Open EC Technologies, Inc.
OTC Bulletin Board : OCEIF

Open EC Technologies, Inc.

October 18, 2006 08:30 ET

Open EC Technologies, Inc. Announces Signing of Term Sheet to Acquire China-Based Shenzhen Jinhuaye Software Ltd.

NORTH VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 18, 2006) - Open EC Technologies, Inc. ("Open EC" or the "Company") (TSX VENTURE:OCE)(OTCBB:OCEIF) is pleased to announce that Shenzhen Jinhuaye Software Ltd. ("Headware") and the Company have executed a term sheet (the "Term Sheet"), approved by the Company's Board of Directors, which outlines the basic terms of a proposed agreement between the parties whereby the shareholders of Headware (the "Vendors") have granted Open EC the sole and exclusive right to purchase sixty percent (60%) of the issued and outstanding shares of Headware from the Vendors for the purchase price of $2,300,000 Cdn (the "Transaction"). In addition, the Vendors have granted Open EC an option to purchase the remaining forty percent (40%) of the issued and outstanding shares of Headware for cash consideration of $1,500,000 Cdn (the "Option"). The Option shall remain in effect for a period of one year from the date of closing of the Transaction. Upon the closing of the Transaction and the subsequent exercise of the Option the Company shall own, including and without limitation, all of the issued and outstanding shares of Headware, all of Headware's assets and liabilities, all of the rights and obligations of any contracts to which Headware is a party, all of Headware's ongoing business operations, including the operations of its subsidiaries, if any, the rights to the intellectual property of Headware and the rights to the services of Headware.

Pursuant to the Term Sheet, the purchase price of $2,300,000 Cdn shall be satisfied in full by payment of $500,000 Cdn cash and $1,800,000 Cdn paid through the issuance of 12,000,000 Open EC shares at a deemed value of $0.15 per share. The Open EC shares shall be escrowed pursuant to an Exchange defined Securities Escrow Agreement between Open EC and the Vendors.

The Term Sheet is subject to the completion of due diligence by Open EC and the execution of a formal share purchase agreement which share purchase agreement will be subject to Board of Director approvals from both companies, receipt of audited financial statements prepared according to Canadian GAAP and pursuant to securities regulations, acceptance of the share purchase transaction by the TSX Venture Exchange (the "Exchange") and completion of a minimum $500,000 Cdn financing by the Company.

The key feature of the Headware acquisition is to combine the two company's software solutions, expertise, resources and knowledge into solutions that will increase overall profit growth for the organization.

1. Headware will provide the entry to penetrate the Chinese supply chain marketplace for Open EC's subsidiary, SoftCare EC Solution Inc.'s ("SoftCare") e-Business, EDI and file broker solutions.

2. SoftCare will provide entry into North America for the Headware Mobile Commerce (mCommerce) software solutions and specialized software development services.

3. SoftCare can leverage Headware's lower labour cost of software development to advance its e-Business software development and to gain product competitive advantages with substantially lower costs. This can provide the Company with revenue growth, by selling more sophisticated solutions, and profit, by delivering the solution at a lower internal cost.

4. The combination of SoftCare and Headware software and solutions will provide both companies with a uniquely competitive solution for the e-Business Telco/Wireless/Service Provider/Retailer/Financial markets. These are emerging markets in North America and internationally, with high growth potential and world wide market appeal.

Open EC and Headware have agreed to begin joint business development activities on the signing of the Term Sheet while the due diligence, audit and regulatory processes take place. Headware will provide Open EC access to as many as 15 intermediate and senior Java software developers for Open EC's internal product development. Open EC will reimburse Headware for the salary cost of any resources allocated to Open EC projects. In addition, Headware and Open EC will cooperate in developing and marketing to joint customers in North America and China for each party's products and services.

Open EC and Headware agree that Open EC will maintain their current management teams. The vendors of Headware would nominate one additional director and the parties would also nominate one mutually agreed upon independent director for a minimum period of three years from the date of closing of this transaction.

Completion of this transaction is subject to a number of conditions including, but not limited to, Exchange acceptance, Open EC board of directors approval and any required shareholders approvals. There can be no assurance that the transaction will be completed as proposed or at all. Should the transaction close, a finders fee will be paid within Exchange guidelines. Trading in the securities of Open EC should be considered highly speculative. The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

About the China Market of Business to Business (B2B Commerce Solutions)

The target market for EDI and AS2 file broker solutions for the Chinese market is large as the penetration of EDI is in its infancy in China, since traditionally business processes have used "paper-based solutions" to communicate information between organizations. The need for EDI is also very large as companies such as Wal-Mart, Tesco and Metro AG insist on electronic data interchange to move transactions within their Asia supply chains. Wal-Mart alone has in excess of 5,000 direct suppliers based in China through which they imported approximately $18 billion in 2004. China also supplies to the suppliers of Wal-Mart and other large retailers/wholesale sellers, estimated to be roughly 50% of all products being sold by the mega-retailers worldwide.

About the Market for Mobile Commerce (mCommerce) Solutions

The target market for mCommerce solutions worldwide are Telecom Companies, Wireless Providers, Banks, Retailers and Content Service Providers. Headware currently has a pilot mCommerce implementation with China Mobile for lottery ticket sales. Other examples of m-commerce services in popular use today include mobile parking meter payments and the purchase of ring-tones. Such services are known as 'micro-payments'; transactions with an average value of under $10. While m-commerce applications can also include the purchase of various high value items, growth in the near future is expected to come from compelling digital content and services, most of which is expected to be valued at under $10 per transaction.

About Shenzhen Jinhuaye Software Ltd. ("Headware")

Headware is a software development company specializing in the Telecom/Wireless Industry with projects in China, Indonesia and the Philippines. The company has approximately 160 employees of which most are technical and software development people. The company's sales and marketing comes from strategic partners who develop business specifically for the company's products and services. Because of this marketing model the company enjoys a very high profit margin Their business partners are large multi national systems integrators and service providers that have developed a large and growing market share both inside China and abroad. The President of Headware has reported that their calendar 2006 revenue is forecast (unaudited) to be approximately $2.2 million with an estimated net profit margin before taxes of 50%. Headware customer projects include; China Telecom, China Mobility, Liantong Telecom China, Indonesia Telkomsel Corp., Indonesia Primasel Corp., Pakistan Telecom and Philippine Telecom. Additional product and solution information is available on the Chinese language web at, with summary information available on the OpenEC web site at

About Open EC Technologies, Inc.

Open EC is a TSX Venture Exchange listed company. Its subsidiary, SoftCare EC Solutions Inc., is an e-business software and solution provider. SoftCare's Open EC® e-business software includes solutions for Electronic Data Interchange (EDI), Business Process Management and Product Information Management (PIM). The Company sells the Open EC® products and solutions to the retail supply chain, healthcare, financial services and government agencies in North America. Additional product and solution information is available on the web at and additional public company information is available on the web at The Company's common shares trade on the TSX Venture Exchange under the symbol: OCE.


Martyn A. Armstrong, President and CEO

Further information about the Company can be found on SEDAR (

This news release may contain forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Open EC Technologies, Inc.
    Mr. Martyn A. Armstrong
    President & CEO
    (604) 983-8083
    Open EC Technologies, Inc.
    Mr. John A. Versfelt
    CFO and Director
    (604) 983-8083
    (604) 983-8056 (FAX)