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Hey Creston, what Tom said.
This complex ownership showed up before, but as I recall, with a smaller fraction of Cyclone.
A convertible note held by this guy converted and upped his number of shares. The outstanding number of shares of 861 million on January 2015 was the last reported number, but the current number is certainly much higher than that. Frankie's last letter to shareholders said they raised the authorized again (from the 2 billion it was raised to before).
This guy's real ownership is much less than 9.99% of outstanding shares, but Cyclone hasn't reported what the outstanding is for more than a year, and he obviously hasn't asked.
Meanwhile, it's now about six months since the owner of Combilift was supposed to have visited. Those 10 Mark 1 engines ordered in November 2014 have yet to be seen. Republic Energy of Foley Alabama apparently hasn't gotten the equipment they ordered before that, nor that Canadian "leading turbine systems integrator" that no one could find. And Q2Power, the WHE business Chris Nelson took with him, hasn't yet demonstrated a working system or got their progress payment from Phoenix Power for making the WHE engine run for 200 hours yet.
So, same-old, same-old.
Beginning of the End for the Q2Power engine?
Letter to Shareholders issued: https://www.sec.gov/Archives/edgar/data/1310527/000154812316000537/exhibit992.htm
Their mission has evolved:
Our prime target market for development of our Resource Ecosystems is comprised of small-scale Waste Water Treatment Plants (“WWTPs”). This also includes farms and commercial operations that utilize Anaerobic Digestion – a proven process that reduces bio-solid volume, treats pathogens, and produces methane as a by-product. We are seeking to become a leading supplier of total waste management solutions for these customers by deploying our proprietary methane-fueled power systems combined with conversion processes and distribution channels to be secured by Q2Power for products produced from bio-solids.
Deployed our first operating pilot system at a local WWTP (a beta unit designed to prove operating concept, and test and improve individual components of our system, i.e., this was not meant to be a revenue-producing or long-running project);
Achieve critical operating and performance benchmarks for our base engine technology to allow us to enter a more efficient manufacturing stage – we are focused on increasing operating times between maintenance, and have an engineering roadmap to accomplish this goal;
Highlights from Annual Report: http://ih.advfn.com/p.php?pid=nmona&article=71128335
Page 6: "The Q2P Engine has been running both in our facility and in initial field pilot programs for over one year, logging hundreds of hours of operating time." There are 8760 hours in a year of which about 2000 is a single shift working year. They said before they had build more than one prototype engine. "Hundreds of hours" means engines have averaged just a few hours per week of operation. How long they operated while producing power is another (unanswered) question.
Page 6: "As we grow, we intend to transition our business model to one that compensates the Company for the value we create for our customers over time. For instance, we may be able to market Power Purchase Agreements (PPAs) and leasing programs directly to municipal, commercial and industrial facility owners." PPAs used to be their prime strategy. Now they "may be able" to do this.
Page 6: "For instance, a WWTP that uses our CHP System to generate power and maintain the operating temperatures within their Anaerobic Digester, could also retain our services to remove sludge and convert that typically landfilled waste into useful co-products like compost and engineered soils." So now Q2Power is moving into the sewage sludge business. (This is the business their new Chairman of the Board Kevin Bolin went broke in.)
Page 8: "We intend to provide customers with a warranty covering the replacement of parts and materials. Such warranties will generally extend between two and five years, subject to the useful life and payback expectations of the particular engine and system." and, Page 9: "We expect our engines to be engineered to perform for up to 10,000 hours of operation, and meet all consumer safety regulations." These statements become important below.
Page 12: "Patents. Currently, the Q2P Engine is protected by one issued patent in the United States, and four internationally, according to our latest communications with Cyclone." That US Patent 7992386 has already lapsed.
Page 15: "As of the date of this Annual Report, we have 6 full-time employees and 2 part-time employees, and one consultant, our CFO."
- Christopher Nelson, CEO
- Douglas Hutchinson, COO
- Sudheer Pimputkar, CTO
- Gerald Fly, VP Power Systems
- Nathan Hawkins, VP Production
- Eric Schacht, VP Systems Engineering
- Packy Underwood, Sr. Technician
- Michelle Murcia, CFO
Nathan Hawkins is co-owner of their machine shop Precision CNC, so he is most likely one of the part-timers. That leaves the entire non-executive "staff" of Q2Power as the Senior Technician and the second part-timer.
Page 16: "We realized a loss of $3,536,021" in 2015, but only need "approximately $2.0 to $2.5 million over the next 12 months to continue its planned business operations." of ramping up production and marketing. They don't say how they will do more with less spending.
Pages 16-22: Of all the risks they describe, the fact that their engine has never been proven to run for 200 hours and they have no plan to make its life commercially acceptable is not mentioned.
Page 25: They are issuing convertible notes, i.e., toxic financing.
Page 27: "It is our goal to have our sales revenue support our engineering and technical operational expenses by the end of 2016"; "Management believes the Company will start generating higher revenues through the sale of its Q2P Engine and CHP Systems within the next six months, and may start generating revenue from other business lines such as bio-solid co-products by the end of the year." This is what their predecessor, Cyclone Power Technologies, has said every year since 2007 or before. They have always anticipated engine production in the next six months.
Page 28: "During the year ended December 31, 2015, the Company generated $20,000 of sales related to Q2P providing engineering services to one customer." They don't say who that customer is, what kind of services, or if they expect any repeat business.
Page 30: They still have $250,000 in deferred revenue from Phoenix Power. This means they still have not gotten the $150,000 progress payment for demonstrating their engine ran under load for 200 hours without failure. Q2Power and Cyclone before them have spent millions since 2007 to get this engine to work right. Statements about 2 to 5 year warranties, 10,000 hour design engine life and selling more systems this year are pure fantasy. The one system they did sell will never meet its milestones and will never be delivered.
Page 55: "On March 15, 2016, the Company entered into a 120 day term loan agreement with one accredited investor in the principal amount of $150,000. The loan bears 20% interest with interest payments due monthly. The holders received a 100,000 share equity kicker and a second security interest in the assets of the Company." This looks like they factored the invoice for that system being built for the customer in Florida. It is supposed to be delivered by the end of May when they expect to get $160,000. Q2Power must be seriously hard up for cash to accept such predatory terms. It's going to be interesting when that note is due and the customer hasn't accepted or paid for the system.
Looking at the annual report in total, a far, far greater proportion is spent describing all the ways the executives and directors are being rewarded than in describing how well their product is working.
Just like Cyclone Power Technologies, a house of cards built on 'Green' hype.
And the Mark 6 was never anything more than a mock-up, even when they did still brag about it.
It gets even worse, if you can believe that. Notice mention of "Cyclone's solar trough, and Cyclone's Thermal Storage Units"?
The solar trough was way back when the WHE was first mentioned maybe 2007. They took a mock-up to a local home show or some such, claimed it worked better than PV cells at lower cost and got some interest. Cyclone was then going to put it in production right away. That's when Harry was claiming he could generate electricity with steam at 230 degrees.
The thermal storage unit is new. That seems to be the hook on this deal, that it can absorb solar heat during the day and keep generating electricity at night. At night, when there's no market for any new generating capacity.
So now that not only do the Marks 1 through 6 engines not work and the Mark 7 is in design for that Danish/Chinese promotion, Cyclone's "engineering staff" (i.e., Harry Schoell) is going to be inventing a thermal storage system that will collect enough solar heat during the day to create steam all night.
Boy, the Laws of Thermodynamics are going to be in for another fight. I wonder who is going to win this round?
I also wonder if this new brain trust has figured out that wholesale electricity prices drop towards zero at night? Big power plants at the utilities don't like to be turned up and down constantly, so they produce excess electricity at night.
It does seem, though, that each of these nonsensical press releases is put out during a day just before trading volume spikes. One probably goes out every time a bill comes due that they can't put off. New stock is issued and sold to get some cash. No doubt Harry and Frankie rationalize the practice as being "for the good of the shareholders."
Although it does restore my faith in humanity a little. Harry and Frankie used to be able to con people with money. Now they are limited to only other BS artists.
Another big agreement with another wannabe partner.
Here is a picture of the new partner's World Headquaters:
Nextra Technologies Europe BV doesn't seem to have a website and thier info only shows up in business directory websites like https://translate.google.com/translate?hl=en&sl=nl&u=http://drimble.nl/bedrijf/lisse/27258718/nextra-technologies-europe-bv.html&prev=search (put the mouse pointer over the words "Move mouse here" to get the street picture.)
No garage even.
Their partner, Yakamoz Energy Solutions B.V., turns out to be located in a high rise apartment building. Maybe they intend to manufacture Cyclone engines on the balcony...
Once again, Cyclone issues a press release to announce Great Things, with no mention of Cyclone getting any money, nor any mention of them having an engine that finally works.
Oops, I missed the connection that Enertech Environmental, that went broke in 2012, was the company started and run by Q2Power's new chairman of the board of directors.
They built a $160 million plant in California to process sewage sludge. In a story from 2012:
In an agenda report, James D. Ruth, the general manager of the sanitation district, said since the start-up of EnerTech's facility in Rialto, it "has only processed one-third of its contractual commitment due to technical problems."
Ruth also said EnerTech faced multiple issues with the new equipment and needed more time for testing.
He went on to say that "After almost four years of operation and fixes, EnerTech has not been able to demonstrate that this technology is reliable in the short or long term."
That article was from 2008. The company went broke in 2012: Wastewater district loses millions to biosolids boondoggle
The Gates Foundation funded development of the Janicki Omni Processor. It uses a diesel engine converted to run on steam to power a generator.
It'd be great if we could find out how well the Q2Power prototype system is working.
Hey Creston, it looks like the buyer has no connection to Harry Schoell, so the sale of the building was legit and not some shifting of titles to hide assets.
The mortgage lien on the Schoell Marine building was paid off before the sale. The liens on Cyclone Power's assets are still there.
It could be the new owner is renting the building back to Cyclone. It was probably bought as an income property so that would be the easiest way to get income.
Cyclone had been paying Schoell Marine $12/sq ft x 6000 sq ft = $72,000 per year in rent for the whole building. This is about what Frankie claims it would cost to the file financial reports they are legally obligated to file but don't because of the cost. Some priorities, huh?
There's been no mention of working on the Mark 5 engine since that video a year ago. Considering there was $300K of Combilift's money sitting in escrow to be paid out once two engines each ran 50 hours, not working on these engines means they've given up trying to make the Mark 5 work.
Instead they're working on the Mark 1 and Mark 3 designs, which are supposed to be 5 and 25 horsepower. Little engines. Harry and Frankie seem to be the only employees, so Cyclone could easily move into a one-car garage.
All the rest of Cyclone's assets are worthless. There are no more potential suckers to show the make-believe engines to. All the parts of engines that didn't work are scrap metal. At least half the patents have expired and those still in effect have never been shown to cover ideas that work. The expensive land speed record car is never going to run (remember last year's $125,000 crowdfunding scheme that raised $430?) so might as well be sold for parts.
Getting rid of all that useless junk and downsizing would be the reasonable thing to do, but it's pretty unlikely. Building engines that actually work has never been a priority for Cyclone. The focus has always been on creating symbols of Harry Schoell's "genius".
Nope, wrong website.
Cyclone's 3R Denmark is http://trer.dk/
A video with cute kids, a slick brochure not in English saying nothing specific, and nothing else.
The spin cycle starts again...
The November 9, 2015 letter to shareholders said
3R A/C, a China based OEM, has reorganized and is now known as 3R Denmark. 3R has asked for a 90 day extension to finalize the agreement with Cyclone for the integration of the Cyclone Engine into their system. They have agreed to our original plan of bringing three of their units, two of their engineers, and their electronic technology to the Cyclone facility. Cyclone engineers and the 3R engineers will assemble two complete units, ship one back to China, and keep one here at Cyclone’s facilities. Cyclone will also have the rights to 3R technology in North America.
In phase one 3 R A/C will pay for our lead engineer inventor, Harry Schoell, to go to their manufacturing facility that has 20 staff engineers, and fast track the production of the Mark 3 engine and the integration with their furnace.
The heating solutions are now being produced in a China facility through a joint venture with a Chinese Manufacturer
Schoell Marine is now homeless.
The building was sold on December 11th for $585,000. http://www.bcpa.net/RecInfo.asp?URL_Folio=484224270580 https://officialrecords.broward.org/oncorev2/ShowDetails.aspx?CFN=113403199
I wonder what happened to those Danish promoters who were supposed to be building wood burning generators at Cyclone this winter.
Happy Friday Lucy,
You were being too optimistic on Q2Power share sales. Here's a detail from the balance sheet:
Common stock, $0.0001 par value, 95,000,000 shares authorized,70,689,631 and 15,389,829 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
There's a new, revised 8K out. http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=11161156
"During the nine months ended September 30, 2015, we incurred a net loss totaling $2,649,009."
That's a little better than the $1 million per quarter average Cyclone used to have. And, compared to Cyclone's $2 in general and administrative to every $1 in R&D, Q2P is only spending $1.50.
"During the next 12 months, Q2Power Technologies expects to spend approximately $1,200,000 on development of our engine products and power systems. With these expenditures, we anticipate launching our commercialized Q2P System, and commencing sales of these products to customers. We expect to also incur approximately $750,000 in general and administrative costs in that period to support our ongoing research and development expenses."
Good trick there -- reducing the burn rate from the current $2.6 million in 9 months to only $1.95 million for 12 months while also doing a product launch and ramping up production.
"On January 21, 2016, the Company signed its initial Technology Sales Agreement with a Florida-based company in January 2016, which is expected to provide approximately $160,000 in revenue to the Company over the following four months as it achieves progress milestones and delivers a 10kW waste-to-power system to this customer."
Mark your calendars, everyone. May 21, 2016 is the official delivery date for their first customer. Unfortunately, the contract contains those two dirty words, "progress milestones". You'd think after all these years that Chris Nelson would have learned not to make payments contingent on delivering working engines:
"Under the terms of the revised agreement with Phoenix Power Group, revenue associated with these deferrals will be recognized subject to the achievement of certain milestones, as follows: (1) on the completion of certain performance testing of the engine, deferred revenue of $150,000 will be recognized; and (2) on the delivery of the first 10 “Generation 1 Engines”, other deferred revenue will be recognized at a rate of $10,000 per delivered engine."
It's official. The Q2Power engine has not yet been able to run for 200 hours without breaking down (that's Milestone #1).
This one is good, too. Under Property and Equipment:
"Shop equipment $9,540"
Looking at their spending:
"We have incurred negative cash flows from operations since inception. As of September 30, 2015, Q2P had an accumulated deficit of $4,478,368."
Expenses in the first 9 months of 2015 were $2.6 million, or $290K per month. At that rate Q2P has an accumulated deficit of $5.64 million as of Jan 31, 2016.
Five and a half million in spending, claims of soon rolling out production of engines and systems, and all they've got to show is $9,540 in shop equipment. That's as bad as Cyclone.
Don't forget their "ingenious".
The sales contract should be an exhibit in the next SEC filing. It will be interesting to see if there are any performance guaranties.
The Phoenix Power contract requires a demonstration of 200 hours of running time before making a $150K progress payment. It's been in the contract for years, but they still haven't made an engine survive that long and the money is still in escrow.
Since there has been no information released on the actual performance of their test system installed in June, its performance must be nothing to brag about.
Somehow, like the engines Phoenix ordered all those years ago and hasn't received yet, it's hard to imagine the system for this new customer actually being delivered in Q2.
Mighty quiet around here...
...everyone must be down at the bay videoing a boat, I guess.
Film at 11.
I'm here to counter misinformation, such as Cyclone was never promoted as anything other than an inventor tinkering away hoping that maybe one day a working engine might result.
Cyclone promoted themselves as having a family of market-ready engines that were going into production within six months.
Claims were made about remarkable efficiency and exhaust actually cleaner than the air that went into the engine. Claims about fantastic power output measured on a dynamometer.
All made up. And Harry and Frankie knew it.
Of course, if they really were concerned about my credibility, it would be so easy to do something about it. Pull Frankie's custom made speedboat (you know, the one shareholders paid so much money to Schoell Marine to build) out of storage, blow the dust off, throw away the fake engine and put in that sweet-runnin' beast of an engine from the dyno. Then video her doing hot laps around Biscayne Bay for a couple hours and post it to YouTube.
So very easy.
But they won't, because they can't. The Cyclone engine wouldn't move the boat away from the dock before breaking down.
You'd have a point, IF Harry and Frankie had treated investors honestly.
For example, here's a slide from the 2011 shareholder's open house:
on file at the SEC: http://www.sec.gov/Archives/edgar/data/1442711/000139843211000968/page16_01.jpg
Yep, they overcame all those technological hurdles, alright. That's why, for instance, in 2013 they hired Ohio State University to fix the problems with the bearings. Or why a year ago they posted a video of the Mark 5 engine with a totally different valve system. Oh, and the totally different condensing system.
And they still don't have any engines that work for 50 hours.
But it isn't for a lack of claims about production starting. Also from the open house:
Raytheon got "Manta Ray 36" engines instead of Mark 5s, and the Army eventually got the S2 generator, but no other event on that schedule has happened. Raytheon disappeared after they got their engines (and the project manager retired), as has the Army after they got their prototype.
So here we are more than four years later without working engines.
Why not?
Simple enough question, isn't it?
What is the current status of the engine designs? What's the longest the Mark 5 has run producing full power without breaking down? Why has the Mark 1 engine, the first batch of ten being ordered in November of 2014, never been shown powering anything?
And why was there an announcement last August of the $42 million "binding contract" after their shifty Danish partner's deal with the penniless Chinese "investor" had already fallen apart?
Why has Frankie announced twice she would be filing unaudited financials, yet never has?
Harry and Frankie have known for years the technology just does not work and cannot be made to work. Combilift has been waiting for years for their two Mark 5 engines to run for just 50 hours. Pretty simple requirement isn't it? What's preventing that from happening? That's a material fact if there ever was one, and Harry and Frankie have been ignoring their legal duty to report it to shareholders.
Would investors be more than $50 million poorer if Harry and Frankie had been honest and said the Cyclone engine didn't work worth a darn, but they hoped one day it might?
Not likely.
It's just too bad no one around here can come up with any real accomplishments of Cyclone Power.
Cyclone: A learning-free zone.
Someone posted a link to their Facebook page to a video of building a 7 cylinder radial engine out of VW air-cooled cylinder jugs. Cyclone's response:
Cyclone Power Technologies Includes a master rod? Not the same but interesting
As always, insightful summary Tom.
Cyclone isn't the only time Harry Schoell has been down the path of inventing a new kind of engine. In the 1990s he invented the Schoell Rolling Radial Engine. It was also a failure, but one who's magnitude was limited by his own finances.
Harry never set foot in a college, but boldly predicted he could build a more thermodynamically efficient engine than anyone else in the last two centuries, and without knowing any thermodynamics.
Actually proving his theories worked by building engines and measuring their performance was for chumps. The "Schoell cycle" works perfectly because Harry Schoell says so. What further proof is needed?
And here we are 12 years later with no working engine ever publicly demonstrated.
Other than such minor details, there's hardly anything wrong with Cyclone's business model. Well, other than spending most of the money on things other than R&D, putting their efforts into speed record boats and cars, and telling investors in 2011 that all the technological problems had been "overcome".
The new Cyclone saviors are the Mark 1 and Mark 3 engines. The manufacturing of the first batch was, what, November 2014? Still no details, no photos, no videos of even a go-kart powered by one. So just as successful a design as all the other Cyclone engines announced over the years.
I just wonder if they will actually show something being powered by a Cyclone engine before folding.
"Q2Power Signs Collaboration Agreement With Phoenix Power to Streamline Sales Process, Open New Markets for Q2Power Products"
PR at http://money.cnn.com/news/newsfeeds/articles/marketwire/1238941.htm
Of course, Cyclone Power (Q2Power's predecessor) has been announcing agreements with Phoenix Power for years:
April 22, 2014 Cyclone’s Waste-to-Power Subsidiary Receives Initial $1,000,000 Purchase Order for Waste Heat Engines from Phoenix Power Group https://www.accesswire.com/414645/Cyclones-Waste-to-Power-Subsidiary-Receives-Initial--1000000-Purchase-Order-for-Waste-Heat-Engines-from-Phoenix-Power-Group
March 18, 2014 Cyclone and Phoenix Power Group Sign Collaborative Agreement To Support Production of Waste Heat Engine https://www.accesswire.com/viewarticle.aspx?id=413182
August 14, 2013 Cyclone Receives Interest for the First 300 Waste Heat Engines; Establishes Baseline for Engine Production Plans https://www.accesswire.com/viewarticle.aspx?id=406837
Sep 27, 2012 Cyclone Power Technologies and Phoenix Power Group Successfully Integrate Waste Oil Co-Generation System http://www.marketwired.com/press-release/cyclone-power-technologies-phoenix-power-group-successfully-integrate-waste-oil-co-generation-otcqb-cypw-1706457.htm
February 02, 2011 Cyclone Power Technologies and Phoenix Power Group Generate Clean Power from Used Motor Oil http://www.businesswire.com/news/home/20110202006002/en/Cyclone-Power-Technologies-Phoenix-Power-Group-Generate
November 19, 2010 Cyclone Power Technologies And Phoenix Power Group Announce Launch Of Waste Oil Power Generator http://www.solidwaste.com/doc/cyclone-power-technologies-and-phoenix-power-0001
Jan 13, 2010 Cyclone Power Technologies to Design Waste Energy Generator for Phoenix Power Group http://www.reuters.com/article/idUS170537+13-Jan-2010+BW20100113
August 04, 2009 Cyclone Power Completes License for Engines To Generate Electricity from Waste Oil http://www.businesswire.com/news/home/20090804005288/en/Cyclone-Power-Completes-License-Engines-Generate-Electricity
Compare today's prediction against that of Sep 17, 2009: "The company anticipates these prototype systems to be available for installation at selected partners` beta sites in 2010."
No explanation has ever been given for why no Cyclone-Pheonix systems have ever been installed at customer sites despite repeated predictions.
Actually, Edison was far more clever than that quote gives him credit for. (The source of the quote itself is listed as disputed at Wikiquotes.)
People were inventing light bulbs for 20 years before Edison looked at them. He played with some for a bit then put it all away for a year. Then he did his thousand filament experiments and we think he invented the light bulb. He didn't invent the light bulb, but he did invent almost the entire rest of the commercially practical electrical system. Hence all the "Edison" power companies out there.
The deal was that prior bulbs were all low-resistance/high-current. The bulb doesn't care, but the power company would need generators that could handle enormous current, as would the power company's distribution system. No one could afford the copper to do that.
After playing for a bit, Edison put it all away and thought about how to make a light bulb pay. One of his notebooks is nothing but economic evaluations.
He decided high impedance generators were needed, and doubled generator efficiency in one step. He invented fuses so customers' houses didn't burn down. He even invented an energy meter so he could charge customers for the power they used. And a bunch of other parts needed for a commercially successful system.
All he needed to make commercial electric lighting work was a high-resistance/low-current light bulb. That's when the thousand filaments were tested. Once he proved that last piece of the puzzle worked, then he started selling stock. And everybody made lots of money.
He also did public demonstrations of a whole street and houses with electric lighting before selling stock to investors.
At Cyclone, on the other hand, there have been many non-functional mock-ups of envisioned engines built and shown at trade shows, a number of licensing deals signed, stock sold on the claim of a whole family of market-ready products, continuous predictions of production in the next six months, a custom speedboat to break the steam water speed record, two race cars to break the steam land speed record, a continuous stream of PRs announcing great things, and not one working engine demonstrated publicly.
Harry Schoell has no idea what he is doing, does not understand why his "ingenious invention" doesn't work and has about as much chance of making the engine work now as those monkeys.
Remember Note 2 of the Q3 2013 10Q (the last financial report filed): The cumulative deficit since inception is approximately $ 53.3 million. Quite a lot of other peoples' money gone with nothing to show but lots of steam engines that don't work, don't you think?
My bet's on the monkeys.
Originally thought they had a fantastic concept and opportunity (and really still do think there is a market for what they were promising).
In doing DD, every answer turned up about three new questions. One was just how many of that Mark 5 engine had they shipped to customers.
The answer turned out to be zero, but it took a lot of reading to discover that. All the photos of shiny engines, boats with engines, truck frame with engine, lawn mower, and land speed record cars turned out to be non-functional mock-ups of engines. All the performance claims were made up. All the talk of customers and applications and orders coming in was just hot air.
It could be Harry and Frankie originally had good intentions, but they've known for years their engines just don't work and they have no idea how to make them work. Meanwhile they've been telling investors during these years the engines will be in production in the next six months, knowing fully well a first class miracle will be needed for that to come true.
Dear Shareholders:
Cyclone Power has been working very diligently on its primary focus of getting product to market. We completed Beta testing and have made large strides towards the production of the Mark 1 (5.5 HP constant duty rated) and Mark 3 (22HP constant duty rated) engines. Our prime manufacturers and integrators will have final pricing available soon so that Cyclone can begin taking purchase orders for generators powered by the all fuel Cyclone engines. Cyclone's prime integrator for an all fuel generator has stated they will have product ready for delivery in Q2 of 2016. There are two additional OEM's ready to purchase the engines for integration into their products. One is an ATV (all-terrain vehicle-US based) and the other is solar (European).
We are still pursuing this demand for payment and feel this is in violation of the separation agreement which includes their license with Cyclone.
Management is continuing its efforts to channel resources to revenue-producing projects. With the projected royalty streams from WHE-GEN,
Completion of the Combilift contract will allow us to collect $300,000. We are pursuing invoice financing to complete this order. The project is in the final process of the 50-hour testing, and we are working toward a 2015 delivery. This effort was delayed due to the resources going to development of the WHE engine and overhead expenses for SEC compliance. Combilift's owner will be here this month, to assess our progress.
The decision has been made to submit a Form 15 with the SEC allowing Cyclone to report and file unaudited financials on a different venue.
3R A/C, a China based OEM, has reorganized and is now known as 3R Denmark.
They have agreed to our original plan of bringing three of their units, two of their engineers, and their electronic technology to the Cyclone facility.
In phase one 3 R A/C will pay for our lead engineer inventor, Harry Schoell, to go to their manufacturing facility that has 20 staff engineers, and fast track the production of the Mark 3 engine and the integration with their furnace.
Cyclone has identified and has LOI's with two major international Military suppliers. The foremost factor bringing them to Cyclone is the "One Engine All Fuel" technology.
Additionally we had to increase our authorized common stock levels to accommodate the convertible contracts that obligate the Company.
38% Rise on $14.50 Trade. No stopping it now!
I wonder when Frankie is filing that Form 15? From Investopedia:
When a company files an SEC Form 15, it usually means one of two things. It may mean that a company is ceasing to exist in a publicly-traded form, either returning to privately-held status or going out of business altogether. Alternatively, it may mean that a company is simply canceling a certain class of securities, replacing them with another class.
Insider trading certainly could be causing this spike.
Here's an email someone posted more than a year ago from Frankie: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=109480654
Frankie Fruge <frankie@cyclonepower.com>
Attachments2:14 PM (0 minutes ago)
to me
Dear XXXX,
Thank you for your interest and investment in Cyclone Power. Please see attached for the status of the Cyclone Engines. All of the Corporate partners have been either delivered and are in their testing procedures or the money for production models was sequestered as two of our large contracts were government funded. Check out link www.teamsteamusa.com this will be running as soon as we get another $20,000 to finish the car. We cannot take Cyclone money to pay for the car just the engine.
We will be delivering the two engines to Combilift in the next 30 days and it will be installed in a fork lift.
Please do not hesitate to contact us.
Kindest regards,
Frankie Fruge
President/Director
Cyclone Power Technologies, Inc.
Frankie@Cyclonepower.com
954-943-8721 - phone
954-788-6565 - fax
SKYPE: cyclone.power.technologies
Hey Tom, I think the key value in the patent was to persuade the not-too-astute investors to buy stock in this 'sure-thing'.
After all, it's patented. It must be a real invention and have huge value, right?
If Chris Nelson continues to peddle stock based on "exclusive patent rights", he's risking jail time.
If he turns honest and admits his company has no IP protection, then what does he have? A goofy engine that has been predicted to be going into production in six months ever since 2007.
Cyclone is claiming Q2Power owes them $150K not paid from last year. I'm wondering if Harry Schoell had a hissy-fit over that and threw away the maintenance fee notice for the WHE patent out of spite. Cyclone was never going to benefit from that patent. Why would Harry spend what little money he has left helping Chris Nelson who is refusing to give Harry that $150K?
It will be interesting to see what happens when the sophisticated investors who have given two or three million to Nelson already find out the company has no IP protection.
Ooooh-eeee. Harry lets Q2Power's main patent expire:
https://www.google.com/patents/US7992386#legal-events
Chris Nelson had paid Cyclone $175,000 last year for a license centered around an exclusive license for the waste heat engine patent. And now the U.S. patent has expired and is worthless.
The WHE patent in China may still be in effect, but the European patent has been allowed to expire in many countries.
Q2Power's whole business plan is built around the U.S. market. As Chris Nelson put in an 8K to the SEC:
"We rely primarily on a combination of patents and trade secrets"
Chris Nelson has now got his WHE spinout company listed under the symbol QPWR.
The Phoenix Power contract went with him when he split WHE Gen from Cyclone. It has a progress payment of $150K once an engine runs under load for 150 hours. That payment hasn't been made as of the 8K filed 3 weeks ago.
So from the time the WHE engine was announced in September 2007 until now more than 8 years have passed, many millions have been spent on R&D, Ohio State University was hired to fix the engine, and it still isn't marketable. Oh, and the parent company may or may not have folded already after failing to create anything of value out of Harry Schoell's steam engine inventions.
It will be interesting to see how Nelson spins that to sell stock.
Can't wait to see how the stock gets promoted now.
There is still no evidence their engine has run for 150 hours without failure. That is a milestone the parent company, Cyclone Power Technologies, has been striving to hit since they announced the waste heat engine in 2007.
Hey Tom, it's actually part of a pattern.
Harry's only real success was his "Delta Conic Hull" design that did make for faster boats. The Schoell Marine website shows how this was done. http://www.schoellmarine.com/index/model.htm
"Harry towing models with Allen Brown"
Notice all the models of different hull shapes and Harry pulling them through water on a pole. He persevered with enough trial and error that he found something that worked. Given all the models of things that didn't work, it's obvious that he doesn't have any particular genius or intuition for hull design. He just got lucky. Like the saying, you throw enough spaghetti at a wall and some of it is gonna stick.
With Harry, though, one success just reinforced magical thinking. Science and engineering is for chumps. Harry Schoell knows better.
His 2.6 speed factor is another example. It didn't come from the physics of wind and water resistance, but from graphing top speed data points from a variety of boats and engines. Draw a line of best fit through the data and the slope comes out at 2.6. Therefore, Harry reasoned, speed and horsepower are linearly related through the factor 2.6.
He missed out on a couple things, though. He wasn't plotting power used by a given boat at various speeds from zero to maximum, but the maximum speeds of different boats. A lot of factors besides wind and water resistance come into that number. The second problem is that he was looking at planing hulls in water and extending that observation to aerodynamic drag. Planing hulls have a resistance curve with one or more dips as speed increases. The big one is going from displacement mode to planing mode where the resistance drops quite a bit.
But to Harry, none of that scientific mumbo-jumbo is relevant. His graph showed a linear function with a factor of 2.6, so that's what aerodynamic drag does.
Fast forward from his toy boat days to advanced steam engine design and what do we see? Harry Schoell, ingenious inventor, with no understanding of thermodynamics, material science, machine dynamics, data acquisition, product development or a host of other relevant fields, promising world-beating engines will be in production in six months.
Of course he (or Frankie) did arrange to have a Board of Technical Advisors, but that was just a clever marketing trick to sucker investors into buying stock. Jim Crank, the lead technical advisor, says they never sought or accepted advice and he now calls them "Delusions-R-Us".
11 years and at least $23 million in investors' money squandered and what's Harry been doing? Trial and error with an ungodly number of engine prototypes, not a clue as to why they don't survive running for mere minutes, even less of a clue as to how to fix them, and no plans for anything other than more trial and error.
If you are up for a challenge, try to figure out just what Harry was up to in his Mark 5 efficiency calculation: https://www.cyclonepower.com/PDF/Mark%20V%20Efficency%20Calculations.pdf
Let's assume he wasn't just pulling numbers straight out of the air to get the answer he wanted.
Indicated horsepower is 131. This is the power applied to the piston tops by the expanding steam.
Thermal losses are 15.5% of indicated power, coming from a heat exchanger and insulation. Why steam already in the cylinders would lose energy to a heat exchanger and insulation outside the cylinders is a mystery, but this 20.3 hp is subtracted from the indicated power.
The only loss between the piston top and crankshaft output is friction and parasitic loads. There are not thermal losses in this flow of energy, yet Harry subtracts 20.3 hp in thermal losses.
Conveniently, though, this brings estimated engine power down to 98.45 which is a lot closer to the 100 hp he had been advertising.
Below that, CO x PA looks like cylinder volume at cutoff (0.314 cu. in.) times 6 cylinders times 3600 rpm gives 6800 cu. in. of steam per minute (not hour as stated). The next line does multiply by 60 to get steam per hour, but the cubic inches have turned into square inches. Who knew there were 1728 square inches in a cubic foot?
So now we've got 235 cubic feet of steam per hour, which has turned into just 235 cu. ft. It gets divided by .3433 hp to give 686.33 lbs. The .3433 number appeared several lines up as "V + Compression(VRC)0.3433 @ 27/1". Who knows what it is.
Our fraction has cu.ft./hr divided by hp. Hp can be expressed as ft-lb/hr. The fraction's units are then [cu.ft./hr]/[ft-lb/hr] which is sq.ft. per lb, and not lbs as given. (The next line, though, calculates water rate in lbs/hp-hr, so the previous line should be in lbs/hr, not lbs in any event.)
Next line: water rate in lb/hp-hr times enthalpy in BTU/lb should give BTU/hp-hr, but instead is BTU/hp. We get 10,947 BTU/hp-hr heat energy supplied by the boiler. But in the next line this turns into 10,737. Units are wrong in that line, too.
Now here's the cool part. Somehow temperatures of air and water turn into 4.05% "airside efficiency gain" and 4.32% "water side efficiency gain". Together that boosts the engine efficiency from 23.2% up to 31.57% And here, ladies and gentlemen, is where Harry Schoell and Cyclone determined the efficiency of engines that have never been built and tested. Numbers pulled straight from the air with calculations that have no physical meaning and the units of quantities in the calculations transmuting as needed.
Sure it's all nonsensical, but no more so than believing aerodynamic drag power increases linearly with speed.
PS: did you see the one where Harry states bearings are little generators?
The car was owned by Chuk Williams. He designed, built and paid for the materials himself. Here's the PR from 2011 when he delivered it to Cyclone to install the engine: http://www.businesswire.com/news/home/20110125006433/en/Cyclone-Williams-Steam-Powered-Speedster-Races-Starting-Line-World
That's Harry Shoell on the left and Chuk Williams on the right.
Cyclone had provided Chuk with a mock-up engine and Chuk re-engineered and rebuilt his car to fit it. It's the round grey thing behind the driver's seat.
As part of the deal Cyclone built the body for the car and written into the contract was that the body would belong to Chuk.
Cyclone never provided a working engine and Chuk was getting eager to actually run his car, so he ended the partnership in 2012. Harry Schoell actually sued Chuk claiming Chuk stole Harry's property (i.e., the car body). The suit ended when Chuk gave the body back. That's why the car ran at Bonneville in 2012 with no body.
After Chuk built a new body for his car, Harry sold the old one on Ebay for $3150, claiming it cost (Cyclone shareholders) $70,000 to make. http://www.ebay.com/itm/Land-Speed-Record-LSR-Streamliner-Fiberglass-Car-Body-/251430846090?nma=true&si=HDj0Fog5vpRRD66U%252FQuS6cab4RU%253D&orig_cvip=true&rt=nc&_trksid=p2047675.l2557
The car was designed, built and owned by Chuk Williams. Harry Schoell promised to deliver a working engine, which he never did. Those facts, however, didn't stop Harry Schoell from telling people it was his car. E.g., from a magazine interview in 2011: http://www.editinternational.com/photos.php?id=4dc2dab2a8d90
"Cyclone says their car will do well over 200 miles an hour when they race it on the Bonneville Salt Flats in Utah in late summer."
The photo of the white land speed record car (before being painted in Cyclone yellow) has Chuk Williams (left, in green shirt), Frankie Fruge (Cyclone president) and Harry Schoell (Cyclone CTO).
Chuk Williams was building the car to set the land speed record for steam cars. In December 2009 Harry Schoell became a sponsor of Chuk's car offering a high performance Cyclone Mark 5 engine. http://www.cyclonepower.com/press/12-09-09.pdf Eventually Harry Schoell painted the car yellow and started telling people it was his car.
In March 2012, after numerous delays in the promised delivery of the Mark 5 engine for the land speed car, Chuk Williams announces the collaboration with Cyclone has ended. http://www.steamautomobile.com/ForuM/read.php?1,14474,19822#msg-19822 Chuk obtained another steam engine and ran his car on the Bonneville Salt Flats in October, 2012.
Good job starting to clean up the info box Creston.
For the lawn mower, you can mention the November 2007 PR where Cyclone announced the license with Revgine for lawn mower engines.
http://www.marketwired.com/press-release/cyclone-power-technologies-signs-license-to-manufacture-clean-green-lawn-equipment-796389.htm
In June 2008 Harry Schoell claimed in a video (at 4:29) "Everything from lawnmowers... You'll see a lawnmower on the market in about a year, 18 months. It's getting into its final design stages now and go into testing shortly." http://www.engineeringtv.com/video/Cyclone-Waste-Heat-Engine
In April 2010 they said "Lawn Mowers: We have temporarily put on-hold the lawn mower project under our license with Revgine Inc., which was not able to compile the technical team and resources to complete their prototype engine."
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acHhnTNt5dkc
The Cyclone lawn mower never appeared on the market. The photo is of a mock-up of an engine concept and not a real engine. No further development of the lawnmower engine was ever announced.
Now, for the much-hyped Popular Science award.
PopSci has a video from 2008 of Harry Schoell describing the engine. http://www.popsci.com/scitech/article/2008-05/steam-under-hood
What he neglects to mention while pointing at hardware and claiming great performance is that what he points to is a non-functional mock-up of an engine and not a real engine.
In December 2009 they put out a PR "Cyclone Power Technologies Runs Flagship Mark V Engine on Steam" announcing they had run part of an engine on steam for the first time. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aTzAS2gkJZE4
Popular Science issued the Invention of the Year award in May 2008, more than a year and a half before even part of the Cyclone steam engine was run on steam.
July 30, 2009: First two Mark V engines are sold to customer Phoenix Power Group LLC of Tennessee with a quoted delivery time of six months. https://www.sec.gov/Archives/edgar/data/1442711/000139843211000685/ex10-8.htm
September 12, 2011: The Combilift corporation in Ireland orders two Mark V engines. The contract specifies the engines will be "Run at Cyclone for a minimum of 50 hours prior to delivery to Combilift". https://www.sec.gov/Archives/edgar/data/1442711/000139843211000847/ex10-15.htm
November 09, 2015: On the Combilift Mark V engines: "The project is in the final process of the 50-hour testing, and we are working toward a 2015 delivery."
http://www.marketwired.com/press-release/cyclone-power-technologies-releases-progress-to-shareholders-otc-pink-cypw-2071769.htm
A short (58 seconds) video of the Cyclone Mark V engine running on a test stand was published in March, 2010
History of the last pilot plant using the Q2Power engine.
Q2Power was spun out of Cyclone Power Technologies (CYPW) last year. Q2P's CEO is Chris Nelson who was Executive Vice President and General Counsel of Cyclone January 2009 and March 2011 (and President and General Counsel until July 31, 2014).
Starting in January 2009 Cyclone made a number of announcements regarding a pilot plant at a company called Bent Glass Designs in Pennsylvania:
January 28, 2009: "Bent Glass Design Purchases Engine System From Cyclone Power Technologies" http://www.marketwired.com/press-release/Bent-Glass-Design-Purchases-Engine-System-From-Cyclone-Power-Technologies-921147.htm
February 10, 2009: "Cyclone Power Technologies Secures License for Waste Heat Recovery Power Systems", http://www.businesswire.com/news/home/20090422005428/en/Cyclone-Power-Technologies-Secures-License-Waste-Heat#.VQ2ed-F26zk
June 30, 2009: "Cyclone Power Improves Performance and Durability of Waste Heat Engine". http://www.cyclonepower.com/press/06-30-09.pdf
July 22, 2009: "Cyclone Power Commences Durability Testing of Waste Heat Engine", http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ayEemLBc7gGA
October 13, 2010: "Cyclone Power Technologies Completes Testing, Ships Initial Waste Heat Power Generator", http://www.cyclonepower.com/press/7-13-10.pdf
November 3, 2010: "Pennsylvania Utility Approves Cyclone Power Technologies' Application for Small-Scale Waste Heat Power Generator". http://www.cyclonepower.com/press/11-3-10.pdf
November 18, 2010: "We made substantial progress in the recent quarter towards the completion of our waste heat engine (WHE-25 model) prototypes, which we expect will lead to the commercialization of this product in the first half of 2011. Among the material events was the delivery in July of the WHE-25 system to Bent Glass Design in Hatboro, PA, for installation on its glass manufacturing furnace. This system will recover over 500,000 BTU of exhaust heat to run the WHE-25 combined with a grid-tied electric generator. This will offer our customer a predicted pay-back in less than 24 months. In November, the electric utility PECO approved our application to connect the system to the grid, allowing this installation to go live sometime in the fourth quarter of 2010." Letter to Shareholders, http://www.otcmarkets.com/financialReportViewer?symbol=CYPW&id=26193
December 8, 2010: "Cyclone Power Technologies to Present its Small-Scale Waste Heat Recovery System at Power-Gen International". http://www.cyclonepower.com/press/12-8-10.pdf
December 14, 2010: "Cyclone Power Technologies Successfully Powers-Up Small-Scale Waste Heat Recovery Pilot", http://www.businesswire.com/news/home/20101214005528/en/Cyclone-Power-Technologies-Successfully-Powers-Up%C2%A0Small-Scale-Waste-Heat#.VRDUUeF26zk
The last press release announced the system was finally operating, and that extensive testing would be conducted. That was the very last news of the Bent Glass Design pilot project. No explanation has been given about how long the engine operated or what happened to the Bent Glass Design installation.
Why does this matter to Q2Power investors? From page 27 of the 11/18/2015 Current Report (http://ih.advfn.com/p.php?pid=nmona&article=69381207):
"The Company’s operating subsidiary, Q2P was originally formed by Cyclone Power Technologies Inc. (“Cyclone”) in April 2010 in the state of Florida as a limited liability company called “Cyclone-WHE LLC.” The purpose of the Company at such time was essentially the same as it is today: to pursue waste-to-power and waste heat recovery business opportunities on a global basis. "
The Managing Director of Cyclone-WHE? Chris Nelson, now CEO of Q2Power.
After the Bent Glass Design experience, the only thing Cyclone-WHE produced was press releases.
Today's infographic for those unfortunates investing in Cyclone WHE technology:
The merger between Q2Power and Anpath Group has gone through. (Well, more like the empty Anpath shell was purchased by Q2Power.) http://www.sec.gov/Archives/edgar/data/1310527/000101041215000195/0001010412-15-000195-index.htm Soon Chris Nelson will rename the Anpath shell and start selling stock to a new generation of suckers.
For instance, on page 28 of that 8K, we find:
"During the six months ended June 30, 2015, we incurred operating expenses totaling $1,943,728.", and,
"Of the operating expenses in the 2015 period, non-cash general and administrative expense related to equity-based compensation totaled $529,220. Stock and options to purchase stock issued to consultants totaled $470,186, and stock and options issued to employees totaled $59,034."
The executives are also consultants, so half the money raised from investors in the first half of this year has gone to line the pockets of the insiders.
Meanwhile, the WHE engine has still not been able to run for 200 hours continuously under load. This is a condition for Phoenix Power to make a $150K progress payment. Note 4 on page 52 says that there is still $250K on the books as deferred revenue from Phoenix Power. This is the money held in escrow for the progress payment ($150K) and the purchase of 10 engines ($100K).
As long as that deferred revenue is listed on the books it is proof their engine has never survived 200 hours of running.
Meanwhile, Yanmar sells a biogas generator system (https://www.yanmar.com/global/energy/bio_gas_micro_cogeneration_package/) and offers extended warranties up to 60,000 hours (http://www.yanmar-es.com/uploads/files/349226-YAN-Catalog-Apr17_FINAL_DIGITAL_med.pdf), which is more than 300x longer than the WHE engine has ever run. As far as we know, the WHE engine may never have run more than 2 hours without failing, which means the Yanmar goes 30,000 times longer....
Harry Schoell has been promising since 2007 the WHE engine was going into production in six months. Now Chris Nelson is still promising that.
Oh, and the blip in CYPW price in March 2011? That came after the announcement that Topline Automotive was going to start manufacturing WHE engines.
A blast from the past:
"In April 2011, the Company also received a purchase order for multiple Mark V engines from Raytheon Company, a contract worth $400,000 to the Company. Management believes that this purchase order will constitute one of multiple contracts that the Company could receive from Raytheon over the next few years worth several million dollars in the aggregate." [source: 2010 annual report]
"multiple" engines meant exactly two.
"multiple" contracts meant exactly one.
"several million" meant exactly $400,000.
"Mark V engines" didn't work so "Manta Ray 36 engines" were substituted.
Delivery of those engines in 2012 was the last interaction with Raytheon.
And the Mark 5 engine still doesn't work.
I wonder if Harry and Frankie will ever be honest enough to explain why the Mark 5 engine has never worked.