Kasten Chase Applied Research Limited

Kasten Chase Applied Research Limited

March 27, 2006 17:01 ET

Kasten Chase Establishes Credit Facility

TORONTO, ONTARIO--(CCNMatthews - March 27, 2006) -

Principals Agree to Secure Loan to Allow Company to Pursue Business Opportunities

Kasten Chase, (TSX:KCA) a leading developer of encryption and key management solutions for data storage, announced today that arrangements have been made with the company's bank for a credit facility of up to $1.5 million. The facility is secured by the personal guarantees and other collateral provided by individuals, each of whom is a director and significant shareholder of the company.

This credit facility will allow the company to continue discussions which are presently underway with multiple parties, which if successful, would help rectify the company's financial situation and improve its long term business prospects. There is, however, no certainty in the outcome of any of these discussions.

In exchange for the personal guarantees and other collateral provided by the individuals, the company will issue warrants entitling the holders to acquire a maximum of 2,875,000 common shares of the company at an exercise price of $0.30 for a term of 18 months. Funds will be drawn by the company and the warrants will be issued in tranches on the approval of a majority of the company's independent directors and a majority of the individuals providing the guarantees and other collateral. The company has a call option on the warrants at a price of $0.21 per warrant.

The intention is this debt financing would be converted into equity on the same terms and as part of a future equity financing which may be undertaken by the company.

The terms of these arrangements were approved by the board of directors based on the unanimous recommendation of a special committee of independent directors. The special committee retained and was advised by independent financial and legal advisors.

Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements of Kasten Chase Applied Research Limited to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this press release, such statements use such words as "may," "will," "expect," "anticipate," "project," "believe," "plan" and other similar terminology. The risks and uncertainties are detailed from time to time in reports filed by the company with the securities regulatory authorities in all of the provinces and territories of Canada to which recipients of this press release are referred for additional information concerning the company, its prospects and the risks and uncertainties relating to the company and its prospects. New risk factors may arise from time to time and it is not possible for management to predict all of those risk factors or the extent to which any factor or combination of factors may cause actual results, performance and achievements of the company to be materially different from those contained in forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

The forward-looking information contained in this press release is current only as of the date of this press release. There should not be an expectation that such information will in all circumstances be updated, supplemented or revised whether as a result of new information, changing circumstances, future events or otherwise.

Contact Information