WonderFi, Coinsquare and CoinSmart Announce Closing of Business Combination

Historic transaction establishes WonderFi as one of the largest regulated crypto investing ecosystems in Canada with over 1.6 million registered users

Toronto, Ontario–(Newsfile Corp. – July 10, 2023) – WonderFi Technologies Inc. (TSX: WNDR) (OTCQB: WONDF) (WKN: A3C166) (“WonderFi“), Coinsquare Ltd. (“Coinsquare“) and CoinSmart Financial Inc. (“CoinSmart“) are pleased to announce that WonderFi, Coinsquare and CoinSmart, further to their news releases dated April 3, 2023, June 20, 2023 and June 27, 2023, have closed their business combination transaction (the “Transaction“) pursuant to the business combination agreement dated April 2, 2023 (the “Business Combination Agreement“), positioning the resulting entity, WonderFi Technologies Inc., and its registered operating subsidiaries, to offer one of the largest registered crypto asset trading ecosystems in Canada and to provide Canadians with a wide range of diversified products and services including both retail and institutional crypto trading, staking products, B2B crypto payment processing and soon also sports betting and gaming.

This news release constitutes a “designated news release” for the purposes of WonderFi’s prospectus supplement dated December 23, 2022 to its short form base shelf prospectus dated September 7, 2022.

Key Transaction Benefits

• With a collective user base of over 1.6 million registered Canadians and combined assets under custody exceeding $600 million, WonderFi boasts one of the largest communities of crypto investors within a single regulated ecosystem in Canada.

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  WonderFi now holds a 43% ownership stake in Tetra Trust Company, Canada’s first and only trust company licensed to custody digital assets.

• WonderFi’s new crypto payment solution, SmartPay, is its answer to the burgeoning crypto payment landscape.

“WonderFi is emerging from this transformational transaction with a strong balance sheet that will enable us to execute on our core strategy,” shared WonderFi President and Interim-Chief Executive Officer, Dean Skurka. “In the evolving digital asset industry, WonderFi is exceptionally positioned as the owner of some of the most respected and regulated crypto trading platforms globally. With our firmly established position, WonderFi is excited for its next chapter as we integrate our 1.6 million registered users, cross-sell services across our diversified suite of products and add to our portfolio of innovative products.”

SmartPay

As the global adoption of digital assets continues to grow, the use cases for them, particularly in facilitating payments, are experiencing significant growth across various sectors, including e-commerce, gaming, content creation, and emerging industries. CoinSmart’s crypto payments solution, SmartPay, has successfully processed over one million transactions to date.

“WonderFi’s dedication to expanding our footprint in the crypto payments space exemplifies our commitment to innovation and growth,” added Skurka.

One Step Ahead

“In the rapidly evolving digital asset sector, WonderFi holds an exceptional position as one of the most regulated crypto trading ecosystems globally,” said WonderFi strategic investor, Kevin O’Leary. “This is a major advantage as unregistered international exchanges can no longer serve the Canadian market without adhering to local regulations. In the past, operating a registered cryptocurrency platform posed a disadvantage compared to competitors who could offer services without the burden of compliance costs. However, those days are now behind us. Now more than ever, investors are actively seeking trading platforms that operate in harmony with regulators. Through consolidation, WonderFi has been one step ahead every step of the way.”

Transaction Details

The following is a general summary of the Transaction. For further details, see the joint management information circular of WonderFi, Coinsquare and CoinSmart dated May 12, 2023, and filed under WonderFi’s profile on the SEDAR website at www.sedar.com:

• The Transaction was completed pursuant to two separate court-approved plans of arrangement involving Coinsquare and CoinSmart, respectively.

• Pursuant to the Transaction, WonderFi issued 270,920,353 common shares to Coinsquare’s shareholders (representing an exchange ratio of 6.946745 WonderFi shares for each Coinsquare share held), and 117,924,334 common shares to CoinSmart’s shareholders (representing an exchange ratio of 1.801462 WonderFi shares for each CoinSmart share held).

• Immediately after giving effect to the Transaction, existing WonderFi shareholders own approximately 38% of WonderFi, former Coinsquare shareholders own approximately 43% of WonderFi, and former CoinSmart shareholders own approximately 19% of WonderFi.

• Mogo Inc. becomes the largest shareholder of WonderFi, owning approximately 14% of the common shares of WonderFi.

• CoinSmart shareholders also received 65,460,350 earnout rights as part of the Transaction, entitling them to receive their proportionate interest of up to an additional $15 million of total consideration in an earn out, payable in cash or a combination of cash and common shares of WonderFi, based on the revenues of CoinSmart’s SmartPay business (over a period of three years following the closing of the Transaction).

• An aggregate of 15,863,554 common shares of WonderFi were also issued to certain advisors of the three companies in settlement of certain obligations in connection with the Transaction.

• An aggregate of 11,294,356 new WonderFi stock options were issued pursuant to WonderFi’s existing incentive plan to former holders of stock options of Coinsquare and CoinSmart that were not “in-the-money” on the date of the Business Combination Agreement, exercisable until April 2, 2028. The exercise prices for these options range from $0.17 to $0.30, with the weighted average exercise price equaling $0.26 per share.

• The exercise prices of existing WonderFi stock options were repriced to an exercise price of $0.30 per share, provided that such existing stock options had an exercise price greater than $0.30 per share prior to the completion of the Transaction.

• The directors, officers and principal shareholders of Coinsquare and the principal shareholders of CoinSmart are subject to lock-up arrangements, pursuant to which their WonderFi shares will become freely tradeable in tranches over an 18-month period after the closing of the Transaction. All other Coinsquare shareholders will be subject to lock-up arrangements, pursuant to which their WonderFi shares will become freely tradeable in tranches over a 12-month period after the closing of the Transaction.

• Pursuant to investor rights agreements and a voting agreement among certain shareholders of WonderFi, Coinsquare and CoinSmart, until the later of: (i) April 2, 2025, and (ii) the second annual general meeting of WonderFi following the effective date at which directors are elected to the WonderFi board of directors (“WonderFi Board“), each of them shall vote all of their WonderFi shares in favour of the size of the WonderFi board being set at and remaining at nine (9) directors and in favour of one another’s WonderFi Board nominees for election to the WonderFi Board. The WonderFi shareholders party to the investor rights agreement are entitled to two nominees to the WonderFi Board, the CoinSmart parties to one nominee, and Mogo Inc. is entitled one nominee to the WonderFi Board

• On closing, WonderFi’s board of directors was reconstituted, with Robert Halpern, Justin Hartzman, Christopher Marsh, G. Scott Paterson, Wendy Rudd, Dean Skurka, Nicholas Thadaney, Jason Theofilos, and Michael Wekerle being appointed as directors.

Early Warning System Matters regarding CoinSmart

Pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues and in connection with the filing of an Early Warning Report regarding the acquisition by WonderFi of all the common shares of CoinSmart, a corporation incorporated under the laws of British Columbia, with its securities trading until completion of the Transaction on the NEO Exchange under the symbol “SMRT” and having a head office located at 1075 Bay Street, Unit 301, Toronto, Ontario, M5B 2B2, Canada, WonderFi advises as follows:

On July 7, 2023, WonderFi, of 341-110 Cumberland St., Toronto, Ontario, M5V 3V5, acquired 65,460,350 common shares of CoinSmart in connection with the implementation of a plan of arrangement of CoinSmart under the Business Corporations Act (British Columbia), in consideration of the issuance of: (i) an aggregate of 117,924,334 common shares of WonderFi (having a market value of $20,636,758 based on the closing price of the common shares of WonderFi on the Toronto Stock Exchange of $0.175 on July 7, 2023), being 1.801462 common shares of WonderFi for each CoinSmart common share so acquired and (ii) one earnout right for each CoinSmart common share so acquired (generally defined as a right to share proportionately in up to an additional $15 million of total consideration, which may be paid by WonderFi in cash or a combination of cash and common shares of WonderFi, based on the revenue of CoinSmart’s SmartPay business over a period of three years following implementation of the CoinSmart plan of arrangement).

Immediately prior to the Transaction, WonderFi held, directly or indirectly, or exercised control or direction over, nil common shares of CoinSmart. After giving effect to the Transaction, WonderFi acquired control and ownership over an aggregate of 65,460,350 common shares of CoinSmart, representing 100% of CoinSmart’s issued and outstanding common shares.

WonderFi acquired CoinSmart for investment purposes in addition to WonderFi’s belief that the acquisition adds complementary services and a new client base to WonderFi, accelerating the growth of WonderFi’s full service Web3 retail platform. Through the acquisition of CoinSmart’s crypto asset trading platform, WonderFi gains access to a new client base and intends to realize cost synergies through its integration. The addition of the SmartPay service enables WonderFi to realize its goal of expanding its Web3 retail platform into the payments vertical.

A copy of the Early Warning Report disclosing the Transaction in respect of CoinSmart will be filed on WonderFi’s SEDAR profile at www.sedar.com and can be obtained from WonderFi at 341-110 Cumberland St., Toronto, Ontario, M5V 3V5, attention: Alexander Davis, or phone: 647-878-1441.

Financial Advisors and Counsel

Bobby Halpern of Halpern & Co. acted as lead special advisor to WonderFi. In connection with the Transaction, WonderFi engaged Haywood Securities Inc. to act as financial advisor and provide a fairness opinion, and Cassels Brock & Blackwell LLP as its legal advisor. Coinsquare engaged Origin Merchant Partners as its financial advisor and Goodmans LLP as its legal advisor. CoinSmart engaged Eight Capital as its financial advisor and Wildeboer Dellelce LLP as its legal advisor.

ABOUT WONDERFI

WonderFi aims to revolutionize access to digital assets by operating its four registered Canadian-owned and operated crypto asset trading platforms: Bitbuy, Coinsquare, CoinSmart, and Coinberry. With a collective user base of over 1.6 million registered Canadians and a combined assets under custody exceeding $600 million, WonderFi boasts one of the largest communities of crypto investors within a single regulated ecosystem in Canada.

WonderFi’s global crypto payment processing division, SmartPay, enables seamless digital asset payments across a range of industries. With a track record of consistent growth and unwavering commitment to excellence, SmartPay has successfully processed over one million transactions to date.

WonderFi remains devoted to offering its users access to new regulated verticals, designed to empower the generation of modern wealth. For further information about WonderFi, please visit www.wonder.fi.

Additional Information

For additional information, please contact:

Media / Investor Relations
Binu Koshy
binu@wonder.fi

Forward-Looking Information and Statements

This press release contains certain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the beliefs of WonderFi Technologies Inc. (“WonderFi” or the “Company”) regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such “could”, “intend”, “expect”, “believe”, “will”, “projected”, “planned”, “estimated”, “soon”, “potential”, “anticipate” or variations of such words.

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements. In addition, in connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information and statements are the following: the inability of the Company to integrate successfully (including the retention of key employees) such that the anticipated benefits of the Transaction are realized; the ability to realize synergies and cost savings at the times, and to the extent, anticipated; the potential impact of the announcement or consummation of the Transaction on relationships, including with regulatory bodies, employees, suppliers, customers, competitors and other key stakeholders; the inability of the Company to obtain the necessary regulatory, stock exchange, shareholder and other approvals which may be required for matters subsequent to closing of the Transaction; the inability of the Company to meet its expected go-live timing for iGaming, sports betting, stock trading and yield products, each of which may be subject to additional regulatory or other approvals which may be required in connection therewith; the ability of the Company to consolidate its registered crypto asset trading businesses under Coinsquare’s Canadian Investment Regulatory Organization investment dealer registration, including obtaining requisite regulatory approvals in connection therewith; the ability of SmartPay to generate the revenues required to entitle CoinSmart shareholders to payments pursuant to their earnout rights; the inability of the Company to work effectively with strategic investors and partners, and any changes to key personnel; security and cybersecurity threats and hacks; internet and power disruptions; uncertainty about the acceptance or widespread use of digital assets; failure to anticipate technology innovations; the COVID-19 pandemic; climate change; currency risk; changes in or enforcement of national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices and political or economic developments in Canada, the United States, Europe and other jurisdictions in which the Company carries on business or in which the Company may carry on business in the future; and material adverse changes in general economic, business and political conditions, including changes in the financial markets and compliance with extensive government regulation. These risks are not intended to represent a complete list of the factors that could affect the Company; however, these factors should be considered carefully. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or statements prove incorrect, actual results may vary materially from those described herein. The impact of any one assumption, risk, uncertainty, or other factor on a particular forward-looking statement cannot be determined with certainty because they are interdependent and the Company’s future decisions and actions will depend on management’s assessment of all information at the relevant time. A more fulsome description of risk factors that may impact business, financial condition and results of operation with respect to WonderFi is set out in its management’s discussion and analysis and financial statements for the period ended March 31, 2023, as well as its annual information form and the joint management circular of WonderFi, Coinsquare and CoinSmart in respect of the Transaction, available on its SEDAR profile at www.sedar.com.

Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice. All financial amounts referenced herein are in Canadian dollars unless otherwise expressly identified.

The Toronto Stock Exchange has not approved or disapproved of the information contained in this release.

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