Advitech announces merger operations with Botaneco Specialty Ingredients

Nov 27 2009

Advitech Inc. ("Advitech" or the "Corporation") (TSX Venture Exchange: AVI) announced today that, further to the consolidation of its common shares on a 8-for-1 basis (the "Consolidation"), the TSX Venture Exchange Inc. (the "TSX-V") has approved the release from escrow of the previously announced acquisition of all the issued and outstanding shares of Botaneco Specialty Ingredients Inc. ("Botaneco") held by Avrio Ventures Limited Partnership ("Avrio") and SemBioSys Genetics Inc. ("SemBioSys") (the "Transaction"), an equity financing in the amount of $2,515,000 with, among others, AgeChem Venture Fund L.P. ("AgeChem") and Avrio (the "Equity Financing") and the redemption of the 58,083,334 pre-Consolidation common share purchase warrants held by AgeChem (the "Redemption of the AgeChem Warrants"), which have been closed in escrow on November 20, 2009. The approval of the TSX-V being the only condition to the release of the escrow, the escrow has now been lifted.

Furthermore, Advitech is pleased to announce the appointment of Mr. Michael Stangel as President and Chief Executive Officer of the Corporation.

"The Transaction is very positive on several fronts for Advitech as it broadens the product portfolio and access-to-market, allows strengthening the management and sales teams and brings Avrio as a main shareholder with the clear vision to grow the Corporation to the next level", said Mr. Claude Livernoche, Director of Advitech.

Transaction

As part of the Transaction, Advitech has issued Avrio and SemBioSys a total of 28,099,003 post-Consolidation common shares, at a price of $0.16 per post-Consolidation common share which represents 49% of all of the issued and outstanding shares of Advitech after closing of the Transaction.

Equity Financing

Concurrently with the Transaction, Advitech completed the Equity Financing for gross proceeds of $2,515,000, with Avrio, AgeChem and Michael Stangel, the Corporation's new President and Chief Executive Officer. The Equity Financing consists in the issuance of a total of 15,718,750 units (each, a "Unit") at a price of $0.16 per Unit. Each Unit consists of one post-Consolidation common share and one common share purchase warrant (each, a "Warrant"). Each Warrant entitles its holder to purchase one additional post-Consolidation common share at a price of (i) $0.17 until the date that is one (1) year after the date of issuance of the Warrants (the "Closing Date"); (ii) $0.19 until the date that is two (2) years after the Closing Date; (iii) $0.21 until the date that is three (3) years after the Closing Date; (iv) $0.23 until the date that is four (4) years after the Closing Date; and (v) $0.253 until the date that is five (5) years after the Closing Date. The proceeds of the Equity Financing will be used by Advitech for the implementation of its business plan.

Redemption of the AgeChem Warrants

Finally, as part of the Transaction, Advitech and AgeChem have also agreed to the redemption of 58,083,334 pre-Consolidation common share purchase warrants held by AgeChem, the value of which has been estimated at a total of $125,000 by the parties hereto, through the issuance of a total of 781,250 post-Consolidation common shares at a price of $0.16 per share.

With the completion of the Transaction, the Equity Financing, and the Redemption of the AgeChem Warrants, the principal shareholders of Advitech are Avrio, holding 41.71%, and AgeChem, holding 21.70%, of all issued and outstanding common shares of Advitech. The new Board of Directors of Advitech consists of seven directors, of which two have been proposed by AgeChem and two by Avrio.

The Equity Financing and the Redemption of the AgeChem Warrants are subject to the final approval of the TSX-V in connection with the listing of the common shares issued as part of such transactions, which will be obtained upon fulfilment of customary conditions for this type of transactions. The securities issued as part of the Transaction, the Equity Financing and the Redemption of the AgeChem Warrants are all subject to a statutory four-month hold period.

Business plan following the Transaction ---------------------------------------

In line with the current focus of both Advitech and Botaneco prior to the Transaction, the resulting entity will be a manufacturer, developer and marketer of proprietary natural ingredients and formulations for oral and topical applications that have been clinically proven to be safe and effective for improving skin health and well being. The resulting entity will grow its business organically by leveraging the channels and products of each company through the efforts of a fully integrated organization, and externally by in-licensing/acquiring topical ingredients to broaden its portfolio and better serve its expanding customer base.

The resulting entity will offer a comprehensive portfolio of stand alone and/or companion active ingredients and specialty products to help its customers to differentiate their products with natural and scientifically supported ingredients. To this end, the plan of the resulting entity comprises the following objectives:

- Finalize the integration of the two entities in the first quarter of 2010 in order to achieve cost synergies while maintaining operations in Quebec City (administration and research and development), Calgary (manufacturing) and Bensalem, Pennsylvania (sales and formulation); - Leverage the capacity of the three technological platforms now owned by the Corporation and benefit from cross-selling opportunities. These platforms are XP-828L for immune mediated inflammatory disorders, IM for anti-aging and wound healing, and the Oleosome platform for the production of non-transgenic specialty ingredients for topical cosmetic, OTC, and Rx products within the natural personal care products sector. In the next few weeks, the Corporation plans to launch new products that have been developed using the assets of these platforms; - Further strengthen the existing management team to allow the resulting issuer to execute its business plan; and - Identify new M&A and product acquisition opportunities, aligned with the key strategic initiatives of the resulting entity. Management ----------

Following the Transaction, Mr. Michael Stangel joined the Corporation as its President and Chief Executive Officer. Mr. Stangel brings a professional expertise of more than 25 years in the cosmetic, cosmeceutical and nutraceutical industries. Prior to joining the Corporation, Mr. Stangel has served as a senior advisor to private equity firms in targeting consumer products sectors for M&A opportunities from 2006 until now, participated in the reorganization of a packaging company as General Manager between 2004 and 2005 and spent several years at Alberto Culver Company from 1987 to 2003 where he started as Director of Sales for the Professional Division and ended successively President of the Canadian and South American subsidiaries. Before 1987, he held various management positions in sales and marketing at companies such as Beierdorf, Purex Corporation, McNail Laboratories and Kraft Foods.

As part of his remuneration package, Advitech issued to Michael Stangel, on the date hereof, subject to regulatory approvals, a total of 2,918,797 options under the Corporation's current stock option plan. These options will expire 5 years from their issuance and have an exercise price of $0.16. Of these options, 1,824,248 will vest in three (3) equal yearly instalments on the anniversary date of the effective date of the employment agreement of Michael Stangel, with the balance of 1,094,549 options vesting on the third anniversary of the effective date of the employment agreement of Mr. Stangel.

Mr. Christian Labbé will continue to act as Vice-President and Chief Financial Officer of the Corporation. Mr. Labbé joined Advitech in 2007 as Financial Director. He has been appointed Vice-President and CFO in January 2009. From 1997, he held various financial management positions with technological companies mainly financed with venture capital, where he was responsible for accounting, finances and administration. He worked, among others, with HexaVision Technology, Adept Technology and Envirogain. Mr. Labbe holds a Bachelor's degree in Business Administration from Université Laval (Québec, Canada) with a specialization in accounting, and he is a member of the Ordre des Administrateurs Agréés du Québec.

Mr. Jack Guth, Ph.D., formerly Director of R&D at Botaneco where he was responsible for all efforts in the areas of product and process development, as well as technical service, has been appointed as Vice-President of R&D of the Corporation. Early in his career, Dr Guth held technical positions at various finished goods companies such as Gillette and Johnson and Johnson Baby Products. He then moved to the supplier side of the Personal Care business, where he held technical management positions at Inolex, National Starch, and Lonza before joining Botaneco. Active in the Personal Care area for over 35 years, he is the author of numerous articles in the areas of hair and skin care and holds approximately 20 patents. Dr Guth received his BS degree in Chemistry from the George Washington University and his PhD in Organic Chemistry from the American University.

Mr. Réjean Drouin, who was Vice-President of R&D of the Corporation before the Transaction, will continue to lead the Advitech's R&D program as Director of R&D.

Board of Directors ------------------

The new Board of Directors consists of Louis Lacasse and Richard Bordeleau, representing AgeChem, Aki Georgacacos and Denis Boyer, representing Avrio, Claude Livernoche and Pierre Labbé, current Board members of Advitech, and Christian Labbé, Vice-President and Chief Financial Officer of Advitech who now joins the Board of Directors.

Mr. Lacasse is the Managing Partner of AgeChem, Mr. Bordeleau was formerly with Atrium Innovations and Biocad Medical and he is now acting as a consultant in the field of corporate development, Mr. Georgacacos is a Managing Partner of Avrio while Mr. Boyer is a Director of Avrio. Mr. Livernoche is board member of corporations and has been acting on Advitech's Board of Directors for seven years. Mr. Pierre Labbé is Vice-President and Chief Financial Officer of Medicago, a TSX-V company (MDG), and member of Advitech's Board since May 2007.

Mr. Renaud Beauchesne, the former Executive Chairman of Advitech, has elected to retire from operations and left the Board of Directors, but he will continue to serve the Corporation as the President of the ad hoc Merger and Acquisition Committee to be created by Advitech. This Committee will also include the newly appointed President and Chief Executive Officer, Mr. Michael Stangel, Mr. Christian Labbé, Vice President and Chief Financial Officer, Mr. Bud Kirchner, founding Partner of Avrio, and Mr. Richard Bordeleau.

Pro forma financial highlights ------------------------------

For information purposes, the financial information for the combined entities is hereunder presented on a pro forma basis, prepared by the management of Advitech and Botaneco using the financial statements of Botaneco and Advitech for the 6-month period ended June 30, 2009 and the 12-month period ended December 31, 2008, as adjusted taking into account: (i) the conversion of all Botaneco convertible debentures, (ii) the preliminary allocation of the purchase price, and (iii) the Equity Financing:

Six-month Year ended period ended Statements of Loss ($Cdn) December 31, June 30, 2008 2009 (unaudited) (unaudited) Total Revenues 1,674,899 652,589 Gross margin 379,903 15,225 Operating expenses 4,492,486 2,440,966 Amortization 791,469 421,872 Interest and exchange loss 613,368 365,399 Net Loss (5,517,420) (3,213,012) As at As at Balance sheet ($Cdn) December 31, June 30, 2008 2009 (unaudited) (unaudited) Current assets 7,471,886 5,778,513 Property and equipment 2,904,613 2,630,317 Goodwill and intangible assets 314,285 2,648,405 Current liabilities 1,632,065 1,200,569 Convertible debentures 1,620,730 26,980 Long-term debt 1,978,761 2,467,353 Shareholders' Equity 5,459,228 7,362,333 Increase of common shares available under the Corporation's Stock ----------------------------------------------------------------- Option Plan -----------

Further to the Transaction, the Equity Financing and the Redemption of the AgeChem Warrants, the Board of Directors of the Corporation has approved the increase of post-Consolidation common shares available for issuance under the Corporation's current stock option plan from 675,000 to 7,200,000 post-Consolidation common shares which represents approximately 10% of the number of post-Consolidation issued and outstanding common shares, on a post-closing basis. This increase is subject to the approval of the TSX-V.