CYCLONE POWER TECHNOLOGIES INC 10-K

Stock Options and Warrants

12 Months Ended

Dec. 31, 2017

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

NOTE 10 – STOCK OPTIONS AND WARRANTS

A. COMMON STOCK OPTIONS

Per the employment contracts with certain officers, the Company issued 1,800,000 common stock options, valued at $3,690 (pursuant to the Black Scholes valuation model) that are exercisable into shares of common stock at an average exercise price of $.0021 and with a maturity life of 10 years. For the years ended December 31, 2017, and December 31, 2016 the amortization of stock options was $2,526 and $2,526, respectively. The unamortized balance at December 31 2017 was $641.

A summary of the common stock options for the period from December 31, 2015 through December 31, 2017 follows:

	Number Outstanding			Weighted Avg. Exercise Price			Weighted Avg. Remaining Contractual Life (Years)

Balance, December 31, 2015		12,380,000		$	0.123			5.8
Options issued		1,800,000			.0021			9.6
Options cancelled		(150,000	)		(..98	)		-
Balance, December 31, 2016		14,030,000		$	0.096			5.3
Options issued		1,800,000			.0008			9.6
Options expired		(2,430,000	)		(.203	)
Balance, December 31, 2017		13,400,000		$	.064			5.8

The vested and exercisable options at period end follows:

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

	Year Ended December 31, 2017			Year Ended December 31, 2016
Risk free interest rate		1.5%-1.98%			.71%-1.4%
Expected volatility		121% - 134%			136% - 139%
Expected term		3			3
Expected dividend yield		0	%		0	%
Average value per options and warrants	$	.0003 -$.0015		$	.0019 -$.0024

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

B. COMMON STOCK WARRANTS

During the year ended December 31, 2017, 500,000 warrants with an average exercise price of $.08 expired.

A summary of outstanding vested warrant activity for the period from December 31, 2015 to December 31, 2017 follows:

	Number Outstanding			Weighted Average Exercise Price			Weighted Average Remaining Contractual Life (Years)
Common Stock Warrants

Balance, December 31, 2015		1,125,000		$	.0042			2.05

Warrants expired		(625,000	)		(.011	)

Balance, December 31, 2016		500,000		$	.08			.67

Warrants expired		(500,000	)		(.08	)

Balance, December 31, 2017		0		$	0.0			.-

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

Exercisable/ Vested

Options Outstanding

Weighted

Avg.

Exercise

Price

Weighted

Avg.

Remaining

Contractual

Life (Years)

Balance December 31, 2017