Summary: Hey, look over there!
The bad grammar suggests this was written by Harry.
Oh, yes, the only problem is bringing product to market. The fact there is no product and never has been anything close to a product isn't management's concern.
After all, Harry told everyone at the shareholder's open house in 2011 that all the technological problems had been overcome and plans were in place to start engine production.
And now all the production is to be done by others, the current batch of strategic partners, with all sales flowing through Cyclone. Yet the holdup is that Cyclone is undercapitalized. Under the claimed business model of Cyclone selling licenses and collecting revenues while sales flow through Cyclone, just what capital is needed? Do they need a fleet of forklift trucks to unload new engines from their strategic partners' delivery trucks to load onto their customers' trucks? Just what's the problem with capital?
WHE GEN (wonder why Harry isn't calling it Q2Power?), we now hear, didn't sell Cyclone stock so therefore held up Cyclone engine production. Then WHE GEN didn't "close the final agreements in a timely matter" causing Cyclone to "use the funds for developing and getting product to market." So WHE GEN caused Cyclone engine development to both stop and advance simultaneously. Very convenient, having a multi-purpose excuse like that.
The military genset for FSDS of Denmark now, we just learn, uses the Mark 1 engine rather than the S-2 engine from the Army genset we were told, for instance, in the 2016 annual report. The Mark 1 engine is rated at 5 hp (also in the annual report) while the genset for FSDS is supposed to produce 20kW of electricity. That's equivalent to 28 hp. Wow, talk about efficiency. A 5 hp engine powers a generator that provides 28 hp of electricity. Harry must have been extra ingenious that day.
Oh look, it turns out California is 2700 miles away from Florida. Who knew? How could management have foreseen that?
So they've decided to switch to local auditors because of that distance. The fact they left a bill for $85,000 from their previous auditors unpaid has nothing to do with it.
Frankie "feels" there has been "great progress with our engines". No actual reportable, objective progress, of course, but she feels like there has been progress. That's good, isn't it?
Maybe that's the real Cyclone strategy. Maybe if we could all just agree to feel there was great progress, all the good cosmic vibes would make Cyclone engines work. Why not? It's just as likely to make the engines work as having Harry spend another decade tinkering.
While we're all feeling sorry for poor undercapitalized Harry doing his heroic work to save the planet and all that, it's worth looking at the original sale of the Mark 5 engines. Two were sold to Phoenix Power in July 2009 with promised delivery in January 2010. Harry signed a legal contract to deliver working engines. He represented to Phoenix the Cyclone engine worked. He even agreed to a $25,000 per month late delivery penalty, up to a maximum of $400,000. Cyclone paid out that $400,000 in penalties, and still didn't deliver any engines. But even though there was no foreseeable prospect of making the Mark 5 engine work, Harry then signed another legal contract in September 2011 to deliver two working engines to Combilift in July 2012. Combilift is still waiting and there is no reasonable prospect they will ever get a working Mark 5 engine. The Mark 5 is now more than 7 years past its promised delivery date and Cyclone has never provided any explanation for why that is.
The land speed record car that shareholders paid hundreds of thousands to build, plus the custom GG MOM speedboat that cost the best part of another hundred grand came out of Cyclone's capital. Was Cyclone undercapitalized? Only in the sense that Schoell Marine drained off many millions from Cyclone and management spent $2 on General & Administrative expenses for every dollar they put into R&D.
But if investors just gave Harry many more millions to do with as he pleases, without making him provide any objective information on the true state of the engines, everything will be wonderful.
