Extreme Motorsports of California, Inc. announced today that it has entered into an agreement arranged by Carmac Associates, Inc. of New York and Delray Beach, Florida, U.S.A. to provide up to $3.6 million in funding in a transaction to be completed in the next 60-90 days. As the funds become available, the Company will commence construction of its 2008 Extreme Security Vehicles (ESVs) for nation-wide demonstration.
In addition, the funding will provide the necessary capital to begin manufacturing a line of proprietary off-road component parts, including hubs, brakes, shifting systems, as well as closing out the long-awaited Extreme Transmission systems project, a first for the sandcar and off-road motorsports industries. The funding will also be used for the development of a new manufacturing center for assembly-line fabrication of the ESVs.
Alan McCaa, President & CEO of Extreme Motorsports commented ““We couldn’t be more pleased to be working with Carmac Associates Inc. to provide Extreme with the necessary growth capital to expand its business beyond anything yet seen in the sandcar industry.”
As well as providing the deposit on its new manufacturing center, approximately $250,000, $100,000 will be used to complete current customer projects (reimbursable when the customers pay the finally bills), $200,000 to secure additional employees, $300,000 for a fleet of tractor-trailers to transport the ESVs, approximately $200,000 in branding, advertising and marketing, and $500,000 in general working capital. The remaining 2.35 million will remain in reserve to support operations once full-time production of the 2008 ESV commences, sometime in 2008.
To accomplish this funding, Extreme has increased its authorized shares of common stock to 100 billion. The Company anticipates issuing up to 80 billion shares of common stock to complete the funding. The shares will be fully restricted for a period of two years. Until the second anniversary of the offering, there will be no increase in the number of free-trade shares in the market. Management will retain 1 billion shares of preferred stock to maintain voting control of the Company.
“While we recognize the significance of this issuance of shares will have for our current shareholders, management believes this funding will significantly increase shareholder value by providing us the growth capital to maximize the opportunity of the ESV,” stated McCaa. “While we considered a reverse split as one option to complete the funding, we made many representations to current shareholders that this was out of the question. We believe the fact that the shares are restricted for a period of two years provides Extreme with the necessary time frame to build the value of its free-trade stock for its current shareholders by developing the market for its ESVs.
“We look forward to the future this funding will allow us to create for the Company and its shareholders,” concluded McCaa.
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