Auston Capital Corp. — Capital/Financing Update 2020

Oct 27, 2020

AUSTON CAPITAL CORP.

AUSTON PROVIDES UPDATE ON PROPOSED QUALIFYING TRANSACTION WITH DIAGNOSTIC LAB CORPORATION, INC.

October 26, 2020 TSX Venture Exchange Trading Symbol: ASTN.P

Auston Capital Corp. (“ Auston ” or the “ Company ”), a capital pool company pursuant to Policy 2.4 of the TSX Venture Exchange (the “ TSX-V ”), announces that further to its press release dated June 18, 2020, the Company and Diagnostic Lab Corporation, Inc. (“ DLC ”) continue to work to progress the transactions contemplated by the merger agreement dated June 10, 2020 (the “ Merger Agreement ”). The proposed transaction, pursuant to the Merger Agreement (the “ Transaction ”), will be Auston’s qualifying transaction in accordance with the policies of the TSX-V. Pursuant to the Transaction, Auston will complete a consolidation of its share capital on a two old for one new basis (the “ Consolidation ”) and the outstanding common shares of DLC (the “ DLC Shares ”) will be exchanged for 32,000,000 post-Consolidation common shares of Auston as the resulting issuer (the “ Resulting Issuer ”), to be distributed pro rata to the holders of the DLC Shares

Pursuant to the terms of the Merger Agreement, completion of the Transaction remains subject to a number of conditions, including but not limited to, closing conditions customary to transactions of the nature of the Transaction, including the completion of the Consolidation, the completion a concurrent private placement for gross proceeds of up to US$2,500,000 (the “ Financing ”), receipt of approvals of all regulatory bodies having jurisdiction in connection with the Transaction and approval of the TSX-V including the satisfaction of its initial listing requirements. There can be no assurance that the Transaction will be completed as proposed or at all.

DLC was able to complete the interim financing (the “ Interim Financing ”) to raise up to US$250,000, as previously announced on April 20, 2020 by obtaining a short-term debt facility with a value of US$175,000 and through a small equity financing for US$75,000.

The short term unsecured bridge facility of US$175,000 bears annual interest of 12%, no amortization and repayable after 5-months or at time of the completion of the Transaction. There will be 70,000 bonus shares of DLC issued at a price of $0.50. US$75,000 was raised through the sale of 150,000 DLC shares at US$0.50.

In order to satisfy the Financing condition for the Transaction, DLC will complete a non-brokered private placement to raise of US$1,540,000 through the sale of 8,800,000 Resulting Issuer Shares at a price of US$0.175 per Resulting Issuer Share. In addition, DLC will secure long-term financing for a further US$1,722,000, which will comprise two secured small business loans issued to DLC. The first, being a term loan issued to DLC, is with an available balance of US$1,172,000 bearing interest at a rate of prime plus 2% and amortized over 17.5 years and the second, a credit line with an available balance of US$550,000 also bearing interest at a rate of prime plus 2% and amortized over a 10 year period.

A further financing has been provided by White Water Associates Inc. in terms of a vendor note for $450,000 that carries 6 months term at an interest rate of 5% and is subordinated to the above small business loans.

Management Team and Board of Directors

As previously disclosed in the Company’s April 20, 2020 news release, upon completion of the Proposed Transaction, it is anticipated that all of the directors and of the Company will resign. Details regarding the anticipated directors and officers of the Resulting Issuer are set forth below. Additional directors or officers may be added to the board of directors or management of the Resulting Issuer in the normal course and once identified, information with respect to the proposed additional directors or officers will be included in a subsequent news release.

Alan Hirsch – President, CEO & Director

Mr. Hirsch has had an extensive 30-year career as an innovative entrepreneur as well as a Commercial and Investment Banker. He has created, built, and exited investments in sectors as diverse as financial services, retail food, and theme entertainment. He pioneered the creation of new asset classes in music and film royalties, was a direct lender funding $650M in transactions, advised on numerous middle market M&A transactions and provided seed and start up financing for many development stage companies.

David McAdam – CFO and Chief Operating Officer

David is a highly effective, results oriented, executive, with over 30 years of finance and operations experience in large and small capitalization companies, David has extensive expertise in fund raising (equity and debt), financial/operational integration/optimization and measuring, financial planning and analysis (including annual budgets and rolling forecasts), mergers and acquisitions (buy and sell side), due diligence, investor relations (TSX.V and JSE), systems strategy, implementation oversight and management, risk management and regulatory compliance. David has a Bachelor of Commerce from the University of British Columbia and a Securities Institute of Canada Certificate.

Gary Herman – Director and Chief Investment Officer

Mr. Herman has many years of investment experience. Since 2005, Mr. Herman has managed Strategic Turnaround Equity Partners, LP (Cayman) and its affiliates. From January 2011 to August 2013, he was a managing member of Abacoa Capital Management, LLC, which managed, Abacoa Capital Master Fund, Ltd. focused on a Global-Macro investment strategy. Since 2005, Mr. Herman has been affiliated with Arcadia Securities LLC, a FINRA-registered broker-dealer in New York. From 1997 to 2002, he was an investment banker with Burnham Securities, Inc. From 1993 to 1997, he was a managing partner of Kingshill Group, Inc., a merchant banking and financial firm with offices in New York and Tokyo. He has served on the boards of public and private companies. Mr. Herman has a B.S. from the University at Albany with a major in Political Science and minors in Business and Music.

David Franklin – Director.

David Franklin is the CEO of Amera Securities LLC, a FINRA registered broker dealer, and responsible for business strategy and growth of the overall firm. David has a diverse business background including more than 15 years’ experience in the financial services industry. Previous to Amera Securities he spent the last six years at Sprott Asset Management in Toronto. David is an active member of the Board of Directors for several public and private companies in the medical,

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mining, and financial sectors. David has an Honours Degree in Economics from Wilfrid Laurier University and holds a Chartered Investment Manager (CIM) designation in Canada.

Stephen Brenner – Director

Dr. Brenner is an Orthopedic Surgeon and specializes in problem trauma and fracture. He is one of the pioneers in arthroscopic surgery and worked with several manufacturers in developing new medical equipment. In his sports medicine practice, he served many professional teams and clubs. He has had an extensive academic and research career and has managed large multi-state orthopedic and physical therapy practices. He has been a wellness physician for over 20 years.

Information Concerning DLC

DLC is a US-based Delaware private company that provides analytical testing services for the food safety, sanitation and agriculture industries and for environmental compliance. DLC has positioned itself as a consolidator of testing service companies within the US and Canada and has been in operation for six years establishing the platform from which it plans to engage in consolidation activities in four states in the USA under the management of current Chairman and CEO, Alan Hirsch.

DLC is seeking a listing in Canada, as a means of boosting its growth and market share of the overall North American food safety testing market which in aggregate is projected to be USD$6.9 billion by 2023 through a carefully constructed merger and acquisition plan that targets additional testing laboratories as well as environmental remediation and associated technology companies. DLC is not a reporting issuer and its securities are not listed or posted for trading on any stock exchange. There are three control persons, all resident in New York state, in DLC being Alan Hirsch who holds 2,000,000 DLC shares representing approximately 27% of the outstanding DLC shares, Stephen Brenner who holds 1,600,000 DLC shares representing approximately 22% of the outstanding DLC Shares and Bida LLC (a private entity controlled by Erez Lapsker) which holds 999,978 DLC shares representing approximately 13.53% of the outstanding shares.

Prior to the completion of the Transaction, DLC will complete the acquisition of the business of White Water Associates, Inc. which will form its initial primary business. White Water Associates, Inc. is an analytical laboratory and environmental consulting firm with over thirty-five years of experience. With offices and laboratories located in Michigan’s Upper Peninsula, White Water Associates Inc, has a diverse set of clients throughout the United States. White Water Associates Inc.’s mission with its seasoned team of scientists is to provide top-quality, competitively priced laboratory and consulting services in the fields of analytical chemistry, environmental analysis, and ecology. As a seasoned team of scientists, White Water Associates, Inc. approaches environmental problem-solving systematically and objectively. White Water has dedicated itself to helping clients in the public and private sectors meet their environmental stewardship goals and responsibilities.

White Water Associates, Inc. current testing areas include testing associated with industrial wastes, groundwater monitoring wells, and underground storage tank removal. It also analyzes water and soil for the presence of metals, nutrients and organics. Analysis of the testing samples is performed in White Water’s laboratory according to federal and state protocol for sample custody, holding time, analysis, review and reporting, all in compliance with federal and state performance evaluation and certification programs.

White Water Associates, Inc., conducts field sampling services which currently include the collection of ground, surface and storm water and soil samples under strict quality assurance and

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quality control conditions, and its lake and stream studies and environmental assessments benefit from the technical support of White Water Associates’s laboratory.

In addition to testing and analysis, White Water Associates Inc. also currently provides environmental consulting services in the areas of ecological surveys, resource management plans, technical services, and environmental education. The business operates not only in Michigan but throughout the Upper Midwestern States, servicing an important geographical market.

Selected Financial Information about DLC

The following tables sets out selected financial information from DLC’s and the business of White Water’s unaudited financial statements as of and for the six months ended June 30, 2020. The information provided herein should be read in conjunction with such financial statements, which will be included in the filing statement being prepared in connection with the Transaction and will be filed on www.sedar.com in due course .

DLC	Interim Period Ended June 30, 2020 (US$)
Total Assets	$166,694
Total Liabilities	$529,704
Deficit	($3,742,361)
Working Capital (Deficit)	($363,010)
Revenues	$23,297
Expenses	$238,459
Net Earnings (Loss)	($218,488)

White Water	Interim Period Ended June 30, 2020 (US$)
Total Assets	$696,899
Total Liabilities	$251,848
Shareholder Equity	$445,051
Working Capital (Deficit)	$178,494
Revenues	$621,332
Expenses	$716,320
Net Earnings (Loss)	($94,988)

Trading Halt

Trading in the Auston Shares has been halted as of April 16, 2020 and will remain halted pending the satisfaction of all applicable requirements pursuant to Policy 2.4 of the TSX-V.

Forward-Looking Statements

This news release contains certain “forward looking statements” including, for example, statements relating to the completion of the Transaction and Financing and the Resulting Issuer’s anticipated share capital. Such forward-looking statements involve risks and uncertainties, both known and unknown. The results or events depicted in these forward-looking statements may differ materially from actual results or events. In addition to other factors and assumptions which may be identified herein, assumptions have been made regarding and are implicit in, among other things: receipt of

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regulatory approvals, the Company’s ability to complete the Transaction and Financing, the state of the capital markets, tax issues associated with doing business internationally, the ability of the Resulting Issuer to successfully manage the risks inherent in pursuing business opportunities in the food safety and agricultural industry, and the ability of the Resulting Issuer to obtain qualified staff, equipment and services in a timely and cost efficient manner to develop its business. Any forward-looking statement reflects information available to the Company as of the date of this news release and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking statement, whether as a result of new information, future events or results or otherwise.

On behalf of the board of directors of the Company:

Mark Fekete Chief Executive Officer, Chief Financial Officer and Corporate Secretary

Telephone: (604) 642.0115 Suite 608 - 409 Granville Street Vancouver, British Columbia V6C 1T2

All information contained in this news release relating to DLC was provided by DLC to the Company for inclusion herein. The Company has not independently verified such information and shall bear no liability for any misrepresentation contained therein.

Completion of the 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 Transaction cannot close until the required shareholder approval is 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.

The TSX-V has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this news release.

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

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