MEARS Technologies, Inc. entered into memorandum of understanding to acquire K2 Energy Limited (ASX:KTE) from Asia Union Investments Pty. Limited, Golden Words Pty Ltd and other sellers in a reverse merger transaction on April 4, 2012. MEARS Technologies, Inc. signed a memorandum of agreement to acquire K2 Energy Limited (ASX:KTE) from Asia Union Investments Pty. Limited, Golden Words Pty Ltd and other sellers in a reverse merger transaction on December 4, 2012. Under the terms of agreement, K2 will issue 800 million K2 shares to Mears equity holders for all of the issued capital of Mears including all common stock, warrants and options. The terms agreed are that Mears shareholders are expected to be entitled to approximately 77% of the merged entity and K2 shareholders approximately 23%. The merged entity is intended to be listed on ASX, retaining the listing of K2 under a new name expected to be Mears Technologies Limited. The merged entity is expected to conduct its business from offices in Sydney, the San Francisco area, and possibly Boston. The number of merger shares will be adjusted by any new issue of ordinary shares or equity securities convertible into new ordinary shares by K2, by any reduction in the number of ordinary shares outstanding in the capital of K2 by way of a capital reduction or consolidation of shares will result in K2 adjusting down the absolute number of merger shares so that the merger ratio is maintained and by any fund raising completed directly by Mears during the interim period.

Within three months of the date of completion of the merger, the merged entity will formally establish an incentive plan for senior management of the merged Entity. The Board members of the merged entity will be selected by the K2 Board and Mears Board on a pro rata basis according to the merger ratio. Additional persons who are currently Directors of Mears will be appointed to be Directors of K2 and there would be no senior management changes. This agreement shall automatically terminate if the terms and condition are not met. Completion of the merger is subject to the completion of a fund raising by K2 in the minimum amount of AUD 7.5 million in new capital via the issue of ordinary shares subscribed in the merged entity simultaneous with the closing of the merger, at a minimum “pre-money” value of at least AUD 30 million for the merged entity. The merger is subject to shareholder approval of K2 and Mears, third party approval, approval of the definitive acquisition agreement by the Mears Board of Directors, official quotation of the merger shares on ASX and any other regulatory approvals. The general meeting to consider the resolutions is expected to be held in December 2012. The merger is expected to close no later than December 31, 2012 but in no case later than March 1, 2013. The merger deadline may be extended by mutual agreement of the Boards of K2 and Mears respectively. As of February 21, 2013, MEARS shareholders approved the merger. As on April 17, 2013, the general meeting of the shareholders of K2 Energy has been postponed from April 19, 2013 to May 2, 2013. General Meeting of shareholders of K2 Energy has been postponed from May 2, 2013 to May 31, 2013. Mick Bain of Wilmer Cutler Pickering Hale & Dorr LLP acted as legal advisor for Mears Technologies. Greg Golding of King & Wood Mallesons acted as legal advisor for K2 Energy.

MEARS Technologies, Inc. cancelled the acquisition of K2 Energy Limited (ASX:KTE) from Asia Union Investments Pty. Limited, Golden Words Pty Ltd and other sellers on June 25, 2013. MEARS Technologies, Inc. and K2 Energy Limited has also decided to cancel the shareholder meeting scheduled for June 28, 2013.