Drone Delivery Canada and Volatus Aerospace Corp. announce transformative merger of equals, creating global leader in drone technology and services

TORONTO, ON / ACCESSWIRE / May 21, 2024 / Drone Delivery Canada Corp. (“Drone Delivery Canada”) (TSXV:FLT)(OTCQX:TAKOF)(Frankfurt:A3DP5Y)(Frankfurt:ABBA.F), an award-winning drone technology company focused on the design, development, and implementing its proprietary technologies for remotely piloted aircraft operations with a focus on cargo delivery and Volatus Aerospace Corp. (“Volatus”) (TSXV:VOL)(OTCQB:VLTTF), a leader in the operation of piloted and remotely piloted aircraft systems (drones), are both pleased to announce that they have entered into a business combination agreement (the “Business Combination Agreement”) to combine the companies in a merger of equal transactions (the “Merger”), whereby the combined company will continue to operate under the name “Volatus Aerospace Corp.” and, subject to the approval of the TSX Venture Exchange (the “TSXV”), continue trading under the ticker “FLT.”

Under the merger, which the boards of directors of both companies have approved, the combined company will be led by a board of directors and a management team of experienced drone technology industry and business leaders, bringing together the cultures, strengths and capabilities of both companies. . By joining forces, Volatus and Drone Delivery Canada plan to immediately begin commercialization efforts, which are intended to enhance shareholder value by forging a robust, financially sound business focused on immediate and long-term revenue with a clear path towards sustainable growth and market leadership. Subject to customary closing conditions, the Merger is expected to close in the third quarter of 2024.

As a result of the Merger, Volatus shareholders will receive 1,785 (the “Exchange ratio“) Drone Delivery Canada votes on common shares (each a “Drone Delivery Canada share“) for each ordinary Volatus share (a “Volatus share“) held (the “Consideration“). Upon completion of the Merger, existing shareholders of Volatus and Drone Delivery Canada will each own approximately 50% of the combined company (based on the currently issued and outstanding shares of each of the companies).

Strategic rationale
To date, Drone Delivery Canada has invested $40 million in building strong, competitive drone cargo solutions that are now ready to hit the market. By focusing on drone services, training and equipment sales, Volatus is well positioned to leverage and commercialize these technologies. As regulations begin to enable the commercialization of drone cargo and remote drone operations, Volatus plans to commercialize its efforts in advanced air mobility, complementing its go-to-market strategy. Without technology like Drone Delivery Canada’s remote operations centre; Flyte management software; DroneSpot infrastructure; and cargo-oriented, commercialized aircraft, the path to competitively entering the advanced air mobility market would require significant research and development (“R&D“) investment for any drone-based services company. The combined company, with its shared decades of technology and aviation experience and strong financial and operating metrics, is expected to have a leading presence globally as a diversified technology and services leader to both short- and long-term growth opportunities in existing and new markets. Furthermore, the combined company is expected to realize material cost synergies to support near-term profitability and improve its margin profile as its revenue profile continues to grow.

Steve Magirias, Chief Executive Officer of Drone Delivery Canada, said: “Drone Delivery Canada has been looking for the right partner to join us on our growth journey and we believe Volatus is an excellent fit for us from a management vision, industry knowledge and experience perspective. We were initially attracted to Volatus’ strong industry reputation, admirable fiscal management in a challenging capital markets environment, and vision for generating diversified revenue streams.”

Ian McDougall, Chairman of the Volatus Board of Directors, commented: “We are pleased to announce this transformative merger with Drone Delivery Canada. The merger with Drone Delivery Canada will enhance our ability to offer cutting-edge technology and services to our customers and help position the combined company as a global leader. Volatus sees an exciting opportunity to commercialize Drone Delivery Canada’s advanced technologies through our network of partners, Fortune 500, international mining, oil and gas and utility companies, further positioning the combined company as a global leader in drone technologies and services.”

Glen Lynch, Chief Executive Officer, President and Director of Volatus, commented: “We believe the strategic impact will be significant right from the start, allowing us to drive innovative technological developments and provide leading technology and service to our customers.”

Leadership and governance
Following the completion of the Merger, the board of directors of the combined company will consist of seven (7) directors, consisting of three (3) directors of Volatus, including Ian McDougall who will act as chairman of the combined company, two ( 2) ) independent directors of Drone Delivery Canada, and two (2) independent directors to be mutually agreed upon at a future date. Management of the combined company will consist of executives from both Volatus and Drone Delivery Canada, with current Chief Executive Officer, President and Director of Volatus, Glen Lynch, taking on the role of Chief Executive Officer of the combined company , and the current Chief Executive of Drone Delivery Canada. Officer, Steve Magirias, will become Chief Operating Officer of the combined company.

Drone Delivery Canada Shareholder Benefits

• Pro forma ownership of 50% in the combined company is expected to provide immediate exposure to Volatus’ revenue profile and near-term cash flow generation with attractive long-term growth potential from Drone Delivery Canada’s portfolio of proprietary technology.
• Better access to new geographies and sectors
• Improved ability to realize value from an existing proprietary drone technology portfolio through a stronger financial position of the combined company, which is expected to be profitable in the near term
• Contributes to Drone Delivery Canada on key financial and operational metrics
• Significant value benefit as the combined company further develops its business plan and achieves profitability

Benefits for Volatus shareholders

• Pro forma ownership of 50% in the combined company is expected to provide Volatus shareholders with exposure to Drone Delivery Canada’s advanced operational and proprietary cargo drone technology and remote control capabilities to enhance Volatus’ existing service offering
• Opportunities for market expansion through improved geographic diversification and access to new end markets, including the emerging freight sector, which is expected to have significant long-term upside
• Provides the opportunity to leverage the strong commercial expertise of the Volatus management team to ensure optimal commercialization of Drone Delivery Canada’s technology and product portfolio
• Enhanced profile in the capital markets, supported by Drone Delivery Canada’s strong shareholder base
• Significant revaluation potential as the combined company further develops its business plan and achieves near-term profitability

Source: press release