Whiteknight Acquisitions II Inc.

June 21, 2012 17:26 ET

Whiteknight Acquistions II Inc. Announces Letter of Intent to Complete a Qualifying Transaction With Astrix Networks Inc.

TORONTO, ONTARIO--(Marketwire - June 21, 2012) - Whiteknight Acquisitions II Inc. ("Whiteknight") (TSX VENTURE:WKN.P), a Capital Pool Company, is pleased to announce that on June 11, 2012 it entered into a letter of intent with Astrix Networks Inc. ("Astrix") to complete a business combination (the "Transaction") whereby all of the issued and outstanding securities of Astrix will be exchanged for securities of Whiteknight. The Transaction is intended to constitute the "Qualifying Transaction" of Whiteknight, as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the "Exchange").

About Astrix

Astrix is a private technology company that was incorporated under the Business Corporations Act (Canada) on January 21, 2008 and has its registered head office located at 3425 Harvester Road, Suite 200, Burlington, Ontario L7N 3N1. Astrix' mission is to improve the ways in which machines, people, and processes work, connect, and communicate on the factory floor, by delivering enhanced manufacturing connectivity with innovative hardware and software solutions to its customers. Astrix has developed a suite of hardware and software that provides its manufacturer clients with the ability to accurately measure the overall performance and efficiency of their manufacturing facilities in real time. This technology has been deployed by Astrix on a global scale in controlled quantities and locations with what management considers to be encouraging results. Astrix has developed and owns 100% of its intellectual property, and has already completed multiple successful customer deployments across several diverse manufacturing markets, including the aerospace, precision manufactured components, and furniture manufacturing markets. Astrix is owned 49.5% by DPA Automation Inc. (DPA Automation Inc. is 100% owned by David McPhail), 21.46% by Soft Services Sales Inc. (Soft Services Sales Inc. is 50% owned by John Rattray and 50%, by Mary Saunders), 14.52% by Third Lake Investments Inc. (Third Lake Investments Inc. is 100% owned through a family trust of Stephen Spinks), and 14.52% by Haycorn Beeches Holdings Inc. (Haycorn Beeches Holdings Inc. is 100% owned by Carolyn Farace).

Astrix was profitable in its most recent completed fiscal year. Revenue for the year ending September 30, 2011 was $796,000, and EBITDA was 9.2%, or $74,043. In the same period Astrix had a cost of goods sold of 18.26%, for a gross profit of $651,039. As of September 30, 2011, Astrix had total assets of $1,088,967 and liabilities of $482,498. All numbers in this paragraph are audited.

As a condition to and prior to closing of the Qualifying Transaction, Astrix intends to complete an interim financing by issuing securities for gross proceeds of up to $500,000 (the "Interim Financing"). The exact terms of this financing are being determined and the parties will provide an update as terms are settled.

David McPhail is the President and Chief Executive Officer of Astrix. Mr. McPhail has over 24 years' experience in the automation industry, including 5 spent with one of the premier systems integrators in North America where he was its founder, vice president and managing partner. Mr. McPhail holds an Electro-Mechanical Engineering Technology Diploma from Humber College.

The Qualifying Transaction

Subject to regulatory approval, Whiteknight will acquire all of the currently issued and outstanding common shares of Astrix for consideration equal to $8.91 million, which will be satisfied by issuing 33 million common shares of Whiteknight (the "Whiteknight Shares") to shareholders of Astrix at a deemed issuance price of $0.27 per Whiteknight Share. Additional Whiteknight Shares (similarly at an issuance price of $0.27 per share), will be issued in respect of any securities of Astrix issued pursuant to the Interim Financing. Astrix does not have any convertible securities issued or outstanding at this time.

The parties intend to complete an offering of common shares concurrently with the closing of the Transaction, at a subscription price of $0.27 per share for gross proceeds of between $1 million and $2 million, with standard fees and commissions to be paid in connection therewith, and the net proceeds of which shall be used for general working capital purposes and/or partial or full repayment of Astrix's current debt (the "Concurrent Financing").

It is currently anticipated that the board of directors of the resulting issuer will consist of David McPhail who will act as Chief Executive Officer and Chairman of the board. Stephen Spinks will act as Chief Financial Officer of the resulting issuer. The current directors of Whiteknight, other than between 1 and 2 such directors to be named at a later date, will resign upon closing of the Transaction. Brief biographies of the directors and officers of the resulting issuer known at this time (other than for Mr. McPhail, who is discussed above) are included below.

John R. Rattray, B.Sc. Hons.

Mr. Rattray has 30 years of sales and marketing in the Information Technology sector with the leading enterprise ERP companies (SAP, Oracle), including a number of start-up companies and new product launches. He is founder of Soft Services Sales Inc. a technology distributorship focused on the manufacturing sector.

Michael Farace, B.A. LL.B.

Mr. Farace has over 23 years of experience in the legal profession that includes acting as general counsel for a major North American property company. He runs a practice that includes commercial litigation and various aspects of contract, employment and intellectual property law.

Stephen Spinks, CA

Mr. Spinks has over 25 years of experience providing financial and tax advice to businesses, with a specialty focus in technology companies. He is the owner of Seek Solutions Inc., a company providing consulting services in SR&ED claims, human resource support, and financial reporting.

The material conditions required to be fulfilled by the parties prior to closing include the following: (i) Astrix shall renegotiate a debt instrument having a $400,000 principal amount on terms acceptable to both Astrix and Whiteknight; (ii) Astrix shall convert shareholder loans in the amount of $578,718 to equity; (iii) closing of the Concurrent Financing; (iv) receiving all necessary regulatory and third party approvals and authorizations; (v) the receipt of an independent valuation of Astrix if required by the Exchange; (vi) approval by each of the board of directors of Astrix and Whiteknight; (vii) the entering into of satisfactory employment agreements for senior management; (viii) confirmation of no material adverse change having occurred to either entity prior to close; (ix) the completion of a definitive agreement setting forth the terms and conditions for the transaction; (x) the completion of due diligence satisfactory to each party; and (xi) the completion of a sponsorship report satisfactory to the Exchange (or waiver by the Exchange of that requirement).

It is intended that the resulting issuer will be listed as a Tier 2 technology company. 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. The proposed Qualifying Transaction will constitute an arm's length transaction, and as such, will not require approval by the shareholders of Whiteknight.

Completion of the transaction is subject to a number of conditions, including but not limited to, 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.

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