Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

I wonder how Chris Nelson is doing at WHE GEN. He's supposed to get a bonus for registering the common stock with the SEC, but nothing seems to be started with the SEC yet.

Funny thing, though, the Separation Agreement included:

Section 1.2 Conversion Round Financing : Prior to or concurrently with the First Series A Closing, Cyclone will complete a separate offering (the “ Conversion Round ”) of no more than 2,210,400 shares of common stock of WHE GEN that Cyclone owns. The Conversion Round offering shall be completed at no less than $.27 per share of Common Stock of WHE GEN, with the exact terms (including possible issuance of Cyclone warrants with a forced conversion feature as a Unit) to be determined by Cyclone; provided, however that Cyclone must obtain prior written consent from WHE if Cyclone uses a Securities Purchase Agreement (“SPA”) that is not materially similar to the SPA used by WHE GEN in the Series A Round Cyclone sale shall be limited to not more than 25 investors, and such transfer shall only be made to accredited investors in full compliance with applicable securities laws. Christopher Nelson will assist Cyclone in the placement of the Conversion Round, for which he will not receive any additional compensation. Without the parties reasonable approval to the contrary, the First Series A Closing may not occur until a Conversion Round of at least $500,000 is also completed and closed. Any WHE GEN shares held by Cyclone and sold to third parties shall be subject to the terms and conditions, including transfer restrictions, found in the Stock Purchase Agreement in the form attached hereto as Exhibit 1.2 .

WHE GEN's Series A Round raised $1.3 million, which allowed Cyclone to sell it's WHE GEN stock. The surprise was that even though the agreement talks about "separate" offering and "third parties", Cyclone sold $500K in stock to WHE GEN.

So WHE GEN raised $1.3M from investors (with a target of $2M), then sent $500K to Cyclone, then sent another $175K to Cyclone for the license fee. WHE GEN only kept half of what the investors put in, and less once fees were subtracted.

This loss of startup money probably wouldn't be as bad if WHE GEN actually had a product to sell. Here's Chris Nelson from one year ago confidently predicting the engine would be in production at the beginning of this year:

I wonder if investors aren't as enthusiastic at throwing money away as Chris and Harry expected...