Volatus Aerospace Corp. announced that it has entered into an agreement and a brokered private placement of up to 3,000 convertible debenture units at a price of CAD 1,000 per debenture unit for aggregate gross proceeds of up to CAD 3,000,000 and a non-brokered private placement of up to 250 debenture units at a price of CAD 1,000 per debenture unit for gross proceeds of up to CAD 250,000 on April 13, 2023. The agent has been granted an option, exercisable at any time up to 48 hours prior to the closing of the transaction, to increase the size of the offering by up to 450 additional debenture units for maximum aggregate gross proceeds under the Offering of CAD 3,450,000.

Each debenture unit will be comprised of CAD 1,000 principal amount senior unsecured convertible debenture and 1,000 common share purchase warrants of the company. The debentures will mature on the date that is 24 months from the date of issuance and shall bear interest at a simple rate of 12% per annum. Interest will be payable semi-annually in arrears in cash on the last day of June and December in each year, with the first coupon payment deferred until June 30, 2024.

The principal amount of the Debentures, or any portion thereof, may be converted at the election of the holder thereof into common shares in the capital of the company at a conversion price of CAD 0.50 per common share being a conversion rate of 2,000 common shares per CAD 1,000 principal amount of debenture units, at any time prior to the maturity date. The principal amount of the debentures may be converted at the election of the company into common shares at the conversion price on not more than 60 days and not less than 30 days notice to the holders of debentures in the event that the daily volume weighted average trading price of the common shares on the TSX Venture Exchange is greater than CAD 1 per share for 10 consecutive trading days, or in connection with a qualified equity or similar financing involving common shares or warrants resulting in aggregate gross proceeds to the company of not less than CAD 10 million subject to the conversion price being ratcheted down to equal the price per security under the qualified financing. The debentures will be redeemable, in whole or in part, at the option of the company, on or after the date that is 12 months from the issue date at price equal to 105% of the principal amount of the convertible debentures then outstanding plus any accrued and unpaid interest that would otherwise be payable to the holders from the time of such redemption until the maturity date.

Each warrant will entitle the holder thereof to acquire one common share at a price of CAD 0.50 per common share for a period of 24 months from the closing date of the transaction. If, at any time following the date that is 4 months and one day following the closing date, the daily volume weighted average trading price of the common shares on the TSXV is greater than CAD 1 per share for the preceding 10 consecutive trading days, the company shall have the right to accelerate the expiry date of the Warrants to a date that is at least 30 days following the date of notice to holders of Warrants. The company has agreed to pay the agents a cash fee equal to 8% of the gross proceeds raised from the transaction and issue to the agents such number of non-transferable common share purchase warrants as is equal to 8% of the gross proceeds raised from the transaction divided by the conversion price.

Each agent's warrant will entitle the holder thereof to acquire one common share at an exercise price of CAD 0.50 per common share for a period of 24 months from the closing date of the transaction. The debenture units, debentures, warrants, and any securities issuable upon conversion or exercise thereof, will be subject to a statutory hold period of four months and one day from the date of issuance of the debenture units. The transaction is subject to final approval by the TSXV.

The transaction is expected to close on or about May 4, 2023.