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CALGARY, AB, Aug. 23, 2024 /CNW/ - Eureka Capital Corp. (TSXV : EBCD.P) (the "Eureka") a capital pool company as defined under Policy 2.4 – Capital Pool Companies ("CPC") of the TSX Venture Exchange (the "Exchange"), is pleased to announce it has entered into a definitive business combination agreement dated August 22, 2024 (the "Definitive Agreement") with Empire Hydrogen Energy Systems Inc. ("Empire"), whereby Eureka's wholly-owned subsidiary, 16299440 Canada Inc. ("Subco"), will amalgamate with Empire (the "Amalgamation") to complete Eureka's qualifying transaction (the "Transaction") in accordance with the policies of the Exchange.

About Empire

Founded in 2009, Empire operates from a 3,000 square foot facility that has been designed with the capacity for up to 2,000 units of production per year and an ability to expand if required.

Empire is currently focused on the many millions of large diesel engines operating in the world and has plans to expand into natural gas-powered engines in the near future.

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 Eureka'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.

Amalgamation

Shareholder Approval

appointment, subject to the completion of the Transaction, of an auditor of Eureka and the authorization of the board of directors of Eureka to fix the remuneration thereof;

continuance of Eureka under the Canada Business Corporations Act ;

; election of the directors of Eureka to hold office from the effective time of the completion of the Transaction; and

change in the name of Eureka from "Eureka Capital Corp." to "Empire Hydrogen Energy Systems Inc." or such other name as the board of directors of Eureka deems appropriate (collectively, the foregoing approvals, the "Required Approvals").

Resulting Issuer Shares

Summary Financial Information of Empire

Based on the audited annual financial statements for Empire as at and for the years ended September 30, 2023 and 2022:

Assets

2023 2022 Current assets:

Cash and cash equivalents

$ - $39,506 Short term investments

2,116 1,000,000 Receivables (note 4)

28,108 75,691 SR&ED Receivable

108,301 - Prepaid expenses

13,460 10,611 Inventories (note 5)

301,072 106,327

453,057 1,232,135 Non-current assets:

Property, plant and equipment (note 6)

14,031 54,259 Total assets

$ 467,088 $ 1,286,394 Liabilities

Current liabilities:

Operating line of credit $ 4,722 $ - Accounts payable and accrued liabilities

202,560 172,036 Due to related parties (note 9)

4,277 1,133 Customer deposits

12,975 - Warranty provision (note 8)

18,800 15,300 Current portion of lease liability (note 7)

8,779 46,472

252,113 234,941 Non-current liabilities:

Non-current lease liability (note 7)

- 8,779 Total liabilities

252,113 243,720 Shareholders' equity

5,401,574 5,377,880 Other paid in capital (note 12 and note 13)

1,460,792 1,389,585 Deficit

(6,647,391) (5,724,791)

$ 467,088 $ 1,286,394

Sales:

Sale of prototype units $ 213,061 $ 231,157

213,061 231,157 Cost of sales 238,885 280,402 Gross (loss) profit (25,824) (49,245) Expenses:

Stock based compensation for consultants (note 12) 71,207 118,191 Professional fees 236,898 343,789 Commissions 4,494 7,100 Employee compensation 388,742 272,210 Depreciation expense 24,679 20,386 Materials and supplies 66,951 37,510 Advertising and promotion 88,336 71,463 Office supplies and maintenance 33,888 50,160 Interest expense on lease liability 8,634 19,258 Travel 48,359 36,340 Interest and bank charges 5,128 8,144 Inventory provision 30,174 - Bad debt 10,963 71

Further financial information, including unaudited financial statements of Empire for the period ended June 30, 2024, will be included in the filing statement to be prepared in connection with the Transaction.

Private Placement of Subscription Receipts of Eureka

Prior to the completion of the Transaction, Eureka is expected to complete a non-brokered private placement (the "Private Placement") for aggregate gross proceeds of up to $600,000 and up to 2,400,000 Empire Shares, or such other amount as may be agreed to by Eureka and Empire, of subscription receipts of Empire (the "Subscription Receipts"), at a price of $0.25 per Subscription Receipt.

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 Eureka, Empire and Odyssey Trust Company or such other third party as is mutually agreed to by Eureka and Empire, as subscription receipt agent (the "Subscription Receipt Agent").

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.

Secured Bridge Loan

In connection with the Transaction and pursuant to the Definitive Agreement Eureka will, subject to required regulatory approvals, advance an aggregate of $250,000 to Empire by way of secured loan (the "Bridge Loan") pursuant to a definitive loan agreement and ancillary documentation. The Bridge Loan shall be secured against all present and after-acquired property of Empire. The Bridge Loan will bear interest at a rate of Prime Rate plus two percent (2%) and will mature on the date that is the earlier of (i) six (6) months from the date of the Bridge Loan agreement or (ii) remain as an inter-company loan between Empire and Amalco on closing of the 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. Empire and Eureka plan to request a waiver of this requirement by the Exchange.

Resulting Issuer

Immediately following the completion of the Transaction, the Resulting Issuer is expected to change its name to "Empire Hydrogen Energy Systems Inc.", and the Resulting Issuer is expected to be an Technology issuer under the policies of the Exchange.

Conditions to Completion of the Transaction

Proposed Management and Board of Directors of Resulting Issuer

Concurrent with the completion of the Transaction, it is expected that the directors and officers of the Resulting Issuer will be as follows:

Sven Tjelta – Chief Executive Officer

Sven in an entrepreneur and business consultant with expertise in electronics and with over five decades of business direction and senior management experience in diverse fields. Sven has experience as the founder, chair and chief executive officer of several successful hi-tech start-ups, including: (i) Microdyne Modular Electronic Systems Inc.; (ii) Capital Electronic Services Limited; and (iii) Lotus Technology Corp.

Microdyne Modular Electronic Systems Inc. conducts research and development and manufactured industrial electronics equipment for the plywood and lumber industry. Sven raised over $1 million in seed capital and grew company sales to over $2 million prior to negotiating a deal for the company's sale through a takeover.

Capital Electronic Services was primarily active in designing, manufacturing and servicing marine radio equipment. It also designed, manufactured and serviced VHF equipment for municipal governments. When the company's annual sales exceeded $1 million, its employees acquired outright ownership.

Lotus Technology Corp. (electronics research and development). Lotus was a research and development company, involved in the development of electronics equipment for "smart buildings". It obtained $4.5 million in research grants, under the federal government's scientific research and experimental development program. The project was sold to, and taken over by, Leader Resources Ltd.

Steve Bjornson – Chief Financial Officer and Director

Mr. Bjornson is a finance professional with decades of board and executive level experience in multiple industries. Steve was Chief Financial Officer of several junior oil and gas companies including Valeura Energy Inc., Sound Energy, Clear Energy Inc. and Vermilion Energy Inc. These companies were Calgary based and engaged in exploration and development in various regions including Canada, US, France, Netherlands, Trinidad and Turkey. Steve has extensive experience in domestic and international finance and business development including acquisitions, tax structuring, debt and equity finance structures and strategic planning. Steve was involved in raising numerous debt and equity finance arrangements, both domestic and international, including the first cross border bank facility in Canada for a junior oil and gas company. Steve currently serves as an Independent Director of Cematrix Corporation and previously served as a director of Bulldog Energy, Bulldog Resources and Aventura Energy Inc. Steve holds a Chartered Accountant designation and a Bachelor of Commerce from the University of Calgary.

Khalid Karmali – Corporate Secretary and Director

Mr. Karmali holds a Bachelor of Arts (B.A.) in Criminology from Simon Fraser University, a Bachelor of Laws from the University of Birmingham, England (LL.B (Hons)) and has received his Certified In-House Counsel - Canada designation (CIC.C). Khalid is a practicing lawyer and currently serves as General Counsel for Besurance Corporation, as Corporate Secretary and General Counsel for Fenchurch General Insurance Company and as a director for AIME Financial Group Inc., a national Managing General Agency (excluding Quebec, Saskatchewan and Nunavut), which is involved in sales of an individual mortgage insurance product and group life insurance. Khalid was also a director of Fenchurch General Insurance Company from April 1, 2019 to October 30, 2021. Khalid has experience providing corporate commercial legal services to a prominent Fortune 500 Oil and Gas company and has worked with prominent UK banking houses on compliance and commercial banking.

Dale Bellavance – Independent Director

Dale has over 40 years of senior management and entrepreneurial experience in a wide variety of mid to large scale recreational, residential, commercial, and industrial projects. Comfortable in government offices, the boardroom, or in the field, Dale also has an extensive background in sales and marketing and has received international recognition throughout Canada, North and South America, Asia, Australia, Europe, and the Middle East.

Dale oversaw the design and development of several oceanfront tourist destinations in Mexico, working with private investors and the Tourism Department of the Federal Government of Mexico. Dale has also played an active role as a Financial Officer with Gulf International Minerals in the raising of capital for the early stages of hard rock gold mining exploration in Tajikistan. In the early 90s, Dale was Principal, President, and CEO of a new lighting technology company. Working with the National Research Council of Canada and the University of Victoria, the company eventually manufactured and shipped the product to the United States, Brazil, Japan, China, Taiwan, Indonesia, Australia, and South Korea.

Frederick Jung – Independent Director

Mr. Jung is a seasoned finance executive with extensive experience in delivering financial leadership for small to large publicly-listed companies across multiple industries. With a strong understanding of financial and operational strategies, Mr. Jung has fostered and delivered innovative business solutions while continuing to identify new opportunities. In his prior roles, he directed and oversaw all aspects of the international finance and accounting function while specializing in global matters related to strategic planning and analysis, taxation, corporate finance, investor relations, and treasury. He now dedicates his knowledge and experience to lead the financial operations and integrity at Solar Flow-Through Funds. His drive, dedication, and business acumen have made him an excellent fit with the management team. Mr. Jung received a Bachelor of Commerce with Honours from the University of British Columbia and holds both the Chartered Professional Accountant and Chartered Financial Analyst designations.

Minaz Lalani – Independent Director

Minaz Lalani holds a Bachelor of Science (First Class Honours) degree in Actuarial Science from the City University in London, England. Minaz was a Fellow of the Canadian Institute of Actuaries (FCIA) and Fellow of the Society of Actuaries (FSA) from 1985 to 2021, and a Chartered Enterprise Risk Analyst (CERA) from 2008 to 2021. Minaz has served as an audit committee member of Cematrix Corporation, a TSXV-listed cellular concrete company since March 2010 and was appointed Chairman of the board of directors in May 2020. He has been the Chairman and Chief Executive Officer of Besurance Corporation, an insurance technology company whose principal business is developing innovative technology platform integrating self-insurance and community insurability, since July 2013, and the Managing Principal of Lalani Consulting Group Inc., an actuarial and risk consulting company, since March 2010. Minaz has also acted as Chairman of Fenchurch General Insurance Company, a Canadian specialty property and casualty insurer, since April 1, 2019. Minaz was also a board member for several private companies, including Kudos Inc., Alberta Motor Association, AMA Insurance, and Orion Travel Insurance. Minaz has volunteered in key positions with the Canadian Institute of Actuaries (CIA) and the Society of Actuaries (SOA) and was awarded the gold medal for his volunteer services with the CIA.

Karim Lalani – Independent Director

Mr. Lalani is an international human rights advocate and an author who holds a Bachelor of Laws (LL.B) from the University of Edinburgh, Scotland and a Bachelors of Arts (B.A. (Hons)) in Anthropology from McMaster University, Canada. Karim currently serves as the Managing Director of Besurance Corporation and has held such role since August 2013.

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 Eureka or Empire in connection with the closing of the Transaction, other than potentially with respect of the Private Placement.

Filing Statement

In connection with the Transaction and pursuant to Exchange requirements, Eureka 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, Eureka, Empire and the Resulting Issuer.

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 the United States in which such offer, sale, or solicitation would be unlawful.

ABOUT EUREKA

Eureka 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, Eureka 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 U.S. SECURITIES ACT OF 1933 (THE "1933 ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO A U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. The Exchange has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the content of this press release.

The information contained or referred to in this press release relating to Empire has been furnished by Empire. Although Eureka has no knowledge that would indicate that any statement contained herein concerning Empire is untrue or incomplete, neither Eureka nor any of its respective directors or officers assumes any responsibility for the accuracy or completeness of such information.

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 Eureka and Empire reflects Empire's or Eureka's, as the case may be, current beliefs and is based on information currently available to Eureka and Empire, respectively, and on assumptions Eureka and Empire, 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 Empire's assumptions regarding its business objectives.

Forward-Looking Information Cautionary Statement

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

SOURCE Eureka Capital Corp.

View original content: http://www.newswire.ca/en/releases/archive/August2024/23/c2924.html

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