Mr. Harry Chew reports

ARCTIC FOX AND MAKERSOUL SIGN NON-BINDING LOI FOR PROPOSED RTO TRANSACTION

Arctic Fox Lithium Corp. has entered into a non-binding letter of intent (the LOI) with MakerSoul (Hong Kong) Ltd. dated Feb. 18, 2025, to effect a transaction that will result in the reverse takeover (the RTO) of Arctic Fox by MakerSoul to ultimately form the resulting issuer. If completed, the proposed transaction will constitute a fundamental change pursuant to the policies of the Canadian Securities Exchange and is expected to require the approval of Arctic Fox shareholders at a meeting of shareholders. The proposed transaction is to be arm's length and will be subject to the necessary regulatory approvals, including final acceptance from the exchange. Following completion of the proposed transaction, the resulting issuer will carry on the business currently carried on by MakerSoul.

Pursuant to the terms of the LOI, it is intended that the proposed transaction be effected by way of a three-cornered amalgamation, share exchange, plan of arrangement or such other transaction structure as will result in MakerSoul becoming a wholly owned subsidiary of Arctic Fox or otherwise combining its corporate existence with that of Arctic Fox. The final structure of the proposed transaction is subject to receipt by the parties of tax, corporate and securities law advice, and will be agreed to pursuant to definitive agreement in respect of the proposed transaction.

There are currently 70,467,381 common shares of Arctic Fox issued and outstanding. Pursuant to the terms of the LOI, following the consolidation (as defined herein) the resulting holders of all issued and outstanding shares of MakerSoul shall hold approximately 90.00 per cent of the issued and outstanding common shares of the resulting issuer (the exchange ratio), subject to adjustment in certain circumstances. In connection with the proposed transaction, Arctic Fox will, subject to the prior approval of the board of directors of Arctic Fox, implement a consolidation of the Arctic Fox shares on a 1:10 basis, such that following the consolidation, there will be 7,0467,31 Arctic Fox shares outstanding.

It is anticipated that all securities convertible, exercisable or exchangeable for MakerSoul shares will be converted or exchanged (or otherwise become convertible or exercisable in accordance with their terms) into similar securities of the resulting issuer on substantially similar terms and conditions based on the exchange ratio. In connection with the proposed transaction, it is anticipated that all outstanding stock options and common share purchase warrants of Arctic Fox will remain in effect on substantially the same terms, subject to the consolidation and customary anti-dilution adjustments in accordance with the terms thereof.

In connection with the proposed transaction, subject to receipt of applicable approvals, MakerSoul expects to effect a name change which will be disclosed at a later date. The composition of the board of directors of the resulting issuer, as well as the retention of any officers or directors, will be negotiated between the parties in good faith. Upon entering into the definitive agreement, Arctic Fox will issue a subsequent news release containing the details of the definitive agreement. No finder's fee of any kind shall be paid as a direct result of, or in association with, the proposed transaction. It is expected that approximately $240,000 of debt of Arctic Fox will be settled into Arctic Fox shares or shares of the resulting issuer immediately prior to or in connection with the closing of the proposed transaction.

Completion of the proposed transaction is subject to a number of conditions precedent, including but not limited to, the parties entering into a definitive agreement, as well as receipt of all required shareholder, regulatory and other approvals. There can be no assurance that the proposed transaction will be completed as proposed or at all. Should either party terminate the proposed transaction following the execution of the definitive agreement, a break fee equal to $150,000 will be payable to the other party, subject to certain conditions, that are expected to be outlined in the definitive agreement. There will also be a commitment fee payable by MakerSoul to Arctic Fox, which will be held in escrow and released to Arctic Fox in the event that certain circumstances arise that prevent the proposed transaction from closing, as will be more fully provided for in the definitive agreement.

About MakerSoul (Hong Kong) Ltd.

MakerSoul is a prominent retail platform for hardware and power tools in Hong Kong. MakerSoul offers wholesale and retail options both on-line and off-line, offering a wide range of hardware, power tools and safety supplies from internationally recognized brands. MakerSoul currently and continues to hold a leading position in Hong Kong within this market segment.

To engage and inform customers, MakerSoul leverages its on-line shopping and social media platforms, and collaborates with stakeholders across multiple industries to generate and disseminate information relevant to customers. Additionally, MakerSoul has developed its own brand, TigerBull, which focuses on user-friendly trolley products. This focus on vertical integration allows for increased margins and a higher level of control.

In fiscal 2023, MakerSoul reported audited revenue numbers of approximately $4-million, reflecting a 100-per-cent increase from $2-million in fiscal 2022. The gross profit for fiscal 2023 was $1.1-million, with a net income of $160,000, representing increases of 15 per cent and 60 per cent from the previous year, respectively. Profit margins ranged from 25 per cent to 28 per cent. For fiscal 2024, MakerSoul is projected to achieve approximately $5.1-million in revenue, a gross profit of $1.5-million and net income of $250,000. The profit margin is expected to rise to approximately 30 per cent.

Management currently estimates revenues of approximately $5.8-million, gross profit of $2-million and net income of $310,000 in fiscal 2025. Profit margin is expected to increase to 33 per cent, which is attributed to the introduction of new products and proprietary brands. Furthermore, the company aims to expand its operations in Asia while also exploring opportunities within the AI (artificial intelligence) robotics industry.

About Arctic Fox Lithium Corp.

Arctic Fox Lithium is a junior mineral exploration company focused on the acquisition and development of mineral properties containing battery, base and precious metals. The company's 2,756-hectare Pontax North lithium project is located 12 kilometres south of Allkem Ltd.'s James Bay Lithium project and 12 km north of Stria Lithium Inc.'s Pontax Lithium project, located in Northern Quebec, approximately 130 km east of the Eastmain Cree Nation's community.

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