Agritech Capital Inc.

June 13, 2006 12:30 ET

Agritech Capital Inc. Announces its Qualifying Transaction with PIGBOSS suivi croissance Inc.

MONTREAL, QUEBEC--(Marketwire - June 13, 2007) - Agritech Capital Inc. (“Agritech” or the “Company”) (TSX VENTURE:AGH.P) is pleased to announce the signature of an agreement in principle dated May 28, 2007 with PIGBOSS suivi croissance Inc. (“Pigboss”) for the completion of its qualifying transaction (the “qualifying transaction”) as defined in Policy 2.4 of the TSX Venture Exchange (the “Exchange”), which will consist of either (i) the acquisition (the “share acquisition”) of all of the issued and outstanding shares of Pigboss (the “Pigboss shares”) by means of a share purchase agreement (the “share purchase agreement”) to be concluded between Agritech, Pigboss and the shareholders of Pigboss (the “shareholders of Pigboss”), or (ii) the amalgamation of Agritech and Pigboss (the “merger”) by means of a merger agreement (the “merger agreement”) to be undertaken between Agritech and Pigboss in order to form the resulting issuer that shall bear the name PIGBOSS suivi croissance Inc. (the “resulting issuer”).

The completion of the qualifying transaction shall be, among other things, subject to the conclusion of the merger agreement between the parties or of the share-purchase agreement and to the approval of Agritech’s shareholders, as well as to other usual conditions for this type of transaction, including the approval of the regulatory authorities.

Concurrent Financing

Concurrently, the Company plans to offer to sell, by means of a prospectus (the “placement”) and through the intervention of Industrial Alliance Securities Inc. (the “placement agent” or “Industrial”), to acquirers residing in the Province of Quebec, a minimum of 5,750,000 and a maximum of 10,000,000 units of the Company (each one a “unit”) at a price per unit of $0.40 (the “offering price”) for minimum gross proceeds of $2,300,000 and maximum gross proceeds of $4,000,000. Each unit is composed of one common share of the Company (one “common share”) and one half-warrant for Agritech common shares (each whole warrant a “warrant”). Each warrant entitles its holder to subscribe, at any time within the 24 months following the closing date, to one common share of Agritech at the price of $0.65 per common share of Agritech.

Pigboss suivi croissance Inc. was created by the merger on October 24, 2006 of Porc Tech Inc., a company incorporated on July 25, 2003 under Quebec Company Act, 9131 9012 Québec Inc. and 9132 1877 Québec Inc. The head office and principal premises of Pigboss is located at 1106 rue Principale, Saint Agapit, Quebec, G0S 1Z0. Pigboss is innovating by concentrating its efforts on the management of porcine food consumption, which is a factor that greatly influences the productivity and profitability of hog breeders, in terms of piglet gestation, birth and fattening. In a first phase, Pigboss designed an interactive feeding system for lactating sows, the “Pigboss 16/21”, which it will assemble and distribute during the coming year. The system enables feeding of sows based on their individual needs and in an interactive manner.

The qualifying transaction is not an operation between related parties.

Valuation of Pigboss

Under the terms of the agreement in principle, Agritech and Pigboss plan to execute, according to the first option, a share-purchase agreement according to which Pigboss’ shareholders will receive 37,500,000 shares of Agritech issued at the assigned and agreed upon price of $0.40 each, for a total of $15,000,000, which corresponds to Pigboss’ value as negotiated by the parties.

As part of the merger agreement, according to the second option, Pigboss’ shareholders will receive 4.4980715 common shares of Agritech, each having an assigned and agreed upon value of $0.40, in exchange for each of the 8,336,906 shares of Pigboss, or a total of approximately $15,000,000.

In addition, 500,000 options issued by Pigboss will be converted or paid, depending on the option used, based on a ratio of 4.4980715. There will therefore be 2,249,036 options transferred or paid to Pigboss’ option holders. Of these options, 1,484,364 have an exercise price of $0.11 and expire on December 31, 2008, and 764,672 have an exercise price of $0.22 and expire on October 1, 2010.

Deposits, Loans and Advances Granted to Pigboss

As part of its negotiations with Pigboss, Agritech has granted to Pigboss an advance in the form of a non-guaranteed loan of a total of $25,000 in order to preserve asset items.

Agritech also plans to grant Pigboss a loan for a maximum amount of $175,000 before the closing of the qualifying transaction according to the commercial terms and conditions in force for this type of loan and subject to the prior approval of the Exchange and to the conditions the Exchange may impose in order to consent that the loan be granted by Agritech to Pigboss.

Sponsorship of the Qualifying transaction

Industrial, subject to the realization of a satisfactory due diligence, has agreed to act in the capacity of sponsor for purposes of the qualifying transaction. Such a commitment shall not be interpreted as a measure of the merit of the qualifying transaction or of the probability of its completion.

Agritech Capital Stock and Granti of Options

Agritech’s authorized capital stock is composed of an unlimited number of common shares, of which 3,081,800 common shares are currently issued and outstanding. No option and no other share-purchase right or security convertible into shares of the capital stock of Agritech has been authorized nor shall be issued and outstanding, with the exception of the 160,000 share-purchase options granted to Agritech’s management allowing them to subscribe to common shares of Agritech at a price per share of $0.20 during a period of five years starting from their issue date, and 208,180 options granted to CTI Capital Inc. according to the same conditions as part of Agritech’s initial public offering.

About Pigboss

Constituted on October 24, 2006, following the merger of Porc Tech Inc., 9131 9012 Québec Inc. and 9132 1877 Québec Inc. (the “group”), Pigboss suivi croissance Inc. has taken over and grouped together the activities of these companies in the field of interactive pig-feeding automation to control the frequency and dosage of portions according to the needs of each animal. This allows to reduce loss of dorsal fat and body weight, increase ADG (average daily gain in weight) of piglets, increase fertility (total number of births) in the next litter and decrease weaning estrus interval (WEI: interval of time required to go back into heat after weaning) and weaning fertile-impregnation interval (WFII: the interval of time required to confirm that the impregnation is fertile after weaning). This automation also enables to decrease manpower and training needs with regard to porcine feeding.

Pigboss currently has a flagship product in operation in the industry, and several products in the development stage.

The porcine production market is divided into two major groups. There is an industrial-type production and a family-type production. In an effort to adapt itself to the particular characteristics of these very different markets, Pigboss has developed two approaches to introduce its technology into the industry.

Pigboss understands the influence wielded by certain major industrial producers, recognized among their peers, and makes use of this influence to promote its product. Pigboss itself presents its product to those industrial producers recognized as influential. An individual, personalized approach is favoured. Pigboss employs diverse strategies (personalized profitability study directly on their operation site, and other avenues at the client’s request) in order to demonstrate both the many advantages of the Pigboss 16/21 product and its profitability.

In addition, Pigboss plans to establish partnerships with local distributors to present the products to small and medium-sized producers who more closely approach the family model. These partners know the producers in their territory well, and are therefore able to appropriately target those who demonstrate openness to new technologies. This approach should enable the Company to minimize marketing costs.

The table below illustrates Pigboss’ financial situation for the past three completed fiscal years on a consolidated basis following the regrouping (figures are from Pigboss’ audited financial statements):

Fiscal year ended
December 31, 2004
December 31, 2006 December 31, 2005 (9 months)
(audited) (audited) (audited)
Sales 62,326 0 0
Net loss (475,457) (387,864) (128,777)
Total assets 884,130 623,684 574,499
Total liabilities 824,792 398,289 196,770
Shareholders’ equity 59,338 225,395 377,729

The increase in losses from 2004 to 2006 was caused by the acceleration of research and development costs. Furthermore, 2006 was the beginning of the marketing process. This process will continue in 2007.

Description of Pigboss’ Capital Stock

As of today, Pigboss’ authorized capital stock is composed of an unlimited number of Class “A” preferred shares, Class “B” preferred shares, Class “C” preferred shares, Class “D” preferred shares and common shares, of which 8,336,906 common shares are currently issued and outstanding.

Share-purchase options granted to certain employees, executives and directors of Pigboss, which allos for the acquisition of a total of 500,000 common shares of Pigboss’ capital stock, are currently issued and outstanding (330,000 have an exercise price of $0.50 and expire on December 31, 2008 and 170,000 have an exercise price of $1.00 and expire on October 1, 2010).

Principal Shareholders and Directors of Pigboss

The principal holders of Pigboss shares bearing voting rights are:

(i) René Beaudoin ("2,017,813") (24.2%);
(ii) Gérald Beaudoin ("2,017,813") (24.2%);
(iii) Nathalie Belleau ("1,223,889") (14.68%);
(iv) Jacques Cimon ("550,313") (6.6%).

Capital Stock Following the Qualifying transaction

The issued and outstanding capital stock in the resulting issuer following the closing of the qualifying transaction and of the related financing shall be composed of 46,569,300 (minimum offer) or of 50,819,300 (maximum offer) common shares (between 59,636,516 common shares (minimum offer) and 66,436,516 (maximum offer) common shares on a fully-diluted basis) issued and outstanding in the resulting issuer distributed as follows:

(a) 37,500,000 common shares of the resulting issuer (representing 80.53% (minimum offer) or 73.79% (maximum offer) of all of the common shares issued and outstanding and between 56.44% and 62.88% between the maximum and minimum offer on a fully-diluted basis) shall be held by the current shareholders of Pigboss;

(b) Between 8,831,800 and 13,081,800 common shares of the resulting issuer (representing between 18.97% and 25.74% of all of the common shares issued and outstanding and between 14.81% and 19.69% on a fully-diluted basis) shall be held by the current shareholders of Agritech and those who acquire common shares of Agritech as part of the concurrent financing;

(c) 237,500 common shares of the resulting issuer (representing 0.51% (minimum offer) or 0.47% (maximum offer) of all of the common shares issued and outstanding and between 0.40% and 0.36% between the maximum and minimum offer on a fully-diluted basis) shall be held by Industrial.

The 30,513,297 common shares of the resulting issuer that shall be held by the current Pigboss shareholders shall be distributed as follows, each with its proportion between the completion of the maximum placement or the minimum placement:

René Beaudoin- 9,076,267 shares - 17.86% to 19.49% Jacques Cimon- 2,475,347 shares - 4.87% to 5.32%

Gérald Beaudoin- 9,076,267 shares - 17.86% to 19.49% Alain Laroche-1,095,069 shares - 2.15% to 2.35%

Nathalie Belleau-5,505,140 shares - 10.83% to 11.82% Adrien Laroche- 1,095,069 shares - 2.15% to 2.35%

Pierrette Boulay- 1,095,069 shares - 2.15% to 2.35% Katie Laroche- 1,095,069 shares - 2.15% to 2.35%

The Board of Directors Following the Qualifying transaction

Subject to the approval of Agritech’s shareholders at the shareholders’ meeting to be called shortly by Agritech’s management as part of the merger with Pigboss or the acquisition of shares of Pigboss, the Board of Directors of the resulting issuer, after the completion of the qualifying transaction, shall be composed of Philippe Bertrand, René Beaudoin, Gérald Beaudoin and Karine Simoes as well as Serge Pelletier, Martin Arsenault and Gilles Seguin.
René Beaudoin will act as President and Chief Executive Officer, while George Holland will occupy the position of Chief Financial Officer. Gilles Seguin will be appointed Secretary, Gérald Beaudoin will be appointed Vice President, Research and Development and Jacques Cimon will be appointed Vice President, Engineering and Information Technology.

René Beaudoin, President and Chief Executive Officer, Director

René Beaudoin, age 48, residing in Saint Étienne de Lauzon (Quebec), has acquired more than twenty years of experience in the field of technologies. He has actively participated in the marketing and development of several innovative feeding systems in the agricultural sector, including, during the past six years, the hog industry. He possesses an in-depth knowledge of the market and expertise in feeding.

George Holland, Chief Financial Officer

George Holland, age 35, residing in Montreal (Quebec), received a degree in administration from Royal Military College in Kingston in 1995. Throughout his military career, which lasted 15 years, he was regularly called on to provide his expertise in strategic logistical and operational support to the Canadian Armed Forces. He has traveled in over 20 countries, where he was called on to command troops and to work with various military and civil agencies, often in hostile conditions. From 1998 to 2006, Mr. Holland was directly involved in the deployment of soldiers, vehicles and equipment for all operations in which the Canadian Armed Forces were engaged, and he was responsible for the command, administration and budgetary considerations of the Movement Control Unit of the Canadian Armed Forces. In addition, he played an essential role in the development of the Canadian Armed Forces current logistical deployed operations support structure.

Gérald Beaudoin, Vice President, Research and Development, Director

Gérald Beaudoin, age 52, residing in Saint Étienne de Lauzon (Quebec), has worked for more than twenty years in the field of new technologies, and possesses a solid experience in business management. He has supervised numerous high-technology development projects, both in software and electronics. In the course of the past seven years, he has developed several products, including a computer-controlled gestation feeding system.

Jacques Cimon, Vice President, Engineering and Information Technology

Jacques Cimon, age 47, residing in La Pocatière (Quebec), has been an analyst and project manager at Pigboss since November 2003. He founded his robotics and control company in 1990, which enabled him to complete several robotics projects, for Bombardier Transportation among others. He joined CRS Robotics (Toronto) in 1994, in the position of application engineer. He has to his credit several developments in automation for well-known companies including GM Saginaw, Medtronic, Spar Aerospace and several contributions including Hyundai (Korea) and, in 1994, a world first in the application of robotics to laparoscopy (surgical procedure using a laparoscope).

Gilles Seguin, Secretary, Director

Gilles Seguin, age 48, residing in Saint Lambert (Quebec), has been an partner at the law firm Desjardins Ducharme S.E.N.C.R.L. since January 2002 and a member of the firm’s Board of Directors since May 2004. From July 1988 to December 2001, Mr. Seguin was an partner at McMillan Binch Mendelsohn. He practices securities law, company law and commercial law. He has been a member of the Quebec Bar since 1982 after having obtained his Bachelor of Law degree in 1981 at Laval University. Mr. Seguin sits on many public and private boards of directors.

Philippe R. Bertrand, Director

Philippe R. Bertrand, age 31, residing in Candiac (Quebec), has since February 2005 been Vice President, Corporate Affairs at Omnitech Consultant Group Inc., where he is participating actively in Omnitech’s operational and financial restructuring. From March 2001 to December 2004, Mr. Bertrand was a consultant to various multinationals, including Groupe SNC-Lavalin and Alphatech Group, on business development in countries in Eastern Europe. He specializes in public relations and international development. Mr. Bertrand sits on the boards of directors of several private companies.

Karine Simoes, Director

Karine Simoes, age 34, residing in Montreal (Quebec), has been Director of Legal Affairs at Omnitech Consultant Group Inc. since September 2005. A member of the Quebec Bar since 1995 and holder of an MBA, she has worked as legal counsel within multinational manufacturing, high-technology, engineering services, finance and venture capital companies. Her fields of practice include securities, compliance, governance, and corporate and commercial law, as well as intellectual property. During her career, she has acted as member of the board of directors and as corporate secretary for several private and public companies.

Serge Pelletier, Director

Serge Pelletier, age 39, residing in Montreal (Quebec), has been President of Spelna Capital Corporation since 2001. He is also President of Groupe Résidences Vie Active and Groupe EspaceVie, two companies operating in real estate development and retirement homes. Mr. Pelletier was President of GLM, a mutual fund brokerage firm, from May 1999 to April 2004. Mr. Pelletier obtained a Bachelor of Business Administration degree from the University of Western Ontario in April 1995.

Martin Arsenault, Director

Since October 2003, Martin Arsenault, age 40, residing in Outremont (Quebec), has been President of Kolombo Technologies, a company specializing in perfecting anti-theft systems for vehicles. He previously acted as Vice President, Business Development at Syscan International Inc., a company that develops application software, from October 1996 to July 2001. Mr. Arsenault obtained his bachelor’s degree in Administration at École des Hautes Études Commerciales in Montreal in 1994.

Closing Conditions

Completion of the qualifying transaction is conditional, in particular, on obtaining the consent of the Exchange and, if required by the Exchange’s policies, on the approval of the majority of the minority shareholders. When this is required, the closing of the operation necessitates obtaining the approval of the shareholders. There is no guarantee that the operation will be completed nor, if it is, that it will be completed in the form proposed.

Investors should know that, with the exception of information provided in the prospectus produced for placement of the units, in the proxy circular or in the management’s declaration of change of listing that must be prepared for the qualifying transaction, the information published or received with regard to the qualifying transaction may not all be exact or complete; consequently, investors should not unduly rely in it. Trading in the securities of a start-up capital company must be considered as highly speculative.

The TSX Venture Exchange has made no statement concerning the merit of the proposed operation, and it has neither approved nor disapproved the contents of this press release.

Contact Information

  • Agritech Capital Inc.
    Serge Pelletier
    418-681-7746 (fax)
    PIGBOSS suivi croissance Inc.
    Rene Beaudoin
    418-888-1489 (fax)