Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

Oh dear. Poor, poor Fankie. President of a public company and forced to evade and dissemble by mere common shareholders...

Those spending figures (e.g., http://investorshub.advfn.com/boards/read_msg.aspx?message_id=126673388) were taken from the annual reports filed by Cyclone. It's easy to verify that. Those were also the cash amounts, not derivative losses.

The numbers for 2014 were incomplete, but the General and Administrative averaged close to $2 million per year. Frankie is trying ot spin those expenses as just the pay for her and Harry and the rent paid to Schoell Marine that they forgave.

Sorry Frankie, but that pay and rent can only account for 15% at the most of the G&A expenses. Where did the other 85% go? That 85% was still far more than spent on R&D.

Cyclone had rented the entire Schoell Marine building, even though Cyclone only used a small part of it and Schoell Marine continued in business using Cyclone's space. That's why all the photos of the place show boats, boat parts and equipment for working on boats. Cyclone was also paying about double market rent for the area. It's only in the more recent years that rent was forgiven. Schoell was paid shareholder cash for rent in most years.

Yes, Harry and Frankie forgave deferred salary, but look through all the statements and tally up all the stock options, warrants and grants issued to them over the years. Allow some time for this as there is an awful lot of ink in the reports devoted to it.

While the stock is worthless now, it wasn't always so and who knows how much those two got out of that.

But by far the biggest wealth transfer was through the "services agreement" between Cyclone and Schoell Marine. That's the only place the lion's share of that G&A could have ended up. And why the Schoell Marine guys working on boats all wore Cyclone shirts.

If Schoell Marine paid a guy $12/hr, how much did he charge Cyclone? $40? $50? $60? That could run up G&A pretty quickly.

Considering Cyclone was paying dear for the entire building and funneling most of its money to Schoell Marine, Schoell Marine must have had some extremely profitable years.

Cyclone didn't just put that cash in a pile and burn it. It must have gone somewhere and Schoell Marine is the only place it could have gone. Frankie could prove me wrong by going back and breaking down the one-line G&A category into components, but she won't. Just like she won't update Cyclone's website to say how many outstanding shares there are now or to delete all the people who no longer work there.

Frankie should ask Harry where her $2 million is.

Does Florida have a palimony law? She must know where the assets went.

Derivatives accounting in the reports is due to all the stock hocus-pocus. Options and warrants represent a future liability so the SEC makes companies estimate what those costs will be. Cyclone has also been using convertible notes - toxic debt - to raise money and then convert to new shares at up to 50% below market price. That dilutes the shares and erases shareholder wealth, so it's in the derivative expenses. Cyclone also eliminated the Class A Preferred shares some years ago and wiped out all those investors, creating more derivative losses.

The derivative losses wasn't cash being paid out, but the wealth shareholders lost due to management's manipulation of stock. Harry and Frankie could simplify the derivative accounting by calling a board meeting and cancelling all the outstanding warrants and options and giving back any stock they've taken in the last few years.

They could also simplify the inventory accounting by writing down the value of the inventory to something justifiable. For instance, a scrap yard in Pompano Beach is currently paying:

Stainless Steel (clean) $0.30 per pound
Cast Aluminum $0.40 per pound
Aluminum Rads Clean (Auto or AC coils) $0.32 per pound

They just have to separate the inventory by material and weigh it. It's all just pieces of engines Harry could never make work, so it's good for nothing but scrap. I'll bet, though, the holdup is that Harry refuses to value this junk realistically and the auditors refuse to write down his delusional valuation.

I wonder if Frankie is just as cranky with Harry. The guy has been making unkeepable promises for years and telling investors outright falsehoods about the state of their technology. After Ohio State University proved the spider bearing and water lubrication were technically unworkable, Harry has gone right back to those in the new Mark 1 and 3 engines. His decision guarantees Cyclone engines will never be marketable. The best they can hope for is to get some money by scamming new investors.

In the final analysis, though, that's all they've ever been good at so it's not surprising they would stay that course.