ALUULA Reports Second Quarter 2024 Financial Results

YTD Q2 2024 Sales Increased 47% Compared to YTD Q2 2023

Achieved Strong Wind Sport Penetration with Sixteen Brands on Board by Q2 2024

YTD Q2 2024 Gross Margin Increased to 43% from 31% in YTD Q2 2023

CEO Sage Berryman Provides Update on ALUULA's Future Strategy and Business Plans

Victoria, British Columbia--(Newsfile Corp. - June 24, 2024) - ALUULA Composites Inc. (TSXV: AUUA) ("ALUULA" or the "Company") today reported its financial results for the three and six-month periods ended April 30, 2024 ("Q2 2024" and "YTD Q2 2024" respectively). All currency amounts are listed in Canadian dollars.

"This quarter, we've focused on establishing a solid foundation to support our current and future business growth. To achieve this, we've made significant strides in stabilizing our business while we work on updating our strategic direction and future business plans. We have started to see the impact of these changes, and we are continually expanding our sales pipeline and product ranges to support our ambitious plans," said Sage Berryman, CEO and President of ALUULA.

During Q2 2024, ALUULA made the strategic decision to focus its assets and resources on areas with the highest growth potential. This focus has resulted in the Company discontinuing Ocean Rodeo's business operations, as previously announced in a news release dated May 6, 2024, pursuing the sale of non-core assets, restructuring the organizational chart and updating its product and patent roadmaps. The updated roadmaps highlight key areas of product development and the associated patents and trade secrets required to support ALUULA's competitive position, while divesting the products and patents that no longer align with the strategic plan.

"Reflecting on our journey from when we started in 2019, we have experienced remarkable progress. Our product range has expanded from a single material to fifty, the number of commercialized windsport brands featuring ALUULA has increased from one to sixteen, and we are experiencing ongoing growth in other verticals," said Berryman. "The decision to divest non-core assets and focus exclusively on our core composite material business formed a large part of this strategic repositioning. By discontinuing Ocean Rodeo's business operations, we can leverage ALUULA's leadership position as a preferred input material supplier for a growing number of high-performance wind sport brands, ensuring there are no perceived conflicts of interest. This move also allows us to streamline our operations as we continue to observe a steady increase for our recycle-ready and high-performing materials quarter-over-quarter."

In the first half of 2024, ALUULA achieved a 47% increase in sales compared to the same period last year. Additionally, the Company reported gross margins of 43%, consistent with the expected range of 40%-45%. At the end of April 2024, ALUULA had twelve commercialized wind sport brands within the performance outdoor channel compared to only three at the end of April 2023. Outside of performance outdoor applications, the Company announced a new research and development collaboration with Michelin Inflatable Solutions on March 18, 2024, had its materials featured by Max Space at 39th Space Symposium in Colorado, USA, and attended the bi-annual Tech Textil tradeshow in Frankfurt, Germany.

"Looking ahead to Q3 2024 and beyond, we're committed to leading with sustainability and embracing circular economy principles across our product lifecycle. ALUULA's materials are recycle-ready at the end of their useful life, minimizing the environmental impact. We're also strengthening our supply chain to enhance resilience and flexibility. Strategic partnerships continue to be key to our growth strategy, especially as we continue to expand our reach in the Performance Outdoor and Commercial Industrial sectors. At the same time, we're streamlining production processes to further improve profitability through economies of scale. Moreover, maintaining high standards of quality and operational efficiency remains at the core of what we do, driving customer satisfaction and our bottom line. With our strategic refocus plan now firmly in place, we're poised to deliver sustainable value to our shareholders in the years ahead," said Berryman.

Key YTD Q2 2024 Highlights

• Sales were $3,400,430 in YTD Q2 2024 compared to $2,313,925 in YTD Q2 2023, which represents a 47% increase. The $1,086,505 increase was primarily due to an increase in sales to the windsport vertical market as manufacturing customers increased purchase orders to support the growing list of windsport brands launching products featuring ALUULA materials.
• Cost of sales increased to $1,937,252 in YTD Q2 2024 compared to $1,604,265 for YTD Q2 2023.
• Gross margin increased to 43% in YTD Q2 2024 from 31% in YTD Q2 2023.
• Net loss and comprehensive loss was $993,332 in YTD Q2 2024 compared to $3,777,296 in YTD Q2 2023, which includes the net and comprehensive loss from both continued and discontinued operations.
• Onboarded eight new wind sport brands in YTD Q2 2024.
• Commercialized customers increased to twelve in YTD Q2 2024 compared to three in YTD 2023.

Key Q2 2024 Highlights

• Sales were $1,403,151 in Q2 2024 compared to $1,598,392 in Q2 2023. The decrease was primarily due to a spike in sales that occurred during Q2 2023 after the Company experienced a working capital shortage in Q1 2023. The working capital shortage caused delays fulfilling sales orders during Q1 2023, pushing product shipment and revenue recognition into Q2 2023.
• Cost of sales decreased to $841,600 in Q2 2024 compared to $1,037,196 for Q2 2023.
• Gross margin increased to 40% in Q2 2024 from 35% in Q2 2023.
• Net loss and comprehensive loss was $764,360 in Q2 2024 compared to $2,612,145 in Q2 2023, which includes the net and comprehensive loss from both continued and discontinued operations.
• Onboarded three new wind sport brands bringing the total to the end of Q2 2024 to sixteen. Ten of these brands are now offering products with ALUULA Gold™ ("Gold") material, while six have purchased materials but have not yet launched their products.
• Sold materials to twenty-eight customers who are in various stages of testing materials.
  • Twelve of these customers being bag and pack brands that are all expected to commercialize products by early 2025.
• Commercialized customers increased to eight in Q2 2024 compared to four in Q2 2023. ALUULA considers companies purchasing more than 1000 square meters of material as commercialized.

Extension of the Related Party Loan

On December 29, 2023, the Company entered into a $1,000,000 short-term loan agreement (the “Loan”) with 0876991 B.C. Ltd., a related party. The Loan bears interest at a rate of 12% per annum and is due on July 1, 2024. On June 21, 2024, the Company, with the support of the related parties, extended the maturity date of the Loan by another 6 months from July 1, 2024, to January 1, 2025. All other terms remain unchanged. The Loan will continue to primarily be used to fulfill the Company's requirement for working capital.

Financial Statements and Management's Discussion and Analysis

This earnings press release should be read in conjunction with ALUULA's interim financial statements for the three and six months ended April 30, 2024 and the related management's discussion & analysis, which can be found on ALUULA's website and its issuer profile on the System for Electronic Document Analysis and Retrieval Plus at www.sedarplus.ca.

About ALUULA Composites

ALUULA is a materials brand that improves the performance of outdoor gear with environmentally sustainable solutions. Proudly owned and manufactured on the Canadian west coast, ALUULA's innovation is driven by a deep understanding that equipment does not need to sacrifice performance for sustainability. ALUULA's materials are known for their unique construction capabilities and their ability to make products lighter, stronger, and more sustainable.

aluula.com | (TSXV: AUUA)

On behalf of the Board of Directors,
Sage Berryman
Chief Executive Officer
1-888-724-2470

For ALUULA investor inquiries, please contact:

1-888-724-2470, ext. 4
IR@aluula.com

For ALUULA media relations, please contact:

info@aluula.com

ALUULA's Brand Partners

The term "brand partners" does not refer to formal partnerships with our customers. The term refers to marketing relationships with our customers who use ALUULA's technology as a brand ingredient in their products.

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 on assumptions subject to significant risks and uncertainties as described in the Company's management discussion and analysis. 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 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.

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