Hoping For A Gust Of Success | Founder hopes it has turned the corner, but 15-year-old Worcester wind-power firm has struggled

Since its inception in 1997, Mass Megawatts Wind Power Inc. of Worcester has raised $4.3 million in stock and worked with clients that have included the U.S. Army. It has built demonstration projects in Massachusetts and upstate New York, and it regularly announces improvements to the design of its wind power generators. Over the last three years, it has also announced deals involving its technology that would have added up to tens of millions of dollars - if they had worked out.

But for the most part, they haven't. Mass Megawatts, whose stock is publicly traded, has barely begun generating sales. Last month, it announced an installation in Colorado.

Meanwhile, two engineers who have looked at the company's plans for its product say the design may have been doomed to failure from the beginning. But company founder Jon Ricker insists he's on the verge of successfully commercializing the wind generators. That would allow him to expand the company, which is now a tiny operation with no employees.

Depending on who you ask, the story of Mass Megawatts is about technology with potential it never lived up to, an idea that was flawed from the start, or success that's just around the corner. Its financial statements have reported five straight years of losses, although those losses have been shrinking since the spring of 2009.

Disappointed Investors

Mass Megawatts recently announced that it had built an "off-the-grid" wind power unit in conjunction with a Colorado roofing company, A-1 Roofing. Ricker said A-1 will build more of the systems for its customers, and pay Mass Megawatts 30 percent of the sales revenues.

A-1's ownership didn't return calls for this story. But others who have done business with Mass Megawatts say things haven't worked out as company press releases might have suggested.

In April 2009, Mass Megawatts announced it had sold a $1.1 million wind power project to a company called Electric City Wind Power Corp. Over the following months, it announced that Electric City, working under a license from Mass Megawatts, had signed contracts with local investors to sell them $16.6 million worth of Mass Megawatts technology that would be used to generate power in various parts of Pennsylvania.

John Moran, who was listed as Electric City's vice president of sales in Mass Megawatts' press statements, said the corporation was simply a group of people who decided to invest in Mass Megawatts' technology.

"We were going to purchase and sell Mass Megawatts equipment," Moran said. "At this point we haven't been able to. No jobs have been completed; let's just put it that way."

Christopher T. Powell, a personal injury lawyer who was also part of Electric City, said the plan was that Electric City would sell the wind power units in Pennsylvania, and possibly even help Mass Megawatts build a factory in that state to make parts for the turbines. But it soon became obvious that wasn't happening.

"We have never been given a working model (of the technology) from Mass Megawatts," Powell said. "Never shown a working model … We were led to believe there was not only a working model but in a short time period we could erect real production."

The person leading them to believe that, Powell said, was Francis Smollon, a New Jersey resident who was traveling around the East Coast encouraging investors to get involved in Mass Megawatts.

Smollon did that, he said, because he believed in Mass Megawatts. He said he was never paid by the company, and, in fact, spent many hours and traveled thousands of miles working to get investors involved in buying and selling its technology. He said he also spent a significant amount of his own money on Mass Megawatts stock when it was trading at more than $2.50 a share. It's now trading at about 10 cents.

Smollon said he thinks the bad economy and a changing energy market hurt wind power companies generally and Mass Megawatts in particular. He added he doesn't think Jon Ricker did anything deliberately wrong.

"I believe that his concept is 1,000 percent solid," he said.

Smollon said he first got sold on the company when he saw a demonstration project it had built at the U.S. Army's Fort Huachuca in Arizona, which he described as "impressive." When Mass Megawatts announced the sale of a 50-kilowatt project at Fort Huachuca in the spring of 2008, its stock spiked from around 50 cents a share to $2.69. But that plant was never built. Ricker said the project never produced enough energy to become viable, though the company did see limited revenues from it.

Mass Megawatts' efforts elsewhere also fell through. In February 2010, it sold a license to Catskills Mountain Wind Management, another investors' group led by Smollon, this one in upstate New York. That led to a wind generator being built in Hunter, N.Y., as a demonstration project, but the unit was later disassembled and never replaced with a commercially viable model.

Brian Donohue, a local business owner who served on the board of Catskills Mountain, said he invested $25,000 to help build the Hunter project but never saw any results.

In the New York City area, Mass Megawatts announced a $1 million sale of a wind power project around the same time as its first Electric City announcement. The buying group was headed by Catherine and Daniel Donnelly, principals of New York City HVAC and mechanical firm Donnelly Mechanical.

Robert Ragozine, president of Donnelly's Sustainable Energy Services division, said the project "hasn't really happened yet."

"The technology has changed," he said. "It's been one thing after another."

Ragozine said he's not up to date on the details and referred an inquiry to Daniel Donnelly. Donnelly said it would be better to talk to Smollon, who he said is acting as a consultant on the project.

Smollon said the New York City efforts, like the others, are awaiting appropriate wind technology, either from Mass Megawatts or another company.

In the meantime, he said, Mass Megawatts has reimbursed investors in Electric City and Catskills Mountain for about $230,000 in fees they paid for Mass Megawatts licenses. Mass Megawatts used another $120,000 paid by the investors to build demonstration projects and hasn't paid it back, he said.

Ricker said he hasn't been in touch with investors from Electric City, Catskills Mountain or the Donnelly project for some time. He said the investors have been waiting on more advanced versions of Mass Megawatts' equipment and clearer data on the units' ability to generate power.

Questions Over The Concept

Tom Gallery's company, North Wind Measurement, was hired by Middle Smithfield Township in Pennsylvania to measure the wind at a spot where the town wanted to install a wind power system. The town was also talking with Mass Megawatts about eventually building that system, so Gallery looked at the company's products.

"The whole concept is flawed at every level," Gallery said.

Gallery said problems with the system include the fact that it sits on the ground instead of being elevated, its inability to move to catch wind from different directions, and the basic idea of improving wind speeds by concentrating wind from a large area.

Jim Manwell, an engineering professor at the University of Massachusetts at Amherst, said he had looked at the company's work years ago when it got some money from the state's Renewable Energy Trust Fund. He said the company never provided a testable model.

"I haven't seen any information that would lead me to believe that this is a good idea," Manwell said. "I think they need to do a lot more homework before they have a successful product."

He said if the company wants to prove its technology, it needs to go through third-party testing.

Ricker said he understands many scientists in the wind industry don't believe augmenters — which Mass Megawatts uses — are a useful technology, but he thinks other companies with similar designs have simply not done as good a job as Mass Megawatts has. He said his company's use of less expensive materials makes its products more economically feasible than other augmenter-style systems, while the use of a small gear box and the absence of the huge, expensive turbine blades found in standard wind turbines give it an edge over those systems.

"It'll take a few examples to actually prove it correct," Ricker said.

Aiming For Independent Tests

Ricker said Mass Megawatts wants to get its newest technology tested by a third party, but it doesn't have the money to pay for it. Once it sells more of its units, he said, he wants those tests done.

The company operates on a small budget. In its 2011 fiscal year, which ended in April, its operating expenses were $472,688, including $147,804 for marketing and $50,045 to develop its wind projects, according to regulatory filings. The company had no sales, but brought in $837,873 by issuing new stock. It also traded another $101,957 in stock for services to the company. Its net loss for the year was nearly $473,000, but that was a substantial improvement over the two previous fiscal years. In the quarter that ended Oct. 31, Mass Megawatts reported a $64,345 loss, substantially lower than the $124,102 it reported in the same quarter in 2010.

Ricker, who isn't considered a company employee, received $40,500 in consulting fees for the year.

With no employees, Mass Megawatts lists several consultants with official company titles in its regulatory filings. But some of them aren't actively involved with the company.

Thomas McBride is listed as chief operating officer, but he says he hasn't worked for Mass Megawatts in eight years, and when he did, it was only in a small advisory role.

"Some of the design concepts that they were trying to use I just didn't feel real good about," he said.

So he stopped working for them.

"I just kept my distance and nobody's called me," he said.

Ricker acknowledged that McBride and others listed in the company's filings aren't involved in the company today. He said Mass Megawatts continues to mention them because their resumes are more impressive than those of other contractors it's using now

Worth The Investment?

Mass Megawatts is a "penny stock" since its price is less than $1 per share. The stock is traded "over the counter" on what's known as the OTC Bulletin Board. In November 2011, more than 2,000 domestic securities traded on the board, with an average price of 11 cents a share.

Gary Sherr, senior vice president at Worcester investment management company Carl P. Sherr & Co., said it's always hard to judge companies that trade their stock on over-the-counter markets. He said a wide variety of small corporations with low stock prices trade on these markets. But Sherr said it's hard to judge, even from financial filings or press statements, how good an investment these kinds of companies are. Since analysts tend not to follow them, people who buy the stock often base their decisions on informal information sources like blogs, message boards or word of mouth. Sherr said investors may also buy stock in these kinds of companies simply based on what industry they're a part of and how it's doing as a whole.

"Sometimes they just rise and fall with the tide," he said.

Michael J. Radzicki, a professor at Worcester Polytechnic Institute who follows local stocks, said he's not particularly familiar with Mass Megawatts, but he said it would be a difficult stock to bet on because it's very thinly traded. His analysis of the company's financial data found a stock price that's trending downward and below that of its economic sector. Mass Megawatts, he concluded in an email, is "in a space that is vulnerable to state, federal and international actions."

But he did see a potential bright spot for the company. "It is positioned to – perhaps – profit from innovation and a lack of debt. I'd say it's a speculative penny stock that may or may not pan out," he wrote.

"I don't know that I'd put any money on such a company unless I knew something," such as definite information that a large amount of sales is right around the corner, Radzicki said.

Hoping For Better Days

With the newest twist on its technology, Ricker said he hopes Mass Megawatts will take off in the coming months, building power generators in Colorado and elsewhere and eventually opening factories to make parts for the devices. Such success would justify the 10- to 12-hour days he said he has been working for the past decade.

But Ricker said he doesn't have any illusions about how things have gone so far.

"I was hoping things would be a lot better by now," he said. "If I'd known it was this amount of time, I probably wouldn't have gotten involved."

Mass Megawatts' Technology

At the heart of Mass Megawatts' problems is the viability of how it generates wind power. Promising to deliver it at a third less the cost than other technologies, the company continues to refine its technology as competition within the growing wind power industry grows.

Mass Megawatts' technology is based on something called the Multi-Axis Turbo (MAT) System. Instead of the huge propeller-style wind turbines generally associated with wind power, it's a sort of like a big box with lots of small, spinning turbine blades.

Since 1997, the design has gotten more complicated. The most significant change was the addition of something called an augmenter system, designed to focus wind and force it through the blades at a faster speed. This, in turn, can lead to a significant increase in power output, the company said in a recent statement; for example, an increase in wind velocity from 10 to 20 miles per hour can boost the wind system's power output by a factor of eight.

Just in the past year, the company announced a new horizontal blade design for the MAT, a lightweight steel framing option for the augmenter and a new polymer material for the augmenter Mass Megawatts says "has allowed the company to competitively price its MAT wind turbine system and begin to bring it to market."

Within the wind power industry, there are opponents and supporters of the concept.

Company founder Jon Ricker said he understands many scientists in the wind industry don't believe augmenters are a useful technology, but he thinks other companies with similar designs have simply not done as good a job as Mass Megawatts has. He said his company's use of less expensive materials makes its products more economically feasible than other augmenter-style systems, while the use of a small gear box and the absence of the huge, expensive turbine blades found in standard wind turbines give it an edge over those systems.

"It'll take a few examples to actually prove it correct," Ricker said. But he concedes if the company wants to prove its technology, it needs to go through third-party testing.

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