The Board of Directors of Markatech Industries Corporation (the Company") is pleased to confirm the particular details with respect to its proposed acquisition of Markatech Compact Disc Inc. ("MCDI").
The Company previously disclosed the intended major acquisition of 60% of MCDI. MCDI is engaged in the business of manufacturing and replicating pre-recorded formats including CD-Audio, CD ROM and CD DVD. MCDI will utilize state-of-the-art optical disc manufacturing equipment which will perform the desired digital formatting (stamper making), high speed replication, printing, packaging and quality control tasks. MCDI's management team have been and continue to be engaged in many aspects of this industry and insofar as the acquisition represents the purchase of a new entity, the operations will mature rapidly, given the prior experience and existing industry contacts of the principals.
The acquisition, as proposed, will be completed as follows, subject to regulatory approval:
1. The acquisition is a major acquisition of 60% of the issued and outstanding shares of MCDI for a total of 1,500,000 voting escrowed common shares of the Company. MCDI principals will retain a 4% gross royalty on sales.
2. The escrowed shares shall be released on the basis of ten shares released for every Cdn.$1.00 in cumulative aggregate net cash flow from operations.
3. MCDI will complete a private offering of non-voting preference shares to raise in aggregate $500,000. The preferred shares will carry a fixed dividend entitlement of 12% and a bonus dividend payable as an aggregate 5% royalty on gross sales of MCDI. The bonus dividend shall be paid pro rata to all preferred equity holders.
Additionally, the preferred shares shall be convertible, at the option of the shareholder, into common voting shares of the Company over a five year period. A total of 2,000,000 shares shall be issued on completion of conversion at a deemed price of $0.25 per share.
Conversion may not occur prior to the expiration of one year from the date of the subscription.
MCDI has reported receipt of the Compact Disc Equipment Lease Agreement, direct from the USA manufacturer, providing favourable pay-as-you-sell CDs payment terms. MCDI further confirms that it is in the final stages of completing the agreement which will bring about delivery of the CD equipment approximately 30 days later.
The Company is pleased to announce that in accordance with an amendment (dated July 28, 1998) to the original MCDI acquisition agreement, the Company will not consolidate its share capital as previously announced in the April 6, 1998 News Release. The Company also re-announces a Private Placement in the aggregate sum of Cdn.$300,000, which will be used to provide for the initial down payment on the equipment lease as to Cdn.$75,000, to provide for additional Autonet product development, and to provide for ongoing working capital. The Private Placement is priced $0.15 per share and provides a warrant exercisable at $0.15 and $0.18 respectively, in years one and two.
The Company also re-announces the setting of employee and director share purchase options, in aggregate of 950,000 shares at the price of $0.15 per share.
All of the foregoing is subject to prior regulatory approval.
ON BEHALF OF THE BOARD OF DIRECTORS
R. Douglas McLean
Director
The Vancouver Stock Exchange has neither approved nor disapproved the information contained herein. |
