Montec Holdings Inc.
TSX VENTURE : MTE.P

Montec Holdings Inc.

March 30, 2006 07:00 ET

Montec Holdings Inc. Announces Proposed Qualifying Transaction with Datex Billing Services Inc.

MONTREAL, QUEBEC--(CCNMatthews - March 30, 2006) - Montec Holdings Inc., a capital pool company listed on the TSX Venture Exchange (TSX VENTURE:MTE.P), announces that it has entered into an Agreement in Principle (AIP) dated March 21, 2006 with Datex Billing Services Inc., a private company based in Mississauga, Ontario specializing in customer relationship management, business intelligence and billing solutions.

The arm's length AIP sets out the terms under which Montec Holdings intends to acquire 51% of the issued and outstanding shares of Datex for aggregate consideration of $1,000,000, $500,000 of which is payable in cash and the balance of which is payable by the issuance of 2,941,177 common shares of Montec Holdings at a price per share of $0.17 to 2085194 Ontario Limited. 2085194 Ontario Limited is a Mississauga-based holding company incorporated under the laws of Ontario, the principal shareholders of which are Marc Carrafiello, Ed Leavens, Jen Read and Dave Harvey. All of the principal shareholders of 2085194 Ontario Limited are resident in Ontario.

In addition to the consideration referred to above, Montec Holdings will also pay 2085194 Ontario Limited an earn-out of up to $1.5 million based on the achievement of certain net income-based targets over the next 5 years. The $1.5 million may be paid in cash or common shares of Montec, or a combination thereof, and will be payable within 30 days of the issuance of Datex's audited financial statements for each of the fiscal years ended December 31, 2006, 2007, 2008, 2009 and 2010. The earn-out adjustment will be based on net earnings (determined in accordance with GAAP) for the foregoing 5 fiscal years using the following formula: 46% (i) (net earnings (i) 51% - $150,000).

The acquisition is intended to constitute Montec Holdings' Qualifying Transaction in accordance with the policies of the TSX Venture Exchange.

Datex Billing Services Inc.

Datex Billing Services Inc. is a leading provider of Customer Relationship Management (CRM), Revenue Assurance, Customer Information Systems (CIS), Business Intelligence (BI) and Billing Solutions in a variety of divergent vertical markets. Datex provides a proven suite of industry-specific solutions, empowering its customers to consistently deliver profitable and superior customer care and to enjoy long term relationships with their customers.

Datex Billing Services Inc. was incorporated in Ontario in 2001. In November of 2001, Datex debuted its premier product: a Customer Lifecycle Management System called ACME (Advanced Customer Management Engine) that leverages the latest advances in Internet-based technologies. ACME is a full feature customer information system, a product management and inventory system, a full trouble ticket, journal and callback system, and a sophisticated accounts receivable system. Coupled with their Back Office Support Services (BOSS), Datex provides its customers an enterprise wide Customer Life Cycle Management. Datex utilizes state-of-the-art secure data centre facilities, disaster recovery and near-real-time backup technologies.

The Datex products are used by telecommunication providers and resellers, Internet Service Providers (ISPs), Voice-over-IP (VoIP) providers, utilities and call centers that are looking for a proven, comprehensive way to handle critical billing and customer care needs.

Further information on Datex can be found on their website - www.datex.ca.

As set out in its audited financial statements, for the fiscal year ended June 30, 2005, Datex had revenues of $2.5 million (compared to $1.5 million in fiscal 2004) and net earnings of $130,000 (compared to a net loss of $30,000 in fiscal 2004). As at June 30, 2005, Datex had assets of $742,000 (compared to $689,000 in fiscal 2004), liabilities of $597,000 (compared to $733,000 in fiscal 2004) and a shareholders' equity of $97,000 (compared to a deficit of $44,000 in fiscal 2004). Datex currently has 1,133,500 common shares issued and outstanding.

Datex currently has 18 full-time employees. It leases 7,500 square feet of space at 2333 North Sheridan Way, Mississauga, Ontario for its head office and houses its secured data center at 151 Front Street West, Toronto, Ontario.

Terms of the Proposed Qualifying Transaction

The AIP provides that Montec Holdings will acquire 51% of the issued and outstanding shares of Datex for aggregate consideration of $1,000,000, $500,000 of which is payable in cash and the balance of which is payable by the issuance of 2,941,177 common shares of Montec Holdings at a price per share of $0.17 to 2085194 Ontario Limited.

In addition to the $1 million referred to above, Montec Holdings may also pay 2085194 Ontario Limited an earn-out of up to $1.5 million based on the annual net earnings of Datex from 2006 to 2010.

The additional consideration, if any, will be payable in cash, common shares of Montec Holdings, or a combination thereof, at the option of Montec Holdings, within 30 days of the issuance of Datex's audited financial statements for each of the fiscal years ended December 31, 2006, 2007, 2008, 2009 and 2010. The earn-out adjustment will be based on net earnings (determined in accordance with GAAP) for the foregoing 5 fiscal years and calculated using the following formula: 46% (i) (net earnings (i) 51% -$150,000).

Concurrent Private Placement

In connection with the Qualifying Transaction, Montec Holdings will seek to affect a non-brokered private placement of securities in an amount of approximately $500,000 to $1 million, which is intended to close concurrently with the Qualifying Transaction. The exact terms of the private placement have yet to be finalized and, in this regard, Montec Holdings expects to issue a separate news release shortly. The proceeds from the proposed private placement will be added to Montec Holding's working capital.

Effect of Qualifying Transaction

Upon closing of the Qualifying Transaction, without taking into account the proposed concurrent private placement, it is expected that there will be 10,945,677 issued and outstanding common shares of Montec Holdings. Of these, 2085194 Ontario Limited will hold an aggregate of 2,941,177 shares (26.9%) and the current shareholders of Montec Holdings will hold 8,004,500 shares (73.1%).

Directors and Management Team - Montec Holdings

The current board of directors of Montec Holdings consists of Myer Bentob, Jan Holland, David Williams, Winnie Fok and Dr. Rosemonde Mandeville. Datex will nominate a director to the board of directors of Montec Holdings upon completion of the Qualifying Transaction. The following are the resumes of the directors and officers of Montec Holdings.

Myer Bentob - Chairman and Director

Myer Bentob is the founder and President of Bentel Capital Inc., a private management consulting company. Mr. Bentob was the founder and, until March 2002, President and Chief Executive Officer of Mitec Telecom Inc., a Montreal-based designer and manufacturer of a wireless and satellite components and sub-systems listed on the Toronto Stock Exchange. Under his stewardship, he nurtured and grew the company from a one-man operation into a global business with yearly revenues of more than $100 million. In the 1990s, Mitec Telecom Inc. was selected as one of the "50 Best Managed Companies in Canada" and in 1994, Mr. Bentob was a finalist in "The Entrepreneur of the Year" - a Canada-wide contest.

Prior to founding Mitec Telecom Inc., Mr. Bentob was for varying periods of time a consultant, the Director of Engineering and Marketing at Andrew Antenna Co. Ltd., a microwave communications systems engineer at Canadian Marconi Co. and a research engineer at Marconi Research Labs in the United Kingdom. Mr. Bentob holds a Diploma in Electrical Engineering (Telecom) from North London Polytechnic. Mr. Bentob currently serves on the Board of Directors of Biophage Pharma Inc., a biopharmaceutical company based in Montreal, Quebec and listed on the TSX Venture Exchange. Mr. Bentob is also a governor of The Canadian Unity Council, a board member of the Canadian Technion Society and on the advisory board of the McGill Conservatory of Music.

Jan Holland - Chief Financial Officer and Director

Jan Holland is a partner with Wagar & Holland, Chartered Accountants in Vankleek Hill, Ontario. He is also an attorney practicing principally in the areas of tax and estate planning, and corporate
and commercial law. He previously practiced as a chartered accountant with Richter Usher & Vineberg and subsequently as a lawyer with Lapointe Rosenstein, both of Montreal, Quebec. He is a member of the Barreau du Quebec, the Quebec Order of Chartered Accountants and the Ontario Institute of Chartered Accountants.

David Williams - Secretary and Director

David Williams is a lawyer with a practice focused on technology-driven and international clients. Admitted to the Quebec Bar in 1977, Mr. Williams has been a member of leading Canadian law firms (the Quebec predecessors of Fasken Martineau DuMoulin LLP and Borden Ladner Gervais LLP) as well as having worked in the West African office of a U.S. firm (Duncan, Allen, Mitchell). He also served as in-house counsel for General Electric, responsible for its hydro power generation business. In 1992, Mr. Williams established his current firm, dedicated to the provision of "outsourced legal services" as "virtual in-house counsel", fulfilling the needs of businesses which seek a balance between the sensitivity to company needs characteristic of in-house counsel and the flexibility of outside firms. He established the legal department of Ericsson Canada Inc., served as its General Counsel from 1992 until 2003 and continues to provide "outsourced legal services" to its R&D Division in Montreal. Mr. Williams has acted as "Virtual In-house Counsel" to a number of other corporations as well. Mr. Williams is a graduate of Dartmouth College, Hanover, New Hampshire, the University of California at Los Angeles, and the University of Montreal.

Winnie Fok - Director

Winnie Fok is the President and co-founder of Treefrog Research, a private investment and research firm with special focus on China. She is a Chartered Financial Analyst (CFA), Canadian Investment Manager (CIM) and Fellow of the Canadian Securities Institute (FCSI). Winnie Fok was an Investment Advisor in Montreal with RBC Dominion Securities Inc. from 1996 to 2003 during which time she managed investment portfolios for high net-worth clients in Quebec and Ontario. Before her investment career, Ms. Fok was a Systems Engineer with IBM in Hong Kong, China, England and Canada. Her expertise included information systems analysis, database design and mid-range system solutions. She graduated with a B.Sc (Hons) in Physics from University of Hong Kong. Winnie Fok is a member of the Association for Investment Management and Research (AIMR) and the Montreal Society of Financial Analysts.

Dr. Rosemonde Mandeville - Director

Dr. Rosemonde Mandeville is the President and Chief Scientific Officer of Biophage Pharma Inc., a biopharmaceutical company based in Montreal, Quebec and listed on the TSX Venture Exchange. The creation of Biophage Pharma Inc. is the culmination of a distinguished career spanning more than 25 years in oncology and immunology research. Dr. Mandeville received her medical degree from the University of Alexandria, Egypt and her Ph.D. from the University of Manitoba. She is the author of 75 publications and 185 communications in peer reviewed international journals and is the author of six books. Dr. Mandeville is a recognized authority in the field of applied cancer research and immunology with special emphasis on host immunity, metastasis development and molecular biology. During her distinguished career as a professor of immunology at Institute Armand Frappier, Universite du Quebec, in Montreal, Dr. Mandeville supervised 27 Master degree and PhD students, 13 post-doctoral fellows and 36 undergraduate students. Dr. Mandeville serves on the Board of Directors of Investment Quebec, La Financiere du Quebec, Centre des Biosciences de l'INRS/IAF and the Armand-Frappier Foundation. Among the awards and distinctions bestowed on Dr. Mandeville are the "Dame of Merit" of the Sovereign Military Order of Saint John of Jerusalem, Knights of Malta; being named in 1996 as one of the 25 most promising scientists in Quebec; and selection by the Museum of Civilization in 1997 as the most valuable person in the medical field who has enriched Quebec society by her work and dedication. In 1997, the Salon de la Femme of Quebec selected Dr. Mandeville as the "Women of the Century" in scientific research, sciences and technology.

Albert Ho - Chief Operating Officer

Albert Ho is a general partner and technology analyst with Bentel Capital Inc., a private management consultancy company based in Montreal. Mr. Ho is an established industry veteran with more 25 years of experience in senior management and technical positions with Nortel Networks Corporation, GPT (now Marconi Communications) and Mitec Telecom Inc. He is accomplished in the fields of program management, business development, and hardware and software development. Mr. Ho was awarded Top Talent by Nortel Networks Corporation in 2000. He holds a B.Sc (Hons) in Electrical and Electronics Engineering from the University of Newcastle, England and is a Member of the Institute of Electrical Engineering (MIEE).

Ian Grier - Chief Technology Officer

Ian Grier has more than 35 years of experience in the microwave communications industry. Mr. Grier has successfully managed research and development teams as well as projects and budgets in the design
of a wide range of telecommunications products. He has participated in several standardization activities and has presented or chaired technology sessions at ITU and IEEE conferences. From 1990 to 2002,
Mr. Grier was employed by SR Telecom Inc. as Vice-President Engineering, Senior Vice-President Engineering and Marketing, and Chief Technology Officer in succession. Prior to that, Mr. Grier
was Director of Engineering for the Canadian operation of Harris Corp., previously Farinon Corp., from 1976 to 1990. Mr. Grier began his career with RCA Ltd., which became Spar Aerospace, where he worked as a Senior Microwave Design Engineer from 1967 to 1976.

Directors and Management Team - Datex Billing Services Inc.

The current board of Datex is composed of Jim Dawson, Lori Dawson, Marc Carrafiello and Ed Leavens. Upon completion of the Qualifying Transaction, Montec Holdings will nominate a majority of the directors of Datex.

Datex will continue to be operated by its current management team, consisting of Jim Dawson (President and Chief Executive Officer), Lori Dawson (Chief Operating Officer), Ed Leavens (Vice-President, Business Development) and Marc Carrafiello (Vice-President, Information Technology). The following are resumes of Datex's management team.

Jim Dawson - President and Chief Executive Officer

As president and co-founder of Datex, Jim is responsible for developing the strategic direction and operational objectives of the company. His technical education and expertise coupled with his visionary leadership style solidifies Datex's position as an innovative provider of billing and customer care solutions. During his 17-year career in the telecommunications industry, he held a number of senior level positions. As Vice-President, Software Development for ACS Canada, Jim was responsible for software technologies and lead the implementation of Verizon's 'Out-of-region' billing platform. He held the Chief Information Officer position for Telecom Advantage, a switch-based telecom retailer. And, as Chief Technology Officer of Yelp Corporation, an Internet Yellow Pages company, Jim was responsible for the company's technology strategies.

Jim is the founder of the Canadian Telecom Resellers Alliance (CTRA) and served as Chairman of the Board from 1997-1999. He holds a Specialized Honors Bachelor of Science in Computer Science degree from York University and attended the University of Waterloo, undertaking a Masters of Applied Science in the Faculty of Engineering.

Lori Dawson - Chief Operating Officer

As co-founder of the company, Lori serves as Chief Operating Officer with a mission to maintain and to build on Datex's excellent reputation for customer satisfaction. Her breadth of knowledge in telecommunications and service bureaus is largely unparalleled in the industry and spans three decades. Lori has directed the billing operations of four service bureaus during that time and has also served as a Vice President for ACS Canada. Lori is also responsible for the ergonomic design of the Datex Customer Lifecycle Management System, ACME, ensuring its wide acceptance across a variety
of industries.

Marc Carrafiello - Vice-President, Information Technology

As Vice-President, Information Technology, and a twelve-year veteran in the industry, Marc is responsible for on-going billing product management and product differentiation. During his long tenure with the company, Marc has, and continues to be, fully responsible for the design and implementation of a stable Internet-enabled telecommunications rating and billing system, as well as the design of the company's Internet enabled customer care system. Marc brings his comprehensive knowledge of billing solutions along with his in-depth understanding of the telecommunications industry to Datex.

Ed Leavens - Vice President, Business Development

As Vice-President, Business Development with Datex, Ed is responsible for developing relationships and partnerships with industry specific providers and, in so doing, expanding Datex's reach and capabilities. Ed also assumes co-responsibility for the company's sales initiatives across North America. Prior to joining Datex, Ed was Chief Operating Officer at Xtend Software Inc., a provider of customer care and billing solutions that was acquired by Datex in January of 2003. Prior to Xtend Software, Ed was Vice-President, Operations at Right Rate Long Distance, a long distance reseller and was Vice-President, Operations for The Homesource Group where he was instrumental in executing sales and marketing strategies for its clients in the deregulated markets.

Conditions to Completion of Qualifying Transaction

The completion of the proposed Qualifying Transaction is subject to a number of conditions, including, but not limited to, acceptance by the TSX Venture Exchange; other regulatory approvals; completion of satisfactory legal, accounting and financial due diligence by both Montec Holdings and Datex ; approval by the boards of directors of Montec Holdings and Datex; the completion of the proposed concurrent private placement by Montec Holdings; and completion of formal agreements. These include employment agreements with key employees of Datex and a shareholders' agreement among the principal shareholders of Montec Holdings and Datex.

It is also a condition of the Qualifying Transaction that Datex and Montec Holdings enter into a management agreement, pursuant to which Montec Holdings will provide various financial, administrative, marketing and legal services to Datex.

Commenting on the proposed transaction, Myer Bentob, Montec Holdings' Chairman of the Board of Directors stated: "We are extremely pleased to have arrived at this Agreement in Principle with Datex and expect it to develop into Montec Holdings' Qualifying Transaction in the near future. After having had extensive discussions with Datex's management team, we are confident of the company's market strength and continued profitable growth. We look forward to a long and mutually beneficial relationship."

"Datex has experienced explosive growth over the past few years and we expect that this new partnership with Montec Holdings will serve to further accelerate this trend. We are impressed by the depth of knowledge and professionalism of the Montec Holdings management team and are eager to forge forward as we enter into this new and exciting relationship." stated Jim Dawson, President and co-founder of Datex.

It is not expected that the common shares of Montec Holdings will commence trading until the completion of the Qualifying Transaction. Further, it is not expected that the Qualifying Transaction will be subject to approval by Montec Holdings' shareholders. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the proposed Qualifying Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company 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. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy for this release.

Forward-Looking Statements

This press release contains certain forward-looking statements that reflect the current views and/or expectations of Montec Holdings Inc. with respect to performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly. Investors are cautioned not to rely on these forward-looking statements. Montec Holdings Inc. does not undertake to update these forward-looking statements.

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