SSTY Releases Further Details of ONTV, Inc. Acquisition [FXPHBZW]
BEIJING, and PHILADELPHIA, March 24 /PRNewswire-FirstCall/ -- On March 17,
2006, Sure Trace Security Corporation (OTC: SSTY) announced that it had
acquired the controlling interest in ONTV, Inc. (OTC Bulletin Board: ONTV), a
company presently trading on the NASDAQ OTC Bulletin Board.
At the time it stated that consideration was in cash and contractual
rights.
Sure Trace intends to provide to its stockholders detailed information
regarding the business and management of ONTV, which we expect will be renamed
True Product ID, Inc. (TPID). In addition, ONTV, which will be under separate
day-to-day management from Sure Trace, intends to file important information
related to the spin-off with the Securities and Exchange Commission on Form 8-
K.
In the meantime, in response to shareholder requests, Sure Trace is
providing the following additional information. It is not meant to be a
comprehensive disclosure of all material facts concerning either Sure Trace or
ONTV. It is limited to a description of the purchase transaction.
The acquisition took the form of the purchase of the common stock of ONTV,
the outstanding shares of Class A Preferred Stock, and the outstanding shares
of Class B Preferred Stock. The consideration for the common and Class A
Preferred Stock was the grant to ONTV of a Master License from Sure Trace to
conduct all marketing and administrative rights, duties, responsibilities and
obligations presently held by Sure Trace and its subsidiaries (except for
those granted/reserved to Sure Trace or other parties prior to closing),
including the rights, duties, responsibilities and obligations for the
Company's activities in China and the rest of the world. The consideration
for the Class B Preferred Stock was a payment of $500,000 to the former
Chairman, President and CEO of ONTV. All shares issued to Sure Trace are
"restricted" as defined by SEC Rule 144.
In its February 10, 2006 press release, Sure Trace stated an intention to
issue to its shareholders, as a dividend, the shares of ONTV acquired in this
transaction. The company intends to complete this transaction in full
compliance with federal securities laws. In the transaction, Sure Trace
acquired 75% of the outstanding shares of ONTV (i.e., 75 million shares, after
conversion of preferred shares, of the 100 million authorized). The other
approximately 25 million ONTV shares are in the hands of public shareholders
of ONTV. In the February 10, 2006 press release, Sure Trace said that it
intended to distribute approximately 90% of the common stock of the acquired
company. In order to get to that level, the company planned to increase its
amount of shares post-acquisition.
At that time the company envisioned issuing an additional 150 million
restricted shares to SSTY (after first increasing the authorized shares) so as
to bring the total OS to 250 million. That would leave approximately 25
million shares in the float and the company's 225 million would equal the 90%
stated. However, for strategic reasons, the plan has changed, in light of the
company's intention to not authorize, issue or register any additional free
trading shares into the market during the 12-month period following the
acquisition. While SSTY will still distribute 100% of the common stock it
holds, that would represent 80% of TPID, not 90%. The reasoning is that it
became apparent to the company that 25 million shares, which would be the only
shares in the float during that time, may not provide enough liquidity in the
stock and may inhibit the company in attracting new investors in the open
market; therefore we expect that ONTV will issue only 25 million additional
restricted shares to Sure Trace, thereby bringing the total outstanding shares
to 125 million, and then effectuate a 2:1 forward split, so that Sure Trace
would own 200 million restricted shares and the remaining stockholders would
own approximately 50 million shares. These 200 million held by SSTY are the
shares that will be the subject of the SSTY shareholder dividend at
approximately 20:1, that is for approximately every 20 shares of SSTY a
shareholder would receive 1 restricted share of ONTV/TPID. They would also
retain their shares of SSTY.
Since there were 3,939,517,068 shares of Sure Trace issued and outstanding
as of the Record Date, that makes the conversion ratio 19.697:1 (i.e. for
every 19.697 shares of SSTY the shareholder is scheduled to get 1 TPID/ONTV)
given that there will be 200 million TPID/ONTV shares to distribute. The
current plan envisions the dividend shares being issued shortly after 20 days
from the date of mailing of the Information Statement. The following is a
further illustration of the effect of this planned distribution to SSTY
shareholders. The following figures represent the daily moving average of the
respective stocks for and as of the five-hour period preceding the close of
the market 3/24/06)
19.679 SSTY shares @ $0.00169 = $0.033
1.0 ONTV share = $0.099 ($0.1989 adjusted for the split)
-----------------------
TOTAL VALUE = $0.1685
Therefore, as of the close of business 3/17/06, approximately $0.033 worth
of SSTY would give the shareholders of record approximately an additional
$0.10 worth of ONTV stock for free.
Michael Cimino, SSTY's president said: "As our Chairman, James Mackay said
previously, we hope to follow this template (that is, shares in the public
company will be delivered to SSTY's then-present shareholder base) with at
least one other subsidiary of SSTY, Globe Staff. Although no specific plan
exists for Globe Staff at this time, we are working diligently toward such an
event."
SOURCE Sure Trace Security Corporation
Michael Cimino, President, Sure Trace Security Corporation, +1-215-972-6999,
michaelc@suretrace.com
24Mar06 14:49 GMT
Symbols:
de;TJS us;ONTV us;SSTY
Source PRN PR Newswire
