AAJ.P AAJ CAPITAL 1 CORP

/Not for distribution to United States newswire services or for dissemination in the United States/

VANCOUVER, BC, Dec. 7, 2020 /CNW/ - AAJ Capital 2 Corp. (TSXV: AAJ.P) ("AAJ" or the "Company") is pleased to announce that it has entered into a letter of intent dated November 26, 2020 (the "LOI") with TUT Fitness Group Limited ("TUT") regarding a proposed transaction to acquire all of the issued and outstanding securities of TUT (the "Transaction"). Upon completion of the Transaction, the combined entity (the "Resulting Issuer") will continue the business of TUT as a Tier 2 "technology" issuer. The Transaction is intended to constitute the "Qualifying Transaction" of AAJ, as defined in TSX Venture Exchange's (the "Exchange") Policy 2.4 – "Capital Pool Companies". In connection with the Transaction, AAJ has applied to the Exchange to reserve "GYM" as the new ticker symbol.

The proposed Transaction is an Arm's Length Qualifying Transaction pursuant to the policies of the Exchange and, as such, the Company is not expected to need shareholder approval for the proposed Transaction.

About TUT Fitness Group Limited

TUT is a private British Columbia based company that has designed, patented, and manufactured one of the world's smallest and most affordable high-performance home gyms. Incorporated in 2018, TUT is an emerging player in the connected Home Gym and Fit Tech hardware space, targeting the US$9.4B Global Home Exercise Equipment Market¹ and Online Fitness Market expected to be US$30B by 2026². At 32 pounds, TUT's flagship products, the TUT Trainer^TM and Rower are lightweight, and more affordable than other alternatives. TUT's proprietary "Time Under Tension" technology creates more load on the muscles than conventional training and cardio machines, while placing less pressure on joints and tendons. The net result is a higher caloric burn and a better workout than comparable machines. Visit www.thetuttrainer.com for more information. 

thetuttrainer.com 
instagram.com/tuttrainer
linkedin.com/company/tutfitness

Compared to other leading consumer Fit Tech hardware and Home Gym brands, TUT's competitive advantage is clear:  

• One of the smallest footprints (less than 2 sq. ft and just 32.2 lbs.) and multifunctional high performance Home Gyms (i.e. over 200 exercises), perfect for any living space
• 40% - 350% more affordable than leading competitors at US$1,195 and doesn't require electrical power
• First mover advantage with patented "Time Under Tension" technology that targets every muscle group
• Flexible and affordably priced TUT Fitness Training App with a 5-tier pricing model including freemium, on-demand programs and subscription offerings

TUT Fitness's mission is to make exercise and wellness more accessible by offering the most affordable all-in-one strength training and cardio solutions, supported by the soon-to-be-released TUT Training App. The new app will be rolled out in 4 phases reflecting a 5 Tier Subscription pricing model, starting with closed Beta testing for Tiers 1 and 2 in December and a "go live" date for late January, with the remaining phases soon after. The app will include a Freemium model with four additional tiers of subscription pricing catering to all users. TUT currently sells directly to the consumer through its website and plans to sell B2B2C, with an initial customer focus targeting fitness trainers (i.e. boutique gyms) and real estate companies (i.e. hotels, condos, and property management companies).                

TUT is in the midst of a brand refresh, that includes a new logo and identity, corporate and ecommerce websites as well as additional social media channels. This new brand identity coincides with, and will support the launch of, the TUT Fitness Training App, as well as a sales and marketing campaign beginning in late December and culminating in a full launch in February 2021.

AAJ CEO, Praveen Varshney, commented, "TUT Fitness has built a great product. TUT has the manufacturing partners in place, strong IP that can be licensed to large or small fitness OEMs, and an aggressive go-to market strategy supported by an experienced team. Our vision is to positively impact as many people's lives by making the TUT ubiquitous, as commonplace and necessary as any other appliance in homes today. Space and cost shouldn't be barriers to health and wellness."

Aaron Fader, Founder and TUT CEO, commented, "We are excited about accessing new growth capital, and completing our corporate rebrand, so that we can deliver on our mission of bringing the highest value gym experience to every home. We designed the TUT Trainer and Rower to target every muscle group, offering a superior alternative to one-dimensional cardio machines that do not build muscle mass or functional strength. We remain committed to consumers and our growing TUT community to ensure that our home gym solutions can be used by anyone, regardless of their level of fitness or economic situation."  

Proposed Management of the Resulting Issuer

On completion of the Transaction and subject to Exchange approval, it is anticipated that the board of directors of the Resulting Issuer will consist of four directors. Information about some of the proposed directors and officers of the Resulting Issuer is included below:

Aaron Fader, Founder and CEO of TUT, Proposed CEO & Director of the Resulting Issuer

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.

Rob Smith, President of TUT & Proposed President & Director of the Resulting Issuer                       

Mr. Smith is currently the President of TUT. Mr. Smith has been an investor and advisor to technology and growth related businesses for the past 25 years. He brings a unique perspective in the areas of financing and business development. Currently, he is a founding partner in Sociable Ventures, a Vancouver-based boutique venture capital firm, and Co-Founder and advisor to NEXE Innovations Inc., which is advancing plant-based material manufacturing. NEXE expects to begin trading on the TSX-V in December 2020 under the symbol NEXE. Mr. Smith has served as a director and officer of several private and public companies.

Praveen Varshney, Chairman of the Board

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

It is anticipated that the Resulting Issuer will also appoint one additional independent director.

The Qualifying Transaction

Terms of the Transaction

Subject to the execution of a definitive agreement ("Definitive Agreement"), AAJ proposes to acquire all of the issued and outstanding securities of TUT in exchange for securities of AAJ.

The closing of the Transaction will be conditional upon AAJ completing a private placement financing of subscription receipts (the "Subscription Receipts"), to raise a minimum of gross proceeds of $3,000,000, each of which will, immediately after the closing of the Transaction, automatically convert into one common share and one common share purchase warrant at a price to be determined (the "Concurrent Financing").

The Transaction is conditional upon, among other things:

AAJ will issue additional news releases related to the final legal structure and terms of the Transaction, capitalization of TUT and the Resulting Issuer and TUT financing terms, financial information regarding TUT, the names and background of insiders of the Resulting Issuer and other material information as it becomes available.

The trading in the shares of AAJ is presently halted and will remain so until the Transaction is completed and approved by the Exchange.

Arm's Length Transaction and Shareholder Approval

The proposed Qualifying Transaction will be an arm's length transaction under the policies of the Exchange, as a result of which AAJ will not be required to obtain shareholder approval for the Transaction.

Filing Statement

In connection with the Transaction and pursuant to the requirements of the Exchange, AAJ will file a filing statement on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the Concurrent Financing, TUT and the Resulting Issuer.

Control Persons

Aaron Fader, Founder, Chief Executive Officer and a Director of TUT, currently owns (through a corporation) 4,500,000 common shares of TUT and its related/affiliate patent company, representing approximately 26.5% of the issued and outstanding common shares of TUT (calculated on an undiluted basis) as at the date hereof.  Other control persons of TUT include Michelle Cheung holding 4,500,000 common shares of TUT, and Varshney Capital Corp. holding 4,000,000 common shares of TUT. After giving effect to the Concurrent Financing and the shares issued under the Transaction (assuming 17,000,000 common shares are issued to the shareholders of TUT), there are not anticipated to be any control persons in the Resulting Issuer.

Sponsorship

AAJ intends to make an application to the Exchange for an exemption from the sponsorship requirements, but there is no assurance that such an exemption will be granted.

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 or information circular 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 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, expected sales, 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, exchange rates, 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.

There can be no assurance that the proposed Transaction or Concurrent Financing will be completed or, if completed, will be successful.

The forward-looking statements contained in this news release are made as of the date of this news release.  Except as required by law, the Company 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, the Company 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