Whiteknight Acquisitions III Inc. Announces Letter of Intent to Complete a Qualifying Transaction with Digital Underground Media Inc.

TORONTO, ONTARIO--(Marketwired - Aug. 7, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Whiteknight Acquisitions III Inc. ("WKA") (TSX VENTURE:WKA.P), a Capital Pool Company, is pleased to announce that on August 7, 2014 it entered into a letter of intent with Digital Underground Media Inc. ("Digital") to complete a business combination (the "Transaction") whereby all of the issued and outstanding securities of Digital will be exchanged for securities of WKA. The Transaction is intended to constitute the "Qualifying Transaction" of WKA, as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the "Exchange").

About Digital

Digital, a globally focused media company, is an early mover in the digital in-tunnel advertising industry, a subset of the rapidly growing digital out-of-home advertising segment. Digital generates revenue through the placement of advertisements on a networked proprietary digital video advertising platform that targets the mobile consumer in subway systems. Digital enters long-term, revenue sharing contracts with subway system owners, such as metropolitan transportation authorities, for the exclusive rights to subway tunnel walls, from which it displays advertisements to passengers in passing subway trains. Digital utilizes both an in-house and contracted sales force to sell the advertising inventory on its advertising platform. Digital is an Ontario corporation that was formed on January 19, 2010.

The Qualifying Transaction

Subject to regulatory approval, WKA intends to acquire all of the issued and outstanding common shares of Digital by way of a business combination for consideration equal to an amount to be determined, to be paid by the issuance of common shares of WKA. Further details about the consideration to be issued by WKA, together with certain other material terms about the Transaction, will be provided in a follow-on press release.

In conjunction with, and prior to the closing of the Transaction, Digital intends to complete a brokered private placement (the "Private Placement") of subscription receipts for gross proceeds of approximately $15 million, the net proceeds of which shall be used for general corporate and working capital purposes. The Private Placement will be undertaken by a syndicate of agents (the "Agents") acting on behalf of Digital led by Beacon Securities Limited, and including Cormark Securities Inc. Each subscription receipt will be automatically exchanged for one common share of Digital immediately prior to the completion of the Transaction and upon the satisfaction of specified escrow release conditions, including the completion or waiver of all conditions precedent to the Transaction and the conditional approval for listing of the common shares of the resulting issuer of the Transaction on the Exchange. The Agents shall be paid standard fees and commissions in connection with the Private Placement.

The subscription receipts will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

It is currently anticipated that the board of directors of the resulting issuer will consist of Ken Bicknell, Drew Craig, and other individuals to be determined.

Ken Bicknell, the current Chief Executive Officer and President of Digital, will act as Chief Executive Officer and President of the resulting issuer. Previously Vice President of ENSIS Management Inc., Ken was a Co-Founding Partner and was involved in all aspects of the business such as strategic planning, expansion activities, investment, government relations and compliance. He was Chair of Management Committee that oversaw day to day operations and led the sales and marketing functions of that company. Ken successfully raised over $140 million for investment in early stage companies and identified, led, and monitored key fund investees. Ken has been CEO of Digital since 2011.

Drew Craig, Digital's Executive Chairman, will be appointed Executive Chairman of the resulting issuer. Previously CEO of Craig Media, Drew has over 30 years of experience in the media industry, growing a single market TV station to become Canada's largest private television broadcaster. He understands the importance of a well-run sales organization being the key success factor of the media business, establishing Craig Sales Media Inc. as an independent national sales arm of Craig Media. Drew expanded the scope of the TV networks into specialty markets with 20 licenses for national digital cable channels. He also entered into a partnership agreement with CBS/Viacom through MTV Canada, MTV2 and TV Land Canada. Craig Media was sold in 2004 for CDN $265 million.

Paul East, the current Chief Technology Officer of Digital, will be appointed CTO of the resulting issuer. Paul is President of Neil East Sound Broadcasting Ltd. ("SBL") with over 20 years' experience in the media business. SBL is a company that specializes in design and implementation of fully automated and redundant systems for the communications industry. Under Paul's leadership, SBL expanded into an engineering consulting business providing services across Canada. Paul has led some major projects including with Rogers Broadcasting (project planning for conversion to DTV), Quebecor Media (engineering and installation services for Sun News Network), Craig Media Toronto (SD/HD broadcast facility), CTV (digital studio and production facility), and City TV (automated digital multi-standard production facilities). Paul has been a Professional Engineer since 1993.

Michael Laitinen, the current Chief Financial Officer of Digital, will be appointed the CFO of the resulting issuer. Previously CFO of Spence Diamonds, Mike was responsible for accounting, information technology, manufacturing and distribution. Previous to his work at Spence Diamonds, Mike was CFO of The News Group, a division of Jim Pattison Group, where he was responsible for accounting, risk management, information technology, shared services, and operations. Mike implemented new accounting software and restructured shared services and accounting, resulting in significant economies. Mike has held significant roles at Electronic Arts (EA) and The Loewen Group, and is a Chartered Accountant. Mike has been CFO of Digital since 2012.

The material conditions required to be fulfilled by the parties prior to closing include the following: (i) closing of the Private Placement on or before September 24, 2014; (ii) receipt of audited financial statements of Digital; (iii) receiving all necessary regulatory and third party approvals and authorizations; (iv) approval by each of the board of directors of Digital and WKA, and the shareholders, if necessary; (v) the entering into of satisfactory employment agreements for senior management; (vi) confirmation of no material adverse change having occurred to either party prior to close; (vii) the completion of a definitive agreement setting forth the terms and conditions for the Transaction; (viii) the completion of due diligence satisfactory to each party; (ix) the completion of a sponsorship report satisfactory to the Exchange (or waiver by the Exchange of that requirement); and (x) a share consolidation by WKA.

The parties will be seeking a waiver of any requirement for a Sponsor in connection with the listing of the common shares of the resulting issuer, but in the event a waiver is not available, will seek a sponsorship relationship for this transaction with an Exchange member firm, and will update the markets accordingly. The proposed Transaction will constitute an arm's length transaction.

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

Completion of the Transaction is subject to a number of conditions, including but not limited to, those listed above and Exchange acceptance. 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.

Notice on forward-looking statements:

This press release includes forward-looking statements regarding WKA, Digital, and their respective businesses, which may include, but is not limited to, statements with respect to the completion of the proposed Transaction and the Private Placement, the terms on which the proposed Transaction and Private Placement are intended to be completed, the ability to obtain regulatory and shareholder approvals 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, and are based on assumptions and subject to risks and uncertainties (including the risk factors listed below). Although the management of each entity believes that the assumptions underlying these statements are reasonable, they may prove to be incorrect. The forward-looking events and circumstances discussed in this release, including completion of the proposed Transaction and the Private Placement, 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 media and digital technology industries, failure to obtain regulatory or shareholder approvals, market conditions, economic factors, the equity markets generally and risks associated with growth and competition. Although WKA and Digital 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 WKA and Digital undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.