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Novo Integrated Sciences, Inc. - Quarter Report: 2011 March (Form 10-Q)

FORM 10-Q
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 10-Q

 

 

 

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

For the quarterly period ended March 31, 2011

 

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

For the transition period from             , 200    , to             , 200    .

Commission File Number 333-109118

 

 

Turbine Truck Engines, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada   59-3691650

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

46600 Deep Woods Road, Paisley Florida 32767

(Address of Principal Executive Offices)

(386) 943-8358

(Registrant’s Telephone Number, Including Area Code)

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

 

$.001 par value preferred stock

    Over the Counter Bulletin Board  

$.001 par value common stock

    Over the Counter Bulletin Board  

 

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

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 definition of “accelerated filer, large 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 Exchange Act).    Yes  ¨    No  x

There were 49,113,995 shares of the Registrant’s $0.001 par value common stock outstanding as of May 13, 2011.

 

 

Documents incorporated by reference: none

 

 


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Contents

 

Part I – Financial Information

  

Item 1.

  Financial Statements      1   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operation      38   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk      42   

Item 4T.

  Controls and Procedures      42   

Part II – Other Information

  

Item 1.

  Legal Proceedings      42   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      42   

Item 3.

  Defaults Upon Senior Securities      42   

Item 4.

  Removed and Reserved      43   

Item 5.

  Other Information      43   

Item 6.

  Exhibits      43   

Signatures

  


Table of Contents

PART I—FINANCIAL INFORMATION

Statements in this Form 10-Q Quarterly Report may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Form 10-Q Quarterly Report, under “Management’s Discussion and Analysis of Financial Condition or Plan of Operation” and in other documents which we file with the Securities and Exchange Commission.

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law.


Table of Contents

Item 1.    Financial Statements

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Financial Statements

As of March 31, 2011 (unaudited) and December 31, 2010 and

for the three months ended March 31, 2011 and 2010 (unaudited)

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

through March 31, 2011 (unaudited)

Contents

Financial Statements:

 

Balance Sheets

   2

Statements of Operations

   3

Statements of Changes in Stockholders’ Deficit

   4

Statements of Cash Flows

   31

Notes to Financial Statements

   33

 

1


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Balance Sheets

 

     March 31,
2011
    December 31,
2010
 

Assets

     (unaudited)     

Current assets:

    

Cash

   $ 84,180      $ 128,264   

Prepaid expenses

     126,681        108,891   
                

Total current assets

     210,861        237,155   
                

Agency fee- intangible, net of accumulated amortization of $107,368 (2011) and $57,368 (2010)

     892,632        942,632   

Furniture and equipment, net of accumulated depreciation of $45,302 (2011) and $44,025 (2010)

     49,353        7,285   
                
   $ 1,152,846        1,187,072   
                

Liabilities and Stockholders’ Deficit

    

Current liabilities:

    

Accounts payable, including related party payables of $3,557 (2011) and $87,707 (2010)

   $ 52,514      $ 162,281   

Accrued agency fee

     900,000        900,000   

Accrued interest

     14,718        14,718   

Accrued payroll

     6,713        4,635   

Note payable

     500        500   
                

Total current liabilities

     974,445        1,082,134   

Accrued expenses – long term

     273,250        273,250   

Accrued payroll – long term

     333,067        270,376   

Accrued royalty fees

     1,114,000        1,051,500   

Convertible note payable net of unamortized discount of $3,425 (2011) and $0 (2010)

     21,575     

Note payable to related party

     1,901        1,901   
                

Total liabilities

     2,718,238        2,679,161   

Stockholders’ deficit:

    

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

    

Common stock; $0.001 par value; 99,000,000 shares authorized; 49,104,995 (2011) and 45,844,161 (2010) shares issued and outstanding

     49,103        45,842   

Additional paid in capital

     13,051,276        12,526,812   

Deficit accumulated during development stage

     (14,968,115     (14,133,147

Common stock payable

     463,800        274,000   

Prepaid consulting services paid with common stock

     (149,456     (193,596

Receivable for common stock

     (12,000     (12,000
                

Total stockholders’ deficit

     (1,565,392     (1,492,089
                
   $ 1,152,846      $ 1,187,072   
                

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

2

 

 


Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Statements of Operations

(unaudited)

 

    

    Three Months Ended March 31,      

 

 

 

   

Period
November 27,
2000 (Date of

Inception) through

 
   2011     2010     March 31,
2011
 

Research and development costs

   $ 16,373      $ 58,514      $ 3,752,088   

Operating costs

     815,032        595,901        10,609,687   
                        
     831,405        654,415        14,361,775   

Interest (income) expense

     3,563        8,564        606,340   
                        

Net loss

   $ (834,968   $ (662,979 )   $ (14,968,115
                        

Net loss per share

   $ (0.02   $ (0.02   $ (0.83
                        

Weighted average number of common shares outstanding

     47,334,304        40,337,435        18,030,902   
                        

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

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Three Months Ended March 31, 2011 and

For Each of the Years From November 27, 2000 (Date of Inception) through March 31, 2011

 

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

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

     10,390,000      $ 10,390       

Net loss for the period

         $ (4,029
                                

Balance, December 31, 2000

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

Issuance of common stock for cash, February 2001*

     10,000        10      $ 4,990     

Issuance of common stock for cash, March 2001*

     10,000        10        4,990     

Issuance of common stock for cash, August 2001*

     10,000        10        4,990     

Issuance of common stock for cash, September 2001*

     55,000        55        27,445     

Payment for common stock issued under subscription receivable

        

Net loss

           31,789   
                                

Balance, December 31, 2001

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

Issuance of common stock for cash, January 2002*

     5,000        5        2,495     

Issuance of common stock for cash, February 2002*

     10,000        10        4,990     

Issuance of common stock for cash, April 2002*

     25,000        25        12,475     

Issuance of common stock for cash, May 2002*

     65,000        65        32,435     

Issuance of common stock for cash, June 2002*

     70,000        70        34,930     

Issuance of common stock for cash, August 2002*

     10,000        10        4,990     

Issuance of common stock for cash, October 2002*

     10,000        10        4,990     

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

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

Shares returned to treasury by founding stockholder, July 2002

     (5,000,000     (5.000     5,000     

Net loss

           (2,796,768
                                

Balance, December 31, 2002

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

Issuance of common stock for cash, February 2003*

     207,000        207        103,293     

Issuance of common stock for cash, September 2003*

     30,000        30        14,970     

Issuance of common stock for services, September 2003*

     290,000        290        144,710     

Payment for common stock issued under subscription agreement

        

Offering costs for private placement offering

         (33,774  

Net loss

           (190,567
                                

Balance, December 31, 2003

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

Issuance of notes payable with beneficial conversion feature

         19,507     

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

     20,000        20        39,980     

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

    
31,125
  
    31        62,219     

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

    
25,025
  
    25        50,025     

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

    
1,000
  
   
1
  
    1,999     

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

     3,500        4        6,996     

 

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

     3,000         3         5,997     

Amortization of offering costs related to Form SB-2 filing

           (10,159  

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

           (6,317  

Contribution from shareholder

           18,256     

Net loss

             (282,009
                                  

Balance, December 31, 2004

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

 

* Common stock issued at $.50 per share.

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

 

5


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

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

           $ (390   $ 10,000   

Net loss for the period

               (4,029
                                          

Balance, December 31, 2000

             (390     5,971   

Issuance of common stock for cash, February 2001*

               5,000   

Issuance of common stock for cash, March 2001*

               5,000   

Issuance of common stock for cash, August 2001*

               5,000   

Issuance of common stock for cash, September 2001*

               27,500   

Payment for common stock issued under subscription receivable

             300        300   

Net loss

               (31,789
                                          

Balance, December 31, 2001

             (90     16,982   

Issuance of common stock for cash, January 2002*

               2,500   

Issuance of common stock for cash, February 2002*

               5,000   

Issuance of common stock for cash, April 2002*

               12,500   

Issuance of common stock for cash, May 2002*

               32,500   

Issuance of common stock for cash, June 2002*

             (2,500     32,500   

Issuance of common stock for cash, August 2002*

               5,000   

Issuance of common stock for cash, October 2002*

               5,000   

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

               2,500,000   

Shares returned to treasury by founding stockholder, July 2002

            

Net loss

               (2,796,768
                                          

Balance, December 31, 2002

             (2,590     (184,786

Issuance of common stock for cash, February 2003*

               103,500   

Issuance of common stock for cash, September 2003*

               15,000   

Issuance of common stock for services, September 2003*

   $ (74,850             70,150   

Payment for common stock issued under subscription agreement

             2,500        2,500   

Offering costs for private placement offering

               (33,774

Net loss

               (190,567
                                          

Balance, December 31, 2003

     (74,850           (90     (217,977

 

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Table of Contents

Issuance of notes payable with beneficial conversion feature

                                                                     19,507   

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

               40,000   

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

               62,250   

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

               50,050   

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

               2,000   

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

               7,000   

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

               6,000   

Amortization of offering costs related to Form SB-2 filing

               (10,159

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

     6,317             

Contribution from shareholder

               18,256   

Net loss

               (282,009
                                          

Balance, December 31, 2004

     (68,533           (90     (305,082

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

Statement of Changes in Stockholders’ Deficit

For the Three Months Ended March 31, 2011 and

For Each of the Years From November 27, 2000 (Date of Inception) through March 31, 2011

 

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

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

     80,000         80         159,920     

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

     125,000         125         249,875     

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

     3,200         3         6,397     

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

     1,500         1         2,999     

Amortization of offering costs related to Form SB-2 filing

           (31,216  

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

           (19,413  

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

     5,000         5         9,995     

Capital contribution from stockholder, May 2005

           170,000     

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

     15,550         16         31,084     

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

          

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

     9,100         9         18,191     

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

     100,000         100         169,900     

Capital contribution from stockholder, June 2005

           450     

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

     5,000         5         4,995     

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

     40,000         40         39,960     

Amortization of prepaid services paid for with common stock

          

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

          

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

     25,000         25         24,975     

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

     20,000         20         19,980     

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

     5,000         5         4,995     

Net loss

             (1,068,738
                                  

Balance, December 31, 2005

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

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

     65,000         65         64,935     

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

     1,500         2         1,498     

Amortization of prepaid services paid for with common stock

          

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

     1,675         2         1,673     

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

     5,000         5         4,995     

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

     10,000         10         9,990     

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

     10,000         10         11,490     

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

     15,000         15         11,985     

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

     200,000         200         99,800     

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

     150,000         150         172,350     

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

     109,091         109         119,891     

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

     30,000         30         14,970     

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

     125,253         125         106,341     

 

 

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Table of Contents

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

     10,000         10         8,065                            

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

     167,200         167         83,433      

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

     210,000         210         104,790      

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

     10,000         10         7,385      

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

     100,000         100         416,567      

Issuance of options to employees, directors and consultants, September

           78,355      

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

 

9


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

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

               160,000   

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

               250,000   

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

               6,400   

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

               3,000   

Amortization of offering costs related to Form SB-2 filing

               (31,216

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

     19,413             

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

               10,000   

Capital contribution from stockholder, May 2005

               170,000   

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

               31,100   

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

     49,120                49,120   

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

               18,200   

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

         $ (170,000    

Capital contribution from stockholder, June 2005

               450   

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

               5000   

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

           (40,000    

Amortization of prepaid services paid for with common stock

           26,833          26,833   

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

           161,500          161,500   

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

               25,000   

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

               20,000   

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

               5000   

Net loss

               (1,068,738
                                          

Balance, December 31, 2005

           (21,667     (90 )     (463,433

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

               65,000   

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

               1,500   

Amortization of prepaid services paid for with common stock

           204,556          204,556   

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

               1,675   

 

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

                5,000   

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

                10,000   

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

                11,500   

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

                12,000   

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

                100,000   

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

           (172,500     

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

           (120,000     

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

           (5,000        10,000   

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

                106,466   

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

                8,075   

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

                83,600   

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

           (12,500        92,500   

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

                7,395   

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

                416,667   

Issuance of options to employees, directors and consultants, September

                78,355   

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

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

Statement of Changes in Stockholders’ Deficit

For the Three Months Ended March 31, 2011 and

For Each of the Years From November 27, 2000 (Date of Inception) through March 31, 2011

 

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

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

     30,000         30         14,970      

Issuance of options to employees, directors and consultants, October

           155,185      

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

     16,000         16         7,984      

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

     15,000         15         9,985      

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

     188,000         188         93,812      

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

     100,000         100         49,900      

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

     2,833         3         1,697      

Net loss

              (1,465,077
                                   

Balance December 31, 2006

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

Issuance of options to consultants, January

           155,188      

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

     26,000         26         12,974      

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

     300,000         300         149,700      

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

     50,000         50         32,950      

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

     10,000         10         5,090      

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

     100,000         100         49,900      

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

     20,000         20         11,980      

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

     239,130         239         54,761      

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

     50,000         50         43,200      

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

     20,000         20         14,280      

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

     558,696         559         127,941      

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

     25,000         25         16,225      

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

     25,000         25         17,475      

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

     2,000         2         998      

 

 

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Table of Contents

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

     24,000         24         5,976      

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

     26,000         26         6,474      

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

     75,000         75         32,175      

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

     8,000         8         3,992      

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

     100,000         100         43,900      

Amortization of prepaid services paid for with common stock

           

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

     72,000         72         17,928      

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

     160,000         160         87,840      

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

     3,000         3         1,497      

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

     28,600         28         10,839      

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

     270,000         270         67,230      

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

     1,300,000         1,300         648,700      

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

     164,000         164         40,836      

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

     26,666         26         7,973      

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

     54,243         53         19,646      

Issuance of options & warrants to employees & consultants, September

           108,470      

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

     6,000         6         1,494      

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

     2,700         3         1,497      

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

     55,000         55         27,445      

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

     1,905         2         998      

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

     125,291         125         34,956      

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

     1,563         1         499      

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

     40,000         40         14,760      

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

     25,000         25         16,850      

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

     68,000         68         16,932      

Net loss

              (2,470,352
                                   

Balance December 31, 2007

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

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

 

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

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

               15,000   

Issuance of options to employees, directors and consultants, October

               155,185   

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

               8,000   

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

               10,000   

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

           (80,000       14,000   

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

               50,000   

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

               1,700   

Net loss

               (1,465,077
                                          

Balance December 31, 2006

           (207,111     (90     (460,336

Issuance of options to consultants, January

               155,188   

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

               13,000   

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

             (150,000  

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

           (33,000    

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

               5,100   

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

             (15,000     35,000   

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

             (12,000  

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

               55,000   

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

               43,250   

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

               14,300   

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

               128,500   

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

               16,250   

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

           (17,500    

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

               1,000   

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

               6,000   

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

               6,500   

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

               32,250   

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

               4,000   

 

 

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Table of Contents

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

                                 44,000   

Amortization of prepaid services paid for with common stock

           890,111          890,111   

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

               18,000   

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

               88,000   

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

               1,500   

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

               10,867   

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

               67,500   

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

           (650,000    

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

               41,000   

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

               7,999   

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

               19,699   

Issuance of options & warrants to employees & consultants, September

               108,470   

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

               1,500   

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

               1,500   

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

               27,500   

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

               1,000   

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

               35,081   

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

               500   

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

               14,800   

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

               16,875   

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

               17,000   

Payment on receivable for common stock

             10,000        10,000   

Net loss

                                 (2,470,352
                                          

Balance December 31, 2007

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

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

Statement of Changes in Stockholders’ Deficit

For the Three Months Ended March 31, 2011 and

For Each of the Years From November 27, 2000 (Date of Inception) through March 31, 2011

 

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

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

     200,000         200         29,800      

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

     160,000         160         60,640      

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

     12,000         12         3,108      

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

     210,000         210         24,990      

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

     350,000         350         69,650      

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

     145,000         145         14,355      

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

     334,000         334         33,066      

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

     150,000         150         12,600      

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

     25,000         25         1,975      

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

     300,000         300         47,700      

Amortization of prepaid services paid for with common stock

           

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

           25,000      

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

     379,500         380         37,571      

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

     30,000         30         4,470      

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

     101,000         101         9,999      

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

     369,000         369         36,531      

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

     306,250         306         24,194      

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

     3,750         4         296      

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

     40,000         40         3,560      

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

     27,000         27         2,673      

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

     12,500         13         987      

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

     32,400         32         3,208      

 

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Table of Contents

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

     12,500         13         875      

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

     161,250         161         12,739      

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

     27,300         27         2,603      

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

     10,000         10         890      

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

     500,000         500         64,500      

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

     12,500         13         2,112      

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

     100,000         100         19,435      

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

     26,297         26         1,974      

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

     270,468         270         19,730      

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

     202,703         203         14,797      

Issuance of warrants for services, December

           29,578      

Net loss

              (982,677
                                   

Balance December 31, 2008

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

Amortization of prepaid services paid for with common stock

           

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

     255,965         256         14,744      

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

     200         1         98      

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

     294,999         295         20,355      

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

     12,500         12         988      

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

     255,000         255         25,245      

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

     166,739         167         9,833      

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

     221,984         222         19,778      

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

     526,927         527         36,358      

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

     110,500         110         10,940      

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

     300,000         300         32,700      

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

     137,768         138         9,862      

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

     316,241         316         24,684      

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

     289,286         289         19,961      

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

     10,000         10         990      

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

           149,750      

Issuance of warrants for services, January

           36,644      

 

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Table of Contents

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

     20,000         20         1,780                        

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

     510,000         510         50,490      

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

     274,999         275         18,975      

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

     29,500         30         2,920      

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

     511,979         512         34,488      

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

     158,897         159         9,841      

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

     399,617         399         24,601      

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

     60,000         60         5,090      

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

     77,000         77         5,313      

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

     381,098         381         24,619      

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

     934,516         935         54,065      

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

     582,142         582         40,168      

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

     420,000         420         34,562      

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

     976,250         976         67,361      

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

     215,500         216         13,792      

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

     20,000         20         1,980      

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

     3,846         4         996      

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

     153,941         154         9,846      

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

     130,000         130         8,970      

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

     58,822         59         4,941      

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

     1,480,000         1,480         146,520      

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

     10,000         10         1,090      

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

     100,000         100         11,900      

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

     152,498         153         36,447      

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

     140,384         140         36,360      

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

     16,785         17         4,683      

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

     164,000         164         49,036      

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

     6,363         6         2,094      

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

     1,200,000         1,200         106,800      

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

     100,000         100         24,900      

 

 

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Table of Contents

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

     50,000         50         4,950                        

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

     100,000         100         15,900      

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

     20,000         20         1,980      

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

     40,000         40         7,960      

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

     286,361         286         62,714      

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

     126,086         126         28,874      

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

     29,787         30         6,970      

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

     46,000         46         11,454      

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

     84,230         84         21,816      

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

     21,333         21         6,379      

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

     1,230         1         399      

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

     67,000         67         22,043      

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

     10,000         10         3,740      

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

     100,000         100         46,900      

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

     500,000         500         304,500      

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

     5,000         5         2,495      

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

     350,000         350         34,650      

Issuance of common stock options, July

           40,706      

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

     11,363         11         2,489      

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

     246,107         246         44,054      

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

     25,882         26         4,374      

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

     98,775         99         17,681      

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

     167,500         168         33,332      

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

     2,500         3         472      

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

     100,000         100         15,900      

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

     5,882         6         994      

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

     102,111         102         18,278      

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

     10,000         10         1,990      

 

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Table of Contents

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

     1,100,000         1,100         328,900      

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

     100,000         100         41,900      

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

     345,000         345         130,755      

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

     1,495,327         1,495         190,505      

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

           100,921      

Issuance of warrants

           10,161      

Payment on stock subscription receivable

           

Net loss

              (2,271,917
                                   

Balance December 31, 2009

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

Payment on stock subscription receivables

           

Amortization of prepaid services paid for with common stock

           

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

     135,000         135         20,115      

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

     318,420         318         50,629      

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

     159,647         160         26,980      

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

     10,000         10         1,790      

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

     553,261         553         126,697      

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

     121,212         120         31,504      

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

     101,000         101         30,199      

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

     100,000         100         33,233      

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

     33,000         33         13,827      

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

     14,000         14         6,636      

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

     20,000         20         11,480      

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

     10,000         10         1,790      

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

     4,761         5         995      

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

     357,142         357         99,643      

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

     6,803         7         1,993      

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

     152,666         153         45,647      

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

     6,000         6         2,094      

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

     13,514         14         4,986      

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

     50,000         50         18,950      

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

     1,025         1         399      

 

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

     3,000         3         1,197                       

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

     80,000         80         21,420     

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

     3,774         4         1,996     

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

     150,000         150         72,600     

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

     600,000         600         293,400     

Write off uncollectible stock subscription receivable, March

           (155,000  

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

           248,889     

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

     40,000         40         13,560     

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

     24,000         24         8,568     

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

     1,795         2         698     

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

     3,570         4         1,496     

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

     2,500         2         1,073     

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

     7,955         8         3,492     

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

     10,000         10         4,490     

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

     55,000         55         26,895     

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

     28,572         29         9,971     

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

     14,000         14         5,586     

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

     116,500         116         51,144     

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

     25,000         25         6,975     

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

     11,000         11         3,289     

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

     1,000         1         309     

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

     3,750         4         1,196     

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

     150,000         150         56,850     

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

     100,000         100         40,400     

Payment received for stock subscription receivable, June

          

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

     76,190         76         15,924     

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

     207,727         208         49,792     

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

     65,788         66         12,434     

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

     393,288         393         74,607     

 

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

     22,500        23        4,477     

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

     1,500,000        1,500        253,500     

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

     269,472        269        49,731     

Forfeiture of common stock issued for services, September

     (600,000     (600     (293,400  

Common stock commitment at $0.25 - $0.27

        

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

     20,589        21        3,479     

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

     20,000        20        3,580     

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

     52,632        53        9,947     

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

     2,000        2        278     

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

     1,333        1        199     

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

     10,000        10        1,030     

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

     258,732        259        39,741     

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

     244,059        244        37,756     

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

     5,000        5        1,145     

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

     2,500        2        373     

Issuance of warrants for services, December

         97,714     

Net loss

           (2,569,223
                                

Balance December 31, 2010

     45,844,161      $ 45,842      $ 12,526,812      $ (14,133,147

Amortization of prepaid services paid for with common stock, unaudited

        

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

         7,000     

Issuance of common stock for services, January 2011($0.15 per share) unaudited

     446,167        446        66,479     

Issuance of common stock issued to employees for services, January 2011 ($0.24, per share) unaudited

     300,000        300        71,700     

Issuance of common stock issued to employees for services, February 2011 ($0.25, per share) unaudited

     700,000        700        174,300     

Issuance of common stock issued to employees for services, February 2011($0.27 per share) unaudited

     100,000        100        26,900     

Issuance of common stock for cash, February 2011($0.10 per share) unaudited

     551,000        551        54,549     

Issuance of common stock for cash, March 2011($0.10 per share) unaudited

     997,000        997        98,703     

Common stock commitment at $0.13 - $0.15 per share unaudited

        

Issuance of common stock for conversion of notes, March 2011 ($0.15, per share) unaudited

     166,667        167        24,833     

Net loss for the three months ended March 31, 2011 (unaudited)

           (834,968

Balance, March 31, 2011, unaudited

     49,104,995      $ 49,103      $ 13,051,276      $ (14,968,115
                                

 

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

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

            30,000   

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

            60,800   

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

            3,120   

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

        (20,000 )       5,200   

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

        (61,600 )       8,400   

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

            14,500   

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

            33,400   

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

            12,750   

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

            2,000   

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

        (48,000 )    

Amortization of prepaid services paid for with common stock

        110,767          110,767   

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

            25,000   

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

            37,951   

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

            4,500   

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

            10,100   

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

            36,900   

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

            24,500   

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

            300   

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

            3,600   

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

            2,700   

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

            1,000   

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

            3,240   

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

            888   

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

            12,900   

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

            2,630   

 

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Table of Contents

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

                                                   900   

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

           (65,000 )    

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

               2,125   

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

               19,535   

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

               2,000   

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

               20,000   

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

               15,000   

Issuance of warrants for services, December

               29,578   

Net loss

               (982,677 )
                                          

Balance December 31, 2008

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

Amortization of prepaid services paid for with common stock

           571,625          571,625   

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

               15,000   

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

               99   

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

               20,650   

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

               1,000   

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

               25,500   

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

               10,000   

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

               20,000   

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

               36,885   

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

               11,050   

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

           (33,000 )    

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

               10,000   

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

               25,000   

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

               20,250   

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

               1,000   

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

               149,750   

Issuance of warrants for services, January

               36,644   

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

               1,800   

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

           (50,000 )       1,000   

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

               19,250   

 

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Table of Contents

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

                                                                      2,950   

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

                35,000   

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

                10,000   

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

                25,000   

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

                5,150   

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

                5,390   

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

                25,000   

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

                55,000   

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

                40,750   

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

                34,982   

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

                68,337   

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

                14,008   

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

                2,000   

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

                1,000   

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

                10,000   

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

                9,100   

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

                5,000   

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

                148,000   

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

                1,100   

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

                12,000   

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

                36,600   

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

                36,500   

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

                4,700   

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

                49,200   

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

                2,100   

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

           (108,000 )     

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

           (25,000 )     

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

           (5,000 )     

 

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Table of Contents

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

                                               (16,000 )    

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

               2,000   

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

               8,000   

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

               63,000   

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

               29,000   

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

               7,000   

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

               11,500   

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

               21,900   

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

               6,400   

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

               400   

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

               22,110   

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

               3,750   

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

               47,000   

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

           (305,000 )    

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

           (2,500 )    

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

               35,000   

Issuance of common stock options, July

               40,706   

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

               2,500   

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

               44,300   

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

               4,400   

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

               17,780   

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

               33,500   

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

               475   

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

             (16,000  

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

             (1,000  

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

             (12,000     6,380   

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

               2,000   

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

               330,000   

 

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Table of Contents

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

                                                   42,000   

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

           (5,700       125,400   

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

               192,000   

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

               100,921   

Issuance of warrants

               10,161   

Payment on stock subscription receivable

             90        90   

Net loss

               (2,271,917 )
                                          

Balance, December 31, 2009

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

Payment on stock subscription receivables

             29,000        29,000   

Amortization of prepaid services paid for with common stock

           98,058          98,058   

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

               20,250   

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

               50,947   

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

               27,140   

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

               1,800   

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

               127,250   

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

               31,624   

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

               30,300   

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

               33,333   

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

               13,860   

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

           (6,650 )    

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

           (11,500 )    

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

               1,800   

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

               1,000   

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

             (100,000 )  

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

               2,000   

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

               45,800   

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

               2,100   

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

               5,000   

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

               19,000   

 

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Table of Contents

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

                                                    400   

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

                1,200   

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

                21,500   

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

                2,000   

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

                72,750   

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

           (294,000 )     

Write off uncollectible stock subscription receivable, March

             155,000      

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

                248,889   

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

                13,600   

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

                8,592   

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

                700   

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

                1,500   

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

                1,075   

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

                3,500   

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

                4,500   

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

                26,950   

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

                10,000   

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

                5,600   

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

                51,260   

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

                7,000   

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

                3,300   

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

                310   

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

                1,200   

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

                57,000   

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

                40,500   

Payment received for stock subscription receivable, June

             100,000         100,000   

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

                16,000   

 

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Table of Contents

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

                                 50,000   

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

               12,500   

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

               75,000   

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

               4,500   

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

               255,000   

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

               50,000   

Forfeiture of common stock issued for services, September

          294,000        

Common stock commitment at $0.25 - $0.27

        274,000        (193,596        80,404   

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

               3,500   

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

               3,600   

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

               10,000   

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

               280   

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

               200   

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

               1,040   

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

               40,000   

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

               38,000   

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

               1,150   

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

               375   

Issuance of warrants for services, December

               97,714   

Net loss

               (2,569,223
                                    

Balance, December 31, 2010

      $ 274,000      $   (193,596)      $   (12,000)      $ (1,492,089

Amortization of prepaid services paid for with common stock, unaudited

          44,140           44,140   

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

               7,000   

Issuance of common stock for services, January 2011($0.15 per share) unaudited

               66,925   

Issuance of common stock issued to employees for services, January 2011 ($0.24, per share) unaudited

        (72,000       

Issuance of common stock issued to employees for services, February 2011 ($0.25, per share) unaudited

        (175,000       

 

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Issuance of common stock issued to employees for services, February 2011($0.27 per share) unaudited

                          (27,000        

Issuance of common stock for cash, February 2011($0.10 per share) unaudited

                55,100   

Issuance of common stock for cash, March 2011($0.10 per share) unaudited

                99,700   

Common stock commitment at $0.13 - $0.15 per share unaudited

        463,800              463,800   

Issuance of common stock for conversion of notes, March 2011 ($0.15, per share) unaudited

                25,000   

Net loss for the three months ended March 31, 2011 (unaudited)

                (834,968
                                     

Balance, March 31, 2011 (unaudited)

      $   463,800      $   (149,456)       $   (12,000)       $ (1,565,392
                                     

 

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Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statements of Cash Flows

(unaudited)

 

     Three Months Ended
March 31,
       
     2011     2010     Period
November 27,
2000 (Date of
Inception)
through
March 31, 2011
 

Operating activities

      

Net loss

   $ (834,968   $ (662,979   $ (14,968,115

Adjustments to reconcile net loss to net cash used by operating activities:

      

Common stock and long-term debt issued for acquisition of license agreement

         2,735,649   

Common stock issued for services and amortization of common stock issued for services

     508,316        165,783        3,994,264   

Options and warrants issued to employees, directors and consultants

         614,287   

Contribution from shareholder

         188,706   

Amortization of beneficial conversion feature

     3,575        9,809        528,136   

Amortization of deferred loan costs

         24,750   

Write off deferred offering costs

         119,383   

Write off of deferred non cash offering costs

         49,120   

Gain on disposal of fixed assets

         (1,965

Depreciation

     1,277        715        48,385   

Amortization of agency fee

     50,000          107,368   

Amortization of discount on notes payable

         33,858   

Decrease (increase) in prepaid expenses

     (17,790     (111,910     (126,682

Increase (decrease) in:

      

Accounts payable

     (43,217 )     (13,621 )     209,189   

Accrued expenses

       37,166        273,250   

Accrued payroll

     79,764        38,770        354,780   

Accrued royalty fees

     62,500        62,500        1,530,667   

Accrued interest

       369        14,718   
                        

Net cash used by operating activities

     (190,538     (473,398     (4,270,252
                        

Investing activities

      

Payments for agency rights

         (100,000 )

Issuance of notes receivable from stockholders

         (23,000

Repayment of notes receivable from stockholders

         22,095   

Advances to related party

         805   

Proceeds from sale of fixed assets

         2,500   

Purchase of fixed assets

     (43,345     (1,118 )     (93,274
                        

Net cash used by investing activities

     (43,345     (1,118 )     (190,874
                        

Financing activities

      

Repayment of stockholder advances

         (157,084

Advances from stockholders

         266,152   

Increase in deferred offering costs

         (194,534

Proceeds from issuance of common stock

     139,799        412,180        3,776,272   

Proceeds from exercise of options

         45,000   

Debt issuance costs

         (19,750

Repayment of convertible notes payable

         (23,000

 

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Proceeds from issuance of convertible notes payable

     50,000        250,000         852,250   
                         

Net cash provided by financing activities

     189,799        662,180         4,545,306   
                         

Net (decrease) increase in cash

     (44,084     187,664         84,180   

Cash at beginning of year/period

     128,264        603,601      
                         

Cash at end of year/period

   $ 84,180      $ 791,265       $ 84,180   
                         

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

 

    

Three Months Ended
            March 31,            

 

     Period
November 27,
2000 (Date of
Inception)
through
March  31,
2011
 
     2011      2010     

Supplemental disclosures of cash flow information and non cash investing
and financing activities:

        

Cash paid for interest

   $ 0       $ 0       $ 21,477   
                          

Subscription receivable for issuance of common stock

   $ 0       $ 100,000       $ 29,090   
                          

Option to acquire license for issuance of common stock

   $ 0       $ 0       $ 10,000   
                          

Deferred offering costs netted against issuance of common stock under
private placement

   $ 0       $ 0       $ 33,774   
                          

Deferred offering costs netted against issuance of common stock

   $ 0       $ 0       $ 41,735   
                          

Value of beneficial conversion feature of notes payable

   $ 0       $ 0       $ 19,507   
                          

Deferred non-cash offering costs in connection with private placement

   $ 0       $ 0       $ 74,850   
                          

Application of amount due from shareholder against related party debt

   $ 0       $ 0       $ 8,099   
                          

Amortization of offering costs related to stock for services

   $ 0       $ 0       $ 25,730   
                          

Settlement of notes payable in exchange for common stock

   $ 0       $ 0       $ 356,466   
                          

Common stock issued in exchange for prepaid services

   $ 0       $ 384,900       $ 2,245,164   
                          

Common stock issued in exchange for accrued royalties

   $ 0       $ 0       $ 416,667   
                          

Receivable issued for exercise of common stock options

   $ 0       $ 0       $ 167,000   
                          

Common stock issued in exchange for fixed assets

   $ 0       $ 0       $ 5,000   
                          

Acquisition of agency fee intangible through accrued expenses

   $ 0       $ 0       $ 900,000   
                          

Beneficial conversion feature on convertible notes payable

   $ 7,000       $ 248,889       $ 531,561   
                          

Conversion of convertible debt to equity since inception (7,173,485
shares of common stock)

   $ 25,000       $ 0       $ 747,000   
                          

Common stock issued for accounts payable

   $ 66,550       $ 55,125       $ 156,675   
                          

Common stock issued for accrued payroll

   $ 15,000       $ 0       $ 15,000   
                          

Write off uncollectible stock subscription receivables

   $ 0       $ 155,000       $ 155,000   
                          

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

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Three Months Ended March 31, 2011 and 2010,

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

through March 31, 2011

1.    Background Information

Turbine Truck Engines, Inc. (the “Company”) is a development stage enterprise that was incorporated in the state of Delaware on November 27, 2000, and converted to a Nevada corporation in To date, the Company’s activities have been limited to raising capital, organizational matters, and the structuring of its business plan. The corporate headquarters is located in Paisley, Florida. The Company’s planned line of business will be the design, development, and testing of turbine truck engine technology licensed through Alpha Engines Corporation (“Alpha”). Alpha owns the patents to a new gas turbine engine system called Detonation Cycle Gas Turbine Engine. If the Company can successfully demonstrate a highway truck engine using the technology, the Company intends to form a joint venture with a major heavy duty highway truck manufacturer to manufacture, market, and sell turbine truck engines for use in heavy duty highway trucks throughout the United States.

2.    Financial Statements

In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three month periods ended March 31, 2011 and 2010 and the period November 27, 2000 (Date of Inception) through March 31, 2011, (b) the financial position at March 31, 2011 and December 31, 2010, and (c) cash flows for the three month periods ended March 31, 2011 and 2010, and the period November 27, 2000 (Date of Inception) through March 31, 2011, have been made.

The unaudited financial statements and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended December 31, 2010. The results of operations for the three month period ended March 31, 2011 are not necessarily indicative of those to be expected for the entire year.

3.    Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended March 31, 2011 and since November 27, 2000 (date of inception) through March 31, 2011, the Company has had a net loss of $834,968 and $14,968,115, respectively. As of March 31, 2011, the Company has not emerged from the development stage and has a working capital deficit of $763,584. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to begin operations and to achieve a level of profitability. Since inception, the Company has financed its activities principally from the sale of public equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

4.    Commitments and Contingencies

On February 1, 2006, the Company entered into an agreement with Embry-Riddle Aeronautical University to complete a 3D model and certain modifications to the original Detonation Gas Turbine Engine in exchange for a fixed price amount. The Company has expensed $10,670 related to this agreement which expired on June 30, 2007. On August 31, 2007, the Company extended the original agreement through December 31, 2009 with a total additional amount not to exceed approximately $297,000. The Company incurred approximately $6,000 and $48,000 in additional costs during the three months ended March 31, 2011 and 2010, respectively.

 

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Once the Company becomes operational, it will be obligated to pay production royalties to Alpha at the rate of eight percent of net sales of the Detonation Cycle Gas Turbine Engine. The minimum royalty amount is $250,000 per year, and the Company began accruing for the fee in February 2005. The royalty fee will be reduced by production royalties paid. Unpaid royalty fees amounted to $1,114,000 and $1,051,500 as of March 31, 2011 and December 31, 2010, respectively.

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

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

As part of the Agreement, the parties anticipate a mutually agreed stock swap between the two publically traded companies will be pursued. No agreement has been reached as to this proposed stock swap through the date of filing.

The Company also entered into an Exclusive Agency Agreement with Falcon Power Co., Ltd. The Agreement grants TTE the exclusive right to resell Falcons’ Products in the State of New York, State of Florida, State of Oklahoma and State of Colorado. As part of this agreement the company was to pay an Agency fee to Falcon in the amount of $1,000,000, with $100,000 due within three days of the agreement and the reminder to be paid within three months following execution of the agreement. During the year ended December 31, 2010 the Company paid $100,000 of the Agency fee, which has been included as an agency fee on the accompanying balance sheet and will be amortized over the five year term of the agreement. The remaining $900,000 of the Agency fee is due on June 18, 2011. As of March 31, 2011, the Company has recorded an agency fee intangible of approximately $893,000 related to these agreements. Amortization related to these agreements was approximately $50,000 for the three months ended March 31, 2011. Further amortization expense related to these agreements for the years 2011 to 2014 will be approximately $209,000 annually, and approximately $107,000 in 2015.

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

The Company entered into a Cooperative Agreement (the “Agreement”) dated April 27, 2010 with Beijing Royal Aerospace Facilities Co., Ltd., a PRC corporation (“Beijing Royal”), for the purpose of providing a framework for the collaboration between the two companies on the development and commercialization of the Detonation Cycle Gas Turbine Engine (“DGCT”) specifically for application to heavy duty trucks, with Beijing Royal to be the Company’s exclusive development partner with respect to 300 – 600 HP DCGT in the People’s Republic of China. The terms of the agreement replace the terms of the agreement dated January 21, 2009 with Aerospace Machinery and Electric Co., Ltd. The terms of the agreement call for the Company to complete the design plan for the 540 HP DCGT engine within three (3) months and submit it to Beijing Royal for further submission to PRC regulatory authorities for review and approval. The parties have agreed to execute a more detailed joint development contract upon the approval of the DCGT project by PRC regulatory authorities to specify the details of their cooperation on the development of the DCGT.

 

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The Agreement further provides that all documentation provided by the Company to Beijing Royal at this stage shall be solely for the purpose of making a funding application, and that any further use shall be by agreement of the parties. The intellectual properties jointly developed under the Agreement would be owned by both parties equally.

The Company entered into various strategic alliances with foreign companies during 2009. During the three months ended March 31, 2011, there were no material changes as disclosed in the December 31, 2010 Form 10K which would warrant further disclosure to these financial statements. The agreements with GUOHAO, TIANJIN, and BEIJING ROYAL are based on the company building, testing, and demonstrating a prototype that will meet the efficiencies required to commercialize the engine for their respective products. Once the company has demonstrated that it can produce an engine with the power output and efficiencies required, the time line set in the original agreements for the respective companies to fulfill their agreements and fund the company to bring the engine to full commercialization for that product will start at that time.

In August 2010, the Company entered into an employment agreement with the Company’s Vice President. Under the employment agreement, the employment term commences on January 1, 2010 through August 2011 and an annual base salary of $225,000. Additional performance-based bonuses are provided for up to 300,000 shares of the Company’s common stock, with the value not to exceed $200,000. During the year ended December 31, 2010, the Company committed to issue 300,000 shares of common stock at $0.25 per share, which represented the fair value of the common stock on the commitment date. At the commitment date, the Company recorded $75,000 in prepaid services paid with common stock. As of March 31, 2011, the Company has recognized approximately $58,000 of stock based compensation expense related to the issuance. The prepaid is being amortized over the employment agreement which represents the expected requisite service period.

In August 2010, the Company entered into an employment agreement with the Company’s Chief Executive Officer. Under the employment agreement, the employment term runs through August 2013 and includes an annual base salary of $225,000. Additional performance-based bonuses are provided for up to 400,000 shares of the Company’s common stock, with the value not to exceed $500,000. During the year ended December 31, 2010, the Company committed to issue 400,000 shares of common stock at $0.25 per share, which represented the fair value of the common stock on the commitment date. At the commitment date, the Company recorded $100,000 in prepaid services paid with common stock. As of March 31, 2011, the Company has recognized approximately $21,900 of stock based compensation expense related to the issuance. The prepaid is being amortized over the employment agreement which represents the expected requisite service period.

In August 2010, the Company entered into an employment agreement with the Company’s general manager of its potential Chinese subsidiary. Under the employment agreement, the employment term runs through August 2011 and includes an annual base salary of $250,000. Additional performance-based bonuses are provided for up to 300,000 shares or based on 10% of contracted sales, whichever is more favorable to the employee. The salary and bonus will be withheld until the Company is producing sufficient cash flow to cover the salary expenses at which time the bonus is also authorized. Through the date of this filing, the subsidiary company has not been established nor generated any cash flows.

In September 2010, the Company entered into an employment agreement with the Company’s Chief Information Officer. Under the employment agreement, the employment term runs through September 15, 2011 and includes an annual base salary of $100,000. Additional performance-based bonuses are provided for up to 100,000 shares of the Company’s common stock, with the value not to exceed $150,000. During the year ended December 31, 2010, the Company committed to issue 100,000 shares of common stock at $0.27 per share, which represented the fair value of the common stock on the commitment date. At the commitment date, the Company recorded $27,000 in prepaid services paid with common stock. As of March 31, 2011, the Company recognized approximately $14,650 of stock based compensation expense related to the issuance. The prepaid is being amortized over the employment agreement which represents the expected requisite service period.

 

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In November 2010, the Company entered into an employment agreement with the Company’s Chief Technology Officer. Under the employment agreement, the employment term runs through October 30, 2011 and includes an annual base salary of $24,000. Additional performance-based bonuses are provided for up to 300,000 shares of the Company’s common stock, with the value not to exceed $300,000. During the year ended December 31, 2010, the Company committed to issue 300,000 shares of common stock at $0.24 per share, which represented the fair value of the common stock on the commitment date. At the commitment date, the Company recorded $72,000 in prepaid services paid with common stock. As of March 31, 2011, the Company recognized approximately $30,000 of stock based compensation expense related to the issuance. The prepaid is being amortized over the employment agreement which represents the expected requisite service period.

Related to the above employment agreements, the Company committed to issue a total of 1,100,000 shares of common stock. As of March 31, 2011, there were approximately 500,000 shares vested related to the employment agreements. For the three months ended March 31, 2011, the Company recognized approximately $44,000 in compensation expense related to the above agreements.

5.    Related Party Transactions

During the year ended December 31, 2003, the Company signed a note payable with a related party in the amount of $15,000. The balance at March 31, 2011 and December 31, 2010 is $1,901. This note payable was unsecured, non-interest bearing and has no specific repayment terms, however, payment is not expected prior to March 31, 2011.

As of March 31, 2011 and December 31, 2010, accounts payable included $3,557 and $47,557 due to a Company owned by the Company’s Chief Technology Officer.

As of March 31, 2011 and December 31, 2010, accounts payable included $0 and $40,150, respectively, due to a director of the Company for various accounting services.

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

6.    Convertible Note Payable

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

Pursuant to the terms of the Debenture, the related Securities Purchase Agreement, Secured Promissory Note and Stock Pledge Agreement, each executed in connection therewith, the Company has issued its $1,000,000 Convertible Debenture (the “Debenture”) for the payment by Golden Gate of $100,000 in cash and the execution and delivery by Golden Gate of a $900,000 Secured Promissory Note of even date (the “Note”), bearing interest at 8% per annum. For financial statement purposes, these items have been netted, as the Company has the legal right of offset.

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

During 2011 and since inception, the Company has drawn $50,000 and $795,000 in proceeds related to the note, respectively. During 2011 and since inception, the Holder has converted $25,000 and $747,000 in convertible notes into 166,667 and 7,173,485 common shares, respectively.

In December 2009, the convertible debenture agreement was amended. As a result of the amendment, effective January 15, 2010, the conversion price has a $0.15 fixed floor price that limits the number of common shares upon conversion to an amount that is substantially below the Company’s authorized common shares that can be issued. Additionally, the penalty associated with the default provision to maintain timely filings of all reports required by the Securities and Exchange Commission was removed. Lastly, the default provision related to the interest rate adjustment indexed to changes in the Company’s common stock was removed. In the event of certain defaults, the Company would pay a default fixed interest rate of 9.75% per annum.

 

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Based on the amended agreement, the Company determined that all potential derivative features associated with the original debenture agreement were removed.

The following table presents the activity during 2011 related to the debenture:

 

Principal balance of the debenture

   $ 50,000   

Less reduction for:

  

Intrinsic value of beneficial conversion feature

     (7,000
        

Recorded at closing

   $ 43,000   

Amounts converted into common stock

     (25,000

Amortization of beneficial conversion feature (interest expense) through March 31, 2011

     3,575   
        

Carrying value at March 31, 2011

   $ 21,575   
        

6.    Options and warrants

The Company’s 2006 Incentive Compensation Plan authorizes up to 2,000,000 shares of common stock to any employee or Consultant during any one calendar year for grants of both incentive stock options and non-qualified stock options to key employees, officers, directors, and consultants. Options granted under the Plan must be exercised within a term determined by the Board of Directors. The Option Price payable for the shares of Common Stock covered by any Option shall be determined by the Board of Directors, provided that such exercise price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of the Option and shall not, in any event, be less than the par value of a Share on the date of grant of the Option. The Company did not grant any options and warrants to consultants and directors during the three month periods ended March 31, 2011 and 2010.

The Company’s 2008 Incentive Compensation Plan authorizes up to 5,000,000 shares of common stock to restrictions on resale upon the purchasers of the Stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors. As of March 31, 2011, no shares have been issued under this plan.

The fair value of each option under the 2006 Incentive Compensation Plan was estimated on the date of grant using the Black Scholes model that uses assumptions noted in the following table. Expected volatility is based on the Company’s historical market price at consistent points in periods equal to the expected life of the options. The expected term of options granted is based on the Company’s historical experience. The risk-free interest rate for the periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company estimates forfeitures; both at the date of grant as well as throughout the requisite service period, based on the Company’s historical experience and future expectations.

The aggregate intrinsic value of options outstanding and exercisable at March 31, 2011, based on the Company’s closing stock price of $0.24 was $126,000. The aggregate intrinsic value of options outstanding and exercisable at March 31, 2010, based on the Company’s closing stock price of $0.48 was $397,196. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

During the three months ended March 31, 2011 and 2010, the Company issued 800,000 and 0 warrants, respectively, in conjunction with the issuance of common stock. The warrants entitle the holder to purchase 800,000 and 0 shares of the Company’s common stock, respectively, at any time, at an exercise price of $0.30 per share.

The following table represents our stock option and warrant activity for the three months ended March 31, 2011:

 

      Shares      Range of Exercise
Prices
     Weighted Average
Grant Date Fair
Value
 

Outstanding and Exercisable

        

Outstanding at December 31, 2010

     3,215,413       $ 0.10 – 2.00      

Options and warrants granted

     800,000       $ 0.30       $ 0.30   

Options and warrants exercised

        

Options and warrants cancelled or expired

        
              

Outstanding at March 31, 2011

     4,015,413       $  0.10 – $2.00      

Exercisable at March 31, 2011

     4,015,413       $ 0.10 – $2.00      

 

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The following table summarizes information about options and warrants outstanding and exercisable as of March 31, 2011:

 

     Outstanding Options and Warrants      Exercisable Options and Warrants  

Range of Exercise Price

   Number
Outstanding
     Weighted
Average
Remaining
Life
     Weighted
Average
Price
     Weighted
Average
Remaining Life
     Number
Exercisable
     Weighted
Average
Price
 

$ 0.10 – $2.00

     4,015,413         4.00 Years       $  0.43         4.00 Years         4,015,413       $  0.43   

Net cash proceeds from the exercise of options and warrants were $0 for each of the three months ended March 31, 2011 and 2010.

8. Earnings per Share

Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. For the three month periods ended March 31, 2011 and 2010 and for the period from November 27, 2000 (Date of Inception) through March 31, 2011, the Company had 4,015,413, 1,907,413 and 4,015,413 potentially dilutive common stock options and warrants, respectively, which were not included in the computation of loss per share.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

               OPERATIONS

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

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

 

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OVERVIEW OF THE COMPANY

We are a development-stage company and not yet generating any revenues. We expect to continue the commercialization of our Detonation Cycle Gas Turbine Engine (“DCGT”) technology. The licensor of the acquired technology has passed the research and development phase and has designed a working prototype. We need to redesign an engine for our application based on this proven Core Technology. We are relying on AbM Engineering in collaboration with AMEC to design, construct and test a 540 horsepower engine prototype for our licensed application (see “Business of the Company”, “Our Product.”).

The financing for our development activities to date has come from the sale of common stock. We intend to finance our future development activities and working capital needs largely from the sale of public equity securities with additional funding from a private placement or secondary offering of up to $10 million and other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements.

Since we have had a limited history of operations, we anticipate that our quarterly results of operations will fluctuate significantly for the foreseeable future. We believe that period-to-period comparisons of our operating results should not be relied upon as predictive of future performance. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies at an early stage of development, particularly companies commercializing new and evolving technologies such as the DCGT. In July 2002, we acquired the license for the DCGT technology for the manufacture and marketing of heavy-duty highway truck engine.

For the three months ended March 31, 2011 compared to the three months ended March 31, 2010

Research and Development Costs – During the three months ended March 31, 2011 and 2010, research and development costs totaled $16,373 and $58,514, respectively. The decrease of $42,141 was mainly attributable to additional costs incurred for the testing of the DCGT engine in 2010.

Operating Costs – During the three months ended March 31, 2011 and 2010, operating costs totaled $815,032 and $595,901, respectively. The increase of $219,131 was mainly attributable to an approximate $76,000 increase in payroll expenses due to an increase in salaries and additional employees and a $242,155 increase in Professional Fees for the addition of a public relations firm (Accounting, Legal, Public Relations, and Marketing).

Interest (Income) Expense - Net - During the years three months ended March 31, 2011 and 2010, net interest expense totaled $3,563 and $8,564, respectively. The decrease of $5,001 was primarily due to the Company issuing less convertible debentures to Golden Gate Investors, Inc. of $50,000 in 2011 and $253,000 in 2010.

The net loss for the three months ended March 31, 2011 and 2010 was $834,968 and $662,979, respectively. The increase of $171,989 was mainly attributable to the increase in professional fee expenses and other operating costs.

Liquidity and capital resources

As shown in the accompanying financial statements, for the three months ended March 31, 2011 and 2010 and since November 27, 2000 (date of inception) through March 31, 2011, the Company has had net losses of $834,968, $662,979 and $14,968,115, respectively. As of March 31, 2011, the Company has not emerged from the development stage. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to begin operations and to achieve a level of profitability. However, there can be no assurance that the Company will be able to raise capital or begin operations to achieve a level of profitability to continue as a going concern. Since inception, the Company has financed its activities principally from the sale of public equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements.

 

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As previously mentioned, since inception, we have financed our operations largely from the sale of common stock. From inception through March 31, 2011 we raised cash of approximately $3,582,000 net of issuance costs, through private placements of common stock financings and $795,000 through the issuance of convertible notes payable. Additionally, we have raised net proceeds from stockholder advances of approximately $109,000.

Since our inception through March 31, 2011 we have incurred $3,752,088 of research and development costs. These expenses were principally related to the acquisition of a license agreement in July 2002 in the amount of $2,735,649, which was expensed to research and development costs for the DCGT technology and general and administrative expenses.

We have incurred significant net losses and negative cash flows from operations since our inception. As of March 31, 2011, we had an accumulated deficit of $14,968,115 and working capital deficit of $763,584.

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

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

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

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

Golden Gate’s secured Promissory Note is payable at the rate of 8% per annum, payable monthly and provides that for the prepayment of the Note in an amount not less than $200,000 monthly upon the happening of certain events. It matures on June 30, 2012. During 2011 and since inception, the Company has drawn $50,000 and $795,000, respectively, in proceeds related to the note. During 2011 and since inception, the Holder has converted $25,000 and $747,000 in convertible notes into 166,667 and 7,173,485 common shares, respectively.

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

We will be dependent upon our existing cash, together with anticipated net proceeds from a public offering and future debt issuances and private placements of common stock and potential license fees, to finance our planned operations through the next 12 months. We will continue to proceed in the design and testing phase of the DCGT engine during the next 12 months and will require additional funding to continue operations. Based on our anticipated growth, we plan to add several employees to our staff.

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

 

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The Company may receive proceeds in the future from the exercise of warrants and options outstanding as of March 31, 2011 in accordance with the following schedule:

 

     Approximate
Number of
Shares
     Approximate
Proceeds*
 

2006 Non-Plan Options and Warrants

     4,015,413       $ 1,731,533   

 

* Based on weighted average exercise price.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

We account for stock option grants in accordance with US GAAP. Stock-based compensation cost recognized during the periods ended March 31, 2011 and 2010 includes compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006 and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on their relative grant date fair values estimated in accordance with US GAAP. The Company recognizes compensation expenses on a straight-line basis over the requisite service period.

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

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

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

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

 

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New Accounting Pronouncements

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

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4T.  Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of and for the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective. The controls were determined to be ineffective due to the lack of segregation of duties. Currently, management contracts with an outside CPA to perform the duties of the Chief Financial Officer and Principle Accounting Officer and an outside consultant to assist with the preparation of the filings. However, until the Company has received additional funding, they are unable to remediate the weakness.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the three months ended March 31, 2011, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1.    Legal Proceedings

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

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

During the three month period ended March 31, 2011, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.

During January 2011, the Company issued 446,167 shares of common stock for services valued at a price of $0.15 per share.

During January 2011, the Company issued 300,000 shares of common stock for employee services valued at a price of $0.24 per share.

During February 2011, the Company issued 700,000 shares of common stock for employee services valued at a price of $0.25 per share.

During February 2011, the Company issued 100,000 shares of common stock for employee services valued at a price of $0.27 per share.

During February 2011, the Company issued 551,000 shares of common stock for cash at a price of $0.10 per share.

During March 2011, the Company issued 997,000 shares of common stock for cash at a price of $0.10 per share.

During March 2011, the Company issued 166,667 shares of common stock for the conversion of notes payable at a price of $0.15 per share.

Item 3.    Defaults upon Senior Securities

There have been no defaults in any material payments during the covered period.

 

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Item 4.    Removed and Reserved

Item 5.    Other Information

The Company does not have any other material information to report with respect to the three month period ended March 31, 2011.

Item 6.    Exhibits and Reports on Form 8-K

(a) Exhibits included herewith are:

 

31.1    Certification of the Chairman of the Board, Chief Executive Officer, and Principal Financial Officer (This certification required as Exhibit 31 under Item 601(a) of Regulation S-K
31.2   

Certification of the Principal Accounting Officer (This certification required as Exhibit 31 under Item 601(a) of

Regulation S-K

32.1    Written Statements of the Chief Executive Officer, This certification required as Exhibit 32 under Item 601(a) of Regulation S-K is furnished in accordance with Item 601(b)(32)(iii) of Regulation S-K
32.2    Written Statements of the Chief Financial Officer and Principal Accounting Officer (This certification required as Exhibit 32 under Item 601(a) of Regulation S-K is furnished in accordance with Item 601(b)(32)(iii) of Regulation S-K

 

 

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereto duly authorized:

 

   

TURBINE TRUCK ENGINES, INC.

   
Dated: May 13, 2011  

By:

  /S/ MICHAEL ROUSE  
       
   

Chief Executive Officer and Chairman of the

Board (Principal Executive Officer and

Principal Financial Officer)

 
Dated: May 13, 2011  

By:

  /S/ REBECCA A. MCDONALD  
       
    Principal Accounting Officer  

 

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