Mr. Shmulik Porre reports

ALKEMY SIGNS STRATEGIC PURCHASE AGREEMENT TO PURCHASE A GERMAN COMPANY TO FACILITATE EXPANSION INTO THE EUROPEAN RECYCLING MARKET

K.B. Recycling Industries Ltd. (Alkemy) has signed a share purchase agreement to purchase oceansix GmbH, a Germany-based company focused on developing technologies and product solutions from recovered materials, from RAM.ON finance GmbH, a company beneficially owned by Gat Ramon, the founder and managing director of the Cabka Group GmbH, a leading recycling corporation specializing in transforming postconsumer and postindustrial waste into material handling solutions.

"This is a significant step in our mission to expand into the global recycling market," said Shmulik Porre, chief executive officer of Alkemy. "Leveraging our purchase of oceansix, we plan to establish production centres in Europe and to conduct R&D [research and development] towards opening additional profitable product lines."

"With the growing government and consumer awareness of the importance of recycling plastic, I see tremendous potential for Alkemy in the European and global markets. The synergy created by adding oceansix to Alkemy will enable us to expand our product lines and set up production centres in Europe and later in the rest of the world," said Mr. Ramon, the beneficial owner of RAM.ON finance.

Following the transaction, Alkemy and oceansix will focus on the development, production and sale of plastic products for a variety of uses, extruded from plastic films made from postconsumer or postindustrial plastics.

Transaction details

In consideration for oceansix, Alkemy has agreed to issue, at closing, 20,295,037 ordinary shares, at a par value of 0.01 Israeli new shekel each, to RAM.ON finance. The transaction also includes earnout payments involving the issuance of additional ordinary shares to RAM.ON finance upon the achievement of certain milestones, including the following:

• The issuance of 10 million additional ordinary shares if Alkemy is able to successfully establish an operational manufacturing site outside of Israel for the production of products utilizing oceansix's or the company's technology or processes within two years of the closing of the transaction;
• The issuance of 4,593,773 additional ordinary shares if Alkemy is able to successfully establish a second manufacturing site, as described herein, within two years of the closing of the transaction;
• The issuance of six million additional ordinary shares if Alkemy is able to successfully commercialize and generate revenues from oceansix's technology within five years of the closing of the transaction;
• The issuance of 20 million additional ordinary shares if, within the five-year period following the closing, the annual sales of products utilizing oceansix's technology reaches a minimum of $40-million (U.S.) and 0.338915 ordinary share for every $1 (U.S.) in sales in excess of $40-million (U.S.), altogether up to a maximum amount of 74,111,190 ordinary shares;
• The issuance of 33,166,312 additional ordinary shares, if, within the five-year period following the closing, the annual sales of products utilizing oceansix's technology exceeds $300-million (U.S.).

The maximum number of ordinary shares to be issued to RAM.ON finance, if all the aforementioned milestones are satisfied, is limited to 148,166,312 ordinary shares.

In connection with the purchase of oceansix, Sullam Holdings L.R. Ltd. and Tedea Technological Development and Automation Ltd., two of Alkemy's significant shareholders, notified the company that they will support the transaction at the shareholder meeting that will be scheduled in order to approve the transaction. Such shareholders have also agreed to enter into a shareholder agreement with RAM.ON finance, which will include a lock-up period of three years with respect to the sale of more than 25 per cent of each of the shareholders' holdings in Alkemy, as well as a right of first refusal for each of the shareholders regarding off-market sales of 10 per cent of such shareholder's holdings in Alkemy, during the period commencing on the end of the lock-up period and until the fifth anniversary of the closing of the transaction.

The aforementioned shareholders have also agreed to co-operate and exercise their votes as shareholders such that the board of directors of the company will consist of eight members, with RAM.ON finance recommending three persons to be nominated and appointed as board members (one of whom shall act as chair of the board). It is the intention of RAM.ON finance to appoint board members who are industry experts and who will take an active role in the company and the development of the company's business.

Based on the agreement between said shareholders, Tedea may recommend the identity of one person to be nominated and appointed as a board member, Sullam may recommend the identity of one person to be nominated and appointed as a board member, and one person to be nominated and appointed as a board member will be recommended by RAM.ON finance, Tedea and Sullam unanimously. The remaining two members of the board shall be external directors (as such term is defined under the Israeli Companies Law, 5759-1999) who shall be nominated and appointed in accordance with applicable law.

The transaction is subject to approval by the shareholders of Alkemy, regulatory and TSX Venture Exchange approvals, and other customary closing conditions.

About K.B. Recycling Industries Ltd. (Alkemy)

Alkemy is an environmental technology company based in Israel that has developed a unique plastic recycling process for plastic bags and sheets traditionally not considered economically viable for recycling. Alkemy employs a dynamic one-step process that does not require separate recycling and production plants. Alkemy's process includes both recycling and finished product manufacturing in a single process called waste to product, allowing Alkemy to reduce the cost of the recycled plastic as raw materials and increase the profit margin per metric tonne.

We seek Safe Harbor.