Cyclone Power Technologies Inc. [CYPW], developer of the all-fuel, clean-tech Cyclone Engine, said yesterday it signed a definitive agreement to acquire the assets and business of Advent Power Systems Inc., Cyclone’s exclusive military licensee since 2006.
The Advent acquisition is subject to standard closing conditions, and is expected to close in the first quarter of 2012.
Advent is currently a prime contractor with Army TACOM Life Cycle Management Command (TACOM) in a Phase I project utilizing Cyclone’s engine technology to build a prototype 10kW auxiliary power unit for use in U.S. combat vehicles.
The purchase price for the acquisition is 1.5 million shares of Cyclone common stock.
Under the agreement, Cyclone will fully assume the $1.4 million Army contract, key agreements with several of the project’s subcontractors, and all opportunities in the Advent pipeline, among other valuable assets.
As a result of efficiencies in contract administration and management, Cyclone expects to enhance profitability and pick-up approximately $450,000 in additional revenue from this contract over the next six to nine months, it said in a statement.
Cyclone will also become the prime contractor of record eligible for Phase II awards through the Defense Department.
Advent CEO Phil Myers will be engaged as a consultant to Cyclone over the next 12 months, assisting in the contract transition process and procurement of other defense awards internationally.
Cyclone President Christopher Nelson said, “The acquisition of Advent is an important financial and strategic development for Cyclone. With this purchase we will generate increased revenue from our current contract, and going forward, we will be able to pursue direct contracts with the military. Moreover, bringing on Dr. Myers and his talented team of advisers to help secure additional awards is a big plus. We look forward to working side-by-side with them in the year ahead.”