Leonovus Announces Bridge Loan

OTTAWA, Feb. 03, 2023 (GLOBE NEWSWIRE) — Leonovus Inc., (“Leonovus” or the “Company”) (TSXV: LTV) announces that it has entered into a loan agreement with two directors of Leonovus, (the “Lenders”) for a secured loan in the principal amount of CAD$100,000 (the “Loan”). The Loan will have a term of eighteen months from the advance date and will bear interest at the rate of 18% per annum and can be paid down at any time with the penalty of the full annual interest.  The Loan will be secured by a general security agreement.

Subject to approval of the TSXV, the Lenders will receive a bonus of 2,500,000 common share warrants (the “Warrants”) of the Company, each Warrant have an exercise price of CAD$0.040 per share and a term of eighteen months. No commission or finder’s fee were paid in connection with the Loan. All bonus securities are subject to a hold period of four months and one day from the date of issuance. The number of common shares issued and outstanding at this time is 20,900,996.

The Company intends to use the proceeds of the Loan for bridge working capital and plans to search for a strategic partner, investment, or acquisition. None of the proceeds will be used for investor relations or paid to related parties other than in the normal course of business operations. Advancement of proceeds under the Loan, and the issuance of the Warrants, is subject to approval of the TSXV and customary closing conditions.

Insider Participation in Loans

As two members of the board of directors of Leonovus, one being the CEO, (together, the “Insiders”) are participating in the Loan, for the amounts of $50,000 and $50,000 respectively, and because they are expected to receive 1,250,000 and 1,250,000 warrants respectively, the Loan constitutes a “related party transaction” under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Leonovus has relied on the exemption under 5.5(b) of MI 61-101 for the requirement to obtain a formal valuation for the Warrants issuable to the Insiders, and the exemption under Section 5.7(1)(a) of MI 61-101 for the requirement to obtain minority approval as the total value of the Loan, and the value of the Warrants, are not equal to or greater than 25% of the market capitalization of the Company, whether considered separately or together. The Company will file a material change report with respect to the Loan. However, the material change report will likely be filed less than 21 days prior to the advancement of proceeds under the Loan.

To learn more, please visit www.leonovus.com.

This press release may contain forward-looking statements and information, which may involve risks and uncertainties, including statements relating to the expected use of proceeds , and statements relating to TSXV approval for the Loan and the Warrants.  The results or events predicted in these statements may differ materially from actual results or events. Factors that might cause a difference include, but are not limited to, competitive developments, risks associated with Leonovus’ growth, the state of the financial markets, regulatory risks and other factors. There can be no assurance or guarantees that any statements of forward-looking information contained in this release will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements.  These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Unless otherwise required by applicable securities laws, Leonovus disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Readers should not place undue reliance on any statements of forward-looking information that speak only as of the date of this release.  Further information on Leonovus’ public filings, including its most recent audited consolidated financial statements, are available at www.sedar.com.

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.

For More Information, please contact:

Michael Gaffney
Chief Executive Officer
mgaffney@leonovus.com