Leonovus Announces an Agreement with Entoro Capital LLC of Houston Texas to Lead the Financing of the Galaxa Project

OTTAWA, May 30, 2019 /CNW/ - Leonovus Inc., ("Leonovus, the Company, we and our") (TSXV: LTV) (OTC: LVNSF) today announced that it has engaged Entoro Securities, LLC ("Entoro" or the "Placement Agent") of Houston, Texas to act as the lead placement agent for the offer and sale of the Company's digital security called GAAX. Entoro is an investment bank and advisory group for digital securities. The Galaxa project and the offering of GAAX were previously disclosed in news releases dated December 21, 2017, September 4, 2018, November 2, 2018, November 12, 2018, and January 16, 2019.

The Offering

GAAX will be sold in the offering at two prices. The first USD$5,000,000 of GAAX will be sold at a price of USD$0.00075 each, with the remainder being sold at a price of USD$0.001 each. The minimum subscription amount will be USD$25,000. The Placement Agent will build a syndicate of broker dealers to raise a minimum of US$10,000,000 and a maximum of US$25,000,000 paid in USD, EUROS, Bitcoin (BTC) or Ethereum (ETH) on a best efforts basis (the "Offering"). Regardless of payment by the investor in fiat or cryptocurrency, it will be immediately converted into USD at the prevailing market rate. There can be no guarantee of the success of the Offering or any part thereof including the ability to convert investments from BTC or ETH into USD.

Proceeds of the Offering will be deposited by the Placement Agent in escrow at Signature Bank of New York pending completion of the Offering, upon which the gross proceeds will be delivered to the Company less the fees payable to advisors as disclosed below.

GAAX will not be tradeable upon the closing of the Offering. The Offering is being conducted under exemptions from the prospectus requirement of Ontario securities law, and, in the United States, under comparable exemptions. In Ontario, GAAX will not be tradeable until it has been qualified by a prospectus, or an exemption from the prospectus requirement applies. The Company does not have any current plans to file a prospectus with the Ontario Securities Commission, however it aspires to do so in the future.

Closing of the Offering is subject to TSX Venture Exchange approval. The distribution of GAAX is being handled by the Company.

Rights of GAAX holders are set forth on page 18 of the Business Plan. There are no traditional share rights attributable to GAAX or GAAX holders. GAAX holders will not rank in priority to any debtholders or sharehodlers of the Company. Funds raised from the Offering will be used by the Company to continue product development, marketing, administration, and other costs arising from the Galaxa project. The Company is currently  in discussions with its auditors regarding the accounting treatment of this transaction.

Advisors

The Offering is being conducted on a best efforts basis by the Placement Agent. The Placement Agent will receive as compensation for the services provided by the Placement Agent an amount of cash equal to 1.75% of the fiat and cryptocurrency received by the Company through the sale of the GAAX. Additionally, the Placement Agent shall receive as compensation for fiat or cryptocurrency received by the Issuer from an investor identified by the Placement Agent an additional amount of cash equal to 5.00% of fiat or cryptocurrency received.

"We believe this is an excellent opportunity for investors in the data center or related businesses as the Galaxa project will take cloud computing to the next level of service globally," said James C. Row, CFA, Managing Partner of Entoro Capital. The project will be listed on Entoro's proprietary offerings platform OfferBoard^®.

The Company has retained Securitize Inc. ("Securitize") to provide hosted software as a service that enables the Company to prepare, facilitate, and manage the Offering (the "Portal"). Securitize provides the compliance platform that electronically qualifies GAAX investors. The Securitize DS Protocol provides end-to-end seamless token and investor management services for GAAX.

The Company has paid to Securitize a one-time setup fee of US$60,000. Securitize will be entitled to receive a warrant to purchase US$150,000 of GAAX at a price equal to the lowest price paid by investors for GAAX in the Offering for 18 months from the closing of the Offering. The Company is paying Securitize a monthly fee of US$5,000 per month for ongoing use of the Portal.

The Company has retained Digimax Capital Inc. ("Digimax") to provide services in connection with the Offering, including assistance with due diligence and negotiation of commissions paid to all parties. The fees payable to Digimax are as follows: a work fee of US$15,000 plus applicable taxes, a consulting fee of US$437,500 plus applicable taxes payable against the raising of US$25,000,000 through the sale of any form of securities of the Company on a percentage-of-completion basis equivalent to the percentage of amounts closed by the Placement Agent and received by the Company.

The Company has retained RockTree LEX Limited ("RockTree") to assist the Company with identifying subscribers in Singapore and Hong Kong on a best efforts basis ("Offshore Subscribers"). The Company will pay RockTree a work fee of CAD$7,500 per month during the engagement up to a maximum of CAD$30,000. The Company will pay RockTree a fee equal to 6.5% of the gross proceeds received from Offshore Subscribers. The Company has granted RockTree the option to purchase GAAX in an amount up to 2% of the total amount of GAAX sold by the Company to Offshore Subscribers, at a price equal to the lowest price paid by investors for GAAX in the Offering, exercisable on a cashless basis for a period of 5 years following the closing of the Offering.

The Company has also retained RockTree to provide advisory services in connection with the Offering. The Company will pay RockTree a commencement fee of CAD$20,000, as well as CAD$10,000 per month for a maximum of 5 months. The Company will pay RockTree a cash commission equal to 0.5% of the total number of GAAX sold in the Offering for its advisory services.

Galaxa

The Galaxa blockchain platform incorporates the patented distributed storage and compute technology developed by Leonovus Inc. Galaxa will be the first blockchain-enabled, enterprise-class, Anything-as-a-Service (XaaS) distributed storage and compute marketplace. The Galaxa blockchain protocol will be powered by a native utility token. These utility tokens are separate from the investment digital securities named GAAX.

Annually, new GAAX will be created at the rate of 2% of the previous year's total issued and outstanding digital securities. These new GAAX will be issued quarterly. 30% of these securities will be issued to current digital security holders and the balance will be issued to Leonovus Inc. to continuously fund the development of the marketplace.

GAAX is a Digital Security because the owners of the digital security will receive regular distributions most likely in the form of BTC or ETH. Because GAAX is a digital security, a Regulated Digital Security Exchange ("DSE") is required to buy and sell GAAX if and when it becomes tradeable. At the beginning of 2019 there are Digital Security Exchanges being developed in Canada, the USA, Singapore, Hong Kong, Gibraltar, Switzerland, the Bahamas and Malta.

Further details of Galaxa and GAAX are set forth in the Company's business plan, available at www.galaxa.com (the "Business Plan") and available on www.sedar.com.

"Our vision is for Galaxa to become one of the largest data centers and cloud service providers in the world without owning any data centers. We estimate that it will take 12 to 24 months to build Galaxa and generate initial revenues. The GAAX digital security offering, to accredited investors only, is a rather unique investment instrument as the holder of GAAX will receive monthly distributions as a percentage of the top line Galaxa revenues," said Michael Gaffney, Chair and CEO.

Galaxa will be the first cloud Anything as a Service ("XaaS") distributed storage and compute shared economy marketplace designed to address the unique requirements of enterprise customers for global on-demand, hyper-secure, hybrid and multi-cloud, storage and compute services. 

"The data storage and compute needs of large enterprises is growing. Enterprises are searching for solutions other than the current oligopoly that controls 72% of the cloud market. CIO's and IT Managers want to purchase cloud storage, compute and other distributed services just like they call an UBER rideshare or book an Airbnb lodging. They need security and compliance in the cloud, but they also want to be cloud agnostic and not locked in to one or few vendors. The shared economy is coming to the enterprise and to the cloud," said Gaffney.  

Leonovus has invested over US$33,000,000 to date in building a robust and secure digital storage platform technology, including a unique blockchain-based compliance feature, that will form the foundation of the Galaxa marketplace. GAAX are not convertible or exchangeable into shares of Leonovus. Holders of GAAX are not entitled to vote at meetings of the Company. Pursuant to continuous disclosure regulations, Leonovus will provide timely disclosure on its progress and use of proceeds to develop and deploy the Galaxa marketplace within the twenty-four month target as well as material event disclosure.

The Offering is being conducted under exemptions from the prospectus requirements of Ontario securities law and under comparable exemptions in the United States including pursuant to Rule 506(c) of Regulation D ("Regulation D") promulgated by the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the "1933 Act"), and Regulation S under the 1933 Act. Sales of the Digital Securities will only be made to (a) Offerees in the United States who are "accredited investors," as such term is defined in Rule 501(a) of Regulation D, and (b) Offerees outside the United States who are not "US Persons," as defined in Regulation S under the 1933 Act and are accredited investors pursuant to the applicable laws of the jurisdiction of residence of such Offerees. Only qualified investors acceptable to the Company will be permitted to participate in the Offering.

GAAX are not and will not be tradeable on the closing of the Offering. Currently, there are no regulated exchanges in Canada to trade digital securities like GAAX. Once the statutory hold periods have ended the Open Finance Network in the USA is approved to trade digital securities such as GAAX. The Company expects several regulated digital security exchanges to launch in various global jurisdictions in the next one to three years. In Ontario, GAAX will not be tradeable until it has been qualified by a prospectus, or an exemption from the prospectus requirement applies. The Company does not have any current plans to file a prospectus with the Ontario Securities Commission or the SEC.

More information can be found at www.galaxa.com.  

About Leonovus

Leonovus is a cloud solutions software provider that offers the leading blockchain hardened hyper-secure software-defined object storage solution.  Designed with the IT manager in mind, Leonovus' patented algorithms encrypt, shred and spread data across a network of on-premises, hybrid or multi-cloud storage nodes – allowing for the most secure yet internally accessible form of object-based data storage across the entire solution. The advanced geo-distributed architecture minimizes latency, optimizes geo-availability, reduces remote backup costs and meets data sovereignty requirements. With its software and hardware agnostic design, Leonovus provides petabyte scalability and allows the enterprise to utilize its existing idle storage resources, extend the useable lifespan of depreciated resources and improve the enterprise's overall ROI. To learn more, please visit www.leonovus.com and www.galaxa.com.

LinkedIn: https://ca.linkedin.com/company/leonovus-inc./  
Twitter: https://twitter.com/LeonovusInc
Facebook: https://www.facebook.com/LeonovusInc/

Galaxa
LinkedIn: https://www.linkedin.com/company/galaxaxaas
Twitter: https://twitter.com/GalaxaXaaS
Facebook: https://www.facebook.com/GalaxaXaaS

About Entoro Capital  

Entoro uses its proprietary online private securities syndication platform OfferBoard^® for accredited investors to analyze and review projects and opportunities. Entoro's strength is in bringing highly vetted projects to investors globally, with maximum efficiency, end-to-end security, and with seamless execution, delivering total confidence in each investment. Entoro's investment platform combined with blockchain technology provides Companys and investors access, flexibility and transparency throughout the investment process. Securities are offered through Entoro Securities, LLC, member FINRA/SIPC.

LinkedIn: https://www.linkedin.com/company/entoro/ 
Twitter: https://twitter.com/EntoroCapital 
Entoro News: https://www.entoro.com/news 
Contact: Morgan Williams [email protected] 

Cautionary Note Regarding Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods.

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.

SOURCE Leonovus Inc.

Lisa Harding, [email protected], [email protected]

Related Links

www.leonovus.com