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Eforce Announces Acquisitions


Eforce Announces Acquisitions That Will Create An International End-To-End Ecommerce Company

Eforce Ltd today announces that an agreement has been entered into to acquire international supply chain management specialists Product Sourcing International (PSI) and web development and hosting agency Imagic. Eforce's combined first year revenue will exceed $50 million.

The move signifies Eforce's intention to build a fully integrated end-to-end global eCommerce organisation that is active in the business to business and business to consumer sectors.

It also signifies the intention to grow aggressively by acquisition in order to establish a major eCommerce company in New Zealand, and to expand internationally.

"Eforce's strategy is to develop complementary and integrated internet-based businesses that use the significant opportunities available through web-based technologies to enhance the business environment," says Eforce Chairman Richmond Paynter.

"Our consumer portal - www.eforce.co.nz - Product Sourcing International and Imagic fit together well and will allow us to deliver our strategy."

"Both Product Sourcing International and Imagic are profitable companies with significant revenue streams and, at the current share price, represent excellent buying for eCommerce investors. This transaction will add substantially to Eforce's shareholder value".

Product Sourcing International services major New Zealand and international retail operations by providing total supply chain management for a wide variety of merchandise. The company has designed and now operates an eCommerce supply chain management platform, which delivers the following capabilities: procurement, quality control, logistics, currency management and inventory control.

The supply chain management software is web-based and is dynamically linked to project management software. This enables Product Sourcing International to provide information to clients and get responses in hours rather than the weeks it can take using traditional offline methods.

"Product Sourcing International has a superb business to business eCommerce platform that cuts through the complexity of international supply management. It is a flexible and scalable system and will allow us to take advantage of national and international supply chain management opportunities," says Richmond Paynter.

Product Sourcing International operates from an Auckland base, with offices in China and Hong Kong, and affiliates in Malaysia, Indonesia and Vietnam.

Imagic is a Christchurch-based marketing design, web development and web hosting agency. Since its inception in 1994, Imagic has worked in multimedia and interactive design developing a broad local, national and international client base. One client, Merino New Zealand, was recognised as the Supreme Marketer of the Year at the 1999 New Zealand Marketing Awards.

Product Sourcing International and Imagic will continue to operate independently in their areas of expertise. Eforce also intends to integrate the supply chain management, web development and consumer portal aspects of its business.

"eCommerce and web technologies are changing the way business operates and consumer's expectations of service and delivery.

"Eforce will be able to offer businesses and consumers the ease and efficiency of online buying and selling, along with quality delivery and supply chain management," says Mr Paynter.

"The acquisition of Product Sourcing International and Imagic gives Eforce greater global potential and infinite scalability. More businesses are developing their eCommerce strategies, and more pure online players are emerging in the market. Eforce will be able

to provide supply chain expertise using web-based technologies, help businesses develop their online presence, and bring buyers and sellers together through its online portal.

"Imagic will also enhance and further develop our supply chain management software so it can be applied to a number of business to business and business to consumer situations.

"Eforce is a business based on profits not promises. We're confident these acquisitions will help Eforce to generate significant revenue growth and substantial bottom line profits, " says Mr Paynter.

ACQUISITION DETAILS The acquisition of Product Sourcing International will be satisfied by the issuing of 36 million new Eforce shares.

The Imagic acquisition will be satisfied by the issuing of 3 million new Eforce shares.

The Managing Director of Product Sourcing International, Mr Bill Farmer will become Eforce's Chief Operating Officer and will be appointed to the Eforce Board of Directors. Product Sourcing International Chairman, Mr Jack L Porus, will become a member of the Eforce board as an independent Director.

Imagic Director Mr Paul Fairbairn was appointed as Creative Director of Eforce after the company's EGM on February 23 this year.

The acquisitions are subject to due diligence and shareholder approval at the Eforce Annual Meeting to be held in May. If approval is given, settlement is planned for the end of May 2000.

Eforce's combined revenue projections for the year ending February 28, 2001, including the new acquisitions, will be: Revenue year to February 28 2001 $54 million Earnings before Interest, Tax, Depn, Ammort $2.1 million

It is also projected that revenue will grow dramatically in the full year to February 2002 as all businesses expand internationally, particularly in the Asia Pacific region. The Eforce board is currently assessing a number of options for further development in these markets.

Richmond Paynter also confirmed that the proposed Eforce Cash Issue, approved at the EGM on 23 February this year, would be offered to existing shareholders in mid-April. The issue of warrants approved at the same meeting will proceed but it is intended to limit the warrants to 5 million.

"This additional further capital raising will be used to take advantage of further business expansion opportunities as they arise," says Mr Paynter.

BACKGROUND

Product Sourcing International (PSI) Product Sourcing International has been in operation since May 1990. The company was originally formed to take advantage of importing opportunities following the de-regulation of New Zealand's licensing laws.

Product Sourcing International provides total supply chain management services for leading retailers in New Zealand and internationally. Its services include product identification, quality control procedures, freight, delivery, import/export documentation and currency management.

Product Sourcing International is currently operating predominantly in Asia. It has offices in Hong Kong and China, with affiliates in Vietnam, Malaysia and Indonesia.

The company has always been an early adopter of technologies to optimise its supply chain management processes. Product Sourcing International has used web communications since 1995.

Product Sourcing International has developed a proprietary software system that is applicable to a wide range of national and international business to business eCommerce situations.

Imagic [www.imagic.co.nz] Imagic was established in 1994 by Paul Fairbairn. It is a Christchurch-based digital media agency supplying marketing and communication services.

The company operates across the array of digital media, including web development and hosting, other internet design, cd-rom and digital audio and video. Since its inception Imagic has grown consistently in size and turnover. It currently employs 13 staff, and will add two more this year.

Imagic services clients throughout New Zealand and internationally. The client list comprises mostly medium to large-scale corporate enterprises and spans varied industries including electronics, travel, clothing and textiles, hospitality and property.

Imagic has won several regional and national awards for their creative and marketing expertise. Last year, Merino New Zealand won the Supreme Marketer of the Year Award at the 1999 New Zealand Marketing Awards.

The company's success lies in a balance of expertise in design and technology. The creative team has visual communication and programming experience.

ends

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