WB III Acquisition Corp.
TSX VENTURE : WXX.P

December 08, 2014 16:57 ET

WB III Acquisition Corp. Announces Merger Agreement With TicToc Planet, Inc. in Respect of Qualifying Transaction

TORONTO, ONTARIO--(Marketwired - Dec. 8, 2014) -

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WB III Acquisition Corp. ("WB") (TSX VENTURE:WXX.P) is pleased to announce that it has entered into a definitive agreement dated December 8, 2014 (the "Merger Agreement") with TicToc Planet, Inc. ("TicToc") pursuant to which WB's wholly-owned subsidiary, WB III Subco Inc. ("WB Subco"), will merge with TicToc (the "Merger") to complete WB's qualifying transaction (the "Transaction") in accordance with the policies of the TSX Venture Exchange Inc. (the "TSXV"). The Merger is structured as a reverse-triangular merger under the Delaware General Corporation Law. As a result of the Merger, TicToc will become a wholly-owned subsidiary of WB. Upon completion of the Merger, it is intended that WB will be known as "Frankly Inc." (the "Resulting Issuer"). The Transaction is subject to the receipt of all necessary regulatory and shareholder approvals as well as the satisfaction of conditions to closing as set out in the Merger Agreement.

About TicToc

TicToc is a corporation existing under the laws of Delaware, with its offices located in San Francisco, California. TicToc is the provider of a free, ephemeral messaging app for iOS and Android devices known as "Frankly", which was launched on September 24, 2013. Frankly, which deletes messages and photos after the recipient views them, caters to the increasing demand of the world's smartphone users for ways to better communicate without digital consequences.

On July 10, 2014, TicToc released an updated version of its application, Frankly 3.0, which, among other things, allows users to send ephemeral messages to non-Frankly users through the use of personalized links. That feature addresses the issue of cross-communication across platforms. Frankly's links, when clicked, can be opened by any user through a webpage on their desktop computer or mobile phone.

As of November 2, 2014, there have been 1.9 million installations of Frankly. On November 2, 2014, active Frankly users sent, on average 25.47 messages. Based on an internal user survey conducted in April 2014, Frankly's user base is approximately 80% female and 80% teenaged. Frankly has achieved a top ten social mobile application ranking in 16 countries in the Apple AppStore, including United States, United Kingdom, New Zealand, Portugal, Norway, United Arab Emirates and Korea.

In October 2014, TicToc launched its chat software development kit ("SDK") initiative, which enables other developers to integrate chat within their own apps, with Frankly serving as the backbone of powering the in-app conversations. At this time, TicToc is already working on SDK integrations with global brands that have demographic alignment to bring a proven, effective engagement layer to standalone applications, and is now accepting selected early partners into its SDK program. TicToc believes that connecting the various apps using the Frankly SDK as a federation of chats within the Frankly open chat network is a unique proposition in the marketplace that leverages the power of a disparate user base rather than attempting to pull all users into one homogeneous platform.

TicToc is indirectly controlled by SK Planet Co. Ltd., a wholly-owned subsidiary of SK Telecom, Korea's largest telecom company, a public company which trades on the facilities of the New York Stock Exchange (NYSE:SMKM) and the Korea Stock Exchange (KOSPI:017670). TicToc does not have any subsidiaries and there is currently no public market for the shares of TicToc.

Summary of Financial Information for TicToc

The following table sets forth selected audited historical financial information for TicToc for the financial year ended 2013. The financial information has been prepared in accordance with United States generally accepted accounting principles.

Income Statement Data
(US$)
Year Ended
2013
Total Revenues 440,951
Total Expenses 4,012,484
Net Loss Before Income Tax Expense (3,571,533 )
Balance Sheet Data
(US$)
As at
December 31,
2013
Total Assets 993,228
Total Current Liabilities 63,534
Working Capital (Deficiency) 929,694

TicToc Financing

Subject to the satisfaction of the applicable conditions, TicToc intends to complete a private placement (the "Private Placement") of 8,596,700 subscription receipts (the "Subscription Receipts") on or about December 9, 2014 for aggregate gross proceeds of C$26,219,935 at a price of C$3.05 per Subscription Receipt. Each Subscription Receipt will be convertible into one share of common stock of TicToc (a "TicToc Share") (and will ultimately entitle the holder thereof to acquire one Resulting Issuer Voting Common Share (as such term is defined below)).

Beacon Securities Limited and Cormark Securities Inc. have been engaged as agents in connection with the Private Placement (the "Agents"). The Agents will receive a cash commission equal to C$1,573,196 (the "Agents' Commission") together with 515,802 options (the "Agents' Compensation Options") entitling the Agents to subscribe for 515,802 TicToc Shares. Each Agents' Compensation Option will be exercisable to purchase one TicToc Share at the price of C$3.05 for a period of eighteen (18) months following the completion of the Escrow Release Conditions (as hereinafter defined).

The proceeds from the Private Placement (less certain expenses of the Agents in connection with the Private Placement) (the "Escrowed Proceeds") will be held in escrow until the satisfaction of certain escrow release conditions, including the confirmation that all conditions precedent to the Transaction, other than the release of the Escrowed Proceeds, have been satisfied (the "Escrow Release Conditions").

Principal Purposes of Funds

The funds to be available to the Resulting Issuer upon the closing of the Transaction, expected to be approximately US$29,018,240, are anticipated to be used, principally, as follows:

Principal Use of Funds Amount (US$)
Product Development and Engineering 1,358,200
General & Administrative 2,485,640
Business Development and Marketing 10,500,000
Current Employee Costs 8,408,025
Future Hires(1) 5,066,375
Transaction Expenses(2) 1,200,000
TOTAL 29,018,240
Notes:
(1) Anticipated future hires through to December, 2016.
(2) Expenses include listing fees, professional services and miscellaneous costs.

The Resulting Issuer intends to spend the funds available to it as stated above. There may be circumstances, however, where for sound business reasons, a reallocation of funds may be necessary.

About the Transaction

WB will hold a special meeting of its shareholders on December 10, 2014, as it may be adjourned or postponed (the "WB Meeting"), to approve, among other things, (i) the board of directors of the Resulting Issuer following the completion of the Merger; (ii) the appointment of KPMG LLP as auditors of the Resulting Issuer; (iii) the consolidation (the "Consolidation") of the issued and outstanding common shares of WB (a "WB Share") prior to the Merger within a range of one (1) post-Consolidation WB Share for every fifteen (15) WB Shares and one (1) post-Consolidation WB Share for every twenty five (25) WB Shares; (iv) the change of the name of the Resulting Issuer to "Frankly Inc."; (v) the creation of restricted voting common shares in the capital of the Resulting Issuer (the "Resulting Issuer Restricted Voting Common Shares"); and (vi) the approval of the Resulting Issuer's equity incentive plan. Based on the pricing of the Private Placement, it is anticipated that the WB Shares will be consolidated on the basis of one (1) post-Consolidation WB Share for every twenty and one third (20.333) outstanding WB Shares pursuant to the Consolidation. On a post-Consolidation basis, it is anticipated that there will be 737,704 WB Shares issued and outstanding.

Details regarding the WB Meeting and the terms of the Resulting Issuer Restricted Voting Common Shares are available in a management information circular dated November 11, 2014 that has been mailed to shareholders of WB. In addition, TicToc will seek the requisite approval of a special majority of its stockholders to approve the Merger and related matters.

Under the terms of the Merger Agreement, at the effective time of the Merger, among other things:

(a) The Resulting Issuer will issue to holders of TicToc Shares (including holders of TicToc Shares pursuant to the Private Placement), approximately 21,320,218 voting common shares in the capital of the Resulting Issuer ("Resulting Issuer Voting Common Shares") and approximately 362,612 Resulting Issuer Restricted Voting Common Shares.
(b) Each holder of an outstanding option to purchase TicToc Shares (of which 382,545 are issued and outstanding as at the date hereof) (each, a "TicToc Option") immediately before the completion of the Merger shall exchange each such TicToc Option for one (1) common share purchase option in the Resulting Issuer (each, a "Resulting Issuer Option") with such Resulting Issuer Option having substantially the same terms and economic value as the TicToc Option being exchanged.
(c) Each Agents' Compensation Option will be exchanged (on a post-TicToc Consolidation basis) for economically equivalent compensation options of the Resulting Issuer.

The deemed issue price per WB Share pursuant to the Transaction is C$0.15 per share on a pre-Consolidation basis (C$3.05 on a post-Consolidation basis, based upon a Consolidation of one (1) post-Consolidation WB Share for every twenty and one third (20.333) outstanding WB Shares).

The completion of the Merger is conditional on obtaining all necessary regulatory and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type.

SKP Planet Co., Ltd. of Seoul, South Korea will, after giving effect to the Transaction, beneficially own, control or direct, directly or indirectly, approximately 9,269,917 Resulting Issuer Voting Common Shares, representing approximately 42.73% of the issued and outstanding Resulting Issuer Voting Common Shares on a non-diluted basis.

Arm's Length Transaction

The Transaction is not a non-arm's length transaction in accordance with the policies of the TSXV and is not subject to WB shareholder approval.

On September 26, 2014, JJR Frankly Holdco Limited Partnership ("JJR Frankly Holdco") entered into a subscription agreement with TicToc pursuant to which JJR Frankly Holdco agreed to purchase 2,092,050 TicToc Shares at US$2.39 per TicToc Share, or 9.8% of the outstanding TicToc Shares after the Private Placement, prior to the Merger. The general partner of JJR Frankly Holdco is controlled by Ronald D. Schmeichel, a director of WB. In connection with JJR Frankly Holdco's investment in TicToc, Mr. Schmeichel was appointed to the board of directors of TicToc. JJR Capital Corp., also controlled by Mr. Schmeichel, was paid a commitment fee of US$175,000. JJR Frankly Holdco will distribute all of its TicToc Shares to the limited partners thereof prior to the Transaction, after which JJR Frankly Holdco will no longer have any interest in TicToc.

Prior to the Merger, Mr. Schmeichel will own 82,500 TicToc Shares, being 0.39% of the outstanding TicToc Shares, in connection with his agreement to purchase the same number of Subscription Receipts pursuant to the Private Placement. Jordan Kupinsky, a director of WB, beneficially owns 20,920 TicToc Shares through his indirect interest in JJR Frankly Holdco. In addition, Mr. Kupinksy will beneficially own 33,000 TicToc Shares in connection with his agreement to purchase the same number of Subscription Receipts pursuant to the Private Placement. Prior to the Merger, Mr. Kupinsky will beneficially own 0.25% of the outstanding TicToc Shares. Kevin Taylor, a director of WB, beneficially owns 315,175 TicToc Shares through his indirect interest in JJR Frankly Holdco. In addition, Mr. Taylor will beneficially own 246,500 TicToc Shares in connection with his agreement to purchase the same number of Subscription Receipts pursuant to the Private Placement. Prior to the Merger, Mr. Taylor will beneficially own 2.63% of the outstanding TicToc Shares.

Proposed Management and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.

Steve Chung - Director, Chief Executive Officer and Corporate Secretary

Mr. Chung is a Director and the Chief Executive Officer of TicToc Planet, Inc. and has been with the company since February 2013. Over the past 10 years he has held senior leadership roles in the technology sector, including Chief Operating Officer of Pan Media Corporation from July 2003 until June 2005, Chief Strategy Officer of CDNetworks Inc. from December 2007 until October 2010, Executive Vice President of KIT Digital, Inc. from October 2010 until January 2012, and Chief Operating Officer of We Heart It (WHI, Inc.) from February 2012 until February 2013. His experience with both start-up and large enterprises has led to his expertise in helping companies grow globally. Mr. Chung began his career at Goldman Sachs as an analyst in New York, and has a passion for connecting U.S. and Asian markets through mobile, media, and Internet technology. Mr. Chung holds a Bachelor of Arts degree from Harvard University, and a Master of Business Administration from Stanford University.

Elena Masters - Interim Chief Financial Officer

Ms. Masters is a Chartered Professional Accountant and a Certified General Accountant. She has progressive international experience in the investment and mining industries having acted as the Chief Financial Officer of several corporate entities, including Stans Energy Corp. and Sino Vanadium Corp, junior natural resource companies, and has acted as a director of several TSXV listed entities, including JM Capital II Corp. and Mercari Acquisition Corp. Ms. Masters has been the President of Administrative Services Corporation Inc., a consulting company, since April 2006. She has a Bachelor of Law degree from Kemerovo State University as well as a Bachelor of Arts in Financial Management from the Moscow State University of Commerce.

Sung Pa (Brad) Park - Chief Technology Officer

Mr. Park is the Chief Technology Officer of TicToc Planet, Inc. and has been with the company since February 2013. He has held senior technology roles over the past 10 years, including more than 4 years as Chief Technology Officer of Arcadia Entertainment Inc. from April 2004 until September 2008, more than three years as the Principal Engineer at the firms Good Technology, Inc. (March 2010 until September 2012) and ZScaler, Inc. (November 2012 until December 2013), and as the Chief Technology Officer of TicToc Planet, Inc. Mr. Park holds a Bachelor degree from Seoul National University.

Jungsoo Park - Vice President, Operations

Mr. Park is the Vice President of Operations and a founding officer and investor of TicToc Planet, Inc. and has been with the company since March 2013. He has held leadership positions in the operations, corporate and business development, and strategy areas over the past four years. Prior to his role at TicToc Planet, Inc., Mr. Park was a director at Madsmart, Ltd. from December 2011 until March 2013 overseeing its product strategy. In this role he managed Madsmart, Ltd.'s sale to SK Planet, Inc. Mr. Park also has more than 10 years of experience in various functions in the technology industry, previously working for Naver Corporation (formerly NHN Corporation) from August 2003 until May 2008, and LG Electronics Inc. from February 2011 until December 2012. Mr. Park holds a Bachelor of Arts degree in Anthropology and a Bachelor of Business Administration degree from Seoul National University, and a Master of Business Administration from the Kellogg School of Management at Northwestern University.

Harrison Shih - Vice President, Product

Mr. Shih is the Vice President of Product and Marketing at TicToc Planet, Inc. and has been with the company since August 2014. Over the past four years he has held leadership positions in the marketing and product design area, including as a Marketing Manager for Google Inc. from June 2010 until February 2012, Senior Product Manager for GREE International, Inc. from February 2012 until May 2013, and the Head of Product and Design at FitStar Inc. from May 2013 until August 2014. Mr. Shih attended Northwestern University's Kellogg School of Management, where he received a Bachelor degree in Economics and Math and a certificate in Financial Economics.

Anthony Lacavera - Director

Mr. Lacavera is the Chairman of the Board of WIND Mobile and serves as the Chairman and Chief Executive Officer of Globalive Capital and Globalive Holdings. Mr. Lacavera has also served as the Chief Executive Officer of WIND Mobile, a division of Globalive Wireless Management Corp., from January 2012 until October 2014, the Chief Executive Officer of Yak Communications (Canada) Corp. from January 2008 until December 2011, and the Chief Executive Officer of Globalive Communications Corp. from November 1997 until December 2007. He was named Canada's Chief Executive Officer of the Year in 2010 by the Globe and Mail's Report on Business Magazine, Canada's Top 40 Under 40 in 2006 and one of the 50 Most Influential Torontonians by Toronto Life Magazine in 2013. Mr. Lacavera holds a Bachelor of Science degree from the University of Toronto. Mr. Lacavera was named an Honorary Fellow of St. Michael's College at the University of Toronto in 2012, and named to the University of Toronto's Engineering Hall of Distinction in 2013.

Jonghyeok Lim - Director

Mr. Lim is a Director of TicToc Planet, Inc., and the Head of the Strategy and Planning Office of SK Planet Co., Ltd. since October 2011. He has held leadership roles in the strategy and planning area for the past 11 years working for SK Telecom Co., Ltd. (from May 1996 until September 2011) and SK Planet Co., Ltd. Mr. Lim holds a Bachelor of Arts degree and a Master of Business Administration from Seoul National University.

Michael Lunsford - Director

Mr. Lunsford is the Chief Executive Officer of SK Planet Inc. and a Director of shopkick, Inc. He has an extensive senior leadership background in mobile, broadband, digital media, software, and services. Mr. Lunsford has notably served as the Interim Chief Executive Officer of EarthLink, Inc., Chief Executive Officer of Rhapsody International Inc., and the Interim Chief Executive Officer of RealNetworks Inc. Mr. Lunsford worked for EarthLink Inc. from March 1999 until December 2007 and RealNetworks Inc. from January 2008 until May 2013. He has extensive experience in corporate development, having bought and sold companies, overseen a complex merger, sold assets, structured large joint ventures, and developed partnerships with large corporations. Mr. Lunsford holds a Bachelor of Arts degree in Economics and a Master of Business Administration from the University of North Carolina.

Ronald D. Schmeichel - Director

Mr. Schmeichel has over 18 years of experience in high-yield credit, leveraged loans, buy-outs and equity capital markets in Canada and the United States. He has specialized in providing credit and equity lines for management buy-outs, recapitalizations, bridge and mezzanine loans and minority equity ownership to small/mid-market companies in Canada. Mr. Schmeichel was one of the founders and partners of JJR Private Capital in 2003. Mr. Schmeichel also served as a President and CEO of Windsor Private Capital from 2010 to 2014. Mr. Schmeichel currently serves as the Chairman of the board of directors of the Concordia Healthcare Corp., and since Concordia's inception was an M&A advisor on six pharmaceutical/healthcare transactions, including two foundational acquisitions. Mr. Schmeichel has been on the board of 15 TSX and TSXV public companies. For the past 12 years, Mr. Schmeichel has been a guest lecturer at the University of Western Ontario, Faculty of Law, as well as a guest lecturer at the Ivey School of Business. He currently serves as a member of the Ontario Local Area Committee to the Toronto Stock Exchange-Venture Group. Mr. Schmeichel received a BA degree, with Merit, from York University in 1992 and a Juris Doctorate degree from the University of Western Ontario in 1995.

Jung Woo Sung - Director

Mr. Sung is a Director of TicToc Planet, Inc., and a Vice President & Head of Corporate Development at SK Planet, Inc. since February 2014 He originated and led the execution of SK Planet, Inc.'s acquisition of shopkick, Inc., a leading Silicon Valley-based mobile commerce and shopping service. Mr. Sung has held leadership positions related to venture capital, private equity and corporate development over the past 13 years. Notably, he was the Head of the Corporate Development Office of SK Planet Co., Ltd. from July 2012 until February 2014, Head of Private Equity Investments at Ilshin Investment Co., Ltd. from January 2012 until June 2012, Vice President of Asia Growth Capital at The Carlyle Group from February 2006 until December 2011, and a Principal at SAIF Partners (formerly Softbank Asia Infrastructure Fund) from January 2004 until January 2006. Mr. Sung is also a member of the Board of Directors of npnf, Inc., a mobile game developer and publisher and was a former member of the Board of Directors at Viki, Inc. (acquired by Rakuten, Inc.) and WiderThan Co., Ltd. (acquired by RealNetworks Inc.). Mr. Sung holds a Bachelor of Arts degree in Economics from The University of Chicago.

Filing Statement

In connection with the Transaction and pursuant to TSXV requirements, WB will file a filing statement on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Merger, the Private Placement, WB, TicToc and the Resulting Issuer.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.

ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

The TSXV has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.

The information contained or referred to in this press release relating to TicToc has been furnished by TicToc. Although WB has no knowledge that would indicate that any statement contained herein concerning TicToc is untrue or incomplete, neither WB nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV 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.

Notice regarding forward-looking statements:

This release includes forward-looking statements regarding WB, TicToc, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the Transaction, the terms on which the Transaction are intended to be completed, the use of the net proceeds from the Private Placement, the ability to obtain regulatory and shareholder approvals, the proposed business plan of TicToc and other factors. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "is expected", "expects", "scheduled", "intends", "contemplates", "anticipates", "believes", "proposes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements are based on the current expectations of the management of each entity. The forward-looking events and circumstances discussed in this release, including completion of the Transaction, may not occur by certain specified dates or at all and could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding the TicToc industry, failure to obtain regulatory or shareholder approvals, economic factors, the equity markets generally and risks associated with growth and competition. Although WB and TicToc have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. No forward-looking statement can be guaranteed. Except as required by applicable securities laws, forward-looking statements speak only as of the date on which they are made and WB and TicToc undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

WB is a capital pool company governed by the policies of the TSXV. The principal business of WB is the identification and evaluation of assets or businesses with a view to completing a qualifying transaction.

Contact Information

  • WB III Acquisition Corp.
    Ronald D. Schmeichel
    President and Secretary
    +1 416-972-6294

    TicToc Planet, Inc.
    Steve Chung
    Chief Executive Officer
    +1 415-861-9797