Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

Uh oh, more trouble for CYPW

Cyclone Power Technologies (OTC PINK: CYPW) will file with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the period ended September 30, 2014

Given they're required by law to do so, no surprise there. (Unless they fold first.)

Current receipt of funding from the sale of $500,000 of Cyclone's WHE Gen stock has been reduced to $350,000.

WHE GEN purchased that $500K in stock with proceeds from their second funding round. Apparently Chris Nelson isn't paying his bills.

Cyclone generated $315,527 of revenue during the nine month period ended September 30, 2014

Revenue for the first 6 months was $140,527 (Army contract final payment). That leaves $175K in Q3, which was the "Consulting payment" made by WHE GEN. So no sales and no customers.

Operating expenses for the same period in 2014 increased by 16% and higher funding related interest expense increased by 209%.

Last year's operating expenses (1st 9 months) were $2,024,988, making this year's $2,348,986. Operating expenses for the first 6 months were $1,310,503, meaning that in Q3 they were $1,038,483, or almost as much as the first 2 quarters combined. Given that they had let go their entire technical staff by then, makes you wonder where the money is going.

My guess: deferred salaries for Harry and Frankie, and payments to Schoell Marine.

Interest expenses for the first 9 months of 2013 were $371,902. 209% increase would be $1,149,177.

Lessee, first 9 months revenue = $315K.
Interest + operating expense = $1,149K + $2,349K = $3,498K
Then there's Cost of Goods Sold, and Derivative Expenses.

Revenue is considerably below 9% of spending.

With the royalty streams that are projected from the subsidiaries and licensees

The WHE subsidiary is gone. The only subsidiary left is the "Performance Division" which is led by Nelson Hoyos, who's been gone for a couple years.

The only licensee is WHE GEN, who's not paying their bills now.

OK, I guess Combilift could be called a licensee, but the license required Cyclone to deliver two engines almost 3 years ago.

(Cyclone Mk V Combilift) and we are hopeful for a January 2015 delivery. ... This is a remarkable engine that we expect to have available for manufacturing in mid-2015.

Given the "major success" in September was that sickly rotary valve engine struggling just to turn itself, nothing will be delivered in January.

But, what do you know, the standard "production will start in 6 months" story pops up again.

we believe that our story is quite compelling:

-- Globally patented engine technology with potentially "game changing" attributes.

And never a public demonstration of a working engine in 10 years.

-- Worldwide markets with a current invested customer base that includes the U.S. Army and Department of Defense.

That's former customer U.S. Army and Department of Defense. They've not made a hint of buying anything else from Cyclone. And "Worldwide markets"? Renovolia in Spain gave up on Cyclone years ago, as did Great Wall in China. Combilift in Ireland ordered engines three years ago and has gotten nothing.

-- Focused path to commercialization for our initial engine products.

After only wasting 10 years and $23 million in operating losses, they now have a "path to commercialization".

-- Experienced technical team, manufacturing experts, and new directors and management.

New directors, yes. They fired all their engineers this year. Their "manufacturing experts" must be the fiberglass workers repairing boats at Schoell Marine. Management is limited to Harry and Frankie, who are definitely not new.

-- Current revenue with consistent sales forecasted to start in 2015.


This one is golden. Other than finishing the Army contract, they had no revenue from sales this year. The only order on the books is Combilift, almost three years late for delivery now, and they determine what the acceptance tests will be. They're not going to pay anything even if working engines do show up.

"Consistent sales" have been forecast continuously for years. For instance, there was this little gem from the last annual report:

Should plans to commence manufacturing of the WHE continue on schedule, we expect to generate approximately $2 million in engine sales over the following 12 months.

Actual revenue from engine sales: 0

Harry and Frankie are busy cashing out. They didn't say it in this PR, but the 1.1 billion new shares were for two purposes:
1) to sell more convertible notes, and,
2) to sell for cash to pay Harry and Frankie's deferred wages and to pay the debt to Schoell Marine (Harry's company).

That's why they're begging current shareholders to not sell.