ALUULA Composites Inc. (AUUA)

We first posted about ALUULA last October and have been watching them for longer. The Company develops and manufactures advanced soft composite materials made out of Ultra-High Molecular Weight Polyethylene (UHMWPE).

As we said last October:

> To be clear, this is quite different than most of our other investments, though if you look at our post history you will quickly come to the conclusion that our portfolio is an eclectic group (things like canned vegetables, gold storage, real estate, valves, and fancy moving movie theatre chairs).

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> Capex & financing: We view that they absolutely need a new facility + working capital and capital needs are not truly known at this point (we expect clarity early next year).

They just completed a capital raise that addresses our number one issue. They completed their private placement and were able to upsize due to interest. Proceeds are being used for the capex build out as well as to finally clear off a ~$1MM related party loan. With 4.3MM shares issued it creates dilution, but the capital was absolutely required. The issue price and size were actually better (for the company and existing shareholders) than we expected. Overall, it is a reasonable outcome given it was absolutely necessary. As they continue to grow, we expect they will become bankable by conventional lenders soon.

We remain long and have used this as an opportunity to increase our position. We stress that this is high risk and we view this as a venture-like holding in our portfolio (in fact, the only one).

With a 75% increase in revenue last quarter year-over-year, we look forward to seeing what they can do now that they actually have some capital.