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By Boyan Angelov
Aug 18, 2014

Cyclone Power Technologies, Inc. (CYPW) Spikes After Announcing Agreement With Hypex, Inc.

Cyclone Power Technologies, Inc. (CYPW) gained 80% in price in just a couple of sessions at the end of last week. The ticker soared up the charts after CYPW announced signing a memorandum of understanding to work in partnership with Hypex, Inc., an industrial machine company based in Southampton, PA.

Hypex has contracted to produce and assemble the components CYPW produces. Statements on the agreement were given by both CYPW's President Frankie Fruge and Hypex's President James Hasson. The news was accepted with great enthusiasm by investors, as the company's stock marked the first significant increase in price since falling under the $0.01 mark a couple of months ago.CYPW_chart.png

It remains to be seen for how long this excitement will last and how CYPW will benefit from this partnership in the long run. In the meantime, there are a few other events that occurred recently which should be noted.

On August 5, CYPW issued an 8-K in which it reported that its 74% owned subsidiary WHE Generation, Corp. had closed its Seed Round of funding in the amount of $350 thousand on July 30. This announcement first came out in a press release issued on that day and got a positive market reaction.

In this filing, CYPW gave additional input on a number of its recent operations. The company reported it had paid the remaining balance of its senior secured debenture with TCA Global Credit Master Fund L.P. Not surprisingly, CYPW registered one of its significant jumps up the charts after this announcement came out.

After a number of positive announcements, CYPW has started climbing up the charts. The question now remains whether the company could maintain its momentum or will the excitement from these events eventually ware off?

The company has been taking up a number of ventures recently which have yet to give results. It remains to be seen if the deal with Hypex, Inc. will be followed on with updates from the companies' operations in partnership. Carrying out the ventures CYPW has recently talked about will require a strong financial backing. Investors should look through the company's latest financial disclosure, the 10-Q for the period ended March 31, 2014 which contains the following:

  • Cash: $7,059
  • Total current assets: $638,9 thousand
  • Total current liabilities: $3,5 million
  • No revenues
  • Net loss: $1 million

CYPW has a low amount of cash on hand to use for financing its current plans. The company has a negative liability to asset ratio. The fact that CYPW has not managed to make a dime from revenues is a major red flag for the company.

CYPW_logo.jpgIt remains to be seen if the agreement with Hypex, Inc. and the sums the company expects to receive from the closing of WHE Generation's contemplated financings can help CYPW maintain its positions and get on the right track. Until results are in from the company's recent actions, investors are advised to do their due diligence before making conclusions based on momentary market movements.

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