Calotto Capital Inc.
TSX VENTURE : TTO.P

May 29, 2009 15:30 ET

Calotto Capital Announces Proposed Qualifying Transaction With Hamilton Thorne, Inc.

TORONTO, ONTARIO--(Marketwire - May 29, 2009) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR THROUGH UNITED STATES WIRE SERVICES.

Calotto Capital Inc. ("Calotto") (TSX VENTURE:TTO.P) announces that it signed a letter of intent dated May 29, 2009 to enter into a merger agreement (the "Merger Agreement") with Hamilton Thorne, Inc. ("Hamilton Thorne"), a private company based in Beverly, Massachusetts. The proposed transaction between Calotto and Hamilton Thorne (the "Transaction") will serve as Calotto's qualifying transaction pursuant to Policy 2.4 of the TSX Venture Exchange (the "Exchange"). The Transaction, being an arm's length transaction, is not expected to be subject to the approval of the shareholders of Calotto but will be subject to a number of conditions as described hereinafter. For greater clarity references in this press release to "Hamilton Thorne Ltd." are references to Calotto following the closing of the Transaction, assuming its name change (which is subject to shareholder and other requisite approvals).

The Transaction

Subject to regulatory approval, including that of the Exchange and the shareholders of Hamilton Thorne, Calotto and Hamilton Thorne have agreed to effect the Transaction by way of a merger by a newly formed wholly-owned Delaware subsidiary of Calotto ("Subco") with and into Hamilton Thorne. Following the completion of the Transaction, Hamilton Thorne will be a wholly-owned subsidiary of Hamilton Thorne Ltd.

The exact number of common shares ("HTL Shares") and other securities in the capital of Hamilton Thorne Ltd. to be issued to security holders of Hamilton Thorne will be determined in accordance with the exchange ratio to be provided for in a definitive merger agreement along with other terms and conditions with respect to the Transaction. It is expected that, subject to the receipt of requisite shareholder, director and regulatory approvals, on or prior to the closing of the Transaction, Calotto shall change its name to "Hamilton Thorne Ltd.", change the composition of its board of directors, adopt a new stock option plan, and shall consolidate its issued and outstanding shares on the basis of one common share for each 7.71 issued and outstanding common shares of Calotto.

Each holder of issued and outstanding common shares of Hamilton Thorne will be issued 303.89 HTL Shares (the "Transaction Shares") for each one share of common stock of Hamilton Thorne ("Exchange Ratio"). All issued and outstanding warrants to purchase shares of Hamilton Thorne will be exercised and converted into HTL Shares at the Exchange Ratio. All issued and outstanding options to purchase shares of Hamilton Thorne will either be exercised or exchanged for options to purchase shares of Calotto under the terms of Calotto's stock option plan, provided that the number of HTL Shares issuable on the exercise of such options, and the exercise price of such options will be adjusted to take into consideration the Exchange Ratio. The Exchange Ratio was determined in arm's length negotiations between Calotto and Hamilton Thorne based on certain factors such as (i) the current business condition of Hamilton Thorne, (ii) the investment made to date in developing Hamilton Thorne's business, (iii) the anticipated future profits of Hamilton Thorne, and (iv) the expertise of the management of Hamilton Thorne.

Under the terms of the Letter of Intent, the HTL Shares will be issued at a deemed price of $0.75 per HTL Share, for an aggregate deemed value of approximately $14,145,440 (pre-Financing). Calotto and Hamilton Thorne acknowledge that the number of HTL Shares and other Hamilton Thorne Ltd. securities to be issued is subject to change and will depend in part on the precise number of securities of each of Calotto and Hamilton Thorne that are outstanding on the closing of the Transaction. Currently Calotto has 26,200,000 fully-diluted common shares outstanding and Hamilton Thorne has 63,495 fully-diluted common equivalent shares outstanding, all of which shall be converted to common shares prior to closing the Transaction. Except for adjustments resulting from the issuance, exercise or cancellation of (a) options pursuant to the stock option plans of each of Calotto and Hamilton Thorne, (b) agents options issued by Calotto in connection with its initial public offering, (c) agents warrants to be issued by Hamilton Thorne Ltd. or Hamilton Thorne in connection with the Transaction and Financing, and assuming the exercise of all other outstanding warrants, it is anticipated by the parties that upon completion of the Transaction and Financing, the current shareholders of Calotto will own 13.38% of the outstanding common shares of Hamilton Thorne Ltd., the current shareholders of Hamilton Thorne will own 74.23% of the outstanding common shares of Hamilton Thorne Ltd. and the Financing investors will own 12.39% of the outstanding common shares of Hamilton Thorne Ltd (11.90%, 66.05% and 22.04% respectively on a fully diluted basis).

The completion of the merger and the issuance of the Transaction Shares will constitute Calotto's qualifying transaction under Policy 2.4 of the Exchange. It is expected that upon completion of the Transaction and Financing, Hamilton Thorne Ltd. will be listed as a Tier 2 Technology Issuer on the Exchange. Although it is currently intended that the Transaction shall be completed by way of a merger by Subco with and into Hamilton Thorne, the structure of the Transaction may be revised by mutual agreement of the parties to accommodate efficiencies for various legal structures, tax and accounting treatment and securities regulation. The Transaction is intended to result in a reverse take-over of Calotto by Hamilton Thorne.

Calotto and Hamilton Thorne have agreed that the closing of the Transaction is conditional upon Hamilton Thorne completing a private placement that raises gross proceeds of at least $2,000,000. Loewen, Ondaatje, McCutcheon Limited ("LOM") has presented an engagement letter dated May 13, 2009 to Hamilton Thorne to act as lead agent in connection with the issuance of units of Hamilton Thorne ("Units") by way of a marketed private placement offering on a best efforts basis, to be closed concurrently with the Transaction (the "Financing"). Each Unit shall consist of one share of common stock and one common share purchase warrant of Hamilton Thorne. Each common share purchase warrant shall allow the holder thereof to purchase one additional share of common stock of Hamilton Thorne. Other terms and conditions of the Units and Financing, including the issue price and warrant exercise price, have yet to be finalized. As compensation for acting as lead agent, LOM will receive a commission equal to 8% of the gross proceeds received pursuant to the Financing, and compensation warrants to purchase a number of Units of Hamilton Thorne equal to 8% of the Units shares sold pursuant to the Financing, exercisable at the same issue price of the Units for a period of eighteen months from the closing of the Financing. Hamilton Thorne has also agreed to pay LOM's legal fees for private placement due diligence as well as additional IP due diligence expenses, plus LOM's reasonable pre-approved travel and other expenses.

The completion of the Financing is dependent on the approval of third parties, including regulatory approval of the Exchange, and is therefore beyond the reasonable control of Calotto, Hamilton Thorne or any other parties which are non-arm's length to either company or to the Transaction. The completion of the Financing is also subject to a number of other conditions including the satisfactory completion of the agent's due diligence and execution of formal documentation including an agency agreement between LOM and Hamilton Thorne. The proceeds from the Financing will be used to fund future growth and for working capital purposes.

Completion of the Transaction and Financing are also subject to a number of other conditions, including but not limited to the obtaining of all regulatory approvals, including Exchange acceptance and appropriate shareholder and lender approval. There can be no assurance that the Transaction and Financing will be completed as proposed or at all.

Calotto will prepare the filing statement required by Policy 2.4 of the Exchange. Investors are cautioned that, except as disclosed in such filing statement, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way opined upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release. Trading of the common shares of Calotto will likely resume after filing with the Exchange of numerous documents, which is expected to take some time.

Business of Hamilton Thorne, Inc.

Hamilton Thorne, Inc. is a leading provider of advanced laser systems and instruments for in-vitro cell applications in the stem cell research and fertility clinic markets.

Hamilton Thorne's ZILOS-tk and XYClone laser systems attach to standard inverted microscopes and operate as robotic micro-surgeons, reducing time and increasing efficiency in key stem cell, embryo and living cell procedures. Hamilton Thorne's CASA systems are designed to bring quality, efficiency and reliability to studies of reproductive cells in the animal, human infertility and reproductive toxicology fields.

Hamilton Thorne's novel laser systems are rapidly emerging as the dominant products to facilitate precise micro-surgical procedures with stem cells and other living cells in the laboratory. Specific applications include the reduction from nine months to six weeks to develop transgenic animal models, dramatic reductions in cell damage during micro-surgical procedures and 50% higher yields for many cell procedures.

Hamilton Thorne sells its products to pharmaceutical companies, biotechnology companies, fertility clinics, university research centers and other commercial and academic research establishments worldwide. Hamilton Thorne's current customers include some of the leading research labs in the world, including Harvard University, MIT, Yale, DuPont, Monsanto, Charles River Labs, Jackson Labs, Merck, Novartis, Pfizer, Oxford University and Cambridge.

Management of Hamilton Thorne Post-Transaction

It is anticipated that the current management of Hamilton Thorne, as described below, will continue as the management of Hamilton Thorne Ltd. and/or Hamilton Thorne following the closing of the Transaction.

Meg Spencer, Chief Executive Officer and Co-Founder - Ms. Spencer brought 17 years experience in the field of regenerative medicine and other technology markets to Hamilton Thorne when she founded the company in 1997. She founded two previous companies, taking each from start-up to global market leadership in their respective sectors. Hamilton Equine Systems, Inc., a high tech veterinary products company, was successfully sold at an attractive ROI for its investors. Hamilton-Thorne Research offered reproductive toxicology testing systems for the study of the effects of chemicals, pesticides and prescription drugs on human and animal reproduction. Ms. Spencer has identified important problems in Stem Cell, transgenic research and molecular diagnostics; she has raised capital, sought and licensed key enabling technologies, forged accelerated university product development programs (with the Public Health Research Institute, Mount Sinai School of Medicine, and Boston University), established international distribution channels and strategic sales alliances, and pushed through development of proprietary in-house technologies to revolutionize stem cell and transgenic research. Establishment of a top management team was accomplished successfully. Education: Harvard University and George Washington University.

David Wolf, Acting President - Mr. Wolf is currently Acting President of Hamilton Thorne and Managing Director of Mercator Group LLC, a specialty consulting firm providing lifecycle services to growing companies. Previously, he was a member of the founding management team of Elcom International, Inc. (NASDAQ), where he played a key role in growing the business to $800 million in revenues in four years and orchestrating Elcom's successful IPO. As President of Elcom Systems, he transformed an internal development organization into a full-fledged software development, marketing and services company that successfully implemented electronic commerce systems for companies around the world. Prior to Elcom, Mr. Wolf was Chief Operating Officer of JWP Information Services, a subsidiary of JWP Inc. (NYSE) where he built the operational infrastructure to support its growth from $250 million to $1.4 billion in sales, and President and COO of NEECO, Inc. (NASDAQ), a $250 million business IT distribution and services business purchased by JWP. Education: McGill University, BA and Boston University, JD.

Diarmaid H. Douglas-Hamilton, Co-Founder, Senior VP, R&D and Chief Technology Officer - Mr. Douglas-Hamilton was formerly Principal Scientist and Project Director at Avco Everett Laboratories, and Technical Director at Eaton Corp. He is a physicist with broad specialties in optics and lasers, holding multiple patents in assorted fields. Mr. Douglas-Hamilton has extensive experience in effectively managing large and small research and development projects. Education: Physics at Oxford University and Harvard University.

John R. Freeman, CFO - Mr. Freeman is CFO of Hamilton Thorne and the principal of Freeman and Associates, an accounting services firm providing part-time top-level financial help to smaller companies in the New England area for over 20 years. He began his career at Coopers and Lybrand (now PricewaterhouseCoopers), for 15 years served in executive roles in a number of New England companies and has public company experience, including taking QC Optics, a developer of laser based inspection systems for the semiconductor, flat panel and hard disk manufacturing industries, public in 1996. Education: Duke University, B.A.

Thomas Kenny, VP Engineering - Mr. Kenny is a New England leader in the engineering and electronic fields, with multiple important products to his credit, including the ZILOS-tk and XYClone. Mr. Kenny has been with Hamilton Thorne since its inception and is a central figure in Hamilton Thorne's technical capabilities. In addition to his development duties, Mr. Kenny speaks at product symposia around the world. Education: Wentworth Institute, BS.

Board of Hamilton Thorne Ltd. Post-Transaction

The board of directors of Calotto currently consists of Mr. Jonathan Drake, Mr. William Dunlop, Mr. Dean Gendron, Mr. Bruno Maruzzo, Ms. Naomi Morisawa De Koven, Mr. Joseph Shannon, and Ms. Susan Tataryn. The board of directors of Hamilton Thorne Inc. currently consists of Meg Spencer, Diarmaid Douglas-Hamilton, Scott A. Pearson, Robert J. Potter, Daniel K. Thorne, Louisa D. Wood, Andrew D. Clapp, and Harry G. McCoy.

It is expected that the board of directors of Hamilton Thorne Ltd. following the closing of the Transaction will consist of seven directors, including five directors to be designated by Hamilton Thorne (currently proposed to be Ms. Meg Spencer, Mr. Diarmaid Douglas-Hamilton, Mr. Robert Potter, Mr. Daniel K. Thorne and Ms. Louisa D. Wood) and two directors to be designated by Calotto (currently proposed to be Mr. Dean Gendron and Mr. Bruno Maruzzo).

Meg Spencer - Chairman & CEO, Hamilton Thorne.

Diarmaid H. Douglas-Hamilton - Chief Technology Officer, Hamilton Thorne.

Robert J. Potter - President and CEO of Expressor Software, a new data integration and data engine software company. Mr. Potter has served with Sigma Partners, a leading venture group in Boston, and was formerly President and CEO of Kalido Corporation, where he grew revenues from $5.6M to $18.5M in two and one half years; Executive Vice President of Iona Technologies where he engineered growth of the company into a $180M global enterprise, and Senior Vice President of Worldwide Sales and Services at Object Design, Inc., where he grew sales from $1M to $38M and the Inc 500 award as the fastest growing company in the USA.

Daniel K. Thorne - Mr. Thorne is President of Star Lake BioVentures, Inc., a private venture capital firm that invests in technology companies. Mr. Thorne is also the Vice-Chairman of South Street Seaport Museum, Trustee of the Wildlife Conservation Society, and member of the Council of the National Trust for Historic Preservation.

Louisa D. Wood - Ms. Wood is CEO of Farnum Hill Ciders, Inc. a high volume hard cider and natural beverage company. Ms. Wood has extensive experience in the branding and promotional world, bringing these skills to assist in Board strategy.

Dean Gendron, President, Chief Executive Officer and Director of Calotto. Mr. Dean Gendron is the founder, President and CEO of Redan Capital Incorporated, a company that provides M&A, Corporate Finance and Investment Banking advisory services to early stage and developed private and public companies. Mr. Gendron is also a founder, Chairman of the Board, President and Chief Executive Officer of Calotto Capital Inc. Mr. Gendron provided key leadership in the financing and growth of Critical Outcome Technologies Inc., a drug discovery and development company. In October 2005, he led the financing activities and concurrent reverse takeover by Critical Outcome Technologies Inc. of Aviator Petroleum Corp., an Exchange-listed capital pool company. Mr. Gendron served as a director of Critical Outcome Technologies Inc. from April 2006 to September 2008. Mr. Gendron was also the President and Chief Executive Officer of DDP Therapeutics, an early stage drug development company. Mr. Gendron is also a founder and Director of KCC Capital Corporation, an Exchange-listed capital pool company. He has also founded and held executive positions with several others companies. Mr. Gendron has a broad base of international market experience.

Bruno Maruzzo, Director of Calotto. Mr. Bruno Maruzzo is President of TechnoVenture Inc., a technology consulting company. Mr. Maruzzo has worked with a variety of public and private high technology companies in the computer, medical instrumentation and biotechnology sectors, where he held positions in a range of areas including business development, corporate development, investor relations, engineering management and general management. He has also worked in the venture capital field, sourcing, assessing and making investments in early-stage technology-based companies in Canada and the US. He has a BASC in Electrical Engineering from the University of Waterloo, an MASC in Biomedical Engineering and an MBA from the University of Toronto. Mr. Maruzzo is currently a director of Pinetree Capital, a TSX-listed company, and Critical Outcome Technologies Inc., Minati Capital, Drift Lake Resources, Cleanfield Alternative Energy, all Exchange-listed companies.

Shareholders of Hamilton Thorne, Inc.

The issued and outstanding shares of Hamilton Thorne are principally held by Daniel K. Thorne, a director and resident of the United Kingdom (14,087 shares - 34.34%), Star Lake BioVentures, LLC, a Delaware limited liability company (12,017 shares - 29.30%), Louisa C. Spencer, a resident of New York State (6,355 shares - 15.49%), and Brook Co-Investment II LP, a Massachusetts limited partnership (2,946 - 7.18%). The remaining 13.69% of the shares of Hamilton Thorne are held by 11 shareholders. Two insiders of Hamilton Thorne hold a beneficial interest in one of these 11 shareholders.

Selected Financial Information

The financial statements of Calotto may be viewed through the internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which can be accessed at www.sedar.com.

The following table, which sets forth summary financial information for Hamilton Thorne, is derived from the company's audited financial statements 2006 and 2007 fiscal years, and its unaudited internal financial statements for the 2008 fiscal year and the quarter ended March 31, 2009.



Year end Year end Year end Quarter End
-------------------------------------------------------

12/31/2006 12/31/2007 12/31/2008 3/31/2009
-------------------------------------------------------
(unaudited) (unaudited)

Summary Income Statement Data (US$)

Revenues: $ 5,247,215 $ 5,134,604 $ 5,757,406 $ 1,115,553
COGS: 1,817,996 1,746,030 2,002,813 418,648
Gross Profit: 3,429,219 3,388,574 3,754,593 696,906
Operating Expenses 5,255,044 5,354,779 4,466,802 987,126
Net Loss $ 2,389,657 $ 3,881,779 $ 1,029,556 $ 337,135

Summary Balance Sheet Data (US$)

Total assets $ 3,788,017 $ 2,033,935 $ 1,925,405 $ 1,494,989
Total liabilities 3,585,997 5,257,079 6,187,615 6,111,594
Total equity 202,020 (3,223,144) (4,262,210) (4,616,605)
Total liabilities
and equity $ 3,788,017 $ 2,033,935 $ 1,925,405 $ 1,494,989


Sponsorship

Sponsorship of a Qualifying Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. Calotto intends to apply for an exemption from sponsorship requirements, however, in the event that this exemption is not obtained, LOM has agreed to act as sponsor in connection with the Transaction, subject to completion of satisfactory due diligence. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.

Trading Halt

Calotto's common shares are currently halted at Calotto's request and will remain so until the documentation required by the Exchange for the proposed Transaction can be provided to the Exchange.

Investors are cautioned that trading in the securities of a capital pool company should be considered to be highly speculative. Calotto Capital Inc. is a capital pool company governed by the policies of the Exchange. Its principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction. This press release contains certain forward-looking statements that reflect the current views and/or expectations of Calotto Capital Inc. with respect to performance, business and future events. Such statements are subject to a number of risks, uncertainties and assumptions. Actual results and events may vary significantly from those disclosed herein. Investors are cautioned not to rely on these forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this new release, and Calotto Capital Inc. does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, (majority of the minority) shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Calotto Capital Inc.
    Mr. Dean Gendron
    CEO
    (613) 769-0453