10-K 1 d10k.htm FORM 10-K Form 10-K
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

 

FORM 10-K

 

 

 

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

For the fiscal year ended December 31, 2009

 

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

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

Commission File Number

333-109118

 

 

Turbine Truck Engines, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Nevada   59-3691650

(State or Other Jurisdiction of

Incorporation or Organization)

  

(I.R.S. Employer

Identification Number)

917 Biscayne Boulevard Suite 6, Deland, Florida 32724

(Address of Principal Executive Offices)

(386) 943-8358

(Registrant’s Telephone Number, Including Area Code)

 

 

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

 

$.001 par value preferred stock    Over the Counter Bulletin Board
$.001 par value common stock    Over the Counter Bulletin Board

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

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

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

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

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

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

 

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

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

The Aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2009 was $7,825,555.

There were 42,747,265 shares of the Registrant’s $0.001 par value common stock outstanding as of April 9, 2010.

Documents incorporated by reference: none

 

 

 

Table of Contents

TURBINE TRUCK ENGINES, INC.

FORM 10-K INDEX

 

Part I       3
Item 1.    Description of Business    3
Item 1A.    Risk Factors    8
Item 1B.    Unresolved Staff Comments    8
Item 2.    Description of Property    8
Item 3.    Legal Proceedings    8
Item 4.    Reserved    8
Part II       8
Item 5.    Market for Common Equity and Related Stockholder Matters    8
Item 6.    Selected Financial Data    10
Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations    10
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk    14
Item 8.    Financial Statements and Supplementary Data    15
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    42
Item 9A(T).    Controls and Procedures    42
Item 9B.    Other information    43
Part III       43
Item 10.    Directors, Executive Officers and Corporate Governance    43
Item 11.    Executive Compensation    44
Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters    45
Item 13.    Certain Relationships and Related Transactions, and Director Independence    46
Item 14.    Principal Accountant Fees and Services    46
Item 15.    Exhibits and Financial Statement Schedules    47
   Signatures    47
   Certifications   

 

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TURBINE TRUCK ENGINES, INC.

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

PART I

 

ITEM 1. DESCRIPTION OF BUSINESS

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

The Company entered into a LOI Joint Venture Agreement dated September 7, 2009 with GENES GUOHAO TECHNOLOGY, Co., Ltd., a Chinese corporation (“GUOHAO”) for the purpose of providing a framework for the collaboration between the two companies on the modification of the DCGT engine for coal fired power generation engine applications. The terms of the Agreement call for GUOHAO to fully fund the project and devote all available resources towards the development of the new fuel source and to work in collaboration with all of the Company’s development partners in the design modifications, construction, and testing for a dry coal slurry fuel for the DCGT. Upon completion, GUOHAO will form a new corporation to Joint Venture with TURBINE. TURBINE, in return will then license the DCGT to the new entity for a 49% ownership interest. The Joint Venture, the terms of which are to be determined at a later date, will license the entity to manufacture and sell the DCGT coal fired engines in Mongolia. As of December 31, 2009 ABM engineering has been conducting research into the use of coal slurries as a fuel source for the DCGT, under our agreements scope of work. Upon completion ABM intends to conduct preliminary testing to demonstrate its viability.

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

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

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

 

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As of December 31, 2009 TIANJIN and their engineering team have been working at their own expense and have submitted Phase One design drawings for a motorcycle DCGT engine. The Company is currently reviewing the designs.

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

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

As of December 31 2009, AMEC has completed their comprehensive investigation of the DCGT technology and believes the technology can be commercialized for a heavy duty truck application and is moving forward with acquiring the right private and governmental funding partners and securing the best divisions of Aerospace to facilitate the project.

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

Under our Agreement with Alpha, they will continue to consult and advise with AbM Engineering on future development of the 540 horsepower DCGT highway truck engine prototype at AbM’s facilities in Daytona Beach, Florida. We receive ongoing status reports of their progress but do not participate in the design, construction and/or testing of the engine. This new energy efficient detonation cycle gas turbine can be designed and manufactured as a new or replacement engine for all heavy duty trucks that utilize engines ranging from 300 to 1,000 horsepower. It is our intention to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine.

It was our initial intention to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine, however, the Company now intends to license other applications of the DCGT engine technology as deemed necessary and appropriate to further the development and commercialization of the engines.

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

To date, we have no marketable product but have completed initial testing of the 540 horsepower prototype. The Company has started demonstrating the engine to investors, and has begun demonstrating it to potential joint venture partners. The contract with Alpha has been completed and comprehensive testing and development of the 540 horsepower prototype is now moving forward at AbM Engineering’s facilities.

 

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

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

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

Golden Gate’s secured Promissory Note is payable at the rate of 8% per annum with interest, payable monthly and provides for the prepayment of the Note in an amount not less than $200,000 upon the triggering of certain events. It matures on June 30, 2012. During 2009, the Company has drawn $395,000 in proceeds related to the note and converted $432,000 in convertible notes into 5,133,532 common shares. For financial statement purposes, the Securities Purchase Agreement and the Convertible Promissory Note have been netted, as the Company has the legal right of offset.

Our Product

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

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

Under our Agreement with Alpha, they will continue to consult and advise with AbM Engineering on future development of this 540 horsepower DCGT highway truck engine prototype at AbM’s facilities in Daytona Beach, Florida. We receive ongoing status reports of their progress but do not participate in the design, construction and/or testing of the engine. This new energy efficient detonation cycle gas turbine can be designed and manufactured as a new or replacement engine for all heavy duty trucks that utilize engines ranging from 300 to 1,000 horsepower. It is our intention to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine.

It was our initial intention to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine, however, the Company now intends to license other applications of the DCGT engine technology as deemed necessary and appropriate to further the development and commercialization of the engines.

PATENTS

Patent #6,000,214 is a novel patent with a 20-year life from the filing date of December 16, 1997. The patent was based on research and development beginning in 1984, which included the design, construction, and testing of

 

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four working prototypes. The patent attorneys were Schoemaker & Mattare Ltd. The inventor will file additional patents to protect any new developments in the engine technology. We will have access to any new patent filings on the highway truck engines as provided for in our licensing agreement.

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

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

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

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

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

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

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

Alpha has developed four working prototypes as described below:

 

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

 

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

 

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

 

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

 

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

 

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

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

 

  •  

Air cooled - less than 2 pounds per horsepower

 

  •  

Fewer moving parts - less maintenance

 

  •  

Flex-fuel and mixed fuels capability

 

  •  

Operates on all hydrocarbon fuels, hydrogen and syn fuels

 

  •  

Cold start capability with any fuels

 

  •  

Burns 30% less fuel “Greenhouse exhaust gases”

 

  •  

Less nitrogen oxides and carbon monoxide exhaust emissions

 

  •  

Less hydrocarbon exhaust emissions

 

  •  

No lube oil, filters or pumps

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

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

We intend to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine. We will not require governmental approval until such time as the engine is placed in vehicles for use. Our engine will meet the new more stringent tailpipe emission requirements set forth by the Environmental Protection Agency (“EPA”).

Research and development of our engine was completed in 1997 with patents obtained in 1999. Through testing, we hope to be able to comply with existing and future environmental laws. We intend to supply our fuel efficient, lower emission engine to a marketplace that must comply with more stringent governmental regulations. In each of the last two (2) fiscal years, the Company has spent $108,938 (2009) and $136,088 (2008) on research and development

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

 

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

 

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

 

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

 

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

During the year ended December 31, 2006, the Company issued 125,000 shares of common stock in satisfaction of the $250,000 note payable to Alpha and the accrual of minimum royalty fees began. In addition, during the year ended December 31, 2006, the Company paid $416,667 of royalty fees through the issuance of 100,000 shares of common stock. As of December 31, 2009, the Company has accrued $801,500 of royalty fees related to this agreement.

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

COMPETITION

The Company has identified seven (7) major engine manufacturers, including Ford, Caterpillar, Cummins, Detroit Diesel, Mack Trucks, Navistar International and Volvo Truck that each manufacture heavy duty truck engines, both gasoline and diesel, which are likely to be the major competitors to our company once our product is

 

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ready for market. To the Company’s knowledge, at this time, none of the Company’s major competitors are working on the development of a turbine engine that would be in direct competition to the Company’s engine, and although we would be competing with them for customers, the Company believes that the technological differences between its product and those that are currently on the market, will provide the Company with a market niche that it can expand upon, even in the face of such established competitors.

EMPLOYEES

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

 

ITEM 1A. RISK FACTORS

Not applicable.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

 

ITEM 2. DESCRIPTION OF PROPERTY

The Company leases 3600 sq. ft. of space with Air Papa Bravo for an administrative office/demonstration facility to house the development of the prototype. The lease agreement is for a two year period, expiring March 31, 2009 with an option to extend the lease for a second two year term. The base rent is $2,000 per month and the lease agreement contains an option to purchase the facility for $310,000 at the expiration of the lease. The Company has negotiated month to month terms at the end of this lease until a new lease can be negotiated.

 

ITEM 3. LEGAL PROCEEDINGS

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

 

ITEM 4. RESERVED

PART II

 

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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

 

     Bid Prices
     High    Low

FISCAL 2009

      

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

    $ 0.21    $ 0.07

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

    $ 0.10    $ 0.07

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

    $ 0.768    $ 0.08

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

    $ 0.46    $ 0.33

FISCAL 2008

      

First Quarter (January 1, 2008 through March 31, 2008)

    $ 0.435    $ 0.15

Second Quarter (April 1, 2008 through June 30, 2008)

    $ 0.25    $ 0.11

Third Quarter (July 1, 2008 through September 30, 2008)

    $ 0.185    $ 0.11

Fourth Quarter (October 1, 2008 through December 31, 2008)

    $ 0.17    $ 0.0765

 

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On March 31, 2010 the closing bid price of the Company’s Common Stock as reported by the OTCBB was $0.48 and there were approximately 387 shareholders of record.

DIVIDENDS

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

Common Stock

During the year ended December 31, 2009, 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 October 2009, the Company issued 100,000 shares of common stock to a qualified investor for services valued at $0.42 per share for a total of $42,000.

During October 2009, the Company issued 11,363 shares of common stock to a qualified investor for $0.22 per share for a total of $2,500.

During October 2009, the Company issued 246,107 shares of common stock to a qualified investor for $0.18 per share for a total of $44,299.

During October 2009, the Company issued 25,882 shares of common stock to qualified investors for $0.17 per share for a total of $4,400.

During November 2009, the Company issued 98,775 shares of common stock to a qualified investor for $0.18 per shares for a total of $17,780.

During November 2009, the Company issued 167,500 shares of common stock to a qualified investor for $0.20 per share for a total of $33,500.

During December 2009, the Company issued 10,000 shares of common stock to qualified investors for $0.20 per share for a total of $2,000.

During December 2009, the Company issued 102,111 shares of common stock to a qualified investor for $0.18 for a total of $18,380.

During December 2009, the Company issued 2,500 shares of common stock to qualified investors for $0.19 per share for a total of $475.

During December 2009, the Company issued 100,000 shares of common stock to qualified investors for $0.16 per share for a total of $16,000.

During December 2009, the Company issued 5,882 shares of common stock to qualified investors for $0.17 per share for a total of $1,000.

During December 2009, the Company issued 1,100,000 shares of common stock to qualified investors for $0.30 per share for a total of $330,000.

During December 2009, the Company issued 345,000 shares of common stock to a qualified investor for services valued at $0.38 per share for a total of $131,100.

During December 2009, the Company issued 1,495,327 shares of common stock to a qualified investor for $0.1284 per share for a total of $192,000.*

 

* Relates to debt that was converted to common stock.

 

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

 

ITEM 6. SELECTED FINANCIAL DATA

Not required.

 

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

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

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

Background of our 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.

 

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The Company entered into a LOI Joint Venture Agreement dated September 7, 2009 with GENES GUOHAO TECHNOLOGY, Co., Ltd., a Chinese corporation (“GUOHAO”) for the purpose of providing a framework for the collaboration between the two companies on the modification of the DCGT engine for coal fired power generation engine applications. The terms of the Agreement call for GUOHAO to fully fund the project and devote all available resources towards the development of the new fuel source and to work in collaboration with all of the Company’s development partners in the design modifications, construction, and testing for a dry coal slurry fuel for the DCGT. Upon completion, GUOHAO will form a new corporation to Joint Venture with TURBINE. TURBINE, in return will then license the DCGT to the new entity for a 49% ownership interest. The Joint Venture, the terms of which are to be determined at a later date, will license the entity to manufacture and sell the DCGT coal fired engines in Mongolia. As of December 31, 2009 Abm engineering has been conducting research into the use of coal slurries as a fuel source for the DCGT, under our agreements scope of work. Upon completion Abm intends to conduct preliminary testing to demonstrate its viability.

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

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

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

As of December 31, 2009 TIANJIN and their engineering team have been working at their own expense and have submitted Phase One design drawings for a motorcycle DCGT engine. The Company is currently reviewing the designs.

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

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

As of December 31 2009, AMEC has completed their comprehensive investigation of the DCGT technology and believes the technology can be commercialized for a heavy duty truck application and is moving forward with acquiring the right private and governmental funding partners and securing the best divisions of Aerospace to facilitate the project.

Alpha has completed the design and prototype of a 540 hp engine for use in highway trucks. The Company entered into a contractual agreement (the “Agreement”) dated July 1, 2008 with AbM Engineering, LLC (AbM) for the

 

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purpose of the continued development and testing of the current 540 horsepower DCGT engine and a 70 horsepower/50kw generator combination. AbM is currently working in a collaborative effort with AMEC’s engineers to modify and test other DCGT engine applications.

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

It was our initial intention to target 18 wheel class 8 vehicles commonly used for transporting goods throughout the United States for distribution of our engine, however, the Company now intends to license other applications of the DCGT engine technology as deemed necessary and appropriate to further the development and commercialization of the engines.

The following steps have been or are being taken by the Company to demonstrate the viability of a final prototype engine:

 

Step 1    The completion of the design has been done and the prototype engine has been built
Step 2    The Company has leased its office and demonstration facilities
Step 3    The Engine is undergoing continuing testing and development, the cost of which is anticipated to be approximately $2,500,000

In Step 3, we will rely on AbM, AMEC, TIANJIN, GUOHAO and potentially other foreign or domestic partners to develop and test the prototype engine at their facilities. AbM, AMEC, and the others will conduct test demonstrations to show the viability and function of the engine. The cost of the on-going testing is expected to be funded from the proceeds of a private placement offering.

For the year ended December 31, 2009 compared to the year ended December 31, 2008:

Research and Development Costs – During the years ended December 31, 2009 and 2008, research and development costs totaled $108,958 and $136,088, respectively. The decrease of $27,130 was mainly due to the completion of the design and testing of the prototype during 2008.

Operating Costs – During the years ended December 31, 2009 and 2008, operating costs totaled 1,871,243 and $827,365, respectively. The increase of $1,043,878 was mainly attributable to a $20,000 increase in advertising & attendance in financial business forums and conferences, an $88,000 increase in payroll expenses, a $126,000 increase in Professional Fees (Accounting, Legal, Public Relations, and Marketing), and a $71,000 increase in Travel and Lodging fees for trips to China and the financial business forums and conferences.

Interest (Income) Expense - Net - During the years ended December 31, 2009 and 2008 net interest expense totaled $291,717 and $19,244, respectively. The increase of $272,473 was primarily due to the Company issuing a convertible debenture to Golden Gate Investors, Inc. and the amortization of the beneficial conversion feature associated with the debentures during 2009 and 2008.

The net loss for the years ended December 31, 2009 and 2008 was ($2,271,917) and ($982,677), respectively. The increase of $1,289,240 was mainly attributable to the increase in operating costs and interest expenses.

Liquidity and capital resources

As shown in the accompanying financial statements, for the year ended December 31, 2009 and 2008 and since November 27, 2000 (date of inception) through December 31, 2009, the Company has had net losses of $2,271,917, $982,677 and $11,563,923, respectively. As of December 31, 2009, 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 December 31, 2009 we raised cash of approximately $2,511,000 net of issuance costs, through private placements of common stock financings and $552,250 through the issuance of convertible notes payable. Additionally, we have raised net proceeds from stockholder advances of approximately $109,000.

Since our inception through December 31, 2009 we have incurred $3,527,150 of research and development costs. These expenses were principally related to the acquisition of a license agreement in July 2002 in the amount of $2,735,649, which was expensed to research and development costs for the DCGT technology and general and administrative expenses.

We have incurred significant net losses and negative cash flows from operations since our inception. As of December 31, 2009, we had an accumulated deficit of $11,563,923 and working capital of $408,001.

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 2009 and since inception, the Company has drawn $395,000 and $552,250, respectively, in proceeds related to the note. During 2009 and since inception, the Holder has converted $432,000 and $469,000 in convertible notes into 5,133,532 and 5,633,540 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 December 31, 2009 in accordance with the following schedule:

 

     Approximate
Number of
Shares		    Approximate
Proceeds

2006 Non-Plan Options and Warrants

    2,007,413    $ 964,283

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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

We account for stock option grants in accordance with US GAAP. Stock-based compensation cost recognized during the years ended December 31, 2009 and 2008 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.

New Accounting Pronouncements

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

 

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

 

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ITEM 8. FINANCIAL STATEMENTS

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

Contents

 

Report of Independent Registered Public Accounting Firm

   16

Financial Statements:

   

Balance Sheets

    17

Statements of Operations

    18

Statements of Changes in Stockholders’ Deficit

    19-26

Statements of Cash Flows

    27-28

Notes to Financial Statements

    29-41

 

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Report of Independent Registered Public Accounting Firm

Board of Director’s and Stockholders

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

DeLand, Florida

We have audited the accompanying balance sheets of Turbine Truck Engines, Inc. (a development stage enterprise) (“the Company”) as of December 31, 2009 and 2008 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years ended December 31, 2009 and 2008 and the period from November 27, 2000 (Date of Inception) through December 31, 2009. These financial statements are the responsibility of the management of Turbine Truck Engines, Inc. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we expressed no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Turbine Truck Engines, Inc. as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years ended December 31, 2009 and 2008 and the period from November 27, 2000 (Date of Inception) through December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company incurred a net loss of $2,271,917 during the year ended December 31, 2009 and has an accumulated deficit of $11,563,923 from inception to December 31, 2009. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Pender Newkirk & Company LLP

Certified Public Accountants

Tampa, Florida

April 14, 2010

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Balance Sheets

 

     December 31,
2009		     December 31,
2008		  

Assets

     

Current assets:

     

Cash

    $ 603,601      $ 2,857   

Prepaid expenses

      10,000     

Loan costs net of accumulated amortization

        4,300   
                

Total current assets

      613,601        7,157   
                

Furniture and equipment, net of accumulated depreciation of $42,271 (2009) and $35,721 (2008)

      8,199        13,001   
                
   $ 621,800        20,158   
                

Liabilities and Stockholders’ Deficit

     

Current liabilities:

     

Accounts payable

    $ 139,520      $ 145,579   

Accrued expenses

        275,250   

Accrued interest

      14,349        13,113   

Accrued payroll

      51,231     

Due to related party

        23,854   

Note payable

      500        500   
                

Total current liabilities

      205,600        458,296   

Accrued expenses – long term

      269,250     

Accrued payroll – long term

      229,178        386,846   

Accrued royalty fees

      801,500        562,500   

Convertible note payable net of unamortized discount of $2,914 (2009) and $13,544 (2008)

      86        49,456   

Note payable to related party

      1,901        1,901   
                

Total liabilities

      1,507,515        1,458,999   

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; 39,693,484 (2009) and 21,859,764 (2008) shares issued and outstanding

      39,692        21,858   

Additional paid in capital

      10,914,424        8,099,730   

Deficit accumulated during development stage

      (11,563,923 )      (9,292,006 ) 

Prepaid consulting services paid with common stock

      (79,908 )      (101,333 ) 

Receivable for common stock

      (196,000 )      (167,090 ) 
                

Total stockholders’ deficit

      (885,715 )      (1,438,841 ) 
                
   $ 621,800      $ 20,158   
                

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

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Statements of Operations

 

     Years Ended December 31,    

Period

  
   2009     2008     November 27,
2000 (Date of
Inception) through
December 31,
2009		  

Research and development costs

    $ 108,958      $ 136,088      $ 3,527,150   

Operating costs

      1,871,243        827,365        7,673,486   
                        
     1,980,201        963,453        11,200,636   

Interest (income) expense

      291,716        19,224        363,287   
                        

Net loss

    $ (2,271,917 )    $ (982,677 )    $ (11,563,923 ) 
                        

Net loss per share

    $ (0.08 )    $ (0.05 )    $ (0.80 ) 
                        

Weighted average number of common shares outstanding

      29,573,293        18,884,072        14,434,628   
                        

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

 

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Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2009 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2009

 

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

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

    10,390,000      $ 10,390       

Net loss for the period

          $ (4,029 )
                              

Balance, December 31, 2000

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

Issuance of common stock for cash, February 2001*

    10,000        10      $ 4,990     

Issuance of common stock for cash, March 2001*

    10,000        10        4,990     

Issuance of common stock for cash, August 2001*

    10,000        10        4,990     

Issuance of common stock for cash, September 2001*

    55,000        55        27,445     

Payment for common stock issued under subscription receivable

         

Net loss

            31,789   
                              

Balance, December 31, 2001

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

Issuance of common stock for cash, January 2002*

    5,000        5        2,495     

Issuance of common stock for cash, February 2002*

    10,000        10        4,990     

Issuance of common stock for cash, April 2002*

    25,000        25        12,475     

Issuance of common stock for cash, May 2002*

    65,000        65        32,435     

Issuance of common stock for cash, June 2002*

    70,000        70        34,930     

Issuance of common stock for cash, August 2002*

    10,000        10        4,990     

Issuance of common stock for cash, October 2002*

    10,000        10        4,990     

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

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

Shares returned to treasury by founding stockholder, July 2002

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

Net loss

            (2,796,768 )
                              

Balance, December 31, 2002

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

Issuance of common stock for cash, February 2003*

    207,000        207        103,293     

Issuance of common stock for cash, September 2003*

    30,000        30        14,970     

Issuance of common stock for services, September 2003*

    290,000        290        144,710     

Payment for common stock issued under subscription agreement

         

Offering costs for private placement offering

          (33,774 )  

Net loss

            (190,567 )
                              

Balance, December 31, 2003

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

Issuance of notes payable with beneficial conversion feature

          19,507     

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

    20,000        20        39,980     

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

    31,125        31        62,219     

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

    25,025        25        50,025     

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

    1,000        1        1,999     

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

    3,500        4        6,996     

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

    3,000        3        5,997     

Amortization of offering costs related to Form SB-2 filing

          (10,159 )  

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

          (6,317 )  

Contribution from shareholder

          18,256     

Net loss

            (282,009 )
                              

Balance, December 31, 2004

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

 

* Common stock issued at $.50 per share.

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

 

19

Table of Contents

 

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

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

            $ (390 )   $ 10,000   

Net loss for the period

                (4,029 )
                                  

Balance, December 31, 2000

              (390 )     5,971   

Issuance of common stock for cash, February 2001*

                5,000   

Issuance of common stock for cash, March 2001*

                5,000   

Issuance of common stock for cash, August 2001*

                5,000   

Issuance of common stock for cash, September 2001*

                27,500   

Payment for common stock issued under subscription receivable

              300        300   

Net loss

                (31,789 )
                                  

Balance, December 31, 2001

              (90 )     16,982   

Issuance of common stock for cash, January 2002*

                2,500   

Issuance of common stock for cash, February 2002*

                5,000   

Issuance of common stock for cash, April 2002*

                12,500   

Issuance of common stock for cash, May 2002*

                32,500   

Issuance of common stock for cash, June 2002*

              (2,500 )     32,500   

Issuance of common stock for cash, August 2002*

                5,000   

Issuance of common stock for cash, October 2002*

                5,000   

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

                2,500,000   

Shares returned to treasury by founding stockholder, July 2002

             

Net loss

                (2,796,768 )
                                  

Balance, December 31, 2002

              (2,590 )     (184,786 )

Issuance of common stock for cash, February 2003*

                103,500   

Issuance of common stock for cash, September 2003*

                15,000   

Issuance of common stock for services, September 2003*

    $ (74,850 )             70,150   

Payment for common stock issued under subscription agreement

              2,500        2,500   

Offering costs for private placement offering

                (33,774 )

Net loss

                (190,567 )
                                  

Balance, December 31, 2003

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

Issuance of notes payable with beneficial conversion feature

                19,507   

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

                40,000   

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

                62,250   

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

                50,050   

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

                2,000   

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

                7,000   

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

                6,000   

Amortization of offering costs related to Form SB-2 filing

                (10,159 )

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

      6,317             

Contribution from shareholder

                18,256   

Net loss

                (282,009 )
                                  

Balance, December 31, 2004

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

 

20

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2009 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2009

 

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

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

    80,000    80    159,920     

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

    125,000    125    249,875     

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

    3,200    3    6,397     

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

    1,500    1    2,999     

Amortization of offering costs related to Form SB-2 filing

          (31,216 )  

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

          (19,413 )  

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

    5,000    5    9,995     

Capital contribution from stockholder, May 2005

          170,000     

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

    15,550    16    31,084     

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

           

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

    9,100    9    18,191     

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

    100,000    100    169,900     

Capital contribution from stockholder, June 2005

          450     

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

    5,000    5    4,995     

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

    40,000    40    39,960     

Amortization of prepaid services paid for with common stock

           

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

           

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

    25,000    25    24,975     

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

    20,000    20    19,980     

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

    5,000    5    4,995     

Net loss

            (1,068,738 )
                      

Balance, December 31, 2005

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

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

    65,000    65    64,935     

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

    1,500    2    1,498     

Amortization of prepaid services paid for with common stock

           

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

    1,675    2    1,673     

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

    5,000    5    4,995     

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

    10,000    10    9,990     

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

    10,000    10    11,490     

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

    15,000    15    11,985     

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

    200,000    200    99,800     

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

    150,000    150    172,350     

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

    109,091    109    119,891     

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

    30,000    30    14,970     

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

    125,253    125    106,341     

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

    10,000    10    8,065     

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

    167,200    167    83,433     

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

    210,000    210    104,790     

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

    10,000    10    7,385     

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

    100,000    100    416,567     

Issuance of options to employees, directors and consultants, September

          78,355     

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

 

21

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

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

              160,000   

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

              250,000   

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

              6,400   

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

              3,000   

Amortization of offering costs related to Form SB-2 filing

              (31,216 )

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

    19,413          

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

              10,000   

Capital contribution from stockholder, May 2005

              170,000   

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

              31,100   

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

    49,120           49,120   

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

              18,200   

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

       $ (170,000 )       

Capital contribution from stockholder, June 2005

              450   

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

              5000   

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

         (40,000 )       

Amortization of prepaid services paid for with common stock

         26,833           26,833   

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

         161,500           161,500   

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

              25,000   

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

              20,000   

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

              5000   

Net loss

              (1,068,738 )
                              

Balance, December 31, 2005

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

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

              65,000   

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

              1,500   

Amortization of prepaid services paid for with common stock

         204,556           204,556   

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

              1,675   

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

              5,000   

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

              10,000   

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

              11,500   

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

              12,000   

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

              100,000   

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

         (172,500 )       

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

         (120,000 )       

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

         (5,000 )        10,000   

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

              106,466   

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

              8,075   

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

              83,600   

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

         (12,500 )        92,500   

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

              7,395   

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

              416,667   

Issuance of options to employees, directors and consultants, September

              78,355   

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

 

22

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2009 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2009

 

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

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

    30,000      30      14,970   

Issuance of options to employees, directors and consultants, October

            155,185   

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

    16,000      16      7,984   

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

    15,000      15      9,985   

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

    188,000      188      93,812   

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

    100,000      100      49,900   

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

    2,833      3      1,697   

Net loss

               (1,465,077 )
                           

Balance December 31, 2006

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

Issuance of options to consultants, January

            155,188   

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

    26,000      26      12,974   

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

    300,000      300      149,700   

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

    50,000      50      32,950   

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

    10,000      10      5,090   

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

    100,000      100      49,900   

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

    20,000      20      11,980   

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

    239,130      239      54,761   

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

    50,000      50      43,200   

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

    20,000      20      14,280   

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

    558,696      559      127,941   

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

    25,000      25      16,225   

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

    25,000      25      17,475   

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

    2,000      2      998   

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

    24,000      24      5,976   

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

    26,000      26      6,474   

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

    75,000      75      32,175   

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

    8,000      8      3,992   

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

    100,000      100      43,900   

Amortization of prepaid services paid for with common stock

            

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

    72,000      72      17,928   

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

    160,000      160      87,840   

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

    3,000      3      1,497   

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

    28,600      28      10,839   

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

    270,000      270      67,230   

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

    1,300,000      1,300      648,700   

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

    164,000      164      40,836   

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

    26,666      26      7,973   

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

    54,243      53      19,646   

Issuance of options & warrants to employees & consultants, September

            108,470   

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

    6,000      6      1,494   

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

    2,700      3      1,497   

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

    55,000      55      27,445   

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

    1,905      2      998   

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

    125,291      125      34,956   

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

    1,563      1      499   

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

    40,000      40      14,760   

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

    25,000      25      16,850   

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

    68,000      68      16,932   

Net loss

               (2,470,352 )
                           

Balance December 31, 2007

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

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

 

23

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

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

               15,000   

Issuance of options to employees, directors and consultants, October

               155,185   

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

               8,000   

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

               10,000   

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

         (80,000 )         14,000   

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

               50,000   

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

               1,700   

Net loss

               (1,465,077 )
                                       

Balance December 31, 2006

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

Issuance of options to consultants, January

               155,188   

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

               13,000   

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

           (150,000 )    

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

         (33,000 )      

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

               5,100   

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

           (15,000 )       35,000   

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

           (12,000 )    

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

               55,000   

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

               43,250   

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

               14,300   

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

               128,500   

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

               16,250   

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

         (17,500 )      

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

               1,000   

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

               6,000   

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

               6,500   

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

               32,250   

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

               4,000   

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

               44,000   

Amortization of prepaid services paid for with common stock

         890,111            890,111   

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

               18,000   

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

               88,000   

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

               1,500   

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

               10,867   

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

               67,500   

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

         (650,000 )      

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

               41,000   

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

               7,999   

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

               19,699   

Issuance of options & warrants to employees & consultants, September

               108,470   

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

               1,500   

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

               1,500   

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

               27,500   

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

               1,000   

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

               35,081   

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

               500   

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

               14,800   

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

               16,875   

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

               17,000   

Payment on receivable for common stock

           10,000          10,000   

Net loss

               (2,470,352 )
                                       

Balance December 31, 2007

    $      $ (17,500 )   $ (167,000 )   $ (90 )   $ (992,448 )

 

24

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statement of Changes in Stockholders’ Deficit

For the Year Ended December 31, 2009 and

For Each of the Years From November 27, 2000 (Date of Inception) through December 31, 2009

 

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

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

    200,000      200      29,800   

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

    160,000      160      60,640   

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

    12,000      12      3,108   

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

    210,000      210      24,990   

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

    350,000      350      69,650   

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

    145,000      145      14,355   

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

    334,000      334      33,066   

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

    150,000      150      12,600   

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

    25,000      25      1,975   

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

    300,000      300      47,700   

Amortization of prepaid services paid for with common stock

            

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

            25,000   

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

    379,500      380      37,571   

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

    30,000      30      4,470   

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

    101,000      101      9,999   

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

    369,000      369      36,531   

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

    306,250      306      24,194   

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

    3,750      4      296   

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

    40,000      40      3,560   

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

    27,000      27      2,673   

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

    12,500      13      987   

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

    32,400      32      3,208   

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

    12,500      13      875   

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

    161,250      161      12,739   

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

    27,300      27      2,603   

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

    10,000      10      890   

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

    500,000      500      64,500   

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

    12,500      13      2,112   

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

    100,000      100      19,435   

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

    26,297      26      1,974   

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

    270,468      270      19,730   

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

    202,703      203      14,797   

Issuance of warrants for services, December

            29,578   

Net loss

               (982,677 )
                           

Balance December 31, 2008

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

Amortization of prepaid services paid for with common stock

            

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

    255,965      256      14,744   

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

    200      1      98   

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

    294,999      295      20,355   

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

    12,500      12      988   

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

    255,000      255      25,245   

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

    166,739      167      9,833   

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

    221,984      222      19,778   

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

    526,927      527      36,358   

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

    110,500      110      10,940   

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

    300,000      300      32,700   

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

    137,768      138      9,862   

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

    316,241      316      24,684   

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

    289,286      289      19,961   

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

    10,000      10      990   

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

            149,750   

Issuance of warrants for services, January

            36,644   

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

    20,000      20      1,780   

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

    510,000      510      50,490   

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

    274,999      275      18,975   

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

    29,500      30      2,920   

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

    511,979      512      34,488   

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

    158,897      159      9,841   

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

    399,617      399      24,601   

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

    60,000      60      5,090   

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

    77,000      77      5,313   

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

    381,098      381      24,619   

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

    934,516      935      54,065   

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

    582,142      582      40,168   

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

    420,000      420      34,562   

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

    976,250      976      67,361   

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

    215,500      216      13,792   

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

    20,000      20      1,980   

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

    3,846      4      996   

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

    153,941      154      9,846   

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

    130,000      130      8,970   

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

    58,822      59      4,941   

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

    1,480,000      1,480      146,520   

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

    10,000      10      1,090   

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

    100,000      100      11,900   

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

    152,498      153      36,447   

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

    140,384      140      36,360   

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

    16,785      17      4,683   

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

    164,000      164      49,036   

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

    6,363      6      2,094   

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

    1,200,000      1,200      106,800   

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

    100,000      100      24,900   

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

    50,000      50      4,950   

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

    100,000      100      15,900   

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

    20,000      20      1,980   

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

    40,000      40      7,960   

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

    286,361      286      62,714   

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

    126,086      126      28,874   

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

    29,787      30      6,970   

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

    46,000      46      11,454   

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

    84,230      84      21,816   

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

    21,333      21      6,379   

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

    1,230      1      399   

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

    67,000      67      22,043   

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

    10,000      10      3,740   

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

    100,000      100      46,900   

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

    500,000      500      304,500   

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

    5,000      5      2,495   

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

    350,000      350      34,650   

Issuance of common stock options, July

            40,706   

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

    11,363      11      2,489   

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

    246,107      246      44,054   

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

    25,882      26      4,374   

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

    98,775      99      17,681   

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

    167,500      168      33,332   

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

    2,500      3      472   

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

    100,000      100      15,900   

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

    5,882      6      994   

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

    102,111      102      18,278   

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

    10,000      10      1,990   

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

    1,100,000      1,100      328,900   

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

    100,000      100      41,900   

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

    345,000      345      130,755   

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

    1,495,327      1,495      190,505   

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

            100,921   

Issuance of warrants

            10,161   

Payment on stock subscription receivable

            

Net loss

               (2,271,917 )
                           

Balance December 31, 2009

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

 

25

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

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

             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 shares)

             3,120   

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

         (20,000 )       5,200   

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

         (61,600 )       8,400   

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

             14,500   

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

             33,400   

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

             12,750   

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

             2,000   

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

         (48,000 )    

Amortization of prepaid services paid for with common stock

         110,767          110,767   

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

             25,000   

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

             37,951   

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

             4,500   

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

             10,100   

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

             36,900   

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

             24,500   

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

             300   

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

             3,600   

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

             2,700   

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

             1,000   

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

             3,240   

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

             888   

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

             12,900   

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

             2,630   

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

             900   

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

         (65,000 )    

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

             2,125   

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

             19,535   

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

             2,000   

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

             20,000   

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

             15,000   

Issuance of warrants for services, December

             29,578   

Net loss

             (982,677 )
                             

Balance December 31, 2008

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

Amortization of prepaid services paid for with common stock

         571,625          571,625   

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

             15,000   

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

             99   

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

             20,650   

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

             1,000   

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

             25,500   

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

             10,000   

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

             20,000   

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

             36,885   

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

             11,050   

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

         (33,000 )    

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

             10,000   

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

             25,000   

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

             20,250   

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

             1,000   

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

             149,750   

Issuance of warrants for services, January

             36,644   

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

             1,800   

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

         (50,000 )       1,000   

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

             19,250   

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

             2,950   

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

             35,000   

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

             10,000   

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

             25,000   

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

             5,150   

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

             5,390   

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

             25,000   

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

             55,000   

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

             40,750   

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

             34,982   

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

             68,337   

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

             14,008   

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

             2,000   

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

             1,000   

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

             10,000   

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

             9,100   

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

             5,000   

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

             148,000   

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

             1,100   

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

             12,000   

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

             36,600   

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

             36,500   

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

             4,700   

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

             49,200   

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

             2,100   

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

         (108,000 )    

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

         (25,000 )    

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

         (5,000 )    

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

         (16,000 )    

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

             2,000   

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

             8,000   

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

             63,000   

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

             29,000   

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

             7,000   

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

             11,500   

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

             21,900   

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

             6,400   

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

             400   

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

             22,110   

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

             3,750   

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

             47,000   

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

         (305,000 )    

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

         (2,500 )    

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

             35,000   

Issuance of common stock options, July

             40,706   

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

             2,500   

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

             44,300   

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

             4,400   

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

             17,780   

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

             33,500   

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

             475   

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

           (16,000 )   

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

           (1,000 )   

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

           (12,000 )      6,380   

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

             2,000   

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

             330,000   

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

             42,000   

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

         (5,700 )        125,400   

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

             192,000   

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

             100,921   

Issuance of warrants

             10,161   

Payment on stock subscription receivable

           90        90   

Net loss

             (2,271,917 )
                           

Balance, December 31, 2009

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

 

26

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Company)

Statements of Cash Flows

 

     Year Ended December 31,        
     2009     2008     Period
November 27,
2000 (Date of
Inception)
through
December 31,
2009		  

Operating activities

       

Net loss

    $ (2,271,917 )    $ (982,677 )    $ (11,563,923 ) 

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

      793,975        216,936        3,011,048   

Options and warrants issued to employees, directors and consultants

      87,511        29,578        614,287   

Contribution from shareholder

          188,706   

Amortization of beneficial conversion feature

      261,302        11,456        272,758   

Amortization of deferred loan costs

      24,050        700        24,750   

Write off deferred offering costs

          119,383   

Write off of deferred non cash offering costs

          49,120   

Depreciation

      6,550        18,056        42,271   

Amortization of discount on notes payable

          33,858   

Decrease (increase) in prepaid expenses

      (10,000 )      2,330        (10,000 ) 

Increase (decrease) in:

       

Accounts payable

      28,941        105,519        174,520   

Accrued expenses

      (6,000 )     5,095        269,250   

Accrued payroll

      (106,437 )     35,184        280,409   

Accrued royalty fees

      239,000        250,000        1,218,167   

Accrued interest

      1,236        234        14,349   
                        

Net cash used by operating activities

      (951,790 )      (307,589 )      (2,525,398 ) 
                        

Investing activities

       

Issuance of notes receivable from stockholders

          (23,000 ) 

Repayment of notes receivable from stockholders

          22,095   

Advances to related party

          805   

Purchase of fixed assets

      (1,747 )        (45,470 ) 
                        

Net cash used by investing activities

      (1,747 )        (45,570 ) 
                        

Financing activities

       

Repayment of stockholder advances

      (23,854 )      (30,150 )      (157,084 ) 

Advances from stockholders

        15,004        266,152   

Increase in deferred offering costs

          (194,534 ) 

Proceeds from issuance of common stock

      1,225,885        227,770        2,705,535   

Proceeds from exercise of options

          45,000   

Debt issuance cots

      (19,750 )        (19,750 ) 

Repayment of convertible notes payable

      (23,000 )        (23,000 ) 

Proceeds from issuance of convertible notes payable

      395,000        95,000        552,250   
                        

Net cash provided by financing activities

      1,554,281        307,624        3,174,569   
                        

Net increase in cash

      600,744        35        603,601   

Cash at beginning of year/period

      2,857        2,822     
                        

Cash at end of year/period

    $ 603,601      $ 2,857      $ 603,601   
                        

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

 

27

Table of Contents
     Year Ended
December 31,		    Period
November 27,
2000 (Date of
Inception)
through
December 31,
     2009    2008    2009

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

         

Cash paid for interest

    $ 13,193    $ 7,536    $ 21,477
                    

Subscription receivable for issuance of common stock

    $ 29,000    $ 0    $ 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

    $ 550,200    $ 194,600    $ 1,835,300
                    

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
                    

Beneficial conversion feature on convertible notes payable

    $ 250,672    $ 25,000    $ 275,672
                    

Conversion of convertible debt to equity (5,133,522 shares of common stock)

    $ 432,000    $ 37,000    $ 469,000

Common stock issued for accounts payable

    $ 35,000       $ 35,000
                    

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

 

28

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

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. 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 DeLand, 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.

The Company entered into a Strategic Alliance Agreement (the “Agreement”) dated January 21, 2009 with Aerospace Machinery & Electric Co. Ltd., a Chinese corporation (“AMEC”) for the purpose of providing a framework for the collaboration between the two companies on the development and commercialization of the Detonation Cycle Gas Turbine Engine (“DCGT”) specifically for application opportunities in the Peoples Republic of China. The terms of the Agreement call for AMEC and TTE to collaborate on modifying and applying the DCGT engine technology to, among other things, create two new engine sizes: a 150hp engine for automobiles and a 400hp engine for buses. The Agreement also provides that the parties anticipate that, pursuant to AMEC’s participation and performance under this Agreement, that they will enter into a Joint Venture agreement in the future whereby TTE will grant AMEC the exclusive rights to manufacture, market and sell the DCGT engines in China. As of December 31, 2009, a Joint Venture agreement has not been entered into.

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

As of December 31 2009, AMEC has completed their comprehensive investigation of the DCGT technology and believes the technology can be commercialized for a heavy duty truck application and is moving forward with acquiring the right private and governmental funding partners and securing the best divisions of Aerospace to facilitate the project.

During August 2009, the Company entered into a strategic alliance with Tianjin Out Sky Technology Co., Ltd. (Tianjin), a leading Chinese bicycle parts manufacturer. Details of the agreement specify that the Company and Tianjin will collaborate on the engineering and technical development of the DCGT engine for motorcycle engine applications. The agreement also stipulates the establishment of a joint venture to manufacture, market and sell the DCGT in China once the engine has been shown to have commercial potential. Other details include Tianjin’s agreement to commit up to ten million U.S. dollars in development funding over the next eighteen months with a further commitment to purchase up to five percent of the Company’s common stock via the public markets. As of December 31, 2009, no funds have been received. As of December 31, 2009 TIANJIN and their engineering team have been working at their own expense and have submitted Phase One design drawings for a motorcycle DCGT engine. The Company is currently reviewing the designs.

 

29

Table of Contents

Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

1. Background Information (continued)

 

During September 2009, the Company entered into a letter of intent to form a joint venture with Genes Guohao Technology Co., Ltd. (“Guohao”), a Chinese corporation. The agreement stipulates that the companies will Turbine collaborate on modifying the Company’s DCGT engine for coal fired power generation applications utilizing Dry Coal Slurry Fuel. The agreement specifies that Guohao will fully fund the project and commit its industrial, engineering, and technical development resources to its success. Guohao has committed $300,000 U.S. dollars to initially fund the project. The agreement also stipulates that the Company and Guohao will form a joint venture whereby Guohao will be licensed to manufacture, market and sell the DCGT coal fired engines in Mongolia. The Joint Venture Letter of Intent further specifies that Guohao, as part of the Joint Venture Agreement, will form a new corporation, and that the Company will license the DCGT to the new entity for a 49% stake in the newly formed corporation. As of December 31, 2009 Abm engineering has been conducting research into the use of coal slurries as a fuel source for the DCGT, under our agreements scope of work. Upon completion Abm intends to conduct preliminary testing to demonstrate its viability. As of December 31, 2009, a joint venture agreement has not been entered into.

 

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the year ended December 31, 2009 and since November 27, 2000 (date of inception) through December 31, 2009, the Company has had a net loss of $2,271,917 and $11,563,923, respectively. As of December 31, 2009, 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. Since inception, the Company has financed its activities principally from the sale of public equity securities. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

3. Significant Accounting Policies

The significant accounting policies followed are:

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

All cash, other than held in escrow, is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or less are considered to be cash equivalents.

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

 

30

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

3. Significant Accounting Policies (continued)

 

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

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

Research and development costs are charged to operations when incurred and are included in operating expenses. The amounts charged for the year ended December 31, 2009 and 2008 and the period November 27, 2000 (date of inception) to December 31, 2009 amounted to $108,958, $136,088 and $3,527,150, respectively.

Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse. Deferred tax assets and liabilities are classified as current or non-current, depending on the classification of the assets or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The principal types of temporary differences between assets and liabilities for financial statements and tax return purposes are set forth in Note 9.

The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10), January 1, 2007. The Company has not recognized a liability as a result of the implementation of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there are no unrecognized benefits at December 31, 2009 or 2008 and since the date of adoption. The Company has not recognized interest expense or penalties as a result of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.

Basic earnings per share are computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding and dilutive options outstanding during the year. Common stock equivalents for the years ended December 31, 2009 and 2008 and the period from November 27, 2000 (Date of Inception) through December 31, 2009 were anti-dilutive due to the net

 

31

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

3. Significant Accounting Policies (continued)

 

losses sustained by the Company during these periods. For the years ended December 31, 2009 and 2008 and the period from November 27, 2000 (Date of Inception) through December 31, 2009, potentially dilutive common stock options and warrants of 2,007,413, 1,398,413 and 2,007,413 have been excluded from dilutive earnings per share due to the Company’s losses in all periods presented.

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

The value of each grant is estimated at the grant date using the Black-Scholes option model with the following assumptions for options granted during the years ended December 31, 2009 and 2008:

 

     Years Ended December 31,  
     2009     2008  

Dividend rate

    0 %    0 % 

Risk free interest rate

    1.44% - 2.51 %    2.09% - 2.18 % 

Expected term

    5 years      2 - 10 years   

Expected volatility

    148.9% - 189.8 %    146.8% - 148 % 

The basis for the above assumptions are as follows: the dividend rate is based upon the Company’s history of dividends; the risk-free interest rate for periods within the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant; the expected term was calculated based on the Company’s historical pattern of options granted and the period of time they are expected to be outstanding; expected volatility was based on the Company’s historical market price at consistent points in a period equal to the expected life of the options. The Company estimates forfeitures both at the date of grant as well as throughout the requisite service periods based on the Company’s historical experience and future expectations.

The Company issues common stock and common stock options and warrants to consultants for various services. For these transactions, the Company follows the guidance in FASB ASC Topic 505. Costs for these transactions are measured at the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measureable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instrument is reached or (ii) the date at which the counterparty’s performance is complete. For the periods ended December 31, 2009 and 2008, the Company recognized $36,644 and $29,578, respectively, in consulting expenses and a corresponding increase to additional paid-in-capital related to common stock options issued for these services. Additionally, the Company recognized $571,625 and $110,767 in consulting expense related to prepaid consulting services paid for with common stock for the periods ended December 31, 2009 and 2008, respectively.

 

32

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

3. Significant Accounting Policies (continued)

 

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

 

  •  

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

 

  •  

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

 

  •  

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

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2009. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The Company had no financial instruments as of December 31, 2009 that would be valued at fair value on a recurring basis.

Certain reclassifications have been made to the financial statements as of and for the year ended December 31, 2008 to conform to the presentation as of and for the year ended December 31, 2009.

 

33

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

3. Significant Accounting Policies (continued)

 

Recent accounting pronouncements

In October 2009, the FASB issued Accounting Standard Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue Arrangements (“ASU 2009-13”) and No. 2009-14, Certain Revenue Arrangements that include Software Elements (“ASU 2009-14”). These standards update FASB ASC 605, Revenue Recognition (“ASC 605”) and FASB ASC 985, Software (“ASC 985”). The amendments to ASC 605 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments to ASC 985 remove tangible products from the scope of software revenue guidance and provide guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. These amendments to ASC 605 and ASC 985 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company adopted these amendments on January 1, 2010. Management does not believe that the adoption of this standard will have a material impact on the Company’s financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (“ASU 2010-06”). This standard updates FASB ASC 820, Fair Value Measurements (“ASC 820”). ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels 1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The standard is effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements which is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company adopted ASU 2010-06 on January 1, 2010, which had no material impact on the financial statements.

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

 

4. Option to Acquire License

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

 

•  

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

 

•  

Minimum royalties – $250,000 due minimum royalty payment each year once licensing note is settled;

 

•  

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

 

•  

Contract fees for design and engineering services.

In July 2002, Alpha modified the agreement to allow the Company to acquire the license agreement in advance of completing its registration statement and accepted a note as payment for the licensing fee and for the issuance of 5,000,000 shares of common stock in lieu of the original 10,000,000 shares. The value of these shares was based on $.50 per share, which was the issuance price for common stock under the Company’s private placement offering. In August 2003 and 2004, the agreement was further amended to extend the term of the note and to establish that minimum royalty payments shall begin after the note is settled.

 

34

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

4. Option to Acquire License (continued)

 

During the year ended December 31, 2005, the Company issued 125,000 shares of common stock in satisfaction of the $250,000 note and the accrual of the minimum royalty fees began. In addition, during the year ended December 31, 2006, the Company paid $416,667 of royalty fees through the issuance of 100,000 shares of common stock. As of December 31, 2009, the Company has accrued $801,500 of royalty fees related to this agreement.

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

The Company has recognized $2,735,649 of research and development expense for the acquisition of the license agreement, as the license is exclusively for the development, manufacturing and sales of the DCGT and has no future economic benefit relative to other research and development projects.

 

5. Prepaid Consulting Services Paid with Common Stock

During the year ended December 31, 2008, the Company entered into a consulting agreement for public relations services in exchange for 380,000 shares of common stock valued at $61,600 to be provided through October 2008. For the years ended December 31, 2009 and 2008, the Company has included $0 and $61,600 in consulting expense related to this agreement.

During the year ended December 31, 2008, the Company entered into a consulting agreement for consulting services in exchange for 100,000 shares of common stock valued at $20,000 to be provided through May 27, 2009. As of December 31, 2009 and 2008, the Company has included $0 and $8,333, respectively, in prepaid consulting services paid with common stock. For the years ended December 31, 2009 and 2008, the Company recognized $8,333 and $11,667, respectively, in consulting expense related to this agreement.

During the year ended December 31, 2008, the Company entered into a consulting agreement for various consulting services in exchange for 300,000 shares of common stock valued at $48,000. As of December 31, 2009 and 2008, the Company has included $0 and $28,000, respectively, in prepaid consulting services paid with common stock. For the years ended December 31, 2009 and 2008, the Company recognized $28,000 and $20,000, respectively, in consulting expense related to this agreement.

During the year ended December 31, 2008, the Company entered into a consulting agreement for various consulting services in exchange for 500,000 shares of common stock valued at $65,000 to be amortized through July 2009 at $9,286 per month. As of December 31, 2009 and 2008, the Company has included $0 and $65,000, respectively, in prepaid consulting services paid with common stock. For the years ended December 31, 2009 and 2008, the Company recognized $65,000 and $0, respectively, in consulting expense related to this agreement.

 

35

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

5. Prepaid Consulting Services Paid with Common Stock (continued)

 

During the year ended December 31, 2009, the Company entered into a consulting agreement for various consulting services in exchange for 100,000 shares of common stock valued at $16,000 to be amortized through July 2010 at $1,333 per month. As of December 31, 2009 the Company has included $9,333 in prepaid consulting services paid with common stock. During the year ended December 31, 2009 the Company recognized $6,667 in consulting expense related to this agreement.

During the year ended December 31, 2009, the Company entered into a consulting agreement for various consulting services in exchange for 15,000 shares of common stock valued at $5,700 to be amortized from January 2010 through March 2010. As of December 31, 2009 the Company has included $5,700 in prepaid consulting services paid with common stock.

During the year ended December 31, 2009, the Company entered into a consulting agreement for various consulting services in exchange for 1,200,000 shares of common stock valued at $108,000 to be amortized through July 2010 at $9,000 per month. As of December 31, 2009 the Company has included $63,000 in prepaid consulting services paid with common stock. During the year ended December 31, 2009, the Company recognized $45,000 in consulting expense related to this agreement.

During the year ended December 31, 2009, the Company entered into multiple consulting agreements with various consultants in exchange for 1,400,000 shares of common stock valued at $413,000. During 2009, all prepaid services relating to these agreements were fully amortized and the Company recognized $413,000 in consulting expense during 2009.

 

6. Furniture and equipment

Furniture and equipment at December 31 consist of the following:

 

     2009    2008

Furniture and fixtures

    $ 1,505    $ 1,505

Equipment

      11,142      9,394

Leasehold improvements

      37,823      37,823
             
     50,470      48,722

Less accumulated depreciation and amortization

      42,271      35,721
             
   $ 8,199    $ 13,001
             

 

36

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

7. 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 granted 900,000 and 200,000 common stock options and warrants to consultants and directors and recognized $87,511 and $29,578 in compensation expense for the years ended December 31, 2009 and 2008, respectively.

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 December 31, 2009, 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 December 31, 2009, based on the Company’s closing stock price of $0.39 was $289,500. The aggregate intrinsic value of options outstanding and exercisable at December 31, 2008, based on the Company’s closing stock price of $0.08 was $0. Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of the options.

During the years ended December 31, 2009 and 2008, the Company issued 747,413 and 100,000 warrants, respectively, in conjunction with the issuance of common stock. The warrants entitle the holder to purchase 747,413 and 100,000 shares of the Company’s common stock, respectively, at any time, at exercise prices ranging from $0.25 – $1.00 per share.

The following table represents our stock option and warrant activity for the years ended December 31, 2009:

 

     Shares     Range of Exercise
Prices		    Weighted Average
Grant Date Fair
Value

Outstanding and Exercisable

        

Outstanding at December 31, 2008

    1,398,413      $ 0.10 – 2.00   

Options and warrants granted

    1,647,413      $ 0.10 – 1.00    $ 0.25

Options and warrants exercised

    (200,000 )   $ 0.10   

Options and warrants cancelled or expired

    (838,413 )   $ 0.43 – 1.00   
           

Outstanding at December 31, 2009

    2,007,413      $ 0.10 – $2.00   

Exercisable at December 31, 2009

    2,007,413      $ 0.10 – $2.00   

 

37

Table of Contents

Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

7. Options and warrants (continued)

 

The following table summarizes information about options and warrants outstanding and exercisable as of December 31, 2009:

 

     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

    2,007,413    4.3 Years    $ 0.48    4.3 Years    2,007,413    $ 0.48

Net cash proceeds from the exercise of options and warrants were $0 for each of the years ended December 31, 2009 and 2008, respectively.

 

8. Commitments and Contingencies

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 $801,500 and $562,500 as of December 31, 2009 and 2008, respectively.

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 $18,000 and $0 in additional costs during the years ended December 31, 2009 and 2008, respectively.

The Company leases its corporate headquarters on a month-to-month basis. For the periods ended December 31, 2009 and 2008, rent expense was approximately $31,900 and $33,600, respectively.

During the year ended December 31, 2007, the Company entered into a lease agreement with Air Papa Bravo, Corporation to lease an airplane hanger for the development of the prototype. The lease agreement is for a two year period expiring March 31, 2009 with an option to extend the lease for a second two year term. The base rent is $2,000 per month and the lease agreement contains an option to purchase the facility for $310,000 at the expiration of the lease. The Company has negotiated month to month terms at the end of this lease until a new lease can be negotiated.

During the year ended December 31, 2009, the Company entered into an employment agreement with the Company’s Chief Technology Officer which began November 1, 2009. The employment agreement is for a one year term and provide for payments of an annual base salary of $24,000, which may be accrued if determined by the Board of Director’s to assist with cash flows of the Company. An additional performance-based bonus is provided for, to be issued in the Company’s common stock with the underlying value not to exceed $300,000, to be determined by the Company’s Board of Directors.

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

9. Income Taxes

Deferred taxes are recorded for all existing temporary differences in the Company’s assets and liabilities for income tax and financial reporting purposes. Due to the valuation allowance for deferred tax assets, as noted below, there was no net deferred tax benefit or expense for the years ended December 31, 2009 or 2008.

There is no current or deferred income tax expense or benefit allocated to continuing operations for the years ended December 31, 2009 or 2008 or the period November 27, 2000 (Date of inception) through December 31, 2009.

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

 

     2009     2008  

Tax expense (benefit) at U.S. statutory rate

    $ (772,500 )    $ (334,100 ) 

State income tax expense (benefit), net of federal benefit

      (82,500 )      (35,000 ) 

Stock option expense

        3,900   

Effect of non-deductible expenses

      1,800        2,800   

Other

      1,000     

Change in valuation allowance

      852,200        362,400   
                
   $ —        $ —     
                

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2009 and 2008 are as follows:

 

     2009     2008  

Deferred tax assets (liability), noncurrent:

     

Depreciation

    $ 7,600        7,100   

License agreement

      475,100        554,300   

Capitalized start up costs

      3,082,600        2,395,400   

Net operating loss

      138,500        13,600   

Stock compensation

      104,400        85,200   

Contribution carryover

      800        900   

Beneficial Conversion feature

        (5,100 ) 

Valuation allowance

      (3,809,000 )      (3,051,400 ) 
                
   $ —        $ —     
                

Since management of the Company believes that it is more likely than not that the net deferred tax assets will not provide future benefit, the Company has established a 100 percent valuation allowance on the net deferred tax assets as of December 31, 2009 and 2008.

As of December 31, 2009, the Company had federal and state net operating loss carry-forwards totaling approximately $368,000 which begin expiring in 2022.

 

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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

10. Related Party Transactions

During the year ended December 31, 2003, the Company signed a note payable with a related party in the amount of $15,000. The balance at December 31, 2008 is $1,901. This note payable was unsecured, non-interest bearing and has no specific repayment terms, however, payment is not expected prior to December 31, 2010.

The due to related party account is made up of advances from the majority shareholder to assist the Company with its financial obligations. These advances are non-interest bearing, unsecured and due on demand. During 2009, the Company repaid the entire advance of $23,854 and accordingly, the balance at December 31, 2009 was $0.

As of December 31, 2009 and 2008, accounts payable included $42,550 and $25,150, respectively, for various accounting services, due to the Company’s Chief Accounting Officer who is also a director of the Company.

As of December 31, 2009, accounts payable included $22,708 due to a Company owned by the Company’s Chief Technology Officer.

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.

 

11. 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 2009 and since inception, the Company has drawn $395,000 and $552,250 in proceeds related to the note, respectively. During 2009 and since inception, the Holder has converted $432,000 and $469,000 in convertible notes into 5,133,532 and 5,633,540 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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Turbine Truck Engines, Inc.

(A Development Stage Enterprise)

Notes to Financial Statements

For the Years Ended December 31, 2009 and 2008,

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

through December 31, 2009

 

11. Convertible Note Payable (continued)

 

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 2009 related to the debenture:

 

Principal balance of the debenture

    $ 195,000   

Less reduction for:

   

Intrinsic value of beneficial conversion feature

      (100,921 ) 
        

Recorded at closing

    $ 94,079   

Amounts converted into common stock

      (192,000 ) 

Amortization of beneficial conversion feature (interest expense) through December 31, 2009

      98,007   
        

Carrying value at December 31, 2009

    $ 86   
        

 

12. Subsequent Event

Subsequent to December 31, 2009, the Company issued 3,053,781 shares of common stock for cash and services.

 

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

None.

 

ITEM 9A(T). CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ending December 31, 2009 covered by this Annual Report on Form 10-K. Based upon such evaluation, the Chief Executive Officer and acting Chief Financial Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a – 15(e) and 15d – 15(e) under the Exchange Act. This conclusion by the Company’s Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after December 31, 2009.

Management’s Report on Internal Control over Financial Reporting

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

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

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

Management, under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2009 under the criteria set forth in the Internal Control – Integrated Framework.

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

 

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Table of Contents

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fourth fiscal quarter ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Auditor’s Report on Internal Control over Financial Reporting

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report on Form 10K.

 

ITEM 9B OTHER INFORMATION

None

Part III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

 

Name

    Age   

Position

Michael Rouse    53    President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer And Principal Financial Officer)
Phyllis J. Rouse    51    Vice President, Secretary, Treasurer and Director
Rebecca McDonald    43    Chief Financial Officer
Magdy Attia    42    Chief Technology Officer
John R. Dickinson    43    Audit Committee Member

Biographies

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

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

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

 

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Dr. Magdy Attia - Dr. Attia received his PhD in Mechanical Engineering from Texas A&M University’s Gas Turbine Laboratory in 1995. He then joined the Westinghouse Electric Corporation as a Senior Design Engineer in the Advanced Engine Development group. In 1998, he joined the Siemens AG Power Generation Division as a Senior Engineer and progressed to become a team leader. From 2002 to 2003 his duties shifted to the R&D group to help manage the development efforts of new Gas Turbine Engine design and analysis tools. In 2003, he founded AbM Engineering, LLC, an engineering consulting firm dedicated to advancing gas turbine engine technologies. In 2004 Dr. Attia joined Embry-Riddle University’s Aerospace Engineering Department. In 2005, he started the Gas Turbine Laboratory with over $2 Million of funding and 14 graduate students. He is currently a tenured Associate Professor, Chair of the Senate Committee on Research, and Associate Director of the Honors Program. His research activities include Lean Engineering, and advanced concepts relating to gas turbine engines.

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

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

AUDIT COMMITTEE

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

CODE OF ETHICS

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

 

ITEM 11. EXECUTIVE COMPENSATION

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

 

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Table of Contents

SUMMARY COMPENSATION TABLE

 

Name and Principal Position

    Year    Salary ($)    Bonus
($)		    Stock
Awards
($)		     Option
Awards
($)		    Non-Equity
Incentive Plan
Compensation
($)		    Nonqualified
Deferred
Compensation
($)		    All Other
Compensation
($)		    Total ($)

Michael Rouse,
President, CEO, Chairman of the Board

    2009    $ 52,000    0      0      0    0    0    0    $ 52,000
   2008    $ 52,000    0      0      0    0    0    0    $ 52,000

Phyllis J. Rouse
Vice President, Secretary, Treasurer and Director

    2009    $ 52,000    0    $ 40,706 (A)    0    0    0    0    $ 92,706
   2008    $ 36,833    0    $ 0      0    0    0    0    $ 36,833

 

(A)

Amount shown is the aggregate grant date fair value of awards computed in accordance with ASC Topic 718.

OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2009

 

     Option Awards    Stock Awards

Name

    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable		    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable		    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)		    Option
Exercise
Price ($		    Option
Expiration
Date		    Number
of
Shares
of Stock
That
Have
Not
Vested
(#)		    Market
Value
of
Shares
of
Stock
That
Have
Not
Vested
($)		    Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares or
Other
Rights
That
Have Not
Vested
(#)		    Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares or
Other
Rights
That
Have
Note
Vested
($)

not applicable

                           

DIRECTOR COMPENSATION

Directors receive no compensation for serving on the Board.

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

 

Name

    Fees
Earned
or Paid
in
Cash
($)		    Stock
Awards
($)		    Option
Awards
($)		    Non-Equity
Incentive Plan
Compensation
($)		    Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)		    All Other
Compensation
($)		    Total
($)

not applicable

                     

 

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

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.

 

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Table of Contents

Plan category

    Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights
(a)		    Weighted-
average
exercise
price of
outstanding
options,
warrants
and rights
(b) 		   Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)

Equity compensation plans not approved by security holders 2006 Incentive Compensation Plan

    2,007,413    $ 0.48    2,135,000

The Company’s 2008 Incentive Compensation Plan (the “2008 Plan”) authorizes up to 5,000,000 shares of common stock to any person employed by the Company either as an employee, officer, director or independent consultant or other person employed by the Company, provided that no person can be granted shares under the 2008 Plan for services related to capital raising or promotional activities. As of December 31, 2009, no shares have been issued pursuant to the 2008 Plan. There are no restrictions on resale upon the purchases of the stock from the employees or the consultants, unless contained in the written award approved by the Board of Directors.

The following table sets forth certain information as of December 31, 2009, with respect to the beneficial ownership of our common stock by each beneficial owner of more than 5% of the outstanding shares of common stock of the Company, each director, each executive officer named in the “Summary Compensation Table” and all executive officers and directors of the Company as a group, and sets forth the number of shares of common stock owned by each such person and group. Unless otherwise indicated, the owners have sole voting and investment power with respect to their respective shares.

 

Name of Beneficial Owner

    Number of
Shares
Beneficially
Owned		    Percentage
of
Outstanding
Common
Stock
Owned		  

Michael Rouse

    4,300,055    10.83 % 

Alpha Engines Corporation (1)

    4,552,040    11.47 % 

Magdy Attia

    20,000    0.05 % 

Phyllis J. Rouse (2)

    200,000    0.51 % 

All directors and executive officers as a group (4 persons)

    9,072,095    22.86 % 

 

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

 

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

None

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

During 2009 and 2008, we were billed by our accountants, Pender Newkirk & Company, approximately $64,500 and $57,000 for audit and review fees associated with our 10-K, 10-KSB, 10-Q and 10-QSB filings.

 

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Tax Fees

During 2009 and 2008, we were billed by our accountants, Pender Newkirk & Company, approximately $0 and $0 for tax work.

All Other Fees

During 2009 and 2008, we were billed by our accountants, Pender Newkirk & Company, approximately $0 and $0 for other work.

Board of Directors Pre-Approval Process, Policies and Procedures

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

 

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

Regulation

Number

   

Exhibit

10.1    Convertible Debenture Amendment
31.1    Rule 13a-14(a) Certification of Chief Executive Officer
31.2    Rule 13a-14(a) Certification of Chief Financial Officer
32.1    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Executive Officer
32.2    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Chief Financial Officer

SIGNATURES

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

 

  TURBINE TRUCK ENGINES, INC.
Dated: April 14, 2010   By:  

/s/ Michael Rouse

   

Chief Executive Officer and Chairman of the Board

(Principal Executive Officer and Principal Financial Officer)

Dated: April 14, 2010   By:  

/s/ Rebecca A. McDonald

   

Chief Financial Officer and

Principal Accounting Officer

 

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