Mr. Piyush Sawhney reports

AUKA CAPITAL CORP. ENTERS INTO DEFINITIVE AGREEMENT IN RESPECT OF PROPOSED QUALIFYING TRANSACTION

Further to Auka Capital Corp.'s news release dated April 24, 2024, it has entered into a definitive business combination agreement dated July 16, 2024, with Dr. Phone Fix Canada Ltd. (DPF). Pursuant to the definitive agreement, Auka's wholly owned subsidiary, 2629911 Alberta Inc. (Subco), will amalgamate with DPF (the amalgamation) to complete Auka's qualifying transaction in accordance with the policies of the exchange.

In connection with the amalgamation, it is intended that Auka will be renamed to Dr. Phone Fix Corp. or such other similar name as may be accepted by the relevant regulatory authorities and approved by DPF and Auka (the resulting issuer). The transaction is subject to the receipt of all necessary regulatory and shareholder approvals required by applicable corporate law, including the approval of the exchange, as well as the satisfaction of conditions to closing as set out in the definitive agreement. It is intended the resulting issuer will continue the business of DPF.

About DPF

DPF is a private company incorporated under the Business Corporations Act (Alberta) and is a multiaward-winning, eco-friendly, customer-centric growth leader in Canada's billion-dollar cell phone and electronics repair and preowned resale industry.

Founded in 2019, DPF operates a growing network of 35 corporately owned cell phone and electronics repair stores in British Columbia, Alberta, Saskatchewan and Ontario. DPF sells certified preowned (CPO) devices and a wide selection of accessories. DPF has well established networks to acquire and resell a wide variety of used and refurbished electronic devices from certified vendors, offering a one-year warranty on all of its CPO devices.

With just one store in St. Albert, Alta., in 2019. DPF began expanding in 2020 and ended the year with five stores. An additional 15 stores were opened in 2021, primarily in Western Canada, and in 2022 DPF entered the Ontario market with the opening of three stores in the Greater Toronto Area and added another two stores in Western Canada. By the end of 2023, DPF was operating 34 retail stores in 20 cities and across four provinces and is named the 10th Fastest Growing Company in Canada in The Globe and Mail's fifth annual rankings.

DPF has 6,555,811 Class A common shares issued and outstanding. Additionally, approximately $5.5-million in DPF debt will, under the terms of the transaction, be converted into approximately three million DPF shares (the debt conversion shares) prior to closing of the transaction.

Terms of the proposed transaction

The transaction will be carried out pursuant to the terms of the definitive agreement, a copy of which is, or shortly will be, filed on Auka's SEDAR+ profile. The description shown herein of the terms of the transaction and the definitive agreement is qualified in its entirety by reference to the full text of the definitive agreement.

Pursuant to the terms of the definitive agreement, at the effective time of the amalgamation, DPF will amalgamate with Subco to form an amalgamated entity (amalco), which will continue as a wholly owned subsidiary of Auka. In connection with the completion of the amalgamation, each holder of DPF shares shall exchange their DPF shares for common shares in the capital of the resulting issuer (resulting issuer common shares) on the basis of 9.15218640916375 fully paid and non-assessable resulting issuer common shares for every one DPF share held, at a deemed price of approximately $1.83 per DPF share. The deemed value of each resulting issuer common share issued to holders of DPF shares under the transaction is 20 cents per share.

The transaction itself is not subject to Auka shareholder approval. Auka intends to hold an annual and special meeting of its shareholders (the Auka meeting) in October, 2024, to approve certain matters related to the transaction, including, among other matters, the:

• Appointment, subject to the completion of the transaction, of EBT Chartered Professional Accountants as the auditor of Auka and the authorization of the board of directors of Auka to fix the remuneration thereof;
• Election of the directors of Auka to hold office from the effective time of the completion of the transaction;
• Change in the name of Auka from Auka Capital Corp. to Dr. Phone Fix Corp. or such other name as the board of directors of Auka deems appropriate (collectively, the foregoing approvals, the required approvals).

Additional details regarding the annual and special meeting of the shareholders of Auka will be available in a management information circular that is expected to be delivered to shareholders of Auka. The amalgamation will be approved by the sole shareholder of Subco by way of a written resolution. The amalgamation will further require the approval of the shareholders of DPF.

In connection with the proposed transaction, it is expected that approximately 87,313,795 resulting issuer common shares will be issued to the holders of DPF shares (not including DPF shares issuable upon the conversion of subscription receipts (as defined herein)). Based on the number of DPF shares outstanding as of the date hereof, and assuming the exchange of each subscription receipt into underlying securities, it is expected that there would be a maximum of approximately 120,070,730 resulting issuer common shares (assuming the full exercise of the agent's option (as defined herein)) outstanding upon completion of the transaction, on a non-diluted basis. On completion of the transaction, the current shareholders of Auka are expected to hold an aggregate of approximately 12.5 million resulting issuer common shares, representing approximately 10.42 per cent of the maximum number of resulting issuer common shares (assuming the full exercise of the agent's option), the current shareholders of DPF (including the holders of debt conversion shares) would hold an aggregate of approximately 87,313,795 resulting issuer common shares, representing approximately 72.80 per cent of the maximum number of resulting issuer common shares (assuming the full exercise of the agent's option), and investors in the private placement (as defined herein) would hold an aggregate of approximately 20,125,000 resulting issuer common shares (assuming the full exercise of the agent's option), representing approximately 16.78 per cent of the maximum number of resulting issuer common shares.

The completion of the amalgamation is conditional on obtaining all necessary regulatory and shareholder approvals in connection with the matters described above and other conditions customary for a transaction of this type. Auka and DPF anticipate closing the transaction in October, 2024.

Summary financial information of DPF

Based on the audited annual financial statements for DPF as at and for the years ended Dec. 31, 2023, and 2022.

The financial information provided as at and for the years ended Dec. 31, 2023, and 2022 is derived from the audited annual financial statements of DPF.

Further financial information, including unaudited financial statements of DPF for the period ended March 31, 2024, will be included in the filing statement to be prepared in connection with the transaction.

Private placement of subscription receipts of DPF

Prior to the completion of the transaction, DPF is expected to complete a brokered private placement, with Canaccord Genuity Corp. as lead agent for aggregate gross proceeds of up to $3.5-million, subject to the agent's option, of subscription receipts of DPF, at a price of $1.83 per subscription receipt. The agent has been granted an option, exercisable in whole or in part at the closing of the private placement, to increase the size of the private placement by up to an aggregate of $525,000 (the agent's option).

The subscription receipts will be created and issued pursuant to the terms of a subscription receipt agreement to be entered into among Odyssey Trust Company, as subscription receipt agent, DPF, Auka and the agent.

Each subscription receipt will be automatically converted, without payment of additional consideration or further action by the holder thereof, into one unit comprising one DPF share and one-half of one common share purchase warrant of DPF. Subject to adjustment in certain events, immediately before the completion of the transaction upon the satisfaction or waiver of the escrow release conditions (as to be defined in the subscription receipt agreement) on or before Oct. 31, 2024 (the escrow release deadline). Each DPF warrant will entitle the holder thereof to acquire one DPF share at a price of $2.2875 per DPF share for a period of 24 months following the date of issuance thereof, subject to adjustment in certain events.

In consideration for the agent's services in connection with the private placement, DPF will pay to the agent a cash commission equal to 6.0 per cent of the aggregate gross proceeds from the sale of the subscription receipts, payable in cash or subscription receipts. Fifty per cent of the commission will be paid on the closing date of the private placement with proceeds from the sale of subscription receipts. The remaining 50 per cent of the commission will be deposited in escrow. As additional consideration for the services of the agent, concurrently with the exchange of the subscription receipts into underlying securities (if and when), DPF and Auka will issue to the agent warrants to purchase units in an amount equal to 6.0 per cent of the number of issued subscription receipts, which warrants shall be exercisable at any time up to 24 months following the date of issuance thereof at a price of $1.83 per unit (the agent warrants). A reduced commission equal to 3.0 per cent, payable in cash or subscription receipts, is payable and a reduced number equal to 3.0 per cent of agent warrants are issuable in respect of the sale of subscription receipts to purchasers identified by DPF or Auka to the agent. As further consideration for the services provided in connection with the private placement and in acting as sponsor for the transaction, DPF has agreed to pay the agent a fee of $125,000 plus applicable taxes upon delivery by the agent of such deliveries as are required of a sponsor under exchange policies.

Upon closing of the private placement, the aggregate gross proceeds of the private placement, less 50 per cent of the cash commission and less the full amount of the agent's reasonable expenses incurred up to and as of the closing date of the private placement, will be deposited in escrow with the subscription receipt agent pending satisfaction or waiver of the escrow release conditions, in accordance with the provisions of the subscription receipt agreement. All such reasonable expenses of the agent will be paid out of proceeds from the sale of subscription receipts. If the escrow release conditions are not satisfied at or before the escrow release deadline, each of the then issued and outstanding subscription receipts will be cancelled and the subscription receipt agent will return to each holder of subscription receipts an amount equal to the aggregate purchase price of the subscription receipts held by such holder plus an amount equal to the holder's pro rata share of any interest or other income earned on the escrowed funds (less applicable withholding tax, if any). To the extent that the escrowed funds are insufficient to refund such amounts to each holder of the subscription receipts of DPF, DPF shall be liable for and will contribute such amounts as are necessary to satisfy the shortfall.

Proceeds of the private placement

It is intended that the net proceeds from the private placement will be used for general working capital purposes following completion of the qualifying transaction.

Sponsorship

Under the policies of the exchange, the parties to the transaction are required to engage a sponsor for the transaction unless an exemption or waiver from this requirement can be obtained. Canaccord Genuity Corp., subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the transaction. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transaction or the likelihood of completion.

Resulting issuer

Immediately following the completion of the transaction, the resulting issuer is expected to change its name to Dr. Phone Fix Corp., and the resulting issuer is expected to be an industrial issuer under the policies of the exchange.

Conditions to completion of the transaction

It is intended that the transaction, when completed, will constitute Auka's qualifying transaction in accordance with Policy 2.4 of the exchange. Completion of the transaction is subject to a number of conditions precedent, including, but not limited to, (i) acceptance by the exchange and receipt of other applicable regulatory approvals; (ii) receipt of the required approvals at the Auka meeting, (iii) receipt of the requisite approval of the shareholders of DPF of the amalgamation, and (iv) completion of the private placement. There can be no assurance that the transaction will be completed as proposed or at all.

Proposed management and board of directors of resulting issuer

Concurrent with the completion of the transaction, it is expected that certain directors and officers of Auka will resign and the directors and officers of the resulting issuer will be as displayed herein.

Piyush Sawhney -- chief executive officer and director

Mr. Sawhney, the founder and CEO of DPF, is multiple award-winning, risk-taking, serial entrepreneur and thought leader playing an integral role in the growth of Canada's burgeoning cell phone repair and electronics industry. His entrepreneurial acumen and strategic vision have been instrumental in expanding the company's footprint and enhancing its service offerings. Mr. Sawhney is a network builder and founder of two cell phone and electronics related companies in Canada. Skilled in corporate development and business expansion, sales, technical training and supply chain development makes him a valuable asset to industry committees focused on technology innovation, business growth and consumer electronics. A cell phone veteran with over 15 years of business operational experience and strategic leadership. Companies he founded were recognized by the Financial Times 1 as one of the 500 Fastest Growing Companies in the Americas for 2024 and named by the Globe and Mail 2 as the 10th Fastest Growing Company in Canada for 2023. He is a winner of Canadian business leadership awards including the 2023 ASTech Change Maker award and the Alberta Chambers of Commerce 2023 Newcomer Entrepreneur award. He was a finalist in 2022 for the Ernst & Young Entrepreneur of the Year award for the Prairies as well as the Canadian SME Small Business Awards Top Immigrant Entrepreneur finalist.

Sunil Goel -- president and director

Mr. Goel is a seasoned professional with 15 years of experience in the telecommunications industry, where he has developed a deep understanding of technology and market trends. His entrepreneurial spirit has driven him to be involved in numerous business ventures and real estate projects, showcasing his versatility and business acumen. Notably, Mr. Goel founded MobilFix repair chain, establishing it as a trusted brand before successfully selling it in 2017. He holds a bachelor of science in mechanical engineering from the prestigious National Institute of Technology (NIT) Kurukshetra, one of India's premier institutes of technology, providing him with a strong technical foundation that has significantly contributed to his success in both the telecommunications and entrepreneurial sectors.

Jason Vandenberg -- chief financial officer

Mr. Vandenberg brings over 20 years of experience across diverse financial leadership positions and has an established record of leading multiple companies through substantial growth, both organically and through business acquisitions. Mr. Vandenberg is currently a senior vice-president and co-founder of Camilla Advisory Group Inc., a management consulting firm based in Edmonton, Alta. Prior to this, Mr. Vandenberg was the chief financial officer of Entrec Corp. from 2011 until 2020 and the chief financial officer of Eveready Inc. and its predecessor companies until it was acquired by Clean Harbors in 2009. In these roles, Mr. Vandenberg was responsible for all finance and administrative functions. Prior to joining Eveready in 2005, Mr. Vandenberg spent six years as an accountant with Grant Thornton and from 2010 until 2011 was the vice-president, finance, with Afexa Life Sciences Inc. Mr. Vandenberg is a chartered professional accountant and holds a bachelor of commerce, with distinction, from the University of Alberta.

Anil Verma -- director and vice-president, store development

Mr. Verma brings over a decade of experience in the telecommunications industry, coupled with a robust background as an experienced residential and commercial home builder. He successfully launched and operated a Bell-authorized dealership in Red Deer, Alta., showcasing his entrepreneurial acumen. Mr. Verma has played a pivotal role in the buildout and development of all 35 DPF locations, demonstrating his expertise in project management and operational efficiency.

Graham Barr -- director and corporate secretary

Mr. Barr is the current managing partner of Barr LLP and has been an equity partner of the firm since 2015. Mr. Barr has 13 years of experience in corporate and commercial law, specializing in commercial asset and share acquisition and sale, corporate reorganizations, commercial financing, shareholder agreements, tax implementation, leasing and lease review, and commercial real estate acquisition and sale.

Prior to practice, Mr. Barr completed a master of laws from the University of Toronto in the field of health law and was thereafter engaged as a research associate at the Health Law Institute at the University of Alberta. Prior to joining Barr LLP, Mr. Barr articled with Ogilvie LLP in Edmonton. He is currently the national chair of the Canadian Bar Associations Real Property subsection and a past member of the real estate practice advisory committee for the Law Society of Alberta.

Jay Baraniecki -- director

Mr. Baraniecki, a current director of Auka, is a utility executive with over 20 years of experience and currently holds the position of vice-president, commercial development, at Epcor Utilities Inc. In his current position Mr. Baraniecki is accountable for providing senior leadership to Epcor's commercial development operations in Canada which primarily involves business development (origination), contract development and negotiation and integration of new commercial development projects and utility acquisitions. Prior to assuming his current role, Mr. Baraniecki was the director, technologies, from February, 2022, to January, 2023, and director, energy services, from June, 2016, to February, 2022, where he led Epcor Utilities Inc.'s energy services division that primarily provides billing and customer care services for Epcor's electricity and water customers. From August, 2003, through June, 2016, Mr. Baraniecki held progressively increasing roles in regulatory affairs for Epcor Utilities' electricity services functions, concluding with the role of director, regulatory affairs and business planning. In this role, he was responsible for the development and execution of regulatory strategies and applications for Epcor Distribution & Transmission Inc.'s distribution and transmission functions and Epcor Energy Alberta GP Inc. (energy services).

Jeff Lloyd -- director

Mr. Lloyd, a current director of Auka, is the president of Almita Piling, a leading North American geostructural provider. Prior to his current position, Mr. Lloyd worked at a New York Stock Exchange-listed international consulting firm based in Edmonton, Alta., as its vice-president of corporate development. Mr. Lloyd graduated with a bachelor of science in business administration from the University of Denver in 1987 and with a juris doctor degree from Osgoode Hall Law School at York University in 1990.

Mr. Lloyd currently serves as a member of the board of directors of Olsson, a multidiscipline engineering and consulting firm based in Lincoln, Neb., and as a member of the board of directors of the Derrick Club in Edmonton, Alta. Mr. Lloyd is a past director and member of the Pigeon Lake Watershed Association, the Epcor Community Essentials Council and the Kids with Cancer Society of Northern Alberta.

Robert Cole -- director

Mr. Cole, current chief executive officer and director of Auka, has over 25 years of experience in capital markets and wealth management. He is currently a principal at Tytata Holdings Inc., a wealth management consulting firm. As a portfolio manager and family enterprise adviser, he consults on family and business wealth creation and eventual transition within a governance framework. His industry experience has ranged from product development, product distribution, practice management, industry regulatory compliance and high-net-worth client advisory. A graduate of the University of Alberta, Mr. Cole holds both a bachelor degree in arts and commerce and is currently an MBA candidate with the Australian Institute of Business.

Arm's-length transaction

The transaction was negotiated by parties who are dealing at arm's length with each other and therefore, the transaction is not a non-arm's-length qualifying transaction in accordance with the policies of the exchange.

Finders' fees

No finders' fees or commissions are payable by Auka or DPF in connection with the closing of the transaction, other than with respect of the private placement.

Filing statement

In connection with the transaction and pursuant to exchange requirements, Auka will file a filing statement under its profile on SEDAR+, which will contain details regarding the transaction, the amalgamation, the private placement, Auka, DPF and the resulting issuer.

Shareholder approval is not required with respect to the transaction under the rules of the exchange. In the event any of the conditions set forth herein are not completed or the transaction does not proceed, Auka will notify shareholders. Trading in the common shares of Auka will remain halted and is not expected to resume trading until the transaction is completed or until the exchange receives the requisite documentation to resume trading.

About Auka Capital Corp.

Auka is a capital pool company that has not commenced commercial operations and has no assets other than cash. Except as specifically contemplated in the exchange's CPC policy, until the completion of its qualifying transaction, Auka will not carry on business, other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.

We seek Safe Harbor.