MITL Loanstock

8/14/2019 MITL Loanstock

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Information Memorandum

14th December 2001

$6,048,000

METALS INVESTMENT TRUST LIMITED:

10% SECURED CONVERTIBLE LOAN STOCKMaturing 15th February 2005

Convertible into 302,703 shares of Metals Investment Trust Limited.

Offered by Metals Investment Trust Limited

2nd Floor, Berkeley Square HouseBerkeley Square

LondonW1J 6BD


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CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM

No securities commission or similar regulatory body has passed upon the merits of the

Secured Convertible Loan Stock [Loan Stock] agreement offered in this ConfidentialOffering Memorandum [the Offering]. There may be restrictions on the sale of the LoanStock and it must be deemed speculative in nature [refer to Benefits and Risks]. TheOffering contemplated is not, and under no circumstances is it to be construed as, a publicoffering of the Loan Stock described herein. As such, persons who subscribe to this LoanStock pursuant to this Offering will not have the benefit of any review of the within materialsby any securities commission or similar regulatory body within the jurisdiction in which theymay be acquired. Acceptance by an investor of the Loan Stock in no way passes upon themerits or the validity of this Offering or of the investments proposed and/or made by MetalsInvestment Trust Limited or any of its affiliated companies.


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This document is a private placement memorandum and is not a public offering or any other formof public solicitation for funds.

$6,048,000

METALS INVESTMENT TRUST LIMITED:10% SECURED CONVERTIBLE LOAN STOCK

Maturing 15th February 2005

Convertible into 302,703 shares of Metals Investment Trust Limited.

Summary of the Confidential Offering Memorandum

Metals Investment Trust Limited [MITL] is a company duly incorporated under the laws ofEngland and Wales on the 26th day of October 1998. Meyado International Ltd [Meyado]in its own name and as nominee shareholder on behalf of its clients owns a majority stakewith more than 75% of the voting rights of MITLs shares. MITL is the sole controllingshareholder of Meretec Corporation; a company duly incorporated under the laws of the Stateof Delaware, USA on the 9th day of May 2000 [Meretec]. Meretec is the global brand namefor a process, which transforms galvanized steel scrap into premium-grade steel melting stockand ready-to-use high quality zinc dust [the Meretec process]. MITL through its whollyowned subsidiary Meretec, has the potential to become one of the worlds largest producers ofzinc and the global market leader in the recycling of galvanised steel.

The proceeds of this Offering, by which investors or subscribers will receive Loan Stock inMITL, will be directed primarily at the completion of Meretecs plant. It is estimated thatwith all best efforts, construction will be completed within an estimated time frame of 12weeks from the closing of this Offering. A further 14 weeks will be required as a run-upperiod in order to bring the plant fully online. Investors in this Offering are required tosubscribe a minimum in MITLs Loan Stock of US$50,000 or multiples of US$ 25,000 [i.e.$50,000, $75,000, $100,000, etc.].

This Offering represents an offer in MITLs Loan Stock paying an annual interest rate of 10%per annum. The Loan Stock is secured on the property, plant and patents of MITL. The Loan

Stock may be converted to shares in MITL at a price of $ 18.50 on 15 th February 2005. It isenvisaged by MITL that the required and realized total subscriptions received from investorsto this Offering will amount to a targeted US$6,048,000.

This value of the property, plant and patents as well as the price per MITLs share has beenbased on an independent valuation of MITLs current plant and projected profit by a majorinternational consulting firm specializing in this field.

Subscriptions by investors will be received by MITL subject to rejection in whole or in part

by the directors of Meyado, which strictly reserves the right to close the within Offering at

any time without notice and in any event, the Offering will terminate at 11.59 pm, GMT, on

the 15th day of February, 2002 or any subsequent extension thereof.


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MITLs registered office is located c/o Meyado International Limited, 2nd Floor, BerkeleySquare House, Berkeley Square, London W1X 6EA, United Kingdom; Tel: +44 (0) 20 7887

6045; Fax: +44 (0) 20 7887 6540; e-mail address www.meyado.com.

All dollar amounts throughout this Offering Document are in US Dollars.


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Summary of the Terms of the Convertible Loan Stock

Issuer: Metals Investment Trust Limited.

Denomination: US Dollars.

Method of sale: Private Placement.

Form of Loan Stock: Secured Convertible Loan Stock secured by theproperty, plant and patent of Metal InvestmentTrust Limited. Loan Stock may be held inmultiples of US$25,000.

Issue of Loan Stock: 15th February 2002.

Interest: Interest will be payable at the rate of 10% per

annum on the 31st of December of each year untilmaturity.

Maturity: 15th February 2005

Conversion: The Loan Stock holder will be offered to converthis holdings into shares of MITL at $18.50 on15th February 2005

Payment and delivery: In the case of redemption interest and principlewill be repaid to the holder to an account of hisnamed choice within 14 days of maturity. In thecase of conversion, the Loan Stock will beconvertible into shares of MITL.

Status: The Loan Stock will be secured by the assets ofMITL namely: the property, plant and patents.

Withholding tax: All payments will be made without withholdingor deduction for or on account of any UnitedKingdom taxes unless required by law.

Governing law: Laws of England.

Listing: The Loan Stock will not be traded on any officialmarket.

Secondary Market: The Loan Stock will be freely transferable by theholder by notice to the Investment Advisor;however, the Loan Stock will not be freely tradedon an open market.

Issuing and Principal Paying Agent: MITL.


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Paying Agents: HSBCGuernsey, Channel IslandsAccount Name: Metals Investment Trust LimitedAccount Number :Sort Code 40-22-25

Swift Code: MIDLJESH

Investment Advisor: Meyado International Limited

Messe Turm

PO Box 23

60308

Frankfurt

Germany.

Responsibilities of the Investment Advisor: The Investment Advisor undertakes the

following:

a) to maintain a record of Loan Stock holders and

to permit and record transfers of Loan Stock

during the life of the Loan Stock.

b) to act as honest broker between MITL and or

the Loan Stockholders in the event of disputes or

non-compliance by MITL of the covenants

contained herein.

c) in the event of non-compliance by the

company of any of the covenants contained

herein the Investment Advisor will inform the

company of the default, and if the default is not

remedied within 14 days the Investment Advisor

will be entitled to appoint an arbitrator to assess

damages (if any) suffered by the Loan Stock

holders at MITLs expense.

Security: The debt is secured on the assets of MITL under a

pledge and security agreement and is guaranteedby MITL. MITL for themselves undertake that atall times the Loan Stock described hereunder willbe collateralised in the form of the property,plant, patents and other fixed assets as describedin the balance sheet of MITL. Copies of thesecurity documents are held at the offices ofMITL and are available upon request.

Covenants: MITL hereby covenants and undertakes with theLoan Stock holder that until all amounts whetherin respect of principal or interest due or tobecome due under this Loan Stock agreementhave been paid in full or the Loan Stock holder


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has converted his interest into shares of thecompany:

a) to make available to the Loan Stock holder assoon as practicable and in any event not later than

120 days after the close of each annualaccounting period a copy of its annual accounts.

b) not to enter into any transactions which in thereasonable opinion of the Loan Stock holderwould or might materially adversely affect itsbusiness, property, assets, operation, financialcondition or MITLs ability to perform itsobligations hereunder.

Anti-dilution: The holders of this Loan Stock will be protected

by anti-dilution provisions during its life. In theevent that the Loan Stock is fully subscribed theholders will be entitled to convert into 0.505% ofthe equity of MITL (in proportion to theirindividual holdings). The effective date forcalculating the anti-dilution number will be 27thMarch 2001, at which point the number ofoutstanding shares is 59,983,365. Any futurechanges in share capital will ensure that LoanStock holders receive a corresponding number ofshares in relation to their current entitlement andthat they will in no way be treated in an unfairway. In the event that only a proportion of theLoan Stock is subscribed, the percentage of theMITL equity will be adjusted accordingly.

Events of Default: Each of the following shall constitute an event ofdefault:

a) If MITL defaults in the repayment of theprincipal or interest due on the Loan Stock and

such default continues for five (5) business daysafter notice.

b) MITL files a voluntary petition for relief underany chapter of the United Kingdom BankruptcyCode or any such law and is not stayed ordismissed within 30 days.

c) If MITL ceases or threatens to cease to carryon its business or any part thereof or changes thenature of its business or any part thereof material

of MITL which would in the opinion of the LoanStock holder affect its ability to discharge itscommitments under this facility.


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d) If MITL enters into any arrangement orcomposition with its creditors.

e) If an encumbrancer takes possession of or a

receiver or trustee is appointed over anymaterial portion of the assets of the guarantors.

Conversion: On 15th February 2005 the Loan Stock holderwill have the right to convert his Loan Stockinto common shares of MITL by giving noticein writing to the Investment Advisor:

Meyado International Limited

Messe Turm

PO Box 2360308

Frankfurt

Germany

Early Conversion: At any time after 16th February 2002, MITL canredeem the Loan Stock provided that it givesLoan Stock holders 45 days notice through theInvestment Advisor of its intention to redeem. Inthe event of a change of control and MITL sharesare sold to a third party or floated on the stock

market, then investors will be offered the chanceto convert into shares at a price of $18.50 prior tomaturity.

Notices: Any communication, notice or demand to begiven hereunder shall be duly given if deliveredor mailed by certified or registered mail to:

The Investment Advisor

Meyado International limited

Messe Turm

PO Box 2360308

Frankfurt, Germany

Tel: + 49 (0) 69 97544663

Fax: +49 (0) 69 97544900or

MITLc/o Meyado International Limited,2nd Floor, Berkeley Square House,Berkeley Square,London W1X 6EA,

United Kingdom;Tel: +44 (0) 20 7887 6045;Fax: +44 (0) 20 7887 6540


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or such other address as shall be designated byany party hereto to the other parties hereto in awritten notice delivered in accordance with theterms hereof.

Subscription Arrangements: Subscriptions will be accepted between 15thDecember 2001 and close of business on 15thFebruary 2002. The subscription is open toeligible investors. All subscriptions must bemade on the printed application forms availableon request from Meyado. Completedapplications must be sent to:

MITL Convertible Loan Stock OfferingC/o International Investment Processors Limited

The Warren, Grove Farm,Stoke Hammond,Bucks.MK17 9BPUnited KingdomTel: + 44 (0)1525 270288Fax: + 44 (0)1525 270788

Subscriptions by investors will be received byMITL subject to rejection in whole or in part by

the directors of Meyado, which strictly reservesthe right to close the within Offering at any timewithout notice and in any event, the Offering willterminate at 11.59 pm, GMT, on the 15th day ofFebruary, 2002 or any subsequent extensionthereof.


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BACKGROUND TO THE INVESTMENT OPPORTUNITY

MITL removes the zinc coating from scrap galvanized steel before recycling, recoveringpremium-grade melt stock and high quality zinc dust as resources to sell with profit, whilst

adding value to customers by preventing pollution and its associated costs.

THE DEMAND

Environmental considerations are now firmly and permanently on the boardroom agenda;corporations are facing the prospect of unlimited legal liability, increasing material andproduction costs, negative publicity and consumer rejection.

Reducing the environmental impact of a companys output has become a strategic corporategoal. The solution is eco-efficiency; the combination of environmental considerations with thepractical reality of business economics. The key components of eco-efficiency are pollution

prevention (P2) and resource recovery (R2).

THE NICHE

With its Meretec process, MITL is a world leader in P2R2 technology and the market leader inits niche. That niche is the multi-billion USD a year market of recycling galvanised steel.

Steel is the most recycled material on earth, a process realised by melting scrap within thesteel making and metal casting industries. But when melting galvanised steel, the zinc coatingvaporises to become a costly contaminant, pollutant and chemical waste, with operational,metallurgical, and environmental consequences. The current costs and production penalties,plus the potential future legal liabilities, resulting from the collection, treatment, disposal andreuse of this waste are neither economically nor environmentally intelligent, when itsproduction can be significantly reduced or eliminated altogether.

THE MERETEC PROCESS

The patented Meretec process removes the zinc coating before the recycling process,preventing the pollution that would otherwise be generated, and recovering the resources thatwould otherwise be lost.

The Meretec process removes the zinc coating via a chemical reaction with sodium hydroxidein solution, leaving the steel in a virtually identical chemical state to when it was firstproduced. The Meretec process then recovers the zinc via electrowinning, a form ofelectrolysis, to produce zinc dust of 99.98% purity.

The Meretec process is itself eco-efficient, with all processing chemicals being internallyrecycled, and only oxygen and hydrogen combined as water vapour, released into theatmosphere.

The resulting residual-free steel is a premium-grade melt stock, the in-feed of choice for muchof the metal casting industry. The high quality zinc dust is an altogether unique product, with

highly specialised industrial and manufacturing applications, and realises a premium over theLME price.


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ADDED VALUE

For each tonne of galvanised steel processed, MITL generates approximately 60 USD oftangible added-value. MITLs profitability is only limited by the volume of galvanised steelthat it can process.

OPERATIONS

Currently focusing on the US market, MITL is positioning itself to process the 2 milliontonnes of scrap galvanised steel produced annually as stamping plant off-cuts by the USautomotive industry. Additional growth will come from processing the galvanised steel fromend-life automotive vehicles.

Capitalising on 15 years of R&D in conjunction with the US Department of Energy, GeneralMotors and the US Iron and Steel Association, MITLs 11-acre East Chicago facility is theworlds first commercial operation and is only 26 weeks away from going on-line.*

THE OPPORTUNITY.

In addition to the contribution Loan Stock holders will make by participating in this Offering,they will be well positioned to take financial advantage of the benefits, which will likelyaccrue if MITL goes for its Initial Public Offering, which is anticipated within the next 18months or is sold to a third party investor (Read Risk Factors).

* As at 30 November 2001, and dependent upon funding of $6,048,000 being raised.


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THE OFFER

This offer is a private placement of Secured Convertible Redeemable Loan Stock

made on its behalf by Meyado International Limited.

1. PRIVATE PLACEMENT

Securities are offered only

(i) To professional investors,

(ii) To a restricted circle of persons or

(iii) In denominations or for a purchase price exceeding $50,000 (US Dollars).

1.1 Professional Investors

A sales prospectus does not need to be published if the securities are only offered topersons who on a professional or commercial basis purchase or sell securities for theirown account or for the account of a third party.

Such persons are institutional investors and other professional investors such as banks,insurance companies, industrial companies, pension funds, investment managementcompanies or financial services institutions, who, due to their professional expertise,do not depend on receiving information about the offered securities in the form of a

sales prospectus.

1.2 Restricted circle of persons

A sales prospectus does not need to be published if the securities are only offered to arestricted circle of persons. A circle of persons is deemed restricted if :

(i) These persons are individually known to the offeror prior to the offer;(ii) If they are addressed by him on the basis of a selected choice according to

individual aspects;(iii) If they require no additional information by means of a prospectus.

1.3 Denominations or purchase price of at least DM 80,000According to Section 2 No. 4 of the Prospectus Act, a sales prospectus does not need

to be published if the securities may only be acquired in denominations of at least

eighty thousand DEM or only at a purchase price of at least eighty thousand DEM per

investor.


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THE PARTIES

a) METALS INVESTMENT TRUST LIMITED

METALS INVESTMENT TRUST LIMITED was duly incorporated under the laws ofEngland and Wales on the 26th day of October 1998.

Board of DirectorsThe directors and officers of METALS INVESTMENT TRUST LIMITED are:

Name and residence Principal position OccupationGunnar Skoog Managing Director Chief Executive1064, Reddington dr,Aurora,Illinois, 60504,

USA

Martin Young Director Director appointed byFlat 1, 5 Mount Street, MeyadoMayfair,London, WIX 5EA,England

TRUSTEE, Daniel Freeland Director representing originalAttorney, Porte dLeau, Plaaz, MRTI shareholders2136 45th Avenue,

HighlandIN 46322

Director of MITL, Meyado International Ltd and Sensor Marketing AB. Mr. Skooghas a Bachelor degree from Stockholm University and has spent most of hisprofessional life in international businesses. He has been with Lux (Householdappliances) as Marketing Executive in the Philippines, South Korea and Malaysia,with Electrolux-Euroclean (Commercial cleaning equipment) as General Manager inGermany, and with Intrum Justitia (Finance) as Managing Director in the CzechRepublic. He has also served as a director of Meyado International for six years. Mr.

Skoog was appointed as Managing Director of MITL in January 2000.

Mr. Martin E. Young was born in the United Kingdom in 1962. Mr. Young foundedMeyado International Limited (MIL) in 1991. MIL has grown over the last 10 years tobe one of the largest financial advisory companies in the world offering PrivateBanking Services to high net worth private clients. Mr. Young started working as aFund manager in 1995 on behalf of MIL clients. He has run three funds for 5 yearsand now specializes in Fund management, Mergers and Acquisitions and raisingventure capital for private clients.

Share CapitalThe authorized share capital of METALS INVESTMENT TRUST LIMITED is1,875,079.96 divided into 59,983,363 shares of 3.126 pence each and 2 shares of2.000 pence each/.


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AuditorsNykiel, Carlin, Glotzbach & Co7135 Indianapolis Blvd,Hammond,

Indiana, 46324,USA.Tel: +1 219 8443900

b) MERETEC CORPORATIONMERETEC CORPORATION was duly incorporated under the laws of Delaware,United States on the 9th day of May 1999..Board of DirectorsThe director (s) and officer of MERETEC CORPORATION are:

Name and residence Principal positionGunnar Skoog Managing Director1064, Reddington dr,Aurora,Illinois, 60504,USA

Dan Johansson Senior Advisor

Fred Dudek Technical Director

Mr Johansson has a M. Sc. in Process Metallurgy from The Royal Institute ofTechnology, Stockholm, Sweden. He has spent 34 years in the Swedish steel industry.Among others he has been responsible for research, production, investmentmanagement and general management. In 1992 - 2000 he served as president of SSABOxelsund AB, an integrated plate producer with sales all over the world

Principal Consultant for Frederick J. Dudek & Co. servicing the chemical and physicalprocessing industries. Mr. Dudek has a Bachelor and Master of Science degrees inPhysics from Northern Illinois University and Illinois Institute of Technology. He

began his industrial career as a Product & Process Development Scientist withAmerican Zinc Corporation and then St. Joe Minerals Corporation. He has held R&Dmanagement positions at Allied-Signal's Corporate Research Center and twomanufacturing divisions. He has also served as Principal Investigator at ArgonneNational Laboratory on projects to develop economic processes for recycling ofindustrial scrap.

Share CapitalThe authorized share capital of MERETEC CORPORATION is $1,000 divided into1,000 shares of $1 each.


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AuditorsNykiel, Carlin, Glotzbach & Co7135 Indianapolis Blvd,Hammond,Indiana, 46324,

USA.Tel: =+1 219 844390

c) MEYADO INTERNATIONAL LIMITEDMEYADO INTERNATIONAL LIMITED was duly incorporated under the laws ofEngland and Wales on the 23rd day of AUGUST 1988, company number 02289023.

Board of DirectorsThe director (s) and officer of MEYADO INTERNATIONAL LIMITED are:

Name and residence Principal positionMartin Young Managing DirectorFlat 1, 5 Mount St,Mayfair,London W1X 5EAEngland

Mark Paine, Company Secretary

AuditorsGallaghers33A High Street,Stony Stratford,Bucks,England

Lawyers:Heuking Kuhn & Partners,Linden Str 31,60325 Frankfurt,Germany

Share CapitalThe authorized share capital of MEYADO INTERNATIONAL LIMITED is 20,000divided into 20,000 shares of 1 each. Meyado International Limited is wholly ownedby MEYADO GROUP HOLDINGS LIMITED.

d) MEYADO GROUP HOLDINGS LIMITEDMEYADO GROUP HOLDINGS LIMITED was duly incorporated under the laws ofthe Bahamas on the 19th day of August 1999.

Board of DirectorsThe director (s) and officer of MEYADO GROUP HOLDINGS LIMITED are:


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Name and residence Principal positionMartin Young Managing DirectorFlat 1, 5 Mount St,Mayfair,

London W1X 5EAEngland

Mark Paine, Company Secretary

Share CapitalThe authorized share capital of MEYADO GROUP HOLDINGS LIMITED is$1,000,000 divided into 20,000,000 shares of 5 cents each.

Other Principal ShareholdingsMEYADO GROUP HOLDINGS LIMITED owns a majority stake in the following

companies operating around the world principally engaged in financial services and inproviding private banking services:

Company Name Jurisdiction

Meyado International Limited England & WalesInternational Investment Processors Limited England & WalesCameron Butler International Limited British Virgin IslandsCameron Butler Hong Kong Limited Hong KongFinesco JerseyCameron Butler PTE Limited Singapore


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INVESTMENT POLICY AND OBJECTIVES

The proceeds of this Offering, namely a maximum of $6,048,000 to be raised fromparticipating subscribers to MITLs Loan Stock, will be directed primarily to the completionof the plant at 415 East 151st Street, East Chicago, Indiana, USA.

SUBSCRIPTION PROCEDURE

MITL is offering an overall total investment subscription of $6,048,000. Investors in thisOffering are required to subscribe a minimum of $50,000 or higher multiples of $25,000.

After execution by the investor of the subscription form and delivery of payment in the formof a bankers draft, certified cheque or telegraphic transfer, an investor is entitled to withdrawfrom the agreement to purchase MITLs Loan Stock if, within 5 days following receipt offunds, written notice is given to Meyado that the investor has chosen not to be bound by theagreement and wishes to be reimbursed his or her subscription amount. In such case the fullsubscription amount, less any bank charges, will be released from the companys bankaccount within 10 days of receipt of such notice, said reimbursed amount not being subject tothe payment of any interest or any administrative charges.

In the event that investors do not avail themselves of the foregoing cooling-off period, thensuch subscriptions are irrevocable and non-refundable. Meyado will hold the subscription

amount pending confirmation to subscribers that their subscription has been received,following which within 10 days, a receipt will be sent to the address given by the subscriberfor correspondence stating that the requisite investment has been transferred to a nomineeaccount bearing the subscribers name.

At any and all times and notwithstanding the foregoing, subscribers may assign their LoanStock to a third party, upon written notice being given to Meyado. The appropriate changesto the company Loan Stock register will be implemented by Meyado to facilitate such transferfrom the Loan Stock holder to any third party.


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RISK FACTORS

Risks that all investors need to be aware of before purchasing Loan Stock:

MITL proposes to operate a plant using a chemical process to treat scrap-galvanised steel andproduce clean black scrap and zinc powder of a very high level of purity. Revenues will bederived from the sale of these products.

THIS OFFERING INVOLVES A CERTAIN DEGREE OF RISK. YOU SHOULDCAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE YOUDECIDE TO BUY OUR LOAN STOCK. IF ANY OF THE FOLLOWING RISKSACTUALLY OCCUR, OUR BUSINESS, PROSPECTS, FINANCIAL CONDITIONAND RESULTS OF OPERATIONS ARE LIKELY TO SUFFER.

1. Risks related to our financial condition

1.1 We Have Only Been in Business for a Short Period of Time; Your Basis for Evaluating UsIs LimitedWe were incorporated in October 1998. The existing plant in East Chicago has not yetreached full operating capacity. Accordingly, we have only a limited operating history foryou to evaluate our business. You must consider the risks, expenses and uncertainties that anearly stage company like ours faces. In order to address these risks successfully, we must:

- Create awareness of our product;

- Develop the quality of the zinc powder we produce to the target level of 99.9%purity;

- Attract customers;

- Develop strategic relationships;

- Continue to develop and upgrade our technology; and

- Attract, retain and motivate qualified personnel.

There can be no assurance that the Company will be able to successfully address such risks,and the failure to do so could have a material adverse effect on the Company's business,prospects, financial condition and results of operations.

1.2 We Have Never Made MoneyWe have received no revenues from any source to date. As of 30th June 2001, we had anaccumulated deficit of approximately $0. We expect to incur losses until we become fullyoperational.

We will need to generate significant revenues to achieve profitability. We may not achieve

profitability. If we do not generate revenues or if our revenues grow more slowly than weanticipate or if our operating expenses increase more than we expect our business, prospects,financial condition and results of operations will be materially and adversely affected.


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1.3No Current Source of RevenueWe expect to derive our revenues from the sale of clean black scrap steel and zinc powder.However to date, we have not yet signed any supply contracts with prospective purchasers forour product. We cannot guarantee that we will be able to obtain sales in sufficient amounts to

make us profitable, or at all.

1.4 Fluctuation in Operating ResultsOur future revenues and results of operations may fluctuate due to a combination of factors,including:

- The LME zinc price, on which our zinc powder sales will be based;

- Our ability to attract and retain customers;

- Technical difficulties that may arise at the plant;

- Future competition in our market; and

- General economic conditions in North America.

Future revenues are difficult to forecast. If we have a shortfall in revenues in relation to ourexpenses, then our business, prospects, results of operations and financial condition would bematerially and adversely affected.

1.5Initial Public OfferingOur goal is to float the Company on the Nasdaq in or about December 2002. There can be noassurance that such a flotation will be successful, and both the decision to go ahead with theflotation, and the timing thereof, will be subject to a number of factors, including:

- Market conditions;

- The commencement, and the quality of our operating performance; and

- Investor sentiment.

These factors may make the timing, amount, terms and conditions of the intended flotation

unattractive for us. If we are unable to arrange a successful IPO our prospects for furtherexpansion would be materially and adversely affected; and the ability of investors to sell theirshares would be jeopardized.

2. Other risks relating to our company

2.1 We Are Dependent on Our Intellectual PropertyWe believe that the US patent we hold, and the patents applied for in the European Union andJapan, will be critical to our success. We will rely on such patents to protect our intellectualproperty rights. Despite our precautions, it may be possible for third parties to obtain details

of and use our processes without authorization, particularly in developing countries where ourprocess will be of great value and where intellectual property rights are not protected to thesame extent as under the laws of the United States.


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Enforcement of our rights against those who may infringe them may be time consuming andexpensive. There may be patents issued or pending that are held by others and that coverprocesses intended to achieve by other means the same results as our process achieves. Thesuccessful development of such processes could have a material adverse effect on our

business, prospects, financial condition and results of operations.

3. Risks related to this offering

3.1Broad Discretion of Management as to Use of Proceeds.The net proceeds to be received by us in connection with this Offering are allocated for aspecific purpose, namely to complete construction of the plant. Nevertheless, managementwill have broad discretion with respect to the expenditure of such proceeds; and to the extentthat only a portion of the Loan Stock is sold, all or a very significant portion of the proceedsreceived from Investors would be used to pay the expenses incurred in the Offering.

3.2 Shares are held by Meyado as Nominee Shareholder on behalf of existing and futureinvestors.Meyado as Nominee Shareholder owns a controlling 75% interest in MITL and will havesignificant influence in determining the outcome of any corporate transaction or other mattersubmitted to the shareholders for approval, including mergers, consolidations and the sale ofall or substantially all of our assets, and also the power to prevent or cause a change incontrol. The interests of Meyado may differ from the interests of the other shareholders.Among other things, Meyado could use such control to add provisions to our Memorandumand Articles that could have the effect of delaying or preventing a change of control orchanges in our management that a shareholder might consider favourable. Meyado is arelatively small private limited company, substantially controlled by a single majorshareholder, and to the extent that Meyado might be subject to financial difficulties MITLcould be adversely affected.

3.3Absence of Dividends.The Company has not paid any cash dividends on the Shares and does not anticipate payingany such cash dividends in the foreseeable future.

3.4Restrictions on Transferability. No Market for the Loan Stock or Shares.There is no existing public or other market for the Loan Stock. It is not anticipated that any

such market will develop which will permit the sale of the Loan Stock unless and until theCompany is floated on the Nasdaq or a similar market. Such flotation is not guaranteed andconsequently investors may not be able to liquidate their investment in the Loan Stock orShares in case of an emergency or for any other reason.

4. Risks related to this offering

Our proposed business is subject to a number of risks. These include:

- Unexpected changes in regulatory requirements;

- Difficulties and costs of staffing and managing operations, particularly in a phaseof rapid growth;


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- Failure to exploit any market opportunity that exists for our products;

- Technology standards;

- Consequences of potentially adverse tax changes.

Any of these factors could adversely affect our business, prospects, financial condition andresults of operations. Our ability to operate successfully depends on many factors. Thesefactors include:

- Our ability to commence operations and generate a sufficient amount of revenuesas soon as possible;

- The quality of the zinc powder produced;

- The effectiveness of our sales and marketing efforts; and

- The performance of our technology.

5. Risk related to the security over the assets

In the event of default and subsequent liquidation, the full value of MITLs assets, namely theproperty, plant, machinery and patents may not be obtained. Consequently, investors may nothave the full amount of their original investment returned. Further, there is no guarantee thatan immediate sale of the assets can, or will, take place.

THE END

This fact sheet does not form part of any prospectus; it is intended for professional advisers only and if you are not aprofessional advisor you should read it in conjunction with the Key Features document or Prospectus. Applications should onlybe considered on the basis of the full prospectus for the offering concerned. An investment in the offering entails risks, whichare described in the prospectus. However you should be aware that the value of Loan Stock, as well as the income you receivefrom them, can fall as well as rise and consequently you may not get back the amount originally invested. Past performance isnot necessarily a guide to the future. Investing in Private Equity / Venture Capital caries a high level of risk as it may take sometime before the proceeds of the investment can be realised. It may be impossible to exit the investment at a price that theInvestment Advisor considers to be fair. Our charges may have to rise in the future, which could reduce the value of theinvestment. Changes in exchange rates between currencies may cause the value of your investment to diminish or increase.Performance of your investment may be affected by uncertainties in government policies, taxation, currency repatriation

restrictions and other developments in the law and regulations of the countries it invests in. All or most of the protectionsprovided by the UK regulatory system do not apply under this investment, compensation under the UKs investor Compensationscheme will not be available and UK cancellation rules do not apply. This fund does not attempt to track the performance indexillustrated; it is merely shown as an indication of the performance of the market(s) in which the service invests. The service isavailable only in jurisdictions where its promotion and the sale are permitted. Nothing in this fact sheet should be construed asadvice. The service is not offered for sale in the US, its territories or possessions, nor in any jurisdiction in which the service isnot authorised to be publicly sold. This fact sheet had been issued by Meyado and does not promote the products of any othercompanies.

Documents

MITL Loanstock