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Yes, Kevin the "black swan" investor.
Waiting for that "independent third party report" like it was the Great Pumpkin on Halloween.
He had bought a bunch of Cyclone and flogged it on that board in the hope the forthcoming report would prove Rossi had something and the world would throw billions into anything that could be connected to Rossi's reactors.
It was maybe a couple years ago while CYPW was still sliding downhill. Kevin lost a bundle.
I remember reading about one of Rossi's demonstrations of excess power production. Someone had the idea to measure current in the ground wire and found it was carrying an astonishing amount of power INTO the reactor.
And there was the salted reaction product isotope samples.
And the time he was going to hold a demonstration, but witnesses showed up with their own instrumentation and he threw them out.
I think at the time Cyclone got their own cold fusion advisor a lot of people like Kevin were contacting Cyclone to say they should hook up with Rossi. Rossi's discussion board shows people suggesting he should contact, or even buy, Cyclone.
Harry and Frankie probably thought there was a big crowd of investors ready to pounce on anything LENR, so put out that PR. Just like they thought a crowd-funding campaign for their LSR car would rake in $125K. Trouble was, Rossi's followers don't have any money. (An outcome of fools and their money being soon parted, I suppose.)
In other news, Q2Power has failed to file their quarterly financials. They shut down the WHE development work in May, laying off all the staff. Since then Chris Nelson has been trying to raise more money to buy a composting outfit in Georgia. Do you suppose he was really dumb enough to believe Harry's stories that Cyclone engines would work some day?
Great summary.
As for the first and second laws of thermodynamics, to paraphrase Bugs Bunny, fortunately for Harry, he never studied law.
Rossi is a fraud, but he ain't stupid. Here's a reply to someone on his blog asking about Cyclone (http://www.journal-of-nuclear-physics.com/?p=829&cpage=6#comment-880588):
Andrea Rossi
December 8, 2013 at 10:00 PM
Rodney Nicholson:
I am not a financial expert, so I don’t know if what you say is true or not. For sure we are interested only to a real product, off the shelf, with a price competitive with the well consolidated technologies and with a competitive efficiency. We did not receive any offer, so far. When we will receive a real offer, we will buy a model to test it in our labs. All the other considerations are not of our interest. Clearly, the shares of a company that has not yet a product in the market are a high risk investment, as a general rule.
Warm Regards,
A.R.
Andrea Rossi
December 5, 2013 at 11:29 AM
Malcom Lear:
We did not receive an offer for an industrialized product, yet. If we will receive an offer for a product ready for the market, which means with acceptable price/kW, we will buy one item and test it. We have received offers for similar issues, but they were prototypes with unacceptable prices, upon which more research and development was necessary. We are not interested to be involved in this R&D, so far, because we are focused on our E-Cats, therefore we will apply to our E-Cats the existing well consolidated technologies. If new technologies will arrive in the market, well tested, certified, consolidated and competitive with the existing $/kW prices, we will be delighted to buy units and test them in our laboratories.
Warm Regards,
A.R.
And they missed the late deadline, too.....
Part of the excuse for the late 10Q was "the Company’s efforts to secure additional funding."
They could file unaudited statements and Chris Nelson is a securities lawyer so he could do the remaining paperwork (98% cut and paste from last time), unless he's waiting for investor cash to pay himself consulting fees on top of his salary.
Unlike Harry and Frankie at Cyclone, Nelson isn't emotionally tied to Q2P's business, what ever it is. He's probably shopping around the shell now.
R/S coming soon.
Yeah, you'd think it wouldn't be that hard to tally up all the business done in the last quarter.
Like, well, no sales, no revenue, no operations, no assets, no taxes... Probably nothing at all other than some more defaults and what cash they could scrape up spent on executives.
I wonder how much Nelson was able to steer into "consulting fees" for outsiders such as himself. Seems to me the only prepaid expenses Q2P had in the past were to Greenblock Capital, whose managing director is Christopher Nelson.
The fact Q2P is still going is living proof P.T. Barnum was right.
PS: definition of insider trading: "Cyclone Power Technologies - of course not all investors have to get it at the same time"
Let's see. Shareholder wealth decreased by at least $55 million, and Frankie's wealth increased by $2 million.
Not bad work, if you can get it.
The only thing holding back the filings is that the auditors intend to tell the truth. Harry and Frankie will have no part in that.
You know they're good auditors because they demanded cash up front from Cyclone. The last thing you would want are auditors that would trust Harry and Frankie with an IOU. Who knows what else they would fall for.
Hey Tom, the simple answer is that 'ingenious inventors' don't need to build and test anything before the final production design. That's what makes them ingeniouses.
Here's the problem in one graphic:
(from the 2011 Shareholder Open House presentation http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=8283228)
Notice the bottleneck?
They have a Chief Engineer who has nobody report to him. Their "Research" operation is "Brownie" who had some kind of career in boat racing. They have mechanics, who were probably boat repairmen, but no machinists.
The flagship product, the Mark 5 engine, was already far behind promised delivery and was under Project Leader and Engineer Vaughn Usher, who's LinkedIn page says he has 60% completed a Bachelor’s Degree in Mechanical Engineering, has an Associate's degree in Industrial Electronics and a Bachelor of Science (BS) in Professional Administration. Who knew that administration is a science program?
He spent 19 years at a company making medical catheters, 3 at a startup making implantable heart bits, 3 at another making tiny insulin pumps, a year at a company doing some kind of general medical device development. He finished with this company in April 2010 and his next job was at Cyclone starting in October 2011 where he was put in charge of the Mark 5 fiasco.
So, what do we have? In 2011 Cyclone was living the high life, able to burn more than $300K in cash per month. The Mark 5 was already more than a year late for delivery and had huge problems. The person Harry picks to fix these problems never finished his engineering degree, has a diploma in electronics (of which there are none on the Mark 5), some kind of education in administration, work experience with small, simple, low volume medical devices but no experience with engines or thermodynamics, and had been unemployed for a year and a half.
And that was the "engineer" put on the biggest, most critical problems.
Who knows what qualifications the others on that chart had.
Harry never set foot in a college himself and has made up all his own scientific theories such as aerodynamic drag does not increase with the third power of speed and that bearings are tiny generators.
Even from a distance we've seen it proven that it is physically impossible for Harry's patented Mark 5 valvetrain to survive for more than a moment, that the "spider bearing" must pound the connecting rods to pieces or that it is impossible for the condenser to reject enough heat to work. The last Mark 5 went to a rotary valve and external condenser. Ohio State University threw away the spider bearing on the WHE and reported much greater engine life.
Even after Ohio State proves the spider bearing can't be made to work, Harry's response was to stop work with Ohio State and keep designing engines with spider bearings.
It reminds one of the saying, ignorance can be cured, but stupid is forever.
Another example is all those shiny mock-ups of engines. He went to an SAE engine show in 2006 and again in 2008 with all those toys. There's a video from one show of Harry spouting complete nonsense such as the lawnmower is completely quiet, the engine is so efficient you can put your hand on it while it's running but you can run a second engine off the exhaust of the first, and so on.
How many times do you suppose he was asked if they have a running engine? Every engine manufacturer of any importance would have had people at those shows and not the slightest bit of interest came out of it.
So does Harry buckle down and make a real, running engine? Nope. Just sells contracts to the unsuspecting. If he had the first clue about the technology I'd say he signed contracts knowing he would never fulfill them, but there's not much evidence to support that he has that clue.
Unfortunately, nobody ever held him to account and made him prove his claims with data. He got away with telling investors pure fiction. Once he got the money he was able to show the world what a Big Shot he is, and that needed all the props, like an extensive executive team, public relations firm, titles for everybody, etc. His ego would never let him hire anyone smarter than he is. (Remember when the CEO James Landon sent a letter to shareholders saying he was hiring contractors to fix the problems with the engines? That was a couple months before he left Cyclone.) And with nobody smarter than Harry there is zero chance a working engine will ever result.
It's like if the Pointy Haired Boss in Dilbert was utterly incompetent in technology and business, but was a skilled con-man.
I expect Cyclone employees all got paid.
Unfortunately for them, a lot of their compensation was stock.
As the money ran out a couple years ago the members of their "executive team" started listing themselves on Linkedin as former employees or posted on-line resumes. They seemed to be let go in a steady stream at that time.
And, anyone who could work for Harry Schoell would have to be quite pliable and not have many options. Even if they got shorted on pay, they'd probably take the balance in stock and thank Harry for it.
You hit the nail on the head about Chris Nelson making sure he got paid.
It always amazed me reading the financials just how much was devoted to all the different ways money was funneled out of the company compared to how little was said about technical progress made in this one (future) product company.
Or even spent discussing a plausible business plan, compared to all the ink spent on various forms of remuneration of executives.
And when you consider that Chris Nelson had spent years as President of Cyclone shepherding all the utter failures of the WHE engine, how is it he could tell people with a straight face he expected the Q2Power system to actually work and generate income?
With all the millions spent at Cyclone, then the work at Ohio State University concluding they couldn't make the bearings work, there was no reason in the world to expect this engine could be made to work without a genuine miracle happening.
Yet he sold millions in stock and borrowed more on top.
But, there's no doubt his paychecks cleared.
Yep, I can't wait to see the CYPW financials where they go on about all the royalty income they are going to rake in from Q2Power selling WHE engines.
Any word on those financials? We're finishing week 13 on that six week estimate.
Those auditors and lawyers must be having some serious problems with signing off on Cyclone's statements.
New Cyclone military generator the hit of a trade show!
On Cyclone's Facebook page there's a photo
The caption is: "Engine/Generator on display at AUSA in DC in FSDS.DK booth (on the far right)"
Here's a close-up of the thing on the far right:
No banner, not even a sign. It's not even opened up so people can see what it is other than a box. It even looks like someone left a paper plate on the table with it the booth staff hadn't bothered to pick it up.
Maybe it's a stealth generator, invisible in plain sight.
"undergoing the testing hours necessary prior to our engineers going to Mexico for the final assembly" There's your answer.
It's just like the announcements of the Combilift engines being shipped, just as soon as they complete the 50 hour durability test.
By designing the Mark 1 with the spider bearing and water lubrication, Harry guaranteed it will never last long enough to be sold to anyone. Ohio State University proved three years ago those features could not be made to work.
PR announcements of sales of engines they know will never be shipped? Just standard operating procedure for Cyclone.
Cyclone is nothing but a straight up con anymore.
You're right Tom, although the problem you describe, both generally and in particular with Cyclone, is covered by existing regulations. It's just that there are too few resources devoted to enforcement.
I'll let the interested reader look up the chapters and verses, but SEC existing rules, if enforced, would not have stopped investors from losing money in Cyclone but would have at least given them a fighting chance to have avoided it.
When Cyclone applied to upgrade their stock listing in 2011 their application was vetted by the SEC. There was something like four rounds of them questioning Cyclone claims. Most of the unsubstantiated stuff was taken out of that application and it went through.
The enforcement part of SEC prioritizes bigger scams, so they've left Cyclone flying under the radar.
The first issue is that a public company must disclose all material information to investors. Material information is anything that would influence a reasonable investor to choose to buy, sell or hold a stock.
Harry and Frankie are knowingly withholding the fact that they've never made an engine work. That Ohio State University work leaves no engineering doubt that the Cyclone engine configuration with a spider bearing and water lubrication will never be viable unless radical new materials are invented.
This failure to disclose is stock fraud.
Then there are cases where Harry and Frankie say things about the engines that are not made known to the general public, like Harry on the steam car board making claims on engine performance or Frankie in email telling individual investors about things that are going to happen soon. That's insider trading.
There has to to be hundreds of PRs announcing things that never came true. The bottom of each one claims the forward looking statements are protected by the Safe Harbor provision of securities law. Trouble (for Cyclone) is that law specifically exempts penny stocks from this protection. Harry and Frankie know fully well that a first class miracle is necessary before any Cyclone engine will be built or sold commercially. Not being protected by Safe Harbor makes these statements material misrepresentations, and therefore, fraud.
And then there are the outright, bald-faced misrepresentations by Harry about engine performance. Like "you can put your hand on this engine when it is running" while leaning on a mockup. Or that old promo video that said Cyclone engine exhaust is "literally cleaner" than the intake air. Or the 2011 shareholder open house where Harry told the audience that all the technological problems had been overcome.
The SEC should also have issued a stop trading order on CYPW for failing to file financial statements.
Now the SEC is only going to be reactive rather than proactive, but I remember people posting they had called the SEC to complain about Cyclone and gotten told there wasn't enough staff to deal with such a small fish.
Individuals have the ability to sue, but that's not going to happen. Harry and Frankie sold stock primarily to small investors who don't have the resources to launch such a suit. There is no doubt the investor would win, but they'd never collect. Cyclone officially has nothing of value.
There are consumer fraud protections, but Florida let Trump University off the hook. They will never bother with Cyclone.
Imagine if Cyclone had been required to publish what actually happened at Bent Glass? Or Revgine, Great Wall, Topline Automotive, the tank genset performance, the land speed car dyno tests of 2012. Or if Harry had been personally fined for making unsubstantiated claims. Investors would have been able to make informed decisions.
Communicating the firm's current business plan is actually part of the filing requirements under the heading of Management Discussion. The SEC says it is supposed to be a lot more than a recitation of the numbers on the balance sheet, but that's all Cyclone's have been. Except, of course, for the forward looking statements of production expected in six months.
People trying to raise funding for companies with stupid business plans is fine with me, as long as they are up front about with the real facts of the case. Let Cyclone explain they intend to sell into the automotive engine market worth $XX billion per year. But make sure they explain in the annual report how many auto manufacturers they've contacted and what the results were.
There would be a lot of merit to have the principals and promoters of these companies have a personal stake in their proper operation and a high probability of losing that stake if they skirt the rules. I suspect, though, greater policing of the financial industry will be only slightly more likely than a running Cyclone engine.
"Let me tell you. With Cyclone engines there is going to be so much spinning, you will get tired of the spin. Believe me."
Yes, it does sound familiar, doesn't it?
There is a retired engineer, Jim Crank, who is a steam car expert and used to be the Chief Technical Advisor for Cyclone. (They used his name to sell stock.) He eventually changed his position on Cyclone's chances. Talking about their land speed car two years ago he said:
I wouldn't worry about Delusions-R-Us, they are never going to run.
Connecting a couple dots here.
November 5, 2013: Cyclone puts out PR about Ohio State University improving the design of the WHE.
They eliminated the spider bearing and:
Overall, the WHE-DR has approximately 60% fewer parts than the earlier version. Initial testing has demonstrated significantly smoother and quieter operation, which is expected to result in the successful completion of durability tests over the next two months.
I think you nailed it Chuck.
Like last year when they tried that crowd funding appeal to raise $125K for "safety equipment" for the land speed car. That money wasn't for safety equipment, it was to fund more tinkering on the Mark 5.
Another thing that supports your insight is that all these engines use the same basic configuration: six radial cylinders exhausting into the crankcase and trying to use water as a lubricant.
Instead of using a master connecting rod, like every successful radial engine ever made, all the Cyclone engines use a "spider bearing", invented by Harry Schoell and used by no one else. This thing flops around and beats the connecting rods to pieces.
When they hired Ohio State University to fix the WHE they put out a PR announcing progress:
The WHE-DR boasts several important advancements over the previous engine model, meant to decrease manufacturing costs and increase operational durability without loss of performance. For instance, the new engine replaces six cylinders with three slightly larger bore cylinders, and utilizes more robust and less complicated admittance and exhaust valving systems, and simplified rod bearing connections. Overall, the WHE-DR has approximately 60% fewer parts than the earlier version. Initial testing has demonstrated significantly smoother and quieter operation, which is expected to result in the successful completion of durability tests over the next two months.
“We are very proud of our improved engine. This is a technological and business milestone that must not be understated, as we are fast approaching our transition into phase one manufacturing with our team that we have been preparing in Ohio. For small-scale waste-to-power applications, we believe this product has enormous market potential,” stated Harry Schoell, Chairman and CTO of Cyclone.
What's interesting is how the speed record story has changed over time.
There was an earlier speed record boat promoted by Cyclone (Tom knows more about this), then it disappeared without having been run and the GG Mom boat was custom built at shareholder expense. It's the one in the photos in the CYPW intro section.
Harry used to post a lot on the steam car club discussion board. The GG Mom was going to set the speed record for steam boats using the Mark 5 engine. Period. (The boat has only ever had a non-functional mockup engine in it.)
Then Chuk Williams was building a car to set the steam car speed record and Cyclone offered to provide an engine. So Chuk built his car to fit the Mark 5. He delivered the working car chassis to Cyclone to have the engine installed, and then the excuses started.
In the photos in the intro section, Chuk is in the green shirt with Frankie and Harry.
In the next picture Chuk's car has been painted Cyclone yellow, and by this point Harry started calling it the Cyclone car, even though Cyclone had still not provided a working engine.
In March 2012 or so Chuk took his car back. Harry threatened to sue Chuk for stealing the body, so Chuk gave Harry the yellow Cyclone body back.
Chuk put in the old outboard engine that was converted to steam and did run the car on the Bonneville Salt Flats that year, but without a real body.
Very soon after the partnership broke up, Cyclone announced the creation of the "Performance Division" and had hired Nelson Hoyos to run it. They hired a race car shop to build the chassis and Cyclone built the fiberglass body. The car as it sits today was finished by December of 2012, with Harry bragging the whole time about how great it was going to be and how powerful the engine was.
The car was written up in Racecar Engineering magazine: https://archive.org/stream/Racecar_Engineering_2013_02#page/n19/mode/1up Interesting statements in there:
- The British team set the record and spent 10 million British Pounds, or about $16 million at the end of 2012. Nelson Hoyos said Cyclone intended to spend less than a tenth of that. (In another article I can't find now he said they were spending half a million.)
- The engine generates 200 hp and 1100 ft/lbs of torque.
- The car was going to do 200 mph in the first quarter of 2013 and to 400 mph by the end of 2013.
Two pages in they quote Harry making a bunch of unsubstantiated claims such as a Cyclone engine in a car would get 1.5 times better mileage. Best line: "The LSR is to prove we have a viable product." That was almost four years ago.
In 2013 the excuses started in earnest. Originally with Chuk's car Harry said they would run a stock, unmodified Mark 5 to prove how well it works. The new car switched to a specially built high power variant rather than the Mark 5.
Harry's plan was to run the car on the road in front of their shop, then at a drag strip, then at the NASA space shuttle runway, then at Bonneville. They even put out a PR claiming NASA had "invited" them to run.
There was always some delay, however. They couldn't run until they fine tuned a setting on the engine. That took many months. Then they needed someone to sponsor safety equipment for $20K or so, even though Nelson Hoyos has all kinds of safety equipment for race cars and, really, how much do you need to run the car on the road in front of their shop?
By June 2105 the safety equipment price went up to $125K https://www.indiegogo.com/projects/clean-cyclone-steam-engine-to-set-speed-record#/
Meanwhile, the car has never moved one foot under its own power nor has a video of the engine actually running on the dyno been made public.
Oh, and the boat that came before the car? Wouldn't it be easy to run that while waiting for sponsors of "safety equipment" for the car? Well, Harry has that covered, too. He will run the boat if and only if the car sets a world record. And then only if it's guaranteed the boat will set a record the first time out.
Bottom line is the fact the Mark 5 engine simply doesn't work never has to be admitted by Cyclone.
And last week, Cyclone announces yet another excuse in response to a Facebook question:
Thank you for your interest in Cyclone Power. Currently we are not selling engines to individuals. We know that in the future as Cyclone has the wherewithal to afford the liability insurance and all the other things it requires to sell to individuals that we will. The engines are currently being integrated and tested into two products both for generating electricity. Please keep watching as we grow.
The numbers I posted were cash. They were the actual operating expenses for R&D and G&A from the annual reports. Derivative losses over that period were another $30+ million on top.
Over those years almost $13 million of real cash money disappeared into G&A with no plausible explanation of where it went. That's twice what went into R&D.
Look at the most recent videos from Cyclone. What you see may look like something thrown together from scavenged materials by a hobbyist, but is actually the product of about $25 million in accumulated (cash) operating losses.
And this is after years of Cyclone telling investors they have a family of "market-ready" products.
The response to "Stop telling us what it is GONNA do, tell us what it HAS done." is
and if I posted Harry's tax return you would repute it too no matter what it said or even if IT'S said it was audited.
You're right, that one hour estimate was intentionally optimistic.
I doubt if a Mark 5 has ever produced its rated 100 hp output. Sure, Harry used to brag on the steam car board about the land speed car engine "runnin' sweet" on the dyno. At one point he announced a testing program for this engine and said he would post the dyno results. People kept after him for the results, but he wouldn't release any real measurement data. When people started to doubt an engine was dyno tested, Harry posted a photograph of the engine on its stand as proof and started talking gibberish about publicly traded companies are not allowed to publish dyno measurements.
My favorite comeback was from someone who said "Stop telling us what it is GONNA do, tell us what it HAS done."
It's now three years later and there has been no mention of Mark 5 performance other than the engines for Combilift are finishing their 50 hour test runs.
That one-hour estimate was for the WHE engine, the low pressure, low temperature, low output and (super) low efficiency design. Surely they could have gotten one of those to produce some power and survive for an hour? After all, people have only been building working steam engines for 200+ years.
Well, that answers the mystery of who Honkel/Henkel is - another Cyclone creditor.
Makes you wonder, though, why anyone would loan them any more money. All the assets are attached, plus there is already an unpaid lien judgement on Cyclone.
The only thing I can think of is that Cyclone pledged future receivables as security. That's seriously risky because a receivable only comes due if Cyclone fills the contract. The two engines for Combilift are now more than four years behind schedule with zero progress in the last year on making them work.
Q2Power did something like this. They sold a system in January for May delivery. They got a term loan until July based on pledging the receivable. The last they reported the system hadn't been delivered or paid for and they were in default on the loan.
Good to know Frankie reads this forum. Maybe she will be overcome by a wave of honesty and release the material information of what is the longest a Cyclone engine has continuously run while producing its full rated output. My guess is one hour.
Prove me wrong Frankie!
Nope, not showing up.
Also try copying the Direct Link for the image into a message. Here's the picture of the Cyclone mechanic having to push start the engine on the last video: http://investorshub.advfn.com/uimage/uploads/2016/8/25/yphlvMark_1_hand_start.png
and again with the link inside the "Image" tags:
Here are a few other things the auditors may be interested in.
Cyclone claims patents as a major asset, but,
1) 2/3rds of their US patents have lapsed for lack of maintenance payments. http://investorshub.advfn.com/boards/read_msg.aspx?message_id=125054722
2) The main Cyclone engine patent (which represents most of their foreign patents), https://www.google.com/patents/US7080512 claims (here shortened for brevity):
An engine comprising:
a condenser including an arrangement of spaced plates...
a steam generator...
a main engine drive assembly comprising:
at least one cylinder;
a piston...
a crankshaft;
a crank cam fixed to said crankshaft and rotatable therewith;
a connecting rod...
an injector valve...
a steam line...
a pump...
said steam line including a section within said combustion chamber...
an exhaust transfer passage... and
a heat exchanger for pre-heating intake air...
Well, it's weird, but no worse than the normal Cyclone operating procedures.
Google can't find BH Consulting Enterprises Inc in PA.
The PA Department of State only lists "B. H. CONSULTING SERVICE, INC." as a similar name, and this firm doesn't show up on Google, either.
Neither Google Maps nor Bing Maps show anything at 3316 Hemlock Farms Road, Lords Valley, Pa 18428.
The company listed on the PA DoS gives an address of 1600 LOCUST STREET PHILADELPHIA PA 19103, but that turns out to be an office of Philadelphia Federal Credit Union, and Google Streetview confirms that.
Mr.Robert Honkel (or Henkel) is similarly a mystery. Whoever he is, he's a master at stealth marketing.
Tracking down Cyclone 'partners' is often like this. Remember that "leading Canadian turbine integrator" Cyclone had the big contract with? Or the Alabama refinery company operating out of the 60,000 sq ft facility? The company names given out by Cyclone didn't exist. Ultimately, the first turned out to be a hobbyist working out of his townhouse and the other was a guy renting part of an old warehouse.
If you get that note confirmation to the auditor I expect they will have a duty to report the debt in the financials. Cyclone can put in their filings that they dispute the debt, but they can't just delete it from the balance sheet.
You might also make sure the auditor knows about the judgement lien from last year: http://www.sunbiz.org/pdf/15896981.pdf and the lien LEAF Captial has on all Cyclone assets: https://www.floridaucc.com/uccweb/RetrieveImage.aspx?sst=&sov=0&sot=Filed%20Compact%20Debtor%20Name%20List&st=cyclone&fn=201503628750&rn=218511&ii=Y&ft=&epn= I imagine an auditor would need to report the judgement lien. Maybe not the security of the assets, but best to let them decide.
If you'd like to post an image of that document, with it on the screen press the PrtSc key on the keyboard (for Print Screen). Then from the Start menu, select the Accessories folder and pick Paint. When this opens, click Paste at the top. This gives an image of the whole screen. Click the Select button at the top and draw a box around the part of the image you want, then click on Crop beside the Select button. Then do a Save As to save the image on your computer (PNG format works well).
In iHub select the Tools/More Tools/My Image Gallery then Browse and Upload the image file from your computer. Copy and past the Embed code, and Bob's your uncle.
So, how are those filings coming along?
On August 1st Frankie said they would be out in 6 weeks. This is the 11th week.
They're behind the 2014 10K, three 2015 10Qs, the 2015 10K and two 2016 10Qs.
That's seven filings that were supposed to be out in six weeks and not a single one has been posted in more than 11 weeks.
Frankie's excuse was Cyclone is using new accountants and lawyers and has no leverage since they were paid in advance.
Weird, huh? You'd think the old auditors and lawyers would have done the work for cash in advance. Why would Cyclone change to new firms?
My bet is the old auditors would no longer sign off on Cyclone's financials. And maybe the new auditors are refusing to sign, too.
Well, maybe. The QPWR CEO, Christopher Nelson, has spent years being confident the Cyclone waste heat engine was going into commercial production "within six months". Didn't matter what year it was, production was always six months away. In 2013 Nelson predicted the Lancaster Ohio facility was going to be building 1500 engines per month by now: http://www.bizjournals.com/columbus/blog/small-business/2013/09/cyclone-power-setting-up-engine-plant.html
Instead, after creating QPWR and burning through about $6 million, the staff was fired and the lease terminated on the Ohio facility earlier this year.
They sold one system, but never delivered it. They may never have even started building it. They haven't said one way or the other.
QPWR on June 30 had current assets of $12,255 against current liabilities of $1,983,814. They have no revenues, other than selling stock. They have no assests they could sell for cash. Currently they have no business at all. It's hard to see how they will raise enough cash to keep out of bankruptcy, let alone the full purchase price of ERTH.
Wayne King may be anxious to close the deal, but what can QPWR offer other than rapidly-diluting QPWR stock?
If ERTH is capable of generating enough cashflow to keep QPWR in business, why aren't other buyers lining up with cash in hand?
Why aren't solvent microcaps bidding on ERTH if making them public will be a pot of gold?
On page 33 of the last 10Q they described being in default on two senior securities, and the total plan for recovery is to renegotiate payment terms. Not much of a business model.
You know, I don't think "THEORETICAL ENGINES" is the right term.
"Theoretical" implies theory is somehow associated with the engines.
The valve train design required dynamic acceleration forces that solid mechanics theory says no real mechanism could survive.
The condenser required heat exchange rates that are beyond what heat transfer theory predicts.
The bearings required the lubricating water to behave in ways that fluid mechanics theory can not explain.
The plastic piston rings require properties that materials science theory has not yet discovered.
The "regenerative Schoell cycle" is built on principles that thermodynamics theory doesn't support.
Of course, Harry Schoell's strength is that he is unencumbered by any understanding of conventional engineering theory. That gives him the freedom not to be limited by the laws of nature. For instance, he's given us the insight that power required to overcome aerodynamic drag does not increase with the third power of speed and that bearings are "tiny generators".
Nobody working within the boundaries of proven theory would ever come up with such things.
So maybe Cyclone engines would be better described as "imaginary" or "fantasy" or "make-believe" or "pretend" engines.
Or, as their former chief technical advisor would call them, "delusional" engines.
Amen to that brother.
All that 'progress', but none of it involves any engines actually working.
3R of Denmark, which was just a small town promoter, has finally folded its tent and moved on. That Chinese factory with the 20 engineers producing their furnaces seems out of the picture now, too.
The new partner in Dubai seems to be no more than an office in a small office building. They've ordered 5 engines. Woo-hoo. In 2014 Phoenix Power ordered 300 engines. Trouble is, Phoenix required the engines to run for at least 200 hours. Cyclone never met that so never shipped an engine.
Although maybe the Dubai peoples' plan is to pawn off the green energy dream to some suckers, so it doesn't matter if the Cyclone engines don't work.
For such an important partner, you'd think Frankie would at least learn how to spell Gary Champagne's name right. He may have a contract with Plunkett Power of Texas (a real company), but he is not part of them. He's been hanging around Cyclone for years peddling dreams of algae oil and Gulf spill oil running Cyclone engines, but nothing has ever come of it.
One wonders how he "has now renewed his long term relationship with Lewis Precision & CNC"? Paid off outstanding debts, perhaps? Lewis Precision & CNC has space to manufacture 500 Cyclone engines per quarter? Wow. Cyclone should talk to GM. I'll bet they've got space to manufacture 500 Cyclone engines per minute. Too bad none of them will work.
FSDS will get a genset to exhibit at a trade show next week. Obviously no testing has taken place on it. It might even be the non-functional mock-up Cyclone used to take to trade shows.
FSDS will also be showing off the Cyclone Genie backpack generator, which has now grown from 80W to 500W. The Genie only exists as a hockey puck painted red with a Cyclone sticker pasted on the top. Wonder how that will go over...
Combilift's Mark 5 final beta engines are finishing testing for delivery, just as they have been for the last two and a half years.
And the auditors had an issue with inventory aging. They must have had a problem with Cyclone claiming parts for engines that never worked are worth more than scrap metal.
So, same old, same old. Probably was a good way to dump some more stock on the market, though.
You nailed it Tom.
Selling empty bottles that no one is allowed to look at.
The engines have been "runnin' sweet" on the dyno for years now. Just don't ask to see the test results. Or a video of one actually producing any power.
C'mon Tom, they've sold lots of engines.
Remember the million dollar purchase order from April 2014?
Cyclone promised "to deliver minimum of 300 WHE-DR engines to first customer over the next 24 months". So what if they've delivered zero engines in 29 months?
Or the $400K they paid in late delivery penalties on the first two Mark 5s they sold (but never delivered).
They've sold lots of engines. It's just that delivery is taking a little longer than expected.
Seems the herd has been thinning out over time.
This was the first pump in quite a while. The first couple had all kinds of hype, but they've been petering out since then.
People must be figuring out (usually too late) that a stock undergoing active dilution leaves almost everyone a bagholder.
High risk, very little reward.
Just like buying a Cyclone engine, come to think of it. Should any ever come up for sale, that is.
So when did Frankie say those filings would be out?
Not to mention the coverup Cyclone has been doing for years.
In February 2013 "Cyclone has teamed with OSU CAR to assist in the commercialization of its external combustion engine technology, specifically the company's Waste Heat Engine (WHE) model."
"Assist in commercialization" has quite a ring to it. Like the product was ready to sell in the marketplace and just needed a little polishing.
The Ohio State people made a presentation in March 2014 of what they were doing on the WHE: https://web.archive.org/web/20150113073456/http://www.cyclonepower.com/2014/IAASP_Presentation_OSU-CAR_Cyclone_March-8-2014.pdf
Here's the flow chart for their work (from page 10):
Notice a couple things. First, they had only got through the tasks highlighted in yellow boxes. The decision point on the right, "Meets Requirements?" was negative, so their next step was to cycle back and repeat.
Second, the end of this flow chart is to go on to "Phase II", which was to continue engine design and testing for something that could go into production.
As far as anyone knows, Ohio State stopped working on the project about this time or slightly after. WHE Gen was split off from Cyclone and gave up on trying to make the WHE engine work a few months ago.
Page 19 is titled "EXAMPLE OF CRITICAL PATH ISSUE: BEARING ANALYSIS" and on page 30
Little or no data exists outside Cyclone’s own experience for the use of water lubrication for either ball bearings or roller bearings in our environment and under our loadings. Calculated life using just the bearing load and the scaling factors for the viscosity of the lubricant indicate that very high ratio of load capacity to applied load is required.
The Cyclone Mark 5 Engine was Popular Science Invention of the Year for 2008, but Cyclone didn't start to build the first two real Mark 5 engines until Phoenix Power placed their order on July 30, 2009.
All of the awards were given based on seeing non-functional mockups of engines and Harry Schoell telling people they were real engines with great performance. Here's his explanation of the engine to the Popular Science people: http://www.dailymotion.com/video/x40pom3_invention-awards-a-steam-engine-for-your-car_lifestyle
Notice that during all the claims about the engine, he never once says any are predictions.
Even though the Mark 5 won this and other awards, it has yet to be seen powering anything.
Another thing to note in that video is to look around the background. This is the Schoell Marine building and it is filled with boats and boat stuff. Cyclone (and, really, Cyclone investors) were paying dearly to lease the entire building from Schoell Marine, yet almost all the space continued to be used by Schoell Marine.
I'll bet a lot of Schoell Marine workers were paid by Cyclone over the years as well. That's the only way this R&D-only company could have spent twice as much on General & Administrative expenses as on R&D.
Some people think so.
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The last balance sheet they provided was for September 30, 2014: http://www.otcmarkets.com/edgar/GetFilingHtml?FilingID=10387513
The WHE Generation division was spun out into a separate company (later named Q2Power, QPWR) who paid $350K cash with another $150K promised later. (Q2Power claimed Cyclone failed to abide by the agreement and in April this 150K debt was cancelled.) They also paid $175K to license the Cyclone patents, which appears to have led to that other $150K receivable.
At that point in time Cyclone's order book was down to the two Mark 5 engines for Combilift. Cyclone has $300K in deferred revenue to be released when those engines were accepted by Combilift, but that hasn't happened yet. Those engines still don't work.
The $440K in inventory is the cost of all the engine parts they've made over the years. These are engines they've tested and found out don't work. This inventory only has value as scrap metal.
Of the $531K in property and equipment, about $300K was to have the land speed record car built and another $80K to have the water speed record boat built. Each was built to fit the Cyclone Mark 5 steam engine which is round and has a vertical crankshaft, so conventional engines don't fit in them. Since the Mark 5 has never been made to run right, neither the car nor the boat has ever been used. They could be sold for cash, but what is the market for a car and boat with no engines that are designed to only go in straight lines? I.e., the trailer might bring more than the boat.
A lot of the remaining property and equipment went to leasehold improvements in the building Cyclone leased from Schoell Marine (Yes, Harry's own company.) Not likely that can be sold.
Patents, trademarks and copyrights are valued at the cost to obtain them minus depreciation for a net of $365K. Patents, the ones that have not lapsed yet, are generating no revenue and aren't likely to. The current generation of Cyclone engines aren't covered by the remaining patents. Trademarks are the name Cyclone and their motto "One planet, one engine." So, not much to be sold there.
That remaining Other Asset of $559,518 is not described but it was only $2,762 at June 30, 2014. It is probably the WHE Gen/Q2Power stock Cyclone got in the spin-off. Q2Power's last 10Q said Cyclone was down to 212,500 shares of Q2Power as of April 8th. If they haven't sold any more their investment is worth $19,125 today.
Now when you look at the cash flow, total operating expenses for Q3 2014 were $1,028,699. That's a burn rate of $343K per month.
On the revenue side, at September 30, 2014 their order book contained only the Combilift order, which they still haven't filled. The next mention of any revenue was the June 23, 2016 PR saying they are getting a $225K engineering fee from FSDS of Denmark. It sounds like that is for producing two 10kW generator sets which likely means installment payments for meeting milestones rather than a lump sum. Cyclone will also need to spend quite a bit of money to have those units built. The prototype 10kW genset built for the Army cost $1.4 million.
The announcements about G2E of Mexico and 3R of Denmark have not mentioned any payments to Cyclone.
So, start at October 1st 2014 with $306K in cash, $559K in stock, a $343K per month burn rate and only that $150K receivable for revenue between then and now and extrapolate to where they must be today. There has been no word of them selling the race car or boat, nor the engine parts inventory.
What's left isn't worth much.
Low risk? Well, let's see.
1) Active Dilution: Before Cyclone stopped filing here is what was happening with outstanding shares:
Since the end of that graph Cyclone has increaed the A/S from 900 million to 2 billion shares, then increased it again to an unreported number.
Cyclone issues stock and sells convertible notesto raise cash. The notes turn into shares at far below market price, so the note holders get lots and lots of shares to sell.
Match up all the great PRs to stock price and it will show not much happens to the price.
Can money be made holding shares that are being diluted?
2) Bankruptcy: There is already a judgement lien registered against Cyclone for $153K, which is more than the company's assets. All this creditor has to do is file some paperwork with the county sherriff to force Cyclone into bankruptcy.
Or other creditors could do their own bit to force a bankruptcy.
Or Harry and Frankie could voluntarily enter bankruptcy.
In any event, it means CYPWQ.
3) Delisting by SEC: Frankie said they need to file all the back financials to "keep the current listing". They are almost 2 years behind, and it sure sounds like the SEC is tapping them on the shoulder. The 'estimated' six weeks for all the reports is now up and we haven't seen the 2014 10K, any of the three 2015 10Qs, the 2015 10K or the two 2016 10Qs.
The SEC could issue a stop trading order any time, and that would be it for CYPW shares.
4) Age and Health: Harry Schoell is now 74 and (his girlfriend) Frankie Fruge is now 72. There may be a casual employee or two, but that's it for the 'engineering' and 'management' team. Let's face it, at those ages there is a pretty good chance of bad health news. When that happens, who is going to keep the company going?
5) No more customers: This could be the last round of positive PRs when each of the current customers falls flat on their face.
3R of Denmark is just a shifty small town promoter. They are getting a heating boiler made in China. Apparently no one in Europe or America will do business with them. They have no facilities or assets. And they've had a Cyclone engine for a long time and haven't announced anything working yet. There has also been no word of them paying anything to Cyclone.
The group at the Mexican university got plans to the Cyclone solar collectors and the Cyclone heat storage unit and are said to be building them. They will be the first. Then they will find out Harry Schoell's technical incompetence extends far beyond steam engines that don't work and into solar energy equipment that also doesn't work. They also have not been stated to have paid Cyclone anything.
The FSDS defense contractor in Denmark is a small operation whose primary business has been putting upgrade kits on personnel carriers for the Danish army. Harry Schoell is a first class BS artist when it comes to misleading investors into thinking he has something, but last week a FSDS engineer was at Cyclone. He will quickly realize Harry has no more than a high school education and speaks technical gibberish.
If FSDS decides to continue with this technology, they are not going to be buying it from Cyclone.
Cyclone simply has never been able to publicly demonstrate an engine powering anything. Who would put any money into these engines without seeing them actually run?
Even if Cyclone can spin a positive-sounding PR again, those have never caused the stock price to go up in the past, so why would it do so now?
Cyclone has always claimed manufacturing and integrating partners.
Revgine was going to mass produce lawn mowers and weed eaters.
Topline was an auto parts manufacturer that was going to mass produce waste heat engines.
Great Wall Alternative Power Systems was going to mass produce Cyclone engines for the Chinese market.
Renovalia Energy, S.A., of Spain was going to set up a factory in Spain to build Cyclone engines for solar collectors.
Advent Power Systems was going to build and integrate Cyclone engines for the defense market.
Republic Energy of Alabama (or one of its many other names, maybe United Fuels then) was going to make home generators that ran on algae oil using Cyclone engines.
Phoenix Power was going to make waste oil furnace generators using Cyclone engines.
And they announced three years ago Precision CNC of Ohio was setting up an engine factory with Cyclone that would be producing 1500 engines per month now.
You can see the hundreds of PRs they have put out here: https://web.archive.org/web/20150608052837/http://www.cyclonepower.com/press.html
Predictions are always the same, only the names and dates change.
Only trouble is, Cyclone has never made a working engine. Other than that, they've got a great business model.