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Hakken Capital Corp
Symbol	HAKK
Shares Issued	11,985,695
Close 2023-11-22	C$ 0.075
Market Cap	C$ 898,927
Recent Sedar+ Documents

Hakken arranges RTO with Eshbal Functional as QT

2024-01-05 11:11 ET - News Release

Subject: Hakken Capital Corp. Press Release/News Attached for Distribution on Stockwatch.com PDF Document File: Attachment Hakken - News Release Announcing LOI for Qualifying Transaction.pdf HAKKEN Capital Corp. NEWS RELEASE January 5, 2024 TSX-V: HAKK.P HAKKEN Announces Proposed Qualifying Transaction VANCOUVER, British Columbia January 5, 2024 - HAKKEN Capital Corp. (TSX-V: HAKK.P) (the "Company" or "HAKKEN"), a capital pool company listed on the TSX Venture Exchange (the "Exchange"), is pleased to announce that it has entered into a letter of intent dated December 27, 2023 (the "Letter of Intent") negotiated on an arm's-length basis with ESHBAL Functional Food (Cooperative) Ltd. ("ESHBAL") in respect of a proposed business combination that will constitute a reverse takeover of the Company (the "Proposed Transaction"). About ESHBAL ESHBAL is a private cooperative duly organized under the laws of Israel, and currently has 1084 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 B2B. ESHBAL's products can be found in many supermarkets as well as other food retailers, health stores and foodservice throughout Israel and selected countries in North America and Europe. For further information see ESHBAL's website at www.eshbal.com. About the Company The Company was incorporated on October 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 Exchange Policy 2.4 Capital Pool Companies ("Policy 2.4"). Currently, the authorized share capital of the Company consists of an unlimited number of common shares (each, a "Common Share"), 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 (the "Definitive Agreement"), pursuant to which the Company will issue an aggregate of 48,000,000 Common Shares (each, a "Consideration Share") to the selling members of ESHBAL in exchange for the sale of 100% 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 16,000,000 Common Shares (each, a "Performance Share") for no further consideration upon the achievement of certain milestones as follows: 4626 LOCKEHAVEN PLACE, NORTH VANCOUVER, BRITISH COLUMBIA, V7G 2B8 TELEPHONE: (604) 612-5450 | EMAIL: RETRENAMAN@TELUS.NET Milestone Number of Performance Shares Gross sales of $17,000,000 and 5,600,000 EBITDA of at least 3% Gross sales of $20,000,000 and 5,600,000 EBITDA of at least 4% Gross sales of $25,000,000 and 4,800,000 EBITDA of at least 4% 16,000,000 TOTAL: 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 (each, a "Finder's Share") 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 advisors. 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 pre-ruling 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 (the "Name Change"). Furthermore, the Consideration Shares will comprise at least 70% 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. 2 Yuval Levy Director Mr. Yuval Levy, through Noki I.P. 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 flavors company. From 1991 to 2005 Mr. Levy served as Senior Executive Vice President at Frutarom and as General Manager of the Global Flavors Division, focusing mainly on business development and M&A of many companies around the world. Mr. Levy holds a B.A. (Hons) in International Marketing from F.I.T. University in New York. Tamir Dagan Director Mr. Tamir 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 Mr. David Bar-Meir, 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, Mr. Bar-Meri established L.D Bar- El Ltd. and after an intensive three years of R&D 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, Mr. Bar-Meir merged the bakery with ESHBAL's activity and with that also became part owner of ESHBAL. Since 2016, Mr. Bar-Meir 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 October 11, 2018. Mr. Eto obtained his B.Sc. (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 Foodservice sectors focussing 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 Mr. Bar-Meir 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. 3 Danit Kochva Chief Financial Officer Mrs. Kochva has over 8 years of experience in the field of finance and joined ESHBAL in November 2022. From 2005 to 2009, Mrs. Kochva worked at the accounting firm Deloitte as a senior in the audit department. Up to 2022, Mrs. Kochva has gained auditing experience in various public and private companies. She is a CPA (Israel) and holds a B.A 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 (the "Concurrent Private Placement") of a minimum of 6,000,000 subscription receipts, or similar security, (each, a "Subscription Receipt") and a maximum of 18,000,000 Subscription Receipts at a price of at least $0.25 per Subscription Receipt to raise minimum gross proceeds of $1,500,000 and maximum gross proceeds of $4,500,0000, 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 (the "Agent") 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 fund 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. For further information regarding the Company, please contact Robert Trenaman at (604) 612-5450 and see the Company's disclosure documents on SEDAR+ at www.sedarplus.ca. 4 ON BEHALF OF THE BOARD "David Eto" David Eto President and Chief Executive Officer Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release. Cautionary Statement Completion of the Proposed 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 Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed 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 Proposed Transaction, any information released or received with respect to the Proposed 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. The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this news release. All information contained in this news release with respect to the Company and ESHBAL was supplied by the parties, respectively, for inclusion herein, and the Company and its directors and officers have relied on ESHBAL for any information concerning such party. This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. The information in this news release includes certain information and statements about management's view of future events, expectations, plans and prospects that constitute forward looking statements, including statements relating to the completion of the Proposed Transaction, the execution of the Definitive Agreement, the proposed business of the Company following completion of the Proposed Transaction, the completion of the Concurrent Financing, the proposed directors and officers of the Company following the Proposed Transaction, the completion of the Name Change, Exchange sponsorship requirements and intended application for waiver therefrom, required corporate, shareholder, unit hold, third-party and regulatory approvals, and future news releases and disclosure. These statements are based upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance of each of the Company and ESHBAL may differ materially from those anticipated and indicated by these forward-looking statements. Although each of the Company and ESHBAL believes that the expectations reflected in forward looking statements herein are reasonable, they can 5 give no assurances that the expectations of any forward-looking statements herein will prove to be correct. Except as required by law, each of the Company and ESHBAL disclaims any intention and assumes no obligation to update or revise any forward- looking statements herein to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise. 6