Dec 26, 2008 15:33 ETCash Technologies Subsidiary Acquires Turbocharger Assets
LOS ANGELES, CA--(Marketwire - December 26, 2008) - Cash Technologies, Inc. (NYSE Alternext US: TQ) ("Cash Tech") announced today that its CPI Holdings, LLC subsidiary dba Champion Parts ("Champion") has acquired certain turbocharger technology assets of Turbomotive, Inc. and Robert McKeirnan, its founder ("Turbomotive") for $1.75 million. McKeirnan has years of experience with turbomachinery development, holds numerous patents in bearing and other mechanical technologies and is Director of Manufacturing at Capstone Turbine Corporation, a leading developer of microturbine generators.
Champion, a nationally known supplier of fuel system components to auto parts retailers throughout the U.S., will integrate the turbocharger products to its product lineup under the brand name Champion Performance™. The company intends to manufacture the turbochargers in its 210,000 square foot facility in Hope, Arkansas, and distribute them to its retail customers which represent more than 15,000 retail stores in the U.S. The products will also be marketed to foreign distributors and vehicle manufacturers.
Champion's management believes that fuel efficiency and "green" products have the greatest market potential as environmental and energy conservation practices come under increasing pressure. The first of such products are the Turbomotive turbochargers, which are based on patented technology that management believes makes the products the most efficient and reliable in the industry.
The market for green automotive products that increase fuel efficiency and reduce toxic emissions is large and rapidly growing. Tougher environmental standards, volatile fuel prices and widespread demand for lower-carbon-footprint vehicles have made green products a dynamic sector and continued expansion is likely into the foreseeable future. Turbochargers can increase fuel efficiency by 25% (50% for diesel engines), reduce emissions by 25%, increase engine power by 50% and keep the engine cleaner which reduces maintenance costs. Most vehicle manufacturers are now designing cars and trucks that include turbos, allowing engines to be smaller, lighter and meet tougher environmental standards while improving performance.
The turbo market reached approximately $5 billion in 2007, with more than 17 million units produced, and is expected to increase by more than 50% within 5 years. Demand for turbochargers is international and a turbo unit manufactured for a foreign car or truck can be sold anywhere in the world where the same engine is used. OEM and international markets can multiply the turbocharger sales potential of Champion. The emerging use of alternative fuels will also increase the demand for turbochargers.
By leveraging Champion's manufacturing capabilities, recognized brand name and extensive national retail distribution, management believes that Champion is the ideal conduit for delivering advanced products to the market and generating substantial sales.
The purchase price is in the form of preferred stock with a face value of $1.65 million (subject to certain adjustments), with a conversion price equal to the market price of Cash Tech's common stock with a floor of $0.75/share and a ceiling of $1.50 per share, and cash payments totaling $100,000. The assets acquired consist of patents, purchase orders, manufacturing processes, other intellectual property and tooling. CPI also intends to hire the Turbomotive principals, including McKeirnan, to assist in manufacturing and development.
Jerry Bragiel, President of CPI Holdings, stated, "We're very pleased to complete this acquisition. The auto parts market performs uncommonly well in a difficult economy as people repair rather than replace their vehicles. Turbochargers have become the most important fuel efficiency products in the automotive world today. They wear out under normal use and must periodically be replaced. As the population of turbocharged vehicles past their warranty period surges in coming years, Champion will be positioned to deliver a superior replacement product through its extensive retail relationships. We believe turbo sales will exceed revenues from the company's other product segments within a few years."
Matters discussed in this release include forward-looking statements within the meaning of the "Safe Harbor" provisions of the PSLRA that involve risks and uncertainties, and actual results may be materially different. Factors that could cause actual results to differ include revenues not reaching expected levels, unexpected competition within the automotive products industry, anticipated improvements in operating costs and net operating margins not being realized, failure to complete expected financing, risks related to management and labor, activity levels in the securities markets and other risk factors disclosed in Cash Tech's reports to the Securities and Exchange Commission, including its Forms 10-QSB and Forms 10-KSB on file with the SEC.
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