Cyclone Power Technologies, Inc. (fka CYPW)

[BuddyWhazhizname]

Anatomy of a CYPW Convertible Note

From one of the Exhibits filed with the SEC.

4. (a) The Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the "Common Stock") without restrictive legend of any nature, at a price ("Conversion Price") for each share of Common Stock equal to 58% of the average of the two lowest closing prices of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future ("Exchange"), for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to included the same day closing price).

The key points:

1) Note holders can convert at any time regardless of maturity dates. (CYPW has sold some notes with nominal maturity dates out to 2017, but they can be converted any time.)

2) Conversion price is 42% discount from the lowest two of the last 10 trading days.

So, for instance, if a note holder got their shares on Thursday for selling on Friday, and it took three days to deliver the shares, the 10 trading days for the price were April 6-17th. The two lowest closing prices were $0.0003. 58% of this is $0.000174

If a $25K note got converted, it turned into 144 MILLION new shares. Pretty good deal if you can get it at $0.00017 and sell for $0.0009.

The 10Q, page 10 listed $313,920 in notes outstanding at September 30, 2014. Since CYPW is no longer filing financial statements, we don't know how many notes are still out there.

But Friday's price spike makes me wonder if the other note holders will think this is a great time to cash in.

Sure, no dilution TODAY. Let's see what tomorrow brings.