Protonex Acquires Mesoscopic Devices
Protonex Technology Corp. announced that it has entered into an agreement to acquire Mesoscopic Devices, a company specializing in solid oxide fuel cell (SOFC) technology, fuel reforming, and desulfurization systems, for a total consideration of $12.4 million, of which approximately $3.2 million is payable in cash and the balance in new common shares in Protonex.
Mesoscopic Devices is a provider of 10 – 1,000W fuel cell power solutions and has developed two platforms of fully integrated power systems based on SOFC and direct methanol fuel cell (DMFC) technologies, including one of the first portable SOFCs operating on liquid fuels. Established in 1998, the company’s principal business has been development of portable fuel cell technology for government, military and commercial customers including the US Army, US Navy, DARPA and NASA. To date the company has received over $13 million in cumulative contracts. The unaudited accounts of Mesoscopic Devices for the year ended December 31, 2006, show revenue of $3.2m, net income of $0.1m, and net assets at December 31, 2006, of $0.7m.
Post acquisition, Protonex will focus the Mesoscopic Devices team primarily on the development of several SOFC-based product platforms. The first SOFC platform fueled by propane gas is currently at the functional prototype stage. Additional SOFC platforms fueled by gasoline, diesel and JP8 are in advanced development today and will be accelerated with additional resources from Protonex. Activities at Mesoscopic Devices outside of these efforts will be limited and the result will be a modest near-term reduction in contract revenues from 2006 levels and an increase in cash burn resulting from a more aggressive investment in product development.
Under the terms of the transaction, Protonex will pay a consideration of cash and stock for the entire issued capital of Mesoscopic Devices. The cash component of the consideration is $3.2 million payable at closing but subject to a working capital adjustment. The total stock component is comprised of 5,102,983 common shares in Protonex, 4,082,385 of which are subject to various lock-up restrictions between six and 30 months in duration and 1,020,598 of which are tied to meeting unit sales milestones in future years.