CleanSpark Completes Acquisition of Pioneer Critical Power

CleanSpark (OTC:CLSK) and Pioneer Power Solutions (NASDAQ:PPSI) announced on Monday that the two companies have closed a merger transaction with CleanSpark acquiring Pioneer’s wholly owned subisidary, Pioneer Critical Power.

As quoted in the press release:

The entity acquired is not related to Pioneer’s engine generator business headquartered in Minneapolis, Minnesota operating under the same name. Pioneer will continue to retain and operate that business under the PCPI name and CleanSpark will change the name of the acquired entity to CleanSpark Critical Power Systems, Inc., no later than February 22, 2019.

Through this acquisition, the Company became the sole owner of strategic intellectual property currently held by PCPI.  CleanSpark plans to utilize its new intellectual property to enter into the switchgear equipment sales industry.  The Company further acquired executed contracts, which it expects will result in approximately $3.6 million in gross sales during early 2019.  As a further condition of the Agreement, CleanSpark and PPSI entered into a Non-Competition and Non-Solicitation Agreement whereby Pioneer Power agreed, among other things, to not compete with the Company or solicit employees or customers of the Company for a period of four years. PPSI also signed an Indemnity Agreement to indemnify the Company of certain contingencies.

Concurrent with the acquisition, CleanSpark entered into a Contract Manufacturing Agreement, whereby Pioneer Power shall exclusively manufacture parallel switchgears, automatic transfer switches and related control and circuit protective equipment for CleanSpark for a period of no less than eighteen months.

“This acquisition will allow CleanSpark to continue to build our intellectual property portfolio and secure substantial revenues, without the capital exposure generally required to operating a manufacturing facility, stated CleanSpark’s President and CFO, Zachary Bradford.  We’ll own the rights to the customer base, the intellectual property and a, UL (Underwriters Laboratories) file portfolio and we expect to benefit from the associated existing and future revenues, but without the exposure of large capital investments in inventory, equipment and facilities.  As a result of this transaction, the prior agreement between CleanSpark and PPSI, to acquire Pioneer Custom Electrical Products has been terminated with the mutual agreement of both parties,” concluded Bradford.

As consideration for the assets, CleanSpark will provide Pioneer with the following:

• 1,750,000 shares of CleanSpark common stock;
• a 5-year warrant to purchase 500,000 shares of CleanSpark common stock at an exercise price of $1.60 per share;
• a 5-year warrant to purchase 500,000 shares of CleanSpark common stock at an exercise price of $2.00 per share;

CleanSpark is a San Diego based technology company whose services offer clarity, control, and surety for Distributed Energy Resource (DER) and Microgrid solutions. CleanSpark’s patented suite of technology and services enable large power users to meet their objectives for utility cost savings, greenhouse gas reductions, and energy security by actively managing their power generation and energy storage resources while also unlocking revenue potential via tenant power sales and/or energy market participation. CleanSpark’s patented approach is technology agnostic, integrating a multitude of DER technologies, which provides for maximum return on new and legacy investments for each unique site. CleanSpark’s proprietary Microgrid Value Stream Optimizer (mVSO) modeling engine provides a bankable financial proforma with turnkey execution through its increasing ecosystem of reputable partners, and then automates the operation of the system to deliver upon each customer’s primary objective with CleanSpark’s mPulse Software and Control Suite.

mPulse seamlessly integrates with existing and new DERs while remaining flexible to expand in the future. A unique feature of mPulse is its ability to learn energy usage patterns and dynamically adopt efficient modes of operation to ensure customers reap the highest financial returns. By actively coordinating electric loads, self-generation, and energy storage, mPulse is able to significantly lower utility costs in the near and long term automatically. Regardless of rate structure changes, Clients experience no disruption to their normal operations, nor do they need to change behaviors to achieve energy reduction and savings. Integrated in mPulse deployments are additional layers of cyber-security and energy security for critical loads in the event of grid disturbances. All this makes it easy for commercial and industrial operations to quickly turn proven technologies into moneymaking microgrids that replace total grid dependence.

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