Mersington Capital to acquire Navaho Networks

The Letter of Intent provides for Mersington to acquire, pursuant to a formal take-over bid in accordance with applicable legislation, all of the issued and outstanding shares of Navaho such that, upon completion of the transaction, the current shareholders of Navaho will collectively exercise control over Mersington and Navaho will become a wholly owned subsidiary of Mersington. Pursuant to the Proposed Acquisition, Mersington will change its name to Navaho Payment Systems Inc. or a similar name. The Letter of Intent provides for the acquisition by Mersington of all of the issued and outstanding common shares and special shares of Navaho for an aggregate purchase price of $25,599,069, calculated as to $23,599,069 for the Navaho common shares and $2,000,000 for the Navaho Special shares. Assuming all of the common shares and special shares of Navaho are acquired, the purchase price shall be payable by the issuance of up to 94,396,276 Mersington common shares at a deemed price of $0.25 per Mersington common share and 8,000,000 Mersington Special shares at a deemed price of $0.25 per Mersington Special share. Upon completion of the Proposed Acquisition, and assuming all of the common shares and Special shares of Navaho are acquired, there will be approximately 103,374,776 Mersington common shares and 8,000,000 Mersington Special shares outstanding. The outstanding warrants and stock options of Navaho will, upon completion of the Proposed Acquisition, be exchanged for warrants and stock options of Mersington, on a one-for-one basis, as adjusted for the transaction. Accordingly, upon completion of the Proposed Acquisition, there will be approximately 8,754,132 Mersington warrants outstanding exercisable for 8,754,132 Mersington common shares at $0.25 per share and approximately 6,729,256 Mersington stock options exercisable for 6,729,256 Mersington common shares at $0.25 per share. In addition, the shareholders of Mersington will be asked to authorize the creation of a stock option plan and set aside up to 20% of the Mersington common shares for previous plan grants and for the grant of stock options in order to facilitate the retention and recruitment of directors, officers, employees and service providers. Navaho is in the business of developing and delivering credit card free transaction services to merchants who are selling products or services over the Internet. Online merchants lose a large percentage of their possible sales when credit cards are offered as the only online payment processing method. Navaho provides safe and convenient, credit card free, methods of accepting and processing payments from an online home shopper. Navahos services provide merchants with the unique ability to monetize a greater percentage of their pass through traffic. Navaho has developed and deployed two proprietary payment technologies: 900 Pay and eWalletXpress. Both of these technologies provide merchants with the ability to accept online payments from home shoppers that do not wish to use a credit card online. Those shoppers using the Navaho suite of services will have the flexibility to make an online payment or purchase either through a telephone bill payment, debit payment or ewallet account payment. In concert, Navahos suite of payment processing services improve an online merchants bottom line by increasing customer acquisition while lowering the overall cost of processing transactions. Increased customer acquisition means that merchants grow sales without adding to sales and marketing expenditures. Navahos services provide merchants and home shoppers alike with secure and easy to use credit card free purchasing alternatives. Navaho is positioned to capitalize on the growth of e-commerce based business-to-consumer (B2C) transactions through its proprietary secure payment transaction solutions. Navahos payment processing solutions are utilized by so