Mark Clancy, a board member and one of two principal owners of U.S. Energy Initiatives, said its difficult to assign a specific cash value to the transaction yet because SeaSprays parent was facing serious challenges.

Were crisis managers, he told Lube Report. In this particular case, they had a rather large note in default secured by the operating activities of SeaSpray. In essence, U.S. Energy forgave Nano Chemicals debt in exchange for the SeaSpray operations. In addition, the shares transaction between the two companies helped eliminate $791,000 in debt for U.S. Energy.

SeaSpray manufactures and sells aerosol-delivered janitorial and industrial products, waxes, lubricants and polishes to other companies, who then sell them under their own brand names. It also manufactures lubricants and cleaners for the federal government, and colors and tints for the National Football League for field coloration.

SeaSpray also manufactured, stored and shipped products for Nano Chemical under the NanOil name. The products include a 2-cycle engine oil and a multipurpose lubricant. Nano-sized molybdenum metal ball bearings are immersed to support the oil, which is made from the byproducts of a palm bio-diesel production process.SeaSpray operates at a plant in Seaford, Delaware, consisting of 36,000 square feet of office space, laboratories, warehouse space, mixing rooms and manufacturing space.

If it is able to be done on a profitable basis, wed love to continue doing the lubricants for NanoChem, Clancy said. He explained they are still examining factors such as the cost of goods and labor before deciding whether to continue to produce those products.

Clancy said his company expects to do more in-depth due diligence on SeaSpray once the transaction closes. Whether or not products like lubricants will be something well focus on going forward is one of the issues we really couldnt answer until we had a better handle on the inner mechanics, if you will, he said. We couldnt run our due diligence to that level until we close. We do think that SeaSpray is a company with absolutely incredible potential.

He said U.S. Energy has interviewed all of SeaSprays clients and vendors as part of a vetting process.

They have a robust client base, he said. Their problem has been lack of liquidity to allow them to react to some of the orders that they have on their table. Hopefully were able to step in and solve that liquidity side of the problem and allow them to focus on what they do.

U.S. Energys other business segments include subsidiary Automated Engineering Corps., a full-service contract electronics manufacturer; and a technology business division that manufactures and markets its patent dual-fuel diesel to natural gas conversion technology though the automotive aftermarket and through certain original equipment manufacturers.