Whiteknight Acquisitions III Inc.
TSX VENTURE : WKA.P

September 01, 2015 16:05 ET

Whiteknight Acquisitions III Inc. Announces Proposed Qualifying Transaction With Delivra Inc.

TORONTO, ONTARIO--(Marketwired - Sept. 1, 2015) -

NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES

Whiteknight Acquisitions III Inc. ("WKA" or the "Company") (TSX VENTURE:WKA.P), a capital pool company, is pleased to announce that it has entered into a non-binding letter of intent (the "LOI") dated August 31, 2015 with Delivra Inc. ("Delivra") which outlines the general terms and conditions of a proposed transaction (the "Proposed Transaction") that will result in WKA acquiring all of the issued and outstanding shares of Delivra (the "Delivra Shares") in exchange for shares of WKA (each, a "WKA Share"). In addition, each convertible, exchangeable, or exercisable security of Delivra shall be exchanged for a convertible exchangeable, or exercisable security, as applicable, of WKA on substantially the same economic terms and conditions as the original convertible, exchangeable or exercisable security of Delivra. The Proposed Transaction is currently expected to be completed by way of a three cornered amalgamation (the "Amalgamation") between WKA and Delivra or other similar transaction which will result in Delivra becoming a wholly-owned subsidiary of WKA.

The LOI is to be superseded by a definitive agreement (the "Definitive Agreement") between WKA and Delivra with such agreement to include representations, warranties, conditions and covenants typical for a transaction of this nature. The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approval of Delivra, final approval of the TSX Venture Exchange (the "Exchange") and standard closing conditions, including the conditions described below. The parties have agreed that during the period from signing the LOI through to execution of the Definitive Agreement, each of WKA and Delivra will continue their respective operations in the ordinary course and will not solicit or accept alternative offers (subject to fiduciary duties). Subject to satisfactory completion of due diligence, the parties expect to execute the Definitive Agreement on or before October 30, 2015 (or such other date as may be mutually agreed in writing between WKA and Delivra) and have agreed to use their best efforts to complete the Proposed Transaction by November 30, 2015 (or such other date as may be mutually agreed in writing between WKA and Delivra).

The Proposed Transaction will constitute the Company's qualifying transaction (the "Qualifying Transaction") pursuant to Policy 2.4 - Capital Pool Companies (the "Policy") of the Exchange.

The Proposed Transaction is not a Non Arm's Length Qualifying Transaction pursuant to Section 2.1 of the Policy and, as such, the Company is not required to obtain shareholder approval for the Proposed Transaction. However, the Company intends to hold a special meeting of shareholders to approve certain matters ancillary to the Proposed Transaction, including a name change, change in the board of directors and a consolidation of the WKA Shares on a 3.75 for 1 basis (the "Consolidation"), effective upon closing of the Proposed Transaction ("Closing"). The Company currently intends to call the special meeting as soon as practicable and expects the meeting to be held prior to November 30, 2015.

Upon completion of the Proposed Transaction, WKA will continue on with the business of Delivra with Delivra as its wholly‐owned, operating subsidiary (the Company after the Proposed Transaction being referred to herein as the "Resulting Issuer").

The Proposed Transaction

It is currently anticipated that the Proposed Transaction will be effected by way of Amalgamation whereby WKA will acquire all of the issued and outstanding Delivra Shares such that, in accordance with the Amalgamation, each shareholder of Delivra (including those becoming shareholders as a result of the Delivra Financing, as defined below) (each, a "Delivra Shareholder") will receive WKA Shares (on a post-Consolidation basis) issued at a deemed issue price of $0.75 (the "Issue Price") in exchange for the Delivra Shares held by such holder. The board of directors of each of the companies has agreed to relative pre-money valuations of each of WKA and Delivra of $1,028,100 and $24,745,125, respectively. The number of WKA Shares (on a post-Consolidation basis) to be issued by WKA to acquire Delivra will be equal to the aggregate of $24,745,125 plus the amount of the Delivra Financing (as defined herein) divided by the Issue Price.

It is currently anticipated that all of the current officers and all but one of the current directors of WKA will resign from their respective positions with WKA. It is currently anticipated that the insiders of the Resulting Issuer will include each of Dr. Joseph Gabriele, and Chris Schnarr, who are expected to become senior officers of the Resulting Issuer. Dr. Joseph Gabriele will also be a director of the Resulting Issuer. Additional insiders of the Resulting Issuer will include directors and officers of each of Delivra and its subsidiaries.

As a result of the Amalgamation, Delivra will become a wholly-owned subsidiary of WKA and WKA will continue on with the business of Delivra. Upon Closing, it is anticipated that the name of the Resulting Issuer will be changed to "Delivra Corp." or such other name as may be acceptable to Delivra and the Exchange.

All WKA Shares issued pursuant to the Proposed Transaction, except those certain WKA Shares issued to U.S. persons who are affiliates (as defined in Rule 144(a)(1) under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")) of Delivra at the time the Proposed Transaction is submitted for vote or consent by the shareholders of Delivra, will be freely tradable under applicable securities legislation but may be subject to Exchange imposed restrictions on resale.

Certain of the WKA Shares to be issued to the Delivra Shareholders pursuant to the Proposed Transaction, including up to 100% of the securities to be issued to "Principals" (as defined under applicable laws), may also be subject to escrow provisions imposed pursuant to the policies of the Exchange.

None of the securities to be issued pursuant to the Amalgamation have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Amalgamation are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Proposed Private Placement

Delivra expects to complete a private placement (the "Delivra Financing") of a minimum of $500,000, the terms and conditions of which are to be determined in the context of the market. The net proceeds from the Delivra Financing will be used for general corporate purposes and to provide working capital to the Resulting Issuer. Further details with respect to the Delivra Financing, including the amount and the involvement of an agent or broker, will be provided by way of a subsequent news release prior to any resumption of trading.

Conditions to Proposed Transaction

Prior to completion of the Proposed Transaction (and as conditions of closing), among other things:

  • Delivra shall complete the Delivra Financing;
  • WKA shall, with appropriate shareholder approval, complete the Consolidation;
  • WKA shall, with appropriate shareholder approval, change its name to "Delivra Corp.", a name substantially similar to such name or another name as agreed to by Delivra and WKA and acceptable to the Exchange, each acting reasonably;
  • completion of satisfactory due diligence investigations by each of Delivra and WKA;
  • approval of the Proposed Transaction by the board of directors of each of Delivra and WKA;
  • Delivra shall obtain shareholder approval of the Proposed Transaction; and
  • receipt of all required consents, waiver and approvals from the Exchange, any securities regulatory authority and any other third party having jurisdiction, including approval from the Exchange for the Proposed Transaction as its Qualifying Transaction and the listing of the Resulting Issuer Shares on the Exchange.

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The parties will be seeking a waiver of any requirement for a Sponsor, 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.

About Delivra

Delivra was incorporated under the laws of the Province of Ontario on July 19, 2007. Delivra is widely held among more than 170 shareholders, and does not have any shareholder owning 20% or more of the company's voting securities. Delivra is a developer of transdermal technologies for the delivery of pharmaceutical and natural molecules, through the skin, rather than via pills. Delivra manufactures and sells a growing line of natural topical creams under the LivRelief™ brand, for conditions such as joint and muscle pain, nerve pain, varicose veins, wound healing, and sports performance. LivRelief products are available in pharmacies, grocery chains, and independent health food stores across Canada, and on-line at www.livrelief.com. LivRelief products are intended to be launched for on-line sales in the United States in Q4 2015. LivRelief's flagship Pain Relief Cream is the #1 selling natural pain relief cream in Canada, and its Nerve Pain Relief Cream is the #1 selling nerve pain relief cream in Canada (Source: AC Neilsen Company of Canada, May 2015). In parallel with its consumer products business, Delivra also has a mandate to license its unique, proven, and patent-pending delivery platform to global pharmaceutical companies for the transdermal delivery of third party active ingredients to treat a broad range of conditions. With a global transdermal drug delivery market forecast to grow to USD $40 billion by 2018 (Source: Kelly Scientific), Delivra believes the licensing opportunity is robust. Delivra is headquartered in Burlington, Ontario and has a research and development laboratory in Charlottetown, PEI.

Delivra is considered a development stage company and had total revenues of $1,052,629 and $1,822,103 and $2,168,876 for the fiscal years ended December 31, 2014 and 2013 and 2012, respectively, with net losses of $1,289,275 and $813,364 and $2,274,907 for the respective years (all figures audited). With an increased marketing budget in 2015, Delivra had revenues of $1,581,531 and a net loss of $860,337 for the 6 months ended June 30, 2015. Delivra had total assets of $3,667,557 and total liabilities of $1,249,801, and net working capital of $2,790,481 at June 30, 2015. The 2015 figures have not been reviewed and are unaudited and remain subject to further adjustments.

Proposed Management of the Resulting Issuer

Subject to Exchange approval, on completion of the Proposed Transaction, it is currently anticipated that the board of directors of the Resulting Issuer will consist of six directors. Information with respect to the proposed directors and officers of the Resulting Issuer are set forth below:

Dr. Joseph Gabriele - Chief Executive Officer and Director

Dr. Gabriele is the founder, inventor and visionary behind the Delivra™ technology. Dr. Gabriele has devoted the past eight years to innovation, development, and commercialization activities at Delivra, and in addition to providing guidance and vision for Delivra, he actively stewards its robust R&D program. He has a doctorate in molecular pharmacology and is an Assistant Professor (PT), McMaster University, Department of Psychiatry and Behavioral Neurosciences, as well as Special Graduate Faculty, University of Guelph, Department of Biomedical Sciences. Dr. Gabriele received a B.Sc from the University of Toronto, with M.Sc. and Ph.D. degrees from McMaster University. Dr. Gabriele's Ph.D. training was conducted under Dr. R.K. Mishra, focusing on molecular pharmacology/neuroscience and its implications in psychiatric and neurological disorders. He has received numerous awards, including a CIHR studentship award in pharmacology during his M.Sc. degree; an NSERC Canada Graduate Scholarship during his Ph.D. training; and the International Congress on Schizophrenia Research, Young Investigator Award.

Chris Schnarr, ICD.D - Chief Financial Officer

Mr. Schnarr has over 20 years of experience across a range of industries, founding, managing, and advising growth companies, including strategy, corporate finance, sales and marketing, operations, corporate development, M&A, and governance, both in private and public companies. Mr. Schnarr also currently serves as a director of Legumex Walker Inc., Tweed Marijuana Inc., and Intrinsic 4D Inc. Mr. Schnarr holds a BBA from Wilfrid Laurier University and an MBA from the University of British Columbia. Mr. Schnarr is a member of the Institute of Corporate Directors, a graduate of the Directors Education Program at the Rotman School of Management at the University of Toronto, and holds the ICD.D designation.

Jeff Hull - Director

Mr. Hull has been in the investment industry for over 24 years and currently holds the title of Senior Financial Advisor, Manulife Securities Incorporated. Manulife is one of Canada's largest financial conglomerates. Mr. Hull has been featured in over 80 articles and 100 television interviews globally. Mr. Hull was an owner in one of Canada's largest privately-held financial institutions, which grew from $50 million to over $14 billion in assets under management in less than 10 years. Mr. Hull serves on the Board of Directors of the NATO Association of Canada. Mr. Hull has been written about in a number of business books, including having a chapter dedicated to him in a book on legendary investing billionaire Warren Buffett. Mr. Hull's entrepreneurial portfolio includes personal investments in an array of private businesses, including in the medical, scientific, and broadcast television industries.

Carmen Fortino - Director

Mr. Fortino is currently Division Head and Senior Vice President of Metro Ontario Inc., the second largest grocery retailer in Ontario with over 260 stores and 70 pharmacies operating under the Metro and Food Basics banners. He has held several executive level positions that have concentrated on business development, brand and market positioning and new product and service development. He is also a seasoned retail professional with over 30 years of general management experience that have included a focus on supply chain, logistics, merchandising, store design and financial management. Prior to joining Metro in September 2014, Mr. Fortino held the positions of Executive Vice President of Business Development at GNC Holdings Inc., President, North America Operations at Atrium Innovations Inc. and CEO of Seroyal International Inc. He has a deep understanding of the food retail industry in Ontario following several posts at Loblaw Companies Limited, where his tenure included time served as an Officer and Executive Vice President of their Ontario division. Mr. Fortino also proudly served as a Governor for Mohawk College, and a Director of GNC Holdings Inc., from 2007 through 2011.

Paul G. Smith, ICD.D - Director

Over his career, Paul G. Smith has held the positions of CFO, CEO, director and Chairman. Mr. Smith was Chair of VIA Rail Canada's Board of Directors from 2010 to 2014 after having joined the board in September 2006 and was President & CEO of Equity Financial Holdings Inc. (TSX: EQI), a Canadian financial services firm he co-founded whose principal subsidiary is an OSFI-regulated deposit-taking institution. Mr. Smith is a director several other companies and before joining the private sector, served as Executive Assistant to the Prime Minister of Canada. Mr. Smith holds a Master of Business Administration from INSEAD (France), a Master of Arts in Public Administration from Carleton University, and undergraduate degrees (Accounting, Political Science) from the University of Ottawa. Mr. Smith completed the Directors' Education Program of the Institute of Corporate Directors (ICD) and holds the ICD.D designation.

Nitin Kaushal - Director

Mr. Kaushal has over 25 years healthcare, financial and investment experience, across North America, spanning life sciences, consumer healthcare, healthcare services and medical device industries. He is presently a Managing Director at PriceWaterhouseCoopers in the corporate finance practice. Over the course of his career, Mr. Kaushal has held various senior roles in venture capital, investment banking, M&A, technology licensing, auditing and consulting. He has sourced, managed and assisted in capital market transactions ranging from private placements and initial public offerings to bought deal underwritings in excess of $2 billion, and has performed on over 40 mergers, acquisitions, strategic advisory and licensing assignments. Mr. Kaushal has extensive public company Board and committee experience and is currently a director of Patient Home Monitoring Inc., Convalo Health International Corp., and Shelby Ventures Inc. Mr. Kaushal received his C.A. designation in 1989 and his CF designation in 2010, from the Canadian Institute of Chartered Accountants, and has a Bachelor of Science (Chemistry) degree from the University of Toronto (1986).

David Mitchell - Director

Mr. Mitchell is currently the managing director of 4Front Capital Partners, a boutique corporate finance and advisory firm based in Toronto, Canada. Mr. Mitchell is also the founder of Stillbridge Ventures Inc., a corporate consulting firm to small and emerging businesses. Mr. Mitchell has had a career in the finance industry of over 28 years. In 2011 Mr. Mitchell founded and has been CEO of the Whiteknight Acquisitions series of Capital Pool Companies and since June 2015 has been a director of TSXV listed Intrinsic4D Inc. Mr. Mitchell is also a founder and director of a private company in the sports apparel industry.

All information contained in this news release with respect to WKA and Delivra was supplied by the parties, respectively, for inclusion herein, and WKA and its directors and officers have relied on Delivra for any information concerning such party.

Completion of the Qualifying 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 Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying 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 Exchange 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 Exchange) accepts responsibility for the adequacy or accuracy of this press release.

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company, Delivra, and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, Delivra, and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's, Delivra, and the Resulting Issuer expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company, Delivra, and the Resulting Issuer with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, Delivra, and the Resulting Issuer. As a result, the Company, Delivra, and the Resulting Issuer cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company, Delivra, and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

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