Mr. Michael Gaffney reports

LEONOVUS PROVIDES BUSINESS UPDATE ON PRECIOUS METALS EXCHANGE DEVELOPMENT

LeoNovus Inc. has provide a business update regarding the development of its institutional-grade precious metals exchange.

A modern marketplace for real-world assets

Leveraging its long-standing expertise in secure data management and blockchain technology, LeoNovus is nearing the completion of a digital precious metals exchange. The platform is expected to utilize a permissioned blockchain ledger to facilitate the trading and settlement of physical assets. The platform and its components remain subject to regulatory approvals (as described below).

Crucially, each digital token on the platform represents a one-for-one ownership of physical gold or silver ounces, held securely in regulated Canadian custodian vaults. This structure ensures that every transaction is backed by allocated, insured bullion, providing users with a transparent and immutable record of their holdings.

Advanced technology and liquidity

The exchange features a high-performance transaction engine designed for rapid settlement. To ensure continuous market depth, the platform is expected to include a user-financed automated market-maker (AMM) liquidity pool. This allows for constant pricing and liquidity without the company acting as a counterparty, maintaining a neutral and auditable marketplace.

Strategic pivot and project independence

On Dec. 3, 2025, LeoNovus terminated the share purchase agreement with Wellfield Technologies Inc. regarding the proposed acquisition of Tradewind Markets Inc. As development by LeoNovus of its exchange platform is now substantially complete, the company determined that the acquisition of Tradewind was no longer strategic to the platform's launch.

"Our independence allows us to focus exclusively on the partnerships and regulatory approvals required for a successful launch," said Michael Gaffney, chair and chief executive officer . "We are applying years of experience in quantum-secure storage and distributed trust models to an asset class where integrity is paramount."

Next steps

The company is currently engaged in advanced discussions with several strategic partners regarding inventory, liquidity and final operational components. LeoNovus plans to complete necessary financing and proceed with final system testing throughout the winter. Commercial launch is subject to the completion of these milestones and receipt of required regulatory approvals (see "Regulatory considerations" below).

Additional corporate updates

Trading of the LeoNovus shares

Trading of the common shares of LeoNovus on the TSX Venture Exchange was halted in accordance with TSX-V policies in conjunction with LeoNovus's proposed transaction with Tradewind. As the Tradewind transaction did not proceed, LeoNovus is working to fulfill the conditions of the TSX-V in order to obtain lifting of the trading halt in the near future.

Loan agreement amendment

As previously announced on Feb. 3, 2023, Jan. 31, 2024, and Aug. 6, 2024, the company has a loan agreement with two directors of LeoNovus that had a maturity date of Aug. 3, 2025. During the third quarter of 2025, the company amended the loan to extend the maturity date on the loan and the expiry date of the warrants issued to the lenders as consideration for the loan to Aug. 3, 2026. The amendment is subject to approval by the TSX-V. See "Insider participation in loans" below.

Regulatory considerations

The proposed precious metals trading platform is a new technology that operates in a regulatory environment for blockchain and other digital assets that continues to evolve over time. To launch the platform with the anticipated features fully enabled, LeoNovus anticipates that it will require registrations and/or exemptive relief from applicable securities legislation that may be applicable to the features of the precious metals exchange platform.

These anticipated features of the platform, namely, a peer-to-peer trading feature, have not yet been approved by Canadian securities regulators and are subject to regulatory approval by applicable Canadian securities regulators prior to their implementation and availability.

There is no assurance that LeoNovus will be able to obtain any necessary registrations and/or exemptions from applicable securities legislation and under any other applicable laws on terms that are satisfactory to LeoNovus (or the timing thereof) for approval of the proposed precious metals trading platform. Any failure to obtain such regulatory approvals could have a material adverse effect on the growth prospects of Leonvous's business.

Insider participation in loans

As the lenders under the loan are members of the board of directors of LeoNovus, the amendment to the loan agreement to extend the maturity date and the expiry date of the warrants constitutes a related party transaction under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. LeoNovus has relied on the exemption under Section 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 per cent of the market capitalization of the company, whether considered separately or together.

We seek Safe Harbor.