Tradewind Provides Update on Reverse Take-Over by Leonovus and C$5 Million Brokered Financing

Executive Summary

• Wellfield Technologies and Leonovus have amended their agreement for a Reverse Take-Over (RTO) where Leonovus will acquire Tradewind Markets Inc. (a wholly-owned subsidiary of Wellfield) in exchange for approximately 151,562,500 pre-consolidated Leonovus shares (approx. 24,250,000 post-consolidation), resulting in a change of name to "Tradewind Precious Metals Exchange Inc."
• Concurrent with the RTO, Leonovus is conducting a C$5 million brokered private placement via its subsidiary FinanceCo, consisting of Debt Equity Subscription Receipts and Equity Subscription Receipts, with proceeds allocated to purchasing physical gold and working capital.
• The transaction includes a C$2 million earnout for Wellfield based on product milestones, a C$1 million IP support agreement, and a 5-year non-compete. The RTO is expected to close in mid-November 2025, subject to TSXV and shareholder approvals.

Key Details

• Transaction Structure: Leonovus acquires all issued and outstanding common shares of Tradewind Markets Inc. from Wellfield.
• Consideration: Approx. 151,562,500 pre-consolidated Leonovus shares (approx. 24,250,000 post-consolidation), subject to reduction for Tradewind net debt.
• Name Change: Leonovus will change its name to "Tradewind Precious Metals Exchange Inc."
• Financing Details (C$5M Brokered Offering):
  • Agent: Research Capital Corporation.
  • Minimum Gross Proceeds: C$5,000,000.
  • Securities Offered:
    • Debt Equity Subscription Receipts at C$2,000 each.
    • Equity Subscription Receipts at C$0.20 each.
  • President's List: Directors, officers, and close associates expected to subscribe for approx. C$2,000,000.
  • Use of Proceeds:
    • Debt Equity Receipts: 50% for physical gold purchase (held at Royal Canadian Mint), 50% for working capital/general corporate purposes.
    • Equity Receipts: Working capital and general corporate purposes.
  • Escrow: Gross proceeds (less agent expenses and 50% cash commission) held in escrow until satisfaction of Escrow Release Conditions (including RTO completion, share consolidation, and TSXV approval) no later than 120 days post-closing.
• Debt Equity Unit Terms:
  • Each Debt Equity Subscription Receipt converts to one Debt Equity Unit upon Escrow Release.
  • Unit Composition: One secured 14% convertible debenture (C$1,000 principal), 5,000 FinanceCo shares, and 9,000 warrants.
  • Security: Debentures secured by physical gold purchased with proceeds (C$1,000 per unit).
  • Conversion: Debentures convertible into FinanceCo Shares at C$0.25/share.
  • Interest: 14% per annum, payable quarterly.
  • Maturity: 60 months from Escrow Release.
• Equity Unit Terms:
  • Each Equity Subscription Receipt converts to one Equity Unit upon Escrow Release.
  • Unit Composition: One FinanceCo Share and one Warrant.
• Warrant Terms:
  • Exercise Price: C$0.25 per share.
  • Term: 60 months from Escrow Release.
  • Underlying Security: Resulting Issuer Shares.
• Broker Warrants:
  • Issued to Agent: 8% of Equity Subscription Receipts sold and 8% of Resulting Issuer Shares issuable upon conversion of Convertible Debentures (reduced to 4% for President's List orders).
  • Exercise Price: C$0.20 per Unit.
  • Term: 60 months from Escrow Release.
• Earnout: Wellfield entitled to C$2,000,000 (via 10,000,000 Resulting Issuer Shares at C$0.20/share) if specific product/business milestones are met within 2 years of closing.
• Support Agreements:
  • IP Support Agreement: Wellfield provides post-closing services valued at C$1,000,000.
  • Non-Compete: 5-year term.
  • Voting Support: Directors/officers holding ~1,429,175 Leonovus shares (~7%) have entered voting support agreements.
• Debt Settlement: Leonovus issuing 4,411,090 shares at C$0.20/share to settle C$882,218 of indebtedness to directors/officers/employees.
• Share Consolidation: 1 new share for every 6.25 existing shares.
• Escrow of Consideration Shares: 24,250,000 shares issued to Wellfield subject to 36-month escrow release in tranches. Wellfield agrees to sell/distribute released shares to maintain ownership at or below 45% post-RTO.
• Management Changes:
  • Current Leonovus directors/officers resign.
  • New Board: Michael Gaffney (Chair/CEO), Fraser Buchan, Jason Ewart, Kristina Bates (Audit Chair), plus one additional director.
  • CFO/Corp Sec: Chris Carmichael.
• Timeline:
  • Leonovus Meeting (Shareholder Approval): Mid-November 2025.
  • Transaction Closing: Second half of November 2025.
  • Offering Closing: Early November 2025.
• Regulatory: Subject to TSXV approval, including potential waivers for sponsorship requirements. Trading in Leonovus shares remains halted.

Notable Quotes

• Michael Gaffney, CEO of Leonovus: "Tradewind is more than a trading platform; it's a solution that integrates blockchain technology with the Royal Canadian Mint's reputation to redefine how gold is owned and traded. By delivering the lowest costs, the best quality gold, and the unique future opportunity, we're setting a new standard for the precious metals market."
• Levy Cohen, CEO of Wellfield: "Spinning out Tradewind into this RTO is a strategic move that underscores our commitment to advancing decentralized finance solutions in traditional markets. By launching this RTO, we are positioning Tradewind to independently accelerate its growth and fully capitalize on the enormous potential of its technology."
• Michael Gaffney, Chair and CEO of Leonovus: "Tradewind's spin-out through this RTO is a significant advance for the gold trading industry... We believe Tradewind is uniquely positioned to bridge the gap between physical assets and seamless finance, enhancing liquidity and accessibility while setting a new standard for integrating gold into modern financial ecosystems."