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Cyclone Power Technologies
601 NE 26
Ct., Pompano Beach, FL 33064
Page 1
May 17, 2010
Dear Friends of Cyclone,
Greetings from South Florida! I would like to share with you some of the financial and operational
highlights from the first three months of 2010, as detailed in our Quarterly Report filed with the
OTC Markets.
Financial Development
In the first three months of 2010, we generated $104,900 of revenue compared to $44,938 for the
same period in 2009, an increase of 133% primarily due to the delivery in March 2010 of our
biomass-to-power engine system to Robotic Technologies under a U.S. Department of Defense
sponsored project.

We incurred operating expenses for the first quarter of 2010 of $434,837 as compared to $417,424
for the same period in 2009. This increase is primarily due to 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. Partially offsetting these expenses in
2010 were reduced R&D costs of $91,316 (39%), which reflects in part the assignment of resources
from research to the production of deliverable inventory as certain of our engine prototypes near
completion. Overall, however, net loss for the recent quarter was $393,901 as compared to a net
loss of $402,948 for the same period in 2009.

We ended the first quarter with cash of $123,000 and total current assets of $365,000. In the
period, we sold 1,303,905 shares of common stock for $115,211, 19,000 shares of Series A
Preferred Stock for $95,000, and issued for services 869,200 shares of restricted common stock and
450,000 common stock options valued at $89,722. 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.

Since the end of the first quarter, we have strengthened our cash position by over $285,000
through the sale of approximately 48,000 additional shares of Series A Preferred Stock and receipt
of $44,900 in design, consulting and testing fees, partially from continued services performed for
Raytheon Company.

You can find our full financial statements with footnotes in our Quarterly Report for the period
ended March 31, 2010, filed with
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Cyclone Power Technologies
601 NE 26
Ct., Pompano Beach, FL 33064
Page 2
Engine Projects and Technological Development

Waste Energy Recovery: In the first quarter of 2010, we strengthened our commitment to the
technological and strategic development of the waste energy recovery side of our business. We see
the use of waste energy resources such as used motor oils and exhausted heat from industrial
processes to run our engines as representing a greatly underserved market with incredible
importance for the future of our nation's energy policy and our planet's environmental
sustainability. The U.S. Department of Energy has estimated that the efficient recycling of energy
such as used oil and waste heat over the next 20 years can help reduce our national dependence on
petroleum imports, spark billions of dollars in private investments, and create up to one million
in the U.S.

In connection with these opportunities, we continue to advance the development of our Mark V
engine for use with waste oil fuels. This project is being funded by
Phoenix Power Group
under our
license signed with them in mid-2009. Phoenix has also recently brought to the table
Clean Burn
Energy Systems
, which is the leading manufacturer and distributor of waste oil heaters in the
world. Working together on development, marketing, sales and installations, we see huge potential
for Cyclone Engines to be the power source for electric generators running on waste oil fuels, which
the EPA considers an important renewable energy source.
In April we completed the baseline Waste Heat Engine (WHE-25) to be delivered to
Bent Glass
, Inc. of Hatboro, PA which will power a system that will produce up to 10kW of electricity
from the heat exhausted from their furnaces. We are now testing a newly-designed heat exchanger
that will more efficiently convert heat from their exhaust stacks to our engines' working fluid. We
are also in discussions with several other beta sites to test our waste heat recovery systems once
our initial unit is installed at Bent Glass. We will conduct these projects through our subsidiary
company, 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).
Military: In the first quarter 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 (
), an agency of the U.S.
Department of Defense. RTI is building the EATR, an autonomous robotic platform for long-range
reconnaissance; however, we believe that there are vast commercial opportunities for Cyclone's
biomass-to-power system beyond military purposes. We also continued to perform testing and
design services for Raytheon Integrated Defense Systems, a business of
Raytheon Company
, and
we are in discussions with them regarding the next phases of a collaborative project slated for late

Solar: Our solar thermal engine being developed for
Renovalia Energy
is progressing well and
performance testing has commenced as of the date of this letter. We expect to provide results and
pre-production design drawings to our licensee shortly.

Land Steam Record: As development of our Mark V engine progresses, so does our project with
U.S. Land Steam Record
team, which plans to use this engine to power the fastest steam vehicle
on earth. If you have not already seen it, please check out the story that the
Discovery Channel
recently featured on this project, which has already attracted some interesting contacts and
potential sponsors (Daily Planet, Ep. 168, May 11, 2010).
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Cyclone Power Technologies
601 NE 26
Ct., Pompano Beach, FL 33064
Page 3
The first quarter of 2010 was a great start as we strive to advance our technological development,
register our common stock with the Securities Exchange Commission, and close major agreements
with partners like Raytheon. We are very thankful for your support along this journey, and are
confident that together we can build a company that will make a meaningful impact on our world.
Harry Schoell, CEO & Director