Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

Some 10K questions for any finance gurus.

You will have to forgive my ignorance, but there are some things that are puzzling me:

1) Cost of Goods Sold to Phoenix

On page 14 under Revenues it has

$150,000 from the successful fulfillment of a key milestone of the Company’s amended license agreement with Phoenix Power Group

Under Gross Profit it has

Included in 2013 Cost of Goods Sold was $380,422 related to the Army contract and $184,464 related to the Phoenix Power Group license revenue.

Now I haven't found that they have sold any goods to Phoenix. Don't you need to sell goods to someone to claim a "Cost of Goods Sold" expense?

It wouldn't be that Cyclone sent a check for $184,464 to Phoenix, then Phoenix sent back a check for $150,000 and then issued a press release about the payment?

2) Cyclone's Patent Assets

If you do a Google Search for Cyclone's U.S. Patents, and scroll down to the very bottom of each one, most all of them say:

Owner name: TCA GLOBAL CREDIT MASTER FUND, LP, FLORIDA

These were all transferred from Cyclone to TCA last September.

I am not a lawyer, but "Owner name" would seem to me to be the owner. The Patent Office has some info for 313 Recording of Licenses, Security Interests, and Other Documents Other Than Assignments [R-11.2013] It says:

Thus, some documents which relate to patents or applications will be recorded, although they do not constitute a transfer or change of title. Typical of these documents which are accepted for recording are license agreements and agreements which convey a security interest.

OK, so TCA is a secured creditor and the patents are security for the credit. The way I read this is that you can record security interests without "transfer or change of title".

The patents, though, are the second biggest asset on the balance sheet.

Can Cyclone legally claim patents owned by TCA as an asset on their balance sheet?