporation, with its principal office located at 601 N.E. 26th Court, Pompano Beach, Florida 33064, U.S.A. (“CYCLONE”), and G2E, S.A.P.I. de C.V, with its principal office located at Escondida 116, Coyoacan, Mexico Df 04010 (“G2E”).

Background

CYCLONE, is engaged in the business of research and development of heat regenerative, external combustion engines, generally characterized as a high efficiency, compact and powerful steam engine that runs on almost any fuel.

CYCLONE holds numerous patents and is engaged in the prototype of the engine, as well as licensing for sales, joint ventures and manufacturing.

CYCLONE wishes to expand the sale of its engines for nonmilitary solar and fueled stationary power applications and introduce them into Latin America, New Zealand and Australia (more defined below) marketplace. The Mexico based G2E is engaged in remote area technologies for rural development for commercial and industrial applications Worldwide.

CYCLONE possesses the fundamental engine technology. G2E wishes to obtain a CYCLONE nonmilitary solar and fueled stationary power ENGINE {“All Mark Engines and other technologies“), to perform engineering and development work for all nonmilitary solar and fueled stationary power with the goal for CYCLONE to grant G2E an exclusive License Agreement(“License”) for the first ten (10) years in territory of Latin America, New Zealand and Australia With minimums to maintain exclusivity and nonexclusive thereafter to distribute Nonmilitary and Stationary Applications in Latin America, New Zealand and Australia territory.

The Cyclone Engine includes trademark and patent rights, manufacturing trade secrets, engineering blue prints and design drawings, specifications and other proprietary information (Cyclone’s Technology”).

CYCLONE and G2E believe a mutually beneficial relationship for the engineering integration of the Cyclone Engine, and its eventual marketing and sale in the Latin America, New Zealand and Australia market can be developed through corresponding working arrangements between them.

NOW, THEREFORE, the parties, in consideration of mutual promises, covenants and understandings below, do agree as follows:

1)	Lease/Purchase of Cyclone Beta Engine.
	G2E will pay $25,000.00 USD as follows :

a) $5,000 USD on signing the Engineering Agreement for development, integration and drawings.

b) $5,000 USD per month after funding until the initial $25,000 is paid.

d) G2E acknowledges this arrangement is a Lease, with option to own the Mark 1 Engine and Cyclone drawings for TSU. Upon successful completion of the engineering-development process above and entry into a formal, long term License, title to the prototype Mark 1 & 3 Engine and TSU shall pass to G2E. In the interim, it is expressly understood CYCLONE will retain ownership.

e) In the event G2E does not complete its engineering development within the twelve (12) month period, this right to use Technology and Lease shall terminate. Upon termination, G2E shall return the Mark 1 & 3 Engine and Cyclone drawings for TSU, as well as all Technology and proprietary information, to CYCLONE.

2) Confidential Information.

G2E acknowledges CYCLONE’S proprietary ownership rights in and to its patented products and to its Know-How. All trade secrets, technical Know-How, other knowledge, information, instructions and engineering disclosed or furnished to G2E by CYCLONE shall be maintained in strict confidence by G2E and agrees that throughout the term of this Agreement, and for five (5) years thereafter, such information will not be disclosed or be permitted to be disclosed by G2E other than to authorized individuals (including, without limitation, sales representatives, distributors and technical personnel) engaged in carrying-out the terms hereof. The parties agree this confidentiality extends to the employees and officers of G2E. G2E agrees to provide the requisite internal security of the subject proprietary information within its organization and further agrees to require its agents, servants and employees having access to the Know-How to acknowledge this obligation of confidentiality. A separate form of Confidentiality is Attachment #3, which must be executed by both G2E and any individual with access to the confidential information.

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3) Technical Assistance.

CYCLONE, upon request, will furnish technical personnel and Engineering to assist G2E regarding the technical information and Know-How necessary to carry-out the purposes of this Agreement, at no additional fees. Provided, however, if travel is involved then G2E shall bear all travel, lodging, expenses, and an hourly rate for Cyclone personnel.

4) Relationship.

G2E is an independent contractor. Nothing in this agreement shall be construed to create a principal/agent, joint venture, partnership or any other business relationship between the parties other than as set forth in this Agreement. Neither party is authorized to act on behalf of the other.

5) Non-Circumvention.

During the term of this Agreement, G2E and CYCLONE agrees not to contact, initiate contact, or attempt to do business with, at any time for any purpose, either directly or indirectly, any officers, directors, shareholders, consultants, attorneys, employees, agents, customers or other affiliates of G2E or CYCLONE concerning this business opportunity, as referred by CYCLONE to G2E or from G2E TO CYCLONE for the purpose of circumventing, the result of which shall be to prevent CYCLONE or G2E from realizing a profit, license and royalty fees or otherwise, without express written approval of CYCLONE or G2E, which approval may be withheld by CYCLONE or G2E in its sole discretion.

6) Notices.

All notices shall be in writing and deemed to have been given when sent by e-mail and Federal Express prepaid to the parties at the addresses set forth below, or such other addresses from time to time given.

To: Cyclone Power Technologies	To: G2E
Frankie Fruge, President	Daniel Camarena
601 N.E. 26th Court	Escondida 116
Pompano Beach, FL 33064	Coyoacan,Mexico Frankie@cyclonepower.com
dc@g2e.mx

7) Remedies.

In addition to injunctive relief set forth in the Confidentiality and License Agreements attached, all damages incurred by a party for a violation of the terms hereof by the other, the prevailing party shall also be entitled to recover all costs and reasonable attorney fees incurred by reason such breach or obtaining compliance with the agreement and appeals. But, this shall not restrict a party’s right to terminate as stated.

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8) No Waiver.

The failure of either party to insist on strict performance of any provisions herein shall not affect the right of such party to enforce same, nor shall the waiver of any breach constitute a waiver of a subsequent default of same or similar nature, nor construed as a waiver of strict performance of any other provisions.

9) Severability.

If any part of this agreement shall be declared void or invalid by law or otherwise, the remaining provisions shall remain valid and enforceable.

10) Indemnification.

G2E agrees to indemnify and hold harmless CYCLONE from any and all loss, damage, cost or expense (including, without limitation, legal fees, court costs, etc.) arising out of, or in connection with, any claim due to any actions, negligence, product liability, or willful misconduct by G2E or any of its agents or employees. Upon entering into formal agreements (after 12 months development period), G2E shall provide proof of products liability insurance, with CYCLONE noted as an Additional Insured.

11) Governing Law.

This agreement shall be governed by and construed under the laws of the State of Florida, USA. If any dispute arises between the parties, it shall be submitted to the Circuit Court of Broward County, Florida, or binding arbitration under the auspices of the American Arbitration Association, such proceedings to be conducted in Broward County, Florida.

12) Entire Agreement.

This Agreement constitutes the entire understanding between the parties and supersedes any previous oral or written undertakings. It may not be modified, except in writing signed by both parties. This agreement shall be binding upon the parties, their successors and assigns.

IN WITNESS WHEREOF, the parties, by their representatives, have set their hands and seals the day and year first above written.

	Cyclone Power Technologies, Inc.
Witness
	By:
	Frankie Fruge, President
	G2E, S.A.P.I. de C.V

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Witness By: Daniel Camarena

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ATTACHMENT NUMBER 1

Specifications Sheet [TO BE DISCUSSED]

Beta Engines: Cyclone will deliver to G2E two (2) Beta Engine, materially conforming to the following specifications, unless the parties subsequently amend these specifications in writing:

____X___	Cyclone Engine block (MARK 1 THEN ABOUT 3 MONTHS LATER A MARK 3)
____X___	Cyclone HP & LOW PRESSURE pumps
____X___	Heat Exchanger
____X___	Combustion chamber for Mark 3
____X___	Air-cooled condenser
____X___	TSU DRAWINGS SIZED TO FIT ENGINE TO STORE 2 TIMES ENGINE SIZE FOR 24/7 POWER OUTPUT

Use: _____ nonmilitary solar and fueled stationary power_______

Fuels/Source of Heat: ____SOLAR & Gas__________

Required HP (net): _____5 HP & 20 HP_________

Required operating RPM range: ____1300 TO 3600__________

Alignment: to operate vertically.

Other: ______________

Beta Engines endurance testing:

Run at Cyclone for a minimum of 10 hours prior to delivery to G2E.

Acceptance Testing: G2E will use the Beta delivery engine to test usability of the engine in its equipment (Acceptance Testing). Integration of the engine with nonmilitary solar and fueled stationary power equipment will be done by G2E engineers, with reasonable assistance from Cyclone.

Commercialization of Engines: Cyclone will manufacture engines through one or more of its contractors, which will then be shipped to G2E in Mexico for assembly and integration with their Nonmilitary and Stationary Applications systems.

Safety and insurance certifications (i.e., UL) for the engines required by G2E for its specific use, and in the geographic territories in which it operates, shall be the responsibility of G2E.

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System level modifications and certifications for Nonmilitary and Stationary Applications equipment shall be the responsibility of G2E (with Cyclone’s reasonable assistance). Such system level modifications and certifications shall include:

- Endurance and durability testing above Cyclone’s standard testing

- Environmental (i.e., freeze, climate) testing and modifications to piping, condensers, etc., to meet SOLAR or Gasification specific requirements

- Emissions testing and modifications (for Mark 3 gasification use)

- Noise level testing and modification (for Mark 3 gasification use)

- Other certifications and modifications for use with Nonmilitary and Stationary Applications equipment

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attachment 2

Systems Application License Agreement

This Systems Application License Agreement (“Agreement”) is entered into as of May 1, 2016(the “Effective Date”) by and between:

Cyclone Power Technologies, Inc., a Florida Corporation, having its offices located at 601 NE 26th Court, Pompano Beach, Florida 33064 (“Cyclone”)

and

G2E, S.A.P.I. de C.V, a corporation formed in Mexico, having its offices located at Escondida 116, Coyoacan, Mexico DF 04010, (“G2E“)

Recitals

WHEREAS, Cyclone has developed and patented a heat-regenerative external combustion engine system called the Schoell Cycle Engine, which it has full rights and authority to license for applications that include all stationary applications excluding military and waste heat/waste to power (as that term is defined below); and

WHEREAS, G2E is a systems integrator and remote power supplier (the “Equipment”, as further defined below), and wishes to obtain a Systems Application License Agreement for the Cyclone engine technology to use with and in its Equipment subject to the terms and conditions set forth more fully in this Agreement; and

WHEREAS, this Agreement contains: I Specific License Terms, and II Standard Terms and Conditions, which together comprise the full agreement of the parties hereto.

NOW THEREFORE, for good and valuable consideration, and subject to the terms, conditions, representations and warranties contained more fully herein, the parties agree as follows:

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I. Specific License Terms

Technology:	Cyclone’s heat regenerative, Schoell-cycle external combustion engine system (the “Cyclone Engine”). “Licensed Technology” is further defined in Section 1 of the Standard Terms and Conditions.
Licensed Products:	Mark Series Engines (the “Engine”) and other Cyclone products identified in separate agreements.
Application:	The G2E may use the Engine specifically for the Equipment, which shall be defined as all stationary non military solar and fueled stationary power.
License Fee:	License fee for exclusivity and territory is Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Belize, Panama, Colombia, Venezuela, Ecuador, Suriname, Peru, Bolivia, Chile, French Guyana, Paraguay, Brazil, Argentina, Uruguay, Cuba, Dominican Republic, Haiti, Brazil, Australia, and New Zealand is $50,000 USD and $25,000 USD will be paid at a rate of $5,000 USD per month starting with the signing of this license and balance upon funding until the non-refundable $25,000 USD interim fee is paid in full.
Exclusivity:	Cyclone grants exclusive rights to the G2E for the Engine, and its designs and specifications, for the specific Application of the Equipment (as set forth above) for a period of the initial phase of twelve (12) months exclusive (date starts on delivery of first beta engine) and upon mutual agreed successful testing of integrated system to then grant ten (10) years exclusive and nonexclusive, automatically renewable for additional 10 years upon reaching certain annual minimum sales quotas (set forth in separate agreement after the twelve (12) month development. This renewal provision will remain in effect for the term of the License Agreement. The start of the first year will commence upon the delivery to G2E of the first production Engine parts for integration with G2E’s Equipment.
Quotas:	The sales quotas and minimum royalty calculation to extend the exclusivity rights period will be agreed in good faith no later than six (6) months prior to the commencement of Year 2 of this Agreement. Should the parties not be able to agree upon a sales quota prior to the commencement of Year 2, the parties shall submit the issue to an independent third-party expert to set quotas for the following two (2 years. Such expert shall be chosen by the parties, or if they cannot agree, the independent expert shall be chosen by the two experts suggested by the parties.
Intellectual Property:	Cyclone and the G2E will honor each other’s patents and confidentiality. G2E will post Cyclone’s patent numbers on all products it produces with the Engine. Each party agrees not to engage in any activity or business that will be in competition with the other if such activity would violate any confidentiality, exclusivity or patent rights of the other party. Additional IP representations are included in the Standard Terms of this License.

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Territory:	Mexico, Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica, Belize, Panama, Colombia, Venezuela, Ecuador, Suriname, Peru, Bolivia, Chile, French Guyana, Paraguay, Brazil, Argentina, Uruguay, Cuba, Dominican Republic, Haiti, Brazil, Australia, and New Zealand
License Term:	10 years with one 10-year renewal
Development Fees:	As stated in Engineering Development Agreement Section 2.
Sales Price:	Cyclone will manufacture Engines for G2E, and ship such Engine to G2E. The price to be paid for each Engine shall be determined between Cyclone and G2E based on volume and other factors as stated above in the Quota section.
Royalties:	G2E will be required to pay royalties on each licensed product it manufacturers. The Royalty fee will have two components a base fee and an annual minimum to maintain the exclusivity of the license agreement. The royalties will be calculated with a base price per engine and a calculation for a minimum fluctuation of exchange rate to USD. This will be agreed up on at time of manufacturing of each product along with minimums.
Manufacturing:	G2E will have the right to manufacture Cyclone products for its use or to sell to Cyclone. The right to manufacture will be initiated with proof of standards by G2E to Cyclone. Cyclone will not unreasonable withhold these rights to G2E.

Cyclone Contacts:

Technology: Harry Schoell, CEO, Tel: 954-943-8721, Harry@cyclonepower.com

Operational/ Legal: Frankie Fruge, Tel: 954-943-8721, Frankie@cyclonepower.com

G2E _ Contacts:

Technology: Daniel Camarena

Operational/Legal: Daniel Camarena

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Balance of page left blank on purpose

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Standard Terms and Conditions

1. Grant of License

1.1 Cyclone grants to G2E a license to use the Licensed Technology solely for use by the G2E in the specific Equipment Applications and in the Territory set forth in the Specific License Terms (the “License”). G2E may not manufacture or have manufactured the Licensed Products for uses other than its identified Applications, and may not sell the Licensed Products separately from its Application systems, except as specifically set forth in the Distributorship section of the Specific License Terms of this Agreement.

1.2 This License may not be transferred or sublicensed to a third party by G2E without the prior written consent of the Cyclone, which consent may not be unreasonably delayed or withheld. If G2E transfers or sublicenses its interests within this Agreement to a third party, then such third party will be bound to the requirements and provisions of this Agreement to the same degree as G2E. This License to use the License Technology will automatically expire upon termination of this Agreement.

1.3 The definition of “Licensed Technology” in the Specific License Terms shall be further defined to mean: Cyclone’s proprietary technology related to its heat regenerative, external combustion engine and shall include any information, inventions, innovations, discoveries, improvements, ideas, know-how, show-how, developments, methods, designs, reports, charts, drawings, diagrams, analyses, concepts, technology, records, brochures, instructions, manuals, programs, expertise, inventions whether or not reduced to practice or the subject of a patent application, test-protocols, test results, descriptions, parts lists, bills of materials, documentation whether in written or electronic format, prototypes, molds, models, assemblies, and any similar intellectual property and information, whether or not protected or protectable by patent or copyright, any related research and development information, inventions, trade secrets, and technical data in the possession of Cyclone that is useful or is needed in the assembly or manufacture of the Licensed Products and that the Cyclone has the right to provide to G2E and has so provided to G2E. This includes without limitation, U.S. Patent #7,080,512, entitled Heat Regenerative Engine, other patents pending US and foreign, all patents that may issue under this patent application and their divisions, continuations, continuation-in-parts, reissues, reexaminations, inventor’s certificates, utility models, patents of addition, extensions, as well as certain research and development information, inventions, know-how, and technical data that relate to and/or are disclosed in said patent application, and any other patent applications, patents divisions, continuations, continuation-in-parts, reissues, reexaminations, inventor’s certificates, utility models, patents of addition, extensions that may issue or be filed that relate to said Licensed Product and/or said patent application.

1.3 The Term of this License is set forth in the Specific License Terms, and will take effect on the Effective Date and will continue in force and effect unless at least 90 days prior to the expiration of the initial or any renewal/additional term, as the case may be, either party gives written notice to the other party hereto that such renewal is not to occur. If such notice is given, this Agreement will terminate at the end of the then current term and all rights and licenses under this Agreement will revert to Cyclone at the end of the current term.

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2. License Fees and Sales Price

2.1 G2E will pay to Cyclone the License/Development Fees set forth in the Specific License Terms.

2.2 G2E will pay to Cyclone the Sales Price or Royalties on G2E manufactured Cyclone products at the rate and on the schedules specified in the Specific License Terms, or any addendums or amendments, or any applicable Purchase Order and Invoice. Payment shall be made as invoiced. All Sales payments shall be paid in immediately available U.S. funds.

3. Reports and Audit.

3.1 G2E will provide Cyclone with a written report on a semi-annual basis detailing the finished units of Licensed Products it has sold in the previous six-month period, including quantity, model type and country where sold. These reports are necessary for Cyclone to monitor G2E’s sales performance for purposes of establishing quotas in the later years of this Agreement, in addition to international patent and IP protection purposes.

4. Representations and Warranties.

4.1 Cyclone represents and warrants to G2E that Cyclone is the owner of the Licensed Technology, and that Cyclone has the right to grant the License to G2E hereunder.

4.2 Cyclone represents and warrants that Cyclone is not involved in any suits, litigation or other claims contesting the validity or ownership of any of the Licensed Technology, the Patents or Patent applications, and knows of no such claims at this time pending or anticipated.

4.3 EXCEPT AS SET FORTH IN SECTION 8, BELOW, THIS SECTION IS CYCLONE’S ONLY WARRANTIES CONCERNING THE LICENSED PRODUCTS, LICENSED TECHNOLOGY AND PATENTS, AND IS MADE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED.

4.4 G2E and Cyclone each represent and warrant to the other that it has full power and authority to enter into this Agreement.

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4.5 G2E and Cyclone each represent and warrant to the other that neither the execution nor delivery of this Agreement, nor the consummation of the transactions contemplated herein, will constitute a violation or breach of the warranting party’s constituent documents or violate, conflict with, result in any breach of any material provisions of or constitute a default under any other contract or commitment made by it, any law, rule or regulation, or any order, judgment or decree, applicable to or involving it.

4.6 G2E and Cyclone each represent, covenant and agree to the other that it will comply with all applicable international, federal, state and local laws, regulations or other requirements, and agrees to indemnify the other party against any liability arising from its violation of or noncompliance with laws or regulations while using the Licensed Technology.

4.7 G2E and Cyclone each represent and warrant to the other that no order, consent, filings or other authorization or approval of or with any court, public board or governmental body is required for the execution, delivery and performance of this Agreement by it.

4.8 G2E represents to Cyclone that neither it nor its affiliated companies are currently or previously involved in any litigation or threatened litigation concerning patent infringement, unauthorized use of intellectual property, breach of a license agreement, or other similar claims.

4.9 G2E represents to Cyclone that no events specific to G2E have occurred, or to its knowledge are pending, that have impaired or may impair materially the financial condition or viability of the G2E, or otherwise make the performance of its financial and operational duties hereunder impossible or impractical.

5. Identification of Infringers

5.1 G2E will, without delay, inform Cyclone of any known infringement, unauthorized use, misappropriation, ownership claim, threatened infringement or other such claim (collectively, an “Infringement”) by a third party with respect to the Licensed Products, and/or the Licensed Technology, and will provide Cyclone with any evidence available to G2E of such Infringement. G2E acknowledges and agrees that Cyclone, in its sole and absolute discretion, will decide what action should be taken with respect to any such disclosed Infringement, whether or not litigation should be pursued against an alleged infringer, the jurisdiction in which any such litigation should be pursued, whether or not litigation should be settled or pursued to final resolution against an alleged infringer, and the terms of settlement. G2E agrees that it shall be responsible to contribute to the costs of all enforcement to protect the Patented Licensed Technology if the claimed infringement involves products similar or competitive to the G2E’s lift equipment products. In such case, G2E shall contribute to all expenses incurred in any action Cyclone decides should be taken to protect the Licensed Technology from Infringement or to defend any claim against Cyclone or the Licensed Technology for Infringement relating (“Infringement Action”), including all attorney, paralegal, accountant or other professional fees from the notice of such Action through all trial and appellate levels. Contribution by G2E shall not exceed twenty five percent (25%) of Development Fees paid or due under this Agreement. The parties shall cooperate with each other and provide all advice and assistance reasonably requested by each other in pursuit of such Infringement matters.

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5.1.1 Cyclone will, without delay, inform G2E of any known infringement, unauthorized use, misappropriation, ownership claim, threatened infringement or other such claim by a third party with respect to the G2E Products, and/or Patented Technology, and will provide G2E with any evidence available to Cyclone of such Infringement.

5.2 Each party will execute all necessary and proper documents, take such actions as is reasonably necessary to allow the other party to institute and prosecute such infringement actions and will otherwise use its commercially reasonable efforts to cooperate in the institution and prosecution of such actions. Each party prosecuting any such infringement actions will keep the other party reasonably informed as to the status of such actions. Any award paid by third parties as a result of such an Infringement action (whether by way of settlement or otherwise) will be applied first to reimburse the parties for all costs and expenses incurred by the parties with respect to such action on a pro rata basis in relation to the amount of costs and expenses so incurred by such party and, if after such reimbursement any funds will remain from such award, the parties will allocate such remaining funds between themselves in the same proportion as they have agreed in writing to bear the expenses of instituting and maintaining such action.

6. Improvements

6.1 G2E will timely inform Cyclone, in writing, of any improvements, changes, advances and/or modifications to the Licensed Products or Licensed Technology (hereinafter “G2E’s Improvements”), and the purpose(s) therefor, made by G2E. Any and all such improvements, changes, advances and/or modifications to the Licensed Products or Licensed Technology made by G2E (“G2E Improvements”) shall become the property of Cyclone and G2E hereby assigns all of its right, title and interest in and to such G2E Improvements to Cyclone regardless if developed or invented by G2E or Cyclone or any of their employees or affiliates. Further, Cyclone will own the entire right, title and interest in any and all patent applications resulting from or relating to any and all improvements and/or modifications to the Licensed Products or the Licensed Technology, whether filed in the United States or countries other than the United States, related to said improvements and/or modifications; and in and to any and all patents which may be issued/granted on any and all said applications and any and all reissues thereof. To the extent that improvements made by other G2Es to the Licensed Technology would improve the G2E’s Licensed Products, such improvements shall be made part of this License. The G2E shall retain ownership of all improvements and intellectual property related to its Equipment.

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6.2 G2E covenants and agrees for itself and for its successors and assigns that, at Cyclone’s request, it will cause to be executed and delivered any applications, affidavits, assignments, and other instruments as may be deemed necessary or desirable to secure for or vest in Cyclone, its successors, legal representatives, or assigns, all right, title, and interest in and to any application, patent, or other right or property covered by this Section, including the right to apply for and obtain patents in foreign countries under the provisions of the International Convention; and G2E hereby requests and authorizes the United States Commissioner of Patents and Trademarks to issue any and all United States patents granted on the G2E Improvements, all divisions, reissues, and continuations thereof to Cyclone as owner of the entire right, title, and interest in and to the same, and authorize appropriately empowered officials of foreign countries to issue any letters patent granted on any patents and all divisions, reissues, and continuations thereof to Cyclone as owner of the entire right, title, and interest in and to the same.

6.3 G2E will not contest the validity or enforceability of any patents that issue from or as a result of any of the patents or patent applications for the License Technology or any continuations, divisional or continuations-in-part of such applications unless such patents or patent applications infringe on the G2E patents and patent applications. G2E will not assert as a defense in any litigation with respect to Licensed Products that any patents that issue from or as a result of any of the patent applications (including any continuations, divisionals or continuations-in-part of such applications) are invalid or unenforceable, unless a court holding denotes such a result.

6.4 Cyclone has and will continue to have sole and absolute discretion to make decisions with respect to the procurement and prosecution of the patents and patent applications for the Licensed Technology, including the right to abandon any such patent application. Cyclone’s abandonment of or any failure to obtain or maintain an issued patent originating from any of the patents or patent applications will not relieve or release G2E from its obligation to pay the License Fees and Sales Prices provided in this Agreement, provided Cyclone can show that suitable rights to exclude competitors from practicing the Licensed Technology are still in place to provide G2E a valuable right under the License in the Territory. Similarly, a holding or decision by a court of law that any such issued patent is invalid or unenforceable will not relieve or release G2E from its obligation to pay the License Fees and Sales Price provided in this Agreement, pursuant to the same requirement of rights to exclude noted above. If any of such events occur, G2E must continue to pay any License Fees and Sales Price due during the Term. If Cyclone cannot show that suitable rights to exclude competitors from practicing the Licensed Technology are still in place in the Territory after abandonment, invalidation, or unenforceability has occurred or been held by a court, then G2E may terminate this Agreement.

7. Default

7.1 If either party is in default of any material obligation under this Agreement, then the non-breaching party may give written notice thereof to the breaching party to cure the breach. If within 60 days after the date of such notice such default is not cured, then this Agreement will automatically terminate at the discretion of the non-breaching party and all rights and licenses under this Agreement will revert to the beneficial owner thereof prior to execution of the Agreement.

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7.2 This Agreement will terminate immediately if G2E is dissolved or liquidated. This Agreement will also terminate immediately absent an adequate written assurance of future performance if: (i) any bankruptcy or insolvency proceedings under any federal or state bankruptcy or insolvency code or similar law, whether voluntary or involuntary, is properly commenced by or against G2E; or (ii) G2E becomes insolvent, is unable to pay debts as they come due or ceases to so pay, or makes an assignment for the benefit of creditors; or (iii) a trustee or receiver is appointed for any or all of G2E’s assets; or (iv) G2E does not make sales of the Engines in any three (3) month period after the first full year of the commercialization of the Engines.

7.3 Immediately after the expiration or termination of this Agreement for any reason:

(a) All rights of G2E granted hereunder will terminate and automatically revert to Cyclone, and G2E will discontinue all assembly and/or manufacturing of the Licensed Technology and will no longer have the right to manufacture, sell or put into use the Licensed Technology or any variation or simulation thereof for any purpose whatsoever;

(b) G2E will be permitted to sell and dispose of its remaining inventory of Engines on hand or in process on the date of such termination or expiration, for a period of one hundred twenty (120) days following the date of such expiration or termination (the “Sale Period”). G2E expressly agrees that it will not market or sell/use any Licensed Product after the end of the Sale Period;

(c) All sums owed by G2E to Cyclone will become due and payable immediately;

(d) G2E will not, following expiration or termination of the this Agreement, use Confidential Information to manufacture or sell Licensed Products anywhere in the world; and

(e) G2E retains no rights whatsoever to any of Cyclone’s Licensed Technology.

(f) These restrictions of the G2E shall survive in perpetuity the termination of this Agreement including after the expiration of Cyclone’s Patents. In such case, G2E may not manufacture or sell Engines that would have been in violation of Cyclone’s patent rights without negotiating and paying to Cyclone a reasonable royalty.

7.4 Notwithstanding the foregoing, or any other provisions of this Agreement to the contrary, Sections 4, 5, 6, 7 and 9 will survive the expiration or termination of this Agreement.

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8. Risk of Loss

8.1 Both parties will acquire and maintain at their sole cost and expense throughout the term of this Agreement, and for a period of five (5) years following the termination or expiration of this Agreement, Comprehensive General Liability Insurance, including product liability, advertiser’s liability (1986 ISO form of advertising injury rider), contractual liability and property coverage, including property of others, (hereinafter collectively, “Comprehensive Insurance”) underwritten by an insurance company qualified to cover liability associated with activities in the Territory of this Agreement (with respect to Cyclone, in the U.S., or such other territory where it manufactures the engines). This insurance coverage will provide liability protection of not less than $2,000,000 combined single limit for personal injury and property damage including products/completed operations coverage (on a per occurrence basis) with the other party named as an additional insured party on the general liability coverage and as loss payee on the property coverage, and the policy will purport to provide adequate protection for G2E and Cyclone against any and all claims, demands, causes of action or damages, including attorney’s fees, arising out of this Agreement including, but not limited to, any alleged defects in, or any use of, the Licensed Products or the Licensed Technology.

8.2 In the event of cancellation of any insurance required to be carried by a party under this Agreement, the other party will be notified thirty (30) days prior to cancellation of same. Should the cancellation be due to dissolution or like problems with the insurance company, then the insured party shall have a suitable amount of time to secure suitable insurance coverage, not to exceed sixty (60) days after notice of cancellation occurs. Should the cancellation be due to failure to pay premiums or like financial problems of G2E, then Cyclone will have the right to terminate this Agreement if G2E does not secure proper insurance coverage at the end of the above-noted thirty (30) day notification period.

8.3 Risk of loss shall be attributed to the parties as follows:

(a) Cyclone shall be responsible for losses resulting from faulty design of its of the Licensed Products, faulty manufacturing of engine parts for the Licensed Products delivered to G2E, faulty assembly of the Licensed Products (to the extent performed by Cyclone on behalf of G2E), and incorrect information about the Technology or Licensed Products delivered to G2E that is reasonably and prudently relied upon by G2E.

(b) G2E shall be responsible for faulty assembly of the Licensed Products (to the extent performed by G2E, and not based on incorrect information supplied by Cyclone), faulty installation of the Licensed Products into G2E’s lift equipment, and all operation, use, customer training and maintenance of the Licensed Products once installed in the G2E’s lift equipment (provided the loss is not shown to result from one of Cyclone’s responsibilities in Section 8.3(a) above).

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(c) G2E assumes sole responsibility for any commitments, obligations, or representations made by it in connection with the use, sale, manufacture, importation, offer to sell, distribution, operation, etc., of its lift equipment , and Cyclone will have no liability to G2E, or any third parties, with respect to economic and/or personal injury, including wrongful death, caused by or resulting from the use of the G2E’s lift equipment by G2E, its agents, employees, or customers, subject to the provisions of this Section 8.3.

8.4 G2E agrees to indemnify, defend and hold harmless Cyclone, its shareholders, officers, directors, employees, affiliates, successors and assigns from and against any and all expenses, damages, proceedings, direct or consequential claims, liabilities, suits, actions, causes of action of any character or nature, penalties, fines, judgments or expenses (including all attorneys’ fees), arising out of, or related to G2E’s responsibilities in Section 8.3 above, and/or G2E’s performance or breach of this Agreement.

8.5 Cyclone agrees to indemnify, defend and hold harmless G2E, its shareholders, officers, directors, employees, affiliates, successors and assigns from and against any and all expenses, damages, proceedings, direct or consequential claims, liabilities, suits, actions, causes of action of any character or nature, penalties, fines, judgments or expenses (including all attorneys’ fees), arising out of, or related to Cyclone’s responsibilities in Section 8.3, above.

8.6 The indemnity provisions of this Section 8 will survive the expiration or termination of this Agreement.

8.7 BOTH PARTIES acknowledge that in no event will ONE PARTY be liable TO THE OTHER for any indirect, special, consequential, incidental or punitive damage, loss or expense, even if BOTH PARTIES haVE been advised of their possible existence.

9. Confidentiality

9.1 Confidential Information means information in oral and/or written form that (a) relates to the Licensed Technology, including, without limitation past, present and future research, development, business activities, products, and services, and (b) has been identified, either orally or in writing, as confidential by either party. Confidential Information shall also mean information provided by either of the parties to the other regarding its technology, systems engineering, business and marketing plans, and any other materials identified, either orally or in writing.

9.2 The receiving party may use the Confidential Information only for the purpose of producing the Licensed Products or as otherwise indicated or contemplated by this Agreement. The receiving party will not, at any time, use the Confidential Information in any other fashion, form, or manner for any other purpose.

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9.3 The receiving party agrees not to disclose the Confidential Information in any manner to anyone other than persons within its organization who have a need to know for the purpose set forth above and who have acknowledged in writing the obligations hereunder and have agreed to abide by the terms hereof. Under no circumstances will the receiving party disclose the Confidential Information to any third party.

9.4 Any Confidential Information in whatever form is the property of the disclosing party and will remain so at all times. The receiving party may not copy any Confidential Information for any purpose without the express prior written consent of the disclosing party, and if consent is granted, any such copies will retain such proprietary rights notices as appear on the original thereof. Any copies of the Confidential Information that the disclosing party may have permitted the other party to make, or other written materials incorporating Confidential Information, will be the sole property of the disclosing party and must be returned to it or destroyed upon the first to occur of (a) termination or expiration of this Agreement or (b) request by the disclosing party.

9.5 Nothing in this Section will prohibit or limit the receiving party’s use of information it can demonstrate is (i) previously known to the receiving party, (ii) independently developed by the receiving party, (iii) acquired by the receiving party from a third party not under similar nondisclosure obligations to the disclosing party, or (iv) which is or becomes part of the public domain through no breach by the receiving party of this Agreement.

9.6 The receiving party acknowledges that the Confidential Information disclosed and/or made available to it hereunder is owned solely by the disclosing party and that the threatened or actual breach of this Agreement would cause irreparable injury to the disclosing party, for which monetary damages would be inadequate. Accordingly, the receiving party agrees that the disclosing party is entitled to an immediate injunction enjoining any such breach or threatened breach of this Agreement, subsequent to the posting of a suitable bond with the court of pertinent jurisdiction. The receiving party agrees to be responsible for all costs, including attorneys’ fees, incurred by the disclosing party in any action enforcing the terms of this Section.

9.7 The receiving party will promptly advise the disclosing party in writing of any unauthorized use or disclosure of Confidential Information of which the receiving party becomes aware and will provide reasonable assistance to the disclosing party to terminate such unauthorized use or disclosure.

9.8 This confidentiality section shall supersede all prior agreements pertaining to confidential information between Cyclone and G2E or a preceding person or entity working to initiate and/or negotiate the terms of this Agreement.

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10. Miscellaneous

10.1 Nothing contained in this Agreement will be construed as conferring by implication, estoppel, or otherwise, upon any party licensed hereunder, any license or other right under any patent except the licenses and rights expressly granted herein.

10.2 G2E will conspicuously mark directly on each Licensed Product it manufactures or sells that the Licensed Product is covered by the Cyclone’s patent, including the numbers and other identifying information for which will be provided to G2E.

10.3 All notices required by this Agreement will be in writing and sent by certified mail, return receipt requested, by hand or overnight courier, to the addresses set forth on the initial page, with copies to the Legal Contacts set forth in the Specific License Terms, unless either party will at any time by notice in writing designate a different address. Notice will be effective three days after the date officially recorded as having been deposited in the mail or upon receipt by hand delivery or the next day by overnight courier.

10.4 G2E shall not assign, convey, encumber, or otherwise dispose of any of its rights or obligations under this Agreement without the prior written consent of Cyclone, which consent shall not be unreasonably delayed or withheld, and any such purported assignment will be invalid.

10.5 No term of this Agreement will be deemed waived, and no breach of this Agreement excused, unless the waiver or consent is in writing signed by the party granting such waiver or consent.

10.6 If any term or provision of this Agreement is determined to be illegal or unenforceable, such term or provision will be deemed stricken or reduced to a legally enforceable construction, and all other terms and provisions will remain in full force and effect.

10.7 This Agreement represents the entire agreement of the parties replacing any earlier agreements concerning the same matters. It may only be modified by a subsequent writing signed by the parties hereto.

10.8 Each party is acting as an independent contractor and not as an agent of the other party. Nothing contained in this Agreement will be construed to confer any authority upon either party to enter into any commitment or agreement binding upon the other party.

Initials: _______ _______

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10.9 This Agreement, including its formation, all of the parties’ respective rights and duties in connection herewith and all disputes that might arise from or in connection with this Agreement or its subject matter, will be governed by and construed in accordance with the laws of the State of Florida, the United States of America, without giving effect to that State’s conflict of laws rules. If any controversy, dispute or disagreement arises from this Agreement, the parties agree to first attempt to settle such by arbitration in accordance with the rules of the American Arbitration Association. In such case, the decision of the arbitrator or arbitrators shall be binding and final, and may be entered as a judgment and enforced by any court having jurisdiction. The prevailing party in any action shall be entitled to receive reimbursement for reasonable attorneys’ fees, court/arbitration costs, and disbursements incurred in connection with such controversy, dispute or disagreement. Should the need arise to determine any reimbursement issues, the parties will be subject to the exclusive jurisdiction of courts located in Broward County, Florida, and their applicable courts of appeal, each party agreeing to such jurisdiction exclusively.

In Witness Whereof, the parties have caused this Systems Application License Agreement, comprised of these Specific License Terms and the Standard Terms and Conditions to be executed by their duly authorized officers on the respective dates hereinafter set forth

Cyclone Power Technologies, Inc.		G2E, S.A.P.I. de C.V.
By:		By:
	Frankie Fruge, President		Daniel Camarena
	May 1, 2016		May 1, 2016

Initials: _______ _______

22

EX-10.48

 

Cyclone Power Technologies, Inc.

601 NE 26^th Court

Pompano Beach, FL 33064

Phone: 954-943-8721 Fax: 954-788-6565

www.cyclonepower.com

EXCLUSIVE ENGINEERING DEVELOPMENT AGREEMENT.

THIS AGREEMENT, is made this 1. juni 2016, by and between CYCLONE POWER TECHNOLOGIES, INC., a Florida corporation, with its principal office located at 601 N.E. 26th Court, Pompano Beach, Florida 33064, U.S.A. (“CYCLONE”), and Falck Schmidt Defence Systems A/SCVR.nr. 28490259 with its principal office located at Oslogade 15000 Odense C, Denmark (“FSDS”).

Background

CYCLONE, is engaged in the business of research and development of heat regenerative, external combustion engines, generally characterized as a high efficiency, compact and powerful steam engine that runs on almost any fuel. CYCLONE holds numerous patents and is engaged in the prototype of the engine, as well as licensing for sales, joint ventures and manufacturing.

CYCLONE wishes to expand the sale of its engines for all Military applications and introduce them into the worldwide marketplace. The Denmark based company engaged in All Military Power Application Technology development for commercial and industrial applications in the World & Aerospace .

CYCLONE possesses the fundamental engine technology. FSDS wishes to buy a CYCLONE S-2 ENGINE {“Mark S-2 Engine”), to perform engineering and development work for Military Auxilary Power Unit (APU)

The Cyclone Engine includes trademark and patent rights, manufacturing trade secrets, engineering blue prints and design drawings, specifications and other proprietary information (Cyclone’s Technology”).

CYCLONE and FSDS believe a mutually beneficial relationship for the engineering integration of the Cyclone Engine, and its eventual marketing and sale in the Military Worldwide & Aerospace market can be developed through corresponding working arrangements between them.

NOW, THEREFORE, the parties, in consideration of mutual promises, covenants and understandings below, do agree as follows:

1) Term of agreement

Subject to the further terms of this Exclusive Engineering Development Agreement, FSDS has the exclusive rights for all the Cyclone Engines, for Any and all Military & Aerospace power applications worldwide for 12 month temporary license with the signing of this agreement.

2) Payment

FSDS will purchase two Beta Total S-2 APU Powered by Cyclone Engine as described in Attachment #1.

All Development Fees once paid to CYCLONE are non-refundable. The Development Fees shall be payable as follows:

a) The fees payable by FSDS to CYCLONE is Two Hundred and Twenty Five Thousand and no/100 USD ($225,000.00) Dollars, payable to CYCLONE as follows:

US 25,000 USD upon signing this Agreement (non-refundable);

US 25.000 Start of work meeting (SOW)

US 25.000 Long lead items ordered

US 25.000 Critical design review (CDR),(control, electric and mechanical interfaces review)

US 50.000 Engine design Documentation package delivered a full documentation package containing all information and drawings for production of S-2 system

US 75.000 Final engine test completed

US 225.000 total.

The parties are obligated to enter into a new agreement establishing the conditions regarding the parties future cooperation. The new agreement must be entered into before the end of June 2016.

3) Confidential Information.

FSDS acknowledges CYCLONE’S rights to its patented products and to its Know-How. All trade secrets, technical Know-How, other knowledge, information, instructions and engineering disclosed or furnished to FSDS by CYCLONE shall be maintained in strict confidence by FSDS and agrees that throughout the term of this Agreement, and for five (5) years thereafter, such information will not be disclosed or be permitted to be disclosed by FSDS other than to authorized individuals (including, without limitation, sales representatives, distributors and technical personnel) engaged in carrying-out the terms hereof. The parties agree this confidentiality extends to the employees and officers of FSDS. FSDS agrees to provide the requisite internal security of the subject proprietary information within its organization and further agrees to require its agents, servants and employees having access to the Know-How to acknowledge this obligation of confidentiality.

Page 2 of 5                             Initials _______ _______

4) Technical Assistance.

CYCLONE, upon request, will furnish technical personnel Harry Schoell & his engineers to assist it regarding the technical information and Know-How necessary to carry-out the purposes of this Agreement, at no additional fees. Provided, however, if travel is involved then FSDS shall bear all travel, lodging, expenses, and an hourly rate for Cyclone personnel.

5) Relationship.

FSDS is an independent contractor. Nothing in this agreement shall be construed to create a principal/agent, joint venture, partnership or any other business relationship between the parties other than as set forth in this Agreement. Neither party is authorized to act on behalf of the other.

6) Non-Circumvention.

During the term of this Agreement, FSDS agrees not to contact, initiate contact, or attempt to do business with, at any time for any purpose, either directly or indirectly, any officers, directors, shareholders, consultants, attorneys, employees, agents, customers or other affiliates of CYCLONE concerning this business opportunity, as referred by CYCLONE to FSDS for the purpose of circumventing, the result of which shall be to prevent CYCLONE from realizing a profit, license and royalty fees or otherwise, without express written approval of CYCLONE, which approval may be withheld by CYCLONE in its sole discretion.

FSDS may terminate this Agreement for its convenience at any time upon providing five (5) days written notice to Cyclone. In such case, Cyclone shall be entitled to receive as full compensation for all services performed hereunder payment for all Work performed prior to the date of termination, together with all retainage withheld in accordance with Article 2. Payment of such compensation is the sole and exclusive remedy of Cyclone for termination of this Agreement by FSDS hereunder and Cyclone shall not be entitled to, and hereby waives, claims for lost profits and all other damages and expenses.

7) Notices.

All notices shall be in writing and deemed to have been given when sent by e-mail and Federal Express prepaid to the parties at the addresses set forth below, or such other addresses from time to time given.

Page 3 of 5                             Initials _______ _______

To: Cyclone Power Technologies	To: Jan Falck-Schmidt, President/CEO
Frankie Fruge, President	Falck Schmidt Defense Systems
601 N.E. 26th Court	Oslogade 15000 Odense C
Pompano Beach, FL 33064	Denmark
Frankie@cyclonepower.com	jafs@f-sds.com

8) Remedies.

all damages incurred by a party for a violation of the terms hereof by the other, the prevailing party shall also be entitled to recover all costs and reasonable attorney fees incurred by reason such breach or obtaining compliance with the agreement and appeals. But, this shall not restrict a party’s right to terminate as stated.

9) No Waiver.

The failure of either party to insist on strict performance of any provisions herein shall not affect the right of such party to enforce same, nor shall the waiver of any breach constitute a waiver of a subsequent default of same or similar nature, nor construed as a waiver of strict performance of any other provisions.

10) Severability.

If any part of this agreement shall be declared void or invalid by law or otherwise, the remaining provisions shall remain valid and enforceable.

11) Indemnification.

FSDS agrees to indemnify and hold harmless CYCLONE from any and all loss, damage, cost or expense (including, without limitation, legal fees, court costs, etc.) arising out of, or in connection with, any claim due to any actions, negligence, product liability, or willful misconduct by FSDS or any of its agents or employees. Upon entering into formal agreements (after 3 months development period), FSDS shall provide proof of products liability insurance, with CYCLONE noted as an Additional Insured.

12) Governing Law.

This agreement shall be governed by and construed under the laws of the State of Florida, USA. If any dispute arises between the parties, it shall be submitted to the Circuit Court of Broward County, Florida, or binding arbitration under the auspices of the American Arbitration Association, such proceedings to be conducted in Broward County, Florida.

13) Entire Agreement.

This Agreement constitutes the entire understanding between the parties and supersedes any previous oral or written undertakings. It may not be modified, except in writing signed by both parties. This agreement shall be binding upon the parties, their successors and assigns.

Page 4 of 5                             Initials _______ _______

IN WITNESS WHEREOF, the parties, by their representatives, have set their hands and seals the day and year first above written.

	Cyclone Power Technologies, Inc.
Witness
	By:
	Frankie Fruge President
Witness	By:

Page 5 of 5                             Initials _______ _______

2

EX-10.49

 

 

 

 

 

 

 

 

 

 

 

 

EX-10.50

PROMISSORY NOTE

$4,000 July 6^th 2016

FOR VALUE RECEIVED, the undersigned, Chad Tendrich (the “Maker”), promises to pay to the order of Cyclone Power Technologies, Inc. (the “Holder”), in the manner hereinafter specified in this Note, the principal sum of four thousand and 00/100 Dollars ($4,000) (the “Principal Amount”).

The Principal amount remaining outstanding under this Note, plus all accrued but unpaid interest shall be due and payable on September 6, 2016 (the “Maturity Date”). Interest shall be at the rate of 4% annually.

THIS NOTE IS PAYABLE IN FULL ON THE MATURITY DATE. AT MATURITY, THE MAKER MUST REPAY THE ENTIRE UNPAID PRINCIPAL AMOUNT OF THIS NOTE AND UNPAID INTEREST THEN DUE.

This Note shall be repaid in lawful money of the United States of America at such place as may be designated by the Holder.

This Note may be prepaid without penalty at any time. This Note shall be construed and enforced according to the laws of the State of Florida.

If default be made in the payment of any sums mentioned in this Note, and shall continue for a period of ten (10) days after receipt by the Maker of written notice of such default, the entire unpaid Principal Amount shall at the option of the Holder of this Note become at once due and collectible without notice. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.

Each person liable on this Note whether Maker or endorser, hereby waives presentment, protest, notice, notice of protest and notice of dishonor and agrees to pay all costs, including a reasonable attorney’s fee, whether suit be brought or not, if, after maturity of this Note or default hereunder, counsel shall be employed to collect this Note.

Maker:
By:
Name:	Chad Tendrich

Acknowledged by Holder:

Cyclone Power Technologies, Inc.

EX-10.51

 

 

 

EX-10.52

PROMISSORY NOTE

$46,000.00 July 26^th 2016

FOR VALUE RECEIVED, the undersigned, Cyclone Power Technologies, Inc (the “Maker”), promises to pay to the order of Chad Tendrich (the “Holder”), in the manner hereinafter specified in this Note, the principal sum of forty-six thousand and 00/100 Dollars ($46,000) (the “Principal Amount”).

The Principal amount remaining outstanding under this Note, plus all accrued but unpaid interest shall be due and payable on January 26, 2017 (the “Maturity Date”) with an annual rate of 10.00%.

THIS NOTE IS PAYABLE IN FULL ON THE MATURITY DATE. AT MATURITY, THE MAKER MUST REPAY THE ENTIRE UNPAID PRINCIPAL AMOUNT OF THIS NOTE AND UNPAID INTEREST THEN DUE.

This note at the Makers discretion may convert the total unpaid principal amount of this note and unpaid interest then due with the issuance of 100,000,000 shares of Cyclone Power Technologies, Inc. stock.

This Note shall be repaid in lawful money of the United States of America at such place as may be designated by the Holder.

This Note may be prepaid without penalty at any time. This Note shall be construed and enforced according to the laws of the State of Florida.

If default be made in the payment of any sums mentioned in this Note, and shall continue for a period of ten (10) days after receipt by the Maker of written notice of such default, the entire unpaid Principal Amount shall at the option of the Holder of this Note become at once due and collectible without notice. Failure to exercise this option shall not constitute a waiver of the right to exercise the same in the event of any subsequent default.

Each person liable on this Note whether Maker or endorser, hereby waives presentment, protest, notice, notice of protest and notice of dishonor and agrees to pay all costs, including a reasonable attorney’s fee, whether suit be brought or not, if, after maturity of this Note or default hereunder, counsel shall be employed to collect this Note.

	Maker:
	By:
	Name:	Cyclone Power Technologies, Inc.
Acknowledged by Holder:
Chad Tendrich

EX-10.53

NOTE AGREEMENT

This loan agreement (the “Agreement”) is entered into on this 1^st day of September, 2016 by and between Sail D. White, place of residence Arkansas, (hereinafter referred to as the “Lender”), and Cyclone Power Technologies Inc., a company duly organized and validly existing under the laws of the State of Florida, United States, with a registered office at 601 NE 26^th Court, Pompano Beach, FL 33064, (hereinafter the “Borrower”), represented by the board member/President Frankie Fruge.

The Borrower and the Lender hereinafter collectively referred to as “Parties” and individually as a “Party”

WHEREAS

The Borrower is established as a public company with its legal seat and registered in the State of Florida in the United States;

The Lender wishes to finance activities of the Borrower by extending an interest bearing loan with principal in cash and interest in stock of Borrower,

NOW, THEREFORE, the Parties have agreed in the following:

1. Loan amounts and disbursement. The Lenders herewith undertake to allocate to the Borrower the loans as following:

Lender	Total loan amount (USD)
Sail D. White	$	27,000.00

The Lender shall transfer the respective loan amount to the bank account of the Borrower at Professional Bank. within 5 business days as of the date hereof:

Beneficiary: Cyclone Power Technologies Inc., Operating Account

Beneficiary Bank: Professional Bank

ROUTING #: 067016574

Bank Account: 2017203

Transfer Details: Loan

2. Loan Term and Interest: The Loan allocated to the Borrower as per this Agreement shall be an interest bearing loan with a term of Six (6) weeks, at an interest payable of 1,500,000 shares of Borrow stock issued to Lender.

i

3. Repayment of the Loan: The Parties herewith agree that that the loan extended to the Borrower shall be called for repayment Six (6) weeks from the signing of this agreement and the Borrower shall repay the Loan to the Lender by issuing a relevant resolution of the Shareholders. The Borrower shall repay the Loans within the term and in the amount set forth in this Agreement. Principal and Interest payment is due and payable in accordance with the following schedule.

3.1.	Principal shall be paid in full no later than with the final payment. Six (6) weeks.
3.2.	Upon execution of this Agreement, Lender shall provide payment instructions to the Borrower. There shall be a five-day grace period permitted for the scheduled payment.
3.3	All due in Six (6) weeks

.

4. Default, Governing Law and Dispute Resolution: This Agreement shall be governed by and construed in accordance with the laws of Florida.

4.1.	The Parties shall make every attempt to resolve disputes arising from this Agreement through amicable negotiation.
4.2.	Should amicable negotiations fail to resolve the dispute, the borrower or lender shall be free to bring suit in any court of competent jurisdiction. Borrower hereby waives presentment and all demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note. Time of payment may be extended in writing by the Lender only. Should payment not be made when due or in the event of default, Borrower shall pay to Lender the costs of collection, including reasonable attorney fees.
4.3.	In the event of default, the amount of principal and interest outstanding shall automatically convert to common stock in Cyclone Power Technologies Inc. in the amount of the previous 20 day stock closing average and stock certificates evidencing ownership shall be promptly delivered. The Lender shall notify Borrower of his intention to hold ownership or file suit for repayment of the principal and interest within 10 days of default.
4.4	In the event the client does not agree with Section 4.3 in the case of default, the company offers collateral in the property located 601 NE 26th Court, Pompano Beach, FL 33064 and the Cyclone patent portfolio.

5. No Assignment The Lender shall not assign this Agreement or any of its/his/her rights or obligations under this Agreement to any person unless otherwise specified in this Agreement.

6. Counterparts of the Agreement This Agreement has been executed in two (2) identical counterparts, one (1) for each Party.

ii

Borrower: Lenders	Lender/Investor:
Cyclone Power Technologies Inc.
	Sail D. White
Frankie Fruge, President/Director
DATE: September 1, 2016	DATE: September 1, 2016

iii

EX-10.54

 

 

 

 

 

 

 

 

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frankie Fruge, certify that:

1.	I have reviewed this report on Form 10-K of Cyclone Power Technologies, 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 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 subsidiary, 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 an 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 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: March 20, 2017	/s/ Frankie Fruge
	Frankie Fruge
	President
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce Schames, certify that:

1.	I have reviewed this report on Form 10-K of Cyclone Power Technologies, 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 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 subsidiary, 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 an 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 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: March 20, 2017	/s/ Bruce Schames
	Bruce Schames,
	Chief Financial Officer
	(Principal Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION 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 Cyclone Power Technologies Inc. (the “Company”) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frankie Fruge, president, and Chief Executive 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 the best of my knowledge:

(a)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 20, 2017	/s/ Frankie Fruge
	Frankie Fruge
	President (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION 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 Cyclone Power Technologies, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bruce Schames, Chief Financial 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 the best of my knowledge:

(a)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 20, 2017	/s/ Bruce Schames
	Bruce Schames
	Chief Financial Officer and Secretary (Principal Accounting Officer)

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2016
Document And Entity Information
Entity Registrant Name	CYCLONE POWER TECHNOLOGIES INC
Entity Central Index Key	0001442711
Document Type	10-K
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float	$ 2,100,000
Entity Common Stock, Shares Outstanding		1,517,400,273
Trading Symbol	CYPW
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2015

XML

Condensed Consolidated Balance Sheets - USD ($)	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash				$ 7	$ 278
Inventory, net	323,508	455,510	515,460	514,801	469,043
Other current assets	587	712	837	962	16,076
Total current assets	324,095	456,222	516,297	515,770	485,397
PROPERTY AND EQUIPMENT
Furniture, fixtures, and equipment	304,569	312,846	312,846	312,846	312,846
Accumulated depreciation	(178,049)	(177,247)	(168,174)	(158,927)	(149,680)
Net property and equipment	126,520	135,599	144,672	153,919	163,166
OTHER ASSETS
Patents, trademarks and copyrights		579,067	579,067	579,067
Accumulated amortization		(260,119)	(250,413)	(240,707)
Net patents, trademarks and copyrights	283,368	318,948	328,654	338,360	348,191
Other assets	8,062	2,761	2,761	2,761	2,762
Total other assets	291,430	321,709	331,415	341,121	350,953
Total Assets	742,045	913,530	992,384	1,010,810	999,516
CURRENT LIABILITIES
Bank overdraft	3,221	3,026	1,228
Accounts payable and accrued expenses	1,159,133	1,107,811	1,037,541	989,124	816,592
Accounts payable and accrued expenses-related parties	210,225	126,475	42,725	614,200	530,450
Notes and other loans payable-current portion	357,737	341,201	325,225	271,555	302,157
Derivative liabilities	383,482	451,590	450,995	457,838	440,184
Notes and other loans payable-related parties	321,334	284,003	247,335	906,656	880,317
Capitalized lease obligations-current portion	12,950	12,826	12,646	12,205	12,058
Deferred revenue and license deposits	148,031	148,030	147,627	122,627	122,627
Total current liabilities	2,596,113	2,474,962	2,265,322	3,374,205	3,104,385
NON CURRENT LIABILITIES
Capitalized lease obligations-net of current portion	36,939	38,143	39,800	44,125	45,642
Notes and other loans payable-net of current portion	50,000	50,000	50,000	50,000
Total non-current liabilities	86,939	88,143	89,800	94,125	45,642
Total Liabilities	2,683,052	2,563,105	2,355,122	3,468,330	3,150,027
Commitments and contingencies
STOCKHOLDERS' DEFICIT
Series B preferred stock, $.0001 par value, 1,000 shares authorized, 1,000 shares issued and outstanding at March 31, 2015 June 30, 2015 and September 30, 2015 December 31, 2015 and December 31, 2014, respectively.
Common stock, $.0001 par value, 4,000,000,000 shares authorized, 1,327,937, 1,327,937 and 1,388,669,532 and 1,388,669,532, and 861,315,576 shares issued and outstanding at March 31, 2015, June 30, 2015 and Sept. 30,2015 and December 31, 2015, and December 31, 2014 respectively.	138,864	138,865	132,792	231,792	86,129
Additional paid-in capital	56,621,826	56,621,427	56,617,055	55,231,719	55,026,213
Treasury Stock 317,000, and 0, shares, at December 31, 2015, and December 31, 2014 respectively, at cost.	(3,000)
Prepaid expenses with common stock					(28,459)
Stock subscription receivable		(6,000)	(6,000)	(6,000)	(6,000)
Accumulated deficit	(58,727,736)	(58,432,914)	(58,135,632)	(57,845,078)	(57,257,441)
Total stockholders' deficit - Cyclone Power Technologies Inc.	(1,970,046)	(1,678,622)	(1,391,785)	(2,387,567)	(2,179,558)
Non controlling interest in consolidated subsidiaries	29,039	29,047	29,047	29,047	29,047
Total Stockholders' Deficit	(1,941,008)	(1,649,575)	(1,362,738)	(2,358,520)	(2,150,512)
Total Liabilities and Stockholders' Deficit	$ 742,045	$ 913,530	$ 992,384	$ 1,109,810	$ 999,516

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	1,000	1,000	1,000	1,000	1,000
Preferred stock, shares issued	1,000	1,000	1,000	1,000	1,000
Preferred stock, shares outstanding	1,000	1,000	1,000	1,000	1,000
Common stock, par value	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001	$ 0.0001
Common stock, shares authorized	4,000,000,000	4,000,000,000	4,000,000,000	4,000,000,000	4,000,000,000
Common stock, shares issued	1,388,669,532	1,388,669,532	1,327,937	1,327,937	861,315,576
Common stock, shares outstanding	1,388,669,532	1,388,669,532	1,327,937	1,327,937	861,315,576
Treasury stock, shares	317,000				0

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Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
REVENUES
Revenues					$ 140,527			$ 140,527		$ 140,527
Engine sales and design revenue												$ 154,027
WheGen-License revenue				175,000						175,000		175,000
Total revenue				175,000	140,527			140,527		315,527		329,027
COST OF GOODS SOLD					58,877	27,000		85,877		85,877		88,807
Gross profit				175,000	81,650	(27,000)		54,650		229,650		240,220
Advertising and promotion
Retirement of demonstration equipment												85,583
Other advertising and promotion expenses											7,434	23,935
Total advertising and promotion	2,500	180	254	6,220	5,565	7,605	434	13,170	2,934	19,390	7,434	109,518
General and administrative
Retirement of patents & trademarks											28,530	8,602
Other general and administrative											624,573	1,881,550
Total general and administrative	125,227	129,435	271,579	626,059	542,777	437,739	401,014	980,516	526,241	1,606,575	653,103	1,890,152
Research and development
Retirement of equipment												93,053
Inventory reserve provision										80,000	192,000	80,000
Other research and development											275,610	845,499
Total research and development	103,605	81,237	106,927	396,420	192,637	124,180	188,164	316,817	291,769	713,237	467,610	1,018,552
Total operating expenses	231,332	210,852	378,760	1,028,699	740,979	569,524	589,612	1,310,503	820,944	2,339,202	1,128,147	3,018,222
Operating loss	(231,332)	(210,852)	(378,760)	(853,699)	(659,329)	(596,524)	(589,612)	(1,255,853)	(820,944)	(2,109,552)	(1,128,147)	(2,778,002)
Other income (expense)
Loss provisions on Whe Gen subsidiary deconsolidation										(706,756)		(706,756)
Other income and (expense)			(50,000)	(706,756)			(50,000)		(50,000)	(706,756)	(50,000)	5,115
Derivative income (expense) -notes payable	(595)	6,843	(17,654)	31,220	(124,351)	(55,158)	(10,811)	(179,509)	(11,406)	(148,289)	56,702	(163,002)
Interest expense	(65,269)	(86,631)	(141,223)	(281,158)	(406,624)	(445,351)	(227,854)	(851,975)	(293,123)	(1,133,133)	(348,858)	(1,327,102)
Total other expense	(65,864)	(79,788)	(208,877)	(956,694)	(530,975)	(500,509)	(288,665)	(1,031,484)	(354,529)	(1,988,178)	(342,156)	(2,176,423)
Loss before income taxes	(297,196)	(290,640)	(587,637)	(1,810,393)	(1,190,304)	(1,097,033)	(878,277)	(2,287,337)	(1,175,473)	(4,097,730)	(1,470,303)	(4,954,425)
Income taxes
Net loss	$ (297,196)	$ (290,640)	$ (587,637)	$ (1,810,393)	$ (1,190,304)	$ (1,097,033)	$ (878,277)	$ (2,287,337)	$ (1,175,473)	$ (4,097,730)	$ (1,470,303)	$ (4,954,425)
Net loss per common share, basic and diluted	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)	$ (0.00)	$ 0.00	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)	$ (0.00)	$ (0.01)
Weighted average number of common shares outstanding	1,346,156,963	1,327,937,290	972,124,660	525,746,233	353,877,991	261,282,936	1,082,119,889	291,288,247	1,145,656,355	335,841,941	1,189,240,307	396,105,362

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Consolidated Statements of Stockholders' Deficit - USD ($)	Preferred Stock B [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Prepaid Expenses Via Common Stock [Member]	Preferred Stock Subscription Receivable [Member]	Accumulated Deficit [Member]	Stockholders' (Deficit) Cyclone Power Tech. Inc. [Member]	Noncontrolling Interest In Consol. Subsidiaries [Member]	Total
Balance at Dec. 31, 2013		$ 27,268	$ 48,644,132	$ (1,706,217)	$ (595,980)	$ (6,000)	$ (52,474,269)	$ (6,111,067)	$ 818,943	$ (5,292,124)
Balance, shares at Dec. 31, 2013	1,000	272,679,942
Amortization of expenses prepaid with common stock					421,687			421,687		421,687
Issuance of restricted shares for OID interest		$ 36	10,678					10,714		10,714
Issuance of restricted shares for OID interest, shares		357,142
Issuance of restricted shares and options for employee and outside services		$ 625	116,175		567,521			684,321		684,321
Issuance of restricted shares and options for employee and outside services, shares		6,250,000
Issuance of options for employee services										10,400
Sale of common stock		$ 821	109,179					110,000		$ 110,000
Sale of common stock, shares		8,219,298								8,219,298
Repayment of debt and interest with common stock		$ 49,631	1,093,016					1,142,647		$ 1,142,647
Repayment of debt and interest with common stock, shares		496,323,413								496,323,413
Repayment of liabilities in common stock		$ 4,045	130,088					134,133		$ 134,133
Repayment of liabilities in common stock, shares		40,450,000
Settlement of stock warrant liability		$ 821	109,179							110,000
Settlement of stock warrant liability, shares		8,219,298
Conversion of officer salaries into common stock		$ 2,031	666,281					668,312		668,312
Conversion of officer salaries into common stock, shares		20,313,416
Forgiveness of officers accrued salaries			956,762					956,762		956,762
Foregiveness of accrued rent, interest & other expenses due to an officer's company
Forgiveness of employees accrued salaries			956,762					956,762		956,762
Application of derivative liability for conversion of debt via common stock			1,013,163					1,013,163		1,013,163
Conversion of common stock warrants-cashless exercise		$ 472	(472)
Conversion of common stock warrants-cashless exercise, shares		4,722,365
Deconsolidation of Whe Gen subsidiary			2,443,506		145,834		171,253	2,760,593	(789,896)	1,970,697
Cancellation of treasury stock		$ (300)	(209,700)	210,000
Cancellation of treasury stock, shares		(3,000,000)
Repayment of shares loaned by stockholder			(4,370)	1,496,217				1,491,847		1,491,847
Repayment of shares loaned by stockholder, shares
Net loss							(4,954,425)	(4,954,425)		(4,954,425)
Balance at Dec. 31, 2014		$ 86,129	55,026,213		(28,459)	(6,000)	(57,257,441)	(2,179,559)	29,047	(2,150,512)
Balance, shares at Dec. 31, 2014	1,000	861,315,576
Net loss										(587,637)
Balance at Mar. 31, 2015										(2,358,520)
Balance at Dec. 31, 2014		$ 86,129	55,026,213		(28,459)	(6,000)	(57,257,441)	(2,179,559)	29,047	(2,150,512)
Balance, shares at Dec. 31, 2014	1,000	861,315,576
Net loss										(878,277)
Balance at Jun. 30, 2015										(1,362,738)
Balance at Dec. 31, 2014		$ 86,129	55,026,213		(28,459)	(6,000)	(57,257,441)	(2,179,559)	29,047	(2,150,512)
Balance, shares at Dec. 31, 2014	1,000	861,315,576
Net loss										(1,175,473)
Balance at Sep. 30, 2015										(1,649,575)
Balance at Dec. 31, 2014		$ 86,129	55,026,213		(28,459)	(6,000)	(57,257,441)	(2,179,559)	29,047	(2,150,512)
Balance, shares at Dec. 31, 2014	1,000	861,315,576
Amortization of expenses prepaid with common stock					28,459			28,459		28,459
Issuance of options for employee services			2,526					2,526		2,526
Repayment of debt and interest with common stock		$ 42,485	88,370					130,855		130,855
Repayment of debt and interest with common stock, shares		424,853,956
Repayment of liabilities in common stock		$ 9,250	57,250					66,500		66,500
Repayment of liabilities in common stock, shares		92,500,000
Forgiveness of officers accrued salaries			655,225					655,225		655,225
Foregiveness of accrued rent, interest & other expenses due to an officer's company			710,272					710,272		710,272
Forgiveness of employees accrued salaries			18,970					18,970		18,970
Repayment of shares loaned by stockholder		$ 1,000	13,000					14,000		14,000
Repayment of shares loaned by stockholder, shares		10,000,000
Loss on debt paid with common stock			50,000					50,000		50,000
Cancellation of stock subscription receivable				(3,000)		3,000
Write-off of stock subscription receivable						3,000		3,000		3,000
Allocation of loses of subsidiaries to non controlling interests							8	8	(8)
Net loss							(1,470,303)	(1,470,303)		(1,470,303)
Balance at Dec. 31, 2015		$ 138,864	$ 56,621,826	$ (3,000)			$ (58,727,736)	$ (1,970,047)	$ 29,039	(1,941,008)
Balance, shares at Dec. 31, 2015	1,000	1,388,669,532
Balance at Mar. 31, 2015										(2,358,520)
Net loss										(290,640)
Balance at Jun. 30, 2015										(1,362,738)
Net loss										(297,196)
Balance at Sep. 30, 2015										$ (1,649,575)

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Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (587,637)	$ (1,097,033)	$ (878,277)	$ (2,287,337)	$ (1,175,473)	$ (4,097,730)	$ (1,470,303)	$ (4,954,425)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization	19,078	17,284	38,031	34,569	56,810	54,864	75,574	68,869
Loss on deconsolidation of Whe Gen subsidiary						706,756		706,756
Provision for inventory reserve						80,000	192,000	80,000
Issuance of restricted common stock, options and warrants for services	62,084	54,572	62,953	109,759	63,377	109,579	2,526	110,404
Issuance of restricted common stock in settlement of common stock warrants						49,500		49,500
(Gain) loss from derivative liability-notes payable	17,654	55,158	10,811	179,509	11,406	148,289	(56,702)	163,002
Amortization of derivative debt discount	78,861	297,929	132,531	602,805	157,507	816,308	174,043	935,128
Loss on debt conversion via common stock	50,000		50,000		50,000		(50,000)
Original issue discount paid with stock		10,714		10,714		10,714		10,714
Write-off of former Whe Gen subsidiary and other trademarks								8,602
Write-off of stock subscription receivables							(3,000)
Amortization of prepaid expenses and interest via common stock & warrants	28,459		28,459		28,459		28,459	421,687
Amortization of original issue discount		14,095		37,385		47,652		68,964
Write-off of expired patents							25,894
Write-off of fixed assets								178,636
Interest paid with common stock	11,372		11,371		12,394
Amortization of prepaid expenses via common stock & warrants		177,435		324,854		434,724
Loss on debt converson via common stock-net
Changes in operating assets and liabilities:
Decrease in accounts receivable								150,000
(Increase) decrease in inventory	(45,759)	(99,764)	(46,417)	(15,608)	13,533	(30,521)	(46,465)	12,054
Decrease in other current assets	15,116	12,358	15,240	22,169	15,365	(36,731)	15,576	31,444
Increase in bank overdraft			1,228		3,027
Increase in other assets							(5,387)	(19,999)
Cash overdraft							3,221
Increase in accounts payable and accrued expenses	177,782	126,577	226,286	300,091	315,437	567,266	483,129	545,796
Increase in accounts payable and accrued expenses-related parties	83,750	102,674	186,470	199,232	361,522	183,539	306,275	196,977
Increase in deferred revenue and deposits		255	25,000	255	25,403	6,505	25,404	6,505
Net cash used by operating activities	(89,240)	(327,746)	(136,314)	(481,603)	(61,233)	(949,286)	(193,756)	(792,570)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures incurred for patents, trademarks and copyrights				(10,610)		(19,465)		(21,460)
Expenditures for property and equipment						(34,913)		(35,464)
Deconsolidation of Whe Gen subsidiary, Net assets		110,000		110,000				436,816
Cash transferred in sales of Whe Gen subsidiary						436,816
Net cash provided by investing activities		110,000		99,390		382,438		379,892
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capitalized lease obligations	(1,370)	(1,569)	(5,254)	(3,482)	(6,731)	(4,779)	(7,811)	(6,124)
Proceeds from notes and loans payable	50,000	240,000	50,000	440,000	50,000	515,000	50,000	515,000
Repayment of notes and loans payable		(38,615)		(38,615)		(38,615)		(120,615)
Proceeds from sale of common stock, net of direct offering costs								10,000
Proceeds from Whe Gen debt financing						350,000		350,000
Increase in related party notes and loans payable-net	40,339	7,626	91,290	9,884	17,686	24,199	151,289	84,148
Net cash provided by financing activities	88,969	207,442	136,036	407,787	60,955	845,805	193,478	832,409
Net increase in cash	(271)	(10,304)	(278)	25,574	(278)	288,957	(278)	(17,085)
Cash, beginning of period	278	17,363	278	17,363	278	17,363	278	17,363
Cash, end of period	7	7,059		42,937		306,320		278
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	10,869	25,121	11,372	38,084	13,836	46,055	14,491	38,084
Cash paid for income taxes
NON CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of 92,500,000 shares of Common stock for accrued expenses							66,500
Issuance of 424,853,956 shares of Common stock for debt and interest repayment							130,856
Issuance of 20,313,416 shares of Common stock for repayment of related party payables								668,312
Issuance of 2,050,000 shares of Common stock for accrued expenses								93,000
Issuance of 117,424,952 shares of Common stock for debt repayment								740,872
Issuance of 3,190,859 shares of Common stock for debt interest								25,507
Issuance of 40,000,000 shares of Common stock for liability settlement	14,000		14,000		14,000
Issuance of 5,250,000 shares of Common stock pursuant to prior year common stock price guarantees	52,500		52,500		52,500
Issuance of 328,161,744 shares of Common stock for debt repayment	109,462		109,462
Issuance of 35,959,970 shares of Common stock for debt interest	11,372		11,372
Issuance of 328,707,198 shares of Common stock for debt repayment					118,462
Issuance of 42,146,758 shares of Common stock for debt interest					12,392
Issuance of 20,313,416 shares of Common stock for repayment of related party payables		668,312		668,312		668,312
Issuance of 2,050,000 shares of Common stock for accrued expenses				93,000		93,000
Issuance of 1,750,000 shares of Common stock for accrued expenses		75,000
Issuance of 399,038,505 shares of Common stock for debt repayment						1,048,232
Issuance of 9,989,872 shares of Common stock for debt interest						32,322
Issuance of 117,424,952 shares of Common stock for debt repayment				740,872
Issuance of 3,190,859 shares of Common stock for debt interest				25,507
Issuance of 21,567,656 shares of Common stock for debt repayment		285,317
Issuance of 983,859 shares of Common stock for debt interest		12,616
Value of shares repaid to stockholder		1,496,217		1,496,217		1,496,217	14,000	1,496,217
Forgiveness of deferred officers' salaries			655,225	956,762	655,225	956,762	655,225	956,762
Forgiveness of accrued rent, interest and other expenses due officer's company			710,272		710,272		$ 710,272
Conversion of convertible debt						954,641
Cancellation of treasury stock						$ 210,000

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - shares	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Common stock issued, shares								8,219,298
Liability Settlement [Member]
Common stock issued, shares	40,000,000	40,000,000	40,000,000	40,000,000	40,000,000	40,000,000
Price Guarantees [Member]
Common stock issued, shares	5,250,000	5,250,000	5,250,000	5,250,000	5,250,000	5,250,000
Debt Repayment [Member]
Common stock issued, shares	328,161,744	328,161,744	328,161,744	328,161,744	328,161,744	328,161,744	117,424,952	117,424,952
Debt Interest [Member]
Common stock issued, shares	35,959,970	35,959,970	35,959,970	35,959,970	35,959,970	35,959,970	3,190,859	3,190,859
Debt Repayment One [Member]
Common stock issued, shares	328,707,198	328,707,198	328,707,198	328,707,198	328,707,198	328,707,198
Debt Interest One [Member]
Common stock issued, shares	42,146,758	42,146,758	42,146,758	42,146,758	42,146,758	42,146,758
Repayment of Related Party Payables [Member]
Common stock issued, shares	20,313,416	1,750,000	1,750,000	1,750,000	1,750,000	1,750,000	20,313,416	20,313,416
Accrued Expenses [Member]
Common stock issued, shares	2,050,000	399,038,505	399,038,505	399,038,505	399,038,505	399,038,505	92,500,000	92,500,000
Accrued Expenses One [Member]
Common stock issued, shares	1,750,000	9,989,872	9,989,872	9,989,872	9,989,872	9,989,872	2,050,000	2,050,000
Debt Repayment Two [Member]
Common stock issued, shares	399,038,505	20,313,416	20,313,416	20,313,416	20,313,416	20,313,416
Debt Interest Two [Member]
Common stock issued, shares	9,989,872	2,050,000	2,050,000	2,050,000	2,050,000	2,050,000
Debt Repayment Three [Member]
Common stock issued, shares	117,424,952	117,424,952	117,424,952	117,424,952	117,424,952	117,424,952
Debt Interest Three [Member]
Common stock issued, shares	3,190,859	3,190,859	3,190,859	3,190,859	3,190,859	3,190,859
Debt Repayment Four [Member]
Common stock issued, shares	21,567,656	21,567,656	21,567,656	21,567,656	21,567,656	21,567,656
Debt Interest Four [Member]
Common stock issued, shares	983,859	983,859	983,859	983,859	983,859	983,859
Debt and Interest Repayment [Member]
Common stock issued, shares							424,853,956	424,853,956

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Organizational and Significant Accounting Policies

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organizational and Significant Accounting Policies

NOTE 1 – ORGANIZATIONAL AND SIGNIFICANT ACCOUNTING POLICIES

A. ORGANIZATION AND OPERATIONS

Cyclone Power Technologies, Inc. (the “Company”, “our,” “Cyclone”) is the successor entity to the business of Cyclone Technologies LLLP (the “LLLP”), a limited liability limited partnership formed in Florida in September 2004. The LLLP was the original developer and intellectual property holder of the Cyclone engine technology. The Company is primarily a research and development engineering company whose main purpose is to develop, commercialize, market and license its Cyclone engine technology.

In 2010, the Company established a subsidiary WHE Generation Corp. f/k/a, Cyclone-WHE LLC (the “WHE Subsidiary”, “WheGen”), to market the waste heat recovery systems for all Cyclone engine models. As of September 30, 2014 the Company has sold most of its ownership. The former subsidiary is currently non consolidated since the investment is below the 20% equity (see Note 15) . In 2012, the Company established Cyclone Performance LLC (“Cyclone Performance”) f/k/a Cyclone-TeamSteam USA, LLC. The purpose of Cyclone Performance is to build, test and run various vehicles and vessels utilizing the Company’s engine. As of December 31, 2015 and 2014, the Company had a 95% controlling interest in Cyclone Performance.

B. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the consolidated financial statements. Effective September 30, 2014, Cyclone sold most of its investment in the WHE Subsidiary and as of December 31, 2014 retains approximately a 2 million share non controlling (below 20%) interest in the WHE Subsidiary. This investment was deconsolidated on September 30, 2014 and is currently recorded on the cost basis (see Note 15). The consolidated statements of operations and cash flows for the year ended December 31 2014 include the accounts of the WHE Gen through September 30, 2014.

The Company prepares its consolidated financial statements in conformity with account principles generally accepted in the United States (“U.S. GAAP”). The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

The consolidated financial statements presented for the quarters ended March, June and September 31, 2015 are unaudited.

C. CASH

Cash includes cash on hand and cash in banks. At December 31, 2015 and 2014, the Company maintained cash balances at one financial institution.

D. COMPUTATION OF INCOME (LOSS) PER SHARE

Net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is not presented as the conversion of the preferred stock and exercise of outstanding stock options and warrants would have an anti-dilutive effect. As of December 31, 2015 and 2014, total anti-dilutive shares amounted to approximately 13.5 million and 14.7 million shares, respectively.

E. INCOME TAXES

Income taxes are accounted for under the asset and liability method as stipulated by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2015, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. Interest related to the unrecognized tax benefits is not recognized in the consolidated financial statements as a component of income taxes. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2012 through 2015.

F. REVENUE RECOGNITION

The Company’s revenue recognition policies are in compliance with ASC 605, “Revenue Recognition – Multiple Element Arrangements”, and Staff Accounting Bulletin (“SAB”) 104, Revenue Recognition. Revenue is recognized at the date of shipment of engines and systems, engine prototypes, engine designs or other deliverables to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Revenue from contracts for multiple deliverables and milestone method recognition are evaluated and allocated as appropriate. The Company has determined that the milestone method of revenue recognition (ASC 605-28) was appropriate for two of the Company’s contracts which specifically enumerate approved work effort milestones required for remuneration – the Company’s contract with the U.S. Army / TARDEC and the Amended and Restated Technology Application License Agreement with Phoenix Power Group LLC. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue on the consolidated balance sheets. Final delivery of the U.S. Army contract was completed in the second quarter of 2014 and the Phoenix Power Group contract was transferred to the WHE subsidiary as part of the separation agreement (see Note 15). The Company does not allow its customers to return prototype products. Current contracts do not require the Company to provide any warranty assistance after the “deliverable” has been accepted.

It is the Company’s intention when it has royalty revenue from its contracts to record royalty revenue periodically when earned, as reported in sales statements from customers. The Company does not have any royalty revenue to date.

G. WARRANTY PROVISIONS

Current contracts do not require warranty assistance subsequent to acceptance of the “deliverable R&D prototype” by the customer. For products that the Company will sell in the future, warranty costs are anticipated to be borne by the manufacturing vendor.

H. INVENTORY

Inventory is recorded at the lower of cost or market. Costs include material, labor and allocated overhead to manufacture a completed engine. These costs are periodically evaluated to determine if they have a net realizable value. If the net realizable value is lower than the carrying amount, a reserve is provided.

I. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, “Fair Value Measurements and Disclosures” requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses, and loans payable approximate their fair market value based on the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels. The three levels of the fair value hierarchy are defined as follows:

Level 1	—	Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date.
Level 2	—	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, as of the reporting date.
Level 3	—	Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

The summary of annual fair values and changing values of financial instruments as of January 1, 2014 through December 31 2014 and January 1, 2015 through December 31, 2015 is as follows:

Instrument	Beginning of Period		Change			End of  Period		Level		Valuation Methodology
Derivative liabilities 2014	$	484,479	$	(44,295	)	$	440,184		3	Stochastic Process  Forecasting Model
Derivative liabilities 2015	$	440,184	$	(56,706	)	$	383,482		3	Stochastic Process  Forecasting Model

Please refer to Note 17 for disclosure and assumptions used to calculate the fair value of the derivative liabilities.

J. RESEARCH AND DEVELOPMENT

Research and development activities for product development are expensed as incurred. Costs for the years ended December 31, 2015 and 2014 were $467,610 and $1,018,552, respectively.

K. STOCK BASED COMPENSATION

The Company applies the fair value method of ASC 718, “Share Based Payment”, in accounting for its stock based compensation. This standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price for the Company’s common stock as of the date in which the obligation for payment of services is incurred.

L. COMMON STOCK OPTIONS AND PURCHASE WARRANTS

The Company accounts for common stock options and purchase warrants at fair value in accordance with ASC 815-40, “Derivatives and Hedging”. The Black-Scholes option pricing valuation method (“BSM option pricing model”) is used to determine fair value of these warrants consistent with ASC 718, “Share Based Payment”. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates.

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “Equity Based payments to Non-employees”.

M. ORIGINAL ISSUE DEBT DISCOUNT

The original issue discount (OID) related to notes payable is amortized by the effective interest method over the repayment period of the notes. The unamortized OID is represented as a reduction of the amount of the notes payable.

N. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows:

	Years
Display equipment for trade shows		3
Leasehold improvements and furniture and fixtures		10 - 15
Shop equipment		7
Computers		3

Expenditures for maintenance and repairs are charged to operations as incurred.

O. IMPAIRMENT OF LONG LIVED ASSETS

The Company continually evaluates the carrying value of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. To date, the Company has not recognized any impairment charges.

P. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This provides guidance for companies to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This adoption has no impact on the financial reporting by the Company.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We adopted the provisions of ASU 2015-03 effective January 1, 2016. The adoption of ASU 2015-03 did not have a material impact our consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases. This was provide guidance to increase transparency and comparability among companies by requiring most leases be included on the balance sheet and by expanding disclosure requirements. We are still in the process of evaluating the effect of adoption on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This addresses the accounting for share-based payment transactions and includes the recognition of the income tax effects of awards that vest or settle as income tax expense and clarification of the presentation of certain components of share-based awards in the statement of cash flows. We are still in the process of evaluating the effect of adoption on our consolidated financial statements and the effective date of application is 2018.

ASU No. 2015-17, “Balance Sheet Classification of Deferred Assets”, was issued by the FASB in November 2015, This required management to provide a classification of all deferred taxes as noncurrent assets or noncurrent liabilities. This ASU is effective for annual periods beginning after December 15, 2016. The Company does not anticipate this ASU will have a material impact to the Company’s consolidated financial position, results of operations or cash flows.

Q. CONCENTRATION OF RISK

The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and accounts receivable to be the two assets most likely to subject the Company to concentrations of credit risk. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure.

As of December 31, 2015, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through December 31,2015. The Company purchases raw material and components from multiple sources, none of which may be considered a principal or material supplier. If necessary, the Company could replace these suppliers with minimal effect on its business operations.

R. DERIVATIVE FINANCIAL INSTRUMENTS

Accounting and reporting standards for derivative instruments and for hedging activities were codified by ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”). It requires that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income (loss) depending on the purpose of the derivatives and whether they qualify and have been designated for hedge accounting treatment. The Company has derivative liabilities pursuant to convertible debt and common stock warrants, and has recognized net expenses on the consolidated statements of operations. The Company does not have any derivative instruments for which it has applied hedge accounting treatment.

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Significant Accounting Policies

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

A. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The unaudited consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. We follow the same accounting policies in preparation of interim reports as we do in our annual reports.

Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. We suggest that these financial statements be read in conjunction with the financial statements and notes thereto included in the above annual reports for the years ended December 31, 2015 and December 31, 2014

The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

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Going Concern

9 Months Ended

12 Months Ended

Sep. 30, 2015

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

NOTE 2 - GOING CONCERN

As shown in the accompanying condensed consolidated financial statements, the Company incurred substantial operating and other losses and expenses of approximately $4.1 million for the nine months ended September 30, and the cumulative deficit since inception to September 30, 2015 is approximately $ 58.4 million,. The Company has a working capital deficit at September 30, 2015 of approximately $2 million. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

The ability of the Company to continue as a going concern is dependent on management’s plans which include continuation of its business model to generate revenue from development contracts, licenses and product sales, and continuing to raise funds through debt and advances from strategic partners and deferred payments to related parties.

NOTE 2 - GOING CONCERN

As shown in the accompanying consolidated financial statements, the Company incurred substantial operating and other losses and expenses of approximately $1.5 million for the year ended December 31, 2015, and $5.0 million for the year ended December 31, 2014. The cumulative deficit since inception is approximately $58.7 million, which is comprised of $26.4 million attributable to actual operating losses (which were paid in cash, stock for services and other equity instruments) and net other expenses, and $32.3 million in non-cash derivative liability accounting which was a result of the conversion of the Company’s Series A Convertible Preferred Stock in 2011, the retirement of a common stock purchase warrant in 2012, and the change in fair value of derivatives associated with notes payable for the years ended December 31, 2013, 2014 and 2015. The Company has a working capital deficit at December 31, 2015 of approximately $2.3 million. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on management’s plans which include implementation of its business model to generate revenue from development contracts, licenses and product sales, and continuing to raise funds through debt or equity raises. The Company will also likely continue to rely upon related-party debt or equity financing.

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company is currently raising working capital to fund its operations via debt, advance contract payments (deferred revenue) and advances from and deferred payments to related parties.

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Inventory, Net

12 Months Ended

Dec. 31, 2015

Inventory Disclosure [Abstract]

Inventory, Net

NOTE 3 – INVENTORY, NET

Inventory principally consists of raw material engine parts, work in process engines, labor and overhead, net of realization, valuation and obsolescence reserves. In the aggregate it is stated at the lower of cost or market.

	December 31, 2015		December 31, 2014
Raw materials	$	323,508	$	323,121
Work in process		0		145,922
Total	$	323,508	$	469,043

We provide estimated provisions for the realization, valuation and obsolescence of our inventories, including adjustments to market, based on various factors, including the age of such inventory and our management’s assessment of the need for such provisions. We look at historical inventory aging and usage reports and margin analyses in determining our provision estimate.

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Property and Equipment, Net

12 Months Ended

Dec. 31, 2015

PROPERTY AND EQUIPMENT

Property and Equipment, Net

 NOTE 4 – PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	December 31,  2015			December 31,  2014
Display equipment for trade shows	$	6,270		$	9,648
Leasehold improvements and furniture and fixtures		93,922			93,922
Equipment and computers		204,377			209,276
Total		304,569			312,846
Accumulated depreciation		(178,049	)		(149,680	)
Net property and equipment	$	126,520		$	163,166

Depreciation expense for the years ended December 31, 2015, and 2014 was $36,645, and $29,434 , respectively.

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Patents, Trademarks and Copyrights

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Patents, Trademarks and Copyrights

NOTE 5 – PATENTS, TRADEMARKS AND COPYRIGHTS

Patents, trademarks and copyrights consist of legal fees paid to file and perfect these claims. The net balances as of December 31, 2015, and 2014 were $283,368 and, $348,191, respectively. For the years ended December 31, 2015, and 2014 the Company capitalized $0, and $34,464, respectively, of expenditures related to these assets. In 2015, the Company recorded a net charge of $ 25,894 included in general and administrative expenses, for 6 expired international patents; the basic patents for the Cyclone technology is still protected. In 2014 the Company wrote off various trademarks for a net charge of $5,091.

As of December 31, 2015, the Company had 15 patents issued on its technology both in the U.S. and internationally. Pursuant to new US Patent Office regulations, upon approval, expired patents can be reestablished from inception.

Patents, trademarks and copyrights are amortized over the life of the intellectual property which is 15 years. Amortization expenses for the years ended December 31, 2015, and 2014 were $38,929 and $39,435 respectively.

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Notes and Other Loans Payable

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Notes and Other Loans Payable

NOTE 6 – NOTES AND OTHER LOANS PAYABLE

A. NON-RELATED PARTIES

A summary of non-related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
12% convertible notes payable, net of discounts of $8,536 and $8,390 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from November 2013 through September 2016 (A)	$	34,558	$	70,378
10% convertible note payable, net of discount of $0 and December 31, 2015 and December 31, 2014, respectively, monthly payments commencing in December 2013 through July 2014 (B)		19,963		19,963
10% convertible notes payable, net of discount of $40,614 and $43,207 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from May 2015 through February 2016 (C)		72,793		59,386
,
10% convertible notes payable, net of discount of $20,343 and $80 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from December 2015 through January 2016 (D)		29,223		40,657
10% convertible note payable, net of discount of $0 and $89,995 at December 31, 2015 and December 31, 2014 respectively, maturing at various dates from February 2015 through August 2015 ( E )		116,200		52,005
12% convertible notes payable, net of discount of $0 and $25,232 at December 31, 2015 and December 31, 2014 , respectively, maturing at various dates from April 2015 through May 2015 ( F )		85,000		59,768
10% note payable, $0 discount, maturing Feb. 3 2017		50,000		-
Total non related party notes –net of discounts		407,737		302,157
Less-Current Portion		357,737		-
Total non-current non related party notes –net of discount (accrued interest is included in accrued expenses)	$	50,000	$	302,157

(A)	Unamortized discount from derivative liabilities at December 31, 2015 is $46,762. The notes are in default.
(B)	Unamortized discount from derivative liabilities at December 31, 2015 is $31,001. This note is in default Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received judgment and Company is negotiating a reduced settlement.
(C)	Unamortized discount from derivative liabilities at December 31, 2015 is $85,871. The notes are in default.
(D)	Unamortized discount from derivative liabilities at December 31, 2015 is $54,838. This note is in default.
(E)	Unamortized discount from derivative liabilities at December 31, 2015 is $144,124. The notes are in default.
(F)	Unamortized discount from derivative liabilities at December 31, 2015 is $78,244. The notes are in default August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received judgment and Company is seeking to arrange a settlement.

B. RELATED PARTIES

A summary of related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A)	$	117,734	$	498,454
6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101.		103,328		67,221
12% non-collateralized loans from officer and shareholder, payable on demand		20,178		15,516
Accrued Interest		80,094		299,126
Total current related party notes, inclusive of accrued interest	$	321,334	$	880,317

(A) This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. The note was secured by a UCC-1 filing on the Company’s patents and patent applications, which expired and has not been renewed. For the years December 31, 2015 and 2014, $0 and $8,100 of principal was paid on the note balance, respectively.

In June 2015, Schoell Marine forgave $710,272 of principle and accrued interest on the note.

During the last quarter of 2014, the Company’s Chairman and co-founder loaned 10 million shares of Company common stock, valued at approximately $14,000, which were reissued pursuant to various debt covenants. These shares have been presented as value of shares loaned by stockholder in the accompanying consolidated balance sheets. These shares were returned to the Chairman in March 2015.

During 2013, the Company’s Chairman and co-founder loaned approximately 37.4 million shares of Company common stock, valued at approximately $1.5 million, as reserve treasury shares pursuant to various debt covenants. These shares have been presented as the value of shares loaned by stockholder in the accompanying consolidated balance sheets. These shares were returned to the Chairman in March 2014.

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Related Party Transactions

9 Months Ended

12 Months Ended

Sep. 30, 2015

Dec. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 2 – RELATED PARTY TRANSACTIONS

In June 2015, Company’s officers forgave $655,225 in accrued salaries and the Chairman of the Board forgave an additional $710,272 in accrued rent, interest and other expenses. These expenses are recorded as salary, rent, interest, etc. and the forgiveness is record as additional paid in capital. In addition, cumulatively, for the nine months ended September 30, 2015, related party debt, accounts payable, and accruals increased $379,208.

NOTE 7 – RELATED PARTY TRANSACTIONS

A. LEASE ON FACILITIES

The Company leases a 6,000 square foot warehouse and office facility located at 601 NE 26th Court in Pompano Beach, Florida. The lease, which is part of the Company’s Operations Agreement with Schoell Marine, provides for the Company to pay an annual rent of $60,000. Schoell Marine sold the building in December of 2015 and the lease was transferred to the new owner. The lease period ends December 2016 with a 1 year renewal at the company’s option, and a 2% rate increase. Occupancy costs for the years ended December 31, 2015, and 2014 were $ 60,000 and $62,964, respectively.  

B. DEFERRED COMPENSATION

Included in accounts payable and accrued expenses - related parties as of December 31, 2015, and December 31, 2014 are $137,500, and $475,000, respectively, of accrued and deferred officers’ salaries compensation which may be paid as funds are available. These are non-interest bearing and due on demand.

In June 2015, the principle officers of the Company forgave $612,500 of deferred compensation.

In January 2014, four of the Company’s executive management converted $668,312 in deferred salary into 20,313,416 shares of restricted common stock, and forgave $956,762 in deferred salary as contributed capital. This forgiveness of deferred salary was recorded as additional paid in capital in the accompanying consolidated balance sheet at December 31, 2014.

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Preferred Stock

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Preferred Stock

NOTE 8 – PREFERRED STOCK

The Series B Preferred Stock is majority voting stock and is held by the two co-founders of the Company. Ownership of the Series B Preferred Stock shares assures the holders thereof a 51% voting control over the common stock of the Company. The 1,000 Series B Preferred Stock shares are convertible on a one-for-one basis with the common stock in the instance the Company is merged, sold or otherwise dissolved.

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Stock Transactions

12 Months Ended

Dec. 31, 2015

Equity [Abstract]

Stock Transactions

NOTE 9 – STOCK TRANSACTIONS

During the year ended December 31, 2015, the Company:

a-	Issued 92,500,000 shares of restricted common stock valued at $116,500 for payment of $66,500 of liabilities and incurred a $50,000 loss on this debt payment.
b-	Amortized (based on vesting) $2,526 of common stock options for employee services.
c-	Issued 424,853,956 shares of common stock valued at $130,855 as repayment of debt and related interest expense.
d-	Repaid a loan of 10,000,000 shares of stock from the Company’s Chairman and co-founder. which had been reissued pursuant to various debt covenants that had to be covered with stock.

During the year ended December 31, 2014, the Company:

a-	Issued 4,722,365 shares of common stock in a cashless exercise of warrants.
b-	Amortized (based on vesting) $10,400 of common stock options for employee services.
c-	Issued 496,323,413 shares of common stock valued at $1,142,647 as repayment of debt and related interest expense. .
d-	Issued 20,313,416 shares of restricted common stock, valued at $668,312 in conversion accrued officers salaries. Additionally, $956,762 of accrued officers salaries were forgiven.
e-	Sold 8,219,298 shares of common stock for $111,829
g-	Issued 6,250,000 shares of restricted common stock, valued at $116,175 for services

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Stock Options and Warrants

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options and Warrants

NOTE 10 – STOCK OPTIONS AND WARRANTS

A. COMMON STOCK OPTIONS

Per the employment contracts with certain officers, the company issued 1,800,000 common stock options, valued at $405 (pursuant to the Black Scholes valuation model) ) that are exercisable into shares of common stock at an average exercise price of $.0009 and with a maturity life of 10 years. For the years ended December 31, 2015, and December 31, 2014 the amortization of stock options was $ 2,526 and $10,400, respectively. The unamortized balance at December 31 2015 was $1,232.

A summary of the common stock options for the period from December 31, 2013 through December 31, 2015 follows:

	Number Outstanding			Weighted Avg. Exercise Price			Weighted Avg. Remaining Contractual Life (Years)
Balance, December 31, 2013		9,740,000		$	0.129			5.5
Options issued		1,350,000			.002			9.8
Options exercised		-			-			-
Options cancelled		-			-			-
Cancelled-old		-
Balance, December 31, 2014		11,090,000		$	0.123			6.0
Options issued		1,800,000			0.0009			9.6
Options exercised		-			-
Options cancelled		(510,000	)		(.12	)		-
Cancelled-old		-
Balance, December 31, 2015		12,380,000		$	0.11			5.8

The vested and exercisable options at period end follows:

	Exercisable/ Vested Options Outstanding		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (Years)
Balance December 31, 2015		10,580,000	$	.128		5.1
Additional vesting by March 31, 2016		450,000		.0003		9.0

The fair value of new stock options, re-priced stock options, new purchase warrants and re-priced purchase warrants granted using the Black-Scholes option pricing model was calculated using the following assumptions:

	Year Ended December 31, 2015			Year Ended December 31, 2014
Risk free interest rate		.89 % -1.31	%		.67 % -1.32	%
Expected volatility		102% - 131	%		63% - 89	%
Expected term		3			2-4
Expected dividend yield		0	%		0	%
Average value per options and warrants		$ .0003 -$.0016			$ .001 - $ .017

expected volatility is based on historical volatility of the Company’s common stock price. Short Term U.S. Treasury rates were utilized at the risk free interest rate. The expected term of the options and warrants was calculated using the alternative simplified method newly codified as ASC 718 “Accounting for Stock Based Compensation,” which defined the expected life as the average of the contractual term of the options and warrants and the weighted average vesting period for all issuances.

B. COMMON STOCK WARRANTS

During the year ended December 31, 2015, 2,508,692 warrants with an average exercise price of $.148 expired.

A summary of outstanding vested warrant activity for the period from December 31, 2013 to December 31, 2015 follows:

	Number Outstanding			Weighted Average  Exercise Price			Weighted  Average  Remaining  Contractual  Life (Years)
Common Stock Warrants
Balance, December 31, 2013		16,097,798		$	0.057			2.85
Warrants exercised-cashless		(9,037,230	)		(0.017	)
Warrants issued		2,838,048			0.111			3.92
Warrants expired		(2,861,251	)		(.166	)
Warrants cancelled		(3,403,673	)		(.011	)
Warrants re-priced:
Cancelled – old		(1,190,625	)		(0.020	)
Re-Priced		1,190,625			0.011
Balance, December 31, 2014		3,633,692		$	0.074			0.89
Warrants exercised-cashless
Warrants issued
Warrants expired		(2,508,692	)		(.148	)
Warrants cancelled
Warrants re-priced:
Cancelled – old
Re-Priced
Balance, December 31, 2015		1,125,000		$	0042			2.05

All warrants were vested and exercisable as of the date issued.

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Income Taxes

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 11 – INCOME TAXES

A reconciliation of the differences between the effective income tax rates and the statutory federal tax rates for the years ended December 31, 2015 and 2014 are as follows:

	Year ended December 31, 2015					Year ended December 31, 2014
Tax benefit at U.S. statutory rate	$	235,276		34	%	$	1,361,148		34	%
State taxes, net of federal benefit		27,679		4			160,135		4
Change in valuation allowance		(262,955	)	(38	)		(1,521,283	)	(38	)
		-		-			-

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2015 and December 31, 2014 consisted of the following:

Deferred Tax Assets	December 31, 2015			December 31, 2014
Net Operating Loss Carry-forward	$	9,924,492		$	9,410,367
Deferred Tax Liabilities		(795,805	)		(382,260	)
Net Deferred Tax Assets		9,128,687			9,028,107
Valuation Allowance		(9,128,687	)		(9,028,107	)
Total Net Deferred Tax Assets	$	-		$	-

As of December 31, 2015, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $21.4 million that may be offset against future taxable income through 2035. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax asset has been reported in the financial statements because the Company believes there is a 50% or greater chance the carry forwards will expire unused. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.

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Lease Obligations

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Lease Obligations

NOTE 12 –LEASE OBLIGATIONS

A. CAPITALIZED LEASE OBLIGATIONS

At December 31, 2014, the Company acquired $37,158 of equipment via capitalized leases at interest rates ranging from 6.9% to 10.0%. In December 2013, the Company acquired $8,408 of equipment via capitalized lease obligations at an interest rate of 15.5%. Total lease payments made for the year ended December 31, 2015 were $7,811. The balance of capitalized lease obligations payable at December 31, 2015, and December 31, 2014 were $49,889 ,and $57,700, respectively. Future lease payments are:

2016	$	12,950
2017		14,382
2018		11,984
2019		8,551
2020		2,022
	$	49,889

B. LEASE ON ADDITIONAL FACILITIES

In August, 2015, the Company terminated the lease for 2,000 square feet of additional space. The related lease expense for the years ended December 31, 2015 ,and 2014 was $10,424, and $18,129, respectively.

Commencing January 2014, the WHE Generation Corp. accrued $1,000 in monthly rent (inclusive of utilities, taxes and shared office assistance) to Precision CNC as part of the joint facility / manufacturing arrangement, and effective July 2014 rent increased to $2,500 per month. The rent expense for the nine months ended September 30. 2014 (up until deconsolidation) recorded by WHE-Gen was $ 13,957.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 13 – COMMITMENTS AND CONTINGENCIES

The Company has employment agreements with Harry Schoell, Chairman and CTO (previously, CEO), at $150,000 per year and Frankie Fruge, President, at $120,000 per year; (collectively, the “Executives”). These agreements provide for a term of three (3) years from their Effective Date (July 2007 with automatically renewing successive one year periods starting on the end of the second anniversary of the Effective Date. If the Executive is terminated “without cause” or pursuant to a “change in control” of the Company, as both defined in the respective agreements, the Executive shall be entitled to (i) any unpaid Base Salary accrued through the effective date of termination, (ii) the Executive’s Base Salary at the rate prevailing at such termination through 12 months from the date of termination or the end of his Term then in effect, whichever is longer, and (iii) any performance bonus that would otherwise be payable to the Executive were he/she not terminated, during the 12 months following his or her termination.

Christopher Nelson, former President and General Counsel, resigned his positions effective July 17, 2014 as President and General Counsel of the Company and elected to forgo any salary and benefits subsequent to May 31 2014 from Cyclone Power Technologies Inc. Effective July 31, 2014, Mr. Nelson signed an employment agreement with WHE-Generation Corp. as the Chief Executive Officer. For the period through December 31, 2014, $70,165 was recorded as officer compensation by WHE-Generation Corp.

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Consolidated Subsidiary

12 Months Ended

Dec. 31, 2015

Equity Method Investments and Joint Ventures [Abstract]

Consolidated Subsidiary

NOTE 14 –CONSOLIDATED SUBSIDIARY

In 2012, the Company established a 100% owned subsidiary (renamed) Cyclone Performance LLC. The purpose of Cyclone Performance is to build, test and run a vehicle utilizing the Company’s engine. In the last quarter of 2012, the Company sold a 5% equity investment to an unrelated investor for $30,000. Subsequent to December 31, 2012, this 5% equity investment was acquired by a corporate officer of the Company. Losses of the subsidiary are currently fully borne by the Company, as there is no guarantee of future profits or positive cash flow of the subsidiary. As of December 31, 2015, the cumulative unallocated losses to the non-controlling interests of this subsidiary of $953 are to be recovered by the parent from future subsidiary profits if they materialize.

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Deconsolidation of Whe Subsidiary

12 Months Ended

Dec. 31, 2015

Deconsolidation Of Whe Subsidiary

Deconsolidation of Whe Subsidiary

NOTE 15 – DECONSOLIDATION OF WHE SUBSIDIARY

The Company sold most of its 73.72% investment in the WHE subsidiary to a company formed by Cyclone’s former President and a Board of Director member and effective September 30, 2014 under separation and stock repurchase agreements dated July 17, 2014 and September 30, 2014, respectively. Under the agreements, as of December 31, 2014, the Company retained approximately a 2.1 million share non-controlling investment (below 20%) The WHE subsidiary has been deconsolidated due to the loss of control. The difference between the fair value of the retained investment in the subsidiary and its carrying amount at the date of the transaction was of $2,443,506, is recorded in Additional Paid in Capital and its remaining investment in the WHE subsidiary was recorded at the fair value of the WHE common stock held by the Company, which was $556,756 as of September 30, 2014. The Company provided an allowance for the full $556,756 due to the uncertainty of investment being realized. This is included in Other income/( expense) on the December 31, 2014 Income Statement.

As part of the separation agreement Whe Gen paid to the company $350,000, and is to pay $150,000 for the remainder of the company’s investment sold. Due to the continued cumulative losses of Whe Gen, the Company provided an allowance for uncollectable accounts for the full $150,000 amount due. This provision is included in Other income/( expense) on the December 31, 2014 Income Statement.

Whe Gen also paid to TCA Global Master Credit Fund LP, the Company’s senior secured creditor, approximately $78,000 to fully retire that debenture and release all of the Company’s assets from its security interest. Whe Gen also paid to the Company an additional $24,000 in reimbursements, and transferred back to Cyclone 3,000,000 shares of treasury stock in Cyclone (valued at $210,000). Whe Gen also assumed a $50,000 liability, deferred revenue of approximately $10,000 and accepted the responsibility to complete an engine delivery contract (previously recorded as $290,000 deferred revenue by the Company) . The Company forgave an intercompany receivable of approximately $85,000. Additionally, the Company satisfied a liability of $17,550 via transferring 65,000 shares of its WheGen shares.

To raise funds pursuant to the separation agreement, Whe Generation Corp. in the “Seed” Round of financing commencing in July 2014, issued $ 350,000 of 6% convertible debt, maturing in 12 months, which were subsequently converted into common stock at $.12 per share as of September 30, 2014. In the common stock “A” funding WHE Generation Corp. raised $1,314,360 of common stock sales at $.27 per share as of September 30, 2014.

In connection with the Agreement, the Company and WheGen also amended its 2010 License Agreement (the “License”) to provide the Company with an initial non refundable license fee of $175,000 and on-going 5% royalties from Whe Gens sale of engines utilizing the licensed technology. This License is 20 years with two 10-year extensions. It is worldwide in territory and exclusive for the specific applications of stationary waste heat recovery (WHR) and waste-to-power (WtP).

The total losses of the WheGen subsidiary for the nine months ended September 30, 2014, for the year ended December 31, 2013 and cumulatively since inception were $696,831 and $157,266, and $ 854,097 respectively. These losses were fully borne by the Company and are included in net loss in the consolidated statements of operations.

In 2015, Whe Gen gave the company 625,000 of Whe Gen common stock in settlement of the $150,000 receivable noted above. In the second quarter of 2016, the company sold its total investment of approximately 2.7 million Whe Gen shares and at which time the Company recorded a gain of $44,000, the amount paid for the shares by a third party.

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Receivables, Deferred Revenue and Backlog

12 Months Ended

Dec. 31, 2015

Deferred Revenue Disclosure [Abstract]

Receivables, Deferred Revenue and Backlog

NOTE 16 – RECEIVABLES, DEFERRED REVENUE AND BACKLOG

As of December 31, 2015, total backlog for prototype engines to be delivered was $400,000 from the Combilift agreement, of which $100,000 has been paid and has been recorded as deferred revenue. In 2015 another customer advanced $25,000 as a deposit towards progress payments on a $80,000 contract for engines currently estimated to be delivered in 2017.

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Derivative Financial Instruments

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

NOTE 17 – DERIVATIVE FINANCIAL INSTRUMENTS

Pursuant to additional financing, in the years ended December 31, 2015 and 2014 the Company entered into convertible note agreements (subject to derivative accounting treatment) in the aggregate amounts of $0, and $855,800, respectively The conversion prices into common stock ranged from a discount of 30% to 45% of the lowest closing prices in the 10 to 20 trading days prior to the conversion. Under provisions of ASC Topic 815-40, this conversion feature triggered derivative accounting treatment because the convertible note was convertible into an indeterminable number of shares of common stock. The fair value of the embedded conversion option was required to be presented as a derivative liability and adjusted to fair value at each reporting date, with changes in fair value reported in the consolidated statements of operation.

The Company recorded derivative liabilities of $0 and $810,527 with a discount offset against the underlying loan, during the years ended December 31, 2015 and 2014, respectively.

In the year ended December 31, 2015, the Company recorded a $174,043 non-cash charge to interest expense (reflective of debt discount amortization), an increase of $0 in additional paid in capital pursuant to conversion of convertible notes to common stock, and a $56,702 of derivative gain related to adjusting the derivative liability to fair value. At December 31, 2015, the derivative related fair value of debt was $383,482.

In the year ended December 31, 2014, the Company recorded a $935,128 non-cash charge to interest expense (reflective of debt discount amortization), an increase of $1,0013,062 in additional paid in capital pursuant to conversion of convertible notes to common stock, and $147,680 of derivative loss related to adjusting the derivative liability to fair value. At December 31, 2014, the derivative related fair value of debt was $440,184.

The Company calculates the estimated fair values of the liabilities for derivative instruments at each quarter-end using the BSM option pricing model and Stochastic Process Forecasting models (Monte Carlo simulations). Volatility, expected term and risk free interest rates used to estimate the fair value of derivative liabilities are indicated in the table below. The volatility was based on historical volatility, the expected term is equal to the remaining term of the debt and the risk free rate is based upon rates for treasury securities with the same term.

	Year Ended December 31, 2015		Year Ended December 31, 2014
Volatility		103%- 343%		96% - 276%
Risk Free Rate		.01% - .28%		.02% - 1.07%
Expected Term (years)		0 – 1.05		0 –4.2
Dividend Rate		0%		0%

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Litigation

12 Months Ended

Dec. 31, 2015

Litigation

Litigation

NOTE 18 – LITIGATION

Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received a judgment and the Company is negotiating a reduced settlement. As at December 31 2015, outstanding interest, default interest and default judgment penalties are included in accrued liabilities.

In August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received a judgment and the Company is seeking to arrange a settlement. As at December 31, 2015, outstanding interest, default interest and default judgment penalties are included in accrued liabilities.

In 2014 Penton Learning Center filed a small claim for cancellation of exhibitor space against Cyclone. Penton and Cyclone reached a $4,500 settlement in 2015 and it was paid in full in 2015.

In 2015 Silest filed a small claim for rent due on storage facility against Cyclone (included in accounts payable). Silest and Cyclone reached a settlement and paid in full in 2016.

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Subsequent Events

12 Months Ended

Dec. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

NOTE 19 – SUBSEQUENT EVENTS

In the second and third quarters of 2016, the Company engaged in the following transactions:

a-	The Company issued 3 million shares of common stock value at $5,700 for services.
b-	The company issued approximately 45.7 million shares of common stock valued at approximately $82,000 pursuant to the final settlement of a liability.
c-	The Company has placed purchase orders for the pre production manufacturing of 5 Mark 3 engines to test application and integration with customers’ systems.
d-	In recognition of the declining market value and low market volume, the company sold all of its investment in Q 2 Power Technologies for $44,000.
e-	The Company issued 80,000 million shares of common stock valued at $216,000 pursuant to the conversion of a liability.

Effective September 1, 2016, the company raised the authorized common stock to 4,000,000,000 shares pursuant to debt conversion requirements. This authorized share increase was retroactively reflected on the December 31, 2015 and 2014 Balance Sheets.

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Organizational and Significant Accounting Policies (Policies)

9 Months Ended

12 Months Ended

Sep. 30, 2015

Dec. 31, 2015

Accounting Policies [Abstract]

Organization and Operations

A. ORGANIZATION AND OPERATIONS

Cyclone Power Technologies, Inc. (the “Company”, “our,” “Cyclone”) is the successor entity to the business of Cyclone Technologies LLLP (the “LLLP”), a limited liability limited partnership formed in Florida in September 2004. The LLLP was the original developer and intellectual property holder of the Cyclone engine technology. The Company is primarily a research and development engineering company whose main purpose is to develop, commercialize, market and license its Cyclone engine technology.

In 2010, the Company established a subsidiary WHE Generation Corp. f/k/a, Cyclone-WHE LLC (the “WHE Subsidiary”, “WheGen”), to market the waste heat recovery systems for all Cyclone engine models. As of September 30, 2014 the Company has sold most of its ownership. The former subsidiary is currently non consolidated since the investment is below the 20% equity (see Note 15) . In 2012, the Company established Cyclone Performance LLC (“Cyclone Performance”) f/k/a Cyclone-TeamSteam USA, LLC. The purpose of Cyclone Performance is to build, test and run various vehicles and vessels utilizing the Company’s engine. As of December 31, 2015 and 2014, the Company had a 95% controlling interest in Cyclone Performance.

Principles of Consolidation and Basis of Presentation

A. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The unaudited consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) applicable to interim financial information and the requirements of Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. We follow the same accounting policies in preparation of interim reports as we do in our annual reports.

Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. We suggest that these financial statements be read in conjunction with the financial statements and notes thereto included in the above annual reports for the years ended December 31, 2015 and December 31, 2014

The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

B. PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company and its 95% owned subsidiary Cyclone Performance. All material inter-company transactions and balances have been eliminated in the consolidated financial statements. Effective September 30, 2014, Cyclone sold most of its investment in the WHE Subsidiary and as of December 31, 2014 retains approximately a 2 million share non controlling (below 20%) interest in the WHE Subsidiary. This investment was deconsolidated on September 30, 2014 and is currently recorded on the cost basis (see Note 15). The consolidated statements of operations and cash flows for the year ended December 31 2014 include the accounts of the WHE Gen through September 30, 2014.

The Company prepares its consolidated financial statements in conformity with account principles generally accepted in the United States (“U.S. GAAP”). The accounting principles utilized by the Company require the Company to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, the reported amounts of revenues and expenses, cash flows and the related footnote disclosures during the periods. On an on-going basis, the Company reviews and evaluates its estimates and assumptions, including, but not limited to, those that relate to the realizable value of inventory, identifiable intangible assets and other long-lived assets, contracts, income taxes, derivative liabilities, and contingencies. Actual results could differ from these estimates.

The consolidated financial statements presented for the quarters ended March, June and September 31, 2015 are unaudited.

Cash

C. CASH

Cash includes cash on hand and cash in banks. At December 31, 2015 and 2014, the Company maintained cash balances at one financial institution.

Computation of Income (Loss) Per Share

D. COMPUTATION OF INCOME (LOSS) PER SHARE

Net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is not presented as the conversion of the preferred stock and exercise of outstanding stock options and warrants would have an anti-dilutive effect. As of December 31, 2015 and 2014, total anti-dilutive shares amounted to approximately 13.5 million and 14.7 million shares, respectively.

Income Taxes

E. INCOME TAXES

Income taxes are accounted for under the asset and liability method as stipulated by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities or a change in tax rate is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced to estimated amounts to be realized by the use of a valuation allowance. A valuation allowance is applied when in management’s view it is more likely than not (50%) that such deferred tax will not be utilized.

In the unlikely event that an uncertain tax position exists in which the Company could incur income taxes, the Company would evaluate whether there is a probability that the uncertain tax position taken would be sustained upon examination by the taxing authorities. Reserves for uncertain tax positions would be recorded if the Company determined it is probable that a position would not be sustained upon examination or if payment would have to be made to a taxing authority and the amount is reasonably estimated. As of December 31, 2015, the Company does not believe it has any uncertain tax positions that would result in the Company having a liability to the taxing authorities. Interest related to the unrecognized tax benefits is not recognized in the consolidated financial statements as a component of income taxes. The Company’s tax returns are subject to examination by the federal and state tax authorities for the years ended 2012 through 2015.

Revenue Recognition

F. REVENUE RECOGNITION

The Company’s revenue recognition policies are in compliance with ASC 605, “Revenue Recognition – Multiple Element Arrangements”, and Staff Accounting Bulletin (“SAB”) 104, Revenue Recognition. Revenue is recognized at the date of shipment of engines and systems, engine prototypes, engine designs or other deliverables to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Revenue from contracts for multiple deliverables and milestone method recognition are evaluated and allocated as appropriate. The Company has determined that the milestone method of revenue recognition (ASC 605-28) was appropriate for two of the Company’s contracts which specifically enumerate approved work effort milestones required for remuneration – the Company’s contract with the U.S. Army / TARDEC and the Amended and Restated Technology Application License Agreement with Phoenix Power Group LLC. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as deferred revenue on the consolidated balance sheets. Final delivery of the U.S. Army contract was completed in the second quarter of 2014 and the Phoenix Power Group contract was transferred to the WHE subsidiary as part of the separation agreement (see Note 15). The Company does not allow its customers to return prototype products. Current contracts do not require the Company to provide any warranty assistance after the “deliverable” has been accepted.

It is the Company’s intention when it has royalty revenue from its contracts to record royalty revenue periodically when earned, as reported in sales statements from customers. The Company does not have any royalty revenue to date.

Warranty Provisions

G. WARRANTY PROVISIONS

Current contracts do not require warranty assistance subsequent to acceptance of the “deliverable R&D prototype” by the customer. For products that the Company will sell in the future, warranty costs are anticipated to be borne by the manufacturing vendor.

Inventory

H. INVENTORY

Inventory is recorded at the lower of cost or market. Costs include material, labor and allocated overhead to manufacture a completed engine. These costs are periodically evaluated to determine if they have a net realizable value. If the net realizable value is lower than the carrying amount, a reserve is provided.

Fair Value of Financial Instruments

I. FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820, “Fair Value Measurements and Disclosures” requires disclosures of information about the fair value of certain financial instruments for which it is practicable to estimate the value. The carrying amounts reported in the balance sheet for cash, accounts payable and accrued expenses, and loans payable approximate their fair market value based on the short-term maturity of these instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions based on the best information available in the circumstances. The fair value hierarchy prioritizes the inputs used to measure fair value into three broad levels. The three levels of the fair value hierarchy are defined as follows:

Level 1	—	Inputs are quoted prices in active markets for identical assets or liabilities as of the reporting date.
Level 2	—	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, as of the reporting date.
Level 3	—	Unobservable inputs for the asset or liability that reflect management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability as of the reporting date.

The summary of annual fair values and changing values of financial instruments as of January 1, 2014 through December 31 2014 and January 1, 2015 through December 31, 2015 is as follows:

Instrument	Beginning of Period		Change			End of  Period		Level		Valuation Methodology
Derivative liabilities 2014	$	484,479	$	(44,295	)	$	440,184		3	Stochastic Process  Forecasting Model
Derivative liabilities 2015	$	440,184	$	(56,706	)	$	383,482		3	Stochastic Process  Forecasting Model

Please refer to Note 17 for disclosure and assumptions used to calculate the fair value of the derivative liabilities.

Research and Development

J. RESEARCH AND DEVELOPMENT

Research and development activities for product development are expensed as incurred. Costs for the years ended December 31, 2015 and 2014 were $467,610 and $1,018,552, respectively.

Stock Based Compensation

K. STOCK BASED COMPENSATION

The Company applies the fair value method of ASC 718, “Share Based Payment”, in accounting for its stock based compensation. This standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock based compensation at the market price for the Company’s common stock as of the date in which the obligation for payment of services is incurred.

Common Stock Options and Purchase Warrants

L. COMMON STOCK OPTIONS AND PURCHASE WARRANTS

The Company accounts for common stock options and purchase warrants at fair value in accordance with ASC 815-40, “Derivatives and Hedging”. The Black-Scholes option pricing valuation method (“BSM option pricing model”) is used to determine fair value of these warrants consistent with ASC 718, “Share Based Payment”. Use of this method requires that the Company make assumptions regarding stock volatility, dividend yields, expected term of the warrants and risk-free interest rates.

The Company accounts for transactions in which services are received from non-employees in exchange for equity instruments based on the fair value of the equity instruments exchanged, in accordance with ASC 505-50, “Equity Based payments to Non-employees”.

Original Issue Debt Discount

M. ORIGINAL ISSUE DEBT DISCOUNT

The original issue discount (OID) related to notes payable is amortized by the effective interest method over the repayment period of the notes. The unamortized OID is represented as a reduction of the amount of the notes payable.

Property and Equipment

N. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows:

	Years
Display equipment for trade shows		3
Leasehold improvements and furniture and fixtures		10 - 15
Shop equipment		7
Computers		3

Expenditures for maintenance and repairs are charged to operations as incurred.

Impairment of Long Lived Assets

O. IMPAIRMENT OF LONG LIVED ASSETS

The Company continually evaluates the carrying value of intangible assets and other long lived assets to determine whether there are any impairment losses. If indicators of impairment are present and future cash flows are not expected to be sufficient to recover the assets’ carrying amount, an impairment loss would be charged to expense in the period identified. To date, the Company has not recognized any impairment charges.

Recent Accounting Pronouncements

P. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. This provides guidance for companies to evaluate the accounting for fees paid by a customer in a cloud computing arrangement. This adoption has no impact on the financial reporting by the Company.

In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”, or ASU 2015-03. ASU 2015-03 amends current presentation guidance by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. We adopted the provisions of ASU 2015-03 effective January 1, 2016. The adoption of ASU 2015-03 did not have a material impact our consolidated financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases. This was provide guidance to increase transparency and comparability among companies by requiring most leases be included on the balance sheet and by expanding disclosure requirements. We are still in the process of evaluating the effect of adoption on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This addresses the accounting for share-based payment transactions and includes the recognition of the income tax effects of awards that vest or settle as income tax expense and clarification of the presentation of certain components of share-based awards in the statement of cash flows. We are still in the process of evaluating the effect of adoption on our consolidated financial statements and the effective date of application is 2018.

ASU No. 2015-17, “Balance Sheet Classification of Deferred Assets”, was issued by the FASB in November 2015, This required management to provide a classification of all deferred taxes as noncurrent assets or noncurrent liabilities. This ASU is effective for annual periods beginning after December 15, 2016. The Company does not anticipate this ASU will have a material impact to the Company’s consolidated financial position, results of operations or cash flows.

Concentration of Risk

Q. CONCENTRATION OF RISK

The Company does not have any off-balance sheet concentrations of credit risk. The Company expects cash and accounts receivable to be the two assets most likely to subject the Company to concentrations of credit risk. The Company’s policy is to maintain its cash with high credit quality financial institutions to limit its risk of loss exposure.

As of December 31, 2015, the Company maintained its cash in one quality financial institution. The Company has not experienced any losses in its bank accounts through December 31,2015. The Company purchases raw material and components from multiple sources, none of which may be considered a principal or material supplier. If necessary, the Company could replace these suppliers with minimal effect on its business operations.

Derivative Financial Instruments

R. DERIVATIVE FINANCIAL INSTRUMENTS

Accounting and reporting standards for derivative instruments and for hedging activities were codified by ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”). It requires that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income (loss) depending on the purpose of the derivatives and whether they qualify and have been designated for hedge accounting treatment. The Company has derivative liabilities pursuant to convertible debt and common stock warrants, and has recognized net expenses on the consolidated statements of operations. The Company does not have any derivative instruments for which it has applied hedge accounting treatment.

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Organizational and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Fair Value of Financial Instrument

The summary of annual fair values and changing values of financial instruments as of January 1, 2014 through December 31 2014 and January 1, 2015 through December 31, 2015 is as follows:

Instrument	Beginning of Period		Change			End of  Period		Level		Valuation Methodology
Derivative liabilities 2014	$	484,479	$	(44,295	)	$	440,184		3	Stochastic Process  Forecasting Model
Derivative liabilities 2015	$	440,184	$	(56,706	)	$	383,482		3	Stochastic Process  Forecasting Model

Schedule of Estimated Useful Lives of Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed on the straight-line method, based on the estimated useful lives of the assets as follows:

	Years
Display equipment for trade shows		3
Leasehold improvements and furniture and fixtures		10 - 15
Shop equipment		7
Computers		3

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Inventory, Net (Tables)

12 Months Ended

Dec. 31, 2015

Inventory Disclosure [Abstract]

Schedule of Inventory, Net

In the aggregate it is stated at the lower of cost or market.

	December 31, 2015		December 31, 2014
Raw materials	$	323,508	$	323,121
Work in process		0		145,922
Total	$	323,508	$	469,043

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Property and Equipment, Net (Tables)

12 Months Ended

Dec. 31, 2015

PROPERTY AND EQUIPMENT

Schedule of Property and Equipment, Net

Property and equipment consists of the following:

	December 31,  2015			December 31,  2014
Display equipment for trade shows	$	6,270		$	9,648
Leasehold improvements and furniture and fixtures		93,922			93,922
Equipment and computers		204,377			209,276
Total		304,569			312,846
Accumulated depreciation		(178,049	)		(149,680	)
Net property and equipment	$	126,520		$	163,166

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Notes and Other Loans Payable (Tables)

12 Months Ended

Dec. 31, 2015

Debt Disclosure [Abstract]

Schedule of Non-related Party Notes and Other Loans Payable

A. NON-RELATED PARTIES

A summary of non-related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
12% convertible notes payable, net of discounts of $8,536 and $8,390 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from November 2013 through September 2016 (A)	$	34,558	$	70,378
10% convertible note payable, net of discount of $0 and December 31, 2015 and December 31, 2014, respectively, monthly payments commencing in December 2013 through July 2014 (B)		19,963		19,963
10% convertible notes payable, net of discount of $40,614 and $43,207 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from May 2015 through February 2016 (C)		72,793		59,386
,
10% convertible notes payable, net of discount of $20,343 and $80 at December 31, 2015 and December 31, 2014, respectively, maturing at various dates from December 2015 through January 2016 (D)		29,223		40,657
10% convertible note payable, net of discount of $0 and $89,995 at December 31, 2015 and December 31, 2014 respectively, maturing at various dates from February 2015 through August 2015 ( E )		116,200		52,005
12% convertible notes payable, net of discount of $0 and $25,232 at December 31, 2015 and December 31, 2014 , respectively, maturing at various dates from April 2015 through May 2015 ( F )		85,000		59,768
10% note payable, $0 discount, maturing Feb. 3 2017		50,000		-
Total non related party notes –net of discounts		407,737		302,157
Less-Current Portion		357,737		-
Total non-current non related party notes –net of discount (accrued interest is included in accrued expenses)	$	50,000	$	302,157

(A)	Unamortized discount from derivative liabilities at December 31, 2015 is $46,762. The notes are in default.
(B)	Unamortized discount from derivative liabilities at December 31, 2015 is $31,001. This note is in default Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received judgment and Company is negotiating a reduced settlement.
(C)	Unamortized discount from derivative liabilities at December 31, 2015 is $85,871. The notes are in default.
(D)	Unamortized discount from derivative liabilities at December 31, 2015 is $54,838. This note is in default.
(E)	Unamortized discount from derivative liabilities at December 31, 2015 is $144,124. The notes are in default.
(F)	Unamortized discount from derivative liabilities at December 31, 2015 is $78,244. The notes are in default August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received judgment and Company is seeking to arrange a settlement.

Schedule of Related Party Notes

A summary of related party notes and other loans payable is as follows:

	December 31, 2015		December 31, 2014
6% demand loans per Operations Agreement with Schoell Marine Inc., a company owned by Cyclone’s Chairman and controlling shareholder (A)	$	117,734	$	498,454
6% non-collateralized loans from officer and shareholder, payable on demand. The original principal balances were $157,101.		103,328		67,221
12% non-collateralized loans from officer and shareholder, payable on demand		20,178		15,516
Accrued Interest		80,094		299,126
Total current related party notes, inclusive of accrued interest	$	321,334	$	880,317

(A) This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. The note was secured by a UCC-1 filing on the Company’s patents and patent applications, which expired and has not been renewed. For the years December 31, 2015 and 2014, $0 and $8,100 of principal was paid on the note balance, respectively.

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Stock Options and Warrants (Tables)

12 Months Ended

Dec. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Common Stock Option

A summary of the common stock options for the period from December 31, 2013 through December 31, 2015 follows:

	Number Outstanding			Weighted Avg. Exercise Price			Weighted Avg. Remaining Contractual Life (Years)
Balance, December 31, 2013		9,740,000		$	0.129			5.5
Options issued		1,350,000			.002			9.8
Options exercised		-			-			-
Options cancelled		-			-			-
Cancelled-old		-
Balance, December 31, 2014		11,090,000		$	0.123			6.0
Options issued		1,800,000			0.0009			9.6
Options exercised		-			-
Options cancelled		(510,000	)		(.12	)		-
Cancelled-old		-
Balance, December 31, 2015		12,380,000		$	0.11			5.8

Schedule of Vested and Exercisable Options

The vested and exercisable options at period end follows:

	Exercisable/ Vested Options Outstanding		Weighted Avg. Exercise Price		Weighted Avg. Remaining Contractual Life (Years)
Balance December 31, 2015		10,580,000	$	.128		5.1
Additional vesting by March 31, 2016		450,000		.0003		9.0

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of new stock options, re-priced stock options, new purchase warrants and re-priced purchase warrants granted using the Black-Scholes option pricing model was calculated using the following assumptions:

	Year Ended December 31, 2015			Year Ended December 31, 2014
Risk free interest rate		.89 % -1.31	%		.67 % -1.32	%
Expected volatility		102% - 131	%		63% - 89	%
Expected term		3			2-4
Expected dividend yield		0	%		0	%
Average value per options and warrants		$ .0003 -$.0016			$ .001 - $ .017

Schedule of Outstanding Vested Warrant Activity

A summary of outstanding vested warrant activity for the period from December 31, 2013 to December 31, 2015 follows:

	Number Outstanding			Weighted Average  Exercise Price			Weighted  Average  Remaining  Contractual  Life (Years)
Common Stock Warrants
Balance, December 31, 2013		16,097,798		$	0.057			2.85
Warrants exercised-cashless		(9,037,230	)		(0.017	)
Warrants issued		2,838,048			0.111			3.92
Warrants expired		(2,861,251	)		(.166	)
Warrants cancelled		(3,403,673	)		(.011	)
Warrants re-priced:
Cancelled – old		(1,190,625	)		(0.020	)
Re-Priced		1,190,625			0.011
Balance, December 31, 2014		3,633,692		$	0.074			0.89
Warrants exercised-cashless
Warrants issued
Warrants expired		(2,508,692	)		(.148	)
Warrants cancelled
Warrants re-priced:
Cancelled – old
Re-Priced
Balance, December 31, 2015		1,125,000		$	0042			2.05

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the differences between the effective income tax rates and the statutory federal tax rates for the years ended December 31, 2015 and 2014 are as follows:

	Year ended December 31, 2015					Year ended December 31, 2014
Tax benefit at U.S. statutory rate	$	235,276		34	%	$	1,361,148		34	%
State taxes, net of federal benefit		27,679		4			160,135		4
Change in valuation allowance		(262,955	)	(38	)		(1,521,283	)	(38	)
		-		-			-

Schedule of Deferred Tax Assets and Liabilities

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at December 31, 2015 and December 31, 2014 consisted of the following:

Deferred Tax Assets	December 31, 2015			December 31, 2014
Net Operating Loss Carry-forward	$	9,924,492		$	9,410,367
Deferred Tax Liabilities		(795,805	)		(382,260	)
Net Deferred Tax Assets		9,128,687			9,028,107
Valuation Allowance		(9,128,687	)		(9,028,107	)
Total Net Deferred Tax Assets	$	-		$	-

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Lease Obligations (Tables)

12 Months Ended

Dec. 31, 2015

Leases [Abstract]

Schedule of Future Minimum Lease Payments for Capital Leases

2016	$	12,950
2017		14,382
2018		11,984
2019		8,551
2020		2,022
	$	49,889

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Derivative Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Liabilities at Fair Value

The volatility was based on historical volatility, the expected term is equal to the remaining term of the debt and the risk free rate is based upon rates for treasury securities with the same term.

	Year Ended December 31, 2015		Year Ended December 31, 2014
Volatility		103%- 343%		96% - 276%
Risk Free Rate		.01% - .28%		.02% - 1.07%
Expected Term (years)		0 – 1.05		0 –4.2
Dividend Rate		0%		0%

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Organizational and Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Number of shares retains for noncontrolling interest												2,000,000
Antidilutive securities excluded from computation of earnings per share											13,500,000	14,700,000
Research and development expense	$ 103,605	$ 81,237	$ 106,927	$ 396,420	$ 192,637	$ 124,180	$ 188,164	$ 316,817	$ 291,769	$ 713,237	$ 467,610	$ 1,018,552
WHE Subsidiary [Member]
Equity method investment, ownership percentage											20.00%
Cyclone Performance [Member]
Equity method investment, ownership percentage	95.00%								95.00%		95.00%	95.00%

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Organizational and Significant Accounting Policies - Schedule of Fair Value of Financial Instrument (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Derivative liabilities, Beginning of Period	$ 440,184
Derivative liabilities, End of Period	383,482	$ 440,184
Fair Value, Inputs, Level 3 [Member]
Derivative liabilities, Beginning of Period	440,184	484,479
Derivative liabilities, Change	(56,706)	(44,295)
Derivative liabilities, End of Period	$ 383,482	$ 440,184
Derivative liabilities, Valuation Methodology	Stochastic Process Forecasting Model	Stochastic Process Forecasting Model

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Organizational and Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2015
Display Equipment For Trade Shows [Member]
Property and equipment estimated useful lives	3 years
Leasehold Improvements and Furniture and Fixtures [Member] | Minimum [Member]
Property and equipment estimated useful lives	10 years
Leasehold Improvements and Furniture and Fixtures [Member] | Maximum [Member]
Property and equipment estimated useful lives	15 years
Shop Equipment [Member]
Property and equipment estimated useful lives	7 years
Computers [Member]
Property and equipment estimated useful lives	3 years

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Significant Accounting Policies (Details Narrative) (10Q)	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Cyclone Performance [Member]
Equity method investment, ownership percentage	95.00%	95.00%	95.00%

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Going Concern (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2015	Mar. 31, 2015
Income (loss) from operating and other losses and expenses	$ 4,100,000	$ 1,500,000	$ 5,000,000
Accumulated deficit	58,432,914	58,727,736	$ 57,257,441	$ 58,135,632	$ 57,845,078
Working capital deficit	$ 2,000,000	2,300,000
Attributable To Operating Losses [Member]
Accumulated deficit		26,400,000
Attributable To Non Cash Derivative Liability Accounting [Member]
Accumulated deficit		$ 32,300,000

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Inventory, Net - Schedule of Inventory, Net (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 323,508				$ 323,121
Work in process	0				145,922
Total	$ 323,508	$ 455,510	$ 515,460	$ 514,801	$ 469,043

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Property and Equipment, Net (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
PROPERTY AND EQUIPMENT
Depreciation expense	$ 36,645	$ 29,434

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Property and Equipment, Net - Schedule of Property and Equipment, Net (Details) - USD ($)	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Property and equipment	$ 304,569	$ 312,846	$ 312,846	$ 312,846	$ 312,846
Accumulated depreciation	(178,049)	(177,247)	(168,174)	(158,927)	(149,680)
Net property and equipment	126,520	$ 135,599	$ 144,672	$ 153,919	163,166
Display Equipment For Trade Shows [Member]
Property and equipment	6,270				9,648
Leasehold Improvements and Furniture and Fixtures [Member]
Property and equipment	93,922				93,922
Equipment And Computers [Member]
Property and equipment	$ 204,377				$ 209,276

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Patents, Trademarks and Copyrights (Details Narrative)	12 Months Ended
	Dec. 31, 2015 USD ($) Patents	Dec. 31, 2014 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)
Net patents, trademarks and copyrights	$ 283,368	$ 348,191	$ 318,948	$ 328,654	$ 338,360
Patents, trademarks and copyrights capitalized	0	34,464
Write-off of expired patents	$ 25,894
Number of expired patents | Patents	6
Number of patents | Patents	15
Finite-lived intangible asset, useful life	15 years
Amortization expenses	$ 38,929	39,435
Trademarks [Member]
Write-off of expired patents		$ 5,091
General and Administrative Expense [Member]
Write-off of expired patents	$ 25,894

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Notes and Other Loans Payable (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015	Dec. 31, 2014	Jun. 30, 2015
Common stock issued, shares				8,219,298
Number of common stock issued			$ 2,526	$ 10,400
Chairman And Co-Founder [Member]
Common stock issued, shares	10,000,000	37,400,000
Number of common stock issued	$ 14,000	$ 1,500,000
Schoell Marine [Member]
Principle and accrued interest					$ 710,272

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Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Total non related party notes -net of discounts		$ 407,737				$ 302,157
Less-Current Portion		357,737	$ 341,201	$ 325,225	$ 271,555	302,157
Total non-current non related party notes -net of discount (accrued interest is included in accrued expenses)		50,000	$ 50,000	$ 50,000	$ 50,000
12% Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[1]	34,558				70,378
10% Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[2]	19,963				19,963
10% One Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[3]	72,793				59,386
10% Two Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[4]	29,223				40,657
10% Three Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[5]	116,200				52,005
12% One Convertible Notes Payable [Member]
Total non related party notes -net of discounts	[6]	85,000				59,768
10% Note Payable [Member]
Total non related party notes -net of discounts		$ 50,000

[1] Unamortized discount from derivative liabilities at December 31, 2015 is $46,762. The notes are in default.

[2] Unamortized discount from derivative liabilities at December 31, 2015 is $31,001. This note is in default Effective May 8, 2015, the Company is subject to a default judgment of approximately $175,000, plus subsequent penalty interest for non-payment of convertible debt and interest. Tonaquint Inc. filed and received judgment and Company is negotiating a reduced settlement.

[3] Unamortized discount from derivative liabilities at December 31, 2015 is $85,871. The notes are in default

[4] Unamortized discount from derivative liabilities at December 31, 2015 is $54,838. This note is in default

[5] Unamortized discount from derivative liabilities at December 31, 2015 is $144,124. The notes are in default

[6] Unamortized discount from derivative liabilities at December 31, 2015 is $78,244. The notes are in default August 2015, the Company is subject to litigation of approximately $150,000, plus subsequent penalty interest for non -payment of a liability. JSJ filed and received judgment and Company is seeking to arrange a settlement.

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Notes and Other Loans Payable - Schedule of Non-related Party Notes and Other Loans Payable (Details) (Parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
12% Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 8,536	$ 8,390
Convertible notes payable, maturity date description	November 2013 through September 2016	November 2013 through September 2016
12% Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 46,762
10% Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 0	$ 0
Convertible notes payable, maturity date description	December 2013 through July 2014	December 2013 through July 2014
10% Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 31,001
Payments for legal settlements	175,000
10% One Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 40,614	$ 43,207
Convertible notes payable, maturity date description	May 2015 through February 2016	May 2015 through February 2016
10% One Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 85,871
10% Two Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 20,343	$ 80
Convertible notes payable, maturity date description	December 2015 through January 2016	December 2015 through January 2016
10% Two Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 54,838
10% Three Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 0	$ 89,995
Convertible notes payable, maturity date description	February 2015 through August 2015	February 2015 through August 2015
10% Three Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 144,124
12% One Convertible Notes Payable [Member]
Convertible notes payable, net of discounts	$ 0	$ 25,232
Convertible notes payable, maturity date description	April 2015 through May 2015	April 2015 through May 2015
12% One Convertible Notes Payable [Member] | Derivative Liabilities [Member]
Convertible notes payable, net of discounts	$ 78,244
Payments for legal settlements	150,000
10% Note Payable [Member]
Convertible notes payable, net of discounts	$ 0	$ 0
Note payable maturity date	Feb. 03, 2017	Feb. 03, 2017

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Notes and Other Loans Payable - Schedule of Related Party Notes (Details) - USD ($)		Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014
Total current related party notes, inclusive of accrued interest		$ 321,334	$ 284,003	$ 247,335	$ 906,656	$ 880,317
Six Percent Demand Loans Per Operations Agreement With Schoell Marine Inc [Member]
Total current related party notes, inclusive of accrued interest	[1]	117,734				498,454
Six Percent Non-collateralized Loans from Officer and Shareholder [Member]
Total current related party notes, inclusive of accrued interest		103,328				67,221
Twelve Percent Non-collateralized Loans from Officer and Shareholder [Member]
Total current related party notes, inclusive of accrued interest		20,178				15,516
Accrued Interest [Member]
Total current related party notes, inclusive of accrued interest		$ 80,094				$ 299,126

[1] This note arose from services and salaries incurred by Schoell Marine on behalf of the Company. The Schoell Marine note bears an interest rate of 6% and repayments occur as cash flow of the Company permits. The note was secured by a UCC-1 filing on the Company's patents and patent applications, which expired and has not been renewed. For the years December 31, 2015 and 2014, $0 and $8,100 of principal was paid on the note balance, respectively.

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Notes and Other Loans Payable - Schedule of Related Party Notes (Details) (Parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Debt instrument principal payment	$ 0	$ 8,100
Schoell Marine [Member]
Debt instrument note bears an interest rate	6.00%

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Related Party Transactions (Details Narrative)		9 Months Ended	12 Months Ended
	Jan. 31, 2014 USD ($) shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) ft²	Dec. 31, 2014 USD ($)	Jun. 30, 2015 USD ($)
Area of warehouse and office | ft²			6,000
Payment for rent			$ 60,000
Lease renewal term			1 year
Number of option increasing rate, percentage			2.00%
Occupancy costs			$ 60,000	$ 62,964
Accounts payable and accrued expenses - related parties		$ 379,208	$ 137,500	$ 475,000
Deferred compensation					$ 612,500
Forgiveness of deferred salary	$ 956,762
Board of Chairman [Member]
Accrued rent		710,272
Officers [Member]
Forgiveness of accrued salaries		$ 655,225
Restricted Common Stock [Member]
Deferred compensation	$ 668,312
Deferred compensation arrangement with individual, shares issued | shares	20,313,416

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Preferred Stock (Details Narrative)	12 Months Ended
	Dec. 31, 2015 shares
Voting control percentage	51.00%
Series B Preferred Stock [Member]
Preferred stock, shares outstanding	1,000

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Stock Transactions (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Stock issued during period, shares, restricted stock award, gross							92,500,000
Stock issued during period, value, restricted stock award, gross (in dollars)							$ 116,500
Payment of debt							66,500
Loss on payment of debt	$ (50,000)		$ (50,000)		$ (50,000)		50,000
Debt conversion, converted instrument, shares issued								496,323,413
Debt conversion, converted instrument, amount							$ 130,855	$ 1,142,647
Exercise of warrants							2,508,692	4,722,365
Stock issued during period, shares, new issues								8,219,298
Stock issued during period, value, new issues								$ 110,000
Stock issued during period, value, issued for services							$ 2,526	$ 10,400
Chairman And Co-Founder [Member]
Debt conversion, converted instrument, shares issued							10,000,000
Officers [Member]
Stock issued during period, shares, restricted stock award, gross								20,313,416
Stock issued during period, value, restricted stock award, gross (in dollars)								$ 668,312
Forgiveness of accrued salaries								956,762
Stock Options For Employee Services [Member]
Allocated share-based compensation expense (in dollars)							$ 2,526	$ 10,400
Restricted Common Stock [Member]
Stock issued during period, shares, issued for services								6,250,000
Stock issued during period, value, issued for services								$ 116,175

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Stock Options and Warrants (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Share-based compensation arrangement by share-based payment award, options, grants in period, gross	1,800,000	1,350,000
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price (in dollars per share)	$ 0.0009	$ .002
Share-based compensation	$ 2,526	$ 10,400
Employee service share-based compensation, nonvested awards, compensation cost not yet recognized	$ 1,232
Warrants expired during period, number	2,508,692	4,722,365
Warrants expired during period, average exercise price	$ 0.148
Employment Contracts [Member] | Officers [Member]
Share-based compensation arrangement by share-based payment award, options, grants in period, gross	1,800,000
Stock options issued during period, value	$ 405
Share-based compensation arrangements by share-based payment award, options, grants in period, weighted average exercise price (in dollars per share)	$ .0009
Stock options issued during period, maturity life	10 years

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Stock Options and Warrants - Schedule of Common Stock Option (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number Outstanding, Balance	11,090,000	9,740,000
Number Outstanding, Options issued	1,800,000	1,350,000
Number Outstanding, Options exercised
Number Outstanding, Options cancelled	(510,000)
Number Outstanding, Cancelled-old
Number Outstanding, Balance	12,380,000	11,090,000
Weighted Avg Exercise Price, Balance	$ 0.123	$ 0.129
Weighted Avg Exercise Price, Options issued	0.0009	.002
Weighted Avg Exercise Price, Options exercised
Weighted Avg Exercise Price, Options cancelled	(.12)
Weighted Avg Exercise Price, Cancelled-old
Weighted Avg Exercise Price, Balance	$ 0.11	$ 0.123
Weighted Avg Remaining Contractual Life (Years), Balance	6 years	5 years 6 months
Weighted Avg Remaining Contractual Life (years), Options Issued	9 years 7 months 6 days	9 years 9 months 18 days
Weighted Avg Remaining Contractual Life (years), Balance	5 years 9 months 18 days	6 years

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Stock Options and Warrants - Schedule of Vested and Exercisable Options (Details) - $ / shares	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Exercisable/Vested Options Outstanding		10,580,000
Weighted Avg Exercise Price		$ 0.128
Weighted Avg Remaining Contractual Life (Years)		5 years 1 month 6 days
Scenario Forecast [Member]
Exercisable/Vested Options Outstanding	450,000
Weighted Avg Exercise Price	$ .0003
Weighted Avg Remaining Contractual Life (Years)	9 years

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Stock Options and Warrants - Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Expected dividend yield	0.00%	0.00%
Minimum [Member]
Risk free interest rate	0.01%	0.02%
Expected volatility	103.00%	96.00%
Expected term	0 years	0 years
Maximum [Member]
Risk free interest rate	0.28%	1.07%
Expected volatility	343.00%	276.00%
Expected term	1 year 18 days	4 years 2 months 12 days
Stock Options And Purchase Warrants [Member]
Expected term	3 years
Expected dividend yield	0.00%	0.00%
Stock Options And Purchase Warrants [Member] | Minimum [Member]
Risk free interest rate	0.89%	0.67%
Expected volatility	102.00%	63.00%
Expected term		2 years
Average value per options and warrants	$ .0003	$ .001
Stock Options And Purchase Warrants [Member] | Maximum [Member]
Risk free interest rate	1.31%	1.32%
Expected volatility	131.00%	89.00%
Expected term		4 years
Average value per options and warrants	$ .0016	$ .017

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Stock Options and Warrants - Schedule of Outstanding Vested Warrant Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number Outstanding, Balance	3,633,692	16,097,798
Number Outstanding, Warrants exercised-cashless		(9,037,230)
Number Outstanding, Warrants issued		2,838,048
Number Outstanding, Warrants expired	(2,508,692)	(2,861,251)
Number Outstanding, Warrants cancelled		(3,403,673)
Number Outstanding, Cancelled – old		(1,190,625)
Number Outstanding, Re-Priced		1,190,625
Number Outstanding, Balance	1,125,000	3,633,692
Weighted Average Exercise Price, Balance	$ 0.074	$ 0.057
Weighted Average Exercise Price, Warrants exercised-cashless		(0.017)
Weighted Average Exercise Price, Warrants issued		0.111
Weighted Average Exercise Price, Warrants expired	(.148)	(.166)
Weighted Average Exercise Price, Warrants cancelled		(.011)
Weighted Average Exercise Price, Cancelled – old		(0.020)
Weighted Average Exercise Price, Re-Priced		0.011
Weighted Average Exercise Price, Balance	$ 42	$ 0.074
Weighted Average Remaining Contractual Life (Years), Balance	10 months 21 days	2 years 10 months 6 days
Weighted Average Remaining Contractual Life (years), Warrants Issued		3 years 11 months 1 day
Weighted Average Remaining Contractual Life (years), Balance	2 years 18 days	10 months 21 days

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Income Taxes (Details Narrative)	Dec. 31, 2015 USD ($)
Operating Loss Carryforwards	$ 21,400,000
Minimum [Member]
Percentage that Carry Forwards Will Expire Unused	50.00%

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Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Details) - USD ($)	3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Tax benefit at U.S. statutory rate											34.00%	34.00%
Tax benefit at U.S. statutory rate											$ 235,276	$ 1,361,148
State taxes, net of federal benefit											4.00%	4.00%
State taxes, net of federal benefit											$ 27,679	$ 160,135
Change in valuation allowance											(38.00%)	(38.00%)
Change in valuation allowance											$ (262,955)	$ (1,521,283)
Effective Income Tax Rate Reconciliation, Percent
Income Tax Expense (Benefit)

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Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Net Operating Loss Carry-forward	$ 9,924,492	$ 9,410,367
Deferred Tax Liabilities	(795,805)	(382,260)
Net Deferred Tax Assets	9,128,687	9,028,107
Valuation Allowance	9,128,687	(9,028,107)
Total Net Deferred Tax Assets

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Lease Obligations (Details Narrative)	1 Months Ended	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Jul. 31, 2014 USD ($)	Mar. 31, 2015 USD ($)	Mar. 31, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)	Aug. 31, 2015 ft²	Jan. 31, 2014 USD ($)
Property and equipment, amount acquired via capitalized lease obligations									$ 37,158	$ 8,408
Capitalized lease obligations, average interest rate										15.50%
Repayments of long-term capital lease obligations		$ 1,370	$ 1,569	$ 5,254	$ 3,482	$ 6,731	$ 4,779	$ 7,811	6,124
Capital lease obligations								49,889	57,700
Area of real estate property (in square feet) | ft²											2,000
Operating leases, rent expense								$ 10,424	$ 18,129
Precision CNC LLC [Member]
Operating leases, rent expense							$ 13,957
Precision CNC LLC [Member] | Whe Generation Corp [Member]
Operating leases, rent expense, minimum rentals	$ 2,500
Accrued rent												$ 1,000
Minimum [Member]
Capitalized lease obligations, average interest rate									6.90%
Maximum [Member]
Capitalized lease obligations, average interest rate									10.00%

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Lease Obligations - Schedule of Future Minimum Lease Payments for Capital Leases (Details)	Dec. 31, 2015 USD ($)
Leases [Abstract]
2016	$ 12,950
2017	14,382
2018	11,984
2019	8,551
2020	2,022
Total	$ 49,889

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Commitments and Contingencies (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Employment agreements, initial term of employment	3 years
Automatic renewing period of employment agreements	1 year
Whe Generation Corp [Member]
Officers compensation		$ 70,165
Harry Schoell Chairman And CTO [Member]
Employment agreements, officer salary	$ 150,000
Frankie Fruge COO [Member]
Employment agreements, officer salary	$ 120,000

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Consolidated Subsidiary (Details Narrative) - USD ($)	3 Months Ended
	Dec. 31, 2012	Dec. 31, 2015
Cumulative unallocated losses to non-controlling interest of subsidiary		$ 953
Unrelated Investor [Member]
Noncontrolling interest, ownership percentage by noncontrolling owners	5.00%
Proceeds from issuance or sale of equity	$ 30,000
Corporate Officer[Member]
Noncontrolling interest, ownership percentage by noncontrolling owners	5.00%
Cyclone Performance [Member]
Percentage of ownership in a consolidated subsidiary	100.00%

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Deconsolidation of Whe Subsidiary (Details Narrative) - USD ($)		3 Months Ended						6 Months Ended		9 Months Ended		12 Months Ended			72 Months Ended
	Sep. 30, 2014	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Jun. 30, 2015	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2015
Treasury stock, retired, cost method, amount											$ 210,000
Intercompany receivable, amount forgiven												$ 85,000
Liability satisfied												$ 17,550
Shares transferred to satisfy liability												65,000
Proceeds from issuance of common stock													$ 10,000
Total losses		$ (297,196)	$ (290,640)	$ (587,637)	$ (1,810,393)	$ (1,190,304)	$ (1,097,033)	$ (878,277)	$ (2,287,337)	$ (1,175,473)	(4,097,730)	(1,470,303)	$ (4,954,425)
TCA Global Master Credit Fund LP [Member]
Repayments of long-term debt												$ 78,000
Whe Generation Corp [Member]
Debt instrument, face amount	$ 350,000				$ 350,000						$ 350,000
Debt instrument, interest rate, stated percentage	6.00%				6.00%						6.00%
Debt instrument, term	12 months
Debt instrument, convertible, conversion price	$ 0.12				$ 0.12						$ 0.12
Proceeds from issuance of common stock	$ 1,314,360
Sale of stock, price per share	$ 0.27				$ 0.27						$ 0.27
Number of common stock in settlement												625,000
Debt receivable amount												$ 150,000			$ 150,000
Whe Generation Corp [Member] | June 30, 2016 [Member]
Investment sold, amount												2,700,000
Gain on investment												44,000
License Agreement [Member]
Proceeds from license fees received												$ 175,000
Royalty revenue, percent												5.00%			5.00%
License agreement, term												20 years
Licensing agreement, optional extension												10 years
WHE Subsidiary [Member]
Investment in subsidiary, percentage sold	73.72%
Non-controlling investment shares													2,100,000
Cost method investments, ownership percentage													20.00%
Gain (loss) on disposition of stock in subsidiary or equity method investee													$ 2,443,506
Cost method investments	$ 556,756				$ 556,756						$ 556,756
Realized investment													$ 556,756
Liabilities assumed												$ 50,000
Deferred revenue												10,000			$ 10,000
Total losses											$ 696,831			$ 157,266	854,097
WHE Subsidiary [Member] | Separation Agreement [Member]
Proceeds from divestiture of interest in consolidated subsidiaries												350,000
Investment sold, amount												150,000
Allowance for uncollectable accounts												150,000
Reimbursement revenue												$ 24,000
Treasury stock, shares, retired												3,000,000
Treasury stock, retired, cost method, amount												$ 210,000
Deferred revenue												$ 290,000			$ 290,000

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Receivables, Deferred Revenue and Backlog (Details Narrative)	12 Months Ended
	Dec. 31, 2015 USD ($)
Customer advance and deposits	$ 25,000
Payment of contract for engines	80,000
Combilift Agreement [Member]
Backlog for prototype engines purchased	400,000
Deferred revenue	$ 100,000

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Derivative Financial Instruments (Details Narrative)	3 Months Ended		6 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2015 USD ($)	Mar. 31, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Dec. 31, 2015 USD ($) Integer	Dec. 31, 2014 USD ($)
Convertible Debt							$ 0	$ 855,800
Derivative Liability							0	810,527
Amortization of debt discount	$ 78,861	$ 297,929	$ 132,531	$ 602,805	$ 157,507	$ 816,308	174,043	935,128
Adjustments to additional paid in capital							0	10,013,062
Loss on derivative instruments							56,702	147,680
Debt [Member]
Derivative Liability							$ 383,482	$ 440,184
Minimum [Member]
Debt instrument convertible price							30.00%
Debt instrument trading days | Integer							10
Maximum [Member]
Debt instrument convertible price							45.00%
Debt instrument trading days | Integer							20

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Derivative Financial Instruments - Schedule of Derivative Liabilities at Fair Value (Details)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Dividend Rate	0.00%	0.00%
Minimum [Member]
Volatility	103.00%	96.00%
Risk Free Rate	0.01%	0.02%
Expected Term (years)	0 years	0 years
Maximum [Member]
Volatility	343.00%	276.00%
Risk Free Rate	0.28%	1.07%
Expected Term (years)	1 year 18 days	4 years 2 months 12 days

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Litigation (Details Narrative) - USD ($)		1 Months Ended	12 Months Ended
	May 08, 2015	Aug. 31, 2015	Dec. 31, 2015
Litigation settlement amount		$ 150,000	$ 4,500
Tonaquint Inc [Member]
Litigation settlement amount	$ 175,000

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Subsequent Events (Details Narrative) - USD ($)	6 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2016	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 01, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Stock issued during period, value, issued for services				$ 2,526	$ 10,400
Common stock, shares authorized				4,000,000,000	4,000,000,000		4,000,000,000	4,000,000,000	4,000,000,000
Subsequent Event [Member]
Number of common stock issued for services, shares	3,000,000	3,000,000
Stock issued during period, value, issued for services	$ 5,700	$ 5,700
Number of common stock issued for settlement of liability, shares	45,700,000	45,700,000
Number of common stock issued for settlement of liability	$ 82,000	$ 82,000
Number of common stock issued for conversion of liability, shares	80,000,000,000	80,000,000,000
Number of common stock issued for conversion of liability	$ 216,000	$ 216,000
Common stock, shares authorized						4,000,000,000
Payments and contract deposits			$ 170,000
Non derivative related debt			$ 100,000
Subsequent Event [Member] | Q 2 Power Technologies [Member]
Investment sold, amount	$ 44,000	$ 44,000