AXEA Energy Inc.
TSX VENTURE : AXT.P

AXEA Energy Inc.

August 06, 2008 15:39 ET

AXEA Energy Inc. Announces Non-Brokered Financing and Updates Qualifying Transaction and Related Transactions

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 6, 2008) - AXEA Energy Inc. ("AXEA" or the "Company") (TSX VENTURE:AXT.P) announces that the Company will proceed with a non-brokered private placement (the "Non-Brokered Financing") of up to 3,125,000 subscription receipts ("Subscription Receipts") at a price of $0.32 per Subscription Receipt for gross proceeds of up to $1,000,000. Each Subscription Receipt will be automatically exercisable on the effective date (the "Effective Date") of completion of AXEA's Qualifying Transaction ("Qualifying Transaction") with AgriMarine Industries Inc. ("AgriMarine"), without payment of any additional consideration, into one unit of the Company (a "Unit"), consisting of one common share of the Company (a "Unit Share") and one-half of one common share purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder thereof to purchase an additional common share of the Company (a "Warrant Share") at a price of $0.50 per Warrant Share for the period ending 12 months from the Effective Date.

The proceeds from the Non-Brokered Financing will be advanced by the Company to AgriMarine as a secured loan repayable upon one year of advance with accrued interest of 8% per annum (the "Loan"). AgriMarine's indebtedness to the Company under the Loan will be further evidenced by a promissory note (the "Promissory Note") executed by AgriMarine in favour of the Company. The Loan will be used by AgriMarine to purchase assets in China for its aquaculture business and for general working purposes.

In the event that the Qualifying Transaction is not completed by October 31, 2008, each Subscription Receipt will immediately thereafter be automatically surrendered to the Company (for cancellation) in exchange for an assignment of the holders' pro rata interest in the AgriMarine Loan. Upon such event, the former holders of Subscription Receipts will only have the right to receive an assignment of their pro rata interest in the AgriMarine Loan and Promissory Note.

In connection with the Qualifying Transaction, the Company also announces that it has executed an engagement letter with Union Securities Ltd. ("Union") to act as agent in respect of a brokered private placement (the "Brokered Financing") of subscription receipts of AXEA for gross proceeds of up to $3 million. Each subscription receipt issued under the Brokered Financing will be exercisable immediately prior to the Effective Date into one unit, comprising of one common share of AXEA and one-half of one common share purchase warrant, with each whole warrant exercisable for one common share of AXEA at the exercise price for a period of 18 months, subject to an earlier expiry date in accordance with its terms. The proceeds from the Brokered Financing will be held in escrow pending the completion of the Qualifying Transaction and upon their release from escrow, will be used by the Company for general working capital purposes. If the Qualifying Transaction is not completed by October 31, 2008, all proceeds under the Brokered Financing will be returned to the subscribers.

The price of the securities issuable under the Brokered Financing will be determined by the Company and Union at a later date.

Union will be paid a cash commission of 7.5% and a corporate finance fee of 1% of the gross proceeds of the Brokered Financing. The Company will also issue to Union 100,000 common shares as a corporate finance fee and compensation options equal to 7.5% of the number of subscription receipts sold under the Brokered Financing, with each compensation option entitling Union to purchase one unit of the Company at the issue price per unit for a period of 18 months from the closing date.

The Qualifying Transaction and related transactions, including the Non-Brokered Financing and the Brokered Financing, are subject to the approval of the TSX Venture Exchange.

The Qualifying Transaction was previously announced in the Company's news releases of January 3, 2008 and February 4, 2008.

The parties have agreed to use their best efforts to complete the Transaction by October 31, 2008. The parties are in the process of finalizing the terms of a definitive agreement outlining the specific terms of the Qualifying Transaction and the procedure under which the Qualifying Transaction will be completed. Management of AXEA will prepare a filing statement to be filed on SEDAR outlining the details of the Qualifying Transaction. AgriMarine will call a shareholders' meeting to approve of the Qualifying Transaction.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, TSX Venture Exchange acceptance. Where applicable, the Qualifying Transaction cannot close until any required shareholder approvals are obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of AXEA should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed Qualifying Transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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