SSTY Announces Deal to Acquire NASDAQ Bulletin Board Company
BEIJING and PHILADELPHIA, Feb. 10 /PRNewswire-FirstCall/ -- Sure Trace Security Corporation (OTC: SSTY - News) today announced that it has signed an agreement to acquire the controlling interest in a company presently trading on the NASDAQ OTC Bulletin Board.
The agreement calls for the acquired company to be renamed True Product ID-US ("TPiD-US"). TPiD-US shall be granted, at closing, a Master License from SSTY to conduct all marketing and administrative rights, duties, responsibilities and obligations presently held by SSTY and its subsidiaries (except for those granted/reserved to SSTY or other parties prior to closing), including the rights, duties, responsibilities and obligations for the company's activities in China and the rest of the world.
SSTY will receive all but between 5 to 10% the shares of TPiD-US in exchange for cash consideration. TPiD-US, as a consequence of the transaction, will become a subsidiary of SSTY. SSTY's board intends to then approve the spin-off of TPiD-US through the dividend of 100% of the SSTY shares of TPiD-US to all shareholders of SSTY. The dividend will be payable on a record date to be determined by the SSTY board. Fractional shares of TPiD- US common stock will not be issued and any SSTY shareholder entitled to receive a fractional share will instead receive a cash payment. The shares issued to SSTY shareholders shall be restricted. SSTY shareholders will retain their present shares in SSTY.
The dividend has been structured to qualify as a tax-free stock dividend to SSTY stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable.
Shortly after the dividend record date, SSTY will mail an information statement to its stockholders of record as of the close of business on the record date. The information statement will include information regarding the dividend and the business and management of TPiD-US following the distribution. In addition, SSTY and TPiD-US intend to file important information related to the spin-off, including this release, with the Securities and Exchange Commission on Form 8-K.
Closing is anticipated to be March 16, 2006 but may be moved in advance or back upon mutual agreement of the parties.
The terms of the Master License to be granted to TPiD-US will call for TPiD-US to pay a monthly minimum payment to SSTY in addition to a five percent (5%) royalty of the gross revenues received by TPiD-US under the worldwide license.
"We hope to follow this template (that is, a monthly minimum will be paid to SSTY and shares in the public company will be delivered to SSTY's then- present shareholder base) with at least one other subsidiary of SSTY, Globe Staff," said James Mackay, SSTY Chairman, although he cautioned that no specific plans exist for Globe Staff at this time.
Michael Cimino, SSTY President, said: "This arrangement will allow SSTY shareholders to hold, in addition to their shares in SSTY, shares in the acquired company, for which there will be publicly disclosed bids and asks, as well as the other features of the OTCBB. The arrangement will also provide a potential source of regular income to SSTY. We foresee no further need to raise additional funds for SSTY, which would eliminate further dilution of SSTY stock. In addition, it transfers the funding burden from SSTY to TPiD-US and Globe Staff respectively, along with the responsibility for their operations." He continued: "This new company will have new management, with specific experience in building global companies and their worldwide operation systems. Our plans are to have that management in place prior to the closing date on the acquisition." |
