SCNV Acquisition Corp. Acquires Majority Interest in Elecmatec
25 May 1999
SCNV Acquisition Corp. Acquires Majority Interest in Elecmatec, Israeli Company with Patented 'Gravity-Free' Technology
Loan and Other Financing Also Provided
OMER, Israel, May 24 -- SCNV Acquisition Corp.
(OTC Bulletin Board: SAQC, SAQCW, SAQCU) has closed on the acquisition of
90.4% of the outstanding shares of Elecmatec Electro-Magnetic Technologies
Ltd. ("Elecmatec"), it was announced today.
Elecmatec researchers in Israel have developed a patented manufacturing
process that simulates the gravity-free conditions of outer space and creates
metal alloys that could not be combined under normal conditions. The company
believes these unique combinations of metals have numerous applications in the
automotive industry and other industries.
"Initially, we intend to use our gravity-free -- or 'micro-gravity' --
technology to produce metal alloys for more durable and less expensive
automobile engine bearings," said Dr. Arik El-Boher, the Chief Executive
Officer of Elecmatec. "For decades, the car industry has been searching for a
way to produce better, longer-lasting bearings and independent tests show that
our technology offers the answer. SCNV's backing will be a tremendous boost
to our efforts to tap into the enormous international market for bearings."
While the aggregate purchase price and equity investment was approximately
$US150,000, SCNV also announced additional payments of up to $150,000 if
Elecmatec obtains third-party financing of at least $500,000; a loan of up to
$1 million; royalty payments of as much as $360,000 based on Elecmatec's
performance as well as other incentive payments. (See below for details.)
SCNV Acquisition Corp. was organized in 1997 to select, develop and
commercially exploit proprietary technologies invented primarily by scientists
who have immigrated to Israel from the former Soviet Union. Elecmatec's
micro-gravity technology was developed by one such emigree -- Dr. Herman
Branover, President of SCNV and a Professor at Ben-Gurion University of the
Negev -- and two of his former doctoral students, Dr. Yuri Gelfgat, now a
Professor at the Institute of Physics at Latvian State University and Dr.
El-Boher, a native Israeli.
Dr. El-Boher also said that Elecmatec planned to establish a production
facility for metal alloys in the southern Israeli town of Kiryat Gat in the
second half of 1999, with an anticipated capacity of 500 tons of alloy. The
company believes the capacity can be expanded to 1,000 tons per year, he said.
According to Dr. El-Boher, tests have confirmed that bearings produced
from Elecmatec's alloys do not "seize" or "freeze up," a common problem for
bearings made from other metals. Compared with other bearings currently on
the market, those from Elecmatec also exhibited significantly less wear and
lower friction, and are significantly less expensive and environmentally
friendlier, he said. An automobile company independent from Elecmatec is
conducting further tests of the bearings' durability.
Further development of the micro-gravity technology could lead to other
applications in the automotive industry as well as the production of metallic
composite materials such as steel-tungsten alloys for metal cutting tools and
the production of porous metals.
SCNV acquired its holdings in Elecmatec through an investment in the
company as well as the acquisition of shares from shareholders of Elecmatec,
including Dr. Branover. Two of the selling shareholders of Elecmatec ceased
being shareholders as a result of the transaction.
In addition to the direct investment and purchase of shares, SCNV has also
agreed to loan -- or guarantee loans taken by Elecmatec or third parties -- up
to $1,000,000 of which $225,000 have been loaned and $162,000 have been made
available as a guarantee to date.
Moreover, SCNV will pay an additional sum of up to $150,000 to current
shareholders, on a sliding scale basis, upon the successful completion by
Elecmatec of third-party debt or equity financing of at least $500,000. In
every calendar quarter in which Elecmatec obtains net income and has overall
retained earnings, SCNV will also pay the former shareholders an amount equal
to 10% of this net income up to an aggregate sum of $360,000.
As part of the transaction, Elecmatec entered into employment agreements
with the three founders of Elecmatec. Drs. El-Boher, Branover and Gelfgat.
The agreements provide for bonuses of up to $540,000 in the event that
Elecmatec becomes profitable. In addition, SCNV granted options to purchase
an aggregate of 30,000 shares of common stock of SCNV to Drs. El-Boher and
Gelfgat and the two former shareholders of Elecmatec. Inasmuch as the
transaction involved two entities in which Dr. Branover has an interest, the
acquisition was unanimously approved by the independent members of SCNV's
Board of Directors.
The final structure of the transactions is somewhat different from that
described in SCNV's "Letter of Intent," which was announced on January 12,
1999. But the transaction remained substantially the same from a commercial
perspective.
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
Certain statements contained in this news release constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve a
number of known and unknown risks, uncertainties and other factors which may
cause actual results, performance or achievements of SCNV or Elecmatec to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, but are not limited to, risks relating to SCNV's or Elecmatec's
growth strategy, uncertainty of feasibility of SCNV's or Elecmatec's
technologies and product development; uncertainty of market acceptance of
SCNV's or Elecmatec's technologies or products; relationships and dependence
on third-party equipment and manufacturers and suppliers; uncertainties
relating to business and economic conditions in markets in which SCNV or
Elecmatec expects to operate; conflicts of interest between SCNV and Elecmatec
and other risks, including those detailed in SCNV's Registration Statement on
Form SB-2 as filed with the Securities and Exchange Commission. The words
"believe," "expect," "anticipate," "intend," and "plan" and similar
expressions identify forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date the statement was made.
For Further Information, Please Contact:
Dan Fleshler at 212-935-0210.