UPSTART INVESTMENTS INC. ENTERS INTO LETTER OF INTENT FOR QUALIFYING TRANSACTION WITH MEGAWATTAGE LLC

/THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES./

MONTREAL, May 23, 2024 /CNW/ - UpStart Investments Inc. (TSXV: UPT.P) (the "Corporation" or "UpStart"), is pleased to announce that it has entered into a binding letter of intent with Megawattage, LLC ("Megawattage"), a limited liability company existing under the laws of the State of Florida, dated May 21, 2024 (the "LOI"), pursuant to which UpStart will acquire all of the issued and outstanding securities and securities convertible into securities of Megawattage (the "Megawattage Securities") (the "Transaction"). It is intended that the Transaction will be an arm's length "Qualifying Transaction" of UpStart, as such term is defined in Policy 2.4 – Capital Pool Companies of the Corporate Finance Manual ("Policy 2.4") of the TSX Venture Exchange ("TSXV").

About Megawattage LLC

Megawattage, founded in 2006, is an industry leader servicing emergency power needs within South Florida. Their blue-chip clients include corporations, government at the federal, state, and municipal levels, hospitals, luxury condominiums, cold storage facilities, and many others within the United States. The Company's turnkey rental fleet is designed for mission-critical and institutional clients with a large inventory of generators ranging in power capacity from 20KW – 3000KW. Megawattage business units are comprised of maintenance contracts, services, generator rentals, and disaster relief. The Company extends services throughout the continental U.S. and areas such as Guam, Hawaii, Puerto Rico, and the U.S. Virgin Islands. For more information, visit www.megawattage.com.       

Transaction Summary

The parties intend to complete the Transaction by way of a share exchange, amalgamation, arrangement, or other similarly structured transaction to be determined, having regard to relevant tax, securities and other factors to form the resulting issuer from the Transaction (the "Resulting Issuer"). Following completion of the Transaction, the parties intend for the Resulting Issuer to continue to list its common shares (after giving effect to the Consolidation and Name Change, as defined below) on the TSXV. It is intended that the Resulting Issuer will be listed on the TSXV as a Tier 1 Industrial Issuer upon completion of the Transaction.

Pursuant to the Transaction, UpStart will acquire all outstanding Megawattage Securities at a valuation of CDN$16,320,000 (prior to giving effect to the Concurrent Financing and Bridge Financing, as defined below), and a deemed valuation of UpStart (prior to giving effect to the Concurrent Financing) of CDN $1,046,127. As of the date hereof, Megawattage has one hundred (100) membership units outstanding (each, a "Target Membership Unit"). Pursuant to the LOI, the parties intend that each membership unit will be exchanged for 562,759.62 common shares of the Resulting Issuer (the "Exchange Ratio"), the Exchange Ratio being subject to adjustment to comply with Policy 2.1 – Initial Listing Requirements of the Corporate Financial Manual of the TSXV.

UpStart Consolidation

Prior to closing of the Transaction ("Closing"), UpStart intends to undertake a consolidation of the common shares of UpStart (each, an "UpStart Share") on a 1.5:1 basis (the "Consolidation"), resulting in one (1) UpStart Share outstanding following the Consolidation for each one and one-half (1 ½) UpStart Share outstanding prior to the Consolidation. Additionally, prior to Closing, UpStart shall change its name to such name as determined by Megawattage, in its sole discretion, in compliance with applicable law and as may be acceptable to the TSXV and a corresponding change shall be made to its trading symbol, as applicable (the "Name Change").

UpStart and Megawattage intend to enter into a definitive agreement (the "Definitive Agreement") evidencing the Transaction which shall contain appropriate terms and conditions, including such reasonable representations and warranties in connection with the Transaction as are customary in comparable circumstances as may be agreed to and in a form satisfactory to both parties.

Finders' Fees

Subject to any requisite approval of the TSXV, upon Closing, an aggregate of $848,500 will be paid to arm's length finders, which shall be payable and satisfied by the issuance of common shares of the Resulting Issuer at the price per security equal to that of the Concurrent Financing (as defined below).

Concurrent Financing

In connection with the Transaction, the parties intend for UpStart to complete a non-brokered private placement offering (the "Concurrent Financing") of UpStart Shares (each, an "Offered Security") of not less than CDN$4,000,000, subject to the rules of the TSXV applicable to the Transaction, at a price per Offered Security of CDN$0.29 (after giving effect to the Consolidation), or such other price as is mutually agreed upon by UpStart and Megawattage, acting reasonably. It is expected that the Concurrent Financing will be conducted as a subscription receipt offering, or such other structure as the parties deem to be necessary or advisable. UpStart intends to use the net proceeds of the Concurrent Financing to fund geographic expansion and potential acquisitions of the Resulting Issuer. A finder's fee may be paid to arm's length finders in connection with the Concurrent Financing.

Bridge Financing

Prior to the closing of the Concurrent Financing, if required and subject to its discretion, UpStart intends to complete an equity private placement bridge financing of a maximum of CDN$250,000 (the "Bridge Financing"). The price per UpStart Share sold pursuant to the Bridge Financing shall be a minimum of CDN$0.2175 (after giving effect to the Consolidation). Subject to the closing of the Concurrent Financing and TSXV acceptance, up to fifty percent (50%) of the net proceeds of the Bridge Financing may, at the option of Megawattage, be advanced by UpStart to Megawattage as a secured loan, bearing an interest rate of five percent (5%) per annum and immediately repayable to UpStart upon termination of the LOI or the Definitive Agreement, as applicable. UpStart intends to use the net proceeds of the Bridge Financing to fund the Transaction. Megawattage intends to use the proceeds of this advance to fund its expenses relating to the Transaction.

Principals of the Resulting Issuer

The board of directors of the Resulting Issuer immediately following Closing shall consist of not more than five (5) persons, two (2) of whom shall be comprised of persons chosen by UpStart, and three (3) of whom shall be determined at the sole discretion of Megawattage. Details regarding the anticipated directors and officers of the Resulting Issuer will be included in a subsequent release.

General Information

Shareholder approval is not required with respect to the Transaction under the rules of the TSXV. However, the structure of the Transaction has not yet been finalized so shareholder approval under corporate law may be required and a meeting of shareholders of UpStart is expected to be held prior to the closing of the Transaction to approve certain matters (including the Consolidation and the Name Change). Trading in the UpStart Shares has been halted and is not expected to resume until the Transaction is completed or until the TSXV receives the requisite documentation to resume trading.

Additional information concerning the Transaction, UpStart, Megawattage and the Resulting Issuer, including financial information respecting UpStart, further details regarding the Concurrent Financing, the names and backgrounds of all persons who will constitute insiders of the Resulting Issuer, and information respecting sponsorship, if applicable, will be provided in a subsequent news release and in UpStart's Filing Statement or Information Circular, as applicable, to be filed in connection with the Transaction and which will be available under UpStart's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedarplus.com.

UpStart intends to make an application for exemption from the sponsorship requirements of Policy 2.4 in connection with the Transaction; however, there is no assurance that the TSXV will exempt UpStart from all or part of the applicable sponsorship requirements.

About UpStart Investments Inc.

UpStart is designated as a Capital Pool Company under Policy 2.4 of the TSXV. The Corporation has not commenced commercial operations and has no assets other than cash. Until the completion of a Qualifying Transaction, the Corporation will not carry on any business other than the identification and evaluation of businesses or assets with a view to completing a proposed Qualifying Transaction. Any proposed Qualifying Transaction must be approved by the TSXV and, in the case of a non-arm's length Qualifying Transaction, must also receive majority approval of the minority shareholders.

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

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. 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 management information circular or 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.

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 upon assumptions that are subject to significant risks and uncertainties. Because of these risks and uncertainties and as a result of a variety of factors, the actual results, expectations, achievements or performance may differ materially from those anticipated and indicated by these forward-looking statements. Forward-looking statements in this news release include, but are not limited to, the completion of the Transaction and on the terms described herein, the execution of the Definitive Agreement, the completion of the proposed Concurrent Financing and the use of proceeds therefrom, the completion of the proposed Bridge Financing and the use of proceeds therefrom, the proposed directors and officers of the Resulting Issuer, obtaining the appropriate approvals required with respect to the Transaction, the completion of the Consolidation, the completion of the Name Change, shareholder and regulatory approvals, and future press releases and disclosure. Any number of factors could cause actual results to differ materially from these forward-looking statements as well as future results. Although the Corporation believes that the expectations reflected in forward-looking statements are reasonable, it can give no assurances that the expectations of any forward-looking statements will prove to be correct. Except as required by law, the Corporation 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.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

SOURCE UpStart Investments Inc.

Franklin Gattinger, the Chief Financial Officer of the Corporation at [email protected], [phone]