Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

Definitely agree.

MTM, sounds like your instincts were right on. It sure shows the value of getting to know who you're giving your money to.

I'm also wondering what we'll hear next from Chris Nelson. Apparently he's looking for a Chief Technology Officer for WHE GEN. To show just how clueless he is about his company's technology, have a look at the requirements:

Licensed Engineer – Master’s degree or Doctorate in Engineering, Mechanical, Thermal or Material Sciences from an accredited college or university and 20 years’ solid, directly related working experience; or equivalent combination of education, appropriate internship and experience may be applicable.
Working knowledge of external combustion engines is required.
Working knowledge of high temp / high pressure materials and systems required
Knowledge of SolidWorks part & assembly drawings required; proficiency in SolidWorks Simulation (stress, thermal, fatigue analyses) required.
Experience in prototype simulation, construction and testing required.
Must demonstrate, by example, successful product development histories from concept to market.
Machinist and Fabrication skills and experience required.
Extensive working knowledge of IC/EC engine components, mechanical power systems, prototype designs and mass production methodologies required
Applicable Academic publishing and recognition preferred.
Engineering innovation as evidenced by successful patent filings as sole party or team member inventor is highly preferred.
Highly knowledgeable of AMSE Standards preferred

PhD in thermal engineering, successful inventions, experience in designing prototype and mass production engines, academic publications and machinist and fabricator qualifications.

It's like the old saying, Harry taught Chris everything he knows, and Chris is still stupid.

Presumably their "AMSE Standards" are the ASME Boiler Code. This is the first acknowledgement I've seen that they realize their high pressure steam systems are legally regulated in every State. Even if the WHE worked, it can't be run legally by a customer without the necessary registrations, inspection and insurance. I wonder if Chris Nelson has been forthright with his investors over that little hitch...

There's probably enough data that can be dug out of the various filings, but I don't expect WHE GEN to survive to next summer. Nelson and Hutchinson are paid $180K and $120K, plus maintain an office in Florida. That's probably $30K per month just for them.

From the last 10-Q: "The total losses of the WHE subsidiary for the six months ended June 30, 2014 were $356,174". That's $60K per month, and this was before Nelson & Hutchinson started being paid by WHE GEN.

Now if they're hiring people, plus the costs of selling stock and, presumably, filing with the SEC, let's say their cash burn is $120K per month.

The seed round funding ($350K minus 80K to Cyclone, minus fees) was supposed to keep them afloat until the end of September.

The Round A funding raised $1.3M, but $500K plus $175K went right to Cyclone. That leaves $600K, or 5 months at $120K per month burn rate.

Their only customer and contract now is with Phoenix Power. When (if) the WHE is made to run for 200 hours, Phoenix makes a progress payment of $150K. Given the prediction from a year ago that this was supposed to happen by the end of last year, and that OSU has worked for a year solid without hitting even this minor level of performance, WHE GEN won't see this money anytime soon.

After the 200 hour milestone is met, WHE GEN has to build and deliver 10 engines to Phoenix to get the next $100K payment. Precision CNC, no doubt, will charge at least that $100K to build the engines so this cash wouldn't help WHE GEN.

Phoenix plans to put the 10 engines on test with customers before ordering any more.

Even if the engines work perfectly for the customers, they only generate 10kW of electricity. If it's worth $0.10/kWh (which is probably high), the gross revenue from a WHE is $1.00 per hour. Phoenix says it takes 2-1/2 gallons of used oil to get that. An installation will cost at least $20K, will need annual boiler inspections, insurance, monitoring and engine rebuilds at 200 hour intervals.

Chris Nelson has no worries, though: "With the ripe market conditions and WHE’s obvious advantages over their competitors, WHE is poised to pursue over $1 Billion in their target market over the next 5 years."