Cyclone Power Technologies, Inc. (OTCPK:CYPW) signed a separation agreement to spin off WHE Generation, Corp on July 17, 2014. As per the terms of the agreement, WHE GEN plans to raise approximately $2.35 million in new funding, and structure its business moving forward. Cyclone may raise $0.5 million in additional capital from the sale of a portion of its WHE GEN equity holdings. It will retain a minority equity interest in WHE GEN estimated between 12% and 23% and the remaining amount will be distributed to Cyclone shareholders. WHE GEN will also file S-1 Registration Statement with the Securities Exchange Commission to register its common stock.

In connection with these transactions, Christopher Nelson resigned as President of Cyclone and will assume the position of Chief Executive Officer of WHE GEN. Frankie Fruge will now serve as the President of Cyclone. Joel Mayersohn also resigned as a Director of Cyclone to become a Director of WHE GEN. Douglas Hutchinson previously resigned from his position as Vice President of Cyclone and is expected to be hired as Chief Operating officer of WHE GEN.

The transaction is unanimously approved by the Board of the Cyclone. According to a valuation and fairness opinion expert, the transaction is deemed fair. The transaction is subject to Securities and Exchange Commission declaring the WHE GEN registration statement effective, WHE GEN common stock being accepted for listing on the OTCQB or such other trading market, receiving of a written opinion of its counsel to the effect that the distribution will qualify as a tax-free transaction, receiving of a written solvency opinion from a financial advisor.

The agreement can be terminated if the funding did not close by September 30, 2014. David Brooks & Assoc. acted as fairness opinion provider for Cyclone. Cyclone paid $0.015 million as advisory fee to David Brooks. Joel Mayersohn of Roetzel & Andress LPA acted as escrow agent in the transaction and was paid $0.02 million as fee.