Black Birch Capital Acquisition III Corp. announces letter of intent with Daymak Inc.

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TORONTO, Aug. 8, 2013 /CNW/ - Black Birch Capital Acquisition III Corp. (TSXV: BBC.P) ("Black Birch" or the "Company") is pleased to announce that it has entered into a letter of intent (the "LOI") dated July 30, 2013 with Daymak Inc. ("Daymak"), a corporation existing under the laws of Ontario, which outlines the general terms and conditions pursuant to which Black Birch and Daymak intend to complete a transaction that will result in Black Birch acquiring all of the issued and outstanding securities of Daymak. The transaction will constitute Black Birch's qualifying transaction (the "Qualifying Transaction") under the policies of the TSX Venture Exchange (the "Exchange"). Following completion of the Qualifying Transaction, it is anticipated that the resulting issuer (the "Resulting Issuer") will be a Tier 1 company.

Terms of Acquisition

Under the terms of the LOI, Black Birch will acquire all of the issued and outstanding securities of Daymak in exchange for equity in Black Birch, as further described below (the "Transaction"). It is currently anticipated that the Transaction will be effected through a "three-cornered amalgamation" (the "Amalgamation"), whereby: (i) Daymak will amalgamate with a newly incorporated company incorporated under the laws of Ontario and wholly-owned by Black Birch, to form an amalgamated corporation ("Amalco"); (ii) the holders of Daymak's common shares will receive 19,475,000 common shares of Black Birch ("Common Shares") at an ascribed value of $0.40 per Common Share and the holders of Daymak's options and warrants will receive approximately 3,781,204 options and warrants of Black Birch; and (iii) Amalco will become a wholly-owned subsidiary of Black Birch. The final structure of the Transaction is subject to receipt of definitive tax, corporate and securities law advice satisfactory to both Black Birch and Daymak.

Pursuant to the terms of the LOI, completion of the Qualifying Transaction will be subject to a number of conditions, including receipt of gross proceeds of not less than $3,000,000 pursuant to the QT Financing (as defined and described below), completion or waiver of sponsorship, receipt of all required regulatory approvals, including the approval of the Exchange of the Qualifying Transaction, completion of all due diligence reviews, satisfaction of the minimum listing requirements of the Exchange and all requirements under the Exchange rules relating to completion of a Qualifying Transaction, and execution of a definitive amalgamation agreement.

The proposed Qualifying Transaction is not a "Non-Arm's Length Qualifying Transaction" within the meaning of Policy 2.4 of the Exchange and, as such, shareholder approval is not required, unless otherwise required by the Exchange.

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange, unless exempt in accordance with Exchange policies. Black Birch intends to apply for an exemption from sponsorship requirements, however, there is no assurance that Black Birch will obtain this exemption.

A filing statement in respect of the proposed Qualifying Transaction will be prepared and filed in accordance with Policy 2.4 of the Exchange on SEDAR at www.sedar.com no less than seven business days prior to the closing of the proposed Qualifying Transaction. A press release will be issued once the filing statement has been filed, as required pursuant to Exchange policies or any other material changes occur.

Capitalization

Black Birch currently has 5,109,850 Common Shares issued and outstanding, as well as options and warrants to acquire Common Shares. There are 510,985 options that entitle the holders thereof to acquire an aggregate of 510,985 Common Shares at a price of $0.10 per share. There are 310,985 warrants that entitle the holders thereof to acquire an aggregate of 310,985 Common Shares at a price of $0.10 per share. Under the terms of the LOI, Black Birch will undertake a 2.67:1 share consolidation such that it will have 1,916,194 Common Shares issued and outstanding with a corresponding adjustment taking place to the options and warrants. On a pre-consolidation basis, the Transaction is being done at an ascribed value of $0.15 per share which equal $0.40 per share on a post-consolidation basis.

Daymak currently has 165.03 common shares outstanding and approximately 32 options and warrants outstanding at strike prices ranging from approximately $36,000 to $70,000. Prior to the Transaction, Daymak shall undertake an 118,009:1 stock split such that there will be 19,475,000 common shares of Daymak issued and outstanding. Each Daymak post-split common share shall be exchanged for one post-consolidation Black Birch Common Share. Daymak options and warrants shall also be split accordingly.

Post-consolidation, and without taking into account the QT Financing (as described below), the Resulting Issuer will have approximately 21,391,194 common shares and 4,089,442 options and warrants issued and outstanding.

QT Financing

It is a condition of the LOI that concurrent with the completion of the Qualifying Transaction, Daymak and Black Birch shall complete a brokered private placement (the "QT Financing"), for minimum proceeds of $3,000,000 and maximum proceeds of $5,000,000. Daymak and Black Birch intend to engage a broker in short order and will issue a press release updating the status of the QT Financing when more information is available.

Daymak will use the proceeds of the QT Financing to continue to grow its retail presence in Ontario; develop and grow dealer networks in the province of British Columbia and Quebec; develop and grow the ADP certified mobility scooter division in Ontario; develop and grow its on-line presence; continue to grow and expand its US market through the US Shopping Channel; continue spending on research and development; and, fund general corporate expenditures.

Daymak Inc.

Daymak, a Toronto-based company incorporated in 2002, is a leading developer and distributor of personal light electric vehicles with over 100 dealers across Canada. Daymak's alternative personal light electric vehicles consist of street legal electric bikes, ATVs, scooters and mobility scooters which are now ADP approved.

Daymak has also developed and commercialized personal light electric vehicles based on its proprietary Daymak D-Drive technology. The Daymak D-Drive Controller is composed of two proprietary components, a microprocessor that generates more power, speed and distance to existing electric vehicles and an electric circuit board which is designed to increase and maximize the input/output capabilities of all electric components safely. Daymak has designed, developed and manufactured the world's first wireless electric bicycle, the patent pending Shadow Ebike. Daymak's accolades include the Clean Tech North Award, Profit Magazine's Top 100 & 200 Canada's Fastest Growing Companies and Top Women Entrepreneurs Award in 2008.

In present market conditions, consumers are looking for affordable recreational vehicles. Also, with an increasingly strong green environmental movement around the world, Daymak believes that the need for fuel efficient vehicles and innovative technologies will be in high demand globally.

Daymak Financial Information (based on unaudited financial statements)

In 2012, Daymak recorded revenues of $7,276,309, up 20% from $6,057,476 in 2011.  Net income in 2012 was $240,269, up from $212,753 in 2011. Since 2008, Daymak has been growing and profitable every single year. Both sales and profit have almost doubled since 2008. At December 31, 2012, Daymak had total assets of $5,412,029 and working capital of $3,258,294.

Proposed Management and Directors

As part of the completion of the Qualifying Transaction, Daymak's current management will assume responsibility for the Resulting Issuer and the Resulting Issuer's board of directors will be comprised of Paul Haber, Kin-Man Lee, Anthony Pizzaro, Robert Tweedy and Aldo Baiocchi. The following are brief descriptions of Daymak's management team and its proposed nominees that will, collectively, assume management responsibility for the Resulting Issuer upon completion of the Qualifying Transaction. Messrs. Haber, Lee and Pizzaro are currently directors of Black Birch and their biographies are available on SEDAR as part of the prospectus issued in relation to the initial public offering of Black Birch.

Yeganeh Baiocchi - President: Ms. Baiocchi is the founder of Daymak and is responsible for purchasing, marketing and sales. Ms. Baiocchi has worked for over 10 years in various management positions with the Bank of Montreal. In 2008 she was voted one of Canada's top 100 woman entrepreneurs.

Aldo Baiocchi - V.P. Production & Director: Mr. Baiocchi is responsible for the development of new products and brings to Daymak over 20 years of experience in sales, marketing and team management. Mr. Baiocchi was previously at Microforum and Aludra Inc. where he managed R&D teams that developed several award winning computer softwares that achieved millions of dollars in sales. Mr. Baiocchi was responsible in bringing the D-Drive to market. Mr. Baiocchi will be a director of Black Birch upon completion of the transaction.

Kurt Mak - Chief Financial Officer: Mr. Mak has 20 years of extensive operational and senior finance experience. He has experience with startup operations and with large public enterprises. He has turned companies around to be profitable and cash flow positive. He recently raised over $20 million in private financing and executed a corporate restructuring to better align corporate values and vision. His past experiences in various senior roles include Ault Foods, SunBlush Technologies, Bayer Inc., Teknion Corporation and the Chippery group of companies.

Robert Tweedy - Director: Mr. Robert Tweedy is a corporate director. He is the Chairman of Useppa Holdings Limited, a private management company. Mr. Tweedy is currently the Chairman of Aurcana Corporation and STT Enviro Corporation. He is a trustee of Dundee REIT and an Advisor to MARS. Mr. Tweedy is a past Director of TransAmerica Life Insurance Company of Canada, Rockwater Capital Corp., the Toronto Hospital Foundation Board, and has served as President and CEO of a number of private and public companies. He is a past Chairman of the Young President's Organization, Ontario Chapter, and currently a member of the World Presidents' Organization. He earned his Honours Bachelor of Arts degree from the University of Toronto and his Master of Business Administration degree from Stanford University. In 2003, he was awarded the H.M. The Queen's Gold Jubilee Medal.

The Company has requested a halt in the trading of the Company's shares until the Qualifying Transaction is completed.

The Company will provide further details in respect of the Qualifying Transaction, in due course by way of press release.

All information contained in this news release with respect to Black Birch and Daymak was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other 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 Qualifying Transaction, any information released or received with respect to the Qualifying 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.

Neither the TSX Venture nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture) has in any way passed upon the merits of the proposed transaction and has neither approved nor disapproved of the contents of this release.

This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "1933 Act")) of any equity or other securities of the Company. The securities of the Resulting Issuer to be issued in connection with the QT Financing have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

SOURCE Black Birch Capital Acquisition III Corp.

For further information:

regarding the Qualifying Transaction, please contact:

Black Birch Capital Acquisition III Corp.

Paul Haber, Chief Executive Officer, Chief Financial Officer and Corporate Secretary

Telephone: 416-318-6501
Facsimile: 416-915-4265
Email: phaber@blackbirchcap.com

Daymak Inc.

Aldo Baiocchi, Vice President

Telephone: 416-658-3993 ext. 201
Facsimile: 416-749-3424
Email: aldob@daymak.com