Wellfield Technologies Inc. and Leonovus Inc. Announce Reverse Take-Over Spin-Out of Wellfield's Tradewind Markets Inc.

Rhea-AI Summary

Wellfield Technologies Inc. (TSXV: WFLD) (OTC Pink: WFLDF) and Leonovus Inc. (TSXV: LTV) have entered into a definitive agreement for a Reverse Take-Over (RTO) involving Wellfield's subsidiary, Tradewind Markets Inc. The deal includes:

1. Leonovus acquiring all Tradewind shares for 444,444,444 pre-consolidated Leonovus shares
2. Leonovus changing its name to 'Tradewind Markets Inc.'
3. A private placement financing of $4-6 million
4. Stock consolidation on an 11.11:1 basis

Tradewind specializes in digital gold ownership and trading, with over CDN$170 million in digitized physical metal on its platform. The RTO aims to accelerate Tradewind's growth in the digital gold market.

Positive

• Tradewind has digitized ownership of over CDN$170 million in physical metal on its platform
• Tradewind will introduce DeFi services, including an AMM for instant settlement in spot gold trading
• Wellfield will provide a support agreement and team of professionals to enhance Tradewind's platform capabilities
• The RTO includes a private placement financing of $4-6 million, strengthening the company's financial position
• The transaction positions Tradewind to independently accelerate its growth in the digital gold market

Negative

• The RTO is subject to several conditions, including shareholder and regulatory approvals, with no guarantee of completion
• Current Leonovus shareholders will own only 3.3% of the Resulting Issuer after the RTO and financing
• Leonovus shares will remain halted pending further filings with the TSXV
• The RTO may require waivers or exemptions from certain TSXV listing requirements

Toronto, Ontario--(Newsfile Corp. - September 6, 2024) - Wellfield Technologies Inc. (TSXV: WFLD) (OTC Pink: WFLDF) (FSE: K8D) ("Wellfield") and Leonovus Inc. (TSXV: LTV) ("Leonovus") are pleased to announce that, further to Wellfield's July 16, 2024 news release, they have entered into a definitive agreement (the "Definitive Agreement") dated September 5, 2024 outlining the terms upon which Leonovus will acquire all of the issued and outstanding common shares in the capital of Tradewind Markets Inc. ("Tradewind"), a wholly-owned subsidiary of Wellfield incorporated under the laws of Delaware, to Leonovus in exchange for an aggregate of 444,444,444 pre-consolidated common shares in the capital of Leonovus (the "Leonovus Shares"), which will result in a "Reverse Take-Over" of Leonovus (the "RTO") under the policies of the TSX Venture Exchange (the "TSXV"). In connection with the completion of the RTO, Leonovus will change its name to "Tradewind Markets Inc." (the "Resulting Issuer"), or such other name as determined by the parties.

The Resulting Issuer: Tradewind Markets Inc.

Tradewind: Revolutionizing Gold Ownership and Trading

Tradewind is at the forefront of the digital gold market, leveraging blockchain technology and a unique collaboration with a sovereign mint to provide investors with digital ownership of securely custodied gold, along with powerful 24/7 trading solutions. Through its flagship products, VaultChain™ Gold and VaultChain™ Silver, Tradewind has digitized ownership of over CDN$170 million in physical metal on its platform. In the coming months, Tradewind will introduce a suite of smart contract-based decentralized finance (DeFi) services, including an Automated Market-Maker (AMM) for instant settlement in spot gold trading, and products offering investors a unique opportunity to generate yield on gold holdings, denominated in gold.

Tradewind's collaboration with a sovereign mint to digitize ownership of physical metal combined with its blockchain-based trading ecosystem is one of a kind and represents a pivotal advancement in the physical precious metals market. This proprietary platform removes barriers for retail investors, enhances efficiencies for institutions, and significantly lowers trading costs. Thanks to its innovations in gold digitization and blockchain-based trading, Tradewind is well-positioned to capitalize on increasing demand from both institutional and retail investors seeking an accessible and affordable hedge against economic and geopolitical uncertainty.

Support Agreement with Wellfield Technologies

Tradewind will enter a support agreement with Wellfield Technologies to enhance its platform's capabilities. Under this agreement, Wellfield will supply a team of professionals with extensive experience in electronic trading, market structure, gold investment management, market operations, cryptography, and blockchain technology. This collaboration aims to ensure seamless technology transfer and operational support during the initial 18 months of Tradewind's service expansion, reinforcing its position as a leader in the digital gold trading landscape.

Levy Cohen, Chief Executive Officer of Wellfield, stated: "Spinning out Tradewind into this RTO is a strategic move that underscores our commitment to advancing decentralized finance solutions in traditional markets. Tradewind has developed a truly innovative platform that redefines physical gold ownership and trading. By launching this RTO, we are positioning Tradewind to independently accelerate its growth and fully capitalize on the enormous potential of its unique technology. We are excited to see Tradewind take this next step and are confident that it will continue to lead the way in the digitization of gold."

Michael Gaffney, Chair and Chief Executive Officer of Leonovus, stated: "Tradewind's spin-out through this RTO provides a unique opportunity in the gold trading industry. As global economic uncertainties persist, the gold market continues to demonstrate its resilience, with demand for gold as a safe-haven asset reaching new heights. According to the World Gold Council, gold demand in 2023 exceeded 4,700 tonnes, driven by robust central bank purchases and strong investor interest. This underscores gold's critical role in diversifying and stabilizing investment portfolios. The technology and vision behind Tradewind align perfectly with this growing demand, offering a seamless digital solution for gold ownership and trading. We are excited to support this transition and believe that Tradewind is poised to significantly impact the market, bridging the gap between physical assets and the world of decentralized finance."

Financing Particulars

In connection with the RTO, Leonovus announces that it has appointed Research Capital Corporation as an agent to Leonovus for a proposed private placement equity financing (the "Financing") of subscription receipts of a wholly-owned subsidiary of Leonovus (the "Subscription Receipts") for minimum gross proceeds of $4,000,000 and a maximum of $6,000,000. The price and terms of the securities of the Financing will be determined in the context of the market.

Transaction Particulars

Pursuant to the Definitive Agreement, a newly incorporated subsidiary of Leonovus will amalgamate with a newly incorporated subsidiary of Leonovus under the Business Corporations Act (Ontario), and such resulting entity will become a wholly owned subsidiary of the Resulting Issuer. On completion of the RTO, the Resulting Issuer will issue replacement common shares in the capital of the Resulting Issuer (the "Resulting Issuer Shares") and replacement warrants to purchase Resulting Issuer Shares to the current holders of Leonovus Shares and the current holders of warrants to purchase Leonovus Shares. Stock options of Leonovus will be cancelled on closing of the RTO.

As part of the RTO, and subject to any required shareholder and regulatory approvals, Leonovus will: (i) change its name to "Tradewind Markets Inc." or such other name as determined by the parties; (ii) change its stock exchange ticker symbol; (iii) consolidate the Leonovus Shares on a basis of 11.11 pre-consolidated Leonovus Shares for one new post-consolidated Leonovus Share (the "Stock Consolidation"); (iv) adopt new by-laws and other corporate policies; (v) adopt new security-based compensation arrangements; and (vi) reconstitute the board of directors and management of the Resulting Issuer.

The full particulars of the RTO, and the Resulting Issuer will be described in the management information circular of Leonovus (the "Leonovus Circular") prepared in accordance with the policies of the TSXV. A copy of the Leonovus Circular will be available electronically on SEDAR+ (www.sedarplus.ca) under Leonovus' issuer profile in due course. It is anticipated that an annual and special meeting of the securityholders of Leonovus will be held later in 2024 (the "Leonovus Meeting").

Shareholder approval at the Leonovus Meeting is required for several of the transactions described in this press release, including: (i) the change of name to "Tradewind Markets Inc."; (ii) the Stock Consolidation; (iii) the approval of the RTO; (iv) the election of directors; (v) the appointment of auditors; (vi) the adoption of new securities compensation arrangements; and (vii) the adoption of new by-laws. Each of the resolutions will require approval by a 50% majority of votes cast at the Leonovus Meeting, other than the resolutions to approve the change of name and the Stock Consolidation, which will require approval by two-thirds (66 2/3%) of the votes cast at the Leonovus Meeting. The resolution for approval of the RTO will also require approval by disinterested shareholders of Leonovus.

Leonovus securityholders are urged to read the Leonovus Circular once available, as it will contain additional important information about the RTO. The RTO is expected to be completed in late November or early December 2024.

In support of the RTO and related transactions, each of the directors and officers of Leonovus, representing an aggregate of 1,429,175 Leonovus Shares (approximately 7% of the issued and outstanding Leonovus Shares) have entered into a voting support agreement with Wellfield in support of the RTO. The respective boards of directors of each of Wellfield and Leonovus, following consultation with their financial and legal advisors, have unanimously approved the Definitive Agreement and the RTO.

The Resulting Issuer is expected to be owned approximately: (i) 70.6% by Wellfield, (ii) 21.2% by the holders of Subscription Receipts, (iii) 3.3% by the current holders of Leonovus Shares, and (iv) 4.9% by certain creditors of Leonovus, after giving effect to the RTO and the Financing (assuming the Financing is completed for aggregate gross proceeds of $6,000,000). The Resulting Issuer Shares issuable to Wellfield will be subject to TSXV escrow policies and releasable in tranches over a period of 36 months following the closing of the RTO. In addition, 45% of the Resulting Issuer Shares issuable to Wellfield shall be subject to contractual escrow and releasable in tranches over 24 months following the closing of the RTO.

In conjunction with the RTO, Wellfield will also provide to the Resulting Issuer: (i) an intellectual property support agreement for post-closing services and support related to the Tradewind business valued at approximately $1,000,000; and (ii) a customary non-competition agreement for a term of 5 years.

Wellfield and the Resulting Issuer will also enter into an investor rights agreement granting Wellfield a participation rights in future Resulting Issuer financings, subject to Wellfield holding at least 5% of the voting rights applicable to the outstanding Resulting Issuer Shares.

Completion of the RTO is subject to several conditions, including, but not limited to, receipt of Leonovus shareholder approval, receipt of TSXV approval, closing of the Financing, completion of certain upgrades to the Tradewind platform, no material adverse change having occurred for either Wellfield nor Leonovus, and compliance with the terms of the Definitive Agreement by each of Wellfield and Leonovus. There can be no assurance that the RTO will be completed as proposed or at all.

Upon completion of the RTO, the current directors and officers of Leonovus will resign and the board of directors of the Resulting Issuer (the "Resulting Issuer Board") will be comprised of four persons nominated by Wellfield and one person nominated by Leonovus for appointment to the Resulting Issuer Board at the Leonovus Meeting, to hold office until the next annual general meeting of the Resulting Issuer or until their successors are elected or appointed. Wellfield will nominate the Chief Executive Officer, the Chief Financial Officer and the Chief Operating Officer of the Resulting Issuer for appointment by the Resulting Issuer Board.

Investors are cautioned that, except as disclosed in the Leonovus Circular to be prepared in connection with the RTO, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of Leonovus should be considered highly speculative.

The Definitive Agreement was negotiated at arm's length between representatives of Wellfield and Leonovus. The Leonovus Shares will remain halted pending further filings with the TSXV. Leonovus may seek waivers or exemptions from certain listing requirements of the TSXV in connection with the RTO, including the requirement to obtain a sponsor for the RTO. However, there can be no assurance that any waivers will be obtained. If a waiver from the sponsorship requirement is not obtained, a sponsor will be identified later. No deposit, advance or loan has been made or is to be made in connection with the RTO.

Further details regarding the RTO, including details regarding the management and board of directors of the Resulting Issuer and the terms of the Financing will be disclosed in a subsequent news release.

Update on Leonovus Cylentium Transaction

Leonovus previously announced a proposed transaction in January 2024 with Cylentium Research Ltd. for the sale of Leonovus' current software and patents to Cylentium, which remains open and contingent upon Cylentium raising the necessary funds to complete the acquisition (the "Cylentium Transaction"). If the Cylentium Transaction proceeds prior to the RTO, then the Cylentium Transaction would require approval at the Leonovus Meeting by two-thirds (66 2/3%) of the votes cast by Leonovus shareholders as a sale of substantially all of the assets of Leonovus. If this transaction is successfully completed, the proceeds therefrom would represent significant capital for the Resulting Issuer, providing a strong financial foundation for its future growth and development.

The TSXV has in no way passed upon the merits of the proposed RTO and has neither approved nor disapproved the contents of this news release.

Advisors

Bennett Jones LLP is legal counsel to Wellfield and DS Lawyers Canada LLP is legal counsel to Leonovus.

About Wellfield Technologies

Wellfield Technologies, Inc. (TSXV: WFLD) is a leading fintech company specializing in innovative solutions leveraging blockchain technology. Our platform Coinmama (web and Mobile app), provides seamless access to the cryptocurrency market for over 3.5 million registered users across 180 countries. We offer disruptive on-chain and web3 secure and friendly self-custody solutions through Coinmama. Additionally, Wellfield operates Tradewind Markets platform to digitize and trade real-world assets, including our flagship VaultChain™ Gold and VaultChain™ Silver products. Expanding our offerings for institutional clients, we present Brane Trust aiming to operate Alberta Canada's second qualified digital asset custodian.

Join Wellfield's digital community on LinkedIn and Twitter, and for more details, visit wellfield.io.

For further information contact:

Wellfield Technologies Inc.
Levy Cohen, CEO
levyc@wellfield.io

Ryan Graybill, Investor Relations
ryan.graybill@wellfield.io

About Leonovus

Leonovus is a secure data management software company. The Leonovus suite of data management tools offer customers a complete end-to-end data-centric solution. This solution can stand on its own or integrates with the organization's zero-trust strategy and architecture. It takes seamless advantage of the organization's existing storage infrastructure and network architecture, working on-premises in the cloud. It extends the data-centric controls across the entire architecture, including cloud resources. To learn more, please visit www.leonovus.com.

For further information contact:

Michael Gaffney, Chair and CEO
mgaffney@leonovus.com

Cautionary Notice on Forward-Looking Statements

This news release contains statements that constitute "forward-looking information" ("forward-looking information") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking information and are based on expectations, estimates and projections as at the date of this news release. Any statement that discusses predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking information. Forward-looking information in this news release includes statements regarding: the completion of the RTO; the completion of the Financing; the timeline to complete the RTO and the Financing; the anticipated benefits of the RTO; the conditions to be satisfied for completion of the RTO; completion of the Stock Consolidation; the name and business carried on by the Resulting Issuer; the reliance on a prospectus exemption for the issuance of the Leonovus Shares to Wellfield; obtaining a waiver from the TSXV sponsorship requirements; the timing and completion of the Tradewind platform upgrades; the terms of the ancillary agreements to the Definitive Agreement relating to the RTO, including the support agreement, non-competition agreement and investor rights agreement; and the approval of the TSXV of the transactions contemplated herein, which are based on Wellfield and Leonovus' current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking information necessarily involves known and unknown risks and uncertainties, which may cause Wellfield and Leonovus' actual performance and results in to differ materially from any projections of future performance or results expressed or implied by such forward-looking information. These risks and uncertainties include but are not limited to Wellfield and Leonovus satisfying the conditions for TSXV approval of the transactions herein; there is no assurance that the Financing will be completed or as to the actual gross proceeds to be raised in connection with the Financing; there is no assurance that Wellfield and Leonovus will obtain all requisite approvals for the RTO, including the approval of the shareholders of Leonovus, or the approval of the TSXV for the RTO (which may be conditional upon amendments to the terms of the RTO); following completion of the RTO, the Resulting Issuer may require additional financing from time to time in order to continue its operations, which may not be available when needed or on terms and conditions acceptable to the Resulting Issuer; unanticipated costs and expenses of the RTO or the Financing; the ability of Wellfield to conduct the Tradewind platform upgrades, in a timely manner, if at all; new laws or regulations could adversely affect the Resulting Issuer's business and results of operations; the stock markets have experienced volatility that often has been unrelated to the performance of companies, which fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance; and general business, financial market, economic, competitive, political and social uncertainties. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated. Readers are cautioned that the foregoing list is not exhaustive, and readers are encouraged to review the disclosure documents accessible on Wellfield and Leonovus' respective SEDAR+ profile at www.sedarplus.ca. Readers are further cautioned not to place undue reliance on forward-looking information as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Except as required by law, Wellfield and Leonovus disclaims any intention and assumes no obligation to update or revise any forward-looking information.

All information contained in this news release with respect to Wellfield and Leonovus was supplied by the parties, respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning such party.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) has approved nor disapproved the contents of this news release, nor do they accept responsibility for the adequacy or accuracy of this release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/222368

FAQ

What is the Reverse Take-Over (RTO) between Wellfield Technologies and Leonovus?

Wellfield Technologies (WFLDF) and Leonovus have agreed to an RTO where Leonovus will acquire Wellfield's subsidiary, Tradewind Markets, in exchange for 444,444,444 pre-consolidated Leonovus shares. Leonovus will then change its name to Tradewind Markets Inc.

How much has Tradewind Markets digitized in physical metal ownership?

Tradewind Markets has digitized ownership of over CDN$170 million in physical metal on its platform through its VaultChain Gold and VaultChain Silver products.

What new services will Tradewind Markets introduce after the RTO?

Following the RTO, Tradewind Markets plans to introduce decentralized finance (DeFi) services, including an Automated Market-Maker (AMM) for instant settlement in spot gold trading, and products offering yield on gold holdings denominated in gold.

What is the proposed financing associated with the Wellfield-Leonovus RTO?

The RTO includes a private placement financing of Subscription Receipts for minimum gross proceeds of $4,000,000 and a maximum of $6,000,000, with Research Capital appointed as the agent.

When is the Wellfield-Leonovus RTO expected to be completed?

The Reverse Take-Over between Wellfield Technologies (WFLDF) and Leonovus is expected to be completed in late November or early December 2024, subject to various approvals and conditions.