Joy Spreader Group Inc. - Capital/Financing Update 2010

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for the securities of AGTech Holdings Limited.

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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)

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF AN INDIRECT 35% EQUITY INTEREST IN GOT

THE ACQUISITION

After trading hours of the Stock Exchange on 5 March 2010, the Purchaser entered into the Agreement with the Vendor pursuant to which the Purchaser has conditionally agreed to acquire and the Vendor has conditionally agreed to sell the Sale Shares, being 50,000 issued shares in Exequs representing the entire issued share capital of Exequs, for an aggregate consideration of HK$50 million.

Exequs is an investment holding company incorporated in the BVI. The principal asset held by Exequs is the entire registered capital of Century Decai, which in turn holds a 35% equity interest in GOT. GOT is one of the vendors approved by China Sports Lottery Administration Centre for the research, development and production of sports lottery terminals and systems.

The consideration for the Acquisition shall be satisfied by the Purchaser as to HK$28 million in cash and as to the balance of HK$22 million by the allotment and issue of 57,894,000 Consideration Shares at an issue price of approximately HK$0.38 per Share to the Vendor.

The Acquisition constitutes a major transaction of the Company under the GEM Listing Rules. The Agreement and the transactions contemplated thereunder including the issue of the Consideration Shares are therefore subject to the approval of the Shareholders at the special general meeting of the Company. MAXPROFIT GLOBAL INC and Mr. Sun, which are beneficially interested in an aggregate of 2,033,328,000 Shares representing approximately 56.66% of the total issued Shares, have given written consent to the Acquisition on 5 March 2010. The written consent from MAXPROFIT GLOBAL INC and Mr. Sun is accepted in lieu of holding a general meeting to approve the Agreement and the transactions contemplated thereunder pursuant to Rule 19.44 of the GEM Listing Rules.

A circular containing, among other things, details of the Agreement, an accountants’ report on the Exequs Group, the financial information on the Group and other information as required under the GEM Listing Rules will be despatched to the Shareholders as soon as practicable.

THE AGREEMENT

Date

5 March 2010

Parties

Purchaser: FAIRMAX ENTERPRISES LIMITED, an indirect wholly-owned subsidiary of the Company

Vendor: SPEEDSUPER LIMITED

To the best of the Directors’ knowledge, information and belief, and having made all reasonable enquiries, (i) the Vendor is an investment holding company; and (ii) the Vendor and its ultimate beneficial owner(s) are third parties independent of the Purchaser and the Company and their respective connected persons. The Group has not entered into any previous transactions with the Vendor or its associates which would otherwise require aggregation pursuant to Rule 19.22 of the GEM Listing Rules.

Assets to be acquired

The Sale Shares (being a total of 50,000 issued shares in the share capital of Exequs), representing the entire issued share capital of Exequs.

The Sale Shares shall be acquired free from liens and encumbrances and together with all rights attached thereto from the date of Completion.

The Consideration

The Consideration for the Acquisition is HK$50 million which shall be satisfied as to HK$28 million in cash and as to the balance of HK$22 million by the allotment and issue of the Consideration Shares in the following manner:

(i) on the Completion Date, the Purchaser is required to deposit the amount of HK$15 million to the Vendor’s designated bank account and the Company shall allot and issue 57,894,000 Consideration Shares to the Vendor;
(ii) on or before 5 March 2011, the Purchaser is required to deposit the amount of HK$9.5 million to the Vendor’s designated bank account; and
(iii) within ten Business Days from the receipt by evidence satisfactory to the Company showing full settlement of other receivables of Century Decai as at 28 February 2010 in the aggregate amount of RMB3,018,803.98 (equivalent to approximately HK$3,429,361.32), the Purchaser shall deposit the remaining balance in the amount of HK$3.5 million to the Vendor’s designated bank account.

The Consideration was arrived at after arm’s length negotiations between the parties, taking into account the performance of GOT as referred to in the paragraph headed “Information on the Exequs Group” below, the net asset value of the Exequs Group, the growth potential of the business of GOT and the possible future earnings contribution from the Exequs Group to the Group.

The issue price of approximately HK$0.38 per Consideration Share represents:

(i) a premium of approximately 28.8% over the closing price of HK$0.295 per Share as quoted on the Stock Exchange on 5 March 2010, being the date of the Agreement;
(ii) a premium of approximately 31.5% over the average of the closing prices of the Shares as quoted on the Stock Exchange over the last five consecutive trading days up to and including 5 March 2010 of HK$0.289 per Share;
(iii) a premium of approximately 39.7% over the average of the closing prices of the Shares as quoted on the Stock Exchange over the last ten consecutive trading days up to and including 5 March 2010 of HK$0.272 per Share; and
(iv) a premium of approximately 31.5% over the audited net asset value per Share attributable to the equity holders of the Company as at 30 June 2009 of approximately HK$0.289.

The Consideration Shares, when issued, will rank pari passu with all other Shares in issue as at the date of issue. The Consideration Shares will be issued under a specific mandate to be approved by the Shareholders at a special general meeting of the Company or by written Shareholders’ approval in lieu of holding a special general meeting of the Company pursuant to the GEM Listing Rules. An application will be made to the Listing Committee for the listing of and permission to deal in the Consideration Shares.

The Consideration Shares represent approximately (i) 1.61% of the existing issued share capital of the Company; and (ii) 1.59% of the share capital of the Company as enlarged by the issue of the Consideration Shares. The aggregate nominal value of the Consideration Shares is HK$115,788.

Pursuant to the Agreement, the Consideration Shares are subject to lock-up period whereby the Vendor shall be restricted from transferring or disposing of any of the Consideration Shares from the date of the allotment and issue of the Consideration Shares by the Company up to the date being six months after the date of the allotment and issue of the Consideration Shares (both dates inclusive).

Pursuant to the Agreement, the Vendor agreed that the obligation on the part of the Exequs Group to repay the Shareholder’s Loan shall be waived entirely and neither the Purchaser nor the Exequs Group shall have any liability relating to the Shareholder’s Loan with effective from the Completion Date.

As advised by the Vendor, as at the date of the Agreement, the outstanding amount of the Shareholder’s Loan was HK$10 million.

Conditions precedent

The Agreement is subject to and conditional upon the fulfillment or waiver of the following conditions:

(i) the Purchaser being satisfied with the results of the due diligence review on the Exequs Group;
(ii) all the representations and warranties given by the parties contained in the Agreement remaining true and accurate as at the Completion Date;
(iii) all commitments as set out in the Agreement being fulfilled by the Vendor before the Completion Date;
(iv) there being no material adverse changes in the operations, assets and liabilities, financial positions or profitability of the Exequs Group;
(v) there being no material adverse changes in the business of the Exequs Group caused by any laws, regulations or government policies in any jurisdictions in which the Exequs Group operates;
(vi) the transfer of the Sale Shares by the Vendor to the Purchaser being lawful and legal;
(vii) the Agreement and the transactions contemplated hereunder including the allotment and issue of the Consideration Shares having been approved by the Shareholders at a special general meeting of the Company or by written Shareholders’ approval in lieu of holding a special general meeting of the Company pursuant to the GEM Listing Rules;
(viii) the Listing Committee having granted the listing of and permission to deal in the Consideration Shares; and
(ix) the Purchaser having obtained all necessary consents and approvals from the relevant authorities in respect of the Agreement and the transactions contemplated thereunder.

The Purchaser shall have the right to waive conditions (i), (ii) (insofar as it relates to the Vendor), (iii), (iv) and (v); while the Vendor shall have the right to waive conditions (ii) (insofar as it relates to the Purchaser), (vi) and (ix). If the above conditions are not fulfilled or waived by 30 April 2010 (or such other later date as agreed by the Vendor and the Purchaser), the Agreement shall lapse and the obligations of the parties under the Agreement shall cease save for antecedent breaches.

Completion shall take place within five Business Days after the fulfillment or waiver of all the above conditions.

SHAREHOLDING STRUCTURE OF THE COMPANY

Set out below is a summary of the shareholding structure of the Company (i) as at the date of this announcement; and (ii) immediately after the allotment and issue of the Consideration Shares, which are prepared on the assumptions that there would be no changes in the issued share capital of the Company since the date hereof:

As at the date of this announcement Number of Shares Approximate %	As at the date of this announcement Number of Shares Approximate %	Immediately after allotment and issue of the Consideration Shares Number of Shares Approximate %	Immediately after allotment and issue of the Consideration Shares Number of Shares Approximate %
2,006,250,000 27,078,000	55.91 0.75	2,006,250,000 27,078,000	55.02 0.74
2,033,328,000	56.66	2,033,328,000	55.76
44,876,600 3,343,750	1.25 0.09	44,876,600 3,343,750	1.23 0.09
48,220,350 1,355,000 3,343,750 2,275,000 400,000 2,088,922,100 – 1,499,600,400 3,588,522,500	1.34 0.04 0.09 0.06 0.01 58.20 – 41.80 100.00	48,220,350 1,355,000 3,343,750 2,275,000 400,000 2,088,922,100 57,894,000 1,499,600,400 3,646,416,500	1.32 0.04 0.09 0.06 0.01 57.28 1.59 41.13 100.00

Notes:

MAXPROFIT GLOBAL INC is beneficially and wholly owned by Mr. Sun.
Fine Bridge International Limited is wholly owned by HB Resources Investment Limited, which is in turn beneficially and wholly owned by Mr. Bai Jinmin.
(i) Mr. Sun, Mr. Bai Jinmin and Mr. Liang Yu are executive Directors; (ii) Ms. Yang Yang is a non-executive Director; and (iii) Mr. Hua Fengmao and Mr. Wang Ronghua are independent non-executive Directors as at the date of this announcement.

INFORMATION ON THE EXEQUS GROUP

Exequs and Century Decai

Exequs was incorporated in the BVI with limited liability on 12 September 2008. The principal business of Exequs is investment holding. It is held by the Vendor for the sole purpose of holding the investment in the entire registered capital of Century Decai.

Century Decai was established in the PRC with limited liability on 25 April 2007 and became a wholly foreign-owned enterprise on 16 December 2008. Its scope of business mainly includes the research and development of software and hardware products for computers and network systems, sales of computer systems and network technology solutions as well as information and technical support services. Save for 35% equity interest in GOT, Century Decai has no other material assets and has not undertaken any operations since its date of incorporation.

GOT

GOT was established in the PRC with limited liability in 1994 and is one of the largest terminal and system providers for sports lottery in the PRC. Initially, it was approved by the State Council and authorised by, among others, the Ministry of Finance, State Administration of Taxation and the former Ministry of Electric Industry and was set up for the implementation of commercial terminal projects in the PRC. The scope of business provided by GOT was research and development, manufacturing and sales of commercial terminals in the PRC at that time.

In 1998, GOT became one of the vendors approved by China Sports Lottery Administration Centre for the research, development and production of sports lottery terminals and systems. In 2004, it established a manufacturing base in Beijing with annual production capability of over 200,000 units. After over 10 years of industry experience, GOT has built up superior research and development abilities in sports lottery terminals and systems and developed an extensive sales network in over 20 provinces and cities in the PRC. In addition, GOT has enhanced its after-sales services by setting up service centres in several provinces and cities across the PRC to handle product repair and provide technical support services. Through its efficient call centre system, under normal circumstances, GOT is able to respond to customers’ enquiries within 1 hour after receiving their calls and provide on-site maintenance services within 2 hours (for customers in urban area) to 6 hours (for customers in rural area) upon customers’ requests. GOT is recognised as a reputable brand in the PRC sports lottery field and was appraised by General Administration of Sport of China as the “Outstanding Company Contributing to Sports Lottery” in 2005.

As at the date of this announcement, GOT is owned as to 35% by Century Decai and 65% by China Electronics Corporation (“CEC”). To the best knowledge of the Directors, CEC is the largest stateowned I.T. enterprise established under the laws of the PRC in 1989 with the approval of the State Council of the PRC. CEC is a nationwide electronics and information technology conglomerate directly administered by the PRC government. It actively focuses on communications, consumer electronics, semiconductor and software sectors in the PRC.

Financial information

Based on the unaudited consolidated accounts of the Exequs Group for the year ended 31 December 2008, the Exequs Group recorded net profit before tax of approximately HK$0.30 million and net profit after tax of approximately HK$0.30 million. Based on the unaudited consolidated accounts of the Exequs Group for the year ended 31 December 2009, net profit before tax was approximately HK$4.59 million and net profit after tax was approximately HK$4.59 million. The net asset value of the Exequs Group as at 31 December 2009 was approximately HK$15.27 million after excluding the Shareholder’s Loan of the Exequs Group as at 31 December 2009.

REASONS FOR THE ACQUISITION

The Company is an investment holding company. The Group is a fully integrated solutions provider for the PRC sports lottery market and is principally engaged in the provision of: (i) territorial management and marketing consultancy services; (ii) lottery shop and retail chain management and marketing consultancy services; (iii) research, design and development of lottery games and systems; and (iv) supply of lottery sales terminals and accessories in the PRC. The Group has operations in various provinces in the PRC.

As disclosed in the annual report of the Company for the year ended 30 June 2009, the Directors foresee strong prospects in the sports lottery sector in the PRC with the global economic downturn starting to ease since the first half of 2009. It has been the intention of the management of the Company to identify suitable business opportunities to enhance the value of its PRC sports lottery business so as to strengthen its market leadership position, generate additional income for the Group and maximize return to the Shareholders.

It is expected that sports lottery sales will grow continuously with market opportunities to be brought about by 2010 South Africa World Cup, 2010 Guangzhou Asian Games and the yearly NBA games in the United States. The Directors expect that China Sports Lottery Administration Centre and the relevant authorities will demand more advanced sports lottery terminals, systems and technologies to cope with such market opportunities. Considering that GOT is an established key industry player with cutting-edge technologies and is strongly supported by its controlling shareholder, CEC, the Directors believe that GOT is in a good position to develop new sports lottery projects for the government of the PRC. The Directors consider that the Acquisition would benefit all business divisions of the Group by providing excellent opportunities to further extend its sales network coverage into more provinces and cities in the PRC, thereby enhancing its market competitiveness and achieving potential synergies. Furthermore, the Directors believe that the Acquisition will enhance the Group’s new product research and development capabilities, in particular, the Group’s self-mastered innovation capabilities. The Group is able to rapidly establish a dynamic I.T. platform to capture any future market opportunities in the PRC sports lottery industry through the Acquisition.

Based on the above industry growth drivers, the established operations of GOT and the current financial position of the Exequs Group, the Directors consider that there is a potential for GOT to bring a stable income stream to the Group and are of the view that the terms of the Agreement (including the issue price of the Consideration Shares) are fair and reasonable and the Acquisition is in the interests of the Company and its Shareholders as a whole.

The cash portion of the Consideration is expected to be funded by the internal resources of the Group.

GENERAL

As Completion is subject to the fulfillment of a number of conditions precedent, the Acquisition may or may not proceed. Shareholders and potential investors should exercise caution when dealing in the Shares.

DEFINITIONS

In this announcement, the following terms have the following meanings:

“Acquisition”	the proposed acquisition of the Sale Shares by the Purchaser for a
	total consideration of HK$50 million pursuant to the Agreement
“Agreement”	the conditional sale and purchase agreement dated 5 March 2010
	entered into between the Purchaser and the Vendor in relation to
	the Acquisition
“associates”	has the meaning ascribed to it under the GEM Listing Rules
“Board”	the board of Directors
“Business Day”	a day (other than a Saturday, a Sunday and public holidays) on
	which banks are open for general business in Hong Kong
“BVI”	British Virgin Islands
“Century Decai”	北京世紀德彩科技有限公司(Beijing Century Decai Technology
	Co., Ltd.*), a company incorporated in the PRC with limited
	liability and a wholly-owned subsidiary of Exequs
“Company”	AGTech Holdings Limited, a company incorporated in Bermuda
	with limited liability, the issued Shares of which are listed on
	GEM (stock code: 8279)

“Completion”	completion of the Agreement
“Completion Date”	the date on which Completion takes place
“connected persons”	has the meaning ascribed to it under the GEM Listing Rules
“Consideration”	the consideration of HK$50 million payable by the Company for
	the Acquisition and to be satisfied in the manner as described in
	this announcement
“Consideration Shares”	57,894,000 new Shares to be allotted and issued at an issue price
	of approximately HK$0.38 per Share
“Director(s)”	director(s) of the Company
“Exequs”	Exequs Co. Ltd., a company incorporated in the BVI with limited
	liability which is wholly-owned by the Vendor
“Exequs Group”	Exequs, Century Decai and GOT
“GEM”	The Growth Enterprise Market of the Stock Exchange
“GEM Listing Rules”	the Rules Governing the Listing of Securities on GEM
“GOT”	北京長城高騰信息產品有限公司(Beijing Greatwall GOT
	Information Products Co., Ltd.*), a company incorporated in the
	PRC with limited liability and 35% equity interest of which is
	held by Century Decai
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Listing Committee”	the listing committee of the Stock Exchange
“Mr. Sun”	Mr. Sun Ho, an executive Director and the chairman of the
	Company
“PRC”	the People’s Republic of China which, for the purpose of
	this announcement, excludes Hong Kong, the Macau Special
	Administrative Region of the PRC and Taiwan
“Purchaser”	FAIRMAX ENTERPRISES LIMITED, a company incorporated in
	the BVI with limited liability which is an indirect wholly-owned
	subsidiary of the Company
“Sale Shares”	50,000 issued shares of US$1.00 each in the share capital of
	Exequs
“Share(s)”	ordinary share(s) of HK$0.002 each in the share capital of the
	Company

“Shareholder(s)”	holder(s) of the Shares
“Shareholder’s Loan”	the shareholder’s loan stated in the unaudited consolidated
	accounts of the Exequs Group as at 31 December 2009 in the
	amount of HK$10 million owed by the Exequs Group to the
	Vendor
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Vendor”	SPEEDSUPER LIMITED, a company incorporated in the BVI
	with limited liability
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC
“US$”	United States dollars, the lawful currency of the United States
“%”	per cent

For illustration purposes, figures in RMB in this announcement have been translated into HK$ at the exchange rate of RMB1 = HK$1.136. Such conversion shall not be construed as a representation that amounts in RMB were or may have been converted into HK$ using such exchange rate or any other exchange rate or at all.

By order of the Board AGTech Holdings Limited Sun Ho Chairman

Hong Kong, 5 March 2010

As at the date of this announcement, the Board comprises Mr. Sun Ho, Mr. Robert Geoffrey Ryan, Mr. Bai Jinmin and Mr. Liang Yu as executive Directors; Ms. Yang Yang as non-executive Director; and Mr. Wang Ronghua, Mr. Hua Fengmao and Mr. Kwok Wing Leung Andy as independent nonexecutive 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 Announcements” page of the GEM website (www.hkgem.com) for at least 7 days from its date of posting and will be published on the website of the Company at http://www.agtech.com.

* For identification purpose only

AI assistant

Joy Spreader Group Inc. Capital/Financing Update 2010

51106_rns_2010-03-05_d05a148b-5a4a-4386-86ab-7ed743954aa6.pdf

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

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF AN INDIRECT 35% EQUITY INTEREST IN GOT

THE ACQUISITION

THE AGREEMENT

Date

Parties

Assets to be acquired

The Consideration

Conditions precedent

SHAREHOLDING STRUCTURE OF THE COMPANY

INFORMATION ON THE EXEQUS GROUP

Exequs and Century Decai

GOT

Financial information

REASONS FOR THE ACQUISITION

GENERAL

DEFINITIONS

AI assistant

Joy Spreader Group Inc. — Capital/Financing Update 2010

51106_rns_2010-03-05_d05a148b-5a4a-4386-86ab-7ed743954aa6.pdf

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

MAJOR TRANSACTION IN RELATION TO THE ACQUISITION OF AN INDIRECT 35% EQUITY INTEREST IN GOT

THE ACQUISITION

THE AGREEMENT

Date

Parties

Assets to be acquired

The Consideration

Conditions precedent

SHAREHOLDING STRUCTURE OF THE COMPANY

INFORMATION ON THE EXEQUS GROUP

Exequs and Century Decai

GOT

Financial information

REASONS FOR THE ACQUISITION

GENERAL

DEFINITIONS

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Joy Spreader Group Inc. Capital/Financing Update 2010

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