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LiquidPiston

First wholly new combustion engine / cycle in 85+ years

Last Funded March 2019

$299,150

raised from 43 investors
Entering UAV market with rotary engine for drones
Last updated December 2018

Investment Terms

Financials

We have financial statements ending September 30, 2023. Our cash in hand is $26,836,212, as of January 2024. Over the three months prior, revenues averaged $796,055/month, cost of goods sold has averaged $357,854/month, and operational expenses have averaged $806,492/month.

At a Glance

Fiscal Year Ends Sep 30
$8,170,177
+22%
Revenue
$1,093,427
-18%
Net Profit
$1,339,034
-36%
Short-Term Debt
$24,801,209
Raised in 2023
$26,836,212
+22%
Cash on Hand
Net Margin:
13%
Gross Margin:
52%
Return on Assets:
5%
Earnings per Share:
$0.06
Revenue per Employee:
$240,299.32
Cash to Assets:
70%
Revenue to Receivables:
666%
Debt Ratio:
8%
LPI Audited Financial Statements FYE 09 30 2023-Final Report.pdf
Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this offering. Some of the information contained in this discussion and analysis, including information regarding the strategy and plans for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Engines are dirty, and physics tells us we can do better! We've developed an optimized thermodynamic cycle and built a fundamentally new combustion engine that's cleaner, cheaper, quieter, and smaller. Compared to piston engines, our "X" rotary engine has the potential to be ~5x smaller and lighter than a Diesel, and 30% more efficient than a gasoline engine. An electric vehicle using LiquidPiston combined with a small battery pack could have a lower CO2 footprint compared to plug-in electric vehicles.
We’ve exceeded objectives in several multi-million dollar government contracts, and received follow-up funding to continue R&D, including a new $35M Air Force R&D contract.  Initially, we will be 100% focused on military applications. We won’t stop, however, until we overturn the entire $400 Billion combustion engine market.
Milestones

LiquidPiston, Inc. was incorporated in the State of Delaware in June 2004.

Since then, we have:* Raised over $50M across three Reg CF and two Reg A+ campaigns, from over 18,000 investors* New engine architecture could improve fuel efficiency while reducing size and weight by 5x over a diesel engine.* 93 patents issued or pending in the U.S. and internationally.*Introduced the XTS-210 engine, a 210cc rotary 2-stroke supercharged engine capable of running on heavy fuels like jet fuel*Signed or executed $65M in Government contracts, including a new $35M Air Force award
Historical Results of Operations*NOTE: The company recently changed its Fiscal Year End from Dec 31 to Sept 30.  The financial statements have been audited for the 12 month period ending Dec 31 2022, and the 9 month period ended Sept 30 2023.   See full disclosure and financial report with the Company's 1-K filing that can be found here. 
  • Revenues & Gross Margin. 
  • The Company generated revenues totaling $8,170,177 and $5,033,368 for the nine months ended September 30, 2023 and 2022, respectively. Booked revenue increased in 2023 compared to 2022 as work progressed on our new government funded contracts. Cost of revenue increased from $2,485,476 to $3,948,517 for the nine-month periods ended September 30 2022 and 2023.
  • Our gross margin was 51.67% in fiscal year 2023, compared to 50.62% in 2022.
  • Assets. As of September 30, 2023, the Company had total assets of $20,728,900, including $14,424,557 in cash. As of December 31, 2022, the Company had $15,749,285 in total assets, including $13,248,306 in cash.
  • Net Income. The Company net income was $1,093,427 in the nine months ended September, 30 2023 compared to $908,164 in the first nine months of 2022.
  • Liabilities. The Company's liabilities totaled $1,708,031 for the fiscal year ended September 30, 2023 and $2,521,832 for the fiscal year ended December 31, 2022.
Related Party Transaction

Refer to Question 26 of this Form C for disclosure of all related party transactions.

Liquidity & Capital Resources

To-date, the company has been financed with $45,535,628 in equity and $2,206,000 in convertibles.

After the conclusion of this Offering, should we hit our minimum funding target, our projected runway is 6 months before we need to raise further capital.

We plan to use the proceeds as set forth in this Form C under "Use of Funds". We don’t have any other sources of capital in the immediate future.

We will likely require additional financing in excess of the proceeds from the Offering in order to perform operations over the lifetime of the Company. We plan to raise capital in 6 months. Except as otherwise described in this Form C, we do not have additional sources of capital other than the proceeds from the offering. Because of the complexities and uncertainties in establishing a new business strategy, it is not possible to adequately project whether the proceeds of this offering will be sufficient to enable us to implement our strategy. This complexity and uncertainty will be increased if less than the maximum amount of securities offered in this offering is sold. The Company intends to raise additional capital in the future from investors. Although capital may be available for early-stage companies, there is no guarantee that the Company will receive any investments from investors.

Runway & Short/Mid Term Expenses

LiquidPiston, Inc. cash in hand is $26,836,212, as of January 2024. Over the last three months, revenues have averaged $796,055.47/month, cost of goods sold has averaged $357,854.62/month, and operational expenses have averaged $806,492/month, for an average burn rate of $368,291.15 per month. Our intent is to be profitable in 0 months.

From October 1, 2023 thru December 31, 2023 we closed on $11,235,086 (net of selling shareholders) from our Reg A+ raise, which closed to new subscriptions on October 24, 2023. 

Revenues and costs are expected to increase toward $900,000 per month as the company executes on it's government contracts through 2024-2026.  The Company will also be making capital investments in the facility.  

The Company incurred losses from operations and has had negative cash flows from operating activities since its inception through December 31, 2021. For the 12-month period ending December 31, 2022 and the 9-month period ending September 30, 2023, the Company made a $368,397 and $661,890 respectively in profit from operations due to DOD R&D contracts, with a net income of $1,327,908 and $1,093,427 respectively including interest, PPP loan forgiveness, and federal employee retention credits. The Company’s current operating plan indicates that new research and development and consulting contracts will be essential to funding the completion of its ongoing research and development activities. Management expects the results of operations operate near breakeven for the next several years.

The Company has government research and development contracts that it is executing on.

All projections in the above narrative are forward-looking and not guaranteed.

Risks

1

Financing Risk: Developing an engine is a time consuming and expensive process. The current financing provides funding to complement certain government contracts. The company will rely on raising a Series A, later in 2018 or 2019 to accelerate commercial adoption of the technology. While we think it is likely we will raise this round, this is not guaranteed, and the company requires external financing until it is self sufficient.

2

Technical Risk: The basic operating principles of the 'X' Engine have been established; however, optimization remains in order to reach the full potential of the cycle and the thermodynamic cycle. In order to commercialize the technology, the engine technology may need to be matured to further 1) attain durability targets sufficient for the application; 2) attain any certification requirements, including durability, emissions, or other requirements, as established by the EPA, or the military, or otherwise as required by a customer; 3) the engine design must be iterated toward volume production, and it is not known yet exactly what the engine will cost in production, as it will be highly dependent on final application and customer requirements; other application specific requirements may be required.

3

Commercialization Risk: LiquidPiston develops technology for engines. Our business model relies on potential strategic partners to 1) assist in co-development of the engine by either funding a portion of development, or investing in-kind resources to assist in the development; and 2) adopt the LiquidPiston engine technology on a licensing basis. The automotive space is known to be especially difficult for a new entrant, which is the reason we have chosen the military and small-engine markets to start, rather than going direct to automotive. However, even in these spaces, there has been no markedly new engine designs that have been successfully commercially adopted since the Wankel engine was developed in the 1960s.

Other Disclosures

The Board of Directors

Director Occupation Joined
Nikolay Shkolnik CTO @ Liquid Piston 2007
Alexander Shkolnik CEO @ Liquid Piston 2007
Per Suneby Managing Director @ Sternhill Associates 2016

Officers

Officer Title Joined
Nikolay Shkolnik CTO, VP of Research and Development 2007
Alexander Shkolnik CEO, President, Secretary 2007

Voting Power

Holder Securities Held Power
Alexander Shkolnik 8,707,618 Common Stock 91.7%

Past Fundraises

Date Security Amount
12/2023 Priced Round $14,476,307
9/2023 Priced Round $10,324,902
12/2022 Priced Round $2,726,180
4/2022 Priced Round $245,747
1/2022 Priced Round $8,137,863
3/2021 Priced Round $7,765,966
9/2020 Priced Round $166,122
7/2020 Priced Round $623,128
4/2020 Priced Round $1,069,413
12/2019 Convertible Note $425,000
3/2019 Convertible Note $889,317
3/2019 Convertible Note $100,000
5/2018 Convertible Note $200,000
9/2017 Convertible Note $299,150
4/2017 Convertible Note $999,999
9/2016 Convertible Note $1,230,000
2/2016 Convertible Note $251,000

Outstanding Debts

None.

Related Party Transactions

In November 2015, $2.25 million of the Company’s secured convertible promissory notes, plus interest, were called by senior lenders. The Company had no means to repay the loans—the Company’s outstanding liabilities were far in excess of assets. The Company was financially insolvent and in need of an immediate cash infusion to avoid dissolution. Without such infusion, immediate foreclosure was threatened by lenders, and the Company lacked sufficient capital to continue to meet operating needs. On December 1, 2015, the company Management purchased all equity and convertible note holding from Adams Capital Management. In December 2015, the company Management approached the Company and lenders with a term sheet relating to a Management Buyout / Merger in order to grant the Company the cash infusion necessary to continue operations, satisfy lenders and provide return to its stockholders. This was the only offer received by the Company. The term sheet was subsequently negotiated on behalf of the Company by an independent director, who was able to negotiate such terms with the Company’s senior lenders as to avoid foreclosure and to increase the consideration offered by Management. On December 14, 2015, the Board unanimously approved the term sheet relating to the Merger, which was subsequently enacted on January 13, 2016. On that date, LiquidPiston, Inc. merged with LiquidPiston Holdings, Inc. This Holdings Company was setup and owned by Company Management. As part of the merger, LiquidPiston Inc. paid back a portion of the Notes outstanding, as partial repayment to the note lenders, and the balance of the notes were converted into Series D preferred stock. All preferred shares in the company were then converted into Common Stock, and as consideration for the merger, LiquidPiston Holdings Inc., paid an additional sum that was distributed amongst all shareholders. Subsequently, as part of the Merger, all equity, convertible notes, and stock options in LiquidPiston, Inc., were cancelled. LiquidPiston, Inc. was the surviving entity in the merger. Nikolay Shkolnik and Alexander Shkolnik each owned 50% of the surviving entity.

Name Alexander and Nikolay Shkolnik
Amount Invested $0
Transaction Type Other
Issued 1/13/16
Relationship Alexander is cofounder/CEO of LPI, Nikolay is cofounder/CTO of LPI

On January 13, 2016, the company entered into a reverse merger with LiquidPiston Holdings, Inc., with LiquidPiston, Inc. as the surviving entity. LiquidPiston Holdings was owned by Alexander and Nikolay Shkolnik. Previous debt holders were repaid a portion of debt. All remaining debt was converted to stock. All previous equity was cancelled as a result of the merger. Total repayment of debt and payout to stock holders by LiquidPiston Holdings Inc was $566,000.

 

Use of Funds

$100,000 97% will cover general operations until potential follow-on financing, which may include government contracts, and a Series A equity investment is obtained. The company will continue technical development, including durability development, emissions measurements, and work to support, initialize, and procure government and partner programs. 3% Wefunder Intermediary fee
$1,070,000 In addition to above, this funding will cover general operations until potential follow-on financing, which may include government contracts, and a Series A equity investment is obtained. The company will continue technical development, including durability development, emissions measurements, and work to support, initialize, and procure government and partner programs. 3% Wefunder Intermediary fee

Capital Structure

Class of Security Securities (or Amount) Authorized Securities (or Amount) Outstanding
Common Stock 25,000,000 17,715,054
Series Seed 1 Preferred Shares 200,000 82,258

Form C Filing on EDGAR

The Securities and Exchange Commission hosts the official Form C on their EDGAR web site.

Details