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Tuesday, 08/17/2010 10:53:54 AM

Tuesday, August 17, 2010 10:53:54 AM

Post# of 28183
NEWS --

POMPANO BEACH, Fla., Aug 17, 2010 (BUSINESS WIRE) -- Cyclone Power Technologies
(Pink Sheets: CYPW) has filed with the OTC Markets its Quarterly Report for the
period ended June 30 , 2010, and has released the following letter to
shareholders:

August 17, 2010

Dear Friends of Cyclone,

Greetings from South Florida! I would like to share with you some of the
financial, technical and operational highlights from the first half of 2010, as
detailed in our Quarterly Report filed with the OTC Markets.

Financial Development

In the first half of 2010 we generated $104,900 of revenue compared to $94,938
for the same period in 2009, an increase of 10%, partially due to the delivery
in 2010 of our biomass-to-power engine system to Robotic Technology under a U.S.
Department of Defense sponsored project. We generated an additional $70,000 in
cash flow during the recent three-month period; however, under GAAP rules until
we deliver prototypes to our customers, these funds are accounted for as
deferred revenue (a balance sheet item). At June 30, we had $595,000 in
cumulative deferred revenue and an additi onal $117,475 in license deposits.

We incurred operating expenses for the first half of 2010 of $1,156,936 as
compared to $1,164,209 for the same period in 2009. Despite having more
engineers on staff as we grow our operations and paying higher professional
services in connection with the filing of audited financial statements with our
2009 Annual Report, our overall R&D costs in the first half of 2010 were lower
than in 2009. This change reflects the assignment of resources from research to
the production of deliverable inventory as some of our engine prototypes near
completion. Overall, however, net loss for the first six months of 2010 was
$1,255,572 as compared to a slightly lower net loss of $1,127,345 for the same
period in 2009.

We ended the second quarter of 2010 with cash of $102,590 and total current
assets of $345,956. Other than debt owed to our officers and directors for
deferred salary and loans provided to the Com pany, we have virtually no
long-term debt -- only $15,950 which is being converted to stock in the third
quarter of 2010. We believe that this fact reduces the financial stress on the
Company and allows us to operate leaner and without fear of defaulting on any
unaffiliated third-party debt. Very few companies can say that in today's
economy.

In the first half of 2010, we partially supported operations by selling
1,750,882 shares of common stock for $145,377, and 81,700 shares of Series A
Preferred Stock for $407,600. We also issued for services 4,068,947 shares of
restricted common stock, 2,500 shares of Series A Preferred Stock and 450,000
common stock options valued at $351,517 in total. As we have said before, we
believe that the continued interest among our key employees and contractors to
receive stock and stock options in lieu of some or all of their cash
compensation demonstrates an unwavering commitment to the completion of our
technological development and the success of our company.

We are still on track to file our initial registration statement with the
Securities and Exchange Commission sometime in the second half of 2010. We are
attempting to coordinate this filing with the raise of additional funds for the
Company, which we hope to complete during the next quarter. In April we added
Bruce Schames as our CFO who will, in addition to his normal duties, assist us
in both this initial filing and future reporting requirements with the SEC.
Bruce has been a licensed CPA since 1971; he has represented both public and
private clients in his own practice since 2001, during which time he conducted
SEC audits and assisted in the preparation and filing of Forms 10-K and 10-Q;
and previously, he served as CFO for two Nasdaq-listed companies. We welcome
Bruce aboard!

You can find our full financial statements with footnotes in our Quarterly
Report for the period ended June 30, 2010, filed with www.otcmarkets.com.

Engine Projects and Technological Development

Waste Energy Recovery: In the second quarter of 2010, we completed the baseline
Waste Heat Engine (WHE-25) and delivered a full waste heat recovery beta system
to our customer, Bent Glass Design, Inc. This power system will produce up to
10kW of electricity from the heat exhausted from their furnaces. Right now
installation is almost complete and we are working with PECO, the local electric
utility, to process our Net Metering application before we flip the switch.

We are also in discussions with several other beta sites to test our waste heat
recovery systems once our initial unit is proven at Bent Glass. We will conduct
these projects through our consolidated subsidiary, Cyclone-WHE LLC, which was
formed with the expectation of generating revenue from the sale and installation
of complete waste heat recovery systems ( i.e., not through licensing revenue, as
is Cyclone's business model). Christopher Nelson, our General Counsel, has been
appointed as Managing Director of this subsidiary, and over the following
months, will be building a team around him to pursue this very exciting and
widely underserved market.

With respect to our WHE-25 engine, our licensee Great Wall Alternative Power
Systems Ltd. has completed the first phase of its License Agreement involving
the establishment of secure intellectual property protocols in China for our
technology, and will now enter the production prototyping phase of the WHE-25
for multiple waste and renewable energy applications for the China market.

We also continue to advance the development of our flagship Mark V engine for
use with waste oil fuels. Dynomometer testing of this engine to date has
demonstrated excellent, albeit early, power and performance results. Engineering
extrapolations based on the current engine configuration confirm output of
approximately 55 hp at 1800rpm and over 100hp at 3600prm. This project is being
funded in part by Phoenix Power Group, who has also teamed-up with Clean Burn
Energy Systems, the leading manufacturer and distributor of waste oil heaters in
the world, and several potential customers for these important renewable energy
products.

Military: In the first half of 2010, we delivered our biomass-to-power system to
our client Robotic Technology Inc., which commissioned the system pursuant to
its Phase II SBIR project sponsored by the Defense Advanced Research Projects
Agency (DARPA), an agency of the U.S. Department of Defense. Similar to our
waste energy projects noted above, we believe that there are vast commercial
opportunities for Cyclone's biomass-to-power system beyond military purposes,
and we are currently in discussions with several potential customers to develop
biomass and combined h eat & power (CHP) systems for the residential markets
worldwide.

In the first half of 2010, we also continued to perform testing and design
services for Raytheon Integrated Defense Systems, a business of Raytheon
Company. We have two outstanding purchase orders from them for design and
development services, and we continue our discussions regarding the next phases
of a larger collaborative project slated to begin in late 2010.

Solar: Our solar thermal engine (S-1) being developed for Renovalia Energy is
progressing well and performance testing has commenced during the second quarter
of 2010. We are achieving power output in excess of what we originally
calculated, and making excellent headway with increasing the durability of
component parts. We anticipate phase 1 prototyping of this engine to be
completed soon.

Land Steam Record: As development of our Mark V engine progresses (see above),
so does our project with the U.S . Land Steam Record team, which plans to use
this engine to power the fastest steam vehicle on earth. We will not make the
August/September 2010 time trials in Bonneville, UT, but we are expecting to
conduct unofficial tests in North Carolina in the Spring of 2011, and then
attempt another official run in Bonneville next year.

Between our Mark V, S-1 and WHE-25 engines, we are very pleased with the overall
development status of our technology. Many people do not realize that we have
almost 1,000 hours of running and testing our engines, have achieved verified
thermal efficiencies above 30%, and are very close to putting the first of these
engine models into small-scale commercial production.

During the first half of 2010 we made great strides in the advancement of our
technology and business. We are very thankful for your support in helping make
this happen. It is our goal to make a meaningful impact on our world by
introducing an engine that challenges the way we currently produce power for
electrical, automotive and other important everyday applications. By using pure
renewable biofuels, waste heat and waste fuels, solar thermal heat and biomass
all in Cyclone Engines, we feel the possibilities for our collective future are
very bright.

Sincerely,

Harry Schoell, CEO & Director

CORPORATE PROFILE

Cyclone Power Technologies is the developer of the award-winning Cyclone Engine
-- an eco-friendly external combustion engine with the power and versatility to
run everything from portable electric generators and garden equipment to cars,
trucks and locomotives. Invented by company founder and CEO Harry Schoell, the
patented Cyclone Engine is a modern day steam engine, ingeniously designed to
achieve high thermal efficiencies through a compact heat-regenerative process,
and to run on virtually any fuel - including bio-diesels, syngas or solar -
w hile emitting fewer greenhouse gases and irritating pollutants into the air.
Currently in its late stages of development, the Cyclone Engine was recognized
by Popular Science Magazine as the Invention of the Year for 2008, and was
presented with the Society of Automotive Engineers' AEI Tech Award in 2006 and
2008. Additionally, Cyclone was recently named Environmental Business of the
Year by the Broward County Environmental Protection Department. For more
information, visit www.cyclonepower.com.

Safe Harbor Statement

Certain statements in this news release may contain forward-looking information
within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6
under the Securities Exchange Act of 1934, and are subject to the safe harbor
created by those rules. All statements, other than statements of fact, included
in this release, including, without limitation, statements regarding potential
future plans and objecti ves of the company, are forward-looking statements that
involve risks and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual results and future events could differ
materially from those anticipated in such statements. The company cautions that
these forward-looking statements are further qualified by other factors. The
company undertakes no obligation to publicly update or revise any statements in
this release, whether as a result of new information, future events or
otherwise.

SOURCE: Cyclone Power Technologies



CONTACT:
Cyclone Power Technologies
Media Contact
Will Wellons, 407-462-2718
will@redletterpr.com
or
Company Contact:
Frankie Fruge, 954-943-8721
Frankie@cyclonepower.com




Copyright Business Wire 2010

-0-




KEYWORD: &n bsp; United States

North America

Florida

INDUSTRY KEYWORD: Energy

Alternative Energy

Automotive

Environment

Defense

Contracts

&nb sp; General Automotive

SUBJECT CODE: Letter

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