Mr. Hageman is a widely respected inventor and entrepreneur who worked with many large and small companies with integrity and honesty in the energy business worldwide. Most of Mr. Hageman’s life has been working diligently in the energy construction business with periods of time in the real estate industry. Mr. Hageman has worked for large international companies like the Fluor Corporation FLR (NYSE) and the Bechtel Power Corporation, a part of the Bechtel Group, Inc. (privately held). Mr. Hageman’s exemplary career led him to many promotions. He was promoted to a construction engineer and construction manager, without having earned a college degree in engineering. Mr. Hageman was born and raised in Southern California graduating high school from Downey High and moved to Phoenix to attend the DeVry Institute of Technology in 1970. He left school and took a job designing oil refineries with the Flour Corp. and was immediately recognized as having talent with a mechanical inclination. He was offered a construction manager position overseas in Indonesia in 1975 where he helped to complete the showcase oil refinery project for the government owned Pertamina Oil Company in the town of Cilicap on the south coast of the island of Java. After working in design engineering back in Irvine, California on a South African coal gasification project, he was transferred to Saudi Arabia for two years, again working as a construction engineer/manager for the largest propane/butane refinery in the world.
Mr. Hageman wanted to advance his knowledge of the energy industry and left Fluor for a job with Bechtel Power, employed as an engineering manager at the San Onofre Nuclear Generating Station near San Clemente, California. He was awarded the position of a nuclear systems testing engineer overseeing the pressure testing of the main reactor cooling and steam generation systems inside the containment buildings, He was greatly admired and respected for the completion of construction on one of the most complicated engineering projects in the nuclear power industry. Mr. Hageman was later transferred to the Palo Verde Nuclear Generating Station in Arizona where he engineered and supervised final construction and testing of the core nuclear reactor systems. All of Mr. Hageman’s work was inspected and approved by the Nuclear Regulatory Commission (NRC) inspectors, completing the responsibility of Bechtel’s construction contract. This began the turn-over process to the electric utility, Arizona Public Service (APS). His engineering work was performed on all three reactors at the Palo Verde power plant, the largest nuclear plant in the United States, which provided the means to complete the project ahead of schedule.
Mr. Hageman decided to pursue his life as an inventor. Earlier in Mr. Hageman’s life he tried to develop an idea he had for a “magnetic roller bearing”, got a patent pending but found the cost of building a prototype excessive. So instead he pursued an inspiration that started while working in the Saudi Arabian desert. Part of Mr. Hageman’s job on the ARAMCO Gas Gathering Project was to test the pressure-worthiness of pipelines. The pipes would be filled with water, vented so no air was in the pipe, then pumped up to a pressure to check for leaks. Mr. Hageman discovered the thermal hydraulic phenomenon that is the basis for his current engine invention. After the pressure pump was turned off, the pressure in the pipeline would continue to increase. The heat from the sun was transferred through the steel pipe. The water would then expand and raise the pressure. The natural process was a nuisance because valves had to be opened to release the added pressure, so we would not over-pressurize the system. Mr. Hageman discussed all this with the engineers on site that led to many realizations about the potential energy source derived from solar thermal power. The solar power developed only gave power through expansion of the liquid, so a reverse thermal effort needed to be discovered which would create a repeatable cycle.
With Mr. Hageman’s background in high pressure piping design, he started drawing concept designs using various ways to harness the expansion of liquids. He went to the Arizona State University engineering library and studied patents that used the expansion of liquids to produce power. Some of the designs seemed reasonable but little work was done to concretely develop any of the ideas. Mr. Hageman discovered the way to harness the expansion energy with controlled hot and cold valves that would inject water over working fluid reservoirs and direct the high pressure flow from the working fluid to a piston in a hydraulic cylinder. The cycling temperature around the working fluid provided the expansion and contraction means that would allow the operation to repeat and deliver power over time. The idea was documented in “working papers” that were sent to the US Patent Office (PTO); allowed before a patent is developed. Mr. Hageman built the first working model in 1984 at his garage in Phoenix and tested a three cylinder engine using hot water from the kitchen sink and cold water from a hose. The working fluid for this model was water. He later found that liquefied gases provided a much larger expansion coefficient than water.
Mr. Hageman knew he would need money to develop the technology. He used to tell people “inventor and investor are on the same page in the dictionary”. He formed a Delaware corporation and started consulting with securities attorneys. The first “Private Placement Memorandum” (PPM) was written by a securities attorney and he proceeded to talk to investors. The attorney filed the PPM with the US Securities Exchanged Commission and the State of Arizona. Mr. Hageman learned that only accredited investors would be allowed in the company. An accredited investor must have a net worth of over $1 million with an annual income of over $200,000 or $300,000 if married. He knew he wasn’t allowed to advertise so the job of finding accredited investors had to be found through talking with private individuals. Mr. Hageman was still in the art business and showed one of his customers the drawings of plans for the new engine that “ran on hot water”. The customer called a friend of his securing the first investment for $50,000. Another friend was called and the second investment of $50,000 was secured. Mr. Hageman started to work on building prototypes. The friends talked to other friends and more checks started coming in. Every investor was required to sign a “subscription agreement” written by our securities attorney and the investors were granted common stock in the company. Files are kept on every shareholder with hard copy documents and electronic spreadsheets tracking all money invested. A bookkeeper was hired to track all investment and spending on prototypes. QuickBooks software has been used to take care of all accounting. The investor base was developed solely on “Word of Mouth” and with a pre – dotcom economy many accredited investors wanted to be part of the company.
Mr. Hageman met with the head of the Arizona Department of Commerce Energy Office around 1997 and they suggested he talk with the University of Arizona Maricopa Agriculture Center (UofA MAC) south of Phoenix. That led to a research agreement and was given an office and use of the 2000 acre research farm to prove the technology. The first water pump was developed at the water reservoir at the center. The engine was very large and bulky, built in a forty foot shipping container. Today’s engines are a fraction of the size through refinement of the engine components. Having an actual working model showed the potential of the technology and through word-of-mouth, more friends and family invested in the company.
The Deluge, Inc. company was formed to allow Hydrotherm Power Corporation to remain as a patent holding company letting Deluge be the operating company and allow investment without selling off the patent holding company. This business strategy was advised by a prominent local Phoenix security attorney who had worked with other technology companies that had technology that could be used in many different applications. The company name “Deluge” was used being a name that meant “a lot of water”. We thought at the time the company would be focused primarily on water pumping for agricultural use.
The Deluge company continued to grow in investment and a facility in Phoenix was leased to house the research and development efforts. A series of engines were built that kept refining the design and performance of the engine. Each engine took at least six months to build and test before starting the next model.
With over 100 shareholders and a few prototypes complete Mr. Hageman decided to hire auditors to make certain that all government regulations were being followed and all the accounting was proper. A local firm was hired and auditors came in the office and preformed a full audit of our accounting and shareholder records. They found a few procedures that needed to be corrected and the staff accountants brought all records into compliance.
Mr. Hageman found that his new technology was desired by national laboratories so money was spent to build new engines to test with the US Department of Energy at the Sandia National Laboratory in Albuquerque, New Mexico, the US Department of Energy Rocky Mountain Oilfield Center near Casper, Wyoming and the US Department of Interior Desalination Laboratory in Yuma, Arizona. The national organization called the Federal Laboratories Consortium recognized DOE's Rocky Mountain Oilfield Testing Center (RMOTC) and Deluge, Inc. with its coveted “Outstanding Technology Development” award for the development and testing of the Thermal Hydraulic Engine for use in crude oil pumping. The validation by these government laboratories led Mr. Hageman to look at the possibility of “going public”.
An initial public offering is a big task that requires time, money and expertise to accomplish. Mr. Hageman decided to hire one of the major national accounting firms, one of the “Big 6” accounting firms of that time. Arthur Anderson in Phoenix, Arizona was hired do perform a second audit of the company and advise on how to strategize the IPO. The desire to go public was talked about among our shareholder base but in the end it didn’t make sense to do an IPO at that time. The decision not to go public was appreciated because subsequent stock market declines nearly wiped out most other new-tech companies that did go public. Our shareholder base continued to grow with investments from new investors averaging $10,000 to $50,000 each. Mr. Hageman continued to build prototypes in different applications proving the new engine was capable of delivering power for electric generation, desalination, deep well crude oil pumping and Freon compression. Mr. Hageman was eager to license the technology to large companies thereby avoiding the excessive expense of commercializing the technology internally.
In 2001 the dot.com stock market bubble and crash devastated our shareholder base. Many of our shareholders that were accredited found themselves losing a large percentage of their net worth which also dried up our ability to find new investors. In 2002 our IPO advising firm, Arthur Anderson went out of business surrounding the collapse of the energy company Enron. Investment in Mr. Hageman’s company dropped by 50% of the average annual investment in prior years and put the company into a considerable amount of debt. Technology development continued but most effort was put into the financial management of debt.
Around 2004 Mr. Hageman decided to try to commercialize products based on the work with the Department of Energy in Wyoming pumping crude oil from deep wells. Mr. Hageman went to Kansas and leased an oilfield, drilled nine wells and had one of our vendors build the engine technology for the field. The new oil wells, using our technology, worked effectively and we were able to sell the crude oil to a local refinery. This oilfield work intrigued a large investment banking firm in New York City. Mr. Hageman worked diligently with Lehman Brothers and was considered for investment from one of their large investment pools. Their investment was to lead to an IPO and “going public” was again a topic within the company and shareholders. Lehman Brothers went out of business in 2008 and with this national economic collapse Mr. Hageman decided to leave the oil business.
Without the Arthur Anderson advisors available, Mr. Hageman decided to hire a third auditing company. A “second tier” auditing firm was hired and an audit was performed and found no problems with our stock sales policies and procedures. A few accounting suggestions were made by the auditors to clean up some of the Arthur Andersen outdated policies. Mr. Hageman consulted with attorneys concerning the issue that the Deluge company was approaching 500 shareholders, the SEC limit on private companies selling stock at that time. Mr. Hageman agreed to close stock sales in Deluge and opened stock sales in the parent company Hydrotherm. Hydrotherm is the patent holding company that licensed a portion of the technology to Deluge. Mr. Hageman never wanted to sell stock in the parent company but in order to continue development in Deluge, stock sales proceeded in Hydrotherm following the same policies and procedures as Deluge stock sales. Since that decision, The SEC opened the number of accredited investors in small companies to 2000 shareholders; during the Obama administration. The 2008 stock market crash severely hurt the nation’s investor net worth and investment became more difficult, if not impossible. Consequently this condition lead to staff layoffs and Mr. Hageman found himself unable to pay rent at the Phoenix facility.
In 2007 Mr. Hageman met a Hawaiian businessman that was developing a large solar thermal project and wanted to use Mr. Hageman’s technology to generate electricity. After months of negotiating, a purchase contract was executed to build a 250 kilowatt engine. This was the largest engine ever built by Mr. Hageman. A price of $400,000 was agreed to with a 50% down payment to start work. Mr. Hageman secured a work facility back at the UofA MAC and proceeded to engineer and fabricate the components for the engine. All the components were packed into a shipping container and shipped to the Big Island in Hawaii. The project was located on four acres that the Hawaiian company had leased from the State of Hawaii’s Natural Energy Laboratory (NELHA) near the airport and the town of Kailua Kona. The project had secured a contract with the Hawaii Electric Company on the Big Island to buy the electricity produced. In 2008 the Hawaiian solar company ordered a second engine/generator and Mr. Hageman leased a warehouse in Phoenix to assembly the new engine. The Hawaiian company made payments as agreed on the purchase order contract and Mr. Hageman and his crew from Phoenix assembled the large engine on the project site. After many months of construction the engine was complete and ready for testing. Concurrent with Mr. Hageman’s construction, the Hawaiian company built their four acres of solar thermal parabolic collectors that were equipped to track the sun. The second engine was being fabricated and most components were shipped to Hawaii when the Hawaiian company told Mr. Hageman that they had run out of funding and stopped work on the project. Mr. Hageman’s vendors had insisted on extending credit for the second engine’s parts which put Deluge in debt while in anticipation of full payment from the Hawaiian company for the second engine. The Hawaiian company owes Mr. Hageman and our investors around $300,000 which has not been paid. The Hawaiian company declared bankruptcy and the project was taken back by the State of Hawaii. All the equipment still sits there abandoned today. It turned out that the solar array was built and tested and didn’t provide the expected heat required for Mr. Hageman’s engines. The defective solar array was reported to only produce about 10% of the thermal energy they expected. Mr. Hageman was left with over $200,000 of debt after the Hawaiian company’s bankruptcy.
By then the Great Recession was devastating the economy and many of Mr. Hageman’s shareholders continued to lose all their net worth. Most of the shareholders were heavily invested in the stock market and real estate, and with no ability to get new mortgages; many shareholders were left without any options, except to file for personal bankruptcy. Many shareholders never recovered from the largest economic collapse since the Great Depression. Mr. Hageman talked to an attorney about the company’s financial condition including filing bankruptcy. However, a bankruptcy filing would have eliminated the common stock in the company and Mr. Hageman decided to stay loyal to his shareholders and has never filed for bankruptcy.
Mr. Hageman had to let his staff go and close the warehouse assembly facility, leaving Mr. Hageman without any resources and new investment was nearly impossible. Mr. Hageman continued to move the technology forward by licensing the technology but discovered many problems with that direction. Out of the three licensees, one invested about $250,000 into the technology but wasn’t able to secure large financing because of the economy, and one licensee still owes Mr. Hageman over $1 million in licensing fees.
Mr. Hageman went back to the drawing board and decided to design a small desalination system with the technology in order to try to sell products instead of building large expensive projects. Mr. Hageman secured a space at a city owned technology incubator where he is currently perfecting the first “Micro-Desal” product. Fabrication has been completed and testing and modifying components is currently underway. With a “shoestring” budget two models have been built. The product is capable of generating revenues to pay back shareholders and provide a return on shareholders’ investment. The “Micro-Desal” product is designed to supply clean drinking water for up to four families for people around the world living in poverty conditions. The design will purify ocean water or brackish water taking salts and twenty hazardous chemicals out of the water including Chromium-6, one of many contaminates found in Arizona drinking water.
Brian Hageman’s inventive nature was inspired by a desire to fix our overuse of energy. Hageman saw firsthand where our energy industry was stuck and he knew that a change was necessary. From the observations made in the Saudi Arabian desert the thought of a new type of energy from the sun stuck in his mind, and as inventors do, he dedicated his life to the pursuit of the idea.
With the economy back on track Mr. Hageman is now reviving the manufacturing center business plan and started the new company Deluge Technologies, Inc. that will bring resources to rebuild the potential of the disruptive and sustainable Thermal Hydraulic Engine.
Future research and development with other applications will be studied. Someday an engine for cars will be developed. Space station power plants will someday operate with the suns full energy outside our atmosphere. Human bionic applications will be developed with engines that run on 98.6 F and powered by our bodies. Hydrogen gas production will be economical using low cost electricity and many other new applications will be found using the Thermal Hydraulic Engine invented by Brian Hageman.