Mr. Robert Archer reports
On Oct. 5, 2000, the company signed a letter agreement to acquire 100 per
cent of the issued and outstanding shares of PODbook.com Ltd., a
Vancouver-based private company registered in the province of British
Columbia. As the proposed arm's-length transaction constitutes a change of
business (COB) under the regulations of the Canadian Venture Exchange,
Magna's shares will be halted from trading until the CDNX has reviewed the
terms of the deal and conducted its preliminary due diligence.
PODbook provides Internet-based print-related services including digital
asset management and print on demand (POD). The company has multiple
revenue streams and is primarily focused on the business-to-business (B2B)
sector of Internet e-commerce, although a business-to-consumer (B2C)
component is part of its proposed business model.
The U.S. Department of Commerce estimates that the traditional printing and
publishing industry exceeded $232-billion (U.S.) in revenues for 1999 and
much of this business is moving on-line. It is PODbook's intent to be at
the forefront of this trend. Daniel C. Walters, systems design engineer and
co-founder of PODbook is used to being at the leading ledge of print
technology, with over 20 years experience in computer applications for the
prepress environment. He was one of the first developers of
PostScript-based systems for prepress and, as a co-founder of Warp 10
Technologies, in the early 1990s, developed a revolutionary method of file
compression for the graphic arts industry. Mr. Walters has consulted for a
wide variety of corporations over the years, including Apple Canada,
Northern Telecom, Bergman's, Quebecor, Transcontinental and Sherman Laws.
Prior to founding PODbook he was a business development executive for Data
Business Forms in Vancouver. As part of the current COB transaction, Mr.
Walters will be appointed to Magna's board of directors. No other additions
to Magna's board are proposed at this time.
Mr. Walters has recently developed a system of file encoding, called Skinny
PostScript, whereby image files are reduced in size by a factor of 60 to
100 times without any loss of quality. As a result, PODbook can reduce,
store and edit on the Internet, E-mail and print huge graphic files that
would otherwise have to be couriered by way of diskette or CD. This results
in significant cost and time savings for corporate clients, thereby
increasing PODbook's competitive positioning in the marketplace.
PODbook is also pleased to announce that its print on demand functionality
will be provided through an agreement with Data Business Forms. A
subsidiary of U.S.-based Workflow Management Inc. (Nasdaq: WORK), Data
Business Forms is Canada's sixth largest printer. Armed with a network of
11 digital print centres across Canada, Data will enable PODbook to offer a
distribute and print service nationwide. Use of Data's Web-based iGetSmart
supply chain management system will allow electronic image files and print
requisitions to be transferred to, and printed at, one of Data's facilities
closest to the desired destination of the final product. Delivery from this
point results in additional cost and time savings which clients may
reallocate to their core business operations.
The agreement with PODbook calls for Magna to acquire an undivided
100-per-cent interest in PODbook in exchange for the issuance of six
million common shares of Magna to the shareholders of PODbook. Such
issuance may be subject to escrow or other restrictions, imposed by the
British Columbia Securities Commission and/or the Canadian Venture
Exchange. A cash payment of $75,000 has also been made to PODbook at the
time of signing of the letter of intent, with this amount to be considered
as a forgivable loan toward working capital. Should the transaction not be
completed for any reason, this sum is to be repaid with interest or
converted into an equity interest in PODbook, at Magna's option.
Magna is considering a financing pursuant to the return to trading,
however, the amount and pricing have not yet been finalized. As PODbook's
business is not capital intensive, initial funds raised will be used
primarily to add to the company's staff and office infrastructure. Magna
currently has working capital of about $400,000.
Magna president, Robert Archer, stated: "This is an unprecedented
opportunity for Magna shareholders as it initiates an exciting new growth
phase for the company. We are thrilled to have the chance to team up with
the highly talented group at PODbook and to build a significant new company
in an industry that is literally exploding in front of us. We believe that
PODbook's business model has tremendous potential and we look forward to
developing it with them."
Completion of the transaction is subject to a number of conditions,
including but not limited to, Canadian Venture Exchange acceptance and
disinterested shareholder approval. The transaction cannot close until the
required shareholder approval is obtained. There can be no assurance that
the transaction will be completed as proposed or at all. |
