Open EC Technologies, Inc.
TSX VENTURE : OCE

Open EC Technologies, Inc.

January 20, 2006 10:49 ET

Open EC Technologies Inc. Signs Letter of Intent to Acquire China-Based A&D Science & Technology Co. Ltd. ("ADTech")

NORTH VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 20, 2006) - Open EC Technologies, Inc. (TSX VENTURE:OCE) ("Open EC" or the "Company") announces that it has taken a first step towards expanding its operations in e-business software and services in the Chinese market with the signing of a letter of intent for the purchase of all the shares of ADTech. Through the acquisition of ADTech, Open EC plans to penetrate the China supply chain by leveraging its software technology and expertise in e-business solutions with ADTech's development resources and contacts to become one of the first fully localized China specific commercial EDI solutions to connect China supply chains with North America and enable China Retailers to adopt North American EDI/Supply Chain solutions.

Open EC has entered into a Letter of Intent (the "Letter of Intent") effective January 20, 2006 to purchase all of the outstanding shares of ADTech. The Letter of Intent provides that ADTech shall operate as a subsidiary of Open EC with current management contracts and operations for a period of no less than 24 months.

Under the terms of the Letter of Intent, Open EC shall purchase 100% of the shares of ADTech for a purchase price (the "Purchase Price") based on a valuation formula of 4.832 times audited trailing 12 month net earnings at December 31, 2005 after income taxes and preferred shareholder equity repayment ("Net Earnings"). Based on estimated unaudited Net Earnings for the 12 month period ended December 31, 2005 of ADTech of CDN$626,278 (estimated unaudited revenues of $7,500,000), the Purchase Price for the ADTech shares would be CDN$3,026,175. An audit of ADTech is currently being performed to confirm Net Earnings and the Purchase Price will be adjusted downward (but not upward), based on the formula, in the event that the audited Net Earnings differ from unaudited Net Earnings. The Purchase Price will be satisfied in full by the issuance of common shares of Open EC (the "Shares") based on a deemed price of CDN$0.12 per Share, subject to reduction in the event that the aggregate number of Shares to be issued would exceed 47.5% of the total number of issued and outstanding shares of the Company following closing.

The Shares are to be issued when the transaction closes, following receipt of TSX Venture Exchange (the "Exchange") acceptance of the transaction. Under the Letter of Intent, the Shares to be issued will be required to be placed in escrow and released as to 10% on approval of the Exchange and 15% every six months thereafter until 36 months after the Exchange acceptance of the transaction.

A finder's fee of 1,531,740 shares is payable to an arms length party upon Exchange acceptance and closing of the 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 shareholder approvals. There can be no assurance that the transaction will be completed as proposed or at all. Trading in the securities of Open EC Technologies, Inc. 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 press release.

Open EC and ADTech have agreed in the Letter of Intent that upon closing and for a period of not less than 24 months thereafter, Open EC will continue under the current management team and the board of directors will be comprised of seven (7) directors, four (4) of whom will be nominated by current Open EC management shareholders and three (3) of whom will be nominated by current ADTech shareholders and both current Open EC management shareholders and current ADTech shareholders will vote affirmatively for the election of these nominees.

Company Combination

OpenEC and its subsidiary SoftCare EC Solutions Inc ("SoftCare") intend to combine forces with ADTech to penetrate the China supply chain market by leveraging OpenEC/SoftCare solutions and expertise in EDI, XML, Data Synchronization/Product Information Management, RFID and AS2 implementations with ADTech's development resources and contacts to create one of the first fully localized China specific commercial EDI solutions to connect China supply chains with North America and enable China Retailers to adopt North American EDI/Supply Chain solutions.

One of the key features of the OpenEC - ADTech transaction is to combine the two company's software solutions, expertise, resources and knowledge into localized solutions that will increase overall profit for the organization. The initial efforts will concentrate on penetrating the Chinese supply chain marketplace for EDI and file broker solutions and growing ADTech's office automation, quality control and education software business.

The software development resources at ADTech and in China in general are ideal for the Company's software development methodology. Chinese educated software developers have a high level of competence in Open EC's key areas of Java, XML and Open Source software engineering. Our overall competitive edge against North American competitors will substantially improve with the access to ADTech's highly qualified software developers at a reduced cost.

About OpenEC Technologies Inc and its subsidiary SoftCare EC Solutions Inc

SoftCare's OpenEC® e-business software includes solutions for Electronic Data Interchange (EDI), Business Process Management and Data Synchronization. The Company's customers include household names such as BC Hydro, Credit Union Central of British Columbia (CUCBC), London Drugs, Rona-Totem Building Supplies and VTECH Electronics, as well as industry leaders like B.C. Tree Fruits, Taymor Industries, Sysco, Atlas Cold Storage, Kal Tire, Premium Brands and many more.

The Company sells the OpenEC® products and solutions to the retail supply chain in North America and through its acquisition of ADTech will expand its sales and services into China. More specifically the market is segmented between the medium to large retailers and the medium to large manufacturing and distribution companies that supply the goods to retailers. Additional product information is available on the web at www.softcare.com.

About A&D Science and Technology Ltd (ADTech)

A&D Science and Technology Ltd was founded in June, 1999 to provide focused industry software solutions for Chinese and foreign trading companies. ADTech has developed and implemented multiple industry specific solutions for the Chinese education, telecommunication, government, finance, and manufacturing marketplaces. ADTech is committed to producing highest quality solutions that meet their customer's needs for today and in the future. The following awards and achievements are disclosed on ADTech's website. In 2002, ADTech was rated as one of the top 100 IT consultants in China. In the same year "Chinese Computer Newspaper" rated ADTech as the "outstanding systems integrator in the education industry" and was rated as one of the top 10 Chongqing system integrators by "Computer Newspaper". In 2002, one of its applications was given the distinguished Microsoft Gold Medal Application award. ADTech is certified ISO9001-2000 and ISO14001, along with the "B Class Computer System Integration Certification" from the Department of Information Industry, "Intellectual (Property) Building Project Certification" from National Construction Department, "Anti-thunder Project Certification".


ON BEHALF OF THE BOARD,

(signed "Martyn A. Armstrong")

Martyn A. Armstrong

President & CEO

Further information about the Company can be found on SEDAR (www.sedar.com).

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 has not in any way passed upon the merits of this news release.

Contact Information

  • Open EC Technologies, Inc.
    Mr. Martyn A. Armstrong
    President & CEO
    (604) 983-8083
    or
    Open EC Technologies, Inc.
    Mr. John A. Versfelt
    CFO and Director
    (604) 983-8083
    (604) 983-8056 (FAX)
    Email: info@softcare.com
    Website: www.openec.com