Auka Capital Corp. Announces Proposed Qualifying Transaction with Dr. Phone Fix

/NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

CALGARY, AB, April 24, 2024 /CNW/ - Auka Capital Corp. (the "Corporation" or "Auka") (TSXV: AUK.P) is pleased to announce details concerning its proposed arm's length qualifying transaction (the "Transaction") involving a business combination with Dr. Phone Fix Canada Limited ("DPF"), to complete the going public transaction in Canada for DPF. Auka intends that the Transaction will constitute its "Qualifying Transaction" under Policy 2.4 - Capital Pool Companies of the TSX Venture Exchange (the "TSX-V").

DPF is a private company incorporated in Alberta under the Business Corporation Act and is a multi-award-winning, eco-friendly, customer-centric growth leader in Canada's billion-dollar cell phone and electronics repair and pre-owned resale industry. Founded in 2019 in Edmonton, Alberta, it is Canada's largest privately owned company in the sector, and it is the second largest seller of certified pre-owned phones. It has 34 locations in 20 cities and across four provinces and is named 10th Fastest-Growing Company in Canada in The Globe and Mail's 5th Annual Rankings.

The Corporation has entered into a binding letter agreement with DPF dated April 23, 2024 (the "Letter Agreement") pursuant to which the Corporation and DPF intend to complete the Transaction by way of a share purchase, three-cornered amalgamation, reverse take-over, merger, plan of arrangement or alternate structure to be determined, having regard to relevant tax, securities and other factors to form the resulting issuer to be called "DPF Canada Ltd." ("Newco"), or such other name as may be determined by DPF and the Corporation, as would be acceptable to the TSX Venture Exchange ("TSX-V").

Pursuant to the proposed Transaction:

(i) each issued and outstanding common share of DPF ("DPF Common Share") will be acquired by a newly-formed subsidiary of Auka for aggregate consideration of $12,000,000, to be satisfied through the issuance of 60,000,000 common shares in the capital of Newco ("Newco Shares"), each Newco Share having a deemed value of $0.20.

(ii) Newco will, on closing of the Transaction, acquire approximately $5.38 million of DPF debt as of March 31^st, 2024 and issue Newco Shares in satisfaction of such debt on the basis of a deemed value of $0.20 per Newco Share. All Newco shares issued to Insiders (as defined under the Securities Act (Alberta) of Newco will be subject to certain voluntary escrow arrangements as will be set out in an escrow agreement.

DPF and Auka will use their commercially reasonable efforts to cause NewCo to, after closing of the Transaction, complete a private placement (the "Concurrent Financing") of a minimum of $2,500,000 and up to a maximum of $3,500,000 of Newco Shares or flow-through shares of Newco (the "Offered Securities") at price per Offered Security to be mutually agreed on by DPF and Auka, acting reasonably.

DPF and Auka will enter into a formal agreement (the "Formal Agreement") evidencing the Transaction which shall contain appropriate terms and conditions, including such reasonable representations and warranties in connection with the Transaction as are customary in comparable circumstances as may be agreed to and in a form satisfactory to both parties.

The Transaction does not constitute a Non-Arm's Length Qualifying Transaction as that term is defined in Policy 2.4 of the TSX-V. A more comprehensive news release will be issued by the Corporation disclosing details of the Transaction, including financial information respecting DPF, further details regarding the Concurrent Financing, the names and backgrounds of all persons who will constitute insiders of Newco, and information respecting sponsorship, once certain conditions have been met, including:

(i) approval of the Transaction by the boards of directors of the Corporation and DPF;
(ii) satisfactory completion of due diligence; and
(iii) execution of the Formal Agreement.

The Letter Agreement expires on May 23, 2024, or such other date as may be agreed to by the parties, if the Formal Agreement has not been executed, and the Corporation and DPF have agreed not to solicit or enter into any agreements that would reasonably be expected to interfere with or prevent the Transaction, from the time of entering into the Letter Agreement until its termination.

Shareholder approval is not required with respect to the Transaction under the rules of the TSX-V. However, the structure of the Transaction has not yet been finalized so shareholder approval under corporate law may be required and a meeting of shareholders of the Corporation may be held prior to the closing of the Transaction to approve one or more of the name change and electing the board of directors. Trading in the common shares of the Corporation will remain halted and is not expected to resume trading until the Transaction is completed or until the TSX-V receives the requisite documentation to resume trading.

Readers are cautioned that, except as disclosed in the filing statement or non-offering prospectus 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.

Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws regarding Auka, DPF and their respective businesses, which may include, but are not limited to, statements with respect to the Concurrent Financing, the Transaction, approval of the Transaction by the board of directors of the Corporation and DPF, respectively, completion of due diligence, execution of the Formal Agreement, approval of the TSX-V, shareholder approval of certain matters and certain forward-looking statements relating to DPF's business generally. The use of any of the words "will", "expected", "view" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events, and are based on assumptions and subject to risks and uncertainties. Although the management of each entity believes that the assumptions underlying these statements are reasonable, actual future results may differ materially. In particular, statements pertaining to the terms and completion of the Transaction constitute forward-looking information. Actual results and developments may not occur or could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding market conditions, economic factors, management's ability to manage and operate the business of Newco and the equity markets generally from those contemplated by forward-looking information. Although Auka and DPF 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. Readers are cautioned not to place undue reliance on forward-looking information. No statement that is forward looking can be guaranteed. The statements made in this news release are made as of the date hereof. The Corporation and DPF disclaim any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Auka is a capital pool company governed by the policies of the TSX-V. The principal business of Auka is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction.

Completion of the Transaction is subject to a number of conditions, including but not limited to, execution of a formal agreement relating to the Transaction, completion of satisfactory due diligence, TSX-V acceptance, receipt of requisite regulatory approvals, and if applicable pursuant to TSX-V requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals, and any ancillary matters thereto, are obtained. 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.

This press release is not an offer of securities for sale in the United States. The Offered Securities described in this press release have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933, as amended) absent registration or an exemption from registration. This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction where such offer, solicitation, or sale would be unlawful.

The TSX-V has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

NEITHER THE TSX-V NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX-V) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE Auka Capital Corp.