Victoria, British Columbia--(Newsfile Corp. - September 22, 2026) - ALUULA Composites Inc. (TSXV: AUUA) (OTCQB: AUUAF) ("ALUULA" or the "Company") today reported its financial results for the three- and nine-month periods ended July 31, 2026 ("Q3 2026" and "YTD Q3 2026," respectively). All currency amounts noted are in Canadian dollars.

"Year-to-date revenue increased 58% to $7,855,901 from $4,956,794 as the Company continued to advance commercialization across both prioritized channels while showing 150% year-to-date growth in Commercial Industrial. Quarterly sales can vary based on order timing, and while this quarter's sales stepped back from a strong prior quarter, the year-to-date trend remains strong. Customer adoption of the larger-width materials continued to build, reinforcing one of the key strategic rationales for our Vancouver expansion," said Sage Berryman, Chief Executive Officer and President of ALUULA.

"Q3 gross margin was lower than prior periods, at 32%, reflecting the continued investment in growth. The principal drivers were the cost of producing larger-width materials within our current production footprint, inventory write-downs and lower fixed-cost absorption. We are making these investments in growth because we believe they support improved gross margin over time, and our new Vancouver facility is designed to address most of these constraints. We will reassess our long-term margin targets in 2027 once we have sufficient operating history in the new location and will provide updated guidance at that time."

"Additionally, subsequent to quarter-end, we announced funding under Canada's Industrial and Technological Benefits Policy to advance our materials for maritime defence and Coast Guard applications, which require the new larger-width materials. It is a meaningful external validation of the breadth of our technology platform and of the relationships and capability we are building."

Key YTD Q3 2026 Highlights

• YTD Q3 2026 sales were $7,855,901, compared to $4,956,794 in YTD Q3 2025, with Performance Outdoor up 52% and Commercial Industrial up 150%.
• Customer adoption of the Company's 1.5-metre-width products continued to advance during the period. These wider materials support a growing range of applications and customer programs that require broader material widths, reinforcing the strategic rationale for the Company's Vancouver manufacturing expansion.
• Gross margin was 40% for the nine-month period, compared to 42% in the prior-year period.
• Net loss from continuing operations was $1,503,028, compared to $1,458,583 in the prior-year period.
• Operating expenses were $4,439,727, compared to $3,251,706 in the prior-year period, reflecting continued investment in personnel, public-company infrastructure, marketing and R&D.

Key Q3 2026 Highlights

• Q3 2026 sales were $2,468,502, compared to $2,121,588 in Q3 2025, driven by growth in both commercial channels; sales decreased 19% from the record $3,056,473 in Q2 2026, consistent with the quarter-to-quarter variability previously identified by the Company.
• Performance Outdoor sales increased 16% to $2,221,461 and represented 90.0% of quarterly sales.
• Commercial Industrial sales increased 23% to $247,041 and represented 10.0% of quarterly sales, continuing its faster relative growth trajectory.
• Gross margin was 32%, compared to 41% in Q3 2025, reflecting a higher proportion of larger-width product manufactured within the Company's existing production footprint, approximately $77,000 inventory write-downs and lower absorption of fixed manufacturing costs on reduced production volumes. Management considers these impacts transitional and expects gross margin to remain affected during the Vancouver commissioning and production ramp-up period.
• Net loss from continuing operations was $677,330, compared to $763,524 in Q3 2025.
• Operating expenses were $1,439,706, compared to $1,550,333 in Q3 2025, as lower share-based compensation and favourable foreign exchange and provision remeasurements more than offset higher salaries, public-company costs, and R&D spend.
• Customer commercialization activity remained active, with materials delivered to 17 new customers during the quarter across pack and bag, marine, wind-assisted propulsion and other more technical applications.
• The Company secured its new Vancouver manufacturing facility and commenced early use of a portion of the premises. Full access to the facility is expected to commence in October 2026. The Company also extended its Victoria facility lease to maintain continuity of customer supply during the transition.

Selected Financial Information

The following selected financial information is qualified in its entirety by and should be read in conjunction with our interim condensed consolidated financial statements for the three and nine months ended July 31, 2026 and 2025 and accompanying notes and Management's Discussion and Analysis ("MD&A") which may be viewed on SEDAR+ at www.sedarplus.ca.

Commercial Progress

The Company ended the quarter with a committed sales order book of over $1.5 million, primarily reflecting the conversion of previously reported orders into revenue and the timing of new orders. As the Company scales, management expects to place greater emphasis on broader commercialization indicators including new customer additions and larger-width product adoption.

Research and Development – Industrial and Technological Benefits Program

Subsequent to quarter-end, on September 17, 2026, the Company signed a milestone-staged funding agreement under Canada's Industrial and Technological Benefits Policy. IBERCISA Deck Machinery, a partner to Seaspan Shipyards, will fund 50% of a $730,000 research and development project, with the Company funding the balance and conducting the work in collaboration with the University of British Columbia's Composites Research Network. The project relates to testing and validation of the Company's larger-width materials for defence shelter and cover applications.

Manufacturing Capacity Expansion – Vancouver Facility

During Q3 2026, the Company secured its Vancouver manufacturing facility and was provided use of a portion of the site ahead of commencement of the remaining premises. The remaining portion of the lease is expected to commence in October 2026, after which commissioning, qualification and production scaling are expected to continue.

The Company expects to operate its Victoria and Vancouver facilities concurrently during the transition to maintain continuity of customer supply. This period is expected to result in duplicate facility costs, split staffing and lower production and operational efficiency until the Vancouver facility is stabilized and operating at scale.

Balance Sheet and Liquidity

As at July 31, 2026, the Company had cash and cash equivalents of $12.6 million and working capital of $14.8 million. Cash used in operating activities from continuing operations was $1.3 million for the first nine months of fiscal 2026, compared with $1.7 million in the corresponding prior-year period. The Company's principal near-term uses of liquidity are capital expenditures for the Vancouver facility and related equipment, working capital requirements and operating activities. Management believes the Company's current liquidity is sufficient to fund its planned capital expenditures, working capital requirements and operations through the Vancouver transition.

Outlook

The Company continues to view fiscal 2026, and into fiscal 2027, as an investment period focused on building the production capacity required to support scalable growth. The Company remains focused on three long-term value drivers: building a scalable operating business with disciplined execution, continuing to invest in its technology portfolio, and strengthening its position as a premium ingredient brand.

Management expects gross margin to remain below its long-term objectives during the Vancouver commissioning, qualification and production ramp-up period. As the Vancouver facility represents a different manufacturing environment from the Victoria footprint under which the Company's historical 40% to 45% gross margin target was established, management intends to reassess and update its long-term gross margin targets once sufficient operating history has been established at the new facility.

The Company continues to invest in product, process and construction innovations, including waterproof breathable material development, material testing, circularity initiatives, its proprietary No-Sew™ construction methodology and improvements to its patented manufacturing process. These initiatives are intended to support wider-width manufacturing readiness, broader customer adoption and future production efficiencies.

The Company also remains focused on strengthening ALUULA as a premium ingredient brand and broadening adoption of its lightweight, durable and recycle-ready materials across Performance Outdoor and Commercial Industrial applications.

As additional manufacturing capacity becomes available, management expects to evaluate opportunities to improve responsiveness to customer sampling, qualification programs and smaller commercial orders, subject to capacity, working capital and inventory-risk considerations.

Financial Statements and Management's Discussion and Analysis

This earnings press release should be read in conjunction with ALUULA's unaudited interim condensed consolidated financial statements for the nine months ended July 31, 2026, and the related management's discussion and 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 an ultra-light, high-performance and recycle-ready composite materials brand that enhances the performance of outdoor gear as well as commercial and industrial equipment. 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) (OTCQB: AUUAF)

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 Information

Certain statements in this news release contain forward-looking information within the meaning of applicable securities laws in Canada ("forward-looking information"). Words such as "may", "would", "could", "will", "intend", "plan", "anticipate", "expect", "believe", "estimate", "target", "forecast" and similar expressions are intended to identify forward-looking information, although not all forward-looking information contains these identifying words. Forward-looking information in this news release includes, but is not limited to, statements regarding the Company's Vancouver facility build-out and lease commencement, commissioning, qualification and production scaling, concurrent operation of the Victoria and Vancouver facilities, production capacity, operating costs and efficiencies during the transition, gross margin expectations and future targets, capital expenditures, working capital requirements, liquidity, customer commercialization, future revenue growth, technology and product development, the Company's research and development project under Canada's Industrial and Technological Benefits Policy, including the scope, timing, funding, milestone achievement and completion of that project, the anticipated benefits of the Company's collaboration with the University of British Columbia's Composites Research Network, and the potential suitability, testing, validation or adoption of the Company's materials for maritime, defence, Coast Guard and related shelter and cover applications, and strengthening the Company's position as a premium ingredient brand. Forward-looking information is based on management's current expectations, estimates, projections and assumptions, including assumptions regarding customer order timing, commercialization cycles, production capacity, facility build-out timing, equipment availability and reliability, supply chain conditions, raw material availability and pricing, liquidity, capital deployment, customer demand, market acceptance, consistent quality and yields, successful qualification of suppliers and equipment, staffing and training requirements, permitting and licensing approvals, intellectual property protection and enforcement, the continued performance by counterparties of their obligations under the Company's funding and collaboration arrangements, the satisfaction of milestones on which staged funding is conditioned, and the continuation of applicable government programs and policies, and general economic, market and industry conditions. Forward-looking information is subject to risks, uncertainties and other factors that could cause actual results to differ materially from current expectations, including risks related to customer adoption and order timing, manufacturing scale-up, facility build-out, production reliability, suppliers and raw materials, product performance and liability, gross margin variability, customer concentration, changing international trade policies including tariffs and customs duties, liquidity and future financing, negative operating cash flow, macroeconomic conditions, foreign currency risk, key personnel, regulatory compliance, cybersecurity and public-company obligations, risks that research and development activities may not produce the anticipated results or may not lead to commercial orders or revenue, risks that funding milestones may not be achieved or that staged funding may be delayed, reduced or not received, risks associated with reliance on third parties and government procurement programs over which the Company has no control, and risks relating to the length, complexity and uncertainty of defence and government qualification and procurement cycles. Readers should refer to the Company's management's discussion and analysis for the three and nine months ended July 31, 2026, annual management's discussion and analysis for the year ended October 31, 2025, and annual information form for the year ended October 31, 2025 for further discussion of risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking information. All forward-looking information is provided as of the date of this news release and, except as required by applicable securities laws, the Company undertakes no obligation to update or revise such information.

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Source: ALUULA Composites Inc.