ExtendMedia Inc.

ExtendMedia Inc.

July 27, 2005 16:55 ET

ExtendMedia Inc. Announces Extension of Bridge Financing and New Equity Investment

TORONTO, ONTARIO--(CCNMatthews - July 27, 2005) - ExtendMedia Inc. ("ExtendMedia") today announced that its outstanding promissory notes (with an aggregate principal amount of $350,000 and held by MWI Nominee Company ("MWI"), Keith Kocho and Leland Verner (the "Lenders")) which were to mature on July 26, 2005 have been extended until November 26, 2005 on similar terms and conditions.

The secured loans bear interest at 15% per annum. In the event the full principal amount and interest is not paid by ExtendMedia on or before maturity, the Lenders have the option of either enforcing on their security or converting the full amount owing into common shares of ExtendMedia at a conversion price of $0.000379 per share.

ExtendMedia also announced the completion of a private placement of common shares for proceeds of $350,000. MWI, Leland Verner and Keith Kocho acquired 659,630,606, 131,926,121 and 131,926,121 common shares, respectively, at a price of $0.000379 per share.

MWI currently holds 753,229,042 common shares, representing 66.78% of all common shares on a non-diluted basis (64.42% on a fully diluted basis). In addition (a) if the MWI note is not repaid at maturity, MWI may at its option convert the note into an aggregate of 659,630,607 common shares of the Company (a conversion rate of $0.000379 per share) in respect of principal and additional common shares at the same rate in respect of any unpaid interest; and (b) MWI holds a warrant expiring April 26, 2006 to purchase additional common shares to provide it under the warrant with approximately 7.14% of the number of common shares outstanding on a fully-diluted basis on the date of exercise, for an aggregate exercise price of $5.00. MWI entered into the transaction in order to assist the Company with its current working capital requirements. MWI has no current intention to acquire additional securities of the Company.

Leland Verner currently holds 131,926,121 common shares, representing 11.70% of all common shares on a non-diluted basis (11.46% on a fully diluted basis). In addition, (a) if the Leland Verner note is not repaid at maturity, Leland Verner may at his option convert the note into an aggregate of 131,926,121 common shares of the Company (a conversion rate of $0.000379 per share) in respect of principal and additional common shares at the same rate in respect of any unpaid interest; and (b) Leland Verner holds a warrant expiring April 26, 2006 to purchase additional common shares to provide it under the warrant with approximately 1.43% of the number of common shares outstanding on a fully-diluted basis on the date of exercise, for an aggregate exercise price of $1.00. Leland Verner entered into the transaction in order to assist the Company with its current working capital requirements. Leland Verner has no current intention to acquire additional securities of the Company.

Keith Kocho currently holds 138,350,561 common shares, representing 12.27% of all common shares on a non-diluted basis (14.0% on a fully diluted basis). In addition, (a) if the Keith Kocho note is not repaid at maturity, Keith Kocho may at his option convert the note into an aggregate of 131,926,121 common shares of the Company (a conversion rate of $0.000379 per share) in respect of principal and additional common shares at the same rate in respect of any unpaid interest; and (b) Keith Kocho holds a warrant expiring April 26, 2006 to purchase additional common shares to provide it under the warrant with approximately 1.43% of the number of common shares outstanding on a fully-diluted basis on the date of exercise, for an aggregate exercise price of $1.00. Keith Kocho entered into the transaction in order to assist the Company with its current working capital requirements. Keith Kocho has no current intention to acquire additional securities of the Company.

Further information (including copies of the reports relating to this transaction filed by MWI, Leland Verner or Keith Kocho) can be obtained by contacting:



Geoff Browne, Keith Kocho, Leland Verner
MWI Partners ExtendMedia Inc. (416) 823-7474
(416) 369-3978 (416) 535-4222 ext. 2202


About ExtendMedia

ExtendMedia knows content services. Our in-depth knowledge has been acquired though 15 years of experience working closely with such successful and innovative communications and media companies as Cablevision, ESPN, Sony, BCE and Tribune. Our OpenCASE™ solution is the foundation of the connected future, offering compelling services, elegant user interfaces, and freedom for consumers to control and enjoy their media experience. For more information, please visit us at www.extend.com.

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