LEQ.H Leo Acquisitions Corp

PsyBio Therapeutics, Inc. (“PsyBio”) and Leo Acquisitions Corp. (NEX:LEQ.H) (“Leo” or the “Company”) are pleased to provide an update on their previously announced proposed qualifying transaction on the TSX Venture Exchange (“TSXV”) and concurrent upsized private placement financing for aggregate gross proceeds of at least CAD$12 million.

On December 2, 2020, Leo, PsyBio, PsyBio Therapeutics Financing Inc. (“Finco”), 1276949 B.C. Ltd. (“Leo BC Sub”) and Eluss, Inc. (“Leo Delaware Sub”) entered into a business combination agreement (the “Definitive Agreement”) which outlines the terms and conditions pursuant to which Leo and PsyBio have agreed to complete a transaction that will result in a reverse take-over of Leo by the shareholders of PsyBio (the “Transaction”). The Definitive Agreement was negotiated at arm’s length.

PsyBio is a US-based biotechnology company developing a new class of drugs intended for the treatment of mental health challenges and other disorders. In collaboration with Miami University based in Oxford, Ohio, PsyBio has retained the global exclusive rights to a proprietary platform technology that biologically synthesizes psilocybin and other targeted next generation psychoactive compounds that are produced naturally in fungi and plants.

The Financing

Prior to completion of the Transaction, PsyBio intends to complete the previously announced brokered private placement (the “Financing”) of subscription receipts (the “Subscription Receipts”) of Finco, an entity incorporated solely for the purpose of the Financing and wholly-owned by the Chief Executive Officer of PsyBio, at a price of CAD$0.35 per Subscription Receipt (the “Issue Price”) for aggregate gross proceeds of at least CAD$12 million, excluding the exercise in full or in part of an option granted to the Agents (as defined below) to increase the size of the Financing by up to 25%. Each Subscription Receipt shall entitle the holder thereof to receive, upon the satisfaction or waiver (to the extent such waiver is permitted) of certain escrow release conditions (the “Escrow Release Conditions”) prior to the escrow release deadline, including all conditions precedent to the Transaction being satisfied, and without payment of additional consideration therefor, one common share in the capital Finco (each, a “Finco Share”). On completion of the Transaction, each Finco Share underlying the Subscription Receipts will be exchanged for one Subordinate Voting Share (as defined below) of the issuer resulting from the Transaction (the “Resulting Issuer”), all in accordance with the terms of the Definitive Agreement.

Eight Capital is acting as lead agent in connection with the Financing (the “Lead Agent”) together with Canaccord Genuity Corp. (together with the Lead Agent, the “Agents”) to offer the Subscription Receipts for sale on a “best efforts” agency basis. In connection with the Financing, the Agents will receive a cash commission (the “Agents’ Commission”) equal to 7% of the gross proceeds raised in the Financing and such number of compensation warrants (the “Compensation Warrants”) that is equal to 7% of the number of Subscription Receipts sold, provided that the Agents’ Commission and Compensation Warrants will be reduced to 3% in respect of sales to purchasers that are on Finco’s president’s list. Each Compensation Warrant will be exercisable to acquire one Finco Share at the Issue Price for a period of 24 months from the satisfaction of the Escrow Release Conditions (the “Exercise Period”). Upon completion of the Transaction, each holder of Compensation Warrants will receive Subordinate Voting Shares in lieu of Finco Shares upon exercise of the Compensation Warrants, including the payment therefor. The Agents will also receive, in connection with certain advisory services provided by the Agents pursuant to the terms of an advisory agreement among the Agents and Finco, cash advisory fees (the “Finance Fee”) and warrants (each an “Advisor Warrant”), with each Advisor Warrant having the same characteristics as the Compensation Warrants.

The gross proceeds from the Financing (less an amount equal to 50% of the Agents’ Commission, 50% of the Finance Fee, and less all of the reasonable costs and expenses of the Agents in connection with the Financing) (the “Escrowed Funds”) will be held in escrow by the subscription receipt agent until the satisfaction of the Escrow Release Conditions.

Upon completion of the Transaction, the proceeds of the Financing are anticipated to be used principally to fund the Transaction, and for research and development, manufacturing, corporate and general working capital purposes. The Financing is expected to close on or about December 4, 2020, or such other date as the Lead Agent and Finco may agree.

Terms of the Transaction

Immediately prior to closing of the Transaction, Leo will continue (the “Continuance”) from the Business Corporations Act (Ontario) (the “OBCA”) to the Business Corporations Act (British Columbia) (“BCBCA”) and, concurrently with and conditional upon the completion of the Continuance, will amend its articles to (i) reclassify its common shares (the “Leo Shares”) as subordinate voting shares (the “Subordinate Voting Shares”) and to amend the terms of such shares, (ii) create a class of multiple voting shares (the “Multiple Voting Shares”), and (iii) change its name to “PsyBio Therapeutics Corp.”, or such other name as may be determined by the board of the Company and agreed to by the TSXV (collectively, the “Article Amendments”) and, immediately thereafter, will effect the consolidation of its issued and outstanding Subordinate Voting Shares currently anticipated to be on the basis of one “new” Subordinate Voting Share for every 1.6667 “old” Subordinate Voting Shares then issued and outstanding, subject to adjustment in accordance with the terms of the Definitive Agreement (the “Consolidation”). Leo has called an annual and special meeting of its shareholders to be held on January 13, 2021 to approve matters related to the Transaction, including the Continuance and Article Amendments.

Immediately prior to closing of the Transaction, PsyBio shall file a certificate of amendment under the laws of the State of Delaware to effect a stock split currently anticipated to be on the basis of approximately 1.1529 “old” shares of PsyBio common stock (“PsyBio Shares”) for every one “new” PsyBio Share, subject to adjustment in accordance with the terms of the Definitive Agreement (the “PsyBio Stock Split”).

Immediately prior to closing the Transaction, each Subscription Receipt will automatically be exchanged for one Finco Share pursuant to the terms and conditions of the Subscription Receipts and the subscription receipt agreement governing the Subscription Receipts, including that all conditions precedent to the Transaction have been satisfied or waived.

At closing of the Transaction, Leo, Finco and Leo BC Sub, a wholly-owned subsidiary of Leo, will complete a three-cornered amalgamation under the laws of the Province of British Columbia, pursuant to which Finco shareholders (including former holders of the Subscription Receipts) will receive one Subordinate Voting Share in exchange for each Finco Share held, and Finco and Leo BC Sub will amalgamate (the “Amalgamation”). Following closing, the resulting entity (“Amalco”) will be wound-up and dissolved, pursuant to which all of the assets of Amalco will be distributed to the Resulting Issuer. The Amalgamation will also provide that all outstanding warrants to purchase Finco Shares (including the Compensation Warrants and Advisor Warrants) shall remain outstanding and thereafter entitle the holders thereof to acquire Subordinate Voting Shares in lieu of Finco Shares on the same terms and conditions.

Concurrently with completion of the Amalgamation at closing of the Transaction, Leo, PsyBio and Leo Delaware Sub, a wholly-owned subsidiary of Leo, will complete a three-cornered merger (the “Merger”) under the laws of the State of Delaware pursuant to which PsyBio and Leo Delaware Sub shall merge, with PsyBio to continue as the surviving corporation and a wholly-owned subsidiary of the Resulting Issuer. As a result of the Merger, Leo will acquire all of the issued and outstanding PsyBio Shares (on a post-PsyBio Stock Split Basis) in exchange for Multiple Voting Shares on the basis of one PsyBio Share for every one underlying Subordinate Voting Share (the compression ratio of the Multiple Voting Shares having yet to be determined), reflecting a deemed price of CAD$0.35 per underlying Subordinate Voting Share or such other value that is acceptable to Leo, PsyBio and the TSXV. Based on the foregoing, the aggregate deemed consideration for the PsyBio Shares (excluding Finco Shares issued in connection with the Financing) is expected to be approximately CAD$23.5 million, subject to adjustment.

Insiders, Officers and Board of Directors of the Resulting Issuer

Upon completion of the Transaction, with the exception of Gerry Goldberg, all directors and officers of Leo will resign and be replaced by nominees of PsyBio. The following sets out the names and backgrounds of the four (4) persons that are currently proposed to be the directors and officers of the Resulting Issuer (the “Resulting Issuer Board”).

Evan Levine, Chief Executive Officer and Director

Evan Levine is an assertive and insightful leader with over three decades of in-depth expertise in strategic ventures, executive supervision, asset management and the institutional investment business. His proficiencies include initiating, restructuring, and managing corporate infrastructure with knowledge and skill. He is adept at launching and reorganizing companies in various stages of development as well as originating and managing investment products including hedge funds, private equity capital vehicles, and NFA commodities/futures funds. Mr. Levine has served on the public and private boards of over one dozen companies in roles that include Chairman of the Board, Executive Chairman, Vice Chairman, Chief Executive Officer, Audit Committee Chairman, Nominating, Governance and Compensation Committee Member, and Trustee. Mr. Levine has technical expertise in the business of PsyBio. He was formerly Chairman and Chief Executive Officer of Adventrx Pharmaceuticals, a global biotechnology drug development company that was listed on the American Stock Exchange (now NYSE American). Mr. Levine received his Bachelor of Arts from Rutgers College, Rutgers University and completed graduate coursework towards his Masters of Business Administration at Stern School of Business, New York University.

Noah Davis, Chief Financial Officer, Corporate Secretary and Director

Noah has significant experience in corporate turnarounds in various industries including education, healthcare, transportation and real estate.  Noah received his BS in Accounting from Yeshiva University in 2004. He has held positions as CFO and COO in various companies.  He has significant experience in corporate turnarounds in various industries including education, healthcare, transportation and real estate.  He has served as CFO in various organizations including leading equity and debt raises of over US$50 million.  His entrepreneurial background coupled with his extensive knowledge of accounting, finance and capital markets has enabled him to contribute operational expertise and creative marketing approaches.  He has also been instrumental in leading a number of e-commerce companies through his knowledge of lead generation.  

Ross Carmel, Director

Ross is an experienced corporate securities attorney and founding partner of Carmel, Milazzo & Feil LLP. Ross has significant experience representing public and private companies, start-ups, brokers, broker-dealers, and investors in all aspects of corporate transactions, including corporate finance, mergers and acquisitions, private equity financing transactions, private placements, registered direct transactions, and initial public offerings. In addition, Ross regularly assists and advises brokers and broker-dealers with broker-dealer compliance, including both SEC and FINRA rules and regulations, and helps them navigate through the ever-evolving regulatory landscape.

Gerry Goldberg, Director

Gerald Goldberg is a Chartered Professional Accountant and a former senior partner at two major accounting firms. Mr. Goldberg has over 30 years of audit experience and was the head of the public company audit division of a major firm. He has industry expertise in cannabis cultivation and aggregation, distribution, retail, mining natural resource and oil & gas, real estate, “not-for-profit” entities and manufacturing industries, with a strong emphasis on taxation and business advisory services. Mr. Goldberg was active in corporate finance and development and was involved in the structure and design of numerous innovative financing instruments, tax shelters and syndications, both in Canada and the US. He was actively involved with the audit of various public Canadian, US, Chinese and other foreign companies listed in the US and Canada. Mr. Goldberg is a director and audit committee member of numerous public companies in both Canada and the United States, including a number of issuers listed on senior Canada and United States stock exchanges. Mr. Goldberg was the Chief Executive Officer of two Canadian cannabis companies, one of which he also served as the executive chair. Mr. Goldberg holds the designation of C.T.A. from the University of South Africa and is a member of the Institute of Chartered Professional Accountants of Ontario and the Public Accountants Council of Ontario.

As at the date hereof, the above individuals, excluding Gerry Goldberg, own in the aggregate, directly or indirectly, approximately 35% of the issued and outstanding PsyBio Shares. Gerry Goldberg owns or controls in the aggregate, directly or indirectly, approximately 5% of the issued and outstanding Leo Shares. Based on the current shareholdings, present knowledge of each of PsyBio and Leo and assuming completion of the Financing, it is anticipated that following the closing of the Transaction, no person or company will beneficially own, directly or indirectly, or control or direct more than 10% of the voting rights associated with the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares other than (i) Rob Nathan (who owns, indirectly, 21% of the issued and outstanding PsyBio Shares and is expected to own approximately 13% of the voting rights associated with the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares on completion of the Transaction, assuming completion of the Financing), and (ii) Evan Levine (who owns, indirectly, 19% of the issued and outstanding PsyBio Shares and is expected to own approximately 12% of the voting rights associated with the issued and outstanding Subordinate Voting Shares and Multiple Voting Shares on completion of the Transaction, assuming completion of the Financing).

Capitalization

Immediately prior to completion of the Consolidation and the PsyBio Stock Split, (i) Leo will have 4,229,363 Leo Shares issued and outstanding, as well as options to acquire up to an aggregate of 422,935 Leo Shares; and (ii) PsyBio will have 58,238,889 PsyBio Shares issued and outstanding. Assuming completion of the Financing, Finco will have approximately 34,285,714 Subscription Receipts issued and outstanding, along with Compensation Warrants and Advisor Warrants issued in connection with the Financing.

Based upon the number of issued and outstanding shares in each of Leo, PsyBio, and Finco on the date hereof, assuming completion of the Financing, the Consolidation, the PsyBio Stock Split, and the issuance of certain finder’s shares in connection with the Transaction, it is expected that the Resulting Issuer will have approximately 105,714,992 Subordinate Voting Shares issued and outstanding (on a partially diluted basis assuming conversion of the Multiple Voting Shares), of which: (i) the current shareholders of Leo, inclusive of 1,748,100 Subordinate Voting Shares to be issued to an arms’ length finder, will hold approximately 4,285,667 Subordinate Voting Shares representing approximately 4.1% of the issued outstanding share capital of the Resulting Issuer (on an as-converted basis); (ii) the former shareholders of PsyBio will hold Multiple Voting Shares convertible into an aggregate of up to 67,143,611 Subordinate Voting Shares, representing approximately 63.5%, of the issued and outstanding share capital of the Resulting Issuer (on an as-converted basis); and (iii) and purchasers under the Financing will hold approximately 34,285,714 Subordinate Voting Shares representing approximately 32.4% of the issued and outstanding share capital of the Resulting Issuer (on an as-converted basis).

In addition, upon completion of the Transaction, the Resulting Issuer will also have outstanding approximately 253,756 stock options, as well as Compensation Warrants and Advisor Warrants issued in connection with the Financing (not accounting for ay exercises thereof).

Conditions to Transaction

The Transaction is subject to various conditions, including but not limited to:

• completion of satisfactory due diligence;
• completion of the Financing;
• completion of the Continuance;
• completion of the Article Amendments;
• completion of the Consolidation;
• completion of the PsyBio Stock Split (collectively, the “Pre-Transaction Steps”);
• conversion of the Subscription Receipts into Finco Shares; and
• all requisite shareholder and regulatory approvals relating to the Pre-Transaction Steps and the Transaction, including, without limitation, TSXV approval, will have been obtained.

Additional Information Regarding the Transaction

The Definitive Agreement may be terminated upon mutual written agreement of the parties, in the event of any breach by the parties of the standstill provisions, or in the event that the Transaction has not been completed by February 28, 2021, amongst other things.

Leo currently exists under the provisions of the OBCA with its registered and head office located at 45 Sheppard Avenue East, Suite 703, Toronto, Ontario M2N 5W9. It is a capital pool company and intends for the Transaction to constitute its “Qualifying Transaction” as such term is defined in the policies of the TSXV. Leo is a “reporting issuer” within the meaning of the Securities Act (Ontario), Securities Act (British Columbia), Securities Act (Alberta), and Securities Act (Saskatchewan).

Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue to focus on the current business and affairs of PsyBio.

Financial Information for Leo

The following tables set forth selected historical financial information for Leo for the years ended June 30, 2020 and 2019 and three months ended September 30, 2020, and selected balance sheet data for such years and period. The audited financial statements of Leo have been prepared in accordance with IFRS and are denominated in Canadian dollars.

Balance Sheet Data	As at September 30, 2020(CAD$)		As at June 30, 2020(CAD$) (audited)		As at June 30, 2019(CAD$)(audited)
Cash and cash equivalents	220,048		220,048		252,918
Total assets	220,048		220,048		252,918
Total liabilities	50,203		45,723		56,585
Shareholders’ equity	(633,173)		(628,693)		(606,685)

Income Statement Data	3 month period ended September 30, 2020(CAD$)		12 month period ended June 30, 2020 (CAD$)(audited)		12 month period ended June 30, 2019(CAD$)(audited)
Total income	Nil		Nil		Nil
Total expenses	4,480		53,076		27,261
Net loss	(4,480)		(22,008)		(27,261)

Since the Transaction is an arm’s length transaction, Leo is not required to obtain shareholder approval for the Transaction. Leo will be required to obtain shareholder approval in respect of the Continuance, the Article Amendments, the Consolidation, the reconstitution of the Resulting Issuer Board and related matters. The Transaction is also subject to shareholder approval of PsyBio.

Financial Information for PsyBio

The following tables set forth selected historical financial information for PsyBio for the period from incorporation on January 21, 2020 to September 30, 2020, and selected balance sheet data for such years and period. The financial information of PsyBio set out below has been prepared in accordance with IFRS, is denominated in United States dollars and has not been audited.

Balance Sheet Data	As at September 30, 2020(US$)(unaudited)
Cash and cash equivalents	708,428
Total assets	708,428
Total liabilities	896,838
Shareholders’ deficit	(188,410)

Income Statement Data	12 month period endedSeptember 30, 2020(US$)(unaudited)
Total income	-
Total expenses	5,351,159
Net income (loss)	(5,350,850)

Sponsorship

Leo will be seeking an exemption from the sponsorship requirements of the TSXV in connection with the Transaction. There is no assurance that the TSXV will exempt Leo from all or part of the applicable sponsorship requirements of the TSXV.

About PsyBio Therapeutics

PsyBio is a US-based biotechnology company developing a new class of drugs intended for the treatment of mental health challenges and other disorders. In collaboration with Miami University based in Oxford, Ohio, PsyBio has retained the global exclusive rights to a proprietary platform technology that biologically synthesizes psilocybin and other targeted next generation psychoactive compounds that are produced naturally in fungi and plants (the “PsyBio IP”). Management of PsyBio expects that the PsyBio IP will enable the rapid generation of these highly stable psychoactive compounds cheaper, faster and greener than other published methods. The registered and head office of PsyBio is located at 4400 Sample Road, Suite 138, Coconut Creek, Florida 33073, United States. PsyBio was incorporated under the laws of the State of Delaware on January 21, 2020 and is not a “reporting issuer” under applicable securities legislation in any jurisdiction and its securities are not listed for trading on any stock exchange.

About Leo Acquisitions

Leo was incorporated under the OBCA on October 28, 2009 and is a Capital Pool Company (as defined in TSXV Policy 2.4 – Capital Pool Companies of the Corporate Finance Manual). Leo is listed on the NEX board of the TSXV. Leo has no commercial operations and no assets other than cash.

Further Information

All information contained in this news release with respect to Leo and PsyBio was supplied by the parties respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.

For further information regarding the Transaction, please contact:Evan Levine CEO, PsyBio Therapeutics, Inc. p: 513-449-9585e: evan@psybiolife.com

Gerry Goldberg CEO, Leo Acquisitions Corp. e: gerrygoldbergcpa@gmail.com

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to the requirements of the TSXV, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release. Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Cautionary Notes

This press 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. In disclosing the forward-looking information contained in this press release, the Company has made certain assumptions, including that: the Financing will be completed on the terms set forth in this press release, on acceptable terms or at all; all applicable shareholder and regulatory approvals for the Transaction will be received; the Transaction will be completed on the terms set forth in this press release, on acceptable terms or at all; the business and operations of the Resulting Issuer following the Transaction will be on the terms set forth in this press release; the use of proceeds from the Financing will be as set forth in this press release; and the safety and efficacy of the PsyBio IP will be cheaper, faster and greener than other published methods. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, it can give no assurance that the expectations of any forward-looking information will prove to be correct. Known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: availability of financing; delay or failure to receive board, shareholder or regulatory approvals; compliance with extensive government regulations; domestic and foreign laws and regulations adversely affecting PsyBio’s business and results of operations; decreases in the prevailing process for psilocybin and nutraceutical products in the markets in which PsyBio and the Resulting Issuer will operate; the impact of COVID-19; and general business, economic, competitive, political and social uncertainties. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release. Except as required by law, the Company disclaims any intention and assumes no obligation to update or revise any forward-looking information to reflect actual results, whether as a result of new information, future events, changes in assumptions, changes in factors affecting such forward-looking information or otherwise.

PsyBio makes no medical, treatment or health benefit claims about PsyBio’s proposed products. The U.S. Food and Drug Administration (the “FDA”) or other similar regulatory authorities have not evaluated claims regarding psilocybin and other next generation psychoactive compounds. The efficacy of such products have not been confirmed by FDA-approved research. There is no assurance that the use of psilocybin and other psychoactive compounds can diagnose, treat, cure or prevent any disease or condition. Vigorous scientific research and clinical trials are needed. PsyBio has not conducted clinical trials for the use of its proposed PsyBio IP. Any references to quality, consistency, efficacy and safety of potential products do not imply that PsyBio verified such in clinical trials or that PsyBio will complete such trials. If PsyBio cannot obtain the approvals or research necessary to commercialize its business, it may have a material adverse effect on the PsyBio’s performance and operations.