XXL.EE

ANNOUNCEMENT



RESOLUTIONS OF SHAREHOLDERS' EXTRAORDINARY GENERAL MEETING



The extraordinary general meeting of shareholders of AS XXL.EE 

(address Tartu St. 87D, Tallinn; registry code 10040414) was attended 

by OÜ CC Computer (represented by chairman Sanjay Jaanus 

Mody), which owns 1,021,487 AS XXL.EE shares or 51.0744% of share 

capital. 



The extraordinary general meeting of shareholders was held on 

18.06.2000, beginning at 15:00, in the rooms of AS XXL.EE (address 

Pärnu St. 139, Tallinn). According to the Supervisory Board decision 

of 08.06.2000, the agenda of the EGM included the following items:



a) 

Appointment of chairman and secretary to the meeting;

The EGM decided unanimously to appoint Arho Anttila to chair the 

meeting; the minutes of the meeting were taken by Märt Viitas. 



b)

Management's report about activities in 1999 and 2000 financial 

years;



c)		 

Cancellation of resolutions made by 29.04.2000 extraordinary 

general meeting of AS XXL.EE shareholders (agenda items 1.1.- 1.10.);

The EGM decided unanimously to cancel the resolutions made by 

29.04.2000 extraordinary general meeting of AS XXL.EE shareholders 

(agenda items 1.1.- 1.10.);



d)

Reduction of AS XXL.EE share capital;

The purpose of share capital reduction is to cover net loss posted in 

1998/99 financial year (net loss in 01.07.1998-31.12.1999 financial 

year was EEK 53,806,289). The company's reserve capital funds are not 

sufficient to cover the loss, it also lacks other reserves. Proceeds 

from simplified share capital reduction will be used to cover the 

company's loss. The company does not have treasury shares. The 

company's chief executive will make a proposal to shareholders' 

general meeting to reduce the company's share capital as follows: 

- share capital amount will be reduced in simplified manner, for 

purpose of covering the company's net loss, in accordance with the 

provisions of article 1 of § 362 of the Commercial Code;

- share capital amount will be reduced by 50%, or by EEK 10,000,000 

(ten million), through cancellation of shares. Altogether 

1,000,000 (one million) AS XXL.EE shares will be cancelled, 

whereas all cancelled shares are of the same type;

- shares will be cancelled on equal basis from amongst all shares, 

i.e. 50% of shares owned by a shareholder are to be cancelled. If 

a shareholder owns odd number of shares, 1 (one) share less is to 

be cancelled (e.g. if a shareholder owns 3 shares, 1 share is to 

be cancelled), and such non-cancelled shares will be cancelled 

from the account of shareholder who owns the largest number of the 

company's shares, provided that this shareholder agrees to this 

decision. Cancellation of shares will take place, and cancelled 

shares are removed from circulation on 03.07.2000 at 8:00 a.m., in 

accordance with a shareholders' list from the Estonian Central 

Depository for Securities. No payments will be made to 

shareholders upon reduction of share capital. 



The EGM decided unanimously to reduce AS XXL.EE share capital under 

the above mentioned terms and conditions;



e)		 

AS XXL.EE chief executive's written clarification about share 

capital increase, incl. grounds for cancellation of pre-emptive right 

and issue price.



f)		 

Increase of AS XXL.EE share capital;

The company's chief executive will make a proposal to shareholders' 

general meeting to increase the company's share capital as follows:

- share capital amount will be increased in a bid to improve the 

company's liquidity. Share capital amount will be increased 

through additional payments;

- share capital amount will be increased through issue of 375 000 

(three hundred and seventy-five thousand) same type shares, at EEK 

10 (ten) par value. The new share capital amount will be EEK 

13,750,000 (thirteen million seven hundred and fifty thousand);

- new shares will be subscribed and payments for the subscribed 

share will be made at the venue of the company from the period of 

adoption of the resolution by the shareholders' general meeting, 

until 03.07.2000 at 8:00 a.m. The shares will be issued at price 

of EEK 30 (thirty) above par per share. If the share issue is 

fully subscribed and paid, the company will receive EEK 15,000,000 

(fifteen million) through share capital increase. The payment for 

shares will take place in monetary form in 2/3 part (up to 

250,000 shares), to the company's account at Hansapank (code 767) 

No. 221001123451, and in 1/3 part (up to 125,000 shares) through 

non-monetary payment in the form of monetary claims against AS 

XXL.EE. Each subscriber must subscribe and pay for minimum of 

12,500 (twelve thousand and five hundred) shares, i.e. minimum 

issue price of EEK 500,000 (five-hundred thousand). The 

shareholders will not be granted a pre-emptive right to subscribe 

for shares to be issued. In case of oversubscription of share 

issue, the supervisory board will decide on pre-term ending of 

subscription period, also allocation of shares between the 

subscribers and cancellation of oversubscribed shares. 



The EGM decided unanimously to increase AS XXL.EE share capital under 

the above mentioned terms and conditions;





MANAGEMENT'S REPORT ABOUT ACTIVITIES IN 1999 AND 2000 FINANCIAL 

YEARS;



XXL.EE predecessor AS Pennu was established in 1988. In June 1996 the 

company was registered at the Commercial Registry under name AS Pennu 

Computer Technology; after restructuring into a concern the company 

introduced a new business name AS Pennu Computer Technology Group 

(hereinafter AS PCTG) in October 1997. PCTG was the first Estonian 

industrial company to be listed in Tallinn Stock Exchange (fall 

1996); in fall 1997, trade in AS PCTG shares began on the stock 

exchanges in Frankfurt and Munich.

The main fields of activity of AS PCTG were creation, development, 

arrangement of production and application of information processing, 

automatics and electronic systems. 

In April 1998 AS PCTG obtained ISO 9002 quality certificate, which 

covers production and sale of computers. 

In June 1998 PCTG's computers passed the tests to obtain CE type 

certificate.

In 1998-1999 financial year the company continued cooperation with 

Western Digital Corporation, and renovated the WDC-produced hard 

disks in PCTG Keila computer factory. The annual output volume stood 

at 12,000 hard disks; the company employed 2 workers.



In 1998 PCTG established franchise sales offices of in Tallinn, 

Tartu, Viljandi and Pärnu. The aim of establishment of the chain was 

to increase its market share, better servicing of corporate clients 

and expansion of product list.



In August 1998 the company opened a representation office in Riga, 

named PCT Riga.



Due to worsened situation on Estonian money market and problematic 

access to cheap capital, the company discontinued in June 1998 for 

indefinite period of time the issue of leases and loans by PCTG's 

subsidiary PCT Liisingu AS.



In fall 1998 the company sold its 60% holding in Järve Kinnisvara 

Hoolduse AS; the main activity field of Järve Kinnisvara Hoolduse AS 

was construction and administration of office building located at 

Järvevana St. 9, Tallinn.



In October 1998 the company sold its 30% holding in ID Süsteemide 

AS; the main activity field of ID Süsteemide AS was information 

systems designing.



As a part of new sales strategy, the company decided to dispose its 

holdings in computer shops in the beginning of 1999. In April 1999 

the company sold its holding in A&Ü Majandustarkvara. In June 1999 

the company sold its 20% holding in AS Kernel.



General worsening of Estonian economy had a substantial impact on 

PCTG's output volumes. In financial year of 01.07.1998-31.12.1999 the 

company produced altogether 4,452 computers, down by almost third 

compared to the previous financial year's results (6,941). In 

September 1999 PCTG closed its Keila factory and transferred the 

production activities to subsidiary AS PCT Arvutid.



In H2 1999 PCTG decided to expand its activities to the field of new 

media services through acquisition and integration of company named 

OÜ Internetivärav XXL. The aforementioned company offered digital 

media services on the Estonian market and administrated the first 

Estonian portal xxl.ee.



In November 1999 the company's share capital was increased by 400,000 

shares (EEK 4,000,000), of which 100,000 shares were directed to the 

owners of OÜ XXL Internetivärav, and 300,000 shares to shareholders 

of PCTG. The issue price of EEK 10 par value shares was EEK 20. The 

issue subscription period was 12.-25.11.1999; the issue was 

oversubscribed. Owners of XXL Internetivärav made a non-monetary 

payment for 100,000 shares; shareholders of PCTG made a monetary 

payment for 300,000 shares.



At the end of 1999 the company established a digital media services 

company XXL Digital SIA in Latvia, where AS XXL.EE has 75% holding. 

This was the first step towards the company's goal to provide 

new media services on international level, in a bid to develop into 

one of the leading East-European digital media agencies. 



Between 01.07.1998 - 31.12.1999 the consolidated and audited net 

turnover of AS XXL.EE totaled EEK 110,202,959. Consolidated and 

audited net loss stood at EEK 53,806,289.



The monthly salary of CEO stood at EEK 5,000 (EEK 15,000 until 

January). 

The Management Board's salaries during the period of 01.07.1998-

31.12.1999 amounted to EEK 493,800. During the same period the 

Supervisory Board members were remunerated in the total amount of EEK 

313,656.



Total salaries amounted to EEK 3,959,989; the company employed 

altogether 28 workers.



In this year the development of AS XXL.EE in the field of new media 

services has continued as planned: the turnover of all web design 

services providing division in Estonia and Latvia (XXL Digital) has 

substantially grown compared to previous periods. A subsidiary is to 

be opened in Lithuania. 

In cooperation with Suomen Infopiste, the xxl.ee portal was 

redesigned into a city of Tallinn-centered vertical portal. AS XXL.EE 

owns 49% holding in AS Linnaportaal, an administrator of this portal. 

Similar city portals are to be launched in Latvia and Lithuania. 



XXL.EE has also made preparations to terminate activities that do not 

fall into the scope of new media services. The company plans to sell 

in the near future its shares in computer producers PCT Arvutid, PCT 

Riga and PCT Liising.





AS XXL.EE CHIEF EXECUTIVE'S WRITTEN CLARIFICATION ABOUT SHARE 

CAPITAL INCREASE, INCL. GROUNDS FOR CANCELLATION OF PRE-EMPTIVE RIGHT 

AND ISSUE PRICE.



AS XXL.EE posted an EEK 53,806,289 net loss in 1998-1999 financial 

year, as a result of which the company's owners' equity fell to EEK 

-4,912,157. Share capital amount will be increased in a bid to 

improve the company's liquidity, to secure the company's successful 

development. Share capital amount will be increased through 

additional payments. Share capital amount will be increased through 

issue of 375,000 (three hundred and seventy-five thousand) same type 

nominal shares, at EEK 10 (ten) par value. The new share capital 

amount will be EEK 13,750,000 (thirteen million seven hundred and 

fifty thousand). New shares will be subscribed and payments for the 

subscribed share will be made at the venue of the company from the 

period of adoption of the resolution by the shareholders' general 

meeting, until 03.07.2000 at 8:00 a.m. The shares will be issued at 

price of EEK 30 (thirty) above par per share. If the share issue is 

fully subscribed and paid, the company will receive EEK 15,000,000 

(fifteen million) through share capital increase. The payment for 

shares will take place in monetary form in 2/3 part (up to 250,000 

shares), to the company's account at Hansapank (code 767) No. 

221001123451, and in 1/3 part (up to 125,000 shares) through non-

monetary payment in the form of monetary claims against AS XXL.EE.

Each subscriber must subscribe and pay for minimum of 12,500 (twelve 

thousand and five hundred) shares, i.e. minimum 

issue price of EEK 500,000 (five-hundred thousand). The shareholders 

will not be granted a pre-emptive right to subscribe for shares to be 

issued. The shareholders will not be granted a pre-emptive right in a 

bid to facilitate and speed up the processes of inclusion of new 

major investors. 



In case of oversubscription of share issue, the supervisory board 

will decide on pre-term ending of subscription period, also 

allocation of shares between the subscribers and cancellation of 

oversubscribed shares.





Arho Anttila arho@xxl.ee

Chief Executive

+372 6 507 500