POMPANO BEACH, FL -- (Marketwire) -- 11/19/12 -- Cyclone Power Technologies (OTCQB: CYPW) has filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the period ended September 30, 2012, and has released the following progress report to its shareholders:
Greeting from South Florida. We had a very positive third quarter marked by increased revenue, decisive steps to limit shareholder dilution, and key business and technological advancements.
Our September 30, 2012 financial statements are now available in our Quarterly Report on Form 10-Q on file with the Securities & Exchange Commission. On behalf of Cyclone's executive team, I would like to take this opportunity to highlight some important developments from that report.
- We recognized $502,000 in revenue in the quarter and over $880,000 in total revenue since the beginning of the year. For the entire year we are forecasting over $1.1 million in revenue, a 400% increase over 2011.
- We secured over $660,000 in financing from three strong partners on favorable terms. GEM Global Yield Fund (GGYF), a $3.4 billion international investment group, purchased $262,000 of restricted common stock in the quarter. New York based Brio Capital LP and California based Gemini Master Fund Ltd acquired 12-month Convertible Promissory Notes bearing a 9% Original Issuance Discount and a floor conversion price of $0.15 per share (33% above our current trading price), subject to standard anti-dilution and price protection provisions.
- We withdrew our S-1 registration statement filed with the SEC covering 10 million additional shares and shares underlying 5 million warrants to be issued to GGYF pursuant to a second round of financing. We made the important decision not to re-file a registration statement at this time because the structure of the deal, whereby GGYF would be able to purchase free-trading shares from us at a 10% discount to market, would be dilutive to our shareholders. Our agreement with GGYF will be amended to provide greater protections to the Company, as suggested by the SEC, and we will reevaluate filing a new registration statement next year if needed.
- We reduced the number of shares issued to service providers by 60% over the previous quarter. We have also instituted incentive programs for our employees that provide them with stock options instead of common stock grants.
These results demonstrate that Cyclone is on the right path to growth. We are focused on generating revenue and related profitability from operations and taking steps to limit shareholder dilution. Building confidence and increasing shareholder value are critically important to our Company and our executive team. Moving forward, our objectives are clear: continue to push ahead the commercialization of our technology.
Cyclone's most immediate focus is pursuing opportunities in the area of waste-to-energy. This includes use of biomass, bio-waste, waste fuels and waste heat to power our engines and spin electric generators. We believe that Cyclone can achieve considerable market penetration over the coming years in the smaller-scale distributed market (under 500kWe output) as businesses, industrial sites, municipal waste authorities and agricultural concerns gain greater understanding of the necessity and economic benefits of utilizing waste resources more effectively. This represents potentially a multi-billion dollar business in the U.S. alone, with even greater possibilities overseas in rapidly developing nations.
To implement this business plan we have pursued the following projects:
- Phoenix Power's waste motor oil power co-generator. This licensing partnership provides a strong, experienced distribution network in a market where over 150,000 current waste oil furnaces in oil change shops, garages and car dealerships are available for retrofitting or replacement with Cyclone/Phoenix power and heat co-generation units over the coming years.
- B&W Constructors & Equipment's methane combustion system. B&W provides Cyclone with a development and distribution partner to start pilot programs for methane-to-power units on small livestock farms, municipal landfills and waste water treatment facilities in the U.S. and the Caribbean in 2013.
- Enginuity Energy's advanced biomass gassifier. Enginuity provides combustion technology that significantly broadens the types of solid biomass and bio-waste that can be used to run Cyclone engines.
- Clean Carbon, an Australian agricultural technology development group. Clean Carbon is working on production development funding opportunities with the Australian government and its base of agricultural and municipal customers.
- Aura Systems, a high tech generator manufacturer. Aura provides the technology and experience to complete the electrical side of our power generating systems.
An enormous opportunity also exists for Cyclone engines to power multi-fuel, cleaner running and more efficient cars and trucks. Because the hurdles to entry for transportation applications are significantly higher than in the waste-to-energy markets, we are seeking major development partners to provide Cyclone with funding and expertise to succeed in this sector. Our strategy for this includes the completion and running of our Team Steam USA Land Speed Record (LSR) car in the coming months, which will provide an important demonstration and further validation to future partners of the capabilities of our technology.
Cyclone has made great strides over the past few months in transitioning its engine technology from prototype to production, which includes:
- Successful integration of our WHE-25 engine with Phoenix's waste oil combustion chamber / heat exchanger (CCHX). Testing is progressing well, and over the following months we will be optimizing the performance and durability of this system with the goal of commencing pilot programs and limited run production in 2013.
- Advancement of the Mark 5 engine for both the LSR project and our customer Combilift, the European material lift equipment manufacturer.
- Progress is ahead of schedule on the compact S-2 engine for our contract with the U.S. Army to use these engines as mounted and dismountable 10kWe auxiliary power units for combat vehicles.
In the past month we have brought in Jim Landon, who currently serves on the Company's Board of Directors, to assume the role of Chief Executive Officer on an interim basis. Jim has considerable experience in manufacturing and operations, and will be instrumental in overseeing our transition from prototyping to production. This will include helping to build greater alliances with Cyclone's manufacturing partners, and recruiting top-level production engineers and executives to oversee this transition process.
As the company's Chairman and co-founder, I have taken on the new position of Chief Technology Officer, a move that has allowed me to focus full time on technology development and innovation for the company. I look forward to continuing to improve and innovate upon our current technologies and bring them to the forefront of today's global energy discussion.
We encourage all Cyclone shareholders, supporters and friends curious about our progress to visit us in South Florida. We are certain that you will be impressed with the level of activity, talent and progress at our shop, and believe that you will understand our mission and why we remain strongly confident in our path to success.
/s/ Harry Schoell
Harry Schoell, Chairman & CTO
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 objectives 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.
About Cyclone Power Technologies
Cyclone Power Technologies is the developer of the award-winning Cyclone Engine -- an all-fuel, clean-tech engine with the power and versatility to run everything from waste energy electric generators and solar thermal systems to cars, trucks and locomotives. Invented by company founder and CEO Harry Schoell, the patented Cyclone Engine is a eco-friendly external combustion 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 -- while emitting fewer greenhouse gases and irritating pollutants into the air. The Cyclone Engine was recognized by Popular Science Magazine as the Invention of the Year for 2008, was included in a 2011 report by Popular Mechanics as an important waste energy technology for the future, and was twice presented with the Society of Automotive Engineers' AEI Tech Award. Additionally, Cyclone was named Environmental Business of the Year by the Broward County Environmental Protection Department. For more information, visit www.cyclonepower.com.
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