Advanced Extraction Systems Inc. (AESI) entered into a non-binding letter of intent to acquire Hakken Capital Corp. (TSXV:HAKK.P) in a reverse merger transaction on June 28, 2022. Pursuant to the LOI, Hakken will acquire all of the issued and outstanding shares of AESI in consideration for common shares of Hakken. The definitive agreement would provide that on closing, Hakken will issue to shareholders of AESI an aggregate of 32,000,000 Hakken Shares at a deemed price of CAD 0.25 per Hakken Share (the “Consideration Shares”). The Consideration Shares will be issued to the shareholders of AESI on a pro rata basis in exchange for 100% of the issued and outstanding shares of AESI. Subject to Exchange approval, Hakken will issue an additional 24,000,000 Hakken Shares(the “Performance Shares”) if the Resulting Issuer achieves the following milestones within 60 months of the closing of the Transaction: (i) 30% of the Performance Shares will be released upon the Resulting Issuer attainting gross sales of CAD 10 million with earnings before taxes and appreciation (“EBTA”) of a minimum of 5%; (ii) 30% of the Performance Shares will be released upon the Resulting Issuer attainting gross sales of CAD 18 million with EBTA of a minimum of 8%; and (iii) 30% of the Performance Shares will be released upon the Resulting Issuer attainting gross sales of CAD 22 million with EBTA of a minimum of 10%. In connection with the Transaction, either Hakken or AESI will undertake financing for minimum gross proceeds of CAD 1.125 million (the “Concurrent Financing”). It is anticipated that the securities issuable or convertible into common shares of either Hakken or AESI will be issued at a price of CAD 0.25 per common share or unit. Following the completion of the Transaction, the resulting entity (the “Resulting Issuer”) will hold all of the assets and continue the business of AESI and intends to list as a Tier 2 Industrial Issuer on the Exchange. Effective upon completion the Transaction, the Resulting Issuer will change its name to “Advanced Extraction Systems Inc.” or such other name as determined by AESI. Hakken and AESI anticipate that management of the Resulting Issuer will be comprised of Peter Toombs as Chief Executive Officer, Al Goodwin as Chief Operating Officer, Kyle MacDonald as Controller, Dave Campbell as Director of Strategic Opportunities, Michael MacDonald as Director of Sales and Nick Desroches as Director of R&D.

The completion of the Transaction is subject to the satisfaction of various conditions that are customary for a transaction of this nature, including but not limited to (i) execution of the Definitive Agreement, (ii) the completion of the Concurrent Financing; (iii) the approval by the directors and shareholders (if required) of Hakken and AESI, (iv) receipt of all requisite regulatory, stock exchange, or governmental authorizations and consents, including the Exchange; (v) the completion of satisfactory due diligence by each of the parties, (vi) delivery of a sponsor report or an exemption from the requirement to deliver a sponsor report to the Exchange, (vii) all requisite approval to enact the Name Change, and (viii) AESI have no long-term debt, other than outstanding loans from Atlantic Canada Opportunities Agency and the Economic Development and Tourism of Prince Edward Island and having a positive working capital position. It is not anticipated that the Transaction will be subject to the approval of Hakken's shareholders. Under the terms of the LOI, the parties have agreed to use commercially reasonable efforts to negotiate and settle the Definitive Agreement by August 31, 2022.

Advanced Extraction Systems Inc. (AESI) cancelled the acquisition of Hakken Capital Corp. (TSXV:HAKK.P) in a reverse merger transaction on February 15, 2023.