AUKA CAPITAL CORP. ENTERS INTO DEFINITIVE AGREEMENT IN RESPECT OF PROPOSED QUALIFYING TRANSACTION
/NOT FOR DISTRIBUTION TO THE
In connection with the Amalgamation, it is intended that Auka will be renamed to "
About DPF
DPF is a private company incorporated under the Business Corporations Act (Alberta) and is a multi-award-winning, eco-friendly, customer-centric growth leader in Canada's billion-dollar cell phone and electronics repair and pre-owned resale industry.
Founded in 2019, DPF operates a growing network of 35 corporately owned cell phone and electronics repair stores in
With just one store in
DPF has 6,555,811 Class A Common shares ("DPF Shares") issued and outstanding. Additionally, approximately
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 at www.sedarplus.ca. The below description 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
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
- appointment, subject to the completion of the Transaction, of EBT Chartered Professional Accountants as the auditors 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; and
- change in the name of Auka from "
Auka Capital Corp. " to "Dr. Phone Fix Corporation " 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
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 below)). 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 below)) 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 12,500,000 Resulting Issuer Common Shares, representing approximately 10.42% 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% 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 below) 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% 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
Summary Financial Information of DPF
Based on the audited annual financial statements for DPF as at and for the years ended
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The financial information provided as at and for the years ended
Further financial information, including unaudited financial statements of DPF for the period ended
Private Placement of Subscription Receipts of DPF
Prior to the completion of the Transaction, DPF is expected to complete a brokered private placement (the "Private Placement"), with
The Subscription Receipts will be created and issued pursuant to the terms of a subscription receipt agreement (the "Subscription Receipt Agreement") to be entered into among
Each Subscription Receipt will be automatically converted, without payment of additional consideration or further action by the holder thereof, into one unit ("Unit") comprised of one DPF Share and one-half of one common share purchase warrant of DPF (each whole warrant, a "DPF Warrant"), 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
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% of the aggregate gross proceeds from the sale of the Subscription Receipts, payable in cash or Subscription Receipts. 50% 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% 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% 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
Upon closing of the Private Placement, the aggregate gross proceeds of the Private Placement, less 50% 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.
Resulting Issuer
Immediately following the completion of the Transaction, the Resulting Issuer is expected to change its name to "
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 follows:
Prior to practice,
Mr.
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.
Finder's Fees
No finder's 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+ at www.sedarplus.ca, 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 above 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.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction, nor shall there be any offer, sale, or solicitation of securities in any state in
ABOUT AUKA
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.
ANY SECURITIES REFERRED TO HEREIN WILL NOT BE REGISTERED UNDER THE
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN
Neither
The information contained or referred to in this press release relating to DPF has been furnished by DPF. Although Auka has no knowledge that would indicate that any statement contained herein concerning DPF is untrue or incomplete, neither Auka nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.
Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance, receipt of requisite regulatory approvals, completion of the Private Placement and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals, and any ancillary matters thereto, are obtained. There can be no assurance that the 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 Transaction, any information released or received with respect to the 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.
This forward-looking information in respect of Auka and DPF reflects DPF's or Auka's, as the case may be, current beliefs and is based on information currently available to Auka and DPF, respectively, and on assumptions Auka and DPF, as the case may be, believes are reasonable. These assumptions include, but are not limited to, management's assumptions about the Exchange approval for the Transaction, closing of the Private Placement, closing of the Amalgamation announced above and DPF's assumptions regarding its business objectives.
Forward-Looking Information Cautionary Statement
This news release includes forward-looking information ("forward-looking information") within the meaning of Canadian securities laws regarding Auka,
Neither
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