Challenger Power Boats (fka CPBI)

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Challenger Powerboats Divests Sugar Sand Line of Jet Boats for $5 Million

Company retains exclusive right to supply and market Sugar Sand line.

WASHINGTON, Mo., Sept 04, 2007 10:42am 09/04/2007

CPWB today announced that it has divested the Sugar Sand jet boat line of its wholly owned subsidiary, IMAR, Inc., to action water sports company Execute Sports, Inc. EXCS, a company engaged in the design, manufacturing and sale of water sports products, for $5 million in cash. In conjunction with the transaction, Challenger and Execute entered into an Agreement for Exclusive Right of Supply, through which Challenger will manufacture and sell Sugar Sand boats to Execute, and an Exclusive Sales and Marketing Agreement, through which Challenger will market Sugar Sand boats on behalf of Execute. These agreements are for periods of ten years each, with similar renewal terms. Challenger will retain its other two lines of boats, the high performance "Challenger" line and the ski and tow boat "Gekko" line.

Challenger CEO Laurie Phillips stated, "One of our main goals this year was to strengthen our balance without sacrificing top line growth. The divestiture of Sugar Sands will enable us to eliminate approximately $5 million in liabilities and $300,000 in monthly debt servicing. While we will no longer own the Sugar Sand asset, the ancillary agreements will provide Challenger the right to continue to produce and market the line for Execute, making it possible for Challenger to benefit from its sales and participate in its gross margin contribution. We look forward to a fruitful partnership with Execute and believe we can further exploit other potential opportunities between the two companies in the marine sport sector."

Geno Apicella, CEO of Execute Sports, added, "We have been aggressively seeking to grow our organization through synergistic acquisitions. By acquiring the Sugar Sand franchise, we expand our product offering without the added responsibilities and complexities of the manufacturing process, while positioning the company to capitalize on existing sales and marketing relationships. We believe we are now on pace to approach approximately $10 million in sales for 2008 and will continue to search for other acquisition opportunities."
About Challenger Powerboats, Inc.

Challenger Powerboats, Inc. designs and manufactures high performance 'go fast' offshore racing boats, family sport cruisers, jet boats and water ski tow boats under the brands 'Challenger Powerboats', 'Sugar Sand' and 'Gekko', which target the recreational boating market. Proven world-class technology is incorporated into the manufacturing of our award winning boats at the Company's 65,000 sq. ft. facility located on our 12 acre complex in Washington, Missouri and 80,000 sq. ft facility in Fargo, North Dakota. The Company's boats are sold through our dealer network in the United States, Canada, Mexico, Europe, Australia, the Middle East and Japan. In 2006, Gekko was selected as an official tow boat for the World Barefooting Championships, and the European Barefooting Championships in 2005.

About Execute Sports, Inc.
Based in Torrance, California, Execute Sports, Inc. develops performance products including wetsuits, vests, and rash guards for the action sports industry. The Company's brands include Execute Wetsuits, Vests, Accessories and Wakeskates. For more information, go to http://www.executesports.com.