Unfortunately, Cyclone is just symptomatic of a trend.
Everything that's been talked about here has been repeated elsewhere, ad infinitum.
The first problem is that way too many people are selling stock for imaginary products, products that have no realistic market, or both. The internet if full of companies flogging engines that have never seen the light of day, Cyclone is actually a bit better than many as they have at least built some engines and actually had them turn under their own power. Amazing how many websites push animation as "proof".
I remember that SEC report requiring Cyclone to revise many of its claims but, obviously, it didn't go far enough as it was just a paperwork exercise. I wonder if bonding companies are the answer? Suppose a regulation was enacted that any company seeking to sell new stock be required to procure a contact with a bonding agency? Said agency would be responsible for examining the company with an eye to ensuring that their claims and situation are compatible. For instance, a company claiming it had a line of engines with certain abilities would have to prove the truth of these claims to the agencies satisfaction. Some specific language would also help ... in the case of companies peddling engines, for example, they could only claim to have engines if said products were demonstrated working on a dynamometer to some minimum standard. A company wishing to seek funding to develop an engine would have to clearly state that they have an unproven engine concept that they would like to prove out.
Likewise, claims of impending mass production would be predicated upon demonstrating an actual manufacturing facility, qualified personnel and sufficient cash on hand to reasonably launch the venture.
I'd be very wary of giving the government this kind of power for ... reasons. On the other hand, private bonding companies can be sued and they would have strong reasons to be diligent. They would do the vetting at a fraction of the cost of any government agency. Part of this cost savings is simple competition, prospective businessmen are going to look for the best rate.
I'm also curious as to why solid business plans aren't required. So many of the companies I see begging for investors seem to work on the idea that "of course this is a fantastic idea and people will buy it at any price." Picking on Cyclone, for example, I don't recall a whole lot of analysis describing how the product would turn a profit. Before selling stock to the public, a solid business plan should be required that outlines capital requirements, probable expenditures and revenues. For example:
It was asserted that the Cyclone engine was cheaper to make than competitive technology but I certainly didn't see any breakdown by people in the industry to support that. The prices they currently quote are so much higher than ICE technology of the same output that you can't even make rational comparisons. Of course, price is dependent upon output volume and you can't compare on the basis of assuming the new product will be built at rates equivalent to the current product. Most outfits grow into that kind of volume over time --- if they live at all.
Perhaps more telling was that they never made a business case that demonstrated a compelling reason for a customer to buy their engine. There is no solid, verified data showing power to weight or size ratios, output power to rpm or measured thermal efficiency. They did have a matrix but the ratings were obviously whatever felt good to sell the product. Certainly there was no data describing time between overhauls or replacement.
Beyond all that, no one has yet explained, to my satisfaction, why you would want the engine. There was a lot of talk of alternative fuels but the touted algae oil has never been offered in commercially viable quantity at competitive prices and the same goes for the citrus oils. One could make an argument for solid biomass but, guess what?, they've never demonstrated that ability either. And that's a big part of a business plan ... "Such and such a customer will buy this because we can do this and this better than these manufacturers and such an advantage is worth X many dollars to a customer. Manufacturing cost being 1/2X and overhead, admin and shipping being 1/4X, we can return a 25% profit on sale. Umpty squat people would potentially benefit from such a product, 10% need to replace in the next 3 years and we figure maybe 5% of these will buy our offerings, giving us a net revenue of so and so. At this rate our shareholders can recover their investment 7.5 years."
Again, let me reiterate, this isn't just Cyclone ... it's a pretty common phenomenon. Just in engines alone you could spend days looking at outfits trying to peddle technologies that have repeatedly not proved themselves in the past. Typically you get a lot of excited, high flown verbiage mixed with vague assurances that the newest claimant has some special expertise that makes success inevitable. I think that, before selling stock, some kind of rudimentary but fiscally solid plan should be mandatory.
I'm not even convinced most of this is intentional, I simply think people don't know how to gather data, do analysis and present a credible case. With enough enthusiasm (often quite genuine, maybe most of them believe in what they are selling), you can usually find buyers if you frame it in terms those buyers want to hear. For example, I think the first guy that Harry suckered was Harry himself. He had these ideas and was so convinced that they were great that he put time, effort and money in without ever really stepping back and asking himself "where are all the down sides to this?" I think he had to be sincere, he ponied up a lot of his own money to acquire all those patents and I doubt most intentional scam artists would risk that kind of stake. That was the problem, he honestly believed he was right and thus could convince others ... and there wasn't a shred of dispassionate analysis of the theory, hardware or market to back any of this up. As far as I'm concerned, people can do what they want to do as far as setting up their own business but, when it comes to drawing in investors, there should be better standards for presenting potential gains and losses. To date, the use of some sort of bonding agencies is the best I can come up with to create such an environment.
