AAJ Capital 2 Corp. Enters into Definitive Agreements with TUT Fitness Group for a Qualifying Transaction & Completes $3 Million Subscription Receipt Financing

VANCOUVER, BC, May 13, 2021 /PRNewswire/ - AAJ Capital 2 Corp. (TSXV: AAJC.P) ("AAJ2" or the "Company"), a capital pool company is pleased to announce that it has entered into definitive transaction agreements (the "Definitive Agreements") with TUT Fitness Group Limited ("TUT") and 1195143 B.C. Ltd. ("119BC" and together with TUT, the "TUT Fitness Group") pursuant to which AAJ2 will acquire all of the issued and outstanding securities of the TUT Fitness Group (the "Transaction"), and has closed its $3,000,000 subscription receipt financing ("Subscription Receipt Financing"), each as more particularly described below. The Transaction and the Subscription Receipt Financing were initially announced in AAJ2's news release dated December 7, 2020, indicating AAJ2 and TUT had entered into a letter of intent with respect to the Transaction.

The Transaction is subject to a number of terms and conditions as set forth in the Definitive Agreements, including (among other things) the approval of the TSX Venture Exchange (the "Exchange" or the "TSXV"). Upon completion of the Transaction, TUT and 119BC will become wholly-owned subsidiaries of the Company and AAJ2 will change its name to "TUT Fitness Group Ltd.", or such other name as the parties may reasonably agree upon and which is acceptable to the Exchange. If completed, the Transaction will constitute the "Qualifying Transaction" of AAJ2, as such term is defined in Policy 2.4 of the Exchange, and the combined entity (the "Resulting Issuer") will continue the business of the TUT Fitness Group as a Tier 2 "technology" issuer on the Exchange. In connection with the transaction, AAJ2 has applied to the exchange to reserve GYM as the new ticker symbol.

"We are extremely pleased with the completion of our capital raising objectives and the signing of the definitive agreements. The importance of health and wellness in our lives cannot be overstated and TUT Fitness is strategically positioned to become a market leader in providing affordable fitness solutions through its unique patents, manufacturing relationships, and experienced management." said Praveen Varshney, director of AAJ2.

Robert Smith, President of TUT commented: "This is an important time for our business,  and we are very appreciative of the investor support we have received to date.  We are creating a whole new category of fitness with our patented stackable resistance band TUT Plates^TM that can replace bulky gym equipment and traditional metal weights. By offering more value, higher performance and convenience in one solution, with over 250 exercises, consumers will not have to feel forced to pay more for multiple pieces of equipment that may not meet all their needs."

The Transaction

AAJ2 has entered into a three-cornered amalgamation agreement dated April 30, 2021 (the "Amalgamation Agreement") with TUT and 1302612 B.C. Ltd. ("130BC"), a wholly-owned subsidiary of AAJ2. Pursuant to the Amalgamation Agreement, TUT and 130BC will amalgamate and AAJ2 will acquire all of the issued and outstanding securities of TUT from TUT's securityholders. Each holder of TUT common shares (each, a "TUT Share") will receive one common share of the Resulting Issuer ("Resulting Issuer Share") for each TUT Share held. All outstanding convertible securities of TUT, including TUT common share purchase warrants and TUT stock options will be exchanged or replaced with convertible securities of the Resulting Issuer on a one-to-one basis and on the same economic terms and conditions as previously issued.

The Company has also entered into a share exchange agreement with 119BC and the shareholders of 119BC dated April 30, 2021 (the "Share Exchange Agreement"), pursuant to which AAJ2 will acquire all of the issued and outstanding securities of 119BC from 119BC's shareholders. Each Class A share of 119BC will be exchanged for one Resulting Issuer Share.

The Transaction is comprised of the transactions contemplated under both the Amalgamation Agreement and the Share Exchange Agreement and is conditional upon, among other things:

1. the representations and warranties of each of AAJ2 and TUT, as set out in the Definitive
   Agreement, being true and correct in all material respects at the closing of the
   Transaction;
2. the absence of any material adverse change in the business of each of the parties;
3. the parties receiving all requisite regulatory approval, including the approval of the
   Exchange, and any third party approvals and authorizations;
4. TUT obtaining the requisite shareholder approval for the Transaction;
5. the parties obtaining requisite board approvals for the Transaction;
6. completion by AAJ2 of a consolidation of the AAJ2 securities on a 2 for 1 basis (the
   "Consolidation"); and
7. completion of the Subscription Receipt Financing.

Pre-Closing Capitalization of AAJ2

As of the date hereof, AAJ2's authorized share capital consists of an unlimited number of common shares ("AAJ2 Common Shares") and an unlimited number of preferred shares in the capital of AAJ2, issuable in series, of which 5,150,000 AAJ2 Common Shares and no AAJ2 preferred shares are issued and outstanding. In addition, AAJ2 has 515,000 stock options and 250,000 broker warrants issued and outstanding. Prior to the closing of the Transaction, AAJ2 will complete the Consolidation. AAJ2 has also reserved for issuance pursuant to the Subscription Receipt Financing, 6,144,810 Resulting Issuer Shares and 6,144,810 common share purchase warrants of the Resulting Issuer, and agreed to issue 170,800 Finder's Warrants (as defined below under Closing of Subscription Receipt Financing) upon completion of the Transaction and release of the escrowed proceeds of the Subscription Receipt Financing.

Pre-Closing Capitalization of TUT and 119BC

As of the date hereof, 18,870,651 TUT Shares, 3,000,000 119BC Shares, 2,755,000 stock options of TUT ("TUT Options"), 2,186,500 warrants to purchase TUT shares and 2,000,000 performance warrants of TUT subject to certain milestone requirements are issued and outstanding. No other rights to acquire securities of TUT or 119BC exist.

Capitalization of the Resulting Issuer

Following the completion of the Consolidation and the Transaction and conversion of the Subscription Receipts, the Resulting Issuer will have 30,590,461 Resulting Issuer Shares issued and outstanding as well as 3,012,500 options outstanding to acquire Resulting Issuer Shares and 10,627,110 common share purchase warrants outstanding.

The Transaction will constitute an arm's-length transaction, and as such, the business combination will not require approval by the shareholders of AAJ2. AAJ2 is preparing and will submit a filing statement in connection with the Transaction in due course.

Closing of Subscription Receipt Financing

On May 11, 2021, the Company closed a non-brokered private placement of 6,144,810 subscription receipts (the "Subscription Receipts") at a price of $0.50 per Subscription Receipt for gross proceeds of $3,072,405 (the "Subscription Receipt Financing"). The proceeds of the Subscription Receipt Financing will be held in escrow pending the satisfaction of certain release conditions ("Escrow Release") set out in a subscription receipt agreement (the "Subscription Receipt Agreement") between AAJ2, TUT and Computershare Trust Company of Canada. Conditions of Escrow Release include, among other things, all conditions precedent to the Transaction set out in the Definitive Agreements being satisfied or waived and conditional approval of the Exchange of the Transaction as the Company's Qualifying Transaction.

Each Subscription Receipt will, upon Escrow Release, with no additional consideration payable or action required by the Subscription Receipt holders, automatically convert into one Resulting Issuer Share and one Resulting Issuer common share purchase warrant (each a "Financing Warrant"), with each Financing Warrant exercisable into a Resulting Issuer Share at an exercise price of $1.00 for a period of twenty-four months from Escrow Release.

Finder's Fees

In connection with the Subscription Receipt Financing, the Company has agreed to pay finder's fees upon Escrow Release. The finder's fees consist of an aggregate of $85,400 in cash payments and issuance of an aggregate of 170,800 finder's warrants (the "Finder's Warrants") to eligible finders. Each Finder's Warrant entitles the holder thereof to acquire one Resulting Issuer Share at an exercise price of $0.50 for a period of twelve months from Escrow Release.

In accordance with applicable securities laws, the Subscription Receipts, the Finder's Warrants and the Resulting Issuer Shares issuable upon conversion of the Subscription Receipts and exercise of the Financing Warrants and the Finder's Warrants, are subject to a hold period until the date that is four months and a day after May 11, 2021. If the escrow release conditions are not completed on or before September 30, 2021, the proceeds of the Financing will be returned to the subscribers.

TUT Financings

In addition to the Company's $3,072,405 Subscription Receipt Financing, TUT has undertaken various rounds of financing (the "TUT Financings"), raising an aggregate of $1,674,980 since December 2020, including $200,175 raised through FrontFundr, a leading online private markets investing platform and an exempt market dealer within Canada. The Subscription Receipt Financing and the TUT Financings have raised total gross proceeds of $4,747,385 raised prior to the Qualifying Transaction.

It is expected that the proceeds of the Subscription Receipt Financing and the TUT Financings will be used for the TUT Fitness Group's ongoing business and toward the remaining costs of completing the Qualifying Transaction.

TUT and its Business

TUT Fitness Group is a private British Columbia based fitness company that has designed, developed and manufactured one of the world's smallest and most affordable high performance gyms. Incorporated in 2018, TUT is an emerging player in the connected Home Gym and Fit Tech hardware space, targeting the US$9.4B¹ Global Home Exercise Equipment Market with a novel, portable way to incorporate Time Under Tension (the amount of time a muscle is under strain during a repetition). The TUT system utilizes industry-first, patented stackable resistance band based TUT Plates^TM in 2, 5, 10, 20, & 40 lb. increments rather than metal weights, a breakthrough in strength and cardio training, that targets every muscle group, and generates a higher caloric burn, without the added pressure to joints and tendons. At a combined 32 lbs., TUT's flagship products, the TUT Trainer^TM and Rower are more convenient and affordable than other leading home gym and cardio equipment products. The TUT Training^TM app targets the Online Fitness Market, expected to be US$30B² by 2026, by providing consumers and trainers with a digital connection to on-demand training videos and fitness related training content. The App seamlessly integrates with Apple Watch/Healthkit, Fitbit, Withings, My Fitness Pal.

See www.TUTFitnessGroup.com or our social channels:Instagram, Facebook, Twitter, LinkedIn, YouTube (TUT Highlights) for more information.

The following summary financial information is derived from the unaudited financial statements of TUT for the 6 months period ended March 31, 2021, the year ended September 30, 2020 and the period from October 3, 2018 to September 30, 2019:

Proposed Management of the Resulting Issuer

Subject to Exchange approval, on completion of the Transaction, it is currently anticipated that the management team of the Resulting Issuer will be comprised of Aaron Fader (CEO), Robert Smith (President), Praveen Varshney (CFO), Satnam Brar (Corporate Secretary) and Mitch Malandrino (VP, Corporate Development). The board of directors of the Resulting Issuer will consist of a minimum of four (4) directors. Information with respect to certain of the proposed directors and officers of the Resulting Issuer is set forth below:

Aaron Fader, Founder, CEO & Director

Mr. Fader is the founder, chief executive officer and a director of TUT. As founder and CEO of both private and public companies, Mr. Fader is a serial entrepreneur with over 30 years of experience in new business development, new product development and international distribution. Over the years, Mr. Fader's companies have produced award-winning, market-changing innovations that are distributed worldwide.

Robert Smith, President & Director

Mr. Smith is currently the president of TUT and has been an investor and adviser to technology-related and growth-related businesses for the past 25 years. He brings a unique perspective in the areas of financing, business development and brand positioning, and has been a director of both private and public companies. Currently, he is a founding partner in Sociable Ventures, a Vancouver-based boutique venture capital firm, and an adviser to NEXE Innovations Inc.

Praveen Varshney, CFO & Director

Mr. Varshney is currently a director of AAJ2. Mr. Varshney brings over 30 years of experience in venture capital, strategy, merchant banking, and, since 1991, in mergers and acquisitions as a director for Varshney Capital Corp. He has extensive experience serving as a director for public and private companies such as MOGO (Toronto Stock Exchange) and Carmanah Technologies, which became Canada's largest solar company. He is also a co-founder, investor or adviser to a number of other social impact businesses, like Little Kitchen Academy.

Mervyn Pinto, Independent Director

Mr. Pinto is currently the president and CEO of Minaean SP Construction Corp. (TSXV) and Mojave Brands Inc. (CSE). He has been a director and executive officer of various publicly traded companies including Kepler Acquisition Corp., which later completed its qualifying transaction with ESE Entertainment Inc.

Satnam Singh Brar, Corporate Secretary

Mr. Brar is currently the corporate secretary of AAJ2. He is an associate at Varshney Capital Corp. and Humanitas Capital, a social-impact venture capital firm that looks to tackle global systematic issues through the application of Smart Planet technologies. Mr. Brar has a bachelor of commerce degree with a specialization in real estate (honours) from the University of British Columbia. He also currently serves as a director of Mojave Brands Inc. (CSE).

Mitchell Malandrino, VP, Corporate Development

Mr. Malandrino is currently the vice-president of corporate development of AAJ2. He heads up the enterprise team as the account manager for Trainerize, one of the world's leading fitness software companies, known as a digital engagement fitness app for independent trainers and large enterprise customers. Mr. Malandrino is also the former general manager of Innovative Fitness, one of Canada's largest networks of personal training studios.

See AAJ2's news releases dated December 7, 2020, January 7, 2021 and January 20, 2021 for additional information about the Transaction, TUT and its business. AAJ2 and TUT will issue additional news releases related to the Transaction, additional independent directors of the Resulting Issuer and other material information as it becomes available. There can be no assurance that the Transaction will be completed as proposed or at all.

Trading in the shares of AAJ2 is presently halted. The shares of AAJ2 will remain halted until the Transaction is completed and approved by the Exchange.

Contact Information:

Rob Smith
President & Director
TUT Fitness Group
Email: [email protected]

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein in the United States. The securities described herein have not been registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities law and may not be offered or sold in the "United States", as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration requirements is available.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, pursuant to the requirements of the Exchange, shareholder approval. 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 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.

All information in this news release concerning TUT Fitness Group has been provided for inclusion herein by TUT. Although AAJ2 has no knowledge that would indicate that any information contained herein concerning TUT Fitness Group is untrue or incomplete, AAJ2 assumes no responsibility for the accuracy or completeness of any such information.

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

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

Forward-Looking Statements

Certain statements in this release are forward-looking statements or information, which include completion of the proposed Transaction and related financing, development of technologies, future plans, regulatory approvals and other matters. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations or intentions regarding the future. Such information can generally be identified by the use of forwarding-looking wording such as "may", "expect", "estimate", "anticipate", "intend", "believe" and "continue" or the negative thereof or similar variations. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, including but not limited to, business, economic and capital market conditions, the ability to manage operating expenses, security threats, and dependence on key personnel. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the demand for its products, anticipated costs, and the ability to achieve goals. Factors that could cause the actual results to differ materially from those in forward-looking statements include, failure to obtain regulatory approval, the continued availability of capital and financing, equipment failures, litigation, increase in operating costs, the impact of COVID-19 or other viruses and diseases on the Company's ability to operate, failure of counterparties to perform their contractual obligations, government regulations, loss of key employees and consultants, and general economic, market or business conditions. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The reader is cautioned not to place undue reliance on any forward-looking information.

The forward-looking statements contained in this news release are made as of the date of this news release. Except as required by law, AAJ2 disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, AAJ2 undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters discussed above.

SOURCE TUT Fitness Group Limited

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED