ExtendMedia Inc.

ExtendMedia Inc.

September 26, 2005 17:00 ET

ExtendMedia Inc. Announces Increase in Principal Amount of Bridge Financing

TORONTO, ONTARIO--(CCNMatthews - Sept. 23, 2005) - ExtendMedia Inc. ("ExtendMedia" or the "Company") today announced that it has obtained a further advance under outstanding grid promissory notes held by MWI Nominee Company ("MWI"), Keith Kocho and Leland Verner (the "Lenders"). The Lenders have loaned an additional aggregate amount of $140,056, increasing the total principal amount outstanding to $490,056 pursuant to the terms of the promissory notes.

The secured loans bear interest at 15% per annum. The Lenders have the option to convert the full amount owing into common shares of ExtendMedia at a conversion price of $0.000379 per share at any time prior to maturity. 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.

MWI currently holds 753,229,042 common shares, representing 66.78% of all common shares on a non-diluted basis (67.49% 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 923,482,849 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 agreed to make the additional advance 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 (12.76% 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, after the additional advance, into an aggregate of 184,770,448 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 agreed to make the additional advance 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 (14.13% 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, after the additional advance, into an aggregate of 184,770,448 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 agreed to make the additional advance 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, MWI Partners
(416) 369-3978

Keith Kocho, ExtendMedia Inc.
(416) 535-4222 ext. 2202

Leland Verner
(416) 823-7474


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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