International Bioanalogics Systems Inc.

October 12, 2006 19:03 ET

International Bioanalogics Systems, Inc.: RTO of reWORKS Inc.

TORONTO, ONTARIO--(CCNMatthews - Oct. 12, 2006) - International Bioanalogics Systems, Inc. ("IBO") is pleased to announce that it has entered into an amalgamation agreement dated September 29, 2006 (the "Amalgamation Agreement") with reWORKS Inc. ("reWORKS"), an Ontario based company. Pursuant to the terms of the Amalgamation Agreement, reWORKS will amalgamate with a subsidiary of IBO resulting in reWORKS becoming a wholly-owned subsidiary of IBO (the "RTO"). Upon completion of the RTO, IBO will change its name to reWORKS Environmental Corp.

The RTO will be a reverse take over pursuant to the policies of the TSX Venture Exchange (the "Exchange") and is an arm's length transaction.

As a condition of the RTO, reWORKS is undertaking a private placement (the "reWORKS Financing") of not less than $1,100,000. It is expected that the reWORKS Financing will be completed through the issuance of units (the "Units") at $0.25 per Unit, that each Unit will consist of one common share of reWORKS and one common share purchase warrant (a "Warrant"), and that each Warrant may be exercised within 12 months from the date of issue at a price of $0.40. The reWORKS Financing will be brokered and it is expected that the majority of the private placement subscribers will be at arm's length to IBO and reWORKS. The proceeds from the reWORKS Financing will be used for working capital, marketing and the acquisition of worms and equipment.

Articles of amendment will be filed by IBO immediately prior to completion of the amalgamation, providing for the consolidation of common shares in IBO on a basis such that the issued and outstanding IBO Shares immediately following the consolidation will represent 10% of the issued and outstanding IBO shares immediately following the completion of the RTO but in any event on the basis of not less than 1 post-consolidation IBO Share for each 2.9543557 pre-consolidation IBO common share. Thereafter, reWORKS will amalgamate with the subsidiary of IBO and the holders of securities in reWORKS will receive securities in IBO as follows:

(i) one post-consolidation common share of IBO for every one reWORKS common share outstanding;

(ii) one warrant to purchase a post-consolidation common share of IBO for every warrant to purchase a reWORKS common share; and

(iii) one option to purchase a post-consolidation common share of IBO for every option to purchase a reWORKS common share.

Currently, there are 10,297,533 issued and outstanding IBO Shares, and no outstanding options, warrants or other convertible securities to acquire IBO Shares. If the reWORKS Financing raises $1,100,000 (the "Minimum Financing") at a price of $0.25 per Unit, the pro forma capitalization of IBO following the amalgamation will be as follows:



Number Percentage
of Securities of Total
-------------- ---------
held by pre-amalgamation IBO shareholders 4,660,247 10%

held by reWORKS shareholders 41,942,226 90%
---------- ----
Subtotal 46,602,473 100%
Reserved for issuance under warrants or
options held by reWORKS shareholders 18,479,437
----------
TOTAL (fully diluted) 65,081,910


For the purposes of the RTO, reWORKS is valued at approximately $8,308,000 based on prior arm's length financings completed by reWORKS . The total consideration to be paid by IBO for the reWORKS shares will be approximately $8,308,000, based on a deemed issue price of $0.20 for each post-consolidation common share of IBO and assuming the Minimum Financing.

From June 1986 to July 2000, IBO conducted business in the research, development, manufacture and sale of medical and fitness diagnostic equipment and software. On July 31, 2000, the Company sold its business. In the fall of 2002, after a contemplated financing did not materialize, IBO did not have sufficient capital to continue its business activities so it ceased operations. IBO was formerly classified as a Tier 2 company listed on the Canadian Venture Exchange until the IBO shares were cease traded in the fall of 2002.

reWORKS is a non-reporting issuer incorporated in 2002 under the Canada Business Corporations Act and having an office in Toronto, Ontario. reWORKS operates in the organic waste diversion sector and is in the business of converting organic waste into worm castings. The company has completed construction of a facility in Toronto which is designed to process up to 60 tons of organic waste per day. reWORKS has just begun to accept organic waste on a commercial scale but the facility is not yet operating at full production. Worm castings are a high grade organic soil rejuvenator.

Based on the audited financial statements of reWORKS as at June 30, 2006, reWORKS had total assets of $2,759,060 and total liabilities of $970,414. Since its inception, reWORKS has incurred operating losses due to the start up of operations, and as at June 30th, 2006 had a deficit of $2,380,006 and working capital of $112,964.

IBO is a corporation continued under the Canada Business Corporations Act and is a reporting issuer in the provinces of British Columbia and Alberta. It is a condition of the RTO that IBO shall become a reporting issuer in Ontario. The common shares of IBO (the "IBO Shares") are subject to cease trade orders in British Columbia and Albert for failure to file financial statements and it is a condition of the RTO that those orders be lifted. The TSX Venture Exchange (the "Exchange") has given its conditional approval of IBO's listing application resulting from the RTO. IBO has no material assets and as of April 30, 2006 it had liabilities of approximately $599,270. IBO does not currently carry on any active business.

The RTO was negotiated at arm's length between the parties and as at the date hereof, no director or officer of IBO holds any position with reWORKS. Donald Green, the Chairman and a director of IBO, owns 3,020,140 reWORKS common shares (representing approximately 7.61% of the current total number of outstanding reWORKS common shares). Upon completion of the RTO, no shareholder of IBO will own 10% or more of the common shares of IBO.

A new stock option plan has been authorized by the directors of IBO, subject to approval by the IBO shareholders. The stock option plan provides for a maximum number of shares issued or subject to issuance under the plan equal to a rolling 10% of the outstanding IBO common shares.

The RTO is subject to a number of conditions that must be satisfied or waived by the parties before the transaction can proceed. The RTO is subject to regulatory and Exchange approval. The shareholders of both IBO and reWORKS must approve the RTO. The RTO is also conditional upon fulfillment of standard conditions, including but not limited to, satisfaction of due diligence conditions and sponsorship requirements. There can be no assurance that the transaction will be completed as proposed or at all.

IBO must obtain a sponsor report from a member firm of the Exchange. Canaccord Capital Corporation, subject to completion of satisfactory due diligence, has agreed to act as sponsor to IBO in connection with the transaction and will be paid a sponsorship fee in connection therewith. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Upon completion of the RTO, it is anticipated that IBO will have 5 directors, 2 of whom will be a nominees of IBO, 2 of whom will be nominees of reWORKS and 1 of whom will be independent. The following is a summary of the proposed directors and senior officers of IBO upon completion of the RTO:

Donald Green - Proposed Chairman, Chief Executive Officer and Director

Mr. Green is currently Chairman & Chief Executive Officer of Greenfleet Ltd., a private investment management company and Chairman and a director of AudienceView Software Corp. Mr. Green also serves as Chairman of the Board of Governors and a director of the Intellectual Property Board of McMaster University. He obtained a degree in Mechanical Engineering from Ryerson University and business degrees from the University of Western Ontario and McMaster University. He has served as a director of various companies, including Union Gas Co. of Canada, Heroux-Devtek Corp., BMG Canada Ltd., Thomson Gordon Ltd., North Sails Fogh Ltd., Thermadyne Welding Products of Canada Ltd., Hamilton Trust & Savings Corp, Devtek Corporation Inc., and DXStorm.com Inc. In addition to these directorships, Mr. Green has held the following executive positions: Chairman & CEO, Tridon Ltd.; Director and Chairman of the Credit Committee, National Bank of Canada; Deputy-Chairman, Aviva Canada Inc.; Director & Chairman-Audit Committee, Laidlaw Inc.; Co-Chair, Ontario Training & Adjustment Board; and Chairman, Innovation Ontario Corporation. Mr. Green is expected to devote approximately up to 25% of his time to the business and affairs of the RI.

Mr. Green owns 3,020,140 reWORKS shares and warrants to purchase up to 820,139 reWORKS shares.

Gary Gould - Proposed President and Chief Operating Officer

Mr. Gould is currently the President and Chief Operating Officer of reWORKS and will continue in the same position with the RI. Prior to joining reWORKS, Mr. Gould served as President and Chief Executive Officer of GN Packaging Equipment from March 1990 to July 2006. It is expected that Mr. Gould will devote his full time and attention to the business and affairs of the RI.

David Prue - Proposed Chief Financial Officer

David Prue is currently the Chief Financial Officer of reWORKS. Mr. Prue has been a full-time employee of reWORKS since October 2002. Prior to joining reWORKS, Mr. Prue served as Vice-President Business Development of Tropika International Limited (CDNX: TPIL). Mr. Prue has also held senior positions in other companies and has worked in the financial services industry in commercial lending and cash management. It is expected that Mr. Prue will devote his full time and attention to the business and affairs of the RI.

Rod Malcolm - Proposed Director

Mr. Malcolm has been a partner with Malcolm, Preston & Huggins Search Partners, an executive search firm, since 2003. Prior to joining his current firm, he held successive partnership positions in two leading executive search firms, Korn/Ferry International and The Enns Partners Ltd. and before that he worked for Scott's Food Services, Inc., as president of the KFC Division of that company. Mr. Malcolm has also held positions with First City Trust, Pepsi-Cola International and Procter & Gamble Company of Canada. He serves or has served on the boards of directors of KFC National Purchasing Co-Operative, Canadian KFC Franchise Association, the Sports Celebrity Festival and the Association of Canadian Advertisers. Mr. Malcolm holds a Bachelor of Commerce degree from Queen's University.

Sam Malatesta - Proposed Director

Mr. Malatesta is President of Malatesta Capital Corp. Prior to forming his current company, he was Senior Vice-President with CARSTAR Canada from 1994 to 2004. He obtained an Honours Bachelor of Commerce degree from McMaster University.

Michael Fitzhenry - Proposed Director

Mr. Fitzhenry was President of Pro Golf Etobicoke between 1996 and 2005. He obtained a Bachelor of Arts from the University of Western Ontario.

David Woolford - Proposed Director

Mr. Woolford is a partner of Cassels Brock & Blackwell LLP, a Toronto-based law firm, in its business law group since June 2003. He practices in the corporate, commercial and technology areas with special emphasis on corporate finance, mergers and acquisitions, divestitures and reorganizations. Mr. Woolford is also an active angel investor and serves or has served on various public and private company boards and advisory boards, including York Capital Corp. (now Silverbirch Inc. (TSX VENTURE:SVB), Lancaster Sierra Capital Corporation (now EFT Canada Inc. (TSX VENTURE:EFT), IBO, Virox Technologies Inc. and Destiny Solutions Inc. He was previously a partner with the law firm of Fraser Milner Casgrain LLP from July 2000 to May 2003 and before that a partner with the law firm of McMillan Binch LLP from 1988. He attended the University of Waterloo and earned his law degree from the University of Western Ontario and is a member of the Law Society of Upper Canada.

Investors are cautioned that, except as disclosed in the Management Information Circular in connection with the transaction, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of IBO should be considered highly speculative.

Completion of the transaction is subject to a number of conditions, including Exchange acceptance and disinterested Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, and information released or received with respect to the (RTO) may not be accurate or complete and should not be relied upon. Trading in the securities of International Bioanalogics Systems, Inc should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information