Mr. David Eto reports

HAKKEN ANNOUNCES PROPOSED QUALIFYING TRANSACTION

Hakken Capital Corp. has entered into a letter of intent dated Dec. 27, 2023, negotiated on an arm's-length basis with Eshbal Functional Food (Cooperative) Ltd. in respect of a proposed business combination that will constitute a reverse takeover of the company.

About Eshbal Functional Food (Cooperative) Ltd.

Eshbal is a private co-operative duly organized under the laws of Israel, and currently has 1,084 units issued and outstanding. Eshbal researches, develops and manufactures advanced food products and dietary supplements with a focus on innovative functional food components.

Eshbal specializes in developing and manufacturing gluten-free baked products according to the highest food and health standards in the industry in its state-of-the-art, gluten-free manufacturing facility in Kibbutz Maanit, Israel. Eshbal also manufactures sugar-free products, vegan products, syrups and dry mixes, including sweeteners and a line of low-carb products. Eshbal focuses on the development of unique formulations of functional food products that it believes promote health beyond their nutritional values, for retail brands, private labels and business-to-business. Eshbal's products can be found in many supermarkets as well as other food retailers, health stores and food service throughout Israel and selected countries in North America and Europe. For further information see Eshbal's website.

About Hakken Capital Corp.

The company was incorporated on Oct. 11, 2018, under the laws of British Columbia, is a reporting issuer in British Columbia and Alberta, and is designated as a capital pool company under TSX Venture Exchange Policy 2.4 Capital Pool Companies. Currently, the authorized share capital of the company consists of an unlimited number of common shares, of which 11,985,695 common shares are issued and outstanding and an additional 660,000 common shares are reserved for issuance upon the exercise of outstanding stock option. The company has not commenced commercial operations and has no assets other than cash. The company expects that the proposed transaction will constitute the company's qualifying transaction in accordance with Policy 2.4.

Summary of the proposed transaction

The letter of intent contemplates that the company, Eshbal and the selling members of Eshbal will negotiate and enter into a definitive agreement in respect of the proposed transaction on or before March 31, 2024, pursuant to which the company will issue an aggregate of 48 million common shares to the selling members of Eshbal in exchange for the sale of 100 per cent of the issued and outstanding units of Eshbal. During the 60 months following the closing of the proposed transaction, the selling members of Eshbal will also be eligible to receive up to an aggregate of 16 million common shares for no further consideration upon the achievement of certain milestones as noted herein.

The company will also pay up to $500,000 in finder's fee to certain arm's-length finders as consideration for certain services rendered in connection with the proposed transaction. The payment of finder's fee will be made by the issuance of common shares of the company at a deemed price equal to the concurrent offering price, subject to exchange approval. Hakken will also pay a corporate advisory fee to Haywood Securities Inc. in the amount of $250,000 which shall be paid by the issuance of finder's shares pursuant to an advisory agreement between Hakken and Haywood.

The final structure of the proposed transaction will be determined by the parties to the letter of intent in consultation with their respective advisers. Completion of the proposed transaction is subject to a number of conditions including, but not limited to, exchange acceptance, receipt of all required corporate, shareholder, unit holder and third party approvals, Eshbal obtaining from the Israel Tax Authority a preruling to treat the proposed transaction as a tax deferred merger, the completion of the concurrent financing (as hereinafter defined), the delivery of a sponsor report and independent valuation satisfactory to the exchange (if required by the exchange), and other conditions customary for a transaction of in the nature of the proposed transaction.

Upon completion of the proposed transaction, the company expects that it will be listed as a Tier 2 industrial issuer on the exchange. Eshbal will operate as a wholly owned subsidiary of the company and the company will continue the business of Eshbal under the name Eshbal Functional Food Inc., or such other name as determined by Eshbal. Furthermore, the consideration shares will comprise at least 70 per cent of the issued and outstanding common shares on a fully diluted basis, following the completion of the proposed transaction.

Changes to board and management

Upon closing of the proposed transaction, the directors and officers of the company will resign and the board of directors of the company will be reconstituted to consist of seven directors. Five directors will be nominated by the selling members of Eshbal, two of which will be independent directors who are yet to be determined, and two directors will be nominated by Hakken, one of which will be an independent director. Management will include a chief executive officer, chief financial officer and other positions as the selling members of Eshbal may determine.

Additional biographic information about the proposed directors who know as of the date hereof and officers of the company upon closing of the proposed transaction is provided below.

Yuval Levy, director

Mr. Levy, through Noki IP Ltd., is the major holder of Eshbal. Noki acquired several companies: Heintz-Remedia baby food, Arava Tea, Taami baby food and established Adama China, a flavours company. From 1991 to 2005 Mr. Levy served as senior executive vice president at Frutarom and as general manager of the global flavours division, focusing mainly on business development and mergers and acquisitions of many companies around the world. Mr. Levy holds a BA (honours) in international marketing from F.I.T. University in New York.

Tamir Dagan, director

Mr. Dagan, through Shiran Representatives 2008 Ltd., is a holder of Eshbal. He has over 30 years of experience in the food industry, as well as other industries. Mr. Dagan is the owner and CEO of Shiran Representatives 2008 Ltd. whose field of activity is international trade in raw materials for industries and representation of international companies.

David Bar-Meir, director

David, through LD Bar-El Ltd., is a holder of Eshbal. David was part of the restaurant business managing The Original Pancake House in Israel for almost 30 years. In 2003, David established L.D. Bar-El Ltd. and after an intensive three years of research and development was able to launch good-quality gluten free baked goods while making Bar-El Bakery, a leader in its field in the Israeli market. In 2016, David merged the bakery with Eshbal's activity and with that also became part owner of Eshbal. Since 2016, David had various management positions in Eshbal and serves as one of its directors.

David Eto, director

Mr. Eto is presently the chief executive officer, president and a director of the company and has served in these positions since Oct. 11, 2018. Mr. Eto obtained his BSc (agriculture) from the University of British Columbia in 1985 and has accumulated 34 years of experience in various private and public companies. Mr. Eto specializes in bakery, fresh, refrigerated and frozen foods in the retail and food service sectors, focusing on strategic and operational continuous improvement principles developing excellence in management teams and culture. Since January, 2018, Mr. Eto has been the president of Qumai SA, a strategic advisory consulting firm. He was the general manager of Creekside Custom Foods for six years prior to his three years as the director of corporate affairs of Premium Brands Holding Corp. before serving as the chief executive officer for the British Columbia Dairy Association from July, 2012, to December, 2016. Mr. Eto was the chief executive officer of Naturally Splendid Enterprise Inc., a reporting issuer in British Columbia and Alberta, from December, 2016, to December, 2017. Mr. Eto has been a director of Geyser Brands Inc. (formerly Kanzen Capital Corp.) since September, 2016. Mr. Eto is presently a director of Free Point Technologies Inc., a private industrial Internet of Things company specializing in the automotive industry.

Tomer Bar-Meir, chief executive officer

Tomer has over 18 years of experience in the gluten-free food industry and joined Eshbal following the merger with Bar-El Gluten-Free Bakery in 2016. He is a graduate of marketing and financing from the Ben-Gurion University and holds an MBA from Ruppin Academic College.

Danit Kochva, chief financial officer

Ms. Kochva has over eight years of experience in the field of finance and joined Eshbal in November, 2022. From 2005 to 2009, Ms. Kochva worked at the accounting firm Deloitte as a senior in the audit department. Up to 2022, Ms. Kochva has gained auditing experience in various public and private companies. She is a certified public accountant (Israel) and holds a BA in economics and accounting from Haifa University, Israel.

Concurrent financing

In connection with the proposed transaction, the company intends to complete a brokered private placement of a minimum of six million subscription receipts, or similar security, and a maximum of 18 million subscription receipts at a price of at least 25 cents per subscription receipt to raise minimum gross proceeds of $1.5-million and maximum gross proceeds of $4.5-million, which will be held in escrow by a subscription receipt agent pending closing of the proposed transaction. It is anticipated that upon satisfaction of the escrow release conditions, including satisfaction of all conditions precedent of the proposed transaction, each subscription receipt will convert, without payment of any additional consideration and without further action on the part of the holder thereof, into one common share or a unit consisting of one common share and a common share purchase warrant (or fraction thereof) of the company.

The company intends to engage a Canadian investment bank to act as lead agent and sole bookrunner (on its own behalf and on behalf of a syndicate of agents which may be formed) to sell the subscription receipts on a best efforts basis.

The company will pay the agent customary commissions on the gross proceeds of the subscription receipts and may issue compensation options based on the number of subscription receipts issued under the concurrent financing, such compensation to be determined at a later date. The company will also reimburse the agent for all reasonable expenses and fees incurred with respect to the concurrent financing.

The subscription receipts and the underlying securities are expected to be issued pursuant to exemptions from the prospectus requirements under Canadian securities laws, such as the accredited investor, $150,000 minimum investment or other relevant exemptions under National Instrument 45-106 Prospectus Exemptions. However, such securities may be restricted from trading until the date that is four months and a day after the distribution date of such subscription receipts.

The net proceeds of the concurrent financing will primarily be used to finance the proposed transaction costs and to meet working capital requirements for listing on the exchange.

Additional information

The company's common shares will remain halted on the exchange until such time that the exchange is in receipt of and has reviewed a comprehensive news release of the company relating to the proposed transaction in accordance with Policy 2.4.

We seek Safe Harbor.