ALUULA COMPOSITES INC. ANNOUNCES COMPLETION OF QUALIFYING TRANSACTION AND $3 MILLION FINANCING

Apr 17, 2023 | Financial News

Victoria, British Columbia – (Newsfile Corp – April 17, 2023) – Aluula Composites Inc. (formerly Bastion Square Partners Inc.) (TSX-V: AUUA) (the “Company”), is pleased to announce that, further to its news release dated April 13, 2023, it has completed the acquisition (the “Transaction”) of all of the issued and outstanding securities of Aluula Composites Inc. (“Old Aluula”). The Transaction constitutes the Company’s “Qualifying Transaction”, within the meaning of Policy 2.4 – Capital Pool Companies of the TSX Venture Exchange (the “Exchange”).

Additional information regarding the Transaction can be found in the Filing Statement of the Company dated April 12, 2023, available at www.sedar.com.

The Transaction was completed by way of a three-cornered amalgamation (the “Amalgamation”) pursuant to which Old Aluula amalgamated with 1391093 BC Ltd. (“BSP Subco”), an entity incorporated for the purposes of the Amalgamation, pursuant to the provisions of the Business Corporations Act (British Columbia). All of the common shares of Old Aluula (each, an “Old Aluula Share”) outstanding immediately prior to the Amalgamation were cancelled and holders thereof received common shares of the Company (each, a “Resulting Issuer Share”) on the basis of 26.05 Resulting Issuer Shares for each one (1) Old Aluula Share held by the holder. On closing the amalgamated company became the wholly owned subsidiary of the Company.

In connection with the completion of the Transaction, the Resulting Issuer Shares will be listed on the Exchange under the stock symbol “AUUA”. It is anticipated that trading of the Resulting Issuer Shares under the new stock symbol will commence at the market open on April 20, 2023.

As a result of the Transaction, the directors and officers of the Company are now as follows:

Richard Myerscough Director and Chief Executive Officer
Peter Berrang Director
Peter Gustavson Director
Hannes Blum Director
Briony Bayer Director
Jeremy South Director
Peter Dorrius CFO and Corporate Secretary
John Zimmerman Chief Operations Officer and President

Concurrent Financings

Concurrently with closing of the Transaction, the Company completed a $3 million financing through the issuance of 6,776,670 Resulting Issuer Shares and the conversion of 18,223,330 BSP Subco subscription receipts (the “Subscription Receipts”) into Resulting Issuer Shares. The 6,776,670 Resulting Issuer Shares are subject to resale restrictions in accordance with applicable securities laws, pursuant to which they may not be sold or transferred until August 15, 2023. Each Subscription Receipt was converted into common shares of BSP Subco and then immediately exchanged for 18,223,330 free trading Resulting Issuer Shares.

The Company paid a finder’s fee of $33,180 to Haywood Securities Inc. in connection with the financings.

A company controlled by a director of the Company participated in the BSP SubCo financing in the amount of $246,299.76. This participation in the BSP SubCo financing constitutes a “related party transaction” as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Bastion Square is relying on the exemptions from the formal valuation and minority shareholder approval requirements under section 5.5(b) (as the issuer is not listed on specified markets) and section 5.7(1)(b) as the fair market value of the Subscription Receipts issued to the related party and the consideration paid by the related party under the financing does not exceed $2.5 million. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the financing, as the participation by the related party in the financing was not settled at that time.

Stock Options and Advisory Agreements

On closing of the Transaction, the Company granted an aggregate of 5,653,713 options to purchase Resulting Issuer Shares to certain directors and officers of the Resulting Issuer, in accordance with the terms of the stock option plan. The stock options were granted at an exercise price of $0.12 and are exercisable for a five-year term, expiring on April 14, 2028. The stock options will vest over four years as follows: the first 25% tranche will cliff vest one year after the date of grant and then 2.08% monthly thereafter for the remaining three years.

The Company is also pleased to announce that Mark Longo, Tim McElvaine and Laurie Clarke have agreed to serve as advisors to the Company providing general advice regarding the capital markets and the business of the Company. The Company has granted 651,442 stock options at an exercise price of $0.12 and a term of five years to Ms. Clarke in consideration for her services, and Mr. Longo and Mr. McElvaine will retain their existing options in consideration for remaining on as advisors to the Company.

Richard Myerscough, CEO of the Company, noted, “We are extremely excited to complete the transaction with Bastion Square Partners and to begin our journey as a public company. We are also pleased to see the strong interest in our concurrent financings which will provide working capital to support our exciting growth plans. The Company is fielding strong inbound interest across all our key markets and geographies as global leaders look to ALUULA and its transformational technology to support their essential product improvements. Our unique ability to provide fully recyclable material is also becoming a high demand product attribute. While the wind sport market remains our major segment, we are seeing strong customer and partner interest in ALUULA across many market segments as the ingredient brand of choice in high performance soft composites.”

Peter Gustavson, Director of the Company and former CEO of Bastion Square Partners Inc., commented, “We are pleased to conclude our qualifying transaction and now begin trading as ALUULA. With solid investor support and a strong pipeline of new partners we look forward to using the public markets platform to support investment in this highly disruptive and transformational technology.”

Early Warning

Immediately prior to the Transaction, Laurie Clarke of Victoria, British Columbia, Canada, did not hold any Resulting Issuer Shares. Pursuant to the Transaction, Ms. Clarke acquired 22,978,365 Resulting Issuer Shares, which represents approximately 10.21% of the issued and outstanding Resulting Issuer Shares on an undiluted basis, resulting in an approximate 10.21% change in Ms. Clarke’s ownership or control over Resulting Issuer Shares. In addition, Ms. Clarke owns or controls 651,442 options to purchase Resulting Issuer Shares. If Ms. Clarke exercises all of her options, she would then own or have control over, directly or indirectly, 23,629,807 Resulting Issuer Shares, representing approximately 10.47% of the issued and outstanding Resulting Issuer Shares on a partially diluted basis, assuming that no further Resulting Issuer Shares have been issued. Ms. Clarke acquired the securities for investment purposes. Ms. Clarke may, depending on market and other conditions, increase or decrease her beneficial ownership of the Resulting Issuer’s securities, whether in the open market, by privately negotiated agreements or otherwise, subject to a number of factors, including general market conditions and other available investment and business opportunities.

Immediately prior to the Transaction, Richard Myerscough of Victoria, British Columbia, Canada, did not hold any Resulting Issuer Shares. Pursuant to the Transaction, Mr. Myerscough acquired 74,899,506 shares, through Winston Ventures Inc., a company beneficially owned and controlled by Mr. Myerscough, which represents approximately 33.29% of the issued and outstanding Resulting Issuer Shares on an undiluted basis, resulting in an approximate 33.29% change in Mr. Myerscough’s ownership or control over Resulting Issuer Shares. In addition, it Mr. Myerscough owns or controls 1,897,317 options to purchase common Resulting Issuer Shares. If Mr. Myerscough exercises all of his options, he would then own or have control over, directly or indirectly, 76,796,823 Resulting Issuer Shares, representing approximately 33.85% of the issued and outstanding Resulting Issuer Shares on a partially diluted basis, assuming that no further Resulting Issuer Shares have been issued. Mr. Myerscough acquired the securities for investment purposes. Mr. Myerscough may, depending on market and other conditions, increase or decrease his beneficial ownership of the Resulting Issuer’s securities, whether in the open market, by privately negotiated agreements or otherwise, subject to a number of factors, including general market conditions and other available investment and business opportunities.

Immediately prior to the Transaction, Peter Berrang of Victoria, British Columbia, Canada, did not hold any Resulting Issuer Shares. Pursuant to the Transaction, Mr. Berrang acquired 48,203,516 Resulting Issuer Shares, which will represent approximately 21.42% of the issued and outstanding Resulting Issuer Shares on an undiluted basis, resulting in an approximate 21.42% change in Mr. Berrang’s ownership or control over Resulting Issuer Shares. In addition, Mr. Berrang owns or controls 1,480,896 options to purchase Resulting Issuer Shares. If Mr. Berrang exercises all of his options, he would then own or have control over, directly or indirectly, 49,684,412 Resulting Issuer Shares, representing approximately 21.94% of the issued and outstanding Resulting Issuer Shares on a partially diluted basis, assuming that no further Resulting Issuer Shares have been issued. Mr. Berrang acquired the securities for investment purposes. Mr. Berrang may, depending on market and other conditions, increase or decrease his beneficial ownership of the Resulting Issuer’s securities, whether in the open market, by privately negotiated agreements or otherwise, subject to a number of factors, including general market conditions and other available investment and business opportunities.

The disclosure above with respect to Resulting Issuer Shares contained in this news release is made pursuant to National Instrument 62-104 Take-Over Bids and Issuer Bids and reports respecting the above acquisitions will be filed with the applicable securities commissions using the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) and will be available for viewing at www.sedar.com.

About Aluula Composites Inc.

ALUULA is a Canadian-based manufacturer of innovative soft composite materials that deliver extremely durable, light and strong composites to a wide range of applications across a broad range of industries. ALUULA has customers in wind sports, sailing, outdoor packs and tents, and aerospace, with plans to expand to other market sectors. For more information regarding ALUULA, please see the Filing Statement of the Company dated April 12, 2023, available at www.sedar.com.

For further information about ALUULA see www.ALUULA.com

For further information on Ocean Rodeo see www.oceanrodeo.ca

ALUULA is proud to have been awarded BEST PRODUCT of the soft equipment category at 2021/22 ISPO for our ALUULA Gold™ composite.

For further information about the Company, please contact:

Mr. Peter Dorrius, CFO and Corporate Secretary of the Company
Email: peter.dorrius@aluula.com
Tel: 1-888-724-2470

TSX Venture Exchange

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.

Forward-looking Statements 

The information in this news release includes certain information and statements about management’s view of future events, expectations, plans and prospects that constitute forward looking statements. These statements are based upon assumptions that are subject to significant risks and uncertainties. Forward looking statements in this news release include, but are not limited to, the expected trading date of the Company’s common shares on the TSXV and post-closing matters. Because of these risks and uncertainties and as a result of a variety of factors, including the timing and receipt of all applicable regulatory, corporate and third party approvals, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward looking statements. Although the Company believes that the expectations reflected in forward looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statement will prove to be correct. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking statements or otherwise. Additional disclosure regarding other assumptions and risks are included under the heading “Risk Factors” contained in the Filing Statement of the Company dated April 12, 2023, and available at www.sedar.com.

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