RB nr 50/2007

Legal basis: § 5 subpar. 1 pt. 1 of RO and § 7 of RO

The Management Board of MCI Management S.A. informs that on July 16, 2007 Digital Avenue – a subsidiary company owned by the Fund signed an investment agreement with the shareholders of Medousa Sp. z o.o. under which Digital Avenue shall take over from the shareholders of Medousa in total 74.00% of shares in Medousa Sp. z o.o. for PLN 5,100,000 (five million one hundred thousand). Digital Avenue shall acquire 740 (seven hundred forty) shares in Medousa at their nominal price of PLN 52.00 per one share at the price of PLN 6,891.8 (six thousand eight hundred ninety one and eight tenths) per one share. The payment for the shares shall be made in cash from the funds raised from the sale of shares in Digital Avenue in private placement preceding introduction of the Company on NewConnect. Under the provisions of the investment agreement also on July 16, 2007 agreements obligating to sell pro rata the shares in Medousa to Digital Avenue were signed with the shareholders of Medousa Sp. z o.o. The transaction shall be finalized and closed after the conditions precedent are fulfilled. The shareholders of Medousa shall be entitled to sell the remaining shares in the form of PUT options to Digital Avenue over 3 years after signing the investment agreement; the conditions of exercising the PUT options shall be connected with the results of popularity achieved by websites and sales. In 2006 Medousa Sp. z o.o. reached sales at the level of PLN 583 thousand and PLN 131 thousand in net profits.

The objective of the transaction is to finalize the first stage of building the Capital Group at the level of Digital Avenue S.A. which shall focus on digital entertainment for the Internet users and mobile telephony. Medousa Sp. z o.o. is the owner of such entertainment websites as fotosik.pl, sms.pl, supergry.pl and other websites with the total number of visits in excess of 3 million Real Users monthly (acc. to MegaPanel PBI). Digital Avenue is going to raise capital from private placement preceding the introduction of the Company on NewConnect.

In order to reach the set objectives and finance the takeover of Medousa Sp. z o.o. the Extraordinary General Meeting of the Shareholders of Digital Avenue adopted on July 17, 2007 a resolution on issuing new series B bearer shares for the value of up to PLN 214 000 (two hundred fourteen thousand zlotys). Thus the initial capital of Digital Avenue shall increase from 642 000 to maximum 856 000 shares with their nominal value of PLN 1.00 per one share. The shares of new issue shall represent maximum 25% of the shares after registration of the increase of the initial capital. The shares of new issue shall be sold in the private placement preceding the introduction of the Company on NewConnect. The General Meeting of the Shareholders of the Company also authorized the Management Board to take steps connected with the introduction of the series A and B shares of the Company and the rights to series B to trading organized in the Alternative System of Trading New Connect and consent to dematerialization and deposit the shares of the company A and B and the rights to series B in the National Depository for Securities in Warsaw (KDPW). Digital Avenue shall get up to PLN 10 million from the sale of shares in private placement.

Furthermore, MCI Management S.A. concluded on July 16, 2007 agreements of sale of shares in Digital Avenue to the persons managing in the Digital Avenue Group and the shareholders connected with IPLAY Sp. z o.o. and Medousa Sp. z o.o. Under the concluded agreements of sale of shares after the conditions precedent are fulfilled MCI Management shall sell in total 189,315 of the shares in Digital Avenue with their nominal value of PLN 1.00 per each share representing 29.49% of the registered initial capital of Digital Avenue for the total price of PLN 189,315.00. The transactions shall conclude the stage of building the shareholding ownership structure of Digital Avenue before going to NewConnect and they shall be made under the investment agreements concluded with the shareholders of IPLAY Sp. o.o. and Medousa Sp. z o.o.
After the transaction of sale of shares in Digital Avenue the MCI Management SA stake in the registered initial capital of Digital Avenue shall be 70.5%.

The sold assets represent over 20% of the share capital of Digital Avenue S.A. and are considered assets of significant value.
The investment is a long-term investment. There are no connections referred to in § 7 subpar. 6 of RO.