QCC Technologies Inc. to Acquire iQ2 Power Corp. and Raise up to $12 Million

August 27, 2004

Release Date: August 27, 2004

CALGARY, ALBERTA–(CCNMatthews – Aug. 27, 2004) – QCC Technologies Inc. (TSX Venture: QCC) (“QCC” or the “Company”) announces that it has entered into an arms-length agreement (the “Agreement”) dated August 24, 2004 pusuant to which it will acquire (the “Acquisition”) iQ2 Power Corp. (“iQ2 Power”), a Calgary-based growing private power retailer company. QCC will acquire iQ2 Power for a deemed value of approximately $15 million, comprised of $2 million of common shares (“QCC Shares”) of QCC, $12 million (cash) and the Earn-Out Consideration. The QCC Shares, cash and the Earn-Out Consideration to be provided in consideration of iQ2 is collectively referred to herein as the “Purchase Price”. Up to an additional 1 million QCC Shares are issuable as the Earn-Out Consideration based upon the financial performance of iQ2 Power following completion of the Acquisition. The QCC Shares to be issued as partial consideration of iQ2, including the Earn-Out Consideration, will be issued at a deemed value of $1.00 per QCC Share after giving effect to the Consolidation referred to below. QCC has delivered to the vendors’ solicitors the amount of $300,000 (the “Deposit”) to be held in an interest bearing trust account for the account of QCC representing the deposit applicable to the Acquisition. If closing (“Closing”) of the Acquisition occurs, the Deposit together with all interest accrued thereon shall be paid by vendors’ solicitors to the vendors in partial satisfaction of the Purchase Price. If Closing does not occur because QCC was unable to satisy certain conditions, the Deposit together with all interest accrued thereon shall be forfeited to the vendors. If Closing does not occur for any reason other than as described above, QCC shall be entitled to, and the vendors’ solicitors shall return to QCC, the Deposit and all interest accrued thereon. The Acquisition is expected to be completed by November 30, 2004 and is subject to a number of conditions as set out below.

About iQ2 Power

iQ2 Power was established under the laws of Alberta in September 2000 as a licensed, full service power retailer to provide services to industrial, commercial and farm customers in Alberta. Over the past three years since de-regulation, iQ2 Power has acquired a stable customer base and continues to provide high quality, low cost power retail services. iQ2 Power has recently received its license to sell natural gas and plans to market gas to its customers in 2005.

The iQ2 Power Management Team

iQ2 Power currently employs 14 full-time staff with over 100 years of cumulative experience in the power industry. The key staff of iQ2 Power are Tom Dechert, Peter Molloy and Renee Usselman, as described below. Tom Dechert, Peter Molloy and their respective spouses are the principal shareholders of iQ2.

Tom Dechert – Vice President Sales & Marketing. Tom has many years experience in power industry with TransAlta Corporation where he fulfilled numerous positions. Tom’s previous positions were with Deloitte & Touche Management Consultants and Telus. Tom holds a Master of Economics from the University of Calgary and a Master of Business Administration from Thunderbird, The Garvin School of International Management, in Glendale, Arizona.

Peter Molloy – Vice President Operations & Systems. Peter began his career with the SouthEast Queensland Electricity Board (now Energex) in Queensland Australia. He has held numerous positions within the electrical industry ranging from engineering and information systems to business development and consulting. With more than 25 years of experience Peter has developed retail business strategies for a number of large corporations including TransAlta Corporation of Calgary, Alberta.

Renee Usselman – Immediately prior to joining iQ2, Renee held executive management positions at the Balancing Pool of Alberta and ESBI Alberta Ltd. (previously the provincial electricity transmission administrator). At the Balancing Pool, she was instrumental in designing and managing the process to auction off the rights to unsold, previously regulated generation in Alberta, a key part of the restructuring of Alberta’s electricity industry. Renee has more than 15 years of management, financial and operational experience in the energy industry. She is a chartered accountant and has a bachelors degree in economics from the University of Saskatchewan.

It is expected that each of Tom Dechert, Peter Molloy and Renee Usselman will continue to provide their services to iQ2 Power as employees following the completion of the Acqusition. No representatives of iQ2 or its principals will be appointed to the Board of Directors of QCC or as officers of QCC or its subsidiaries.

iQ2 Power’s Financial Summary

Financial information of iQ2 Power for the fiscal years ending December 31, 2003, 2002 and 2001 is set out in the table below. This information has been extracted from the audited financial statements of iQ2 Power.

December 31, December 31, December 31,
2003 ($) 2002 ($) 2001 ($)

Total revenue 45,662,075 38,308,591 18,914,046
Gross margin 3,027,072 3,092,638 919,460
Net income 31,158 (1) 405,526 (2) (5,243)
Current assets 4,836,025 6,347,042 2,750,611
Total assets 11,830,146 11,192,185 3,499,271
Current liabilities 5,474,501 6,541,920 2,803,629
Long term liabilities 164,919 4,366,094 816,997
Share capital 5,875,497 100 100
Shareholders’ equity 6,190,726 284,171 (121,455)

(1) Net of owner/manager bonuses of $875,615.
(2) Net of owner/manager bonuses and management fees of $1,006,505.

Private Placement

The Corporation will conduct a private placement (the “Private Placement”) concurrent with the closing of the Acquistion. Under the Private Placement, QCC intends to raise up to $12 million by issuing up to 12 million units (“Units”) at $1.00 per Unit. Each Unit consisting of one QCC Share and one-half of one QCC share purchase warrant (“QCC Warrant”), all issued on a post-Consolidation basis. Each full QCC Warrant is exerciseable for one common share at a price of $1.50 per share for a period of 18 months from the Closing. The Agreement requires QCC to raise a minimum $12 million as a condition of closing.

Proceeds of the Private Placement will firstly be used to pay the various costs associated with conducting the Private Placement such as sponsorship and agency expenses, legal, accounting and commissions. The net proceeds of the Private Placement will be used by QCC to partially pay the $12 million portion of the Purchase Price and as working capital. The balance of the cash portion of the Purchase Price will be paid from QCC’s general funds.

Sponsor and Agent Retained

Raymond James Ltd. (“Raymond James”), subject to completion of satisfactory due diligence, has agreed to act as sponsor to QCC in connection with the Acquistion. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Also, Raymond James has agreed to act as lead agent, on a commercially reasonable efforts basis, to raise a minimum of $3 million and a maximum of $4 million of the total amount of $12 million to be raised under the Private Placement. An offering memorandum will be used solely in conjunction with that portion of the Private Placement led by Raymond James so that all interested investors may qualify and participate in the Private Placement.


Prior to completion of the Acquisition and the Private Placement, QCC will seek to consolidate (the “Consolidation”) the issued and outstanding QCC Shares on a nine for one basis, resulting in approximately 2,292,065 QCC Shares being issued and outstanding immediately prior to closing of the Private Placement and the Acquisition. The QCC Shares issuable to the Vendors in partial payment of the Purchase Price and issued under the Private Placement will be issued on a post-Consolidation basis.

Conditions of Closing

The Acquisition is subject to a satisfactory due diligence review by both parties, regulatory approval, approval of the shareholders of QCC, the completion of the Private Placement, the finalization and execution of definitive documentation and the acceptance of the TSX Venture Exchange. The transactions cannot close until the required shareholder approval is obtained. There can be no assurance that the transactions will be completed as proposed or at all.

Grant of Stock Options

QCC intends to reserve for issuance to directors, officers, employees and consultants of QCC and its subsidiaries options to purchase up to 10% of the total number of shares of QCC issued upon completion of the transactions described herein with an exercise price of $1.00 per share (on a post-Consolidation basis).

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the acquisition, any information released or received with respect to the transactions may not be accurate or complete and should not be relied upon. Trading in the securities of the Company should be considered highly speculative.

QCC Technologies Snapshot

QCC Technologies Inc. through its operating subsidiary based in Saskatoon provides advanced information technology services in the forms of technology management; systems and software engineering; technology development; consulting; systems integration; technical support; and, automated network-based services.

Certain information regarding the Company contained herein may constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will be realized. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement.


QCC Technologies Inc.
Sid Dutchak
President and CEO
(403) 777-1721
QCC Technologies Inc.
Investor Relations
Email: info@qcctech.com
Website: www.qcctech.com
The TSX Venture 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.

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