Joy Spreader Group Inc. — Capital/Financing Update 2009

Oct 6, 2009

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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AGTech Holdings Limited 亞博科技控股有限公司 [*]

(incorporated in Bermuda with limited liability)

(Stock Code: 8279)

DISCLOSURE PURSUANT TO RULE 17.10 OF THE GEM LISTING RULES (Acquisition of up to a maximum of approximately 55.0% equity interest in Gextech Holdings Limited)

Financial Adviser to the Company

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The Board is pleased to announce that on 6 October 2009, the Investor (being an indirect wholly-owned subsidiary of the Company) entered into respective agreements with, amongst others, Gextech to subscribe for new shares in, and a call option for the issue of Convertible Notes by, Gextech. Following Completion, the aforesaid new shares, together with the shares that are issuable to the Investor upon full conversion of the Convertible Notes, in Gextech shall allow the Investor to hold up to a maximum of approximately 55.0% of the enlarged issued share capital of Gextech.

Gextech Group is principally engaged in the research, development and provision of software relating to interactive virtual sports gaming content and the provision of solutions for online gaming and lottery operators, including ancillary services. Its clients include internationally renowned sports betting bookmakers, gaming machine and casino operators, and leading satellite broadcasters in the United Kingdom, Australia and Europe. Gextech Group has operations in the United Kingdom and Spain. It has developed its own proprietary series of games known as the “Fantastic League” – this unique virtual football platform combines advanced computer graphics and three-dimensional animation, plus its mathematical intelligence that has the ability to create live multiple virtual fixed-odds betting football games at high frequency over multiple distribution channels (Internet, broadcast, lottery sales terminals and mobile phones).

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Following Completion and leveraging on the Group’s strong presence in the sports lottery market in the PRC, the Investor (or its nominated entity within the Group) shall act as the sales agent of the Gextech Group to promote, sell or distribute the “Fantastic League” products of the Gextech Group in the PRC, Macao and Hong Kong. Apart from this synergy between the Group and the Gextech Group, the Board believes that the Acquisition will bring about various benefits to the Group as described in detail in the section headed “Reasons for and benefits of the Acquisition” below in this announcement.

The Acquisition does not constitute a notifiable transaction for the Company under the GEM Listing Rules. The Company is making this announcement pursuant to Rule 17.10 of the GEM Listing Rules.

The Acquisition is subject to the fulfilment or waiver (at the Investor’s sole discretion) of a number of conditions precedent to Completion as stated in this announcement below. Accordingly, the Acquisition may or may not proceed. Shareholders and investors should exercise caution when dealing in the Shares.

This announcement is made by the Company pursuant to Rule 17.10 of the GEM Listing Rules.

THE ACQUISITION

The Board is pleased to announce that on 6 October 2009, the Investor (being an indirect whollyowned subsidiary of the Company) has entered into the following agreements for the Acquisition of Gextech which, following Completion, shall allow the Investor to hold up to a maximum of approximately 55.0% of the enlarged issued share capital of Gextech if the Investor exercises its right to convert the Convertible Notes in full:

• (1) Subscription Agreement with Gextech and the Guarantors, whereby the Investor shall subscribe for new shares in Gextech representing approximately 35.53% of the total enlarged issued share capital of Gextech immediately upon Completion at a consideration of £2,500,000 (or approximately HK$30,750,000), which shall be settled in cash upon Completion; and

• (2) Call Option Agreement with Gextech, whereby the Investor has the right (i.e. call option) to require Gextech to issue to the Investor Convertible Notes in the principal amount of up to £1,521,993.50 (or approximately HK$18,720,520) convertible into shares of Gextech at a conversion price per share in Gextech of £0.05 (or approximately HK$0.615) for a period of two years from the date of the Call Option Agreement.

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, as at the date of this announcement, Gextech, the Guarantors and the substantial shareholders of Gextech are all third parties independent of and not connected with the Company and the directors, chief executives, management shareholders or substantial shareholders of the Company or its subsidiaries, or any of their respective associates (as defined under the GEM Listing Rules).

Full conversion of the Convertible Notes, together with the shares in Gextech subscribed by the Investor under the Subscription Agreement, will allow the Investor to hold approximately 55.0% of the total enlarged issued share capital of Gextech.

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Other key terms of the Convertible Notes are as follows:

• Conversion period: The Convertible Notes can be converted in whole or in part by the Investor at any time within 2 years from the date of issuance of the Convertible Notes;

• Coupon rate: 5% per annum;

• New shares in Gextech converted under the Convertible Notes shall rank equally in all respects with existing issued shares of Gextech;

• If any portion of the Convertible Notes is not converted by the Investor by their maturity date, being the date falling on the second anniversary of the date of issuance of the Convertible Notes, Gextech shall be required to redeem the outstanding balance of the Convertible Notes at cost plus any accrued interest; and

• The Investor shall exercise part of the aforesaid call option for an amount up to £500,000 (or approximately HK$6,150,000) under the Call Option Agreement upon satisfaction of certain business performance targets to be achieved by the Gextech Group.

Upon the Investor exercising the option to subscribe for at least £500,000 in principal value of Convertible Notes under the Call Option Agreement, Gextech shall, and shall procure Gex Technologies (UK) Limited and Gex Technologies S.A. (both of which are Gextech’s wholly owned subsidiaries, together with Gextech shall be known as the “Chargor”), grant to the Investor fixed and floating charges over the Chargor’s assets and undertakings to secure all the present and future obligations and liabilities of the Chargor under or pursuant to the Convertible Notes.

Immediately upon Completion (that is, before the Investor holding any shares in Gextech that are issuable to the Investor upon conversion of any portion of the Convertible Notes), the Investor shall hold only approximately 35.53% of the then enlarged issued share capital of Gextech. Accordingly, Gextech shall be treated as an associated company of the Company at that time. In the event that the Investor exercises the aforesaid call option under the Call Option Agreement and convert the Convertible Notes to such extent as would enable it to top up its shareholdings in Gextech to more than 50% following Completion, Gextech shall then be treated as a subsidiary of the Company.

The Acquisition does not constitute a notifiable transaction for the Company under the GEM Listing Rules.

Conditions precedent to Completion:

Completion of the Subscription Agreement is conditional upon the following principal outstanding conditions:

• (a) the board of directors of Gextech passing a resolution for approving, amongst others, the matters contemplated under the Subscription Agreement, the Call Option Agreement and the Sales Agency Agreement;

• (b) the Investor being reasonably satisfied with the results of its legal and financial due diligence on the Gextech Group;

• (c) the execution of the Sales Agency Agreement and the Call Option Agreement by Gextech and the Investor; and

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• (d) the execution of the instrument for the Convertible Notes by Gextech and its subsidiaries.

The Call Option Agreement shall take effect subject to the Completion.

The Acquisition is subject to the fulfilment or waiver (at the Investor’s sole discretion) of a number of conditions precedent to Completion as stated above. Accordingly, the Acquisition may or may not proceed. Shareholders and investors should exercise caution when dealing in the Shares.

Long-stop date:

The above conditions precedent to Completion shall have been fulfilled and/or waived by the Investor (at its sole discretion) on or before 31 October 2009 (or such other later date as is agreed between the parties to the Subscription Agreement).

Date of Completion:

The date of Completion is a date to be agreed between Gextech and the Investor being not later than 5 Business Days after the date on which the above conditions precedent or the last of them shall be fulfilled or waived.

INFORMATION ON THE GEXTECH GROUP

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(websites of Gextech: http://www.gextech.com and http://www.fantasticleague.com)

Gextech Group is principally engaged in the research, development and provision of software relating to interactive virtual sports gaming content and the provision of solutions for online gaming and lottery operators, including ancillary services. Its clients include internationally renowned sports betting bookmakers, gaming machine and casino operators, and leading satellite broadcasters in the United Kingdom, Australia and Europe. Gextech Group has operations in the United Kingdom and Spain. It has developed its own proprietary series of games known as the “Fantastic League” – this unique virtual football platform combines advanced computer graphics and three-dimensional animation, plus its mathematical intelligence that has the ability to create live multiple virtual fixed-odds betting football games at high frequency over multiple distribution channels (Internet, broadcast, lottery sales terminals and mobile phones).

INFORMATION ON THE GROUP

The Company is an investment holding company incorporated in Bermuda and its issued Shares are listed on GEM. The Group is a fully integrated solutions provider for the sports lottery and gaming market. It is principally engaged in the provision of lottery and gaming related products and services, including:

• CONSULTING: Marketing consultancy for provincial and regional sports lottery markets in the PRC;

• RETAIL: Lottery shops and retail chain management and marketing consultancy;

• SOFTWARE GAMES: Lottery and gaming software and system development; and

• HARDWARE: Supply of lottery sales terminals and accessories.

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The Group has operations in various provinces in the PRC.

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Group has been looking for suitable investment opportunities in order to broaden its income source and maximise the return of the Shareholders. Following Completion and assuming that the Investor exercises the call option under the Call Option Agreement in whole and convert the Convertible Notes so obtained in full, the equity interest of the Investor in Gextech shall be increased to approximately 55.0% on a fully diluted basis.

The Board considers that the Acquisition will bring along the following benefits to the Group:

Synergy between the Group and the Gextech Group

The core business of the Group has been the provision of integrated solutions (including the provision of software games and related systems) for the sports lottery market in the PRC. The “Fantastic League” series of games developed by the Gextech Group are also sports-themed and the Board considers such products to be highly suitable for deployment in the PRC, Hong Kong, Macao and in fact anywhere in the Asian region where sports betting and high frequency sports lottery games are permitted. The game content and betting content focus primarily on the world’s most followed sports, namely, football (which is also enthusiastically followed in the PRC). The fact that the “Fantastic League” games of the Gextech Group have received the support from internationally renowned gaming operators in other mature and major jurisdictions (as demonstrated by the existing clientele of the Gextech Group) is expected to add credibility when such games are marketed to other lottery and/or gaming jurisdictions.

Following Completion and leveraging on the Group’s strong presence in the sports lottery market in the PRC, the Investor (or its nominated entity within the Group) shall act as the sales agent of the Gextech Group to promote, sell or distribute the “Fantastic League” products of the Gextech Group in the PRC, Macao and Hong Kong under the Sales Agency Agreement.

The Group has been placing emphasis on its research and development (“R&D”) capabilities for lottery games. Apart from the well-received “Fantastic League” series of games developed by the Gextech Group, the Acquisition will provide the Group with the support from the seasoned team of game research and development of the Gextech Group in Spain. The combined knowhow and R&D capabilities of the two groups are expected to enhance the Group’s capability to develop further gaming products and customise such products for the PRC and/or other Asian markets.

Reposition of the Group as an international lottery and gaming group

The Acquisition will redefine and reposition the Group, turning it from a player in a developing market (namely, the PRC sports lottery market) into an international lottery and gaming group with a more diverse customer base covering (without limitation) the United Kingdom, Australia and Europe.

The Acquisition will also differentiate the Group from other lottery companies in the PRC as the Group will become a direct owner of intellectual property rights of gaming products (namely, the “Fantastic League” series of games developed by the Gextech Group) which will enhance the Group’s market position as a supplier of sports games.

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Wide application of the “Fantastic League” series of games

The “Fantastic League” series of games can be distributed via multiple channels including Internet, satellite broadcast, lottery sales terminals and mobile phones.

Access to an immediate diverse and reputable international client base

The clients of the Gextech Group include internationally renowned sports betting bookmakers, gaming machine and casino operators, and leading satellite broadcasters in the United Kingdom, Australia and Europe (including Austria, Germany, Greece, Belgium, Italy, Switzerland, Denmark, Serbia, Bosnia & Herzegovina, Montenegro, Macedonia, Cyprus, Ukraine, Lithuania and Romania). In particular, through the extensive broadcasting platform of the leading satellite broadcaster, it is anticipated that the “Fantastic League” football game (when launched after current testing) can be broadcast into a large number of betting shops operated by the bookmaker clients of such broadcaster, thus allowing the “Fantastic League” products to reach bookmakers throughout the United Kingdom and Ireland, in addition to providing extensive satellite access to betting and gaming operators across Europe. Further background information on some of the clients of the Gextech Group can be found on the “Fantastic League” website at http://www.fantasticleague.com/index.php/lang-en/about/overview.

In view of the above-mentioned benefits, the Directors are of the view that the Acquisition is in the interests of the Company and the Acquisition is on normal commercial terms reached after arm’s length negotiations between the parties involved, which terms are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

DEFINITIONS

In this announcement, unless the context requires otherwise, the following expressions have the following meanings:

“Acquisition”	the acquisition by the Investor of up to a maximum of
	approximately 55.0% equity interest in Gextech in accordance
	with the terms and conditions of the Subscription Agreement and
	the Call Option Agreement
“Board”	the board of Directors
“Business Day”	a day other than a Saturday, Sunday or a public holiday on which
	banks are open for business in Hong Kong and London, the
	United Kingdom
“Call Option Agreement”	the agreement dated 6 October 2009 entered into between Gextech
	and the Investor in relation to a call option granted by Gextech to
	the Investor to require Gextech to issue the Convertible Notes to
	the Investor
“Company”	AGTech Holdings Limited, a company incorporated in Bermuda
	with limited liability and the issued Shares of which are listed on
	GEM
“Completion”	completion of the Subscription Agreement

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“Convertible Notes”	convertible notes in the principal amount of up to £1,521,993.50
	to be issued by Gextech to the Investor in accordance with the
	terms and conditions of the Call Option Agreement and the
	instrument for such convertible notes
“Directors”	the directors of the Company
“GEM”	the Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“Gextech”	Gextech Holdings Limited, a company incorporated in England
	and Wales with limited liability
“Gextech Group”	Gextech and its subsidiaries
“Group”	the Company and its subsidiaries
“Guarantors”	Mr. Peter Glancy (the substantial shareholder and Chief Executive
	Officer of Gextech) and his controlled entity, Soccer Gold
	Limited, which together guarantee the obligations of Gextech to
	the Investor under the Subscription Agreement
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Investor”	AGTech Limited, a company incorporated with limited liability
	under the laws of the British Virgin Islands and is an indirect
	wholly-owned subsidiary of the Company
“Macao”	the Macao Special Administrative Region of the PRC
“PRC”	the People’s Republic of China which, for the purpose of this
	announcement, excludes Hong Kong, Macao and Taiwan
“Sales Agency Agreement”	the sales agency agreement to be entered into between Gextech
	and the Investor whereby the Investor (or its nominated entity)
	shall act as the sales agent of the Gextech Group to promote,
	sell or distribute the “Fantastic League” products of the Gextech
	Group in the PRC, Macao and Hong Kong
“Share(s)”	ordinary share(s) of HK$0.002 each in the share capital of the
	Company
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Subscription”	the subscription for new shares in Gextech by the Investor in
	accordance with the terms and conditions of the Subscription
	Agreement

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“Subscription Agreement” the subscription and voting agreement dated 6 October 2009 entered into between Gextech, the Investor and the Guarantors in relation to the Subscription

“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“£”	Pounds sterling, the lawful currency of the United Kingdom
“%”	per cent

Note: In this announcement, the exchange rate of £1 to HK$12.3 has been used for reference only.

By order of the Board Sun Ho Chairman

Hong Kong, 6 October 2009

As at the date of this announcement, the Board comprises (i) Mr. Sun Ho, Mr. Robert Geoffrey Ryan, Mr. Bai Jinmin and Mr. Liang Yu as executive Directors; (ii) Ms. Yang Yang as non-executive Director; and (iii) Mr. Wang Ronghua, Mr. Hua Fengmao and Mr. Kwok Wing Leung Andy as independent non-executive Directors.

This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this announcement is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this announcement misleading; and (3) all opinions expressed in this announcement have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

This announcement will remain on the “Latest Company Announcement” page of the GEM website at www.hkgem.com for at least seven days from the day of its posting and will be published on the website of the Company at http://www.agtech.com.

• For identification purpose only

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