Saratoga Electronic Solutions Inc.

Saratoga Electronic Solutions Inc.

January 26, 2007 16:35 ET

Saratoga Electronic Solutions Update on the Proposed Acquisition of Cartel and Senior Management Appointment

MONTREAL, QUEBEC--(CCNMatthews - Jan. 26, 2007) - Saratoga Electronic Solutions Inc. (TSX VENTURE:SAR) ("Saratoga") wishes to provide an update regarding its previously announced proposed arm's length acquisition of Car-Tel Distributions Inc. ("Cartel"), a privately-held wholesale distributor of prepaid phone cards and point-of-sale activated prepaid phone PINs.

As described by Saratoga in its earlier press releases of February 8, July 17 and September 29, 2006 since the initial signing of the agreement to purchase Cartel on February 3, 2006, Saratoga has been actively involved in restructuring Cartel's affairs. Based on the audited financial statements, during the 12-month period ended October 31, 2006, Cartel earned revenues of $27.6 million, generated $1.6 million in net transactional revenues, incurred operating losses of $0.6 million and incurred a net loss of $1.4 million. As at October 31, 2006, the assets of Cartel totalled $3.42 million and its liabilities, including loans from Saratoga at such time in the amount of $1.90 million and other payable to Bell Distribution inc. in the amount $0.94 million, totalled $6.37 million. Shareholder's deficit was at that date $2.95 million.

As of this date the transaction remains subject to the applicable regulatory approval. Issues pertaining to the ownership of certain of the shares of Cartel to be acquired by Saratoga were resolved in December 2006. The acquisition of Cartel is expected to occur before the conclusion of Saratoga's financial quarter ending March 31, 2007. In the interim Cartel will keep paying to Saratoga a monthly administrative fee of $20,000 in order to manage its operations. In turn, Saratoga will keep reinvesting these amounts in Cartel in the form of non-interest bearing advances secured by the first ranking security which is already in place in favour of Saratoga.

Saratoga remains of the view that the acquisition of Cartel will be beneficial to Saratoga and its shareholders in that it will diversify and significantly enhance its revenue stream and provide it with synergies and opportunities to leverage its operations with those of Cartel.

In addition, Saratoga announces the appointment of Mr. Benoit Cyr, CA.,MBA, to the position of acting Chief Financial Officer of the company. This appointment is effective immediately. Mr. Yves Simard, CA is leaving the company and the board of directors. Saratoga wishes to thank him for his valuable contribution.


The Company is in the business of placing and operating automatic teller machines ("ATM's") and is currently developing other banking and prepaid solutions.

Forward looking statements

This news release contains certain forward-looking statements concerning our future operations, economic performance and financial condition. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us and our subsidiaries or their businesses or operations.

We undertake no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Saratoga Electronic Solutions Inc.
    Georges Durst