AJA Merchant Banking: Agreement to Acquire Advanced Flex, Inc.

VANCOUVER, British Columbia--(BUSINESS WIRE)--March 6, 1998-- AJA Merchant Banking Corporation (OTCBB:AJBC) ("AJBC") announces that on February 26, 1998, it reached an agreement to acquire Advanced Flex, Inc. ("AFI") of Minnesota through a management led buyout by AFI's key principal management for a purchase price of approximately US $24,500,000. The actual purchase price is subject to certain adjustments during a 45 day due-diligence period in cooperation with the principal management of AFI, its auditors, and counsel.

According to the terms of the agreement, a series of institutional term debt financings through the merchant bank will provide the primary source of funding for the acquisition. Principal management and AJBC will provide approximately 20 percent to 25 percent of the current projected purchase price as equity funding. Upon closing, AFI will become the first major acquisition and second wholly owned subsidiary of the merchant bank.

AJBC intends to continue to focus its initial acquisitions on technology related companies such as AFI in order to build upon the market share of AFI in multi-layer circuit board manufacturing and on AFI's research and development of microcircuit board technology.

AFI is a diversified printed circuit board manufacturer that for over 26 years, has specialized in the production of multi-layered printed circuit boards for the telecommunications, medical, computer, aerospace, defense, and general electronics industries. The company provides leading edge circuit board design and production capability. Its customer base includes Lucent Technologies, GE Medical, Seagate Technologies and Lockheed Martin.

AFI has received nationally recognized awards as surveyed by Printed Circuit Fabrication Magazine. In 1993 and 1994, the company received "Best PCB Manufacturing Quality" service awards for manufacturing quality. During 1994, AFI received "Highest Technology Award" from Printed Circuit Fabrication Magazine, an award from the State of Minnesota regarding its handling of environmental responsibilities on waste management, recycling, and water conservation as well as ISO 9001 certification.

AFI has demonstrated exceptional growth over the past 10 years. In fiscal year 1997, the company had revenue of approximately $27,600,000 and fiscal year 1998 revenue is expected to exceed $30,000,000. During the past two years, AFI has successfully restructured its facilities by consolidating operations from two large plants into one while revamping the second plant as a research and development center for advanced microcircuit board manufacturing.

"The Management of AFI is very pleased with the progress we have made in strengthening AFI since we began our corporate consolidation of our operations and the expansion of sales and production at our Minnetonka facility. AFI is very excited about our engaged buyout with the merchant bank since it provides us with additional opportunities to immediately participate in key growth avenues in this industry" commented Michael Halbach, Chief Financial Officer of AFI.

Mr. A.J. Alda, President and CEO of AJBC responded that "Our management has been following the progress of AFI and we see significant potential in participating in their management led buyout. We believe that AFI is undervalued and this company will become a leader in bringing to market the next generation of microcircuit boards. For us, this is the greatest intrinsic value of AFI. During the next two to three years, our objective is to augment the growth of AFI through a series of integrated acquisitions of companies that participate in different markets. These acquisitions will operate under the new name of AFI Group of Companies, Inc., ("AFI Group") and will enhance the diversity and market share of AFI Group and enable it to participate in a series of market streams on a global scale."

Mr. Alda continued, "After reviewing the recent restructuring and reapplication of its sales and production focus and considering AFI's success to-date, we have total confidence in the management team of AFI. The merchant bank has committed an initial $2,500,000 in research and development funding for AFI's second facility that may be renamed AFI Research and Development, Inc. once this deal is completed. The research being conducted by AFI represents the most advanced break through technology concerning high end circuit boards. Our merchant bank is very excited about this acquisition."

Mr. Larry Bergman, CEO of AFI, will become Chairman and CEO of the AFI Group of Companies, Inc. Mr. Bergman has 30 years experience in the circuit board industry and is a recognized expert in this field. Mr. Bergman will also be elected as a board member of the merchant bank where he will contribute his expertise and knowledge in technology acquisition activities. Mr. Michael Halbach, CFO of AFI for the past 7 years, will become Chief Operating Officer of the AFI Group on the closing date of the acquisition.

Larry Morningstar, VP Corporate Affairs

-0- This press release may contain forward looking statements that involve risks and uncertainties which could cause the actual results to differ materially from those intended or anticipated by the Company.

No stock exchange has approved or disapproved the information contained herein.

CONTACT: A.J. Alda & Associates, Inc.

A.J. Alda, 604/602-9886

Email: [e-mail]

http://www.aja.com

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CorpReports.com Inc., 510/947-4212