Mr. Alan Simpson reports

PROTON CAPITAL ENTERS INTO AGREEMENT TO PURCHASE PHARMACHOICE CANADA BRANDED PHARMACY IN SASKATOON FOR PROPOSED QUALIFYING TRANSACTION

Further to the news releases dated April 20, 2023, July 26, 2023, Aug. 31, 2023, and Oct. 10, 2023, Proton Capital Corp. has entered into a share purchase agreement dated effective Feb. 14, 2024, with the shareholders of a PharmaChoice Canada Inc.-branded pharmacy located and operating in Saskatoon, Sask. (the target pharmacy), to purchase 75 per cent of the outstanding shares of the target pharmacy to form the resulting issuer. Upon completion of the qualifying transaction (as defined below), it is the intention of the parties that the resulting issuer will continue the business of the target pharmacy, subject to the terms and conditions outlined below. Proton Capital intends that the acquisition, together with the previously announced strategic alliance agreement with PharmaChoice Canada, will constitute its qualifying transaction, as such term is defined in Policy 2.4 (Capital Pool Companies) of the policies of the TSX Venture Exchange.

The target pharmacy is a private Saskatchewan company incorporated on Aug. 27, 2014. The target pharmacy operates a retail pharmacy in Saskatoon, Sask. The target pharmacy operates under the PharmaChoice Canada banner offering prescription drug and custom compounding specialization services, weight loss and lifestyle management solutions, including health and wellness products, and common convenience and confectionery products.

The attached table sets out certain selected financial information of the target pharmacy.

Details of the acquisition and summary of the qualifying transaction

The share purchase agreement provides that Proton Capital will purchase 75 per cent of the issued and outstanding shares of the target pharmacy. The purchase price of $1,092,030 shall be satisfied by the issuance of 2,730,075 common shares of the corporation at a deemed price of 40 cents per share plus an additional cash payment of $250,000 at closing. The purchase price is subject to an adjustment in the event that the current loan of approximately $456,460 owing by the target pharmacy is repaid to the lender, such that the price will be increased by 75 per cent of the amount of the loan that is paid out to the applicable lender prior to closing. The purchase price is also subject to a net asset value adjustment as of the closing date. The shareholders of the target pharmacy can elect to have the net asset value adjustment, if any, paid in cash or common shares issued at a deemed price of 40 cents per share. In addition, the shareholders of the target pharmacy shall be eligible to receive, pro rata, an earnout, up to a maximum amount of $414,375, based on 4.25 multiplied by the amount that normalized earnings before interest, taxes, depreciation and amortization (up to $580,000) are greater than $450,000, for the one-year period beginning on Sept. 1, 2023, and ending on Aug. 31, 2024. The shareholders of the target pharmacy can elect to have the earnout, if any, paid in cash or, subject to approval of the TSX-V, common shares (at the market price at the time of payment) or a combination of both.

The qualifying transaction will not constitute a non-arm's-length qualifying transaction (as such term is defined in the policies of the TSX-V). No person who is a non-arm's-length party (as such term is defined in the policies of the TSX-V) of Proton Capital has any direct or indirect beneficial interest in the target pharmacy or PharmaChoice Canada or their assets prior to giving effect to the qualifying transaction, and no such person is an insider of either the target pharmacy or PharmaChoice Canada. Similarly, there is no known relationship between or among any person who is a non-arm's-length party of Proton Capital and any person who is a non-arm's-length party to either the target pharmacy or PharmaChoice Canada.

It is expected that following completion of the qualifying transaction and assuming that the offering (as described below) is fully subscribed (excluding the overallotment option), the current holders of Proton Capital shares will hold approximately 28.2 per cent of the outstanding shares of the resulting issuer, the subscribers in relation to the offering will hold approximately 69.9 per cent of the outstanding shares of the resulting issuer and the holders of the shares of the target pharmacy will hold approximately 1.9 per cent of the outstanding shares of the resulting issuer, all as calculated on a non-diluted basis immediately following the closing of the qualifying transaction.

The completion of the acquisition is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including, but not limited to:

• The corporation completing its due diligence reviews;
• Representations and warranties remaining true;
• Receipt of a waiver of rights of first refusal of PharmaChoice Canada;
• Continuation of the target pharmacy's service contracts and pharmacy contracts;
• The target pharmacy shall have entered an employment agreement with its managing pharmacist, a current pharmacist and shareholder of the target pharmacy;
• Lack of material adverse effects;
• Obtaining necessary consents, including the consent of the Saskatchewan College of Pharmacy Professionals;
• The certificate of the target pharmacy for the prospectus (as defined below) shall only certify that the information in the prospectus with respect to the target pharmacy constitutes full, true and plain disclosure of all material facts relating to the securities of the target pharmacy;
• Delivery of certain certificates by officers and other certificates and documents;
• TSX-V conditional acceptance of the qualifying transaction and the offering.

The parties to the qualifying transaction are at arm's length, and therefore, the approval of the shareholders of Proton Capital in respect of the qualifying transaction will not be required. Proton Capital held a special meeting of shareholders on Jan. 22, 2024, where, among other things, the shareholders of Proton Capital approved: (i) the change of name of Proton Capital to PharmaCorp Rx Inc. or such other name as the board of directors of Proton Capital may approve, conditional upon completion of the qualifying transaction; (ii) the appointment of a new slate of directors, conditional upon completion of the qualifying transaction; and (iii) the approval of an equity incentive plan of Proton Capital, conditional upon completion of the qualifying transaction. Copies of the management information circular of Proton Capital dated Dec. 11, 2023, and certain related documents and agreements have been filed with Canadian securities regulators and are available at the SEDAR+ website under Proton Capital's profile.

In connection with the qualifying transaction and the offering (as described below), and pursuant to the requirements of the TSX-V, the corporation anticipates filing a long form prospectus on its issuer profile on SEDAR+, which will contain details regarding the acquisition, the qualifying transaction, the offering, the corporation, the target pharmacy and the resulting issuer.

The offering

As announced on Oct. 10, 2023, in connection with the qualifying transaction, Proton Capital is proposing to complete a brokered public offering of up to 100 million common shares in the capital of the corporation at a price of 40 cents per common share, for gross proceeds of up to $40-million. iA Private Wealth Inc. has been engaged to act as the sole agent and bookrunner for the offering, under which common shares will be offered for sale to investors on a best effort basis. The corporation also intends to grant the agent an option to cover overallotments and for market stabilization purposes, exercisable at any time up to 30 days subsequent to the closing of the offering, to purchase up to an additional 15 per cent of common shares, pursuant to the offering, on the same terms and conditions of the offering. The common shares will be offered under the prospectus to be prepared and filed in each of the provinces of Canada, other than Quebec.

Assuming that closing of the qualifying transaction occurs, the net proceeds from the sale of the common shares are expected to be used for further acquisitions by Proton Capital of PharmaChoice Canada-bannered pharmacies, acquisitions of other independently owned pharmacies in Canada, general and administrative costs, and general corporate working capital purposes.

Copies of the prospectus, following filing thereof, may be obtained on SEDAR+ under the corporation's profile and from iA Private Wealth, 219, 2nd Ave. South, Saskatoon, Sask., S7K 1K8. The prospectus will contain important detailed information about the corporation, the qualifying transaction and the proposed offering. Prospective investors should read the prospectus and the other documents the corporation has filed under its issuer profile on SEDAR+ before making an investment decision.

There can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering. Completion of the offering will be subject to the receipt of all necessary regulatory approvals, including the approval of the TSX-V and other customary conditions.

The resulting issuer

In connection with the completion of the qualifying transaction, the resulting issuer is expected to change its name to PharmaCorp Rx Inc., and the resulting issuer will be a Tier 2 industrial issuer under the policies of the TSX-V.

Upon the closing of the qualifying transaction, it is anticipated that Alan Simpson, Dwayne Anderson, Grady Brown, Calvin LeRoux, Ken Brownell, James Dumont and Grant Hladun will constitute the board of directors of the resulting issuer. It is also anticipated that the new senior management team of the resulting issuer will be composed of Mr. Simpson (executive chairperson), Mr. Brown (chief executive officer), Mr. LeRoux (president), Terri Tatchell (chief financial officer), Paul Dale (chief operating officer) and Kimberly Carroll (corporate secretary). Other than the changes to the board and officers, no new insiders will be created as a result of the qualifying transaction.

The following are brief resumes of the currently proposed directors and senior officers of the resulting issuer.

Alan Simpson, director and executive chairperson

In 2007, Mr. Simpson co-founded Storagevault Canada Inc., and was president and chief executive officer of Storagevault until April, 2015. Storagevault has grown from a capital pool company to a company with a market capitalization of approximately $2.0-billion. Storagevault has been recognized as a TSX-V Venture 50 company and recently graduated to the Toronto Stock Exchange. He now serves Storagevault as a director and acquisition committee chair. Since April, 2015, the acquisition committee of Storagevault has reviewed and approved over $1.8-billion of acquisitions by Storagevault. In 2000, Mr. Simpson co-founded Hospitality Network Canada, now operating as HealthHub Patient Engagement Solutions Inc. He was president and chief executive officer until 2005 and chair from 2011 to 2017. Recently, Mr. Simpson founded Living Sky Sports and Entertainment Inc. in 2020. Mr. Simpson holds a PhD in business administration from Edinburgh Business School.

Dwayne M. Anderson, director

Mr. Anderson founded Anderson Law Firm Prof. Corp. in 2000, which specializes primarily in tax planning and corporate commercial law. Mr. Anderson received his bachelor of commerce degree in 1985 (honours) and bachelor of law degree in 1990, both from the University of Saskatchewan. In addition to his professional background, Mr. Anderson has acted as a director and officer of several companies, limited partnerships and joint ventures related to oil and gas, food and beverage, cannabis, and real estate.

Grady Brown, director and chief executive officer

Mr. Brown, a dedicated leader and visionary, has been the driving force behind the incredible growth and success of PharmaChoice Canada. Mr. Brown embarked on his professional career in the pharmaceutical sector at Mylan Pharmaceuticals ULC, where he was managing strategic accounts. In 2014, Mr. Brown joined PharmaChoice Canada. Under his guidance, the membership of PharmaChoice Canada has grown from 400 members to a remarkable 1,100 members across Canada. Current retail sales for PharmaChoice Canada-branded pharmacies are exceeding $2.1-billion. Mr. Brown's dedication to his work extends beyond the boardroom. From 2015 to 2021, he served as a board member of the Ronald McDonald House. Mr. Brown holds a bachelor of commerce from the University of Saskatchewan.

Calvin LeRoux, director and president

Mr. LeRoux has over 35 years experience in the pharmacy industry. After 10 years in sales with Rhone Poulenc Rorer, and then three years with McKesson Canada in a banner management role in Halifax, Mr. LeRoux co-founded PharmaChoice Atlantic Inc. in 1999 beginning with 26 locations. Mr. LeRoux led PharmaChoice Atlantic as chief executive officer and expanded the number of locations to 125 locations by 2005. In 2006, PharmaChoice East formed a partnership with United Pharmacists Enterprises in Saskatchewan and created PharmaChoice West Inc., growing to over 250 locations. In 2018, PharmaChoice East amalgamated with PharmaChoice West Inc. to create PharmaChoice Canada with over 750 locations. Mr. LeRoux shared the leadership role of PharmaChoice Canada with Mr. Brown as co-chief executive officers until July, 2022. Mr. LeRoux now holds the position with PharmaChoice Canada as an adviser providing support to Mr. Brown and his executive team and the PharmaChoice Canada board. He holds a BBA degree from St. Francis Xavier University in Antigonish, N.S.

Ken Brownell, director

Mr. Brownell is currently the board of directors chair for PharmaChoice Canada. Mr. Brownell is currently a committee member and past director of the Pharmacy Association of Nova Scotia. He is also currently a director of All Saints Community Health Care Foundation. Mr. Brownell has over 31 years experience as a pharmacist in community pharmacies. He also has 25 years experience as a community pharmacy owner. Mr. Brownell and his partner provide support to pharmacists to assist them in purchasing and operating community pharmacies. Mr. Brownell enjoys travelling and is an avid snowmobiler and skier.

James Dumont, director

Mr. Dumont has over 25 years of experience in the pharmacy/pharmaceutical industry. Mr. Dumont served on the PharmaChoice East board of directors from 2014 to 2019, where he participated in amalgamating PharmaChoice East and PharmaChoice West to become one national company in 2019, PharmaChoice. Mr. Dumont continues to serve on the PharmaChoice Canada board since its amalgamation. Mr. Dumont held numerous positions on the PharmaChoice Canada board, has been the chair of finance since 2017 and continues in that role. Mr. Dumont owns and operates a pharmacy in Ottawa since 2006, operates several on-line retail stores and is also involved in commercial real estate. Prior to being a pharmacy owner, he held positions in sales and marketing in the pharmaceutical industry, where he was a top-tier producer between 2001 and 2006. Mr. Dumont holds a degree in biochemistry and physics, and health sciences, as well as an education in pharmacy.

Grant Hladun, director

Mr. Hladun is a pharmacist and business entrepreneur. For over 30 years, he has owned and operated multiple independent pharmacies in the province of Saskatchewan. Mr. Hladun's board experience has been continuous since 1996 with independent pharmacy co-operatives. This includes United Pharmacists Enterprises, PharmaChoice Western and PharmaChoice Canada. He has served on several committees as board chair and co-chair, and currently sits as vice-chair of the PharmaChoice Canada board. Mr. Hladun was part of the team that directed the growth from Saskatchewan (United Pharmacists Enterprises) to Western Canada (PharmaChoice Western) and subsequently to amalgamate to form PharmaChoice Canada. Mr. Hladun has been part of the growth of PharmaChoice Canada from 114 independent pharmacies in 1996 to over 1,100 today. Mr. Hladun holds a bachelor of science in pharmacy from the University of Saskatchewan.

Terri Tatchell, chief financial officer

From 2007 to 2015, Ms. Tatchell held multiple audit and finance roles within Federated Co-operatives Ltd. From 2015 to 2022, Ms. Tatchell held the accounting manager role at Mega Group Inc. Currently, Ms. Tatchell is the director of finance for PharmaChoice Canada and will take on the role of the resulting issuer as CFO while remaining the director of finance for PharmaChoice Canada. She earned her CPA and CMA designation in 2010.

Paul Dale, chief operating officer

Mr. Dale has dedicated his entire career to the retail business as a senior executive with broad experience in all aspects of business operations and management spanning several retail industries. Most notably, he was the executive vice-president of Rexall Canada with annual sales of $3.6-billion. Areas of leadership responsibility included the operation of 400 retail stores, specialty pharmacies, new store development and acquisitions, and loss prevention. Serving as a member of the executive operating committee, he continuously worked on collaboration across all areas of the business and was a key contributor to the strategic direction of the business. Most recently, he was the chief operating officer of Earth Fare, an American health and wellness supermarket chain.

Kimberly Carroll, corporate secretary

From 1997 to 2007, Ms. Carroll held several finance management roles with SaskTel. From 2007 until 2021, she was the chief financial officer and chief privacy officer with HealthHub Patient Engagement Solutions Inc. (formerly Hospitality Network Canada Inc.). She is currently an independent accounting management consultant and a partner in Regina's Pet Depot. She also serves on the board of directors and audit committee with the Regina Humane Society. She earned her CPA and CMA designation in 2001.

Sponsorship

Sponsorship of the qualifying transaction of Proton Capital is required by the TSX-V unless an exemption from this requirement is available in accordance with the policies of the TSX-V. Proton Capital intends to apply to the TSX-V for an exemption from the sponsorship requirements for the qualifying transaction. There is no assurance that an exemption from this requirement will be obtained.

Additional information

Proton Capital will provide further details in respect of the qualifying transaction and the offering in due course by way of a subsequent news release; however, Proton Capital will make available to TSX-V all information, including financial information, as may be requested or required by the TSX-V.

All information contained in this news release with respect to Proton Capital and the target pharmacy was supplied by the respective party, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Other information and halt

Completion of the qualifying transaction is subject to a number of conditions, including, but not limited to, TSX-V acceptance and, if applicable pursuant to TSX-V requirements, majority of the minority shareholder approval. Where applicable, the qualifying transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the qualifying transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the prospectus, any information released or received with respect to the qualifying 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.

In accordance with the policies of the TSX-V, the common shares of Proton Capital are currently halted from trading and will remain halted until further notice.

About the target pharmacy

The target pharmacy is a private Saskatchewan company operating a retail pharmacy in Saskatoon, Sask. The target pharmacy operates under the PharmaChoice Canada banner offering prescription drug and custom compounding specialization services, weight loss and lifestyle management solutions, including health and wellness products, and common convenience and confectionery products.

About PharmaChoice Canada Inc.

PharmaChoice Canada is a corporation operating as a shareholder-owned buying group composed of approximately 1,100 independent pharmacies in Canada. Headquartered in Saskatoon, Sask., and Halifax, N.S., PharmaChoice Canada is the third-largest pharmacy banner in Canada and eighth-largest pharmacy banner in North America by store count, and the fastest-growing pharmacy banner in Canada over the last six years.

PharmaChoice Canada licenses pharmacy brands to independent pharmacy owners in Canada.

About Proton Capital Corp.

Proton Capital was incorporated on Sept. 1, 2021, by certificate of incorporation issued pursuant to the provisions of the Business Corporations Act (Alberta). Proton Capital is classified as a capital pool company as defined in Policy 2.4 of the TSX-V. The principal business of Proton Capital is to identify and evaluate assets or businesses with a view to potentially acquire them or an interest therein by completing a purchase transaction, by exercising an option or by any concomitant transaction. The purpose of such an acquisition is to satisfy the related conditions of a qualifying transaction as defined under TSX-V policies. Proton Capital's shares trade on the TSX-V under the trading symbol PTN.P.

We seek Safe Harbor.