U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 40-F

 

☒ Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934

 

or

 

☐ Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

 

  For the fiscal year ended    
       
  Commission File Number    

 

DEFI TECHNOLOGIES INC.

 

(Exact name of Registrant as specified in its charter)

 

Canada   7379   N/A
(Province or other jurisdiction of incorporation or organization)   (Primary Standard Industrial Classification Code Number (if applicable))   (I.R.S. Employer
Identification Number)

 

198 Davenport Road

Toronto, ON M5R 1J2

(Address and telephone number of Registrant’s principal executive offices)

 

Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

 

Copies to:

 

Kenny Choi   Ethan L. Silver

Defi Technologies Inc.

198 Davenport Road

Toronto, ON

M5R 1J2

  

Lowenstein Sandler LLP
1251 Avenue of the Americas

New York, New York 10020

Tel: (973) 597-2500

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Shares   DEFT   The Nasdaq Stock Market LLC

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

For annual reports, indicate by check mark the information filed with this Form:

☐ Annual information form                  ☐ Audited annual financial statements

 

 

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: N/A.

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☐     No ☒

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☐     No ☐

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

 

Emerging growth company ☒

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

 

Yes ☐     No ☐

 

†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

 

 

 

 

 

 

SUMMARY

 

The following summary highlights, and should be read in conjunction with, the more detailed information contained elsewhere in this registration statement, and the documents filed as exhibits hereto. You should read carefully the entire document, including our financial statements and related notes and other exhibits, to understand our business, and the common shares which are being registered hereby. You should pay special attention to the “Risk Factors” sections below and in our Annual Information Form, filed as Exhibit 99.98 hereto. Unless the context otherwise requires, the terms “DeFi,” the “Company”, “we” or “our” and similar references in this prospectus refer to Defi Technologies Inc., including its wholly owned subsidiaries.

 

Our Company

 

We are a publicly listed technology company on the Cboe Canada Exchange in Canada that bridges the gap between traditional capital markets and decentralized finance through five business lines:

 

●Asset Management – Through our wholly-owned subsidiary, Valour Inc. (“Valour Cayman”), and Valour Digital Securities Limited (“VDSL”, and together with Valour Cayman, “Valour”), we develop and list Exchange Traded Products (“ETPs”) on traditional exchanges in Europe that provide indirect exposure to underlying digital assets, digital asset indexes, or other decentralized finance instruments;

 

●Infrastructure – We participate in decentralized blockchain networks by processing data transactions from nodes based in Europe and the Middle East that contribute to network security and stability, governance, and transaction validation;

 

●Ventures – We make early-stage investments in companies, banks and foundations in the digital asset space;

 

●DeFi Alpha – We operate a specialized arbitrage trading desk based in Switzerland that focuses on identifying and capitalizing on low-risk arbitrage opportunities within the digital asset market; and

 

●Research – We acquired Reflexivity Research LLC (“Reflexivity”) a digital asset research firm in February 2024.

 

“Decentralized finance” or “DeFi” refers to a financial system that seeks to operate as an alternative to the traditional financial system. DeFi seeks to allow people and companies to effect transactions on a “peer to peer” basis, typically employing blockchain or other distributed ledger technology to allow participants to interact with one another directly between each other. Because transactions are effected peer to peer, DeFi does not rely on traditional intermediaries such as banks, brokerages, and stock exchange, so transactions can be completed on a more timely basis and without the fees typically charged by intermediaries.

 

Asset Management

 

Valour ETPs

 

Valour Cayman develops and lists ETPs on a range of regulated stock exchanges in Europe. These products synthetically track the value of a digital asset or DeFi protocol token, or an index or basket thereof. ETPs simplify the ability for retail and institutional investors to gain exposure to digital assets and decentralized finance as they remove the need to manage wallets, various logins, custody and other intricacies that are linked to managing a digital asset portfolio. Rather, retail and institutional investors can simply purchase the associated ETP with the digital asset or DeFi protocol token they wish to gain exposure to as a traditional equity product through a bank or brokerage account on the relevant stock exchanges.

 

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As of the date hereof, Valour Cayman has the following ETPs listed on the exchanges indicated:

 

Name of ETP (Currency)   Listing Exchange(s)   ISIN No.
Valour Avalanche (AVAX) ETP (EUR)   Borse Frankfurt Zertifikate AG (the “Frankfurt Exchange”)   CH1149139615
Valour Avalanche (AVAX) ETP (SEK)   Nordic Growth Market (the “NGM”)   CH1114178788
Valour Binance (BNB) (EUR)   Frankfurt Exchange   CH1149139672
Valour Binance (BNB) (SEK)   NGM   CH1149139698
Valour Bitcoin Carbon Neutral (EUR)   Frankfurt Exchange   CH1149139706
Valour Bitcoin Staking   Frankfurt Exchange   CH1213604544
Valour Bitcoin Staking (SEK)   NGM   CH1213604536
Valour Bitcoin Zero (EUR)   NGM, Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH0573883474
Valour Bitcoin Zero (SEK)   NGM   CH0585378661
Valour Cardano (EUR)   Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH1114178820
Valour Cardano (SEK)   NGM   CH1114178796
Valour Chainlink (SEK)   NGM   CH1161139592
Valour Core SEK   Spotlight Exchange   CH1213604593
Valour Cosmos (ATOM) (EUR)   Frankfurt Exchange   CH1149139664
Valour Digital Asset Basket 10 (VDAB10) (EUR)   NGM and Frankfurt Exchange   CH1149139623
Valour Digital Asset Basket 10 (VDAB10) (SEK)   NGM   CH1161139568
Valour Enjin (ENJ) ETP (EUR)   Frankfurt Exchange   CH1149139656
Valour Ethereum Zero (EUR)    Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH0585378752
Valour Ethereum Zero (SEK)   NGM   CH1104954362
Valour Hedera   Frankfurt Exchange   CH1213604528
Valour Hedera (SEK)   Spotlight Exchange   CH1213604585
Valour Internet Computer (SEK)   NGM   CH1213604510
Valour Near (SEK)   Spotlight Exchange   CH1213604577
Valour Polkadot ETP (EUR)   Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH1114178812
Valour Polkadot ETP (SEK)   NGM   CH1114178770
Valour Ripple (XRP) (SEK)   NGM   CH1161139584
Valour Short Bitcoin (SBTC) SEK   NGM   CH1149139649
Valour Solana ETP (EUR)   Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH1114178838
Valour Solana ETP (SEK)   NGM   CH1114178762
Valour Toncoin (SEK)   NGM   CH1161139600
Valour Uniswap ETP (EUR)   Frankfurt Exchange, Euronext Amsterdam and Euronext Paris   CH1114178846
Valour Uniswap ETP (SEK)   NGM   CH1114178754

 

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Products and Services

 

Valour Cayman’s ETPs are issued under a base prospectus dated December 15, 2022 (as updated to the date hereof, the “Base Prospectus”), as supplemented by supplements or final terms from time to time (“Final Terms”), which together govern the ETP program (the “Program”). The Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in France, Germany, Italy, Austria, Belgium, Denmark, Finland, Luxembourg, The Netherlands, Norway and Spain. Valour Cayman may also request the SFSA to publicize the approval of the Base Prospectus to other European Economic Area (“EEA”) states in accordance with Regulation (EU) 2017/1129. For further details on the terms and conditions of the ETPs, a copy of the Base Prospectus may be obtained at https://valour.com/en/issuer-reporting

 

Valour Cayman’s current ETP range are all open-ended certificates that provide exposure to either a single digital asset, an index or a basket of digital assets, as specified in the relevant Final Terms. The Final Terms and for each of Valour Cayman’s ETPs are available on the company website on the respective ETP pages: https://valour.com/products. Valour Cayman is the issuer of the ETPs offered under the Program and also acts as calculation agent. Valour Cayman’s policy is always to hedge 100% of the market risk in the underlying asset. Hedging is done continuously and in direct correspondence to the issuance of ETPs to investors. In order to hedge its exposure to each digital asset, Valour Cayman relies on digital asset exchanges operating outside of the United States to be able to buy and sell the digital assets which the ETPs track.

 

For its Bitcoin Zero and Ethereum Zero products, Valour Cayman charges zero management fees, and for all other products, it charges a management fee of 1.9%.

 

Valour Cayman currently lists its ETPs on the following European stock exchanges: NGM, Euronext Amsterdam, Euronext Paris, Lang and Schwarz Exchange, Frankfurt Exchange and Spotlight Exchange. The listing of ETPs is subject to approval by the relevant exchange.

 

Valour Digital Securities Limited ETPs

 

Valour Digital Securities Limited (“VDSL” and together with Valour Cayman “Valour”), is owned by the charitable trust VLR Charitable Trust in Jersey. VDSL is a special purpose vehicle incorporated as a public limited liability company under the laws of Jersey. In April 2023, VDSL obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering of physically backed ETPs to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. Valour Cayman acts as arranger for all ETPs issued by VDSL.

 

As of the date hereof, VDSL has listed the following ETPs:

 

Name of ETP (Currency)   Exchange Listings   ISIN No.
Valour Physical Bitcoin Carbon Neutral (SEK)   Deutsche Börse Xetra and Frankfurt Exchange   GB00BQ991Q22
1Valour Ethereum Physical Staking   Deutsche Börse Xetra   GB00BRBMZ190
1Valour Internet Computer Staking (EUR)   Deutsche Börse Xetra   GB00BS2BDN04
1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip   Deutsche Börse Xetra   GB00BPDX1969
Valour Internet Computer Physical Staking   Deutsche Börse Xetra   GB00BS2BDN04

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Products and Services

 

VDSL ETPs are issued under a base prospectus dated April 5, 2023 (as updated on an ongoing basis, the “VDSL Base Prospectus”), as supplemented by supplements or final terms from time to time (“VDSL Final Terms”), which together govern the VDSL ETP program (the “VDSL Program”). The VDSL Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. VDSL may also request the SFSA to publicize the approval of the VDSL Base Prospectus to other EEA states in accordance with Regulation (EU) 2017/1129. In addition, VDSL may decide to register this VDSL Base Prospectus in Switzerland with the reviewing body SIX Exchange Regulation AG or another FINMA approved reviewing body, as a foreign prospectus that is also deemed to be approved in Switzerland pursuant to Article 54 paragraph 2 FinSA, for the purposes of making a public offer of VDSL ETPs in Switzerland or admission to trading of all or a series of VDSL ETPs on a regulated stock exchange in Switzerland. For further details on the terms and conditions of the ETPs, a copy of the VDSL Base Prospectus may be obtained at https://valour.com/en/issuer-reporting.

 

The VDSL Program permits VDSL to issue VDSL ETPs related to any one of 124 underlying digital currencies (“Digital Currencies”) (or more subject to supplements to the VDSL Base Prospectus), to a “basket” comprising two or more of such Digital Currencies or to an index linked to Digital Currencies, as specified in the relevant VDSL Final Terms. The VDSL Final Terms and for each of VDSL’s ETPs are available on the Valour’s website on the respective ETP pages: https://valour.com/products. The VDSL ETPs are designed to offer investors a means of investing in Digital Currencies without having to acquire digital assets themselves and to enable investors to buy and sell that interest through the trading of a security on a stock exchange.

 

Each VDSL ETP is an undated secured limited recourse debt obligation of VDSL, which ranks equally with all other VDSL ETPs of the same class. VDSL ETP holders only have recourse to the assets of the class of VDSL ETP of which they are a holder. If the net proceeds are insufficient for VDSL to make all payments due, neither the trustee nor any person acting on behalf of the trustee will be entitled to take any further steps against the VDSL, and no debt shall be owed by the VDSL in respect of such further sum.

 

The underlying assets for the VDSL ETP of each class, by which they are backed and on which they are secured, comprise private keys evidencing ownership of Digital Currencies. These private keys are held in the name of VDSL in secure vaults at the premises of the relevant custodian of VDSL (“VDSL Custodian”) and are not fungible with other digital assets held by the relevant VDSL Custodian.

 

The VDSL ETPs are constituted under the trust instrument dated April 5, 2023 between VDSL and The Law Debenture Trust Corporation p.l.c. as trustee (the “Trustee”) for the holders of VDSL ETPs (“VDSL ETP Holders”) (the “Trust Instrument”). The Trustee holds all rights and entitlements under the Trust Instrument on trust for VDSL ETP Holders. In addition, VDSL and the Trustee have entered into a single security deed (the “Security Deed”) in respect of all pools of VDSP ETPs (“Pools”). The rights and entitlements held by the Trustee under the Security Deed, to the extent attributable to a Pool, are held by the Trustee on trust for the VDSL ETP Holders of that particular class of VDSL ETP. Under the terms of the Security Deed, VDSL has charged to the Trustee for the benefit of the Trustee and the relevant VDSL ETP Holders by way of first fixed charge the Digital Currencies held in custody attributable to the relevant class of VDSL ETP and all rights of VDSP in respect of the respective custody accounts to the extent attributable to the relevant Pool. VDSL has also, under the terms of the Security Deed, assigned to the Trustee by way of security the contractual rights of the issuer relating to such class under the custody agreements entered into by VDSL and has granted a first-ranking floating charge in favour of the Trustee over all of VDSL’s rights in relation to the secured property attributable to the applicable Pool, including but not limited to its rights under the custody agreements and the custody accounts attributable to that Pool.

 

VDSL charges management fees ranging from 0% to 1.9% on the VDSL ETPs.

 

VDSL ETPs are currently listed on the Deutsche Börse Xetra and the Frankfurt Exchange. The listing of ETPs are subject to approval by Deutsche Börse Xetra or Frankfurt Exchange, as applicable.

 

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Infrastructure

 

Our Infrastructure business offers governance services and products within the DeFi ecosystem from nodes operated in Europe and the Middle East. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for networks, in addition to partnering with other companies and institutions to further improved governance within specific projects.

 

Node management refers to the practice of acting as a “node”, which is a stakeholder that verifies transactions on a decentralized blockchain network. In exchange for such activities, the node is compensated by the network, usually in the form of the digital assets native to the applicable blockchain network.

 

As of the date hereof, the Company has:

 

●acquired intellectual property (the “Solana IP”) from prominent Solana developer Stefan Jørgensen pursuant to a definitive purchase agreement (the “Solana IP Agreement”), dated December 18, 2023 to bolster its staking and node revenues;

 

●staked the Company’s Blocto tokens. Blocto, a holding of the Company through its Ventures business, is a blockchain wallet hub that allows users to conveniently and securely access blockchains; and

 

●partnered with Pyth network to provide real-time digital asset pricing data to the Pyth network to improve DeFi market transparency.

 

Venture

 

Our Venture business makes equity investments or investments in digital assets of decentralized finance companies in early-stage ventures. By virtue of being a public company in the digital asset and decentralized finance industry, our advisors, directors, officers, employees and consultants are exposed to various investment opportunities in such industry. Prior to making any investments, management reviews the terms and conditions of the investments, the viability of the underlying company or project, whether such investment may further our other business lines and our internal resources. We make these equity or token investments on our own behalf using our own treasury.

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the DeFi ecosystem to build a diversified portfolio of DeFi assets and venture investments, predominantly at Seed or Series A stage. As of June 30, 2024, the Company has participated in equity or token raises from the following ventures:

 

●AMINA Bank is one of the first FINMA-regulated institutions to provide digital asset banking services. The broad, vertically integrated spectrum of services, combined with the highest security standards, make AMINA's value proposition unique. AMINA operates globally from its regulated hubs of Switzerland, Abu Dhabi and Hong Kong to offer fiat and digital asset services to progressive investors, traditional and crypto-native alike, whether individuals, corporates or institutions.

 

●Clover is a substrate-based smart contracts platform with Ethereum Virtual Machine (EVM) compatibility, providing cross-chain infrastructure for scaling decentralised applications (dApps).

 

●Sovyrn provides DeFi infrastructure for Bitcoin via a non-custodial and permissionless smart contract-based system that enables lending, borrowing and margin trading.

 

●Saffron Finance is a peer-to-peer (P2P) risk exchange and decentralised marketplace for risk arbitrage, built on Ethereum.

 

●Blocto is a UX-focused interoperable ecosystem that enables users to easily access dApps, digital asset and NFTs cross-chain.

 

●Luxor Technologies provides a range of solutions for scaling blockchain infrastructure including a globally distributed mining pool, a hashrate network-switching engine, and a wide variety of blockchain related software.

 

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●Oxygen Protocol is a Solana based DeFi prime brokerage service that democratises borrowing, lending, and leverage trading.

 

●Maps.me is the world's leading offline mapping application. With over 140M users, Maps.me 2.0 aims to become the global passport to the new financial system.

 

●Mobilecoin is an open-source, encryption-focused digital asset designed for use in everyday transactions, addressing security, transaction speed, energy consumption, and optimization for mobile devices.

 

●Volmex Labs offers a tokenised volatility protocol built on Ethereum that enables the creation of volatility indexes (VIX) for digital assets.

 

●3iQ Corp. is a Bitcoin and digital asset fund manager that offers digital asset investment products.

 

●Wilder World is the first full-scale, immersive 5D Metaverse being built out on Ethereum with full augmented reality (AR) and virtual reality (VR) integration.

 

●Neuronomics AG, is a private company founded in Switzerland. Neuronomics is a Swiss asset management firm specializing in quantitative trading strategies based on artificial intelligence, computational neuroscience, and quantitative finance. Neuronomics holds an asset management license from the Swiss Financial Market Supervisory Authority (FINMA), allowing it to manage and administer financial assets on behalf of its clients.

 

●Boba Network is a blockchain Layer-2 scaling solution and Hybrid Compute platform offering lightning fast transactions and fees up to 100x less than Layer-1.

 

Each of these ventures were selected for their innovative potential, high quality teams, growing and / or potential user bases and unique position in the market or market share, cutting edge technology, and/or leading investors. The ventures respective use cases include borrowing and lending, decentralized exchanges, derivatives and asset management, amongst others.

 

Reflexivity

 

Reflexivity is a U.S.-based digital asset research firm seeking to bridge traditional finance into the ever-evolving world of digital assets. Reflexivity produces research reports on the digital asset market, digital assets and DeFi protocols. Reflexivity operates on a subscription model, whereby retail and commercial users pay a subscription fee to access Reflexivity’s research reports. Reflexivity does not produce research reports on any equity securities. Additionally, Reflexivity holds conferences in the digital asset sector, such as Bitcoin Investor Day held in New York on March 22, 2024 and Crypto Investor Day to be held on October 25, 2024, bringing together institutional investors, capital allocators, and entrepreneurs.

 

DeFi Alpha

 

DeFi Alpha is a specialized arbitrage trading desk based in Switzerland that focuses on identifying and capitalizing on low-risk arbitrage opportunities within the digital asset market. Utilizing advanced algorithmic strategies and in-depth market analysis, DeFi Alpha aims to generate alpha by exploiting inefficiencies and discrepancies in digital asset pricing. The trading desk's primary focus is on arbitrage opportunities in both centralized and decentralized markets, ensuring minimal market or protocol exposure to mitigate downside revenue volatility.

 

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Summary of Risk Factors

 

Our business is subject to numerous risks, as more fully described in the section titled “Risk Factors.” You should read these risks before you invest in our common stock. In particular, risks associated with our business include, but are not limited to, the following:

 

●There are regulatory risks related to the digital assets industry, and ongoing and future regulatory actions may materially alter our ability to operate;

 

●Digital asset and DeFi protocol exchanges and other trading venues are relatively new;

 

●We face risks from our staking and lending of digital assets;

 

●There are material risks and uncertainties associated with custodians of digital assets;

 

●We face risks related to particular digital asset’s status as a “security” in the U.S.;

 

●If we are deemed an “investment company” subject to regulation under the Investment Company Act of 1940, the law’s restrictions could make it impractical for us to continue our business as contemplated, which would have a material adverse effect on our business;

 

●Banks may cut off banking services to businesses that provide digital asset-related services;

 

●Digital assets are especially susceptible to the impacts of geopolitical events;

 

●Our digital assets, digital assets are subject to price volatility and inflation;

 

●We may be adversely affected by fluctuations in the market price of digital assets;

 

●Further development and acceptance of digital assets is uncertain;

 

●Digital asset networks might not continue to be maintained;

 

●There is the possibility that blockchain could be manipulated;

 

●Our line of business makes us susceptible to security breaches; and

 

●We lack meaningful historical financial data due to our limited operating history.

 

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EXPLANATORY NOTE - INTRODUCTORY INFORMATION

 

We are a Canadian issuer eligible to prepare and file this registration statement pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on Form 40-F pursuant to the U.S.-Canadian multi-jurisdictional disclosure system. We are a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Our equity securities are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3. We are filing this Form 40-F registration statement with the SEC to register its class of common shares under Section 12(b) of the Exchange Act.

 

Previous Form 40-F

 

On November 10, 2021, we filed a Form 40-F to register our common shares under Section 12(b) of the Exchange Act, which was subsequently amended on February 25, 2022, April 11, 2022 and June 07, 2022 after receiving, and subsequently responding to, comments from the staff of the United States Securities and Exchange Commission. On September 11, 2024 we voluntarily withdrew that Form 40-F filed with the SEC.

 

FORWARD-LOOKING STATEMENTS

 

This registration statement and the Exhibits incorporated by reference into this registration statement contain forward-looking statements within the meaning of applicable securities laws that reflect management’s expectations with respect to future events, our financial performance and business prospects. All statements other than statements of historical fact are forward-looking statements. The use of the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results or events to differ materially from those anticipated or implied in such forward-looking statements, including, without limitation, those described in the Company’s Annual Information Form for the financial year ended December 31, 2023 filed as Exhibit 99.98 to this registration statement. No assurance can be given that these expectations will prove to be correct and such forward-looking statements in the Exhibits incorporated by reference into this registration statement should not be unduly relied upon. Our forward-looking statements contained in the Exhibits incorporated by reference into this registration statement are made as of the respective dates set forth in such Exhibits. Such forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made. In preparing this registration statement, we have not updated such forward-looking statements to reflect any change in circumstances or in management’s beliefs, expectations or opinions that may have occurred prior to the date hereof. Nor do we assume any obligation to update such forward-looking statements in the future. For the reasons set forth above, investors should not place undue reliance on forward-looking statements.

 

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RISK FACTORS

 

Our business, operations, financial results and prospects are subject to the normal risks of our industry and are subject to various factors which are beyond our control. Certain of these risk factors are described below. The risks described below are not the only ones we are facing. Additional risks not currently known to us, or that we currently consider immaterial, may also adversely impact our business, operations, financial results or prospects, should any such other events occur.

 

Risks Relating to Our Business and Industry

 

There are regulatory risks related to the digital asset industry, and ongoing and future regulatory actions may materially alter our ability to operate.

 

As digital assets have grown in both popularity and market size, governments around the world have reacted differently to digital assets with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, our ability to continue to operate. The effect of any future regulatory change on us or on any digital asset that we may invest in is impossible to predict, but such change could be materially adverse to both us and the digital asset industry as a whole.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of digital assets. Ownership of, holding or trading in digital assets may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject companies in the digital asset industry to additional regulation.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade digital assets or to exchange digital assets for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading of our common shares. Such a restriction could result in us liquidating our digital asset investments at unfavorable prices and may adversely affect our shareholders.

 

There are regulatory risks associated with the Valour products.

 

The Company has neither sought nor received any exemptive relief from regulators in Canada. The Company discusses regulatory compliance with its external legal counsel on a regular basis. With respect to Valour, investments in the ETPs in the light of their exposure to digital assets must always be assessed by every investor based on the circumstances and legal and regulatory conditions applicable to that investor. An investor governed by such conditions may be subject to limited possibilities to invest in the ETPs and/or experience unforeseeable consequences of a holding in the ETPs. The combination of the nature of Valour’s activities, the markets to which it is exposed, the institutions with which it does business and the securities which it issues makes it particularly exposed to national, international and supranational regulatory action and taxation changes. The scope and requirements of regulation and taxation applicable to the Company continues to change and evolve and there is a risk that as a result it may prove more difficult or impossible, or more expensive, for Valour to continue to carry on their functions in the manner currently contemplated. This may require that changes are made in the future to the agreements applicable to Valour and may result in changes to the commercial terms of the ETPs and/or the inability to apply for and redeem ETPs and/or compulsory redemption of some or all of the ETPs and/or disruption to the pricing thereof.

 

Valour Cayman and VDSL are companies which are regulated by various laws and regulations of the Cayman Islands and Jersey, respectively. Furthermore, the ETPs issued by Valour are subject to the rules and regulations of the exchanges such ETPs are listed on and of the countries under which the relevant prospectuses are qualified in. Valour Cayman and VDSL cannot fully anticipate all changes that in the future may be made to laws and regulations to which Valour Cayman, VDSL and their ETPs are subject to in the future, nor the possible impact of all such changes. Valour Cayman and VDSL's ability to conduct its business is dependent on the ability to comply with rules and regulations.

 

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If the Company was found to be in breach of regulations applicable to Valour Cayman or VDSL, it could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition.

 

Valour Cayman or VDSL's involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman or VDSL's operations, the ETPs and/or the underlying assets, may adversely affect Valour Cayman or VDSL's business or an investment in the ETPs.

 

The impact of any detrimental developments in the underlying digital asset’s regulation on Valour Cayman and VDSL’s ETPs becomes evident by considering an ETP’s product nature: An Exchange Traded Product is a financial instrument traded – like a share - on a stock exchange whereby typically the aim is to provide the same return as a specified benchmark or asset (before fees). Although ETPs can take a number of forms (ETFs/ETCs/ETNs), they share some common characteristics. ETPs are designed to replicate the return of an underlying benchmark or asset, with the easy access and tradability of a share or digital asset (that otherwise may only be bought via a decentralized exchange wallet-setup). Investors can benefit from the broad diversification of a benchmark, gaining exposure to hundreds or thousands of individual underlying securities – or digital assets - in a single transaction. Additionally, the wide range of asset classes covered by ETPs opens up more exotic investment areas which historically could only be accessed by institutional investors (such as individual commodities, emerging markets or digital assets). ETPs generally do all this with a lower fee than actively managed funds and therefore compete with traditional index funds on cost.

 

Valour’s ETPs are non-interest-bearing debt securities that are designed to track the return of an underlying digital/digital asset. While VDSL’s ETPs are collateralized, the current Valour Cayman ETP program in place does not provide that those securities are collateralised. Although their yield references an underlying benchmark or asset, the Valour Cayman ETPs are similar to unsecured, listed bonds. As such, Valour Cayman’s ETPs are entirely reliant on the creditworthiness of Valour as issuing entity. Hence, generally a change in that creditworthiness might negatively impact the value of the ETP, irrespective of the performance of the underlying benchmark or digital/digital asset.

 

Valour Cayman’s policy is always to hedge 100% of the market risk in the underlying asset. Hedging is done continuously and in direct correspondence to the issuance of ETPs to investors. In order to hedge its exposure to each digital asset, Valour Cayman transacts with digital asset exchanges operating outside of the United States to buy and sell the digital assets which the ETPs track. Valour may lend or stake such digital assets on its balance sheet to generate revenue in accordance with the policies in the Base Prospectus. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour’s Lending and Staking Policy.

 

Our DeFi Alpha business line is nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and are not assured to be profitable.

 

Our Switzerland-based DeFi Alpha trading business (our “trading business”) began operations in 2024. The focus is on arbitrage trading opportunities in the digital asset space with low risk in both centralized and decentralized markets (with minimal market or protocol exposure), thereby minimizing downside revenue volatility. Our trading business is nascent, unproven and subject to material legal, regulatory, operational, reputational, tax and other risks in every jurisdiction and is not assured to be profitable. Our trading business is therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial and other resources and lack of revenues, any of which could have a material adverse effect on us and may force us to reduce or curtail operations.

 

Our DeFi Alpha trading business model has not been fully proven, and we have limited financial data that can be used to evaluate our current trading business and future prospects, which subjects us to a number of uncertainties, including our ability to plan for, model and manage future growth and risks. Our historical revenue growth should not be considered indicative of our future performance. There is no assurance that we will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of the early stage of operations. Even if we accomplish these objectives, we may not generate the anticipated positive cash flows or profits. No assurance can be given that we will ever be successful in our operations and operate profitably. We may fail to be able to implement our investment or trading strategies, achieve our investment objectives or produce a return for our investors.

 

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We may fail to develop and execute successful investment or trading strategies.

 

The success of our investment and trading activities will depend on the ability of the investment team to identify overvalued and undervalued investment opportunities and to exploit price discrepancies. This process involves a high degree of uncertainty. No assurance can be given that we will be able to identify suitable or profitable investment opportunities in which to deploy our capital. The success of the trading activities also depends on our ability to remain competitive with other over-the-counter traders and liquidity providers. Competition in trading is based on price, offerings, level of service, technology, relationships and market intelligence. The success of investment activities depends on our ability to source deals and obtain favorable terms. Competition in investment activities is based on relationships, the ability to offer strategic advice to portfolio companies and reputation. The barrier to entry in each of these businesses is very low and competitors can easily and will likely provide similar services in the near future. The success of our venture investments and trading business could suffer if we are not able to remain competitive.

 

We may make, or otherwise be subject to, trade errors.

 

Errors may occur with respect to trades executed on our behalf. Trade errors can result from a variety of situations, including, for example, when the wrong investment is purchased or sold or when the wrong quantity is purchased or sold. Trade errors frequently result in losses, which could be material. To the extent that an error is caused by a third party, we may seek to recover any losses associated with the error, although there may be contractual limitations on any third party’s liability with respect to such error.

 

Our trading orders may not be timely executed.

 

Our investment and trading strategies depend on the ability to establish and maintain an overall market position in a combination of financial instruments. Our trading orders may not be executed in a timely and efficient manner because of various circumstances, including, for example, trading volume surges or systems failures attributable to us or our counterparties, brokers, dealers, agents or other service providers. In such an event, we might only be able to acquire or dispose of some, but not all, of the components of our positions, or if the overall positions were to need adjustments, we might not be able to make such adjustments. As a result, we would not be able to achieve our desired market position, which may result in a loss. In addition, we can be expected to rely heavily on electronic execution systems (and may rely on new systems and technology in the future), which may be subject to certain systemic limitations or mistakes, causing the interruption of trading orders made by us.

 

Our trading business and the various activities we undertake expose us to counterparty credit risk.

 

Credit risk is the risk that an issuer of a security or a counterparty will be unable or unwilling to satisfy payment or delivery obligations when due. In addition to the risk of an issuer of a security in which we invest failing or declining to perform on an obligation under the security, we are exposed to the risk that third parties, including trading counterparties, clearing agents, trading platforms, decentralized finance protocols, clearinghouses, custodians, administrators and other financial intermediaries that may owe us money, securities or other assets will not perform their obligations. Any of these parties might default on their obligations to us because of bankruptcy, lack of liquidity, operational failure or other reasons, in which event we may lose all or substantially all of the value of any such investment or trading transaction. When we trade on digital asset trading platforms that specialize in digital asset futures and derivatives, we are exposed to the credit risk of that digital asset trading platform.

 

In the case of loans that are secured by collateral, while we generally expect the value of the collateral to be greater than the value of such loans, the value of the collateral could actually be equal to or less than the value of such loans or could decline below the outstanding amount of such loans. This risk is heightened given that some portion of the collateral for these loans is expected to be digital assets, and thus subject to the volatility, liquidity and other risks detailed herein. Our ability to have access to the collateral could be limited by bankruptcy and other insolvency laws. Under certain circumstances, the collateral could be released with the consent of the lenders or pursuant to the terms of the underlying loan agreement with the borrower. There is no assurance that the liquidation of the collateral securing a loan would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal, or that the collateral could be readily liquidated. As a result, we might not receive full payment on a secured loan investment to which we are entitled and thereby could experience a decline in the value of, or a loss on, the investment.

 

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We may co-invest with third parties through joint ventures or other entities. Such investments may include risks in connection with such third-party involvement, including the possibility that a third-party co-venturer may have financial difficulties, may have interests or goals that are inconsistent with ours or may be in a position to take action in a manner contrary to our investment objectives. We and our subsidiaries have loaned money to other companies as part of the balance sheet venture investment business and lending business. The return of principal of such loans will depend in large part on the creditworthiness and financial strength of the issuers of such loans. While we perform extensive due diligence on our investments and loans, nonetheless defaults are possible. In the event of a default by a borrower underlying an investment or loan, we might not receive payments to which we are entitled and thereby could experience a decline in the value of our investments in or loans to the borrower. In the case of loans that are secured by collateral, while we generally expect the value of the collateral to be greater than the value of such loans, the value of the collateral could actually be equal to or less than the value of such loans or could decline below the outstanding amount of such loans subsequent to the investment. This risk is heightened given that some portion of the collateral for these loans is often comprised of digital assets, and thus subject to the volatility, liquidity and other risks detailed herein. Our ability to have access to the collateral could be limited by bankruptcy and other insolvency laws. Under certain circumstances, the collateral could be released with the consent of the lenders or pursuant to the terms of the underlying loan agreement with the borrower. There is no assurance that the liquidation of the collateral securing a loan would satisfy the borrower’s obligation in the event of non-payment of scheduled interest or principal, or that the collateral could be readily liquidated at prices that would generate sufficient proceeds to repay the loans or at all. We may also be subject to lender liability claims for actions taken by us with respect to a borrower’s business or instances where we exercise control over the borrower. As a result, we might not receive full payment on a secured loan investment to which we are entitled and thereby could experience a decline in the value of, or a loss on, the investment.

 

In derivatives, we may invest in options on digital or non-digital assets. Purchasing and writing put and call options are highly specialized activities that entail greater-than-ordinary investment risks. An uncovered call writer’s loss is theoretically unlimited. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of over-the- counter options (options not traded on exchanges) are generally established through negotiation with the other party to the option contract. While this type of arrangement allows greater flexibility to tailor an option, over-the-counter options generally involve greater credit risk than exchange-traded options, which are guaranteed by the clearing organization of the exchanges where they are traded. As of the date of this registration statement, the availability of exchange-traded and over-the-counter options on digital assets is extremely limited, so terms may be unfavorable in comparison to those available for more firmly established types of options.

 

The failure or bankruptcy of any of our clearing brokers (or futures commission merchants) could result in a substantial loss of our assets. Under the current regulations of the CFTC, a clearing broker maintains customers’ assets in a bulk segregated account. If a clearing broker fails to do so or is unable to satisfy a substantial deficit in a customer account, its other customers may be subject to risk of loss of their funds in the event of that clearing broker’s bankruptcy. In such an event, the clearing broker’s customers, such as us, are entitled to recover, even in respect of property specifically traceable to them, only a proportional share of all property available for distribution to all of that clearing broker’s customers.

 

Digital asset exchanges and other trading venues are relatively new.

 

We and our affiliates manage our holdings of digital asset, DeFi protocol tokens and other digital assets primarily through non-U.S. digital asset exchanges. In particular, Valour transacts primarily through non-U.S. digital asset exchanges to buy and sell the digital assets which its ETPs track. To the extent that digital asset exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in digital asset prices. Digital asset market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of digital asset exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

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We face risks related to our staking and lending of digital assets, DeFi protocol tokens and other digital assets.

 

We may stake or lend digital asset assets to third parties, including our affiliates. In the event of a termination of the staking arrangement or loan, the counterparty is required to return the digital assets to us; any gains or loss in the market price during the period would inure to us. In the event of the bankruptcy of the counterparty, we could experience delays in recovering our digital assets. In addition, to the extent that the value of the digital assets increases during the term of the loan, the value of the digital assets may exceed the value of collateral provided to us, exposing us to credit risks with respect to the counterparty and potentially exposing us to a loss of the difference between the value of the digital assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of digital assets, including by failing to deliver additional collateral when required or by failing to return the digital assets upon the termination of the loan, we may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its digital assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged digital assets.

 

The digital assets that we stake, loan or pledge to third parties include digital assets held by Valour for the purposes of hedging its ETPs. We are exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted digital asset available to us to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of digital asset should the sale of ETPs, and correspondingly, the underlying digital asset, exceed our available reserves.

 

The determination as to whether a particular digital asset constitutes a “security” in the United States is uncertain and the regulation of digital assets is uncertain in the light of differences between the SEC’s and CFTC’s approaches to digital asset classification as well as potential legislation.

 

Historically the CFTC and the SEC have not taken consistent positions with respect to the appropriate classification of various digital assets which presents regulatory uncertainty. The classification of a digital asset as a security or a commodity under applicable U.S. federal law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, holding, and clearing of such assets and could materially and adversely affect our business. As detailed below, if certain digital assets in our portfolio were conclusively deemed to be securities by the SEC or a U.S. court, either through a rulemaking or final court order, we could be forced to materially alter our business which could adversely affect our financial condition, business and results of operations, among other things.

 

The SEC and its staff have taken the position that certain digital assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given digital asset is a security is a highly complex, fact-driven analysis that has evolved over time, and the outcome of which is difficult to predict. The SEC generally does not provide advance guidance or confirmation as to whether or not it believes that a particular digital asset constitutes a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. To date, the SEC has not determined through official rulemaking or regulatory guidance that any particular digital asset that we hold or transact in is a security, and only a relatively small number of specific digital assets have been subjected to review by federal courts (none of which are material holdings of our Company). The views and positions of the SEC and its staff with respect to digital assets are subject to continued evolution, detail, and development in the future for a variety of reasons, including as a result of changes to governing administrations, SEC Chair or commissioner appointments, or otherwise. Though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given digital asset is a security in April 2019, this framework does not constitute an SEC rule or regulation, is not binding on the SEC, and has been updated to account for subsequent judicial or enforcement precedent. Furthermore, while the SEC Division of Enforcement to date has filed complaints against digital asset exchanges, projects and intermediaries, alleging, among other things, that certain digital assets are securities or have been offered as securities, many of these enforcement actions are ongoing, involve particularized facts, and therefore do not provide conclusive direction for digital asset market participants to follow.

 

Of note, public statements by senior officials at the SEC, some of whom no longer hold a role at the agency, indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form). Specifically, Chairman Gensler has acknowledged publicly that he does not consider Bitcoin to be a security. Consistent with these public statements, this year the SEC approved 11 spot Bitcoin coin commodity ETFs and eight spot Ether commodity ETFs. The SEC has also dropped its investigation of Consensys Software Inc. in connection with Ethereum 2.0. Notably, to date Bitcoin and Ether are the only digital assets for which officials at the SEC have publicly expressed such a view.

 

The CFTC and its staff have taken the position that certain digital assets fall within the definition of a “commodity” under the U.S. federal commodities and derivatives laws. In his July 2024 testimony before the Senate Committee on Agriculture, Nutrition and Forestry, CFTC Chairman Rostin Benham re-iterated that in a July 2024 decision (CFTC v. Sam Ikkurty A/K/A Sreeniv Asi Rao, et. al, 22-cv-02465 (Northern District of Illinois)(“Rao”)), a federal court “re-affirmed that both Bitcoin and Ether are commodities under the Commodity Exchange Act.” The court in Rao relied on previous precedent from the federal District Court of Massachusetts (CFTC v. My Big Coin Pay, Inc., 334 F. Supp. 3d 492, 498 (D. Mass. 2018) (“My Big Coin Pay”)), which stated that “the [Commodity Exchange Act] only requires the existence of futures trading within a certain class (e.g. “natural gas”) in order for all items within that class (e.g. “West Coast” natural gas) to be considered commodities.” The court in Rao also used the My Big Coin Pay language to determine that two other non- Bitcoin and Ether digital assets also qualify as commodities. The CFTC has further classified other digital assets as commodities in its own enforcement settlement orders and complaints.

 

While both the SEC and CFTC continue to develop distinct positions with respect to digital asset classification and jurisdiction, the U.S. Congress is also moving forward with legislation that would definitively clarify jurisdiction over digital assets between the two agencies. In May 2024, the House of Representatives passed the Financial Innovation and Technology for the 21st Century Act, which would provide the CFTC with primary oversight responsibilities for digital commodity markets. In addition, the U.S. Senate has also been considering legislation that would provide the CFTC with a clearer digital asset market oversight mandate. Notwithstanding the conclusions we may draw based upon existing applicable law and regulations, new case law precedent, market practices, and digital asset architecture and offering histories, there is no certainty that the SEC will not determine that a particular digital asset is a “security” under applicable law at some point in the future.

 

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We trade our digital asset holdings primarily on non-U.S. digital asset exchanges, which may subject us to regulatory uncertainty in foreign jurisdictions.

 

We buy and sell digital assets primarily on non-U.S. exchanges consistent with the regulatory frameworks applicable to such foreign jurisdictions and outside of the regulatory purview of the SEC. The majority of our digital asset trading activities occur on regulated exchanges located in the European Union (“EU”). In 2023, the EU passed the Markets in Crypto-Assets Act (“MiCA”). The law went into effect in June 2024 and provides a clear framework for offering and trading digital assets, without requiring a determination of the security status of a particular digital asset. While several foreign jurisdictions have taken a broad-based approach to classifying digital assets as “securities,” other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain digital assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets as “securities.”

 

We primarily trade our digital asset holdings in secondary market transactions on non-U.S. digital asset exchanges that blindly match buyers and sellers, which have been determined to be non-securities transactions by a U.S. federal court.

 

While we trade and hold a substantial amount of digital assets, we only interact with digital assets that we believe would not constitute securities under applicable U.S. federal securities laws. On July 13, 2023, in SEC v. Ripple Labs, et al., 20-cv-10832 (S.D.N.Y) (“Ripple Labs”), in a ruling on both parties’ motions for summary judgment, the court distinguished between bilateral, contractual sales of XRP from Ripple (the issuer) to institutional investors, and “programmatic” sales of XRP on secondary markets that facilitate trading through an order book that blindly matches buy and sell orders (“Programmatic Trading”). The court found that while the initial XRP sales satisfied the Howey test and therefore constituted securities under U.S. federal securities laws, the court held that XRP underlying Programmatic Trading did not constitute a security under Howey. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of digital assets as “securities.”

 

While the ruling in Ripple Labs is not definitive, and other courts have taken dissimilar positions with respect to other digital assets, our interaction with digital assets is almost exclusively in connection with Programmatic Trading activities (i.e., we generally purchase, sell, and hold digital assets through exchanges that operate blind matching engines). In addition, as described above, these activities occur exclusively in the EU consistent with the MiCA regulatory regime. Ultimately, none of the digital assets that comprise a material portion of our digital asset holdings have been conclusively determined to be a security by the SEC or any U.S. court.

 

The SEC’s enforcement actions against digital asset companies have not yielded definitive regulatory treatment of digital assets.

 

Despite the lack of formal rulemaking and guidance with respect to digital assets, the SEC has pursued enforcement actions against U.S.-based digital asset issuers and trading venues on the basis that it views certain digital assets as securities. These enforcement actions have provided practical insight into the actual application of U.S. federal securities laws by U.S. courts. Of particular note, while the Northern District of California in SEC v. Payward, Inc., et al., 23-cv-06003-WHO (N.D. Cal.) recently denied Kraken’s (a U.S. digital asset exchange) motion to dismiss an SEC complaint alleging Kraken is operating an unregistered securities exchange because it offers trading in digital asset securities, the court also noted the “SEC’s inconsistent manner of discussing [digital assets].” According to the court, the SEC “strays into alleging that the digital assets themselves—as in, the individual tokens bought, sold, and traded on Kraken’s platform—are investment contracts,” a characterization other courts have rejected. These, and other, court rulings as to the regulatory status of digital assets demonstrate the ongoing discordant application of U.S. federal securities laws.

 

If we are deemed an “investment company” subject to regulation under the Investment Company Act of 1940, the law’s restrictions could make it impractical for us to continue our business as contemplated, which would have a material adverse effect on our business.

 

We trade and hold a substantial amount of digital assets. As detailed below, if certain of the digital assets that we hold other than Bitcoin and Ether are determined to be securities by the SEC or a U.S. court, we could be forced to materially alter our business in order to comply with the Investment Company Act of 1940.

 

Under the Investment Company Act of 1940, as amended (the “Investment Company Act”), an issuer will generally be deemed to be an “investment company” if, absent an applicable exemption:

 

●it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or

 

●it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.

 

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We regard ourselves as a non-securities digital asset services company engaged in the business of providing access to non-securities financial products and not in the business of investing, reinvesting or trading in securities. As of June 30, 2024, approximately 5.154% of the value of our total unconsolidated assets, exclusive of cash items, consisted of securities as defined in Section 2(a)(36) of the Investment Company Act. Therefore, as of June 30, 2024, less than 40% of our total unconsolidated assets, exclusive of cash items, consist of securities. Further, given our current business lines, and the nature of our digital asset holdings, we do not hold ourselves out as being engaged primarily in the business of investing, reinvesting or trading in securities. Therefore, we do not currently intend to register as an investment company under the Investment Company Act.

 

However, if in the future: (1) some material percentage of our digital asset holdings other than Bitcoin or Ether were conclusively deemed to be securities by the SEC or a U.S. court; or (2) if it was determined that we hold ourselves out as being, or propose to be, primarily engaged in the business of investing, reinvesting or trading in securities, we could be required to register as an investment company pursuant to Section 3(a)(1)(A) of the Investment Company Act. If we, or any of our subsidiaries, become obligated to register as an investment company under the Investment Company Act, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

 

●limitations on capital structure;

 

●restrictions on specified investments;

 

●prohibitions on transactions with affiliates; and

 

●compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

 

If we, or any subsidiary, were deemed to be an investment company under the Investment Company Act, the applicable entity would either have to register as an investment company under the Investment Company Act, obtain exemptive relief from the SEC or make business and organizational changes to fall outside the definition of an investment company.

 

Registering as an investment company pursuant to the Investment Company Act could, among other things, materially adversely affect our financial condition, business and results of operations, materially limit our ability to borrow funds or engage in other transactions involving leverage and require us to add directors who are independent of us and otherwise will subject us to additional regulation that will be costly and time-consuming. Modifying our equity interests and debt positions or organizational structure or our contract rights could require us to alter our business and investment strategy in a manner that requires us to purchase or dispose of assets or securities, prevents us from pursuing certain opportunities, or otherwise restricts our business, which may have a material adverse effect on our business results of operations, financial condition or prospects

 

There are material risks and uncertainties associated with custodians of digital assets.

 

We use multiple custodians (or third-party “wallet providers”) to hold digital assets for our Ventures and Defi Alpha business line, for digital assets underlying Valour ETPs as well as for digital assets held in treasury for the Company. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares.

 

We also rely on cold self-storage to self-custody and safeguard certain of our digital assets from theft, loss, destruction or other issues relating to hackers and technological attack. Nevertheless, our designated self-custody security system may not be impenetrable and may not be free from defect or immune to acts of God, and we will bear any loss due to a security breach, software defect or act of God.

 

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Our security system and operational infrastructure, or those of other custodians, may be breached due to the actions of outside parties, error or malfeasance of an employee of ours, of other custodians, or otherwise, and, as a result, an unauthorized party may obtain access to our, private keys, data or digital assets. Additionally, outside parties may attempt to fraudulently induce employees of ours, or of our custodians, to disclose sensitive information in order to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our security system occurs, the market perception of the effectiveness of our security system could be harmed, which could adversely affect an investment in us. In the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us.

 

Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of digital assets and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

In the event of a security breach, we may be forced to cease operations, or suffer a reduction in assets, the occurrence of each of which could adversely affect an investment in us.

 

Banks may cut off banking services to businesses that provide digital asset-related services.

 

Companies that provide digital asset-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to digital asset related companies or companies that accept digital assets for many reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide digital asset-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of digital assets as a payment system and harming public perception of digital assets or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of digital assets as a payment system and the public perception of digital assets could be damaged if banks were to close the accounts of many or of a few key businesses providing digital asset-related services. This could decrease the market prices of digital assets and adversely affect the value of our digital asset inventory.

 

Most digital asset transactions are irrevocable.

 

Bitcoin and most other digital asset and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred digital assets or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of digital assets or a theft of digital assets generally will not be reversible and we may not be capable of seeking compensation for any such transfer or theft. To the extent that we are unable to seek a corrective transaction with the third party or are incapable of identifying the third party that has received our digital assets through error or theft, we will be unable to revert or otherwise recover incorrectly transferred digital assets. We will also be unable to convert or recover digital assets transferred to uncontrolled accounts.

 

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Digital assets are especially susceptible to the impacts of geopolitical events.

 

Crises may motivate large-scale purchases of digital assets which could increase the price of digital assets rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of our digital asset holdings. The possibility of large-scale purchases of digital assets in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of digital assets and may impair their price performance which would, in turn, adversely affect our digital asset holdings.

 

As an alternative to fiat currencies that are backed by central governments, digital assets are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of digital assets either globally or locally. Large-scale sales of digital assets would result in a reduction in their market prices and adversely affect our operations and profitability.

 

Our Digital Currencies, DeFi protocol tokens and digital assets are subject to price volatility and inflation.

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Digital Currency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of Digital Currencies and DeFi protocol tokens, inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of our Digital Currency and DeFi protocol token inventory and thereby affect our shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of Digital Currencies, DeFi protocol tokens and other digital assets. Digital Currencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such Digital Currencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If Digital Currencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any digital asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in digital assets and digital platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of digital assets;

 

●the ability for digital assets to meet user and investor demands;

 

●the functionality and utility of digital assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of digital assets and digital asset markets;

 

●regulatory or legislative changes and updates affecting the digital economy;

 

●the characterization of digital assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

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●the ability for digital networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major digital platforms;

 

●availability of an active derivatives market for various digital assets;

 

●availability of banking and payment services to support digital-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global digital asset supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various digital assets; and

 

●actual or perceived manipulation of the markets for digital assets.

 

We may be adversely affected by fluctuations in the market price of Digital Currencies, DeFi protocol tokens and digital assets.

 

As Valour’s ETPs track the market price of Digital Currencies, DeFi protocol tokens and other digital assets, the value of our common shares are partially related to the value of such Digital Currencies, DeFi protocol tokens and other digital assets, and fluctuations in the price of Digital Currencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in our common shares. Several factors may affect the price of Digital Currencies, including: the total number of Digital Currencies, DeFi protocol tokens and other digital assets in existence; global Digital Currency, DeFi protocol token and other digital asset demand; global Digital Currency, DeFi protocol token and other digital asset supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of Digital Currencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which Digital Currencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of Digital Currency exchanges and liquidity of such Digital Currency exchanges; interruptions in service from or failures of major Digital Currency exchanges; Cyber theft of Digital Currencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of Digital Currencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of Digital Currencies; the availability and popularity of businesses that provide Digital Currencies, DeFi protocol tokens, other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various Digital Currency or DeFi protocol networks; increased competition from other forms of Digital Currency or payments services; global or regional political, economic or financial events and situations; expectations among Digital Currency, DeFi protocol token and other digital asset economy participants that the value of Digital Currencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a Digital Currency, DeFi protocol token or other digital asset transaction.

 

Digital Currencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If Digital Currency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their common shares at a time when the price of Digital Currencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their common shares. In addition, investors should be aware that there is no assurance that Digital Currencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of Digital Currency, DeFi protocol token and other digital asset payments by mainstream retail merchants and commercial businesses will continue to grow.

 

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Digital Currency, DeFi protocol token and digital assets networks might not continue to be maintained.

 

Many Digital Currency networks, the DeFi protocol token network and other digital asset networks, including the Bitcoin Network, operate based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with such network protocols and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and our business may be adversely affected.

 

Miners may cease operations, which may have a material adverse effect on our business.

 

If the award of Bitcoins or other Digital Currencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control, which may have a material adverse affect on our business.

 

There is the possibility that blockchain could be manipulated.

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on a digital asset network, it may be able to alter or manipulate the Blockchain on which such digital asset network and most digital asset transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new digital assets or transactions using such control. The malicious actor could “double-spend” its own digital asset token or digital currency (i.e., spend the same digital asset in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on a digital asset network or the effected digital asset community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that a digital asset ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of digital asset mining processing power, the feasibility of a malicious actor obtaining control of the processing power on a digital asset network will increase.

 

Further development and acceptance of digital asset and DeFi networks is uncertain.

 

The further development and acceptance of digital asset and other cryptographic and algorithmic protocols governing the issuance of transactions in digital assets and DeFi protocol tokens, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of digital assets in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding digital assets and DeFi protocol tokens, and thus may adversely affect our operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of digital assets and DeFi;

 

●governmental and quasi-governmental regulation of digital assets and their use, or restrictions on or regulation of access to and operation of the network or similar digital asset and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

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●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of digital assets.

 

Currently, there is relatively small use of Digital Currencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect our operations, investment strategies, and profitability.

 

As relatively new products and technologies, Digital Currencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of Digital Currency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of Digital Currencies. The relative lack of acceptance of Digital Currencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by Digital Currencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact our operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable blockchain, demand for Digital Currencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in price of the Digital Currencies.

 

Our lines of business make us susceptible to security breaches.

 

As with any other computer code, flaws in digital asset and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create digital assets and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other Digital Currency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm our business operations or result in loss of our assets. Any breach of our infrastructure could result in damage to our reputation and have a material adverse effect on our business. Furthermore, we believe that if our assets grow, we may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by us. Our security procedures and operational infrastructure may be breached due to the actions of outside parties, error or malfeasance of one of our employees or otherwise, and, as a result, an unauthorized party may obtain access to our digital asset account, private keys, data or digital assets. Additionally, outside parties may attempt to fraudulently induce our employees to disclose sensitive information to gain access to our infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of our accounts occurs, the market perception of our effectiveness could be harmed.

 

As technological change occurs, the security threats to our digital assets, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. Our ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of our digital assets, DeFi protocol tokens and other digital assets. To the extent that we are unable to identify and mitigate or stop new security threats, our digital assets, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

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Fluctuations in share price of public companies we invest in could adversely affect us.

 

Our investments in securities of public companies are subject to volatility in the share prices of such companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond our control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the technological and digital asset industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of our investments.

 

Our investments in private issuers or projects may create liquidity risks.

 

Through our Ventures business line, we invest in securities and/or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair our ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or project are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of our private investments, or that we will otherwise be able to realize a return on such investments.

 

The value attributed to securities and/or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

We may also invest in illiquid securities of public issuers. A considerable period may elapse between the time a decision is made to sell such securities and the time we are able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that we will be unable to realize our investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, we may be prohibited by contract or by law from selling such securities for a period or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

We may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Risks Relating to Our Financial Position, Capital Requirements and Management Team

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The digital asset economy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our Asset Management, Infrastructure, Venture, DeFi Alpha and Reflexivity Research business lines compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

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●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

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Our revenue and cash flow are generated primarily from financing activities which creates liquidity risks.

 

Our revenue and cash flow are generated primarily from financing activities, trading returns of DeFi Alpha, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of digital assets and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of our direct control. Our liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if DeFi Alpha is unable to identify profitable trades, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

We are dependent on our management personnel.

 

We are dependent upon the efforts, skill and business contacts of key members of management and the Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, our success may depend upon the continued service of these individuals who are not obligated to remain our consultants. The loss of the services of any of these individuals could have a material adverse effect on our revenues, net income and cash flows and could harm our ability to maintain or grow existing assets and raise additional funds in the future.

 

It is not certain that we will succeed in managing our growth.

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on our managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve our technical, administrative and financial controls and reporting systems. No assurance can be given that we will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on our operating results and overall performance.

 

Conflicts of interest may arise.

 

Certain current or future directors and officers of us and our subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. Our directors and officers are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

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DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES

 

We are permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this registration statement on Form 40-F in accordance with Canadian disclosure requirements, which are different from those of the United States. We prepare our consolidated financial statements, which are filed with this registration statement on Form 40-F, in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, and they may be subject to Canadian auditing and auditor independence standards. IFRS differs in certain respects from United States generally accepted accounting principles (“U.S. GAAP”) and practices prescribed by the SEC. Therefore, such financial statements may not be comparable to financial statements prepared in accordance with U.S. GAAP.

 

PRINCIPAL DOCUMENTS

 

In accordance with General Instruction B.(1) of Form 40-F, we hereby incorporate by reference Exhibits 99.1 through 99.155 inclusive, as set forth in the Exhibit Index attached hereto. The documents filed or incorporated by reference as Exhibits contain all information material to an investment decision that we, since January 1, 2023: (i) made or were required to make public pursuant to the laws of any Canadian jurisdiction; (ii) filed or were required to file with the TSX Venture Exchange (the “TSXV”) or the Cboe Canada Exchange (“Cboe Canada”) and which was made public by the TSXV or Cboe Canada, as applicable; or (iii) distributed or were required to distribute to its security holders. In accordance with General Instruction D(9) of Form 40-F, we have filed the written consent of our auditors as Exhibit 99.155, as set forth in the Exhibit Index attached hereto.

 

TAX MATTERS

 

Purchasing, holding, or disposing of our securities may have tax consequences under the laws of the United States and Canada that are not described in this registration statement on Form 40-F.

 

DESCRIPTION OF COMMON SHARES

 

The required disclosure containing a description of the securities to be registered is included under the heading “Description of Share Capital” in our Annual Information Form for the financial year ended December 31, 2023, attached hereto as Exhibit 99.98.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

DISCLOSURE OF CONTRACTUAL OBLIGATIONS

 

The following table lists, as of December 31, 2023, information with respect to our known contractual obligations (in Canadian dollars):

 

    Payments due by period  
Contractual Obligations   Total     Less than
1 year		     1-3 years     3-5 years     More than
5 years		  
Long-term debt obligations     NIL       56,210,709       NIL       NIL       NIL  
Capital (finance) lease obligations     NIL       NIL       NIL       NIL       NIL  
Operating lease obligations     NIL       NIL       NIL       NIL       NIL  
Purchase obligations     NIL       9,174,846       NIL       NIL       NIL  
Other long-term liabilities (bonds, debentures, etc.)     NIL       NIL       NIL       NIL       NIL  
Total     NIL       1NIL       NIL       NIL       NIL  

 

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NASDAQ CORPORATE GOVERNANCE

 

Nasdaq Marketplace Rule 5615(a)(3) permits a foreign private issuer to follow its home country practice in lieu of certain of the requirements of the Rule 5600 Series. A foreign private issuer that follows a home country practice in lieu of one or more provisions of the Rule 5600 Series shall disclose in its registration statement related to its initial public offering or first U.S. listing on Nasdaq, or on its website, each requirement of the Rule 5600 Series that it does not follow and describe the home country practice followed by the issuer in lieu of those requirements.

 

We do not follow Rule 5620(c), but instead follow our home country practice. The Nasdaq minimum quorum requirement under Rule 5620(c) for a meeting of shareholders is 33.33% of the outstanding common shares. Our bylaws provide that two persons present in person, each being a shareholder entitled to vote at the meeting or a duly appointed proxyholder for an absent shareholder entitled to vote at the meeting shall be a quorum at any meeting of the shareholders. The foregoing is consistent with the laws, customs and practices in Canada. As required by Nasdaq Rule 5615(a)(3), the Registrant will disclose on its website, www.defi.tech, as of the listing date, each requirement of the Nasdaq Stock Market Rules that it does not follow and describe the home country practice followed in lieu of such requirements.

 

UNDERTAKING

 

We undertake to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to the securities registered pursuant to Form 40-F, the securities in relation to which the obligation to file an Annual Report on Form 40-F arises or transactions in said securities.

 

CONSENT TO SERVICE OF PROCESS

 

We have filed with the Commission a Form F-X. Any change to the name or address of our agent and service shall be communicated promptly to the Commission by amendment to the Form F-X referencing the file number.

 

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EXHIBIT INDEX

 

The following documents are being filed with the Commission as Exhibits to this registration statement:

 

Exhibit   Description
99.1   News release dated January 10, 2023
99.2   News release dated January 12, 2023
99.3   Material change report dated January 13, 2023
99.4   News release dated January 23, 2023
99.5   Letter from successor auditor dated February 3, 2023
99.6   Letter from former auditor dated February 3, 2023
99.7   Notice dated February 3, 2023
99.8   News release dated February 3, 2023
99.9   News release dated February 13, 2023
99.10   News release dated March 2, 2023
99.11   News release dated March 13, 2023
99.12   News release dated March 21, 2023
99.13   Form 52-109F1 - Certification of annual filings dated March 31, 2023 (CFO)
99.14   Form 52-109F1 - Certification of annual filings dated March 31, 2023 (CEO)
99.15   Annual information form dated March 31, 2023
99.16   Annual MD&A dated March 31, 2023
99.17   Audited annual financial statements dated March 31, 2023
99.18   ON Form 13-502F1 (class 1 and 3B reporting issuers - participation fee) dated March 31, 2023
99.19   AB Form 13-501F1 (class 1 and 3B reporting issuers - participation fee) dated March 31, 2023
99.20   News release dated April 12, 2023
99.21   Notice of the meeting and record date dated April 14, 2023
99.22   Form 52-109F2 - Certification of interim filings dated May 15, 2023 (CFO)
99.23   Form 52-109F2 - Certification of interim filings dated May 15, 2023 (CEO)
99.24   Interim MD&A dated May 15, 2023
99.25   Interim financial statements/report dated May 15, 2023
99.26   News release dated May 17, 2023
99.27   Notice of meeting dated May 23, 2023
99.28   Management information circular dated May 23, 2023
99.29   Form of proxy dated May 23, 2023
99.30   News release dated May 30, 2023
99.31   News release dated June 15, 2023
99.32   News release dated June 20, 2023
99.33   News release dated June 21, 2023
99.34   Material change report dated June 22, 2023
99.35   News release dated June 22, 2023
99.36   News release dated June 30, 2023
99.37   Preliminary short form prospectus dated June 30, 2023
99.38   Qualification certificate dated June 30, 2023
99.39   Decision Document (Preliminary) dated July 4, 2023
99.40   News release dated July 7, 2023
99.41   Other securityholders documents dated July 11, 2023
99.42   News release dated July 12, 2023
99.43   Material change report dated July 12, 2023
99.44   News release dated July 18, 2023
99.45   Form 52-109F2 - Certification of interim filings dated August 14, 2023 (CEO)
99.46   Form 52-109F2 - Certification of interim filings dated August 14, 2023 (CFO)
99.47   Interim MD&A dated August 14, 2023
99.48   Interim financial statements/report dated August 14, 2023

 

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99.49   News release dated August 22, 2023
99.50   News release dated August 23, 2023
99.51   Report of exempt distribution (45-106F1) dated August 28, 2023
99.52   News release dated August 29, 2023
99.53   Notice to the Public dated September 26, 2023
99.54   News release dated October 24, 2023
99.55   News release dated November 1, 2023
99.56   Material change report dated November 2, 2023
99.57   News release dated November 8, 2023
99.58   Report of Distributions outside Canada (Form 72-503F) dated November 13, 2023
99.59   News release dated November 13, 2023
99.60   Form 52-109F2 - Certification of interim filings dated November 14, 2023 (CFO)
99.61   Form 52-109F2 - Certification of interim filings CEO dated November 14, 2023 (CEO)
99.62   Interim MD&A dated November 14, 2023
99.63   Interim financial statements/report dated November 14, 2023
99.64   News release dated November 14, 2023
99.65   News release dated November 22, 2023
99.66   News release dated November 28, 2023
99.67   Form 52-109F2 - Certification of interim filings dated November 29, 2023 (CFO)
99.68   Report of Distributions outside Canada (Form 72-503F) dated November 30, 2023
99.69   Report of exempt distribution (45-106F1) dated November 30, 2023
99.70   News release dated December 6, 2023
99.71   News release dated December 7, 2023
99.72   News release dated December 11, 2023
99.73   News release dated December 18, 2023
99.74   Letter from successor auditor dated January 8, 2024
99.75   Notice dated January 8, 2024
99.76   Letter from former auditor dated January 8, 2024
99.77   News release dated January 8, 2024
99.78   News release dated January 8, 2024
99.79   News release dated January 9, 2024
99.80   News release dated January 22, 2024
99.81   News release dated January 30, 2024
99.82   News release dated February 5, 2024
99.83   News release dated February 7, 2024
99.84   News release dated February 9, 2024
99.85   Report of Distributions outside Canada (Form 72-503F) dated February 15, 2024
99.86   Report of exempt distribution (45-106F1) dated February 15, 2024
99.87   News release dated February 20, 2024
99.88   News release dated February 22, 2024
99.89   News release dated March 4, 2024
99.90   News release dated March 7, 2024
99.91   News release dated March 14, 2024
99.92   News release dated March 18, 2024
99.93   News release dated March 20, 2024
99.94   News release dated March 28, 2024
99.95   News release dated April 1, 2024
99.96   Form 52-109F1 - Certification of annual filings dated April 1, 2024 (CEO)
99.97   Form 52-109F1 - Certification of annual filings dated April 1, 2024 (CFO)
99.98   Annual information form dated April 1, 2024
99.99   Annual MD&A dated April 1, 2024
99.100   AB Form 13-501F1 (class 1 and 3B reporting issuers - participation fee) dated April 1, 2024
99.101   ON Form 13-502F1 (class 1 and 3B reporting issuers - participation fee) dated April 1, 2024
99.102   Audited annual financial statements dated April 1, 2024
99.103   News release dated April 8, 2024
99.104   Notice of the meeting and record date dated April 15, 2024

 

27

 

 

99.105   News release dated April 17, 2024
99.106   News release dated April 18, 2024
99.107   News release dated April 30, 2024
99.108   News release dated May 7, 2024
99.109   News release dated May 8, 2024
99.110   News release dated May 13, 2024
99.111   News release dated May 15, 2024
99.112   Form 52-109F2 - Certification of interim filings dated May 15, 2024 (CEO)
99.113   Form 52-109F2 - Certification of interim filings dated May 15, 2024 (CFO)
99.114   Interim MD&A dated May 15, 2024
99.115   Interim financial statements/report dated May 15, 2024
99.116   News release dated May 15, 2024
99.117   News release dated May 16, 2024
99.118   News release dated May 23, 2024
99.119   Form of proxy dated May 27, 2024
99.120   Notice of meeting dated May 27, 2024
99.121   Management information circular dated May 27, 2024
99.122   News release dated June 3, 2024
99.123   News release dated June 4, 2024
99.124   News release (section 4.8 of NI 62-104) dated June 6, 2024
99.125   News release dated June 10, 2024
99.126   News release dated June 11, 2024
99.127   Other dated June 12, 2024
99.128   News release dated June 18, 2024
99.129   News release dated June 19, 2024
99.130   News release dated June 19, 2024
99.131   News release dated June 24, 2024
99.132   News release dated June 28, 2024
99.133   News release dated July 9, 2024
99.134   News release dated July 10, 2024
99.135   News release dated July 16, 2024
99.136   News release dated July 17, 2024
99.137   News release dated July 18, 2024
99.138   News release dated July 30, 2024
99.139   News release dated July 31, 2024
99.140   News release dated August 6, 2024
99.141   News release dated August 8, 2024
99.142   News release dated August 13, 2024
99.143   News release dated August 14, 2024
99.144   Form 52-109F2 - Certification of interim filings dated August 14, 2024 (CFO)
99.145   Form 52-109F2 - Certification of interim filings dated August 14, 2024 (CEO)
99.146   Interim MD&A dated August 14, 2024
99.147   Interim financial statements/report dated August 14, 2024
99.148   News release dated September 5, 2024
99.149   News release dated September 6, 2024
99.150   Audited annual financial statements dated April 1, 2024
99.151   Form 52-109F1R - Certification of refiled annual filings dated September 6, 2024 (CFO)
99.152   Form 52-109F1R - Certification of interim annual dated September 6, 2024 (CEO)
99.153   News Release dated September 10, 2024
99.154   News Release dated September 13, 2024
99.155   Consent of HDCPA Professional Corporation, dated September 16, 2024

 

28

 

 

SIGNATURES

 

Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Defi Technologies Inc.
   
Date: September 16, 2024 By: /s/ Olivier Roussy Newton
    Olivier Roussy Newton
    Chief Executive Officer and Executive Chairman

 

 

29

 

Exhibit 99.1

 

 

 

Valour Inc. Announces Approval of a renewed EU-Base Prospectus by the Swedish Regulator SFSA and update on AUM & Net Sales for the Month Ending December 2022

 

●Valour Inc., a securities issuer wholly owned by NEO-listed Valour, has obtained the approval of a renewed EU-base prospectus covering digital assets ETP-products by the Swedish Regulator SFSA

 

●For the month ending December ’22, Valour’s total assets under management (AUM) stood at $77.88M, with net sales increasing to $340.7M.

 

Toronto, Ontario, January 10, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, is proud to announce the approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA.

 

This expansion of Valour’s product line is a significant step forward in the company’s mission to make digital assets more accessible and facilitate their integration with traditional assets. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments. This is an exciting development for Valour as it continues its mission to make digital assets more accessible and facilitate their integration with traditional assets.

 

“We are pleased to be able to offer additional types of ETP securities to investors under the new base prospectus approval,” said Olivier Roussy Newton, CEO of Valour. “This enables expansion of our product line and is a testament to our dedication to providing industry-leading investment opportunities and the necessary infrastructure, security, and collaboration to support the growth and maturation of digital assets. We are confident that these new securities will provide our investors with a unique opportunity to diversify their portfolios and capitalize on the potential of these innovative assets.”

 

For the month ending December ’22, Valour’s total assets under management (AUM) stood at $77.8M, with net sales increasing to $340.6M. These figures indicate a healthy interest in Valour’s suite of exchange traded products, and steady growth all round. During the past year, Digital-asset funds saw total net inflows of $433M of which Valour was able to capture almost a 10% market share.1

 

- Valour Total Accumulated Net Sales: $340’693’787

 

- Valour Net Sales for December: ($623’905)

 

- AUM for End of December: $77’882’607 Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

1Source: Cointelegraph

 

 

 

 

 

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and decentralised finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and decentralised technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #  

 

For further information, please contact:
Investor Relations
ir@valour.com

 

 

 

 

Exhibit 99.2

 

 

Valour Announces Receipt of Approval in Principle by the Jersey Regulator JFSC and Filing of a new EU Base Prospectus regarding physically asset backed ETPs with the Swedish Regulator SFSA

 

●Valour Digital Securities Limited, a Jersey-based securities issuance vehicle cooperating with Cayman-based Valour Inc. as arranger, has obtained the approval in principle by the JFSC and has subsequently submitted a new EU base prospectus documentation covering physically backed ETP-Products with the Swedish Regulator SFSA.

 

Toronto, Ontario, January 12, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, is pleased to announce the approval in principle by the JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded product (ETP) securities.

 

This expansion of Valour’s product line is another significant step forward in the company’s mission to make digital assets more accessible and facilitate their integration with traditional assets. These new products will allow investors to diversify their portfolios by adding selected digital asset exposure to their existing traditional securities accounts without the need to open any additional digital asset holding accounts such as wallets with crypto exchanges.

 

Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holders. This provides investors with an added layer of security and protection for their assets. It signifies a crucial stepstone of a stringent and strategic development for Valour and further solidifies its mission to make digital assets more accessible and facilitate their seamless integration with traditional assets.

 

“We are excited to have received the approval in principle from the JFSC for our asset backed issuance programme, and to have submitted the documentation for final approval to the SFSA,” said Olivier Roussy Newton, CEO of Valour Inc. “This is an important step in our mission to make digital assets more accessible and facilitate their seamless integration with traditional assets. Our goal is to provide investors with a broader range of investment options and the ability to easily diversify their portfolios. This new product line is another significant step forward in achieving that goal.”

 

Alongside with this upcoming new issuance programme Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

 

 

 

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@valour.com

 

 

 

 

Exhibit 99.3

 

FORM 51-102F3

MATERIAL CHANGE REPORT

 

ITEM 1Name and Address of Company:

 

Valour Inc. (“Valour” or the “Company”)

198 Davenport Road

Toronto, Ontario

M5R 1J2

 

ITEM 2Dates of Material Change:

 

May 14, 2021, July 20, 2021, October 4, 2021, July 5, 2022, October 6, 2022, and November 12, 2022

 

ITEM 3News Release:

 

News releases were issued by the Company on May 14, 2021, July 20, 2021, October 4, 2021, July 5, 2022, October 6, 2022, and November 12, 2022 and subsequently filed on SEDAR.

 

ITEM 4Summary of Material Change:

 

On May 14, 2021, Valour appointed Krisztian Tóth as a director of the Company

 

On July 20, 2021, Valour appointed Russell Starr as Executive Chairman of the board of directors of the Company.

 

On October 4, 2021, Valour appointed Russell Starr as Chief Executive Officer of the Company, Diana Biggs as Chief Strategy Officer of the Company, Johan Wattenstrom as Chief Operating Officer of the Company. Mr. Starr replaces Mr. Wouter Witvoet as Chief Executive Officer of the Company

 

On July 5, 2022, Diana Biggs resigned as Chief Strategy Officer of the Company.

 

On October 6, 2022, Valour appointed Olivier Roussy Newton as Chief Executive Officer of the Company. Mr. Roussy Newton replaces Russell Star as the Chief Executive Officer of the Company and Mr. Johan Wattenstrom resigned as Chief Executive Officer of the Company.

 

On November 12, 2022, Bernard Wilson resigned as director of the Company.

 

ITEM 5Full Description of Material Change:

 

On May 14, 2021, Valour appointed Krisztian Tóth as a director of the Company

 

On July 20, 2021, Valour appointed Russell Starr as Executive Chairman of the board of directors of the Company.

 

On October 4, 2021, Valour appointed Russell Starr as Chief Executive Officer of the Company, Diana Biggs as Chief Strategy Officer of the Company, Johan Wattenstrom as Chief Operating Officer of the Company. Mr. Starr replaces Mr. Wouter Witvoet as Chief Executive Officer of the Company

 

On July 5, 2022, Diana Biggs resigned as Chief Strategy Officer of the Company.

 

 

 

 

On October 6, 2022, Valour appointed Olivier Roussy Newton as Chief Executive Officer of the Company. Mr. Roussy Newton replaces Russell Star as the Chief Executive Officer of the Company and Mr. Johan Wattenstrom resigned as Chief Executive Officer of the Company.

 

On November 12, 2022, Bernard Wilson resigned as director of the Company.

 

ITEM 6Reliance on subsection 7.1(2) or (3) of National Instrument 51-102:

 

Not applicable.

 

ITEM 7Omitted Information:

 

Not applicable.

 

ITEM 8Executive Officer:

 

Olivier Roussy Newton

Chief Executive Officer

olivier@valour.com

 

ITEM 9Date of Report:

 

January 13, 2023

 

 

 

Exhibit 99.4

 

 

Valour Announces Increase in AUM by 44% Since Beginning of the Year

 

●Valour AUM increases by 44% since the beginning of the year
   
●Valour sets another record in net sales of 1 million Solana units on January 13, 2023

 

Toronto, Ontario, January 22, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), is pleased to announce that its subsidiary Valour Inc. (Cayman) (“Valour Cayman”) has increased its Assets Under Management (“AUM”) since the beginning of the year by 44% to US$112 million. Valour is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance.

 

With the resurgence of Bitcoin and the crypto market, Valour Cayman’s weekly turnover and net weekly inflows have also seen an uptick in activity. Valour Cayman’s Solana (SOL) exchange traded product (“ETP”) reached record net sales of 1 million units on January 13, 2023. Valour Cayman has also seen net inflows increase every day of the last week. Average weekly turnover in the new year increased 300% compared to Q4 2022 turnover. Assuming continued price appreciation and market interest Valour anticipates AUM to grow exponentially.

 

“We are thrilled to see such strong growth in our AUM and ETP sales,” said Olivier Roussy Newton, Chief Executive Officer of Valour. “This is a clear indication that our products are resonating with investors and we are clearly on track to beat our average Q4 monthly income if prices stay at current levels. With the approval of our SPV we also anticipate launching numerous new and innovative products shortly”.

 

Valour Cayman offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour Cayman’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour Cayman’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

On January 19, 2023, Genesis Global Capital LLC (“Genesis”) and its group companies filed for bankruptcy protection in the US and listed Valour as a creditor. Valour clarifies that Valour Cayman, its wholly-owned subsidiary, is a borrower of funds under a master loan agreement with Genesis dated January 22, 2022. The loan amount borrowed by Valour Cayman under the loan agreement is US$6 million which is collateralised. Valour currently has no reason to believe that the aforementioned situation will render the loan agreement invalid.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; price levels of and market interest in cryptocurrency; investor interest in Valour Cayman’s ETPs; future income; loan agreement with Genesis; bankruptcy proceedings of third party counterparties ; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; bankruptcy and insolvency of counterparties; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:
Investor Relations
ir@valour.com

 

 

 

Exhibit 99.5

 

5400 W Cedar Ave
Lakewood, CO 80226
Telephone: 303.953.1454
Fax: 303.945.7991

 

February 3, 2023

 

Alberta Securities Commission

British Columbia Securities Commission

Ontario Securities Commission

Nova Scotia Securities Commission

 

Re: Valour Inc. – (the “Company”) Notice of Change of Auditors

 

Ladies and Gentleman:

 

We have reviewed the information contained in the Change of Auditor Notice of Valour Inc. dated February 3, 2023 (the “Notice”), which we understand will be filed pursuant to Section 4.11 of National Instrument 51-102. Based on our Knowledge as of the date hereof, we agree with the statements contained in the Notice. We have no basis to agree or disagree with the comments in the Notice relating to RSM Canada LLP, Chartered Accountants.

 

We understand that a copy of the Notice and this letter will be provided to the shareholders of the Corporation.

 

Sincerely,

 

 

BF Borgers CPA PC

Certified Public Accountants

Licensed Public Accountants

 

 

Exhibit 99.6

 

 

February 3, 2023

 

Alberta Securities Commission
British Columbia Securities Commission
Ontario Securities Commission
Nova Scotia Securities Commission

 

Dear Sirs/Mesdames:

 

Re:Valour Inc. (the “Corporation”)  
 Change of Auditor Notice  

 

We acknowledge receipt of the Change of Auditor Notice (the “Notice”) dated February 3, 2023, delivered to us by the Corporation in respect of the change of auditor of the Corporation as it relates to RSM Canada LLP.

 

Pursuant to National Instrument 51-102 of the Canadian Securities Administrators, please accept this letter as confirmation that we have reviewed the Notice and, based on our knowledge as at the time of receipt of the Notice, we agree with each of the statements therein.

 

Yours truly,

 

RSM Canada LLP

 

 

 

Chartered Professional Accountants

Licensed Public Accountants

 

 

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

 

RSM Canada LLP is a limited liability partnership that provides public accounting services and is the Canadian member firm of RSM International, a global network of independent audit, tax, and consulting firms. Visit rsmcanada.com/aboutus for more information regarding RSM Canada LLP and RSM International.

 

Exhibit 99.7

 

Change of Auditor Notice

 

TO:Alberta Securities Commission

British Columbia Securities Commission
Ontario Securities Commission

Nova Scotia Securities Commission

 

On February 3, 2023, RSM Canada LLP, Chartered Professional Accountants, (“RSM”), resigned as auditors of Valour Inc. (the “Corporation”) on its own initiative. On the recommendation of the Audit Committee, the Board of Directors of the Corporation approved a proposal to engage the accounting firm of BF Borgers CPA PC (“Borgers”) as auditors for the Corporation for Fiscal 2022. The Corporation will ask that the shareholders of the Corporation ratify the appointment of Borgers at the next annual and special meeting of the shareholders of the Corporation, to be held in 2023.

 

RSM did not express any modified opinion in their auditor’s reports for the financial statements of the Corporation for the recently completed fiscal year, during which RSM was the Corporation’s auditor, or for any period subsequent thereto for which an audit report was issued and preceding the resignation of RSM.

 

The Corporation has requested RSM and Borgers to each furnish a letter addressed to the securities administrators in each province in which the Corporation is a reporting issuer stating whether or not they agree with the information contained in this notice. A copy of each such letter to the securities administrators will be filed with this notice.

 

It is the Corporation’s opinion that there have been no reportable events within the two most recently completed fiscal years or for any period subsequent thereto for which an audit report was issued.

 

DATED the 3rd day of February, 2023

 

 VALOUR INC.
  
 (Signed) “Olivier Roussy Newton”
 Name:  Olivier Roussy Newton
 Title: Chief Executive Officer

 

 

 

Exhibit 99.8

 

 

Valour Inc. Announces Change of Auditor

 

TORONTO, Feb. 03, 2023 -- Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTCQB: DEFTF), a technology company bridging the gap between traditional capital markets and decentralized finance, announces that it has changed its auditors from RSM Canada LLP (“Former Auditor”) to BF Borgers CPA PC (“Successor Auditor”) effective as of February 3, 2023.

 

There were no reservations in the Former Auditor’s audit reports for any financial period during which the Former Auditor was the Company’s auditor. There are no “reportable events” (as the term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) between the Company and the Former Auditor.

 

In accordance with National Instrument 51-102, the Notice of Change of Auditor, together with the required letters from the Former Auditor and the Successor Auditor, have been reviewed by the Company’s Audit Committee and will be filed on SEDAR accordingly.

 

About Valour

 

Valour Inc. is a technology company bridging the gap between traditional capital markets and decentralized finance. Our mission is to expand investor access to industry-leading decentralized technologies which we believe lie at the heart of the future of finance. On behalf of our shareholders and investors, we identify opportunities and areas of innovation and build and invest in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. For more information or to subscribe to receive company updates and financial information, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to: the appointment of a successor auditor of the Company; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

For further information, please contact: Investor Relations

 

ir@valour.com

Exhibit 99.9

 

 

VALOUR VDAB10 becomes new benchmark index for crypto offerings at independent research provider MoneyMoon

 

●VALOUR VDAB10 becomes new crypto benchmark index
   
●Valour ETP products are outperforming similar competitors due to exact tracking

 

Toronto, Ontario, February 13, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), is pleased to announce that its subsidiary Valour Inc. (Cayman) (“Valour Cayman”) VALOUR VDAB10 Index got selected as the benchmark index on MoneyMoon, one of the major European exchange traded product comparison platforms with far over 75,000 monthly active users.

 

According to independent research provider MoneyMoon, Valour’s ETP products are consistently delivering a higher performance compared to their peer group. VDAB10 (ISIN: CH1149139623) tracks the performance of the top 10 largest crypto assets based on a market capitalization with a cap of 30% for any constituent, providing investors a diversified exposure to the evolving crypto landscape.

 

“To ensure a full transparent comparison for the users of the app, we perform in-depth analysis to find the best benchmarks for each ETF/ETP category to guarantee a fair comparison within the ETF/ETP categories. In case of crypto basket ETPs, a lot depends on the weighting of the cryptocurrencies in order to avoid non-optimal diversification. In this respect Valour Digital Asset Basket convinced us in several dimensions to be the best benchmark,” said Imre Kiss Founder and CEO MoneyMoon.

 

 

 

 

 

“We are thrilled to be selected as the benchmark index on MoneyMoon and to have our products consistently recognized for their strong performance,” said Olivier Francois Roussy Newton, CEO of Valour Inc. “Our commitment to delivering the highest quality and most innovative ETP products has always been a top priority for us and it’s great to see our efforts paying off. We are proud to offer investors a diversified and high-performing exposure to the rapidly evolving digital asset space through our VDAB10 Index and our ETP products.

 

 

 

 

 

Valour Cayman offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour Cayman’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour Cayman’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

 

The Company also announces that Mr. Russell Starr has elected to step down from his role as Executive Chairman but will remain as Head of Capital Markets. Olivier Francois Roussy Newton, CEO of Valour, will assume the role of Executive Chairman replacing Russell Starr.

 

Learn more about Valour and MoneyMoon at www.valour.com and www.moneymoon.eu

 

 

2

 

 

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

About MoneyMoon:

 

MoneyMoon is an independent european ETF/ETP platform. They preselect the most favourable exchange traded products for end users. The app can be downloaded in the App Store or Google Play Store. For more information, please visit www.moneymoon.eu

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

3

 

Exhibit 99.10

 

 

Valour Announces Strategic Partnership with Spirit Blockchain and Participation in Private Placement of CSE:SPIR

 

●Spirit is a Canadian-Swiss group operating in the blockchain and digital asset sectors with the primary goal of creating value in a rapidly growing environment through recurring cash flows and capital appreciation.

 

●Valour’s CEO, Olivier Roussy Newton intends to seek a seat on the Spirit Board following the closing of the private placement. In addition, Spirit CEO Lewis Bateman will following the closing of the private placement join the board of directors of Valour and guide Valour in its product development.

 

TORONTO, March 2, 2023 /CNW/ - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance is pleased to announce that they have agreed to enter into a strategic partnership in with Spirit Blockchain (CSE: SPIR), a Canadian company that offers shareholders diversified exposure to the Blockchain and Digital Asset Industry. Leading up to this strategic partnership, Valour will also participate Spirit Blockchain’s private placement.

 

Spirit is listed on the Canadian Securities Exchange (CSE) under the symbol SPIR.CN. Spirit is a Canadian-Swiss group operating in the blockchain and digital asset sectors with the primary goal of creating value in a rapidly growing environment through recurring cash flows and capital appreciation. Spirit provides investors with direct exposure to the sector without the technical complexity or constraints of purchasing and holding the underlying crypto assets.

 

To align the interests of all parties and help Spirit achieve its objectives, Valour’s CEO, Olivier Roussy Newton intends to seek a seat on the Spirit Board following the closing of the private placement. In addition, Spirit CEO Lewis Bateman will following the closing of the private placement join the board of directors of Valour and guide Valour in its product development. Over the following six months, the two firms will also establish objectives, key results, and key performance indicators for the strategic partnership and execute definitive agreements reflecting the partnership.

 

“Valour is a great company to partner with, and the partnership will be the foundation of great opportunities and growth for both companies.” “This is only the beginning,” Spirit CEO Lewis Bateman said.

 

“We are thrilled to have the opportunity to work with Spirit Blockchain as a partner” said the CEO of Valour, Olivier Roussy Newton. “This partnership symbolizes Valour’s commitment to building the leading decentralized digital asset management firm in the world.” Lewis Bateman has extensive experience in exchange-traded product solutions and capital formation in both traditional and digital markets and was the strategic lead in mergers and acquisitions at previous public companies.

 

Learn more about Valour and Spirit Blockchain at www.valour.com and www.spiritblockchain.com/

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

 

 

 

About Spirit Blockchain

 

Spirit is listed on the Canadian Securities Exchange (CSE) under the symbol SPIR.CN.

 

Spirit is a Canadian-Swiss group operating in the Blockchain and digital asset sectors with the primary goal of creating value in a rapidly growing environment through recurring cash flows and capital appreciation.

 

Spirit provides investors with direct exposure to the sector, without the technical complexity or constraints of purchasing and holding the underlying crypto assets. Spirit’s strategy is based upon management’s conviction that the Blockchain and digital asset ecosystem will provide significant growth and outperform traditional asset classes over the medium to long-term.

 

The strategy of the Company is centered on four complementary economic units:

 

●Royalties & Streams by lending capital to Blockchain ecosystem participants, where repayment of the notional and interest takes place in the form of crypto assets;

 

●Advisory & Research Services;

 

●Treasury management through investment in major crypto assets with cold storage in Switzerland; and

 

●Providing IT Solutions to the sector in the areas of Compliance, AML, Forensics and Risk Reporting.

 

To learn more about Spirit, go to: www.spiritblockchain.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the strategic partnership between Spirit and Valour Inc.; Valour Inc. participating in the private placement of Spirit; Mr. Bateman been nominated to the board of directors of Valour Inc. following the closing of the private placement; Mr. Roussy Newton being nominated to the Board of directors of Spirit following the closing of the private placement.; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

View original content to download multimedia:

https://www.prnewswire.com/news-releases/valour-announces-strategic-partnership-with-spirit-blockchain-and-participation-in-private-placement-of-csespir-301760614.html

 

SOURCE Valour, Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/March2023/02/c1292.html

 

%SEDAR: 00007675E

 

For further information: Investor Relations, ir@valour.com

 

CO: Valour, Inc.

 

CNW 07:30e 02-MAR-23

 

 

 

 

Exhibit 99.11

 

 

Valour confirms No Exposure to Silvergate Bank, Signature Bank or Silicon Valley Bank

Valour’s partially owned bank, SEBA Bank AG, is expanding onboarding resources due to higher customer demand amidst recent banking developments

 

Toronto, Ontario, March 13, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), today confirms, in connection with the Company’s commitment to providing transparent information, that neither itself nor any of its operating subsidiaries have any exposure to Silvergate Bank, Signature Bank or Silicon Valley Bank.

 

The company also confirms that SEBA Bank AG, one of its strategic investments, has no exposure to Silvergate, Silicon Valley Bank, or USDC. “The strategic decision to acquire a stake in one of two digital asset licensed banks by the Swiss regulator FINMA, SEBA Bank, has proven to be paying off, particularly during difficult times like these. SEBA Bank has no exposure to USDC, Silvergate or Silicon Valley Bank and is seeing more interest from potential customers during the last days,” said Olivier Roussy Newton, Chief Executive Officer of Valour, who also holds a seat on SEBA’s management board. The security and safety of investors’ funds will always remain the Company’s top priority.

 

Valour Cayman offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour Cayman’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour Cayman’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@valour.com

 

 

 

Exhibit 99.12

 

 

Valour Expands Product Offering Access in France a Key Market for Expansion

 

- Valour’s suite of competitive products are now available with top brokers in France

 

- The French market reflects an immense growth opportunity, as suggested by a recent study from KPMG

 

Toronto, Ontario, March 21, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, is proud to announce the availability of their competitive crypto product range to French investors.

 

“The French market has great potential. A recent study by KPMG reflects that 38% of the French population reportedly have invested or intend to invest in crypto assets in the future. Valour brings the tools to make these numbers a reality, by offering digital asset ETPs that can easily be added to an existing securities portfolio”, said Johanna Belitz, Head of Sales France and Nordics.

 

Expanding into another market further validates the Company’s status as a go-to partner for brokers and banks wishing to offer regulated crypto exposure to their clientele.

 

“By integrating Valour’s low to zero-fee ETPs, French brokers will be able to provide their customers with access to safe and regulated exposure to the crypto ecosystem,” said Marco Infuso, Chief Sales Officer of Valour. “In general costs are a foremost priority for investors. Offering zero-cost investment products in Bitcoion and Ethereum provides a substantial advantage for our investors and signifies another milestone in the democratization of this novel and ever-growing asset class.”

 

Valour Asset Management offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour Asset Management’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Valour Bitcoin Carbon Neutral, and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour Cayman’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

Product Range - France

 

The range listed at Euronext Paris is:

 

Valour Bitcoin Zero (CH0573883474)

Valour Ethereum Zero (CH0585378752)

Valour Cardano (CH1114178820)

Valour Solana (CH1114178838)

Valour Polkadot (CH1114178812)

 

Contact your broker for the availability of the products.

 

The Company further announces that it has filed under its SEDAR profile a material change report (the “Material Change Report”) dated as of January 13, 2023, regarding the appointment and resignations of certain directors and officers of the Company during the period beginning May 14, 2021, and ending November 12, 2022. The Material Change Report has been filed at the request of the Ontario Securities Commission (the “OSC”) in connection with the OSC’s review of the Company’s continuous disclosure record. As a result of the filing of the Material Change Report, Staff of the OSC have advised the Company that it will be placed on the public list of Refiling and Errors in accordance with OSC Staff Notice 51-711 (Revised) Refilings and Corrections of Errors.

 

 

 

 

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: RMJ.F) (OTCQB: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

Exhibit 99.13

 

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc., certify the following:

 

1.I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in those documents (together, the “annual filings”) of DeFi Technologies Inc. (the “issuer”) for the financial year ended December 31, 2023.

 

2.Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3.Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a)a description of the material weakness;

 

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3N/A

 

 

 

 

6.The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7.The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: April 1, 2024 
  
(Signed) “Ryan Ptolemy” 
Ryan Ptolemy 
Chief Financial Officer 

 

 

 

 

Exhibit 99.14

 

FORM 52-109F1
CERTIFICATION OF ANNUAL FILINGS
FULL CERTIFICATE

 

I, Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies Inc., certify the following:

 

1.I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in those documents (together, the “annual filings”) of DeFi Technologies Inc. (the “issuer”) for the financial year ended December 31, 2023.

 

2.Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3.Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a)a description of the material weakness;

 

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

 

 

 

5.3N/A

 

6.The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7.The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: April 1, 2024

 

(Signed) “Olivier Roussy Newton”

Olivier Roussy Newton

Chief Executive Officer

 

 

 

 

Exhibit 99.15

 

 

VALOUR INC.

 

ANNUAL INFORMATION FORM

 

FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2022

 

Dated: March 31, 2023

 

 

 

 

TABLE OF CONTENTS

 

EXPLANATORY NOTES AND CAUTIONARY STATEMENTS 1
CORPORATE STRUCTURE 3
GENERAL DEVELOPMENT OF THE BUSINESS 4
DESCRIPTION OF THE BUSINESS 13
Risk Factors 21
DIVIDENDS 42
DESCRIPTION OF SHARE CAPITAL 42
MARKET FOR SECURITIES 42
Escrowed securities 43
DIRECTORS AND OFFICERS 43
PROMOTER 45
LEGAL PROCEEDINGS AND REGULATORY ACTIONS 45
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 46
TRANSFER AGENT AND REGISTRAR 46
MATERIAL CONTRACTS 46
INTERESTS OF EXPERTS 46
ADDITIONAL INFORMATION 46

 

i

 

 

EXPLANATORY NOTES AND CAUTIONARY STATEMENTS

 

Explanatory Notes

 

In this Annual Information Form (the “AIF”), the term “Company” or “Valour” refers to Valour Inc. and its subsidiaries as a whole, unless otherwise specified or the context otherwise requires.

 

Information contained in this AIF is given as of December 31, 2022, the financial year end of the Company, unless otherwise specifically stated.

 

Unless otherwise indicated, all currency amounts in this AIF and references to “$” are stated in Canadian dollars.

 

Market and industry data used throughout this AIF was obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainty inherent in any statistical survey of market size, conditions and prospects.

 

This AIF should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2022. The financial statements and management’s discussion and analysis are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com. The Company’s financial statements are prepared in accordance with International Financial Reporting Standards.

 

Caution Regarding Forward-Looking Information

 

This AIF contains “forward-looking information” within the meaning of that term under Canadian securities laws. This information relates to future events or future performance and reflects the Company’s expectations and assumptions regarding such future events and performance. In particular, all statements, other than statements of historical facts, included in this AIF that address activities, events or developments that management of the Company expects or anticipates will or may occur in the future contain forward-looking information, including but not limited to, statements with respect to:

 

●financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategies, profits or operating expenses;

 

●details and expectations regarding the Company’s investments in the decentralized finance (“DeFi”) industry;

 

●expectations regarding revenue growth due to changes in the Company’s business strategy;

 

●expansion and growth of the Company’s Valour Asset Management, Valour Ventures and Valour Infrastructure business lines;

 

●development of ETPs and partnerships and joint ventures with other companies;

 

●investment performance of ETPs, DeFi protocols and portfolio companies that the Company has invested in;

 

●development of laws and regulations governing the DeFi industry;

 

●requirements for additional capital and future financing options;

 

●publishing and marketing plans;

 

●the availability of attractive investments that align with the Company’s investment strategy;

 

●future outbreaks of infectious diseases like the novel coronavirus (“COVID-19”);

 

●the impact of climate change; and

 

●other expectations of the Company.

 

Forward-looking information can be identified by the use of words such as, but not limited to, “plans”, “expects”, “project”, “predict”, “potential”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

 

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Forward-looking information involves various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from the Company’s expectations are described in the Company’s documents filed from time to time with the applicable regulatory authorities and such factors include, but are not limited to, risks related to investment performance, minority investments, market fluctuations, fluctuations in commodity prices, uncertainties relating to the availability and costs of financing needed in the future, the strength of the global economy and financial system, foreign exchange fluctuations, competition, social, political, environmental and economic risks in the countries in which the Company’s investment interests are located, risks inherent to the DeFi industry, risks inherent to the mining industry, risks inherent to the technological industry, including the emergence of disruptive technologies and other risks described herein including under the heading “Risk Factors – Risks Relating to the Business and Industry of the Company”.

 

When relying on forward-looking information to make decisions, readers should ensure that the preceding information, the risks and uncertainties described in “Risk Factors” and the other contents of this AIF are all carefully considered. The forward-looking information contained herein is current as of the date of this AIF, and, except as may be required by applicable law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking information contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any information is based. Readers should not place undue importance on such forward-looking information and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s public filings available under its profile on SEDAR at www.sedar.com and at www.aequitasneo.com.

 

With regard to all information included herein relating to companies in the Company’s investment portfolio, the Company has relied on information provided by the investee companies and on publicly available information disclosed by the respective companies.

 

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CORPORATE STRUCTURE

 

Name, Address and Incorporation

 

The Company was incorporated in British Columbia pursuant to the Company Act (British Columbia) (the “BCCA”) under the name “Western Premium Resource Corp.” on April 14, 1986. On August 29, 1997, the Company filed a certificate of change of name under the BCCA and changed its name to “Zodiac Exploration Corp.” On December 18, 1998, the Company filed a certificate of change of name under the BCCA and changed its name to “Donnybrook Resources Inc.” On August 13, 2003, the Company filed a certificate of change of name under the BCCA and changed its name to “Rodinia Minerals Inc.” On November 3, 2009, the Company was continued under the Business Corporations Act (Ontario) (the “OBCA”), and on June 15, 2010, the Company filed articles of amendment under the OBCA and changed its name to “Rodinia Lithium Inc.” On August 16, 2016 the Company filed articles of amendment under the OBCA and changed its name to “Routemaster Capital Inc.” The common shares of the Company (the “Common Shares”) began trading on the TSX Venture Exchange (the “TSXV”) on June 30, 2010. The Company sold its sole subsidiary on December 29, 2015 and completed a change of business (“COB”) to a tier 2 investment issuer under the rules of the TSXV on September 16, 2016. On January 19, 2021, the Common Shares were uplisted to trade on the NEO Exchange Inc. (“NEO”), and on February 26, 2021, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” On April 19, 2022, the Common Shares were listed for trading on the OTCQB Venture Market. On June 1, 2022, the Company filed articles of amendment under the OBCA and changed its name to “Valour Inc.” The Company’s head office and registered office is located at 198 Davenport Road, Toronto, Ontario, M5R 1J2.

 

As of the date of this AIF, the Company holds 100% of the issued and outstanding shares of DeFi Holdings Inc. (“DeFi Holdings”), 100% of the issued and outstanding shares of DeFi Holdings (Bermuda) Inc., 100% of Electrum Streaming Inc. and 100% of Valour Inc. (Cayman Islands) (“Valour Cayman”) The following is an organizational chart illustrating the inter-corporate relationships between the Company and its subsidiaries and the jurisdiction of organization of each such entity, as at the date hereof:

 

 

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GENERAL DEVELOPMENT OF THE BUSINESS

 

The Company is a publicly listed company on the NEO Exchange trading under the symbol “DEFI”. The Company operates three lines of business: Valour Asset Management, Valour Ventures and Valour Infrastructure, each of which is explained further below under their respective headings in “Description of Business”.

 

Three Year History

 

The following is a summary of the general development of the Company’s business over the three most recently completed financial years.

 

Subsequent to Fiscal 2022

 

On February 13, 2023, the Company announced that Russell Starr has elected to step down from his role as Executive Chairman but will remain as Head of Capital Markets. Olivier Francois Roussy Newton, CEO of Valour, assumed the role of Executive Chairman replacing Russell Starr.

 

On February 3, 2023, the Company announced the change of its auditors from RSM Canada LLP to BF Borgers CPA PC.

 

On January 22, 2023, the Company announced that on January 19, 2023, Genesis Global Capital LLC (“Genesis”) and its group companies filed for bankruptcy protection in the US and listed Valour as a creditor. Valour clarified that Valour Cayman, its wholly-owned subsidiary, is a borrower of funds under a master loan agreement with Genesis dated January 22, 2022. The loan amount borrowed by Valour Cayman under the loan agreement is US$6 million which is collateralised.

 

On January 10, 2023, the Company announced the approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish Financial Supervisory Authority (“SFSA”).

 

Fiscal 2022

 

On August 26, 2022, the Company announced the extension of the expiry date of 12,684,560 Common Share purchase warrants, previously issued in November 2020, to February 13, 2023.

 

On March 21, 2022, the Company announced that Valour Cayman had created a special purpose vehicle to support distribution of digital asset backed products to institutional clients, to additional exchanges and to offer a broader range of products across Europe.

 

Management, Board and Advisory Board Changes

 

On November 14, 2022, the Company announced the resignation of Bernard Wilson as director of the Company.

 

On October 6, 2022, the Company announced the appointment of Olivier Roussy Newton as Chief Executive Officer of the Company. In addition, the Company announced Russell Starr will re-assume the role of Head of Capital Markets and maintain his role as Executive Chairman of the Company.

 

On July 5, 2022, the Company announced Diana Biggs stepped down from her role as Chief Strategy Officer of the Company.

 

Financings

 

On November 29, 2022 the Company announced the closing of the second tranche of the October 2022 Unit (as defined below) offering for gross proceeds of $132,400 through the sale of 662,000 October 2022 Units. No finders fees were paid in connection with the closing of the second tranche. The securities underlying the second tranche closing were subject to a statutory hold period of four months and one day following the closing date, expiring March 30, 2023.

 

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On November 14, 2022, the Company announced the closing of the first tranche of the October 2022 Unit offering, for gross proceeds of $1,414,973 through the sale of 7,074,865 October 2022 Units. A director of the Company purchased 2,500,000 October 2022 Units under the first tranche closing. In connection with the November 14, 2022 first tranche closing of the October 2022 Unit offering, the Company paid aggregate finder’s fees of C$ 7,499.73 in cash to certain finders and 187,493 broker warrants, each broker warrant entitling the holder to acquire one Share at a price of $0.30 for a period of two years from issuance. The securities underlying the first tranche closing were subject to a statutory hold period of four months and one day following the closing date, expiring March 15, 2023.

 

On October 11, 2022, the Company announced its non-brokered private placement financing of 25,000,000 units (the “October 2022 Units”), at an offering price of $0.20 per October 2022 Unit, for aggregate gross proceeds of $5,000,000. Each October 2022 Unit was comprised of one Common Share and one half Common Share purchase warrant, entitling the holder of a whole warrant to acquire one Common Share, at an exercise price of $0.30, for a period of 24 months from issuance.

 

SEBA Bank Partnership and Investment

 

On May 9, 2022, the Company announced it had partnered with SEBA Bank AG (“SEBA”) to launch the SEBA VALOUR Metaverse Index (SVMETA), an investable index that provides exposure to crypto assets related to gaming, entertainment, and social interactions within virtual and augmented reality. On June 7, 2022 the Company announced SVMETA was available for trading OTC.

 

On March 1, 2022, the Company announced that it has launched a joint initiative with SEBA to offer investment solutions in crypto assets.

 

On January 25, 2022, the Company announced that it has closed its investment of CHF 25 million in SEBA, acting as the co-lead in the oversubscribed CHF 110 million Series C funding round of SEBA. SEBA is a fully integrated, FINMA licensed, digital assets banking platform providing a seamless, secure, and easy-to-use bridge between digital and traditional assets.

 

On January 5, 2022, the Company announced that it has entered into a commercial agreement (the “Preferred Partnership Agreement”) to establish a preferred partnership relationship with SEBA. The Preferred Partnership Agreement outlines a framework for the Company to become a preferred provider of staking services, client referrals, market making and liquidity to SEBA, and SEBA to become a preferred provider of custody services to the Company. The Preferred Partnership Agreement also outlines further cooperation between SEBA and the Company with respect to asset and investment management, mining services, tokenization, digital capital markets and institutional research.

 

Additions to Indices

 

On January 26, 2022, the Company announced that it will be added to the CoinShares Blockchain Global Equity Index, administered by Solactive AG, on February 8, 2022. The index aims to offer exposure to listed companies that participate or have the potential to participate in the blockchain or cryptocurrency ecosystem. It also aims to capture the potential investment upside generated by earnings related to the adoption of blockchain technologies or cryptocurrencies.

 

On January 24, 2022, the Company announced that it has been added to the Melanion Bitcoin Exposure Index. This unique index, sponsored by Melanion Capital and administered by Bita GmbH, marks the first milestone in the development of an innovative Digital Asset business for Melanion Capital.

ESG initiatives

 

On January 18, 2022, the Company announced that it joined the Crypto Climate Accord (“CCA”), an industry initiative whose objective is to decarbonise the global crypto industry by prioritizing climate stewardship and supporting the entire crypto industry’s transition to net zero greenhouse gas emissions by 2040, as a supporter.

 

Valour Asset Management

 

On December 23, 2022, the Company announced its products were listed on the independent comparison platform MoneyMoon, a major European ETP comparison platform.

 

On December 1, 2022, the Company announced its partnership with Autostock, a Swedish trading platform, to launch an automated trading strategy designed to capture weekly effects of Bitcoin.

 

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On October 28, 2022, the Company announced it had filed a new EU-base prospectus covering digital assets ETP-products with the SFSA.

 

On October 18, 2022, the Company announced the consolidation of its full pro-rated ETHW allocation received as a result of the Ethereum proof-of-work to proof-of-stake forking event. Net proceeds from the consolidation were reinvested into the underlying asset of the Company’s Ethereum Zero certificate products. The change was reflected through an adjustment to the net asset value of both Valour Cayman Ethereum Zero certificates (SEK and EUR denominated).

 

On October 12, 2022, the Company announced its partnership with Swedish index provider Vinter to launch the Company’s first multi-asset crypto ETP, the Valour Digital Asset Basket 10 ETP (VDAB10). The Valour Digital Asset Basket 10 ETP tracks the 10 largest digital assets weighted by their market capitalisation, with a maximum portfolio allocation of 30% per asset.

 

On September 23, 2022, the Company announced the debut and trading of its Carbon Neutral Bitcoin ETP on the Boerse Frankfurt Zertifikate AG (the “Frankfurt Exchange”).

 

On August 24, 2022, the Company announced the debut and trading of its new Binance Coin Exchange traded product, Valour (BNB) EUR ETP, on the Frankfurt Exchange. The Valour (BNB) EUR ETP tracks the price of BNB, the native token behind the BNB Chain, a decentralized open-source, multi-chain platform being used to build parallel virtual ecosystem infrastructure.

 

On August 18, 2022, the Company announced an agreement with German banks, Comdirect and Onvista, that will enable banking clients to integrate Valour Cayman ETPs into their investment portfolios.

 

On August 16, 2022, the Company announced its partnership with German online brokerage firm justTrade, whereby the Company was retained to provide physically-backed crypto ETPs to justTrade’s savings plan program (Sparplan) by the end of the year.

 

On July 26, 2022, the Company announced trading of its ETP products on the Lang and Schwarz Exchange, based in Germany. Trading of Bitcoin Zero, Etherium Zero, Valour Uniswap ETP, Valour Polkadot ETP, Valour Cardano ETP, Valour Solana ETP, Valour Avalanche ETP, and Valour Cosmos ETP began July 25, 2022.

 

On May 26, 2022, the Company announced Valour Cayman received approval to begin trading of the Valour Enjin (ENJ) EUR ETP and Valour Cosmos (ATOM) EUR ETP on the Frankfurt Exchange. Trading began on May 26, 2022.

 

On May 2, 2022, the Company announced that Valour Cayman received approval from the SFSA to extend its distribution from the Top 75 single digital assets by market capitalization to the Top 125.

 

On April 6, 2022, the Company announced that Valour Cayman began trading of its Polkadot (DOT) EUR ETP, Cardano (ADA) EUR ETP, and Solana (SOL) EUR ETP on the Euronet Exchange in Paris and Amsterdam. Trading began on April 6, 2022.

 

On February 17, 2022, the Company announced a strategic partnership with RockX, a Singapore-based institutional gateway to crypto finance and blockchains, to enhance the staking components of the Company’s current respective ETP infrastructures, co-develop ETP products, provide institutional staking services, custodian services and real time data yield oracle.

 

On February 16, 2022, the Company announced that Valour Cayman received approval to begin trading of its Terra (LUNA) SEK ETP and Avalanche (AVAX) SEK ETP on the Nordic Growth Market Exchange (“NGM”). Trading on the NGM began on February 28, 2022 and trading on the Frankfurt Exchange began on March 25, 2022.

 

On February 14, 2022, the Company announced that Valour Cayman received approval to begin trading of the Polkadot (DOT) EUR ETP and Cardano (ADA) EUR ETP on Frankfurt Stock Exchange. Trading began on February 21, 2022.

 

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On February 2, 2022, the Company announced that Valour Cayman applied for a Swiss Verein zur Qualitätssicherung von Finanzdienstleistungen (“VQF”) membership through its Swiss subsidiary Valour Europe AG (formerly known as DeFI Europe AG). The VQF membership is awarded by the Verein zur Qualitätssicherung von Finanzdienstleistungen (Financial Services Standards Association), a self-regulatory association for the financial industry in Switzerland. Approval for the VQF membership was granted on April 11, 2022.

 

On February 1, 2022, the Company announced that Valour Cayman received approval to begin trading its Solana ETP on the Frankfurt Exchange, with trading to begin February 2, 2022.

 

Valour Ventures

 

On April 5, 2022, the Company announced it had participated in the $45 million Series A raise for Boba Network, a blockchain Layer-2 scaling solution and Hybrid Compute platform that integrates smart contracts with Web2 API.

 

On January 19, 2022, the Company announced that it has made a block purchase of $WILD tokens, the native token of Wilder World, an immersive 5D Metaverse built on Ethereum, Unreal Engine 5 and open protocol ZERO.

 

Normal Course Issuer Bid

 

On April 8, 2022, the Company announced the extension of its Normal Course Issuer Bid (“NCIB”), previously launched on April 13, 2021, to buy back Common Shares through the facilities NEO Exchange and/or other Canadian alternative trading platforms. The actual number of Common Shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the Company. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms not to exceed up to 10% of the public float for the Common Shares as of April 8, 2022, or 20,359,513 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with NEO Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the NEO Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the NEO Exchange as measured from November 8, 2021 to April 8, 2022.

 

Fiscal 2021

 

Valour Asset Management

 

On December 16, 2021, the Company announced that Valour Cayman received approval to launch a Top 10 Digital Assets and Top 5 Defi ETP. The approval from Finansinspektionen, the SFSA, enables Valour Cayman to distribute the ETPs across key European markets. The ETPs will consist of an index of the top 10 digital assets and top 5 DeFi specific digital assets.

 

On December 15, 2021, the Company announced that Valour Cayman listed its Bitcoin Zero ETP and Ethereum Zero ETP on the Euronext Amsterdam and Paris exchanges.

 

On December 13, 2021, the Company announced that Valour Cayman received approval to launch a Metaverse and Gaming Index ETP from the SFSA. The ETP will consist of an index of the top five digital assets related to the metaverse and has regulatory approval for distribution across key European markets.

 

On November 29, 2021, the Company announced that Valour Cayman’s Uniswap ETP began trading on NGM.

 

On October 26, 2021, the Company announced that Valour Cayman will launch the world’s first Uniswap ETP on the Frankfurt Exchange, with the product going live on October 28, 2021. Uniswap, the world’s most popular decentralized exchange (“DEX”), is a liquidity provider for the trading of tokens on the Ethereum network. As of September 2021, Uniswap Labs shared that the Uniswap protocol passed $500bn USD in total trading volume since its launch in November 2018.

 

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On September 20, 2021, the Company announced that Valour Cayman received approval for listing of its Bitcoin Zero and Ethereum Zero ETPs in Frankfurt, with trading of its Bitcoin Zero and Ethereum Zero products to begin on the Boerse Frankfurt Zertifikate AG that week.

 

On September 16, 2021, the Company announced that Valour Cayman launched its Solana ETP on the NGM stock exchange. Solana is the fastest blockchain in the world and the fastest growing ecosystem in the crypto universe, with more than 400 projects spanning DeFi, non-fungible tokens (“NFTs”), Web3, and more. It sat among the top 10 cryptocurrencies in the world by market capitalization 1 at USD $52.36 billion as of September 13, 2021.

 

On June 16, 2021, the Company announced that Valour Cayman signed a letter of intent with Arcane Assets AS with the intention to explore the issuance and listing of an exchange-traded product based on Arcane’s cryptocurrency fund.

 

On June 1, 2021, the Company announced that Valour Cayman launched its Polkadot ETP on the NGM stock exchange. Polkadot is a next generation blockchain protocol that enables interoperability and scalability for multiple blockchains. An open-source project founded by the Web3 Foundation, Polkadot’s native token, DOT, carries out three essential functions: providing governance for the network, operating the network via staking, and supporting the creation of parachains, specialized blockchains that connect to Polkadot.

 

On May 18, 2021, the Company announced that Valour Cayman launched the Cardano (ADA) ETP on the NGM. Cardano is an open-source, proof-of-stake blockchain platform which facilitates decentralized applications and peer-to-peer transactions via its native token, ADA. With a research-driven approach and focus on the security, scalability and programmability, Cardano’s development has been propelled in the past year.

 

On April 7, 2021, the Company announced that Valour Cayman launched Ethereum Zero, an ETP with Ethereum’s native token as an underlying, on the NGM stock exchange. Until now, people wanting to gain exposure to ether (ETH) through an ETP had to pay up to 2.5% management fees with competitor products, which can reduce the value of the investment. With the launch of Ethereum Zero, Valour Cayman provides investors with an ETP tracking the performance of the world’s second largest digital asset without any management fee.

 

On March 23, 2021, the Company announced that it entered into a binding Letter of Intent (“Second Valour LOI”) to acquire the remaining 80% equity interest in Valour Cayman that it did not own. The Second Valour LOI contemplated that the Company and Valour Cayman would promptly negotiate and enter into a definitive agreement, together with such other documents that may be required in order to formalize and execute the terms of the acquisition as outlined in the Valour LOI (the “80% Valour Acquisition”). In consideration for the acquisition, the Company agreed to, upon closing, issue 36,934,315 Common Shares at a deemed price of $2.05 per DeFi Share to the shareholders of Valour Cayman in exchange for 80% of the common shares in the capital of Valour Cayman. On January 19, 2021, the Company entered into a definitive agreement with respect to the 20% Valour Acquisition, and on February 12, 2021, the Company completed the 20% Valour Acquisition. On April 1, 2021, the Company announced that it had completed the 80% Valour Acquisition. Together, the 20% Valour Acquisition and the 80% Valour Acquisition constituted a “significant acquisition” for the Company as defined in National Instrument 51-102 – Continuous Disclosure Obligations. The Company filed a Form 51-102F4 in respect of the acquisition of Valour Cayman on April 9, 2021.

 

On February 12, 2021, the Company announced that Ms. Diana Biggs was appointed as Chief Executive Officer of Valour Cayman.

 

On January 4, 2021, the Company announced that it has entered into a binding Letter of Intent (“Valour LOI”) to acquire a 20% equity interest in Valour Cayman The Valour LOI contemplated that the Company and Valour Cayman would promptly negotiate and enter into a definitive agreement, together with such other documents that may be required in order to formalize and execute the terms of the acquisition as outlined in the Valour LOI (the “20% Valour Acquisition”). In consideration for the acquisition, the Company shall upon closing issue 21,000,000 Common Shares at a deemed price of $0.66 per share to the shareholders of Valour Cayman in exchange for 20% of the common shares in the capital of Valour Cayman. On January 19, 2021, the Company entered into a definitive agreement with respect to the 20% Valour Acquisition, and on February 12, 2021, the Company completed the 20% Valour Acquisition.

 

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Valour Ventures

 

On June 8, 2021, the Company announced that it entered into a definitive agreement to acquire a 10% equity interest in SDK:meta (“SDK”) (the “SDK Acquisition”), a privately held web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. Pursuant to the agreement, the Company issued 3,000,000 Common Shares to SDK in exchange for a 10% of the units in the capital of SDK upon closing of the SDK Acquisition. No finders’ fee were paid in connection with the SDK Acquisition. The SDK Acquisition was completed on June 14, 2021.

 

On April 14, 2021, the Company announced that it has co-invested alongside Pomp Investments (Anthony Pompliano’s investment fund) into SOVRYN, one of the first implementations of decentralized finance technologies specifically designed for the Bitcoin network. SOVRYN’s decentralized protocol extends the functionality of Bitcoin beyond permissionless, monetary sovereignty to include financial services such as trading, lending, liquidity insurance, and many other forms of trustless finance.

 

On March 19, 2021, the Company announced that it has finalized an investment in Volmex Finance one of the first implementations of decentralized volatility index strategies. Volmex Finance is the leading volatility index platform in crypto. Volatility derivatives are a core pillar of modern finance, as they provide a cost-effective means for hedging market volatility risk. Volmex Finance brings volatility hedging to Ethereum, unlocking a myriad of new DeFi applications and building blocks.

 

On January 27, 2021, the Company announced that it finalized an investment in Maps.me, one of the first implementations of decentralized finance technologies for a large international user base of customers.

 

On January 14, 2021, the Company announced that it has entered into a definitive agreement (the “DeFi Holdings Definitive”) to acquire the remaining 51% equity interest in DeFi Holdings that it did not own at such time (the “51% DeFi Holdings Acquisition”). In consideration for the acquisition, the Company issue 20,000,000 Common Shares to the shareholders of Defi Holdings in exchange for 51% of the common shares in the capital of Defi Holdings. The 51% DeFi Holdings Acquisition was completed on January 28, 2021.

 

On January 12, 2021, the Company announced that DeFi Bermuda had purchased tokens in the SNX, AAVE, UNI and YFI protocols, among others.

 

On January 8, 2021, the Company announced that it has set up an investment and trading subsidiary in Bermuda, DeFi Holdings Bermuda Ltd (“DeFi Bermuda”). The Company also entered into an agreement with Neversink River Capital, LLC an innovative cryptocurrency manager led by asset management and technology veterans of Deutsche Bank and MIO Partners to advise and actively manage its portfolio.

 

Valour Infrastructure

 

On December 1, 2021, the Company announced that it deployed a Solana validator node that will act as an independent validator for the network. By processing transactions and participating in consensus, DeFi Technologies will be supporting the growth and performance of the Solana network. In connection with running the node, DeFi Technologies can receive rewards from securing transactions on Solana as well as for providing governance services such as voting on code changes and other upgrades to the globally decentralized network.

 

On November 22, 2021, the Company announced that it began staking the Company’s Blocto Tokens. Blocto, a portfolio company of the Company, is a blockchain wallet hub that allows users to conveniently and securely access blockchains, use DApps, send and receive their crypto and digital assets. BLT, the utility and governance token of Blocto, serves as the foundation of the ecosystem and the interconnective link between the wallet, Blocto-made products, and their users.

 

On November 18, 2021, the Company announced that it selected Bison Trails, the leading blockchain infrastructure platform-as-a-service company, to enhance the node infrastructure for the Valour Infrastructure business line. As part of the agreement, Bison Trails will begin by openly implementing validator nodes leveraging Bison Trails’ infrastructure and protocol expertise. The effort will contribute to the DeFi ecosystem by further establishing secure and reliable networks, voting, and increasing overall decentralization.

 

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On November 15, 2021, the Company announced that it would deploy Solana nodes and act as an independent validator for the network. By processing transactions and participating in consensus, the Company will be supporting the growth and performance of the Solana network. In addition, the Company plans to participate in staking, thereby earning staking rewards.

 

On November 3, 2021, the Company announced that it will be joining the Pyth network, a decentralized financial market data distribution platform built on the Solana blockchain. As an active participant of the Pyth community, the Company will be bringing its real-time cryptocurrency pricing data to the Pyth network to improve DeFi market transparency.

 

On March 12, 2021, the Company announced that it launched a new product, DeFi Governance (now Valour Infrastructure). DeFi Governance seeks to work with decentralized networks, running nodes to provide governance to networks and validate transactions globally.

 

Management, Board and Advisory Board Changes

 

On November 1, 2021, the Company announced that Valour Cayman appointed Tommy Fransson to the role of Chief Executive Officer starting January 1, 2022. Mr. Fransson was previously at the NGM where he was Deputy CEO for ten years and Head of the Nordic Derivatives Exchange. Mr. Fransson replaced Diana Biggs, who moved into the role of the Company’s Chief Strategy Officer.

 

On October 4, 2021, the Company announced an expansion of its management team, with (a) Mr. Russell Starr, who has been serving as Executive Chairman of the Company, assuming the role of Chief Executive Officer, (b) Mr. Johan Wattenstrom, who is a co-founder and director of Valour Cayman, assuming the role of Chief Operating Officer, (c) Ms. Diana Biggs, who was then the Chief Executive Officer of Valour Cayman, assuming the role of Chief Strategy Officer as of November 1, 2021 and (d) Mr. Wouter Witvoet, formerly the Chief Executive Officer of the Company, assuming the role as President.

 

On July 20, 2021, the Company announced that it had appointed Mr. Russell Starr as Executive Chairman of the Company.

 

On May 14, 2021, the Company announced that it appointed Mr. Krisztian Tóth to the Board of Directors and Mr. Starr to the management team as Head of Capital Markets.

 

Mr. Tóth, is an experienced M&A lawyer and partner at the law firm of Fasken Martineau DuMoulin LLP, which is a leading international business law and litigation firm with eight offices with more than 700 lawyers across Canada and in the UK and South Africa. Mr. Tóth began his career at Fasken in 2003, eventually becoming a partner of the firm in 2009. He currently focuses on mergers and acquisitions and corporate finance with an emphasis on international and cross-border transactions, proxy contests and other contested matters, public and private financings, securities regulations and corporate governance. He has been recognized by IFLR1000 for his capital markets work. Mr. Tóth is also a director of a number of public companies, including Voyager Digital, a publicly listed crypto-asset broker that provides retail and institutional investors with a turnkey solution to trade crypto assets.

 

Mr. Starr is an established CEO, entrepreneur and financier with deep capital markets and industry expertise. Mr. Starr is a trusted leader and advisor focused on forging meaningful, high stakes, high return business development connections. Mr. Starr is also a co-founder and part owner of Echelon Wealth Partners, a large Canadian investment dealer. After leaving Bay Street, Mr. Starr has held executive positions and board roles with numerous TSX and TSXV listed companies.

 

On March 2, 2021, the Company announced that Mr. Anthony Pompliano was appointed as an advisory to the Company. Mr. Pompliano manages an investment portfolio valued at approximately $500 million. He is the Managing Partner at Pomp Investments and previously co-founded asset management firm Morgan Creek Digital. Mr. Pompliano hosts the popular “Pomp Podcast” and writes a daily letter to more than 135,000 investors about bitcoin and digital assets. His interests lie at the intersection of finance, technology, entrepreneurship, and economics, which he tweets about extensively. Mr. Pompliano has long been a staunch proponent of bitcoin and has deep conviction that the world, including financial applications, will run on open, decentralized protocols.

 

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On February 16, 2021, the Company announced that Mr. Wouter Witvoet was appointed as Chief Executive Officer of the Company. Mr. Witvoet previously was Founder and CEO at Secfi, Inc., the first platform offering financing secured by private company stock. Secfi raised two rounds of venture capital as well as a facility of US$550 million from a leading New York based hedge fund. Under his leadership the company grew from 1 to 40 employees and has helped many employees from Snowflake, Uber, Pinterest, DoorDash and others with the money they need to exercise their stock options.

 

On February 3, 2021, the Company announced that Mr. Thibaut Ceyrolle, EMEA founder and VP of Snowflake Inc., had join the board of advisors of the Company. Thibaut has a wealth of experience in growing and scaling Software and Cloud industries companies for more than 20 years. He was Snowflake’s first employee outside the United States. Under Thibaut’s leadership, Snowflake EMEA grew from zero to a presence in 14 countries, and several hundred new customers and employees with an unprecedented growth in the Software industry. Snowflake is one of the most successful IPOs in the software industry and the largest software initial public offering in Q4 last year. Thibaut has been named the #1 Sales leader 2020 in the sales confidence community.

 

On January 19, 2021, the Company announced the appointment of Bernie Wilson as an additional independent director of the Company. Mr. Wilson is a senior financial professional. He is the former Vice-Chairman of PriceWaterhouseCoopers LLP and is the Chairman of the Founders Board of the Institute of Corporate Directors. Mr. Wilson has served as Chairman of the Canadian Chamber of Commerce; Chairman of the International Chamber of Commerce - Canada; and Member of the Canada/US Trade Committee. Mr. Wilson is currently a director of a number of other public Canadian companies.

 

Financings

 

On March 9, 2021, the Company announced that it had closed its previously announced non-brokered private placement financing of Common Shares gross proceeds of $10,000,000 (the “March 2021 Offering”). Pursuant to the closing of the March 2021 Offering, the Company issued 5,000,000 Common Shares. In connection with the Offering, the Company paid aggregate finder’s fees of C$274,120 in cash to certain finders. The securities issued under the March 2021 Offering were subject to a statutory hold period of four months and one day following the closing date, expiring July 10, 2021.

 

Normal Course Issuer Bid

 

On April 9, 2021, the Company announced its intention to commence a NCIB to buy back Common Shares through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms. The actual number of Common Shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the Company. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms not to exceed up to 9.7% of the public float for the Common Shares as of April 9, 2021, or 18,162,177 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with NEO Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the NEO Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the NEO Exchange as measured from November 9, 2020 to April 8, 2021.

 

Name Change and Listing of Common Shares

 

On November 10, 2021, the Company announced that it filed a Form 40-F Registration Statement with the United States Securities and Exchange Commission to list the Common Shares on the Nasdaq Stock Market.

 

On February 26, 2021, the Company announced that the shareholders of the Company approved the change of name of the Company to “DeFi Technologies Inc.”.

 

On January 19, 2021, the Company announced that effective January 21, 2021, the Common Shares will be listed on the NEO Exchange under the symbol “DEFI” and that the Common Shares would delist from the TSX Venture Exchange.

 

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HIVE Blockchain Share Exchange

 

On March 25, 2021, the Company announced that it has entered into a letter of intent with HIVE Blockchain Technologies Ltd. (“HIVE”) for a share swap arrangement, by which HIVE will receive ten (10) million Common Shares representing 6.5% of the existing outstanding common shares of the Company at such time, in exchange for four (4) million HIVE common shares, representing 1.1% of Hive’s issued and outstanding common shares at such time. In addition, HIVE and DeFi Technologies plan to create a partnership surrounding the decentralized finance (DeFi) ecosystem with specific applications around Ethereum and Miner Extractable Value (MEV). The new partnership, which follows three months of discussions, will provide the Company with a strategic stake in HIVE and a broader partnership surrounding the DeFi ecosystem with a specific focus on the Ethereum based MEV space and developments surrounding it. The share swap arrangement with HIVE was completed on April 21, 2021.

 

Fiscal 2020

 

Investments

 

On December 29, 2020, the Company announced that it has invested in a seed-round financing of $100,000 in Luxor Technology Corporation, an institutional hashrate marketplace.

 

On November 18, 2020, the Company announced that it had entered into a definitive agreement dated as of November 18, 2020 to acquire 49% of the issued and outstanding common shares of DeFi Holdings (the “Definitive Agreement”). Under the terms set out in the Definitive Agreement, the Company issued 20,000,000 common shares of the Company from treasury (the “Payment Shares”) to the shareholders of DeFi Holdings in exchange for a 49% of the total issued and outstanding common shares DeFi Holdings (the “Purchased Shares”) pro rata in proportion to their holdings of Purchased Shares. Pursuant to the Company’s press release dated October 6, 2020, the Payment Shares issued had a deemed value of $0.055 per Payment Share. The acquisition under the Definitive Agreement was completed on December 10, 2020.

 

On October 6, 2020, the Company announced that it has entered into a binding Letter of Intent (“LOI”) to acquire a 49% equity interest in DeFi Holdings. The LOI contemplated that the Company and DeFi Holdings would promptly negotiate and enter into a definitive agreement, together with such other documents that may be required in order to formalize and execute the terms of the Acquisition as outlined in the LOI. In consideration for the acquisition, the Company shall upon closing issue 20,000,000 common shares of the Company at a deemed price of $0.055 per share to the shareholders of Defi in exchange for 49% of the common shares in the capital of Defi Holdings.

 

On September 11, 2020, the Company announced that it has entered into a royalty purchase agreement (the “Purchase Agreement”) with 2776234 Ontario Inc. (the “Purchaser”) to sell the 1.0% net smelter returns royalty granted by Potasio Y Litio de Argentina S.A. with respect to the Sal de los Angeles lithium project (the “Lithium NSR Royalty”) and the 2.0% net smelter returns royalty granted by QMX Gold Corporation with respect to its Quebec mineral properties (the “QC NSR Royalty” and, together with the Lithium NSR Royalty, the “Royalties”) (the “Transaction”). As consideration for the Royalties, the Company received 404,200 common shares of Brazil Potash Corp. at a price per share of US$3.75 and 1,010,500 common shares of Flora Growth Corp. at a price per share of US$0.75 per share. Based on the Bank of Canada exchange rate of C$1.317 to US$1.00, the Company received total consideration valued at approximately C$3,000,000.

 

Financing Activities

 

On November 16, 2020, the Company closed its previously announced non-brokered private placement financing of units (the “Nov 2020 Units”) for gross proceeds of $2,000,000 (the “Nov 2020 Offering”). Pursuant to the closing of the Nov 2020 Offering, the Company issued 20,000,000 Nov 2020 Units. Each Nov 2020 Unit consists of one Common Share and one common share purchase warrant (each, a “Nov 2020 Warrant”), entitling the holder to acquire one additional Common Share at an exercise price of $0.25 for a period of 24 months from issuance. If at any time after four months and one day from the closing date the common shares of the Company trade at $0.20 per common share or higher (on a volume weighted adjusted basis) for a period of 10 consecutive days, the Company will have the right to accelerate the expiry date of the Nov 2020 Warrants to a date that is 30 days after the Company issues a news release announcing that it has elected to exercise this acceleration right.

 

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On November 16, 2020, the Company also granted a total of 1,600,000 stock options to certain consultants of the Company pursuant to the Company’s stock option plan. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is 12 months from the date of grant and may be exercised at a price of $0.09 per option for a period of five years from the date of grant.

 

On July 23, 2020, the Company announced that it had closed its previously announced non-brokered private placement financing of units (the “July 2020 Units”) for gross proceeds of $600,000 (the “Offering”). Pursuant to the closing of the Offering, the Company issued 20,000,000 July 2020 Units. Each July 2020 Unit consists of one Common Share and one half common share purchase warrant (each, a “July 2020 Warrant”), entitling the holder to acquire one additional Common Share at an exercise price of $0.05 for a period of 24 months from issuance. In connection with the closing of the Offering, the Company has paid aggregate finder’s fees of $3,150 in cash and 105,000 finder’s warrants (“Finder’s Warrants”) to certain finders. Each Finder Warrant will entitle the holder thereof to purchase one Common Share at a price of $0.05 for a period of 24 months from the date of the closing of the July 2020 Offering.

 

On February 14, 2020, the Company announced that it had terminated its previously announced $2 million private placement of units of the Company.

 

Management, Board and Advisory Board Changes

 

On December 30, 2020, the Company announced that it had strengthened its advisory board with the addition of Chris Yeung, Head of Trading, Asia at BlockFi to its Advisory Board (as defined below).

 

On November 26, 2020, the Company announced that it had formed an advisory board (the “Advisory Board”) with Wouter Witvoet, Olivier Francois Roussy Newton and Trapp Lewis as its founding members. The Advisory Board will work with the Company and DeFi Holdings to identify and grow promising decentralized finance projects.

 

The Company also announced that Daniyal Baizak has been appointed President, Chief Executive Officer and a director of the Company. Mr. Baizak is a business consultant with considerable experience providing financial and strategic advice on investment, mergers and acquisitions and project management for a variety of private and public companies. Mr. Baizak holds a Bachelor of Commerce from Rotman School of Management, University of Toronto. Mr. Baizak replaced Fred Leigh, the former President, Chief Executive Officer and director of the Company.

 

On March 10, 2020, the Company announced that it had appointed Fred Leigh as President, Chief Executive Officer and a director of the Company. Mr. Leigh was previously the Chief Executive Officer and a director of the Company from 2016 to 2019. Mr. Leigh replaced James Lanthier, the former President, Chief Executive Officer and director of the Company.

 

DESCRIPTION OF THE BUSINESS

 

General

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance through three primary business lines: (a) the development and listing of Exchange Traded Products (“ETPs”), investment vehicles providing indirect exposure to underlying cryptocurrencies, digital asset indexes, or other decentralized finance instruments, through our Valour Asset Management business line, (b) participating in decentralized blockchain networks by processing data transactions that contribute to network security and stability, governance, and transaction validation through our Valour Infrastructure business line, and (c) through our investments in decentralized finance companies in early-stage ventures through our Valour Ventures business line.

 

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“Decentralized finance” or “DeFi” refers to a financial system that seeks to operate as an alternative to the traditional financial system. DeFi seeks to allow people and companies to effect transactions on a “peer to peer” basis, typically employing blockchain or other distributed ledger technology to allow participants to interact with one another directly between each other. Because transactions are effected peer to peer, DeFi does not rely on traditional intermediaries such as banks, brokerages, and stock exchange, so transactions can be completed on a more timely basis and without the fees typically charged by intermediaries.

 

Valour Asset Management

 

The Company’s wholly owned subsidiary Valour Cayman develops and lists ETPs on regulated stock exchanges in Europe that synthetically track the value of a cryptocurrency or DeFi protocol token, or an index or basket thereof. ETPs simplify the ability for retail and institutional investors to gain exposure to cryptocurrencies and decentralized finance as they remove the need to manage wallets, various logins, custody and other intricacies that are linked to managing a digital asset portfolio. Rather, retail and institutional investors can simply purchase the associated ETP with the cryptocurrency or DeFi protocol token they wish to gain exposure to through a bank or brokerage account with access to the relevant stock exchanges.

 

As of the date hereof, Valour Cayman has listed the following ETPs:

 

Name of ETP (Currency) Exchange Listings ISIN No.
Valour Bitcoin Zero (EUR) NGM, Borse Frankfurt Zertifikate AG,
Euronext Amsterdam and Euronext Paris		 CH0573883474
Valour Bitcoin Zero (SEK) NGM CH0585378661
Valour Ethereum Zero (EUR) Borse Frankfurt Zertifikate AG,
Euronext Amsterdam and Euronext Paris		 CH0585378752
Valour Ethereum Zero (SEK) NGM CH1104954362
Valour Cardano ETP (SEK)
Valour Cardano ETP (EUR)  		 NGM
Borse Frankfurt Zertifikate AG		 CH1114178796 CH1114178820
Valour Polkadot ETP (SEK)
Valour Polkadot ETP (EUR)  		 NGM
Frankfurt Exchange		 CH1114178770 CH1114178812
Valour Solana ETP (SEK) NGM CH1114178762
Valour Uniswap ETP (EUR) Borse Frankfurt Zertifikate AG CH1114178846
Valour Uniswap ETP (SEK) NGM CH1114178754
Valour Avalanche (AVAX)
ETP (SEK)		 NGM CH1114178788
Valour Avalanche (AVAX)
ETP (EUR)		 Borse Frankfurt Zertifikate AG CH1149139615
Valour Enjin (ENJ)
ETP (EUR)		 Borse Frankfurt Zertifikate AG CH1149139656
Valour Cosmos (ATOM) (EUR) Borse Frankfurt Zertifikate AG CH1149139664
Valour Binance (BNB) (EUR) Borse Frankfurt Zertifikate AG CH1149139672
Valour Bitcoin Carbon Neutral (EUR) Borse Frankfurt Zertifikate AG CH1149139706
Valour Digital Asset Basket 10
(VDAB10) (EUR)		 Borse Frankfurt Zertifikate AG CH1149139623

 

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Products and Services

 

Valour Cayman ETPs are issued under a base prospectus dated December 15, 2022 (the “Base Prospectus”), as supplemented by supplements or final terms from time to time (“Final Terms”), which together govern the ETP program (the “Program”). The Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in France, Germany, Italy, Austria, Belgium, Denmark, Finland, Luxembourg, The Netherlands, Norway and Spain. Valour Cayman may also request the SFSA to publicize the approval of the Base Prospectus to other European Economic Area (“EEA”) states in accordance with Regulation (EU) 2017/1129. For further details on the terms and conditions of the ETPs, a copy of the Base Prospectus may be obtained at https://www.fi.se/en/our-registers/prospektregistret/details/?id=21-25431.

 

Valour Cayman’s current ETP range are all open-ended certificates that provide exposure to a single digital asset, or an index or a basket thereof, as specified in the relevant Final Terms. The Final Terms and for each of Valour Cayman’s ETPs are available on the company website on the respective ETP pages: https://valour.com/products. Valour Cayman is the issuer of the ETPs offered under the Program and also acts as calculation agent.

 

Valour Cayman’s policy is always to hedge 100% of the market risk in the underlying asset. Hedging is done continuously and in direct correspondence to the issuance of ETPs to investors. In order to hedge its exposure to each digital asset, Valour Cayman relies on cryptocurrency exchanges to be able to buy and sell the digital assets which the ETPs track.

 

For its Bitcoin Zero and Ethereum Zero products, Valour Cayman charges zero management fees and for all other products, a management fee of 1.9% applies.

 

Valour Cayman currently lists its ETPs, on the following European stock exchanges: NGM, Euronext Amsterdam, Euronext Paris, Lang and Schwarz Exchange, and Borse Frankfurt Zertifikate AG. The listing of ETPs are subject to exchange approval by the relevant exchange.

 

Staking of Cryptocurrency and Defi Protocol Tokens

 

As part of Valour Cayman policy to hedge 100% of the market risk, Valour Cayman purchases and sells the digital assets which its ETPs track. Pursuant to the Base Prospectus and Final Terms, Valour Cayman may lend or stake such digital assets on its balance sheet to generate revenue. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour Cayman’s Lending and Staking Policy.

 

Pursuant to the Lending and Staking Policy, lending and staking activities are overseen by its Allocation Committee, which is comprised of its Head of Asset Management and Trading, currently John Wattenstrom, its Head of Finance, and its Chief Operating Officer. Prior to entering into any lending or staking transaction, due diligence will be conducted on all potential counterparties, among them Blockdaemon Ltd. and Copper Technologies (Switzerland) AG and in particular counterparties in the following situations:

 

●Custody of assets of Valour Cayman by third parties, without legal separation from assets of such third party

 

●Deposits of cash with banks and investment firms

 

●Bilateral FX transactions (settlement risk)

 

●Bilateral transactions in digital assets (settlement risk)

 

●Lending and borrowing transactions relating to digital assets (settlement risk)

 

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In order to evaluate a counterparty the following information is collected and documented in the counterparty scorecard:

 

Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date.

 

Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc are documented.

 

Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

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Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty.

 

Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour Cayman will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders. If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

When deciding whether to lend or stake a particular asset, the Lending and Staking Policy provides that the decision will initially be made based on the risk profile of the potential counterparties, then the highest yield available, then prioritizing staking over lending.

 

The Lending and Staking Policy requires that assets be lent or staked for an open term, with no fixed duration lock-up, thereby allowing Valour Cayman to withdraw from the lending or staking transaction. The Lending and Staking Policy also sets limits on how much of a particular digital asset can be lent or staked of 55% in the case of assets under management of less than US$10 million, and 80% for over US$10 million. Allocations by counterparty will be limited to 33% of Valour Cayman’s aggregate assets. Exceptions to these rules can be made with Board approval.

 

“Staking” refers to the process of dedicating digital assets to a particular blockchain for a set period of time so as to verify transactions on that blockchain. The act of staking typically results in the staking person or company receiving newly-created digital assets of the same type as a reward verifying the transactions. In addition, having digital assets staked improves the integrity and security of the applicable blockchain ledger.

 

Custody of Digital Assets

 

The policies of Valour Cayman require the application of internal multi-signature cold-storage and external custody. External custody solutions include specialized third-party custody providers within the United States and Europe. Valour Cayman currently utilizes the following third-party custody providers to hold and safeguard Valour Cayman’s digital assets:

 

Custodian Location % of digital assets custodied by market value(1) Regulatory Body
Bitcoin Suisse AG Switzerland 11.38% Financial Services Standards Association (VQF), Zug, Switzerland
Anchorage Digital United States 21.89% Office of the Comptroller of Currency
Coinbase Global, Inc. United States 0.03% New York Department of Financial Services

 

Note 1: As at December 31, 2022; Residual digital assets served as collateral for loans with B2C2-Group (approx. 56.4 %; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (10,02%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

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Prior to engaging any prospective third-party to perform custody services, Valour Cayman conducts diligence and counterparty risk analysis of such third-party. Such measures include:

 

●verifying contact information of the third-party and the responsible onboarding owner on the Valour Cayman side.

 

●reviewing current status of the relationship with the third-party, the connection type, as well as the services, products and currency pairs used by the third-party.

 

●documenting the prospective third-party’s regulatory regime and licenses.

 

●assessing the third-party’s jurisdiction of incorporation and regulatory regime for compliance to international anti-terrorism and money laundering guidelines such as the Financial Action Task Force country evaluation, Transparency.org Corruption Perception Index as well as the VQF SRO country risk recommendations.

 

●collecting and documenting public exchange scores, such as Coinmarketcap and Coingecko, of the third-party

 

●assessment of the third-party’s information security certification, such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001.

 

●assessment and documentation of the third-party’s insurance coverage with respect to investor protection.

 

●verifying if the third-party has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

●searching for any adverse public media results regarding the third-party

 

●analyzing risk exposure and business restrictions through engaging the third-party.

 

●recurring review of third-party custody providers.

 

Valour Cayman’s current third-party custody providers do not engage sub-custodians to provide custody services. None of Valour Cayman’s current third-party custody providers are Canadian financial institutions or related parties of the Company. Each of Valour Cayman’s third-party custody providers maintain general commercial insurance on its own behalf and would be subject to their respective jurisdiction’s bankruptcy laws in the event of such an event. The Company and Valour Cayman are not aware of any aspect of the above custody providers that would adversely affect the Company from obtaining an unqualified audit opinion on its audited financial statements. The Company and Valour Cayman are not aware of any security breaches or similar incidents with respect to its third-party custody providers.

 

In addition, Valour Cayman utilizes custody solutions offered by institutional quality exchanges. The exchanges typically store between 95% and 100% of the assets in multi-signature cold storage. Different exchanges store different proportions of their assets in online wallets, and the proportion of assets in cold storage is one of the factors determining their risk weight in our model for capital adequacy. Cold storage means storage facilities where the private keys of a wallet are held off-line protected physically as well as by the multi-signature features of the wallet. By comparison, hot storage means storage facilities or platforms that are connected to the internet, which provide greater accessibility to digital assets for users, but are subject to greater cybersecurity risks.

 

The Company does self custody some of the Company’s venture portfolio using meta mask and other hot wallets. The total value of the Company’s digital assets under self custody was approximately US$1.6m as at December 31, 2022. No digital assets related to the Valour Cayman ETPs are self-custodied.

 

The controls around the meta mask and other hot wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

18

 

 

The following principles are applied with regards to Valour Cayman’s internal safe keeping of digital assets:

 

a.The quantities that are kept by means of hot storage shall be limited to what is reasonably estimated as required for hedging of potential transactions in the near future;

 

b.The quantities that are kept by means of hot storage shall be distributed between a reasonable number of the approved counterparties for such storage, taking practical aspects into consideration; and

 

c.The allocation of assets between Valour Cayman’s counterparties shall be optimized with respect to security and quality of Valour Cayman’s products within the limits set forth by the model for capital adequacy.

 

Specialized Skill and Knowledge

 

Valour Cayman has assembled a team of employees, officers, directors and consultants with specialized skill and knowledge of regulated exchanges in Europe, investment banking, cryptocurrencies, digital assets and decentralized finance. In particular, Valour Cayman has retained Johan Wattenstrom, Co-Founder & Director at Nortide Capital and previously the Founder of XBT Provider (now known as Coinshares), which created the world’s first ever Bitcoin ETP in 2015, and has served on the management committees of several Nordic investment banks.

 

Valour Cayman also retains external legal counsel with respect to regulatory compliance of its Program ETPs. Additional information can be found in the Base Prospectus.

 

Competitive Conditions

 

There are several other issuers that have listed similar tracker-products in various forms and markets, including in Europe. Valour Cayman holds a strong competitive position, particularly in the Nordics, due to its competitive and transparent pricing model. Valour Cayman’s Bitcoin and Ethereum Zero ETPs are the first and only of their kind to track the two largest digital assets by market capitalisation and charge zero management fees. For its other products, Valour Cayman charges 1.9% management fees, whereas competitor products in the same markets charge up to 2.5% management fees.

 

Valour Cayman’s innovative product range is also a competitive advantage, as Valour Cayman launched the first and only Uniswap ETP and has issued a number of other digital asset ETPs in 2022.

 

New Products

 

On December 16, 2021, the Company announced that Valour Cayman has received approval to launch a Top 10 Digital Assets and Top 5 Defi ETP. The approval from Finansinspektionen, the SFSA enables Valour Cayman to distribute the ETPs across key European markets. Work on structuring such ETPs are ongoing with launch date anticipated in early 2023.

 

Cycles

 

As Valour Cayman’s products are financial markets products tracking digital assets of finite supply, the demand for ETPs may experience cycles resulting from fluctuating supply and demand, and as an alternative asset class, although the correlation between traditional markets and cryptocurrencies has been seen to be increasing.

 

Employees

 

In addition to the 8 employees and 3 consultants at Valour Cayman, the Company has 11 consultants.

 

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Valour Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the DeFi ecosystem to build a diversified portfolio of DeFi assets and venture investments, predominantly at Seed or Series A stage. As of December 31, 2022 the Company has participated in equity or token raises from the following ventures:

 

●Skolem Technologies provides data and trade execution services for decentralised financial markets positioning themselves as an outsource partner for strategy execution.

 

●Clover is a substrate-based smart contracts platform with Ethereum Virtual Machine (EVM) compatibility, providing cross-chain infrastructure for scaling decentralised applications (dApps).

 

●Sovyrn provides DeFi infrastructure for Bitcoin via a non-custodial and permissionless smart contract based system that enables lending, borrowing and margin trading.

 

●Saffron Finance is a peer-to-peer (P2P) risk exchange and decentralised marketplace for risk arbitrage, built on Ethereum.

 

●Earnity bridges the needs of retail and institutional customers by providing crypto holders with a vehicle to earn interest on their crypto assets.

 

●Blocto is a UX-focused interoperable ecosystem that enables users to easily access dApps, crypto and NFTs cross-chain.

 

●Luxor Technologies provides a range of solutions for scaling blockchain infrastructure including a globally distributed mining pool, a hashrate network-switching engine, and a wide variety of blockchain related software.

 

●Oxygen Protocol is a Solana based DeFi prime brokerage service that democratises borrowing, lending, and leverage trading.

 

●Maps.me is the world’s leading offline mapping application. With over 140M users, Maps.me 2.0 aims to become the global passport to the new financial system.

 

●Mobliecoin is an open-source, encryption-focused cryptocurrency designed for use in everyday transactions, addressing security, transaction speed, energy consumption, and optimization for mobile devices.

 

●SDK:meta, LLC is a privately held web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralised finance and related offerings.

 

●Volmex Labs offers a tokenised volatility protocol built on Ethereum that enables the creation of volatility indexes (VIX) for crypto assets.

 

●3iQ Corp. is a Bitcoin and digital asset fund manager that offers digital asset investment products

 

●Wilder World is the first full-scale, immersive 5D Metaverse being built out on Ethereum with full augmented reality (AR) and virtual reality (VR) integration

 

●Boba Network is a blockchain Layer-2 scaling solution and Hybrid Compute platform offering lightning fast transactions and fees up to 100x less than Layer-1.

 

Each of these ventures were selected for their innovative potential, high quality teams, growing and / or potential user bases and unique position in the market or market share, cutting edge technology, and/or leading investors. The ventures respective use cases include borrowing and lending, decentralized exchanges, derivatives and asset management, amongst others.

 

Specialized Skill and Knowledge

 

The Company believes that the success of its Valour Ventures line of business is dependent on the performance of its management team and the ability of the Company to leverage the network of its management, directors and advisory board. Management of the Company and its subsidiaries have extensive knowledge and understanding of evolving DeFi industry and have a strong track record of identifying sound investment opportunities and making prudent business decisions. In addition, the members of the advisory board have also been selected due to their wealth of experience in the crypto and DeFi industry. The Company has adequate personnel with the specialized skills required to successfully carry out its operations.

 

Competitive Conditions

 

As the DeFi industry is an emerging industry, competition in the space is constantly evolving. With respect to investment in DeFi projects, protocols and other ventures, the Company’s competitors range from established DeFi protocol trading companies to crypto and / or traditional VCs to individual angel investors. The Company may also compete with other emerging companies in the DeFi industry and established mutual funds, investment funds, hedge funds, investment companies, management companies and other investment vehicles for investment opportunities. Many of these competitors have greater financial, technical and other resources than the Company. To compete, the Company depends on the knowledge, experience and network of business contacts of the management, directors and the Advisory Board of the Company.

 

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Valour Infrastructure

 

The Company’s Valour Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for networks.

 

Node management refers to the practice of acting as a “node”, which is a stakeholder that verifies transactions on a decentralized blockchain network. In exchange for such activities, the node is compensated by the network, usually in the form of the digital assets native to the applicable blockchain network.

 

As of the date hereof, the Company has:

 

●deployed a validator node on the Solana blockchain, a blockchain which allows users to launch digital asset and NFT projects. that will act as an independent validator for the network. In connection with running the node, DeFi Technologies can receive rewards from securing transactions on Solana as well as for providing governance services such as voting on code changes and other upgrades to the globally decentralized network;

 

●staked the Company’s Blocto Tokens. Blocto, a portfolio company of the Company through its Valour Ventures business, is a blockchain wallet hub that allows users to conveniently and securely access blockchains; and

 

●partnered with Shyft to openly implement node servers for Shyft’s decentralized network. Shyft is building the first of its kind identity layer for DeFi so that participants and transacting institutions can provide additional transparency by identifying both sides of a transaction instantaneously and securely.

 

Furthermore, the Company announced that it selected Bison Trails, the leading blockchain infrastructure platform-as-a-service company, to enhance the node infrastructure for the Valour Infrastructure business line. As part of the agreement, Bison Trails will begin by openly implementing validator nodes leveraging Bison Trails’ infrastructure and protocol expertise. The effort will contribute to the DeFi ecosystem by further establishing secure and reliable networks, voting, and increasing overall decentralization.

 

In connection with data processing, the Company may be compensated for securing transactions on such networks as well as for providing governance services such as voting on code changes and other upgrades to the globally-decentralized network. As a publicly-traded company that is regulated, audited and is transparent as to its operations and finances to the public markets, the Company is uniquely suited to support governance of decentralized networks.

 

Employees

 

In addition to the 8 employees and 3 consultants at Valour Cayman, the Company has 11 consultants.

 

Risk Factors

 

The Company’s business, operations, financial results and prospects are subject to the normal risks of its industry and are subject to various factors which are beyond the control of the Company. Certain of these risk factors are described below. The risks described below are not the only ones facing the Company. Additional risks not currently known to the Company, or that it currently considers immaterial, may also adversely impact the Company’s business, operations, financial results or prospects, should any such other events occur.

 

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Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour Cayman for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

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●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour Cayman’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

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Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s crytocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

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Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, Valour Cayman relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

The Company has not received any exemptive relief from regulators in Canada. The Company discusses regulatory compliance with its external legal counsel on a regular basis. Investments in the ETPs in the light of their exposure to digital assets must always be assessed by every investor based on the circumstances and legal and regulatory conditions applicable to that investor. An investor governed by such conditions may be subject to limited possibilities to invest in the ETPs and/or experience unforeseeable consequences of a holding in the ETPs. The combination of the nature of Valour Cayman’s activities, the markets to which it is exposed, the institutions with which it does business and the securities which it issues makes it particularly exposed to national, international and supranational regulatory action and taxation changes. The scope and requirements of regulation and taxation applicable to the issuer continues to change and evolve and there is a risk that as a result it may prove more difficult or impossible, or more expensive, for Valour Cayman to continue to carry on their functions in the manner currently contemplated. This may require that changes are made in the future to the agreements applicable to Valour Cayman and may result in changes to the commercial terms of the ETPs and/or the inability to apply for and redeem ETPs and/or compulsory redemption of some or all of the ETPs and/or disruption to the pricing thereof.

 

Valour Cayman is a company which is regulated by various laws and regulations of the Cayman Islands. Valour Cayman cannot fully anticipate all changes that in the future may be made to laws and regulations to which Valour Cayman is subject to in the future, nor the possible impact of all such changes. Valour Cayman’s ability to conduct its business is dependent on the ability to comply with rules and regulations.

 

If the Issuer was found to be in breach of regulations applicable to Valour Cayman could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition.

 

Valour Cayman’s involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman’s operations, the ETPs and/or the underlying assets, may adversely affect Valour Cayman’s business or an investment in the ETPs.

 

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The impact of any detrimental developments in the underlying crypto asset’s regulation on Valour Cayman’s ETPs becomes evident by considering an ETP’s product nature: An Exchange Traded Product is a financial instrument traded – like a share - on a stock exchange whereby typically the aim is to provide the same return as a specified benchmark or asset (before fees). Although ETPs can take a number of forms (ETFs/ETCs/ETNs), they share some common characteristics. ETPs are designed to replicate the return of an underlying benchmark or asset, with the easy access and tradability of a share or digital asset (that otherwise may only be bought via a decentralized exchange wallet-setup). Investors can benefit from the broad diversification of a benchmark, gaining exposure to hundreds or thousands of individual underlying securities – or digital assets - in a single transaction. Additionally, the wide range of asset classes covered by ETPs opens up more exotic investment areas which historically could only be accessed by institutional investors (such as individual commodities, emerging markets or digital/crypto assets). ETPs generally do all this with a lower fee than actively managed funds and therefore compete with traditional index funds on cost.

 

Valour Cayman’s ETPs are non-interest-bearing debt securities that are designed to track the return of an underlying digital/crypto asset. The current Valour Cayman ETP program in place does not provide that those securities are collateralised. Although their yield references an underlying benchmark or asset, the ETPs are similar to unsecured, listed bonds. As such, Valour Cayman ETPs are entirely reliant on the creditworthiness of Valour Cayman as issuing entity. Hence, generally a change in that creditworthiness might negatively impact the value of the ETP, irrespective of the performance of the underlying benchmark or digital/crypto asset.

 

However, the primary appeal of these types of ETPs is that they guarantee exposure to a benchmark or an asset’s return (minus fees) even when the underlying markets or sectors suffer from liquidity shortages. The return is guaranteed by the issuing entity and not reliant on the access (direct or via a directive) to the underlying assets. Unlike physical replication, a synthetic ETP does not hold the underlying assets the product is designed to track. Instead, an ETP issuer like Valour Cayman enters into hedging transactions thereby directly and trading in the underlying assets, entering into swap agreements etc. with a range of counterparties to provide the return of the underlying assets. Consequently, a negative change of regulation (tightening/restriction/prohibition) can have a direct impact on Valour Cayman’s issuer activity or – indirectly – by affecting its contractual counterparties. Restrictive of prohibitive regulation may lead to counterparty default, known as counterparty risk. If a counterparty defaults on its obligations under the hedging transactions described above, the ETP would not provide the return of the asset it is designed to track which could also expose investors to losses.

 

Canada

 

In Canada, the Canadian Securities Administrators (the “CSA”), the umbrella group for the provincial and territorial securities regulators, have generally taken the position that securities laws apply to cryptocurrencies. The CSA, beginning in 2017, has published a series of Staff Notices outlining their position and explaining how securities laws apply to various aspects of the cryptocurrency industry. The majority of those Staff Notices have dealt with cryptocurrency trading platforms and other businesses that hold cryptocurrencies on behalf of clients, which the Company does not do as part of its business.

 

The CSA has also, however, published Staff Notices focused on the analysis of when a cryptocurrency constitutes a security for securities law purposes. On August 24, 2017 and June 11, 2018, the CSA published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws. While the Company does not create or sell digital assets of its own issue, through its Valour Venture and Valour Infrastructure business lines it holds a number of digital assets from a variety of issuers. In the event that any of these were determined to be securities, it could negatively impact the issuers of those digital assets by making trading subject to prospectus requirements, which could reduce the market price of such assets and therefore devalue the holdings of the Company.

 

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While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

U.S. Classification of Crypto Assets and Investment Company Act of 1940

 

The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular crypto asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form). Bitcoin and Ether are the only crypto assets as to which senior officials at the SEC have publicly expressed such a view. Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other crypto asset. With respect to all other crypto assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular crypto asset could be deemed a “security” under applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given crypto asset is a security in April 2019, this framework is also not a rule, regulation or statement of the SEC and is not binding on the SEC.

 

Several foreign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of crypto assets as “securities.” The classification of a crypto asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets.

 

Additionally, we do not currently intend to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If certain crypto assets that form a part of our ETPs are determined to be crypto assets, we may be obligated to register as an investment company under the Investment Company Act, and we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

 

●limitations on capital structure;

 

●restrictions on specified investments;

 

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●prohibitions on transactions with affiliates; and

 

●compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

 

Further, the classification of certain crypto assets as securities could draw negative publicity and a decline in the general acceptance of the crypto asset, which could have a negative effect on our ETPs that contain such crypto assets.

 

Issuance of Crypto ETPs in the EU

 

As mentioned above, the Valour Cayman Base Prospectus covering the public offering of the ETPs in the EU has been approved by the SFSA, the Swedish financial authority, and is passported to France, Germany, Italy, Austria, Belgium, Denmark, Finland, Luxembourg, Netherlands, Norway and Spain where the ETPs can be offered and sold via the respective stock exchange listings.

 

The following provides an overview on the digital/crypto assets regulatory landscape on supra-national EU level and the various EU countries in which Valour Cayman issued ETPs are available:

 

EU

 

The EU is the first major jurisdiction worldwide to provide a comprehensive, dedicated regulatory framework for crypto-assets, the EU Markets in Crypto-Asset Regulation (MiCA). MiCA has four specific objectives. The first is to provide a legal framework for crypto-assets not covered by existing EU legislation on financial services. Secondly, by setting up a sound and transparent legal framework, it would support innovation, promote crypto-assets and the wider use of distributed ledger technology (DLT). Thirdly, the proposal would secure an appropriate level of consumer and investor protection and market integrity. Finally, it would enhance financial stability, as some of the crypto-assets may ‘become widely accepted and potentially systemic’.

 

MiCA is set to regulate crypto-assets, including so-called stablecoins that do not already fall under existing EU rules, by setting regulatory requirements for the public offer and marketing of crypto-assets and the provision of services related to them. In addition, MiCA includes provisions to prevent market abuse involving crypto-assets. More specifically, with regard to stablecoins and with a view to mitigate risks to investors and financial stability, MiCA provides that issuers of stablecoins will need to be authorised (either as a credit institution or an e-money institution for e-money tokens, or under MiCA for asset-referenced tokens) and have in place a robust and segregated reserve of assets to support the peg, and in the case of e-money tokens enable holders to redeem at par. For issuers of significant so-called stablecoins, supplemental requirements and EU-level (instead of national) supervision apply. The final text of MiCA is expected to be published in the Official Journal in spring 2023 and will enter into force between 12 and 18 months thereafter. Yet, while MiCA is intended to create a comprehensive regulatory framework for cryptoassets, continuous monitoring will remain necessary. As the system continues to evolve quickly, with novel business models and emerging risks, further regulatory actions may be required through time. A wider crypto adoption among European citizens and institutions may also expand intersystem exposures.

 

Sweden

 

The Financial Supervisory Authority (FSA) and the central bank have publicly declared that bitcoin is legal but not an official form of payment or legal tender. From a tax perspective they are viewed as an asset, not a currency or cash. The FSA has warned of the risks associated with cryptos and investment products with cryptos as underlying assets such as exchange-traded products (ETPs). Sweden has imposed registration requirements that mean custodians, wallet providers and exchanges must comply with the Swedish Currency Exchange Act. The act requires certain types of financial institutions (which are otherwise largely unregulated and unsupervised) to comply with AML provisions. The scope of the Currency Exchange Act now includes custodian wallet providers and providers of virtual currency exchange services in accordance with the implementation of the Fifth Anti-Money Laundering Directive (AMLD5). Mining activities are not regulated under Swedish law. There are no licensing or registration requirements specifically applicable to virtual currency mining activities. Sweden’s Central Bank, the Riksbanken, has been a leader in developing a CBDC, the e-krona. Swedish income tax law has different categories of income such as employment income, self-employment income, business income and investment income. Capital gains are treated as investment income. Sweden imposes capital gains tax on cryptocurrencies at a flat rate of 30%. Losses are deductible up to 70%. Income tax is based on a progressive model with average rates around 32%.

 

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France

 

In April 2019, the French National Assembly adopted the Plan d’Action pour la Croissance et la Transformation de Enterprises (PACTE – Action Plan for Business Growth and Transformation) that will establish a framework for digital asset services providers. France’s Financial Market Authority (AMF) has adopted new rules and regulations for cryptocurrency service providers and ICOs, related to the (PACTE). Ordinance No 2020-154452, was issued on December 9, 2020, to compliment France’s cryptocurrency regulations. In June 2021, the regulations were finalized and went into effect. Firms are now subject to mandatory registration and subject to stricter KYC regulations. The rules established new AML/CFT rules related to digital assets. They imposed new requirements on crypto exchanges and prohibit anonymous accounts, expand AML/CFT and KYC obligations to better harmonize the French AML framework with Financial Action Task Force (FATF) principles and respond to new risks associated with digital assets. Lawmakers in France have recently debated changing the tax structure related to cryptos. Cryptos are taxed similar to movable property. Occasional traders are charged a flat tax of 30% while miners and professional traders are taxed 45%.

 

Germany

 

The German government was one of the first countries to provide legal certainty to financial institutions, allowing them to hold crypto-assets. Regulations stipulate that citizens and legal entities can buy or trade crypto-assets as long as it is done through licensed exchanges and custodians. Firms must be licensed with the German Federal Financial Supervisory Authority (BaFin). BaFin views and classifies cryptos as “units of account” within the meaning of the German Banking Act. They are therefore not legal tender, money, or foreign exchange notes or coins. The regulators have agreed, however, that they are deemed “crypto-assets” in accordance with the definition of financial instruments. Germany has signed up to requirements under AMLD5. It has established licensing requirements for custody services. Crypto-assets are, however, based on agreement and accepted as a means of exchange or payment or as an investment, and can be transferred, stored, and traded electronically. The German Federal Central Tax Office considers cryptocurrencies as private money for tax purposes. For individuals, gains of less than 600 euros held for less than a year are considered tax-free. Sales of cryptos held for more than a year are tax-exempt in Germany. If neither of the conditions are met, the gains are taxed subject to ordinary income rates.

 

Italy

 

In February 2022, Italy published new AML rules for crypto firms which outline registration and reporting requirements for VASPs that align with the EU AMLD5 and the Financial Action Task Force (FATF) guidelines for crypto firms. The new rules also require virtual asset service providers to register in a special roster for crypto firms. Registration is required if firms offer any digital asset-related services in the country. Italy joined the European Blockchain Partnership (EBP) along with 22 other countries in April 2018. The EBP was established to enable member states to work together with the European Commission on blockchain technology. Cryptocurrencies and blockchain are regulated at the legislative level in Italy under Legislative Act no. 90. The decree in 2017 grouped cryptocurrency exchanges with foreign currency exchanges. Although the decree states that cryptocurrencies are not issued by the central bank and are not correlated with other currencies, it is a virtual currency used as a medium of exchange for goods and services.

 

Austria

 

The Financial Market Authority (FMA) has warned investors that cryptocurrencies are risky and that the FMA does not supervise or regulate virtual currencies, including bitcoin, or cryptocurrency trading platforms. The FMA’s regulations follow Austria’s implementation of the Fifth Money Laundering Directive (AMLD5), defining crypto-assets as “financial instruments.” The FMA regulations provide registration requirements with respect to the issuance and selling of virtual currencies as well as transferring them, trading and exchange platforms for them as well as providers of custodian wallets. Cryptocurrencies are legal but are not considered as legal tender. The Austrian Ministry of Finance classes cryptocurrencies as “other (intangible) commodities.” As part of a nationwide tax overhaul, Austria will apply a 27.5% capital gains tax on digital currencies, bringing the treatment of cryptos into line with that of stocks and bonds, to “streamline” conditions between asset classes.

 

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Belgium

 

The Belgian Financial Services and Markets Authority and the National Bank of Belgium are the primary regulatory bodies for financial services in Belgium. The regulators have published guidance and warnings to the public that cryptocurrencies are not legal tender and have also issued statements regarding scams and investor protection. Belgium has, however, fostered a strong fintech community involved in digital assets and blockchain. The minister of justice has announced plans to establish a legal framework related to cryptos. In February 2022 Belgium announced new rules for certain virtual asset service providers. The rules, which took effect in May 2022, require service providers “to meet a series of conditions, including ones relating to their professional integrity and compliance with the anti-money laundering legislation.” Gains on cryptocurrencies are taxable by as “miscellaneous income.”

 

Denmark

 

The Danish Financial Supervisory Authority is the main regulator in Denmark. Cryptocurrency regulation is, however, influenced by EU law. An amendment in January 2020 to the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism defines a virtual currency as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” There is no regulation of mining for virtual currencies in Denmark. Denmark amended the AML Act in 2020 to implement AMLD5, which is designed to bring virtual currencies within the scope of the the existing AML-laws. The Danish central bank, the Nationalbanken, is researching the development of a digital currency, the “e-krone.”

 

Finland

 

In May 2019, Finland’s Financial Supervisory Authority (FSA) began regulating virtual currency exchange providers, wallets and issuers of virtual currencies. Registration is required to ensure compliance with statutory requirements surrounding reliability of the provider, protection of client money, segregation of assets, marketing and compliance with AML/CFT regulations. The FSA has warned consumers of the risky, volatile and speculative nature of the investments. The Finnish FSA has published stricter rulings regarding crypto marketing saying “Only registered virtual currency providers can market virtual currencies and related services in Finland. The marketing of virtual currencies in Finnish and in Finland is only allowed for entities registered as virtual currency providers in Finland.” The list of supervised entities operating in the cryptocurrency and digital currency sector is small; although, the FSA does not advise on or restrict Finnish customers visiting foreign websites. Finland has joined the European Blockchain Partnership and agreed to AMLD5.

 

Luxembourg

 

In the Luxembourg, there is not yet a formal regulatory stance on crypto-assets, but the “Virtual Assets – FAQ” document published in November 2021 and updated in January 2022 by the Commission de Surveillance du Secteur Financier (CSSF) has shed a light on some aspects.

 

For instance, it clarified that Undertaking for Collective Investment in Transferable Securities (UCITS) funds and Undertakings for Collective Investment (UCIs) addressing non-professional customers and pension funds are forbidden to invest directly or indirectly in Virtual Assets. The document also outlines the conditions under which Alternative Investment Funds (AIFs) may invest in crypto-assets, as well as the requirements for the Alternative Investment Fund Manager (AIFM) and the specific Anti-Money Laundering (AML) considerations.

 

Lastly, in a FAQ document on virtual assets for credit institutions issued in January 2022 by the CSSF, the regulator states that credit institutions may directly invest in virtual assets and open accounts that allow customers to invest in virtual assets. On the other hand, credit institutions cannot open bank accounts in virtual assets, must submit a business case as well as an application file to the CSSF to provide virtual assets services and must set up an effective investor protection framework.

 

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The Netherlands

 

The Dutch Central National Bank De Nederlandsche N.V. (DNB) requires crypto firms to register with it. Dutch regulations require VASPs to provide identifying information on themselves and their customers. The DNB also supervises crypto service providers’ compliance with the Sanctions Act 1977. The DNB defines cryptos as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” In May 2020 the Dutch Implementation Act amended Dutch AML rules and implemented AMLD5. The Netherlands does not impose taxes on capital gains, but rather imposes a deemed interest on the value of all assets minus all liabilities. The deemed interest is taxable against a flat rate of 31% (in 2021, 30% in 2020).

 

Norway

 

Cryptocurrencies are legal. They are defined as an asset and not any type of money. Norway has been an attractive location for blockchain start-ups. The Financial Supervisory Authority of Norway “Finanstilsynet” and the country’s Ministry of Finance has established money laundering regulations which apply to “Norwegian providers of virtual currency exchange and storage services.” The legislation requires firms such as storage services and exchanges that convert cryptos to fiat currency to comply with AML rules, but it does not impose regulatory obligations on other crypto services. “Finanstilsynet will ensure that virtual currency exchange and storage providers comply with the money laundering rules. However, FSA does not have any tasks monitoring other areas of these providers, such as investor protection,” the regulator said. In June 2021, Finanstilsynet published a warning which said, “Most cryptocurrencies are subject to extreme price fluctuations. The risk of loss is high… Price formation is in many cases not transparent.” It also warned of significant criminal activity. “Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers,” the warning stated. Bitcoin profits are subject to wealth tax and use of cryptos falls under sales tax regulations The Central Bank of Norway is exploring the development of a CBDC.

 

Spain

 

Like its neighbor Portugal, Spain was a notable early hot spot for cryptocurrencies among EU members, with merchants accepting payments and bitcoin kiosks in the streets. Despite having no formal legal status, virtual currencies in Spain are taxable as income and under VAT. In 2021 the Spanish Securities and Exchange Commission, the Comision Nacional del Mercado de Valores (CNMV) and the Bank of Spain issued a joint statement warning of the risks and volatility associated with cryptos. The joint statement also highlighted that, from a legal standpoint, cryptocurrencies are not a means of payment and are not backed by a central bank or other customer protection mechanisms or authority. Spain issued the Royal Decree Law 5/202176 which included a provision giving the CNMV power to regulate advertising related to cryptocurrencies. In January 2022, the CNMV published a circular saying it would begin to regulate rampant advertising of crypto assets, including by social media influencers, to make sure investors are aware of risks.

 

No ETP issuance into non-EU countries

 

Although some of its operational staff is located in Switzerland, Valour Cayman does not yet offer any ETPs in Switzerland.

 

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Switzerland

 

Switzerland is known as one of the most cryptocurrency-friendly nations in the world. Switzerland’s financial markets regulator, the Swiss Financial Market Supervisory Authority (FINMA) has defined licensing requirements for cryptocurrency businesses of all types including bitcoin kiosk operations, and has created requirements for blockchain companies. Cryptocurrency businesses are subject to AML regulations and licensing requirements under FINMA. FINMA’s regulatory environment complies with the FATF’s digital asset regulation issued in June 2019. Switzerland further improved its regulations surrounding tokens with the July 2021 implementation of the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (the DLT Act). In Switzerland capital gains arising from a “private wealth asset” are exempt from income tax. This applies to capital gains from cryptos. Realized gains arising from the disposal of cryptocurrency are therefore not subject to tax. Losses arising from the disposal of cryptocurrency assets are not tax-deductible. Under Swiss tax law, cryptocurrencies are considered items that can be valued and traded. They are therefore assets that are subject to wealth tax. Tax rates vary on regional level.

 

United Kingdom

 

Valour Cayman does not offer any ETPs in the UK. However, UK-domiciled investors may purchase Valour ETPs on the respective EU stock exchanges where they are listed as Valour ETPs are registered for a preferential tax treatment with the HM Revenue & Customs authority.

 

The UK Financial Conduct Authority (FCA), HM Treasury and the Bank of England make up the country’s Crypto-assets Taskforce. The FCA has created regulations to cover KYC, AML and CFT tailored for crypto-assets. It has also created regulations to cover VASPs, but has been careful to not stifle innovation. Crypto exchanges must register with the FCA unless they have applied for an e-money license. Cryptocurrencies are not considered legal tender and taxes are levied based on activities. The FCA has banned the trading of cryptocurrency derivatives. The Law Commission published a call for evidence on digital assets in April 2021. The request seeks input from stakeholders ahead of publication of a consultation paper on digital assets which will make proposals for new legislation. In February 2022, the UK government and the FCA published complementary reform proposals to bring financial promotions for some “qualifying crypto-assets” into HM Treasury’ financial promotions regime and into the FCA financial promotions rules. There is no specific UK regulatory regime that captures the activities of crypto miners. Although there is no specific UK tax legislation applicable to cryptos, HM Revenue and Customs has set out its view of the treatment based on normal principles. Receipt of cryptos from an employer are treated as “money’s worth” and are taxed as income based on the value of the assets at the time of receipt. Where cryptos are held as personal investments, capital gains tax applies upon disposal. In cases where frequent trading is involved, income tax rather than capital gains may apply.

 

Valour Cayman is a company which is regulated by various laws and regulations of the Cayman Islands. Valour Cayman cannot fully anticipate all changes that in the future may be made to laws and regulations to which Valour Cayman is subject to in the future, nor the possible impact of all such changes. Valour Cayman’s ability to conduct its business is dependent on the ability to comply with rules and regulations.

 

If the Issuer was found to be in breach of regulations applicable to Valour Cayman could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition.

 

Valour Cayman’s involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman’s operations, the ETPs and / or the underlying assets, may adversely affect Valour Cayman’s business or an investment in the ETPs.

 

Valour Venture Portfolio Exposure

 

Given the nature of the Company’s Valour Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise Valour Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

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Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

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●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets.

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Valour Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. Digital assets of Valour Cayman that are held internally via multi-signature cold storage may be prone to loss or theft as a result of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

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Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and open source contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

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Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at December 31, 2022, the Company’s investments through its Valour Venture business arm comprise of C$4,716,333, which represented approximately 0.02% of the Company’s total assets.

 

Competition

 

The Company operates in a highly competitive industry and competes against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. The Valour Asset Management and Valour Infrastructure business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If the Company is unable to compete successfully, or if competing successfully requires the Company to take costly actions in response to the actions of the Company’s competitors, the Company’s business, operating results, and financial condition could be adversely affected.

 

Harm to the Company’s brand and reputation could adversely affect the Company’s business. The Company’s reputation and brand may be adversely affected by complaints and negative publicity about the Company, even if factually incorrect or based on isolated incidents. Damage to the Company’s brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about the Company, its ETPs, its management team, its other employees or contractors or third-party service providers;

 

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●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by its management team, its other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into its business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in its financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of its business;

 

●a failure to operate our business in a way that is consistent with its values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to its competitors, to the extent the resulting negative perception affects the public’s perception of the Company or its industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its Valour Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

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Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s Valour Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

38

 

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

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Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

40

 

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future. See “Dividends”.

 

41

 

 

DIVIDENDS

 

The Company has not paid any dividends since its incorporation. Any determination to pay any future dividends will be at the discretion of the Board and will be made based on the Company’s financial condition and other factors deemed relevant by the Board. There are currently no restrictions on the ability of the Company to pay dividends except as set out under the OBCA.

 

DESCRIPTION OF SHARE CAPITAL

 

The Company is authorized to issue an unlimited number of Common Shares without par value. The holders of Common Shares are entitled to dividends, subject to the rights of holders of any other class of shares of the Company, if, as and when declared by the Board. The holders of Common Shares are also entitled to one vote per Common Share at meetings of the shareholders of the Company and, subject to the rights of holders of any other class of shares of the Company, to share, on a pro rata basis with the other holders of Common Shares, the net assets of the Company, upon liquidation, dissolution or winding up of the Company. The Common Shares are not subject to call or assessment nor do they carry any pre-emptive or conversion rights. There are no provisions attached to such shares for redemption, purchase for cancellation, surrender or sinking or purchase funds.

 

As of the date hereof, 219,010,501 Common Shares are issued and outstanding.

 

As of the date hereof, the Company also has 18,698,100 options, 3,868,432 warrants and 6,370,000 deferred share units (“DSUs”) issued and outstanding. See the notes to the Company’s audited financial statements for the year ended December 31, 2022 for additional information regarding the Company’s convertible securities.

 

MARKET FOR SECURITIES

 

Trading Price and Volume

 

The Common Shares are listed and posted for trading on the NEO Exchange under the symbol “DEFI” following the uplisting of the Common Shares on January 19, 2021. Previously, the Common Shares were listed and posted for trading on the TSX Venture Exchange under the symbol “RM.V”. The following table sets forth, on a monthly basis, the reported high and low sale prices (which are not necessarily closing prices) and the aggregate volume of trading of the Common Shares on the NEO Exchange during the financial year ended December 31, 2022.

 

Date   High ($)     Low ($)     Volume  
January 2022     3.18       1.35       11,312,648  
February 2022     2.88       1.44       12,989,630  
March 2022     1.90       1.37       8,993,619  
April 2022     1.54       1.00       7,625,781  
May 2022     1.40       0.62       7,499,122  
June 2022     0.75       0.33       8,797,002  
July 2022     0.61       0.33       5,510,145  
August 2022     0.57       0.36       4,344,920  
September 2022     0.42       0.23       6,286,627  
October 2022     0.33       0.13       15,459,661  
November 2022     0.23       0.09       9,327,955  
December 2022     0.21       0.105       4,143,579  

 

42

 

 

Prior Sales

 

During the financial year ended December 31, 2022, with respect to each class of securities of the Company that is outstanding as of the date of this AIF and not listed or quoted on a marketplace, the Company issued the following securities:

 

Date of Issuance  Security  Number of Securities Issued   Exercise Price Per Security ($) 
January 26, 2022  Options   500,000   $1.98 
March 31, 2022  Options   700,000   $1.43 
May 9, 2022  Options   500,000   $2.00 
May 9, 2022  Options   1,200,000   $1.11 
May 20, 2022  Options   500,000   $1.00 
July 21, 2022  DSUs   2,400,000    N/A 
July 21, 2022  Options   400,000   $0.8 
October 17, 2022  Options   500,000   $0.17 
October 19, 2022  Options   1,000,000   $0.165 
October 19, 2022  DSUs   500,000    N/A 
October 6, 2022  DSUs   2,000,000    N/A 

 

Escrowed securities

 

To the Company’s knowledge, no securities of the Company are held in escrow or that are subject to a contractual restriction.

 

DIRECTORS AND OFFICERS

 

The following table sets forth for each director and executive officer of the Company as at the date of this AIF, each such individual’s name, province or state and country of residence, position(s) held with the Company, principal occupation(s) for the last five years, if currently a director, period(s) during which such individual has served as a director of the Company, and the number and percentage of issued and outstanding Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such individual (for avoidance of doubt, excluding any convertible securities in the capital of the Company held by such individual). The statements as to principal occupation(s) for the last five years of, and the number and percentage of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by, the directors and executive officers of the Company are in each instance based upon information furnished by the individuals concerned. All directors of the Company hold office until the next annual meeting of shareholders of the Company or until their successors are elected or appointed.

 

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Name, Province/State and Country of Residence and Position(s)
with the Company		  Principal Occupation(s) for the Last Five Years  Period(s) Served
as a Director		  Number of
Common Shares
Beneficially Owned or Controlled or Directed		   Percentage of Common Shares Beneficially Owned or Controlled or Directed 
Olivier Roussy Newton Zug, Switzerland
Chief Executive Officer and Executive Chairman		 

President of EV Technology Group since September 2021.

 

Founder and Partner of Latent Capital since July 2015.

 

Managing Director of BTQ since March 2021.

 

Director of SEBA Bank AG since 2022

  N/A   11,398,900    5.2%
Tito Gandhi(1)(2)(3)
Ontario, Canada
Director		  Chief Financial Officer of Busys.ca  Since
August 11,
2016		   20,000    <0.01%
William C. Steers(1)(2)(3)
Ontario, Canada
Director		 

Managing partner at IMC Consultoria Representacao Com. Int. Ltda

 

Director of Indústrias Verolme-Ishibras S.A. (private manufacturer and repairer of ships, vessels, and off-shore platforms for oil exploration and production) and Docas Investimentos S.A. (private investment company).

  Since
March 14,
2018		   0    Nil 
Krisztian Toth(1)(2)(3)
Ontario, Canada
Director		  Partner at Fasken Martineau Dumolin LLP  Since
May 14,
2021		   0    Nil 

 

Notes:

 

(1)Member of the Corporation’s audit committee.
(2)Member of the Compensation, Nomination and Governance Committee
(3)Independent director

 

As of the date hereof, the directors and executive officers of the Company, as a group, beneficially owned, or controlled or directed, directly or indirectly, 11,618,900 Common Shares, representing 5.30% of the total issued and outstanding Common Shares.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

No director or executive officer of the Company is, as at the date hereof, or has been, within the ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:

 

(a)was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days and that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

 

44

 

 

(b)was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer.

 

No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

 

(a)is, as at the date hereof, or has been, within the ten years before the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

 

(b)has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

 

As at the date hereof, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:

 

(a)any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

 

(b)any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

 

Conflicts of Interest

 

The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interests that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required to disclose his interest and abstain from voting on such matter in accordance with the OBCA. In appropriate cases, the Company will establish a special committee of independent non-executive directors to review a matter in which one or more directors or officers may have a conflict.

 

To the best of the Company’s knowledge, and other than as disclosed herein, there are no known existing or potential material conflicts of interest between the Company or a subsidiary of the Company and any director or officer of the Company or a subsidiary of the Company, except that certain of the directors and officers serve as directors and officers of other public or private companies and therefore it is possible that a conflict may arise between their duties as a director or officer of the Company and their duties as a director or officer of such other companies.

 

PROMOTER

 

The Company does not have a promoter.

 

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

 

Except for a claim against the Company with respect to the exercise of stock options, as described below, the Company has not been since, and was not during, the financial year ended December 31, 2022 a party to any legal proceedings, nor has any of its property been since nor was any of its property during the financial year ended December 31, 2022 subject of any legal proceedings. On January 22, 2022, the Company settled a claim from a former consultant of the Company, Asset Strategy Corp.

 

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In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company filed an appeal, regarding the Court’s November 8, 2022 decision, to the Court of Appeal for Ontario on January 26, 2023.

 

There have been no penalties or sanctions imposed against the Company by a court relating to securities legislation or by any securities regulatory authority since or during the financial year ended December 31, 2022, or any other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision, and the Company has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority since or during the financial year ended December 31, 2022.

 

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

Other than as disclosed herein, none of the directors or executive officers of the Company, nor any person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the issued and outstanding Common Shares, nor any associate or affiliate of the foregoing persons or companies, has or has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Company.

 

TRANSFER AGENT AND REGISTRAR

 

The transfer agent and registrar for the Common Shares is TSX Trust, at its offices in Toronto, Ontario located at 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 4H1.

 

MATERIAL CONTRACTS

 

The Company has no material contracts.

 

INTERESTS OF EXPERTS

 

The Company’s external auditor during the financial year ended December 31, 2022 was RSM Canada LLP. RSM Canada LLP has advised the Company that it is independent of the Company in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

 

On February 3, 2023, the Company announced the change of its external auditor from RSM Canada LLP to BF Borgers CPA PC (“Borgers”). The Company has engaged Borgers to act as auditor in respect of the Company’s financial year ended December 31, 2022. Borgers has advised the Company that is independent of the Company in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Company may be found under the Company’s profile on SEDAR at www.sedar.com and at www.aequitasneo.com.

 

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, is contained in the Company’s management information circular dated April 7, 2022 prepared in connection with the Company’s annual and special meeting of shareholders held on May 6, 2022.

 

Additional financial information is provided in the Company’s annual consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2022, both of which are available under the Company’s profile on SEDAR at www.sedar.com and at www.aequitasneo.com.

 

 

46

 

Exhibit 99.16

 

 

 

 

 

 

 

 

 

 

 

(Formerly Defi Technologies Inc.)

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

Year ended December 31, 2022

 

 

 

 

Background

 

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to Valour Inc. (“we”, “our”, “us”, “Valour” or the “Company”) containing information through March 31, 2023, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the years ended December 31, 2022 and 2021. The financial statements and related notes of Valour have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Please refer to the notes of the December 31, 2022 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation. The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

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Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through three distinct business lines: Valour ETPs, Valour Ventures and Valour Infrastructure.

 

The Company’s consolidated financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements.

 

Investment Pillars

 

Valour generates revenue through three core pillars:

 

Valour ETPs

 

The Company, through its 100% ownership of Valour Cayman Inc. (“Valour Cayman”), is developing Exchange Traded Notes (“ETNs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETNs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

Valour Venture

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

Valour Infrastructure

 

The Company’s Valour Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

3

 

 

Highlights For The Year Ended December 31, 2022 And Subsequent Events:

 

●On January 5, 2022, the Company announced its preferred partnership agreement with SEBA Bank AG (“SEBA”), a leading global private Swiss Crypto Bank. SEBA is a fully integrated, FINMA licensed, digital assets banking platform providing a seamless, secure, and easy-to-use bridge between digital and traditional assets.
   
●On January 12, 2022, the Company announced it is co-leading an investment of CHF25 million and will receive a seat on SEBA’s Board of Directors.
   
●On January 26, 2022, the Company was added to CoinShares Blockchain Global Equity Index, administered by Solactive AG.
   
●On February 1, 2022, the Company announced that Valour Inc. received approval to begin trading Solana ETP on the Frankfurt Stock Exchange.
   
●On February 16, 2022, the Company received approval from the Nordic Growth Market stock exchange for the listing of two new ETPs, Valour Terra (“LUNA”) SEK and Valour Avalanche (AVAX) SEK, these products were launched on February 28, 2022.
   
●On February 17, 2022, the Company entered into a strategic partnership with RockX to provide staking yield through financial products.
   
●On March 21, 2022, the Company created a special purpose vehicle to support distribution of an asset-backed product program.
   
●On March, 25, 2022, the Company’s wholly owned subsidiary Valour Inc., an issuer of digital asset exchange-traded products (ETPs), has listed two of its low-fee ETPs tracking the price of the digital assets Valour terra (LUNA) and avalanche (AVAX) on Boerse Frankfurt Zertifikate AG. The Valour Terra ETP tracks the performance of LUNA, the native token of the Terra protocol, a leading decentralized and open-source public blockchain protocol for algorithmic stablecoins. LUNA is among the top 10 cryptocurrencies in the world by market capitalization, currently at US$33.2-billion. The Valour Avalanche (AVAX) ETP tracks the performance of AVAX, the native token of the avalanche platform. Avalanche is an open, programmable smart contracts platform for decentralized applications aiming to rival ethereum due to its high speed. AVAX is among the top 15 cryptocurrencies in the world by market capitalization, currently at US$22.7-billion.
   
●On April 5, 2022, the Company participated in the US$45-million Series A raise for Boba Network, a decentralized autonomous organization (DAO) and next-generation Ethereum layer 2 Optimistic Rollup scaling solution. The Series A raise values the project at $1.5-billion (U.S.). The financing will address Ethereum's computational limitations and foster greater functionality for decentralized applications (dApps) through Boba's Hybrid Compute platform.
   
●On April 6, 2022, the Company’s subsidiary, Valour Inc., will began trading of Valour Cardano, Valour Polkadot and Valour Solana on the Euronext exchange in Paris and Amsterdam. Trading of these exchange-traded products (ETP) began today, April 6, 2022. These ETPs will be offered on Euronext Paris and Amsterdam enabling both retail and institutional investors to gain exposure to the native tokens of the Cardano, Polkadot and Solana networks safely and without navigating the process of opening a crypto wallet.

 

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●On April 8, 2022, the Company extended its normal course issuer bid (“NCIB”) to buy back common shares of the company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021, and was set to expire on April 8, 2022. The actual number of common shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the company.
   
●On April 19, 2022, the Company qualified for trading on the OTCQB Venture Market in the United States, operated by OTC Markets Group Inc., and the Company's common shares began trading today on the OTCQB Venture Market under the symbol DEFTF. The company's common shares are also eligible for electronic clearing and settlement through Depository Trust Company (DTC). Defi Technologies' common shares will continue to trade on the NEO Exchange in Canada under the symbol DEFI and on the Frankfurt Stock Exchange under the symbol RMJ.

 

●On May 9, 2022, the Company’s wholly owned subsidiary partnered with Seba Bank and MarketVector Indices (MVIS) to launch the Seba Valour Metaverse Index (SVMETA). The SVMETA index is an investable index for tokens building for the metaverse that provides exposure to crypto assets related to gaming, entertainment and social interactions within the virtual and augmented reality world. In September 2022, the Company terminated the partnership with SEBA bank as the Company decided to build the asset-backed platform in house rather than work to raise assets on the SEBA platform.
   
●On May 26, 2022, the Company’s wholly owned subsidiary received approval to begin trading Valour Enjin (ENJ) EUR and Valour Cosmos (ATOM) EUR on the Boerse Frankfurt Zertifikate AG (Frankfurt Stock Exchange). The Valour Enjin (ENJ) EUR ETP precisely tracks the price of ENJ, the native token of the Enjin protocol. Enjin (ENJ) is an on-line gaming community creation platform built on the ethereum blockchain. The Valour Cosmos (ATOM) EUR ETP tracks the performance of the native token of Cosmos. Cosmos (ATOM) is a cryptocurrency that powers an ecosystem of blockchains designed to scale and interoperate with each other.
   
●On June 6, 2022, the Company’s Seba Valour Metaverse Index (SVMETA) is available for trading OTC (over the counter). Valour collaborated with Seba Bank and MVIS to launch an investable index for tokens building for the metaverse, SVMETA.
   
●On July 7, 2022, the Company appointed Marco Infuso to the role of chief sales officer. With his international experience in the field of digital assets and ETFs, he will drive sales throughout Europe, as well as win new customer groups globally.
   
●On July 11, 2022, the Company appoint Peter Markl to the role of its general counsel. With his international experience in investment banking and digital assets, he will head the legal department globally and lead Valour on all legal and regulatory matters, in particular in relation to ETPs.
   
●On July 26, 2022, the Company’s has begun trading its exchange-traded products (ETP) on the Lang and Schwarz Exchange. Trading of Bitcoin Zero, Etherium Zero, Valour Uniswap ETP, Valour Polkadot ETP, Valour Cardano ETP, Valour Solana ETP, Valour Avalanche ETP, Valour Cosmos ETP and Valour Enjin ETP.
   
●On August 1, 2022, the Company appointed Elaine Buhler to the role of product manager. With her extensive experience in product and portfolio management with a diverse financial background, including private equity and derivatives, she will be responsible for enhancing Valour's ETP initiatives globally.

 

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●On August 16, 2022, the Company formed a partnership with German on-line brokerage platform, justTrade. The partnership will retain Valour as the provider of physically-backed crypto ETPs to the online broker's savings plan program (Sparplan) by the end of the year. Valour will also offer its entire range of crypto ETPs like Bitcoin, Ethereum as well as others like Enjin and Uniswap immediately.
   
●On August 18, 2022, the Company signed an agreement with German banks Comdirect and Onvista that will enable banking clients to integrate Valour ETPs (exchange-traded products) into their investment portfolios. Comdirect and Onvista customers will have access to Valour's entire range of crypto ETPs.
   
●On August 24, 2022, the Company announced it will debut its new Binance Coin exchange-traded product (ETP) on Borse Frankfurt. Trading of Valour (BNB) ETP begins today, August 24, 2022.
   
●On September 23, 2022, the Company announced its new Carbon Neutral Bitcoin exchange-traded product (ETP) on Borse Frankfurt. Valour's Bitcoin Carbon Neutral ETP becomes the 11th ETP offered by Valour. Valour Bitcoin Carbon Neutral offers investors exposure to bitcoin and presents a trusted investment method that benefits the environment and aligns with ESG (environmental, social and governance) goals by financing certified carbon removal and offset initiatives in order to neutralize the associated bitcoin carbon footprint.

 

●On October 6, 2022, the Company appointed Olivier Roussy Newton as chief executive officer. Russell Starr, formerly chief executive officer, will reassume the role of head of capital markets and maintain his role as executive chairman.
   
●On October 12, 2022, the Company announced it has partnered with Swedish index provider Vinter to launch Valour's first multi asset crypto exchange-traded product, the Valour Digital Asset Basket 10 Index (VDAB10). The Valour Digital Asset Basket 10 ETP tracks the 10 largest digital assets weighted by their current market capitalization, with a maximum portfolio allocation of 30 per cent per asset. The index, provided by Vinter, is rebalanced quarterly and weighted to enable investors to gain broad and trusted exposure to the largest disruptive digital assets, offering a diversified entry without the need to set up a dedicated trading account.
   
●On October 28, 2022, the Company filed a new European Union base prospectus covering digital asset ETPs (exchange-traded products) for approval with the Swedish regulator SFSA. If approved, Valour will be in a position to enhance the public offering of its digital asset performance tracking securities by various new index solutions, asset class mixes and derivative features. In the future Valour will be able to offer a wide range of ETP securities that combine digital assets exposure with other asset classes such as equities and commodities, third party funds' performances, and derivative tools, such as leveraged or capital protection investments.

 

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●On November 14, 2022, the Company closed the first tranche of its non-brokered private placement financing of units for gross proceeds of $1,414,973 through the sale of 7,074,865 Units at a price of C$0.20 per Unit. Each Unit is comprised of one common share of the Company and one half of a common share purchase warrant, each whole warrant entitles the holder of a warrant to acquire one additional common share of Valour at an exercise price of $0.30 for a period of 24 months from issuance.
   
●On November 29, 2022, the Company closed the second tranche of its non-brokered private placement financing of units for gross proceeds of $132,400 through the sale of 662,000 Units at a price of C$0.20 per Unit. Each Unit is comprised of one common share of the Company and one half of a common share purchase warrant, each whole warrant entitles the holder of a warrant to acquire one additional common share of Valour at an exercise price of $0.30 for a period of 24 months from issuance.
   
●On December 1, 2022, the Company announced a partnership with Autostock, a Swedish trading platform to launch an automated trading strategy designed to capture weekly effects of Bitcoin. Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. Valour and Autostock have agreed to an exclusive partnership specific to digital assets which makes it possible for clients of Autostock to make use of a weekly effect of the Bitcoin price development, in an automated manner known as Coinbot Zero by Valour.
   
●On December 23, 2022, the Company announced that Valour Crypto products are now avaliable on the independent comparison platform MoneyMoon. MoneyMoon is one of the major European exchange traded product comparison platforms with over 75,000 active monthly users.
   
●On January 10, 2023, the Company announced approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments.

 

●On January 12, 2023, the Company announced the approval in principle by the Jersey regulator JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded (ETP) securities. Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holder
   
●On February 3, 2023, the Company announced that it has changed its auditors from RSM Canada LLP (“Former auditor”) to BF Borgers CPA PC (“successor Auditor”) effective as of February 3, 2023. There were no reservations in the Former Auditor’s audit reports for any financial period during which the Former Auditor was the Company’s auditor. There are no “reportable events” (as the term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) between the Company and the Former Auditor.
   
●On March 2, 2023, the Company announced that they have agreed to enter into a strategic partnership in with Spirit Blockchain (CSE: SPIR), a Canadian company that offers shareholders diversified exposure to the Blockchain and Digital Asset Industry. Leading up to this strategic partnership, Valour will also participate Spirit Blockchain's private placement. Spirit is listed on the Canadian Securities Exchange (CSE) under the symbol SPIR.CN. Spirit is a Canadian-Swiss group operating in the blockchain and digital asset sectors with the primary goal of creating value in a rapidly growing environment through recurring cash flows and capital appreciation. Spirit provides investors with direct exposure to the sector without the technical complexity or constraints of purchasing and holding the underlying crypto assets.
   
●On March 21, 2023, the Company’s launched its crypto product range to French investors.

 

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Digital Assets

 

 

As at December 31, 2022, the Company’s digital assets consisted of the below digital currencies, with a fair value of $106,635,434 (December 31, 2021 - $370,053,740). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value for Bitcoin, Cardano, Ethereum, Polkadot, Solana and Uniswap is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for the other digital assets is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

The Company’s holdings of digital assets consist of the following:

 

   December 31, 2022   December 31, 2021 
   Quantity   $   Quantity   $ 
Binance Coin   11.1000    3,678    0.3000    197 
Bitcoin   2,126.5130    47,498,630    1,837.5692    112,052,901 
Ethereum   21,141.7368    34,333,700    18,666.2358    89,582,049 
Cardano   36,438,339.0800    12,004,332    34,447,996.7900    59,079,245 
Polkadot   931,646.4544    5,407,239    1,133,717.2970    40,213,624 
Solana   428,280.68    5,537,534    294,114.51    65,591,792 
Mobilecoin   2,855.5045    -    2,854.9570    35,506 
Shyft   3,507,575.4684    37,530    1,137,025.7440    616,106 
Uniswap   148,734.0602    1,021,542    66,993.0000    1,557,232 
USDC        1,586         4,063 
USDT        14,134         8,055 
Doge   10,000.0000    914         - 
Cosmos   201.0000    2,531         - 
Avalanche   48,995.3900    712,745         - 
Matic   890.0000    906         - 
Shiba Inu   90,000,000.0000    975         - 
Ripple   2,000.0000    919         - 
Enjin   10,009.9900    3,180         - 
Terra Luna   199,195.3600    -         - 
Current        106,582,076         368,740,770 
Blocto   251,424.913    6,737    251,424.913    607,519 
Maps   285,713.000    -    285,713.000    92,478 
Oxygen   400,000.000    -    400,000.000    352,266 
Boba Network   250,000.00    -    -    - 
Saffron.finance   86.21    2,345    86.210    24,850 
Clover   310,000.00    13,216    190,000.000    118,032 
Sovryn   15,458.95    2,342    13,916.670    117,771 
Wilder World   148,810.00    28,660    -    - 
Pyth   2,500,000.00    -    -    - 
Volmex   2,925,878.00    58    2,925,878.000    54 
Long-Term        53,358         1,312,970 
Total Digital Assets        106,635,434         370,053,740 

 

The continuity of digital assets for the years ended December 31, 2022 and 2021:

 

   December 31,
2022		   December 31,
2021		 
Opening balance  $370,053,740   $636,600 
Digital assets acquired   231,392,840    729,666,919 
Digital assets disposed   (191,092,048)   (331,176,366)
Realized gain on digital assets   (47,595,430)   2,291,313 
Digital assets earned from staking, lending and fees   5,955,456    3,356,020 
Net change in unrealized gains and losses on digital assets   (275,739,651)   (34,720,746)
Foregin exchange gain   13,660,527    - 
   $106,635,434   $370,053,740 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

  

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Digital Assets loaned

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions. As of December 31, 2021, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.82% to 11.00% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2021, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair
Value Share		 
Digital and fiat currencies on loan:            
Bitcoin   997.8835   $60,849,811    57%
Ethereum   8,541.8186    40,993,461    38%
Polkdot   151,662.7649    5,379,568    5%
Cardano   3,279.4500    5,624    0%
Total   164,481.9170   $107,228,464    100%

 

As of December 31, 2021, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  

Number of coins on loan

   Fair Value 
Digital and fiat currencies on loan:            
Counterparty A   11.00%   154,942.2149   $5,385,193 
Counterparty C   4.0% - 5.125%    1,250.0000    20,043,867 
Counterparty D   2.85% - 4.25%    2,451.1958    37,044,530 
Counterparty F   0.82%-2.43%    5,838.5063    44,754,875 
Total        164,481.9170   $107,228,464 

 

As of December 31, 2021, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2021		 
Digital and fiat currencies on loan:       
Counterparty A  London, UK   5%
Counterparty C  United States   19%
Counterparty D  London, UK   35%
Counterparty F  United States   42%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2022 and 2021, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions. As of December 31, 2021, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 1.5% to 12% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

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As of December 31, 2021, digital assets staked consisted of the following: 

 

   Number of
coins on loan		   Fair Value   Fair
Value Share		 
Digital and fiat currencies on loan:            
Polkdot   755,287.915    26,790,510    32%
Cardano   3,162,507.802    5,423,786    6%
Solana   231,732.350    51,679,668    62%
Euro   1,007.471    1,450    0%
Total   4,150,535.5383   $83,895,414    100%

 

As of December 31, 2021, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates  

Number of coins on loan

   Fair Value 
Digital and fiat currencies on loan:            
Counterparty B   

1.50% - 12.0%

    3,968,035.4883    73,623,935 
Counterparty E   2.10%   137,500.0000    235,816 
Counterparty G   7.76%   45,000.05    10,035,662 
Total       $4,150,536   $83,895,414 

 

As of December 31, 2021, digital assets staked were concentrated with counterparties as follows:

 

   Geography 

December 31,
2021

 
Digital and fiat currencies on loan:       
Counterparty B  London, UK   88%
Counterparty E  Switzerland   0%
Counterparty G  United States   12%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2022 and 2021, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Third Party Custodians

 

 

As of December 31, 2022, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian   Location
Bitcoin Suisse AG   Switzerland
Bitgo Trust   United States
Anchorage Digital   United States
Coinbase Global, Inc.   United States
Fidelity Digital Asset Services, LLC   United States

 

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Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of December 31, 2022, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian   Location   % of digital assets
custodied by
market value(1)		   Regulatory Body
Bitcoin Suisse AG   Switzerland   11.38%   Financial Services Standards Association (VQF), Zug, Switzerland
Anchorage Digital   United States   21.89%   Office of the Comptroller of Currency
Coinbase Global, Inc.   United States   0.03%   New York Department of Financial Services

 

Note 1: As at December 31, 2022; Residual digital assets served as collateral for loans with B2C2-Group (approx. 56.4 %; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (10,02%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour Cayman diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.
   
●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.
   
●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.
   
●The counterparties are reviewed in regular intervals and re-evaluated.
   
●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.
   
●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

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3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

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13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

 

At December 31, 2022, the Company’s had self-custody of digital assets totaling $2,326,139 (December 31, 2021 - $1,964,582).

 

The Company maintain controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

Staking and Lending Policy

 

 

The Company’s lending arrangements policy is as follows:

 

(a)which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b)the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c)contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d)borrower's ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

13

 

 

(e)borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f)callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At December 31, 2022

 

 

At December 31, 2022, the Company’s investment portfolio consisted of one publicly traded investments and eight private investments for a total estimated fair value of $43,522,496 (December 31, 2021 – one publicly traded investment and seven private investments at a total estimated fair value of $10,275,906).

 

Public investments

 

At December 31, 2022, the Company’s one publicly-traded investments had a total estimated fair value of $17,227.

 

Public Issuer  Note   Security description  Cost   Value   of FV 
Smart Valor AG      19,000 SDR   150,908    17,227    100.0%
Total public investments         $150,908   $17,227    100.0%

 

At December 31, 2021, the Company’s one publicly-traded investments had a total estimated fair value of $18,146

 

Public Issuer  Note  Security description  Cost  

Estimated
Fair Value

  

%
of FV

 
Silo Wellness Inc  (i)  403,250 common shares   40,325    18,146    100.0%
Total public investments        $40,325   $18,146    100.0%

 

(i)Investments in related party entities

 

14

 

 

Private Investments

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG     3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

(i)Investments in related party entities

 

At December 31, 2021, the Company’s seven private investments had a total fair value of $10,257,760.

 

Private Issuer  Note  Security description  Cost   Fair Value   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,140    36.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,049,779    20.0%
Earnity Inc.     85,142 preferred shares   130,946    198,356    1.9%
Luxor Technology Corporation     201,633 preferred shares   630,505    633,963    6.2%
SDK:meta, LLC     1,000,000 units   3,420,000    3,420,000    33.3%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    177,488    1.7%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    38,034    0.4%
Total private investments        $7,517,458   $10,257,760    100.1%

 

3iQ Corp (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of Valour. 3iQ is a leading bitcoin and digital asset fund manager. As at December 31, 2022, 3iQ was valued at $3,740,473 which was based on 3iQ’s February 2022 financing price. The investment represented 1.8% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to Valour of $374,047.

 

Brazil Potash Corp. (“BPC’)

 

BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil. During Q3, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. These shares were valued at US$3.75 per share for a total consideration of US$1,515,750 ($1,998,668). As at December 31, 2022, BPC was valued at $2,189,794 for an unrealized gain of $71,200 and a cumulative unrealized gain of $191,126. The BPC investment represented 1.03% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to Valour of $218,979.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. The Company made an initial investment of $130,946 in exchange for the preferred shares, the investment was valued at $14,991 based on Earnity’s December 2022 financing resulting in an unrealized loss of $183,366 and a cumulative unrealized loss of $115,955. As at December 31, 2022, the Earnity investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to Valour of $1,499.

 

15

 

 

Luxor Technology Corporation (“LTC”)

 

LTC is building infrastructure to support the next generation of digital assets. During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. The investment was valued at $677,268 at December 31, 2022 resulting in an unrealized gain of $43,304 and a cumulative unrealized gain of $46,763. As at December 31, 2022, the LTC investment represented 0.3% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to Valour of $67,726.

 

SDK: meta, LLC (“SDK”)

 

SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31, 2022, the SDK investment had a fair market value of $nil and represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to Valour of $0.

 

SEBA Bank AG (“SEBA”)

 

SEBA is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. The investment was valued at $36,652,500 at December 31, 2022 resulting in an unrealized gain of $2,153,750 and a cumulative unrealized gain of $2,153,750. A 10% decline in the fair market value of SEBA would result in an estimated increase in loss to Valour of

$3,665,250.

 

Skolem Technologies Ltd. (“STL”)

 

STL is an Institutional DeFi trade execution platform. In Q4, 2020, the Company invested US$20,000 ($25,612) in STL for the rights to certain preferred shares of STL. During Q4, 2021, these rights were converted into 16,354 series A preferred shares. As such, the investment was valued at $189,611 at December 31, 2022 resulting in an unrealized gain of $12,124 and a cumulative unrealized gain of $12,124. As at December 31, 2022, the STL investment represented 0.00% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to Valour of

$18,961.

 

VolMEX Labs Corporation (“VLC”)

 

VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. The investment was valued at $40,632 at December 31, 2022 resulting in an unrealized gain of $2,598 and a cumulative unrealized gain of $2,823. As at December 31, 2022, the VLC investment represented 0.00% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to Valour of $4,063.

 

16

 

 

Acquisition of DeFi Capital Inc.

 

 

On December 10, 2020, the Company acquired 49% of DeFi Capital by issuing a total of 20,000,000 common shares of the Company to the shareholders of DeFi Capital in proportion to their pro rata shareholdings of DeFi Capital, in exchange for a 49% interest in DeFi Capital. The 20,000,000 common shares are fair valued at a price of $0.13 per share, based on the trading price of the common shares issued, for a total value of $2,600,000. On January 28, 2021, the Company acquired the remaining 51% of Defi Capital by issuing an additional 20,000,000 common shares of the Company. The 20,000,000 common shares are fair valued at a price of $0.99 per share, based on the trading price of the common shares issued, for a total value of $19,800,000. DeFi Capital is a company focused on investing, incubating, and managing trading technologies associated with the decentralized finance market. As a result of the control obtained through the acquisition of 100% of the outstanding shares of DeFi Capital, the asset and liabilities were consolidated into the Company’s financial statements. The assets consisted of one intangible asset being brand name. The Company paid total consideration of $22,400,000 in consideration of 100% ownership of DeFi Capital.

 

The acquisition of DeFi Capital is being treated as an asset acquisition for accounting purposes as DeFi Capital does not meet the definition of a business, as defined in IFRS 3, Business Combinations. The assets acquired and liabilities assumed were based on the fair value of consideration paid.

 

Purchase price consider paid:    
Fair value of shares issued on December 10, 2020  $2,600,000 
Fair value of shares issued on January 28, 2021   19,800,000 
Fair value of shares issued  $22,400,000 
      
Fair value of assets and liabilities assumed:     
Brand Name  $22,406,968 
Accounts payable   (6,968)
Total net assets aquired  $22,400,000 

 

The Company assessed that it held significant influence over DeFi Capital after the initial acquisition on December 10, 2020 and as such has accounted for this 49% investment using the equity accounting method from December 10, 2020 to January 28, 2021. Since the transaction is an asset acquisition, the Company did not remeasure the previously held equity interest in DeFi Capital when the remaining 51% equity interest in DeFi Capital was acquired.

 

During the year ended December 31, 2020, the Company did not record any equity loss during the year. No dividends or cash distributions were received by the Company from the associate during the year.

 

Acquisition of Valour Inc.

 

 

On February 12, 2021, the Company initially acquired 20% interest in Valour (formerly known as Valour Structured Products Inc.) by issuing 21,000,000 common shares and on April 1, 2021, the Company acquired the remaining 84% (including the 4% dilution of its previously held equity interest) in Valour by issuing 36,934,316 common shares of the Company. Valour is a private company incorporated in the Cayman Islands that operates as an issuer of exchange-traded certificates linked to various digital currencies and hedging thereof. The acquisition has provided the Company an entry into the exchange- traded certificates market.

 

Details of the consideration for acquisition, net assets acquired and goodwill are as follows:

 

Purchase price consideration

 

Consideration for acquisition:    
Fair value of previously held equity interest  $11,694,200 
Fair value of shares issued on April 1, 2021   66,481,769 
Total consideration for the acquisition  $78,175,969 
Treasury shares acquired   (7,360,000)
Fair value of shares issued  $70,815,969 
Fair value of net assets acquired:     
Cash and cash equivalents   3,859,430 
Amounts receivable   21,677 
Investments at fair value through profit or loss   1,537,800 
Digital assets   67,831,424 
Prepaid expenses and accrued revenues   403,701 
Property, plant and equipment   10,443 
Right-of-use assets   53,899 
Accounts payable and accrued expenses   (1,094,855)
ETP holders payable   (68,848,678)
Lease liabilities   (53,899)
Brand Name   20,383,000 
    24,103,942 
Goodwill   46,712,027 
Net assets acquired  $70,815,969 

 

17

 

 

Financial Results

 

 

The following is a discussion of the results of operations of the Company for the three and twelve months ended December 31, 2022, and 2021. They should be read in conjunction with the Company’s consolidated financial statements for the years ended December 31, 2022 and 2021 and related notes.

 

Three and twelve months ended December 31, 2022 and 2021:

 

  

Three months ended
December 31,

  

Years ended
December 31,

 
   2022   2021   2022   2021 
                     
Revenues                     
Realized and net change in unrealized gains and losses on digital assets  $(42,314,407)  $(27,468,781)  $(322,611,606)  $(33,332,787)
Realized and net change in unrealized gains and losses on ETP payables   45,101,006    27,079,461    320,382,227    37,908,556 
Realized and unrealized loss on derivative asset   (14,281)   284,604    (434,072)   284,604 
Staking and lending income   456,035    2,430,432    4,519,001    3,372,897 
Management fees   204,153    783,527    1,436,455    1,116,597 
Node revenue   13,911    544,407    347,758    1,090,008 
Realized (loss) on investments, net   -    972,255    (12,077)   (207,532)
Unrealized (loss) gain on investments, net   1,351,937    384,702    (1,986,557)   4,740,451 
Interest income   971    103,022    55,264    108,284 
Total revenues   4,799,325    5,113,629    1,696,393    15,081,078 
Expenses                    
Management and consulting fees   1,800,221    4,929,281    7,218,808    9,569,693 
Share based payments   192,064    28,969,180    15,889,455    42,035,158 
Travel and promotion   294,853    745,255    2,331,176    2,234,553 
Office and rent   304,123    566,990    1,051,511    1,810,869 
Accounting and legal   607,671    294,154    4,103,581    837,611 
Regulatory and transfer agent   8,171    148,819    42,983    501,467 
Depreciation - property, plant and equipment   8,629    3,236    18,342    8,284 
Depreciation - right of use assets   47,998    16,478    69,322    49,217 
Amortization- intangibles   509,575    1,394,164    2,277,443    3,582,697 
Finance costs   925,346    537,697    4,014,038    1,186,408 
Transaction costs   188,272    491,877    1,113,941    1,315,775 
Foreign exchange (gain) loss   (35,591)   (326,856)   (324,699)   15,481 
Impairment loss   13,865,356    11,438,316    13,865,356    17,483,284 
                     
Total expenses   18,716,687    49,208,591    51,671,256    80,630,497 
(Loss) income before other item   (13,917,362)   (44,094,962)   (49,974,863)   (65,549,419)
Excess purchase price over fair value of asset assumed (expense)   -    (5,945,800)   -    (5,945,800)
Net (loss) for the period   (13,917,362)   (50,040,762)   (49,974,863)   (71,495,219)
Other comprehensive loss                    
Foreign currency translation loss   1,138,732    38,130    (3,237,282)   241,064 
Net (loss) and comprehensive (loss) for the period  $(12,778,630)  $(50,002,632)  $(53,212,145)  $(71,254,155)

 

For the three and twelve months ended December 31, 2022, the Company recorded a net (loss) and comprehensive (loss) of $(12,778,630) and $(53,212,145) ($(0.06) and $(0.25) per basic share) on total revenues of $4,799,325 and $1,696,393 compared to net (loss) and comprehensive (loss) of $(50,002,632) and $(71,254,155) ($(0.25) and ($0.37) per basic share) on total revenues of $5,113,702 and $15,081,078 for the three and twelve months ended December 31, 2021.

 

For the three and twelve months ended December 31, 2022, realized and net change in unrealized gains and loss on digital assets was $(42,314,407) and $(322,611,606) and realized and net change in unrealized gains and loss on ETP payables was $45,101,006 and $320,382,227. Lower digital asset prices in Q4 and YTD 2022 resulted in losses on our digital assets that was offset by gains on ETP payables due to the decreased share price of the ETPs.

 

The Company earned staking and lending income of $456,035 and $4,519,001 for three and twelve months ended December 31, 2022 compared to $2,430,432 and $3,372,897 for the same periods in 2021. The Company actively stakes and lends its cryptocurrencies to earn additional revenue. Please see Digital Assets section for more details.

 

The Company had management fee revenue of $204,153 and $1,436,455 for three and twelve months ended December 31, 2022 compared to $783,527 and $1,116,597 for the same periods in 2021. In 2022, the Valour had 12 ETP products vs. 2021 had four ETP products that charges a 1.49% to 1.9% per annum management fee.

 

18

 

 

The Company had node revenue of $13,911 and $347,758 for three and twelve months ended December 31, 2021 compared to $544,407 and $1,090,008 for the same periods in 2021. In July 2021, the Company became one of the main node validators on the Shyft network. During the twelve months ended December 31, 2022, the Company earned 2,370,550.72 (December 31, 2021 - 1,137,025.744) Shyft tokens for its services. The decrease revenue in 2022 is due to lower token price of the Shyft token vs. higher prices in 2021.

 

The Company had realized gain (loss) of $nil and $(12,077) on investments for the three and twelve months ended December 31, 2022 compared to $972,255 and $(207,532) for the same periods in 2021. The Company had unrealized (loss) gain of $1,351,937 and $(1,986,557) on investments compared to $384,702 and $4,740,451 in the prior period. The unrealized loss for the nine months ended December 31, 2022 primarily consisted of the write down on the Company’s investment holding in SDK: Meta, LLC offset by unrealized gains on SEBA and BPC.

 

Management and consulting fees were $1,800,221 and $7,218,808 during the three and twelve months ended December 31, 2022 compared to $4,929,281 and $9,569,693 during the same periods in 2021. Management and consulting fees are higher in 2021 as the Company made additions to the global management team, added new advisors and consultants. In addition, the Company granted a small bonus in Q1 2021.

 

Share based payments were $192,064 and $15,889,455 during the three and twelve months ended December 31, 2022 compared to $28,969,180 and $42,035,158 in the same periods in 2021. The Company granted 5,300,000 options and 6,500,000 DSU and cancelled 7,330,600 options and 6,755,000 DSU during 2022 compared to the 21,420,000 options and 13,125,000 of deferred share units to directors, officers and consultants of the Company during 2021.

 

Travel and promotion was $294,853 and $2,331,176 during the three and twelve months ended December 31, 2021 compared to $745,255 and $2,234,553 during the same periods in 2021. Corporate activities and business development was higher 2021 with the acquisitions of Valour Inc. (Cayman) and DeFi Capital.

 

Office and rent was $304,123 and $1,051,511 during the three and twelve months ended December 31, 2022 compared to $566,990 and $1,810,869 during the same periods in 2021 due to opening and acquiring new office locations in 2021. The Company reduced costs in 2022.

 

Accounting and legal was $607,671 and $4,103,581 during the three and twelve months ended December 31, 2022 and $294,154 and $837,611 during the same periods in 2021 due to increased legal costs and a recording a legal provision and due to increased accounting fees in 2022.

 

Regulatory and transfer agent costs were $8,171 and $42,983 during the three and twelve months ended December 31, 2022 compared to $148,819 and $501,467 during the prior periods in 2021 due to listing of the Company’s shares in NEO and OTC and as well as applying to list its shares on Nasdaq markets in 2021.

 

Total depreciation and amortization was $566,201 and $2,365,106 for the three and twelve months ended December 31, 2022 from $1,413,878 and $3,640,198 during the prior periods in 2021. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of DeFi Capital and Valour.

 

19

 

 

Finance costs were $925,346 and $4,014,038 for the three and twelve months ended December 31, 2022 from compared to $537,697 and $1,186,408 during the prior periods in 2021. The increase in financing costs related to trading of digital assets as well as the interest expense on the digital asset provider loans.

 

Transaction costs were $188,272 and $1,113,941 for the three and twelve months ended December 31, 2022 compared to $491,877 and $1,315,775 in the prior periods. The decrease in transaction costs related to margin trading of digital assets as brokerage commission and ETP issuance costs.

 

Foreign exchange (gain) loss was $(35,591) and $(324,699) for the three and twelve months ended December 31, 2022 compared to $(326,856) and $15,481 in the prior period. The loss reflects the currency fluctuations in the Company’s assets and liabilities denominated in US dollars, British Pounds, Euro and Swiss Franc.

 

Impairment loss was $13,865,356 and $13,865,356 for the three and twelve months ended December 31, 2022 compared to $11,438,316 and $17,483,284 in the prior period. The Company impaired the carry value of its brand names acquired as part of the Valour Inc. (Cayman) and DeFi Capital in 2022 vs. 2021 the Company only impaired the carry value of its brand name acquired DeFi Capital.

 

During the three and twelve months ended December 31, 2023, the Company provided $3,065,120 and used $89,643,172 in operations of which $478,815 was used in change of working capital and $658,750 was provided from the change of working capital, $nil and $34,649,658 used to purchase the Company’s investment in SEBA, $3,371,332 and $231,392,840 was used to purchase digital assets offset by $nil and $28,248 provided from sales of investment and $1,248,583 and $191,092,048 was provided from the disposal of digital assets. During the comparative three and twelve months ended December 31, 2021, the Company used $148,902,136 and $326,919,242 in operations of which $(2,258,330) and $1,633,080 was (used) / provided from the change of working capital, $2,109,438 $2,185,226 used in purchase of various investments, $7,152,071 and $19,290,229 provided from sales of various investments, $280,211,072 and $649,502,651 was used to purchase digital assets offset by $141,462,686 and $331,176,366 was provided from the disposal of digital assets. The cash used from operations was lower in 2022 compared to 2021 due to lower net loss in 2022 as the Company decreased rent and office costs as well as net purchase of digital assets in 2022 was $(40,300,792) compared in 2021 the net purchase of digital assets was $(318,326,285). The lower net purchase of digital assets is a result of weaker cryptocurrency markets in 2022 compared to 2021 and lower assets under management in 2022.

 

During the three months and twelve months ended December 31, 2022, the Company used $2,669,095 and $2,669,095 in investing activities compared to used $16,133 and provided $3,779,325 in the prior periods. In 2022, the Company right of use assets and lease payments increased as Valour Inc. (Cayman) entered into a new lease. In 2021, the proceeds from investing activities primarily from the Valour Inc. (Cayman) acquisition.

 

During the three and twelve months ended December 31, 2022, $(145,713) and $88,057,398 was (used) / provided from financing activities compared to $147,420,242 and $332,009,726 in the prior periods. The Company received proceeds of $nil and $242,378,583 from ETP holders, proceeds of $1,554,348 from private placement financing, $1,685,571 was used in and $53,117,760 was provided from proceeds from loan from digital asset liquidity providers, $nil and $647,284 from exercise of warrants and $nil and $45,000 from exercise of stock options offset by $nil and $196,516,517 used for payments to ETP holders, $14,490 in share issuance costs and $nil and $13,154,570 used in NCIB purchases. During the three and twelve months ended December 31, 2021, the Company received proceeds of $328,244,876 and $729,048,754 from ETP holders, proceeds of $nil and $9,614,450 from private placement financing, $nil and $2,219,806 from exercise of warrants and $nil and $238,940 from exercise of stock options offset by $175,687,259 and $395,369,306 used for payments to ETP holders, $nil and $309,901 in share issuance costs and $5,308,082 and $13,434,017 used in NCIB purchases. The cash provide from financing was lower in 2022 compared to 2021 due a small private placement financing and lower number of warrants and options being exercised due to a lower share price in 2022. The lower net proceed from ETP holders is a result of weaker cryptocurrency markets in 2022 compared to 2021 and lower assets under management in 2022.

 

20

 

 

Liquidity and Capital Resources

 

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager, Blockfi, etc. with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on more or less the same terms (collateral and interest rate) throughout the year. The Company successful raised approximately $1.5M from new investors in 2022 via private placements financings.

 

With the decline in crypto prices, the Company has been earning less revenue via staking and lending as well as its management fees on ETP products as the Company is paid in the cryptocurrency lend or staked or ETPs. The lower cryptocurrency prices resulted in lower recorded revenue.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

Valour relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). Interest is accrued and calculated at rates between 8.15% to 8.27% per annum. Principal plus accrued interest are due and payable on April 14, 2022 and April 17, 2022. The loans were secured with 315 BTC and 7,330 ETH. The loans were extended with new maturity dates between May 14, 2022 and July 14, 2022 with interest rates ranging from 6.9% to 8.7%. The extended loans was secured with 415 BTC and 8,130 ETH. on April 4, 2022 the Company entered into a loan with a second digital asset provider for US$5,500,000. This second loan matures of June 4, 2022. The interest accrued interest at 7% annually and is payable monthly. The second loan was secured with 143 BTC. The Company partially repaid of one of the loans of $3,500,000 in April 2022, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. During the year ended December 31, 2022, the loans were extended with new maturity dates varying between open term, September 14, 2022 and October 14, 2022 with interest rates ranging from 7.6% to 8.65%. The extended loans were secured with 1895 BTC and 18216 ETH. On November 10, 2022, a partial payment on the loan was made in the amount of $1,150,000. Subsequent to December 31, 2022, the loans were extended on an open term basis, with interest rates ranging from 7.05% to 7.45%. The extended loans were secured with 1,759 BTC and 18,093 ETH.

 

As of December 31, 2022, the loan principal of $52,821,600 (US$39,000,000) was outstanding. The loans were extended with new maturity dates varying between Open Term December 2, 2022, December 14, 2022 and January 31, 2023 with interest rates ranging from 5.7% to 7.25%. The extended loans were secured with 1,759 BTC and 18.093 ETH.

 

One of Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The next court hearing is scheduled for March30, 2023. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at December 31, 2022, the value of the 475 BTC was US$7,833,570 and potential loan loss exposure is US$1,833,570 and as at March 31, 2023 value of the 475 BTC was approximately US$13,349,400 and potential loan loss exposure is approximately US$7,349,400.

 

21

 

 

Private Placement Financings

 

On November 14, 2022, the Company closed a non-brokered private placement financing and issued 7,736,865 unit for gross proceeds of $1,414,973 at a price of $0.20 per common unit, each unit consist of one common share of the Company and one-half warrant, each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.30 for a period of 24 months following the closing date. The transaction closed in 2 tranches with 3,724,926 warrants issued on November 14, 2022. At the issue date fair value of the warrants was estimated at $0.17 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The second tranche closed on November 19, 2022 with 331,000 warrants issued. At the issue date fair value of warrants was estimated at $13,183 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

Valour used cash of $89,643,172 in its operating activities during the twelve months ended December 31, 2022. Included in cash used in operations are $34,649,658 used in the purchase of investment, $231,392,840 used in the purchase of digital assets, $658,750 provided from the changes of working capital offset by $28,248 generated from proceeds on sale of investments and $191,092,048 generated from the disposal of digital assets. Valour also used $2,669,095, in investing activities, $1,411,062 was used for additions to right of use assets and $1,259,033 was used for lease payments. Valour also provided $88,057,398 in financing activities. Included in cash provided in financing activities are $242,378,583 from proceeds from ETP holders, $53,117,760 was provided from proceeds from loan from digital asset liquidity providers, $1,554,348 provided from private placement financing, $647,284 from the exercise of warrants and $45,000 from the exercise of options offset by $196,516,517 used for payments to ETP holders, $14,490 for share issuance costs and $13,154,570 used for repurchasing shares under the NCIB.

 

As at December 31, 2022, the Company’s sources of funds include the estimated fair value of its cash of $4,906,165, equity investments of $43,522,496 and digital assets of $106,635,434 offset by total liabilities of $166,094,517.

 

Normal Course Issuer Bid (“NCIB”)

 

On April 13, 2021, the Company commenced a NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platforms. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the Exchange and/or other Canadian alternative trading platforms not to exceed up to 9.7% of the public float for the Common Shares as of April 9, 2021, or 18,162,177 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the Exchange as measured from November 9, 2020 to April 8, 2021.

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from Nov. 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the year ended December 31, 2022, the Company purchased and cancelled 8,560,100 shares at an average price of $1.54 per share (2021 - $1.90).

 

22

 

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

As at December 31, 2022 and 2021, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

December 31, 2022
 
    United States
Dollars		     British
Pound		     Swiss
Franc		     European
Euro		  
Cash   $ 4,742,001     $ -     $ -     $ -  
Receivables     67,103       -       -       -  
Private investments     6,852,769       -       36,652,500       -  
Prepaid investment     551,379       -       -       -  
Digital assets     106,635,434       -       -       136,189  
Accounts payable and accrued liabilities     (2,649,621 )     (72,189 )     (23,685 )     (21,687 )
Loan payable     (52,821,600 )                        
ETP holders payable     (105,740,627 )     -       -       -  
Net assets (liabilities)   $ (42,363,163 )   $ (72,189 )   $ 36,628,815     $ 114,502  

 

December 31, 2021 
  
   United States
Dollars		   British
Pound		   European
Euro		 
Cash  $8,928,642   $-   $- 
Receivables   32,065    -    - 
Private investments   10,257,760    -    - 
Prepaid investment   34,436    -    2,409,710 
Accounts payable and accrued liabilities   (3,363,109)   80,782    - 
ETP holders payable   (363,491,362)          
Net assets (liabilities)  $(347,601,568)  $80,782   $2,409,710 

 

As at December 31, 2022, United States Dollar was converted at a rate of $1.3544 (December 31, 2021 - $1.2678) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.6322 (December 31, 2021 - $1.7132) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4458 (December 31, 2021 - $1.4391) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.4661 (December 31, 2021 - $1.3897).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

  ●to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

  ●to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

  ●taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

  ●raising capital through equity financings; and

 

  ●realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the twelve months ended December 31, 2022.

 

23

 

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,198,960 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $1,117,164, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

Summary of Quarterly Results

 

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar 
   2022   2022   2022   2022   2021   2021   2021   2021 
Revenue  $4,799,325   $295,605   $(5,219,545)  $1,821,008   $5,113,702   $8,626,446   $(1,920,427)  $3,261,357 
Net (loss) income and comprehensive (loss) income  $(12,778,631)  $(9,011,375)  $(18,870,125)  $(12,552,015)  $(50,243,623)  $(2,077,424)  $(12,321,876)  $(6,852,296)
(Loss) income per Share - basic   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)  $(0.06)  $(0.04)
(Loss) income per Share - diluted   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)  $(0.06)  $(0.04)
Total Assets  $209,926,951   $263,678,822   $241,666,497   $468,623,726   $459,690,575   $372,062,311   $261,772,737   $194,017,574 
Total Long Term Liabilities  $1,709,911   $1,681,358   $ Nil   $ Nil   $5,646   $22,048   $38,240   $ Nil 

 

Selected Annual Information

 

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-22   31-Dec-21   31-Dec-20 
(a) Net Revenue   1,696,393   $15,081,078   $(46,776)
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (53,212,146)  $(71,495,219)  $2,073,533 
(ii) Income (loss) per share – basic   (0.25)  $(0.37)  $0.04 
(iii) Income (loss) per share – diluted   (0.25)  $(0.37)  $0.04 
(c) Total Assets   209,926,951   $459,690,575   $7,296,044 
(d) Total Liabilities   166,094,517   $367,909,179   $992,248 

 

Off Balance Sheet Arrangements

 

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

 

During the year ended December 31, 2022, the Company paid or accrued $609,398 (2021 - $2,891,666) to directors of the Company and $4,650,086 (2021 - $6,361,178) to officers of the Company in fees and share-based compensation.

 

As December 31,2022, the Company had $296,084 (December 31, 2021 - $11,124) owing to its current key management, and $356,340 (December 31, 2021 - $655,296) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

24

 

 

Related Party Transactions

 

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of December 31, 2022 and December 31, 2021.

 

Investment   Nature of relationship to invesment   Estimated
Fair value		  
Brazil Potash Corp.*   Officer (Ryan Ptolemy) of Investee   $ 2,189,794  
SEBA Bank AG   Director (Olivier Roussy Newton) of investee     36,652,500  
Total investment - December 31, 2022       $ 38,842,294  

 

Investment   Nature of relationship to invesment   Estimated
Fair value		  
Brazil Potash Corp.*   Director (Stan Bharti), officer (Ryan Ptolemy) of Investee   $ 2,049,779  
Silo Wellness Inc.***   Former Director and Officer (Fred Leigh), Former Officer (Kenny Choi, Ryan Ptolemy) and common shareholders of investee     18,146  
Total investment - December 31, 2021       $ 2,067,925  

 

Valour Inc. (Cayman) holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2022,

 

During the twelve months ended December 31, 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

●The Company incurred $120,000 (2021 - $120,000) of expenses for its proportionate share of shared office costs with other corporations that may have common directors and officers. The costs associated with this space are administered by 2227929 Ontario Inc. As at December 31, 2022, the Company had a payable balance of $90,400 (December 31, 2021 - $nil) with 2227929 Ontario Inc. to cover shared expenses. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment and due on demand. Fred Leigh, a former officer and former director of the Company, is also a director of 2227929 Ontario Inc.

 

●The Company incurred $41,086 (2021 - $nil) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $34,759 (2021 – $8,550) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

●Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($72,189) (December 31, 2021 - $75,731) expenses owed to Vik Pathak, a former director and officer of Valour.

 

●On November 14, 2022, the Company closed a non-brokered private placement financing and issued 7,736,865 unit for gross proceeds of $1,414,973 at a price of $0.20 per common unit, each unit consist of one common share of the Company and one-half warrant, each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.30 for a period of 24 months following the closing date. The transaction closed in 2 tranches with 3,724,926 warrants issued on November 14, 2022. At the issue date fair value of the warrants was estimated at $0.17 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

●The second tranche closed on November 19, 2022 with 331,000 warrants issued. At the issue date fair value of warrants was estimated at $13,183 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

●The Company also paid share and warrant issue costs of $14,490. Of the total subscriptions, 2,500,000 units were acquired by a former officer of the Company. Company paid $14,950 in finders fees and other share issue costs. A former officer of the Company subscribed 2,500,000 units for $500,000.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

25

 

 

Management Change

 

 

On October 6, 2022, the Company appointed Olivier Roussy Newton as chief executive officer. Olivier Roussy Newton is Co-Founder of Valour. Mr. Roussy Newton previously founded and served as the President of HIVE Blockchain Technologies (NASDAQ: HIVE), the first publicly traded crypto miner. He is a partner at Latent Capital, an investment fund focused on breakthrough technology in quantum computing, finance and bioinformatics. He currently sits on the board of SEBA Bank AG.

 

Russell Starr, formerly chief executive officer, will reassume the role of head of capital markets.

 

Financial Instruments and Other Instruments

 

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

●The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

●Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2022 and 2021.

 

●Digital assets classified as financial assets relate to USDC which is measured at fair value

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market
price)		    

(Valuation
technique -
observable
market Inputs)

   (Valuation
technique -
non - observable
market inputs)		   Total 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 
Publicly traded investments  $18,146   $-   $-   $18,146 
Privately traded invesments   -    -    10,257,760    10,257,760 
Digital assets   -    4,063    -    4,063 
December 31, 2021  $18,146   $4,063   $10,257,760   $10,279,969 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended December 31, 2022 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended 

December 31,
2022

  

December 31,
2021

 
Balance, beginning of period  $4,063   $636,600 
Disposal   (2,477)   (632,537)
Balance, end of period  $1,586   $4,063 

 

26

 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended December 31, 2022 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended 

December 31,
2022

  

December 31,
2021

 
Balance, beginning of period  $10,257,760   $3,018,493 
Purchases   34,498,750    4,710,797 
Transferred to Level 2   -    (1,051,233)
Realized and unrealized gain/(loss) net   (1,251,241)   3,579,703 
Balance, end of period  $43,505,269   $10,257,760 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2022.

 

Description   Fair vaue     Valuation
technique		   Significant
unobservable
input(s)		   Range of
significant
unobservable
input(s)
3iQ Corp.   $ 3,740,473     Recent financing   Marketability of shares   0% discount
Brazil Potash Corp.     2,189,794     Recent financing   Marketability of shares   0% discount
Earnity     14,991     Recent financing   Marketability of shares   0% discount
Luxor Technology Corporation     677,268     Recent financing   Marketability of shares   0% discount
SEBA Bank AG     36,652,500     Recent financing   Marketability of shares   0% discount
SDK:meta, LLC     -     Recent financing   Marketability of shares   0% discount
Skolem Technologies Ltd.     189,611     Recent financing   Marketability of shares   0% discount
VolMEX Labs Corporation     40,632     Recent financing   Marketability of shares   0% discount
December 31, 2022   $ 43,505,269              
                     
3iQ Corp.   $ 3,740,140     Recent financing   Marketability of shares   0% discount
Brazil Potash Corp.     2,049,779     Recent financing   Marketability of shares   0% discount
Earnity     198,356     Recent financing   Marketability of shares   0% discount
Luxor Technology Corporation     633,963     Recent financing   Marketability of shares   0% discount
SDK:meta, LLC     3,420,000     Recent financing   Marketability of shares   0% discount
Skolem Technologies Ltd.     177,488     Recent financing   Marketability of shares   0% discount
VolMEX Labs Corporation     38,034     Recent financing   Marketability of shares   0% discount
December 31, 2021   $ 10,257,760              

 

27

 

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour (see Note 3 and 11). As at December 31 2022, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,047 (December 31, 2021 - $374,014) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arm’s length party of the Company (see Note 8 for details). As at December 31, 2022, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2021. As at December 31, 2021, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,979 (December 31, 2021 - $204,978) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at December 31 2022, the valuation of Earnity was based on the December 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31 2022, a +/- 10% change in the fair value of Earnity will result in a corresponding +/-

$1,499 (December 31, 2021 - $19,836) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at December 31 2022, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31 2022. As at December 31 2022, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,727 (December 31, 2021 - $63,396) change in the carrying amount.

 

SDK: Meta, LLC (“SDK”)

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31 2022, the valuation of SDK:Meta LLC was $Nil (December 31, 2021 - $3,420,000). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31 2022, a +/- 10% change in the fair value of SDK: Meta LLC will result in a corresponding +/- 0 (December 31, 2021 +/- $342,000) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at December 31, 2022, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,665,250 change in the carrying amount.

 

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Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at December 31, 2021, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of STL will result in a corresponding +/-

$18,961 (December 31, 2021 - $17,749) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at December 31, 2021, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2022. As at December 31, 2022. a +/- 10% change in the fair value of VLC will result in a corresponding

+/- $4,063 (December 31, 2021 - $3,803) change in the carrying amount.

 

Outstanding Share Data

 

 

Authorized unlimited common shares without par value – 219,010,501 are issued and outstanding as at March 31, 2023.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at March 31, 2023

 

Stock options and convertible securities outstanding as at March 31, 2023 are as follows:

 

Stock Options:

 

17,777,500 with exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and October 19, 2027.

 

Warrants:

 

4,055,926 with exercise price ranging from $0.30 expiring between November 14, 2024 and November 29, 2024.

 

Deferred shares units:

 

6,370,000 with vesting terms ranging from one year to two years.

 

Risks and Uncertainties

 

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2022 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

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Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Valour Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over- the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

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●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

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Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

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Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, Valour relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

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Valour Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

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As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

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As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self- regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

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Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

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Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at December 31, 2022, the Company’s investments through its Defi Venture business arm comprise of $39,855,684 represented approximately 18.8% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively. The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

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Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

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The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

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Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third- party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

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Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

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No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

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Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

Multilateral Instrument 52-109 Disclosure

 

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

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Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

We have not identified any changes to our internal control over financial reporting which would materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

 

The CEO and CFO, together with other members of Management, have evaluated the effectiveness of internal controls over financial reporting as defined by National Instrument 52-109, and have concluded, based on our evaluation that they are operating effectively as at December 31, 2022.

 

Significant Accounting Policies

 

 

The Company’s significant accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2022 and 2021

 

Future accounting change

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

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Critical Accounting Estimates and Assumptions

 

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair Value for Bitcoin, Ethereum, Cardano, Polkadot, Solana and Uniswap is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”).Fair value for the other digital assets is determined by taking the last closing price in the range (UTC time) from www.coinmarketcap.com.

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

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Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share- based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 6 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

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Exhibit 99.17

 

 

 

 

 

 

 

 

 

 

 

 

 

(Formerly Defi Technologies Inc.)

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

For the years ended December 31, 2022 and 2021

(expressed in Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independent Auditor’s Report

 

To the Shareholders of Valour Inc.

 

Opinion

 

We have audited the financial statements of Valour Inc.. (“the Company”), which comprise the consolidated statements of financial position as at December 31, 2022 and the statements of changes in shareholders’ deficiency, comprehensive loss, and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2022, and its consolidated financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

 

Basis for Opinion

 

We conducted our audits in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the consolidated financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Material Uncertainty Related to Going Concern

 

We draw attention to Note 1 in the consolidated financial statements, which indicates that the Company incurred a net loss of $53,212,146 during the year ended December 31, 2022 and, its ability to continue as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Company’s ability to continue as a going concern. Our opinion is not modified in respect to this matter.

 

Other Matter

 

The consolidated financial statements of the Company for the year ended December 31, 2021, were audited by another auditor who expressed an unmodified opinion on the financial statements on March 31, 2022.

 

Other Information

 

Management is responsible for the other information. The other information comprises Management’s Discussion and Analysis.

 

Our opinion on the consolidated financial statements does not cover the other information and will not express any form of assurance conclusion thereon.

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

 

We obtained Management's Discussion and Analysis prior to the date of this auditors' report. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

2

 

 

Responsibilities of Management and Those Charged with Governance for the financial statements

 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

 

Auditor's Responsibilities for the Audit of the financial statements

 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

●Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

●Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

 

●Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

●Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

●Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

●Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

The engagement partner on the audit resulting in this independent auditor's report is Ben Borgers.

 

/S/ BF Borgers CPA PC

 

BF Borgers CPA PC

Lakewood, Colorado

March 31, 2023

 

3

 

 

Valour Inc.

 

Table of Contents

 

Consolidated statements of financial position   5
     
Consolidated statements of operations and comprehensive (loss)   6
     
Consolidated statements of cash flows   7
     
Consolidated statements of changes in equity   8
     
Notes to the consolidated financial statements   9-55

 

4

 

 

Valour Inc.

(Formerly DeFi Technologies Inc.)

Consolidated Statements of Financial Position  

(Expressed in Canadian dollars)

 

 

   Note  December 31,
2022		   December 31,
2021		 
      $   $ 
Assets           
Current           
Cash and cash equivalents  20   4,906,165    9,161,034 
Amounts receivable  4,20   67,102    32,565 
Public investments, at fair value through profit and loss  3,20,23   17,227    18,146 
Prepaid expenses  5   564,742    1,407,697 
Digital assets  6   106,582,076    177,616,891 
Digital assets loaned  6   -    107,228,465 
Digital assets staked  6   -    83,895,414 
Total current assets      112,137,312    379,360,212 
Private investments, at fair value through profit and loss  3,20,23   43,505,269    10,257,760 
Digital assets  6   53,358    1,312,970 
Derivative asset  6,20   -    284,404 
Equipment      20,623    33,569 
Right of use assets  8   1,917,174    5,646 
Intangible assets  9,10,11   5,581,188    21,723,987 
Goodwill  10,11   46,712,027    46,712,027 
Total assets      209,926,951    459,690,575 
Liabilities and shareholders' equity             
Current liabilities             
Accounts payable and accrued liabilities  8,12,20,23   5,822,379    4,412,171 
Loan payable  13,20   52,821,600    - 
ETP holders payable  14,20   105,740,627    363,491,362 
Total current liabilities      164,384,606    367,903,533 
Non-current liabilities             
Lease liabilities  8   1,709,911    5,646 
Total liabilities      166,094,517    367,909,179 
Shareholders' equity             
Common shares  18(b)(c)   166,151,401    163,265,466 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  19   27,909,984    25,898,062 
Accumulated other comprehensive income      (2,996,218)   241,064 
Deficit      (151,554,084)   (101,944,546)
Total equity      43,832,434    91,781,396 
Total liabilities and equity      209,926,951    459,690,575 
Nature of operations and going concern  1          
Commitments and contingencies  24          

 
Approved on behalf of the Board of Directors:    
     
“Tito Gandhi”   “Olivier Roussy Newton”
Director   Director

 

See accompanying notes to these consolidated financial statements

 

5

 

 

Valour Inc.

(Formerly DeFi Technologies Inc.)

Consolidated Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

     Years ended December 31, 
   Note  2022   2021 
      $   $ 
            
Revenues           
Realized and net change in unrealized gains and (losses) on digital assets  15   (322,611,606)   (33,332,787)
Realized and net change in unrealized gains and (losses) on ETP payables  16   320,382,227    37,908,556 
Realized and unrealized gain (loss) on derivative assets      (434,072)   284,604 
Other trading income      -    16,865 
Staking and lending income      4,519,001    3,356,032 
Management fees      1,436,455    1,116,597 
Node revenue      347,758    1,090,008 
Realized gain (loss) on investments, net  3   (12,077)   (207,532)
Unrealized gain (loss) on investments, net  3   (1,986,557)   4,740,451 
Interest income      55,264    108,284 
Total revenues      1,696,393    15,081,078 
Expenses             
Operating, general and administration  17, 23   14,748,059    14,954,193 
Share based payments  19   15,889,455    42,035,158 
Depreciation - property, plant and equipment      18,342    8,284 
Depreciation - right of use assets      69,322    49,217 
Amortization - intangibles  11   2,277,443    3,582,697 
Finance costs      4,014,038    1,186,408 
Transaction costs      1,113,941    1,315,775 
Foreign exchange (gain) loss      (324,699)   15,481 
Impairment loss  11   13,865,356    17,483,284 
Total expenses      51,671,257    80,630,497 
(Loss) before other item      (49,974,864)   (65,549,419)
Excess purchase price over fair value of assets assumed (expensed)      -    (5,945,800)
Net (loss) for the year      (49,974,864)   (71,495,219)
Other comprehensive loss          
Foreign currency translation (loss) gain      (3,237,282)   241,064 
Net (loss) and comprehensive (loss) for the year      (53,212,146)   (71,254,155)
(Loss) per share             
Basic      (0.25)   (0.37)
Diluted      (0.25)   (0.37)
              
Weighted average number of shares outstanding:             
Basic      209,054,713    192,626,463 
Diluted      209,054,713    192,626,463 

 

See accompanying notes to these consolidated financial statements

 

6

 

 

Valour Inc.

(Formerly DeFi Technologies Inc.)

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

     Years ended December 31, 
   Note   2022
$		   2021
$		 
Cash (used in) provided by operations:           
Net (loss) income for the year     $(49,974,864)  $(71,495,219)
Adjustments to reconcile net (loss) income to cash (used in)             
operating activities:             
Share-based payments  19   15,889,455    42,035,158 
Impairment loss  11   13,865,356    17,483,284 
Loss on deemed disposal of an associate      -    5,945,800 
Interest income      (55,264)   (108,284)
Depreciation - Property, plant & equipment      18,342    - 
Depreciation - right of use assets  8   69,322    - 
Amortization - Intangible asset  9,10,11   2,277,443    3,640,198 
Realized loss on investments, net      12,077    207,532 
Unrealized loss (gain) on investments, net      1,986,557    (4,740,451)
Realized and net change in unrealized (gains) and loss on digital assets      322,611,606    22,213,636 
Realized and net change in unrealized (gains) and loss on ETP      (320,382,227)   (37,908,556)
Realized and unrealized (loss) on derivative asset      434,072    - 
Staking and lending income      (4,519,001)   (3,413,607)
Node revenue      (347,758)   (1,090,008)
Management fees      (1,436,455)   - 
Unrealized loss (gain) on foreign exchange      4,171,619    (100,523)
       (15,379,720)   (27,331,040)
Adjustment for:             
Purchase of digital assets      (231,392,840)   (649,502,651)
Disposal of digital assets      191,092,048    331,176,366 
Purchase of investments      (34,649,658)   (2,185,225)
Disposal of investments      28,248    19,290,229 
Loan provided      -    - 
Change in amounts receivable      (34,537)   - 
Change in prepaid expenses and deposits      693,287    443,187 
Change in accounts payable and accrued liabilities      -    1,189,892 
Net cash (used in) from operating activities      (89,643,172)   (326,919,242)
Investing activities             
Additions to right of use assets      (1,411,062)   - 
Equipment purchased      -    (31,410)
Lease payment      (1,258,033)   (48,695)
Cash received from acquisition of subsidiary      -    3,859,430 
Net cash provided from investing activities      (2,669,095)   3,779,325 
Financing activities             
Proceeds from ETP holders      242,378,583    729,048,754 
Payments to ETP holders      (196,516,517)   (395,369,306)
Loan Payable      53,117,760    - 
Proceeds from issuance of units  18(b)   1,554,348    9,614,450 
Share and warrant issuance costs  18(b)   (14,490)   (309,901)
Proceeds from exercise of warrants  18(b)   647,284    2,219,806 
Proceeds from exercise of options  18(b)   45,000    238,940 
Shares repurchased pursuant to NCIB      (13,154,570)   (13,434,017)
Net cash provided by financing activities      88,057,398    332,008,726 
Effect of exchange rate changes on cash and cash equivalents      436,552    (39,850)
Change in cash and cash equivalents      (4,254,869)   8,828,959 
Cash, beginning of period      9,161,034    332,075 
Cash and cash equivalents, end of period     $4,906,165   $9,161,034 
Supplemental information:             
Value of shares issued for DeFi Holdings Inc.      -    19,800,000 
Value of shares issued for Valour Structured Products, Inc.      -    78,175,969 
Value of shares issued for Hive Blockchain Technologies Ltd      -    16,000,000 
Shares issued for SDK:meda, LLC      -    3,420,000 

 

See accompanying notes to these consolidated financial statements

 

7

 

 

Valour Inc.

(Formerly DeFi Technologies Inc.)

Consolidated Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

 Share-based payments 
    Number of Common Shares    Common Shares    Number of Preferred Shares    Preferred Shares    Options    Deferred Shares Unit (DSU)    Treasury Shares    Warrants    Share-based Payments Reserve    Accumulated other comprehensive income    Deficit    Total 
                                                             
Balance, December 31, 2021   211,102,552   $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986   $25,898,062    241,064    (101,944,546)   91,781,396 
Private Placement   7,736,865    1,367,932    -    -    -    -    -    171,926    171,926    -    -    1,539,858 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    296,160 
NCIB   (8,560,100)   (6,743,038)   -    -    -    -    -    -    -    -    (6,411,536)   (13,154,574) 
Warrants exercised   3,714,917    647,284    -    -    -    -    -    -    -    -    -    647,284 
Value of warrants exercised   -    136,447    -    -    -    -    -    (136,447)   (136,447)   -    -    - 
Warrants expired   -    -    -    -    -    -    -    (33,352)   (33,352)   -    33,352    - 
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    - 
Options cancelled   -    -    -    -    (5,150,380)   -    -    -    (5,150,380)   -    5,150,380    - 
DSU exercised   4,377,500    3,561,550    -    -    -    (3,561,550)   -    -    (3,561,550)   -    -    - 
Value of DSU exercised   -    3,535,000    -    -    -    (3,535,000)   -    -    (3,535,000)   -    -    - 
DSU cancelled   -    -    -    -    -    (1,593,130)   -    -    (1,593,130)   -    1,593,130    - 
Share-based payments   -    -    -    -    7,274,616    8,614,838    -    -    15,889,455    -    -    15,889,455 
Net (loss) and comprehensive (loss) for the year   -    -    -    -    -    -    -    -    -    (3,237,282)   (49,974,864)   (53,212,145)
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984   $(2,996,218)  $(151,554,084)  $43,832,433 
Balance, December 31, 2020   103,405,361   $23,357,691    4,500,000   $4,321,350   $276,407   $-   $-   $914,588    1,190,995   $-   $(22,566,240)  $6,303,796 
Private Placements   5,000,000    10,000,000    -    -    -    -    -    -    -    -    10,000,000      
Warrants issued   -    (309,901)   -    -    -    -    -    -    -    -    -    (309,901)
Shares issued for acquisitions   77,934,316    103,921,769    -    -    -    -    -    -    -    -    -    103,921,769 
Treasury shares acquired   -    (7,360,000)   -    -    -    -    -    -    -    -    -    (7,360,000)
Shares issued for investments   13,000,000    19,420,000    -    -    -    -    -    -    -    -    -    19,420,000 
NCIB   (7,078,200)   (5,552,561)   -    -    -    -    27,453    -    27,453    -    (7,908,909)   (13,434,017)
Warrants exercised   12,826,675    2,219,806    -    -    -    -    -    -    -    -    -    2,219,806 
Value of warrants exercised   -    328,602    -    -    -    -    -    (328,602)   (328,602)   -    -    - 
Option exercised   1,514,400    238,940    -    -    -    -    -    -    -    -    -    238,940 
Value of options exercised   -    166,120    -    -    (166,120)   -    -    -    (166,120)   -    -    - 
Options cancelled   -    -    -    -    (25,822)   -    -    -    (25,822)   -    25,822    - 
DSU exercised   4,500,000    15,830,000    -    -    -    (15,830,000)   -    -    (15,830,000)   -    -    - 
value of DSU exercised   -    1,005,000    -    -    -    (1,005,000)   -    -    (1,005,000)   -    -    - 
Share-based payments   -    -    -    -    18,148,210    23,886,948    -    -    42,035,158    -    -    42,035,158 
Net (loss) and comprehensive (loss) for the year   -    -    -    -    -    -    -    -    -    241,064    (71,495,219)   (71,254,155)
Balance, December 31, 2021   211,102,552   $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986   $25,898,062   $241,064   $(101,944,546)  $91,781,396 

 

See accompanying notes to these consolidated financial statements

 

8

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

Valour Inc. (the “Company” or “Valour”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. Valour is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at December 31, 2022, the Company has working capital (deficiency) of ($52,247,294) (December 31, 2021 - $11,456,679, including cash of $4,906,165 (December 31, 2021 - $9,161,034) and for the year ended December 31, 2022 had a net loss and comprehensive loss of $53,212,146 (for the year ended December 31, 2021 – $71,254,155). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These consolidated financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

2.Significant accounting policies

 

(a)Statement of compliance

 

These consolidated financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). The policies as set out below were consistently applied to all the periods presented unless otherwise noted. These consolidated financial statements of the Company were approved for issue by the Board of Directors on March 31, 2023.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These consolidated financial statements of fiscal 2022 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc. (Cayman), DeFi Europe AG, Crypto 21 AB and Valour Management Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements.

 

9

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(c)Basis of preparation and functional currency

 

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non- monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for Valour Inc., DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc. (Cayman), DeFi Europe AG, Crypto 21 AB and Valour Management Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Significant accounting judgements, estimates and assumptions

 

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

10

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets was classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair Value for Bitcoin, Ethereum, Cardano, Polkadot, Solana and Uniswap is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”). Fair value for the other digital assets is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

(ii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 3 and 20 for further details.

 

(iii)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 3 and 20 for further details.

 

(iv)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

11

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vi)Contingencies (See Note 24 for details)

 

(vii) Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii) Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 11 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

12

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)Financial instruments

 

Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company has become a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Company’s financial instruments consist of cash, amounts receivable, public investments, private investments, derivative asset, accounts payable and accrued liabilities and ETP holders payable.

 

(i)Investments

 

Purchases and sales of investments where the Company cannot exert control or significant influence are recognized on a trade date basis. Public and private investments at fair value through profit or loss are initially recognized at fair value, with changes in fair value reported in profit (loss). At each financial reporting period, the Company’s management estimates the fair value of its investments based on the criteria below and reflects such valuations in the financial statements.

 

Transaction costs are expensed as incurred in the statements of loss. The determination of fair value requires judgment and is based on market information where available and appropriate. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such changes in valuations in the statements of loss. The Company is also required to present its investments (and other financial assets and liabilities reported at fair value) into three hierarchy levels (Level 1, 2, or 3) based on the transparency of inputs used in measuring the fair value, and to provide additional disclosure in connection therewith (see Note 20, “Financial instruments”). The three levels are defined as follows:

 

Level 1 – investment with quoted market price;

 

Level 2 – investment which valuation technique is based on observable market inputs; and

 

Level 3 – investment which valuation technique is based on non-observable market inputs.

 

Publicly traded investments:

 

1. Securities, including shares, options, and warrants which are traded on a recognized securities exchange and for which no sales restrictions apply are recorded at fair values based on quoted closing prices at the statement of financial position date or the closing price on the last day the security traded if there were no trades at the statement of financial position date. The Company utilizes the quoted closing prices provided they fall within the bid-ask spread. In circumstances where the quoted closing prices are not within the bid-ask spread, the Company will determine the point within the bid-ask spread that is most representative of fair value. These are included in Level 1 as disclosed in Note 20.

 

13

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)Financial instruments (continued)

 

(i)Investments (continued)

 

2. Securities which are traded on a recognized securities exchange but which are escrowed or otherwise restricted as to sale or transfer are recorded at amounts discounted from market value. Shares that are received as part of a private placement that are subject to a standard four-month hold period are not discounted due the short term of the hold period. In determining the discount for such investments, the Company considers the nature and length of the restriction, business risk of the investee corporation, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. These are included in Level 2 in Note 20.

 

3. Warrants or options of publicly traded securities which do not have a quoted price are carried at an estimated fair value calculated using the Black-Scholes option pricing model if sufficient and reliable observable market inputs are available. These are included in Level 2 as disclosed in Note 20.

 

4. Securities which are traded on a recognized securities exchange but which do not have an active market are recorded at the most recent transaction price. These are included in Level 3 in Note 20.

 

The amounts at which the Company’s publicly traded investments could be disposed of may differ from carrying values based on market quotes, due to market price changes and the fair value was determined at a specific time, the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Such differences could be material.

 

Privately held investments:

 

1. Securities in privately held companies (other than options and warrants) are initially recorded at cost, being the fair value at the time of acquisition. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such valuations in the financial statements. These are included in Level 3 as disclosed in Note 20. Options and warrants of private companies are carried at fair value using valuation technique.

 

With respect to valuation, the financial information of private companies in which the Company has investments may not always be available, or such information may be limited and/or unreliable. Use of the valuation approach described below may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these may not be realized or realizable. In addition to the events described below, which may affect a specific investment, the Company will take into account general market conditions when valuing the privately held investments in its portfolio. In the absence of occurrence of any of these events or any significant change in general market conditions indicates generally that the fair value of the investment has not materially changed.

 

2. An upward adjustment is considered appropriate and supported by pervasive and objective evidence such as significant subsequent equity financing by an unrelated investor at a transaction price higher than the Company’s carrying value; or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a positive impact on the investee company’s prospects and therefore its fair value. In these circumstances, the adjustment to the fair value of the investment will be based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which, for example, reduce the corporate tax burden, or to an extent that, it was not previously allowed, or reduce or eliminate the need for approvals;

 

●receipt by the investee company of approvals, which allow the investee company to proceed with its project(s);

 

14

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)Financial instruments (continued)

 

(i)Investments (continued)

 

Privately held investments: (continued)

 

●release by the investee company of positive operational results, which either proves or expands their investee’s prospects; and

 

●important positive management changes by the investee company that the Company’s management believes will have a very positive impact on the investee company’s ability to achieve its objectives and build value for shareholders.

 

3. Downward adjustments to carrying values are made when there is evidence of a decline in value as indicated by the assessment of the financial condition of the investment based on third party financing, operational results, forecasts, and other developments since acquisition, or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a negative impact on the investee company’s prospects and therefore its fair value. The amount of the change to the fair value of the investment is based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which increases the tax burden on companies;

 

●denial of the investee company’s application for approvals which prohibit the investee company from proceeding with its projects;

 

●the investee company releases negative operating results;

 

●changes to the management of the investee company take place which the Company believes will have a negative impact on the investee company’s ability to achieve its objectives and build value for shareholders;

 

●the investee company is placed into receivership or bankruptcy; and

 

●based on financial information received from the investee company, it is apparent to the Company that the investee company is unlikely to be able to continue as a going concern.

 

The resulting values may differ from values that would be realized had a ready market existed. The amounts at which the Company’s privately held investments could be disposed of may differ from the carrying value assigned. Such differences could be material.

 

(ii)Financial assets other than investments at fair value and liabilities

 

Financial assets

 

Initial recognition and measurement

 

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either fair value through profit or loss (“FVPL”) or fair value through other comprehensive income (“FVOCI”), and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

 

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

 

Financial assets with embedded derivatives are considered in their entirety when determining their classification at FVPL or at amortized cost. Other accounts receivable held for collection of contractual cash flows are measured at amortized cost.

 

15

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)Financial instruments (continued)

 

Subsequent measurement – financial assets at amortized cost

 

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Subsequent measurement – financial assets at FVPL

 

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of earnings (loss). The Company’s investments are classified as financial assets at FVPL.

 

Subsequent measurement – financial assets at FVOCI

 

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.

 

After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive income (loss). When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.

 

Dividends from such investments are recognized in other income in the statements of earnings (loss) when the right to receive payments is established.

 

Derecognition

 

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

 

Impairment of financial assets

 

The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, accounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

 

Financial liabilities

 

Initial recognition and measurement

 

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL. ETP holders payable are designated as financial liability at fair value through profit or loss on initial recognition. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s financial liabilities also include accounts payable and accrued liabilities and loans payable, which are measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.

 

Subsequent measurement – financial liabilities at amortized cost

 

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Derecognition

 

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of earnings (loss).

 

16

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(f)Cash

 

Cash is comprised of cash on hand and deposits that generally mature within 90 days from the date of acquisition. Deposits are held in Canadian chartered banks or in a financial institution controlled by a Canadian chartered bank.

 

(g)Revenue recognition

 

Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct service to be delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the Company. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.

 

Management fees

 

The Company recognizes revenue from management fees earned on various ETP products. The management fee percentage is outlined in each ETP prospectus. The management fee is calculated daily based on the daily ETP net asset value and is recognized daily when the management fee is calculated. The management fee is deducted from the net asset value of the ETPs. The management fees are valued in the underlying ETPs base currency and converted into USD daily.

 

Other revenues

 

The Group earns revenue from aggregating small individual trades during the day to facilitate hedging and optimize liquidity and hedging them periodically. These are computed as net fiat receivables and are measured based on the average daily USD rates at the end of each day.

 

Public and private investments

 

Realized gains and losses on the disposal of investments and unrealized gains and losses in the value of investments are reflected in the statement of loss on a trade date basis. Upon disposal of an investment, previously recognized unrealized gains or losses are reversed, so as to recognize the full realized gain or loss in the period of disposition. All transaction costs are expensed as incurred.

 

(h)Lending, staking and node revenue

 

Lending and Staking

 

The Company earns a yield based on digital assets that are lent or staked with various reputable digital asset exchanges. The Company transfers digital asset to either staking account within the exchange platform and into staking custody accounts. The Company transfers the digital assets to those staking accounts in return the counterparty delivers staking and lending returns in return. The digital assets rewards are based on the rewards offered at the time the Company enters into staking or lending arrangements. The transaction price is an interest rate offered for the digital asset deposit. Over the period that the digital assets are staked or lent, the digital assets rewards are deposited into the custody accounts. The rewards are based on the amount of digital assets staked or lent and the rate offered by the custodian at that time. Staking and lending rewards are recognized as revenue as they are earned over the period the digital assets are staked or loaned. Consistent with the market convention, the yields are earned in digital assets and are measured by using a daily or weekly USD conversion rate, recorded in profit or loss in the period they are earned.

 

Staking allows the Group to earn passive income through a process that is used to verify cryptocurrency transactions. It involves committing holdings on an overnight basis to support a blockchain network and confirming transactions. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle. Not all cryptocurrencies operate in this manner (for example BitCoin and Ethereum 1.0 use a different protocol called “Proof of Work”), and therefore, staking is limited to a subset of cryptocurrencies only.

 

17

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(i)Lending, staking and node revenue

 

Node Revenue

 

Node revenue is earned as transactions are validated on a blockchain. When transactions are validated on the blockchain, the Company receives rewards from that blockchain. The transaction price are the rewards earned by the Company as transactions are validated by the Company’s node. The Company receives rewards for these services provided to the blockchain. The blockchain token rewards are only earned when the Company validates transactions that take place on the blockchain. When a transaction is validated by the Company’s node, rewards are deposited to the Company’s account. As the tokens are earned, revenue is calculated by summing up the tokens earned each day and multiplying the value of reward tokens on each day they are earned.

 

(j)Leases

 

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company, as a lessee, recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made to branches or office premises. The right-of-use asset is subsequently amortized using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

 

The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in net income if the carrying amount of the right-of-use asset has been reduced to zero. The Company presents right-of-use assets and lease liabilities in the Consolidated Statement of Financial Position. The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

(k)Operating segments

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and Chief Operating Officer.

 

The Company’s material operating segments are located in Canada, Bermuda and Cayman Islands (See Note 25 for details).

 

(l)Income (loss) per share

 

Basic income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of the Company’s common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing the applicable net income (loss) by the sum of the weighted-average number of common shares outstanding if dilutive common shares had been issued during the period. The calculation of diluted income (loss) per share assumes that outstanding stock options and warrants with an average exercise price below market price of the underlying shares are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price for the period. Diluted income per share for the year ended December 31, 2022 and 2021 all stock options and warrants were anti-dilutive and excluded from the calculation of dilutive loss per share.

 

18

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(m)Comprehensive income (loss)

 

Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity’s whose functional currency differs from the presentation currency.

 

(n)Income taxes

 

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

 

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

(o)Share-based payments

 

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity reserve.

 

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For options that expire unexercised, the recorded value is transferred to deficit.

 

19

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(p)Investment in Associate

 

Associates are entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments over which the Company has the ability to significantly influence are initially recorded at cost. When the initial recognition of the investment in the associate occurs as a result of a loss of control of a former subsidiary, the fair value of the retained interest in the former subsidiary on the date of the loss of control is deemed to be the cost on initial recognition. Investment income (loss) is calculated using the equity method. The Company’s share of the associate’s profit or loss is recognized in the consolidated statements of operations and its share of movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

 

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the consolidated statements of operations. Profits and losses resulting from upstream and downstream transactions between the Company and its associate are recognised in the Company’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Company. Dilution gains and losses arising in investments in associates are recognized in the consolidated statements of operations. The investment account of the investor reflects: i) the cost of the investment in the investee; ii) the investment income or loss (including the investor’s proportionate share of discontinued operations) relating to the investee subsequent to the date when the use of the equity method first became appropriate; and iii) the investor’s proportion of dividends paid by the investee subsequent to the date when the use of the equity method first became appropriate

 

(q)Digital Assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss.

 

Digital assets consist of cryptocurrency denominated assets (see Note 6) and are included in current assets. Digital assets are measured using unadjusted quoted prices taken from active markets, where available. Fair value measurement for digital assets with available active market prices has been classified as Level 1 in the fair value hierarchy. The Fair Value of digital assets is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Traded Products.

 

20

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(q)Digital Assets (continued)

 

Disclosure

 

The Group applies the disclosure requirements in the IFRS Standard applicable to its holding of cryptocurrencies. Accordingly, the Group applies the disclosure requirements in IAS 2 – Inventories for holdings of cryptocurrencies. If an entity measures its holding in cryptocurrencies at fair value, IFRS 13 Fair Value Measurement specifies applicable disclosure requirements. In applying IAS 1 Presentation of Financial Statements, the Group discloses judgements that its management has made regarding its accounting for holdings of cryptocurrencies if those are part of the judgements that had a significant effect on the amounts recognized in the consolidated financial statements.

 

The Group has evaluated the impact of the Agenda Paper and has determined that cryptocurrencies with an active market should be classified as digital assets and measured at fair value through other profit or loss.

 

Increases and decreases in the fair value of digital assets are recognized through profit or loss. Digital assets are derecognized when the Group has transferred substantially all the risks and rewards of ownership on disposal.

 

(r)Digital Asset Loaned

 

Initial recognition and measurement

 

The Company enters into loan agreements with various digital asset exchanges to earn yield based on the digital assets that are lent. At the time the Company enters into the loan agreement, the digital asset is derecognized from digital assets as the borrower obtains the rights to direct the use of the digital asset and the Company recognizes this as digital assets loaned, measured at the fair value of the loaned digital asset.

 

Subsequent measurement

 

During the term of the digital asset loan, the digital asset loaned is measured at the fair value based on the fair market value of loaned digital assets with any gains / (losses) resulting from remeasuring the digital asset loaned to the realized and net change in unrealized gains and losses on digital assets.

 

Derecognition

 

At the end of the digital asset loan, the digital asset loaned is derecognized and re-recorded as digital assets at the carrying amount of the digital asset loaned.

 

(s)Intangible assets

 

Intangible assets consist of brand names. The Company has estimated the brand name will contribute cash flows for 10 years.

 

Intangible assets are carried at cost less accumulated amortization and impairment losses.

 

Impairment

 

Impairments are recorded when the recoverable amounts of assets are less than their carrying amounts. The recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Impairment losses are evaluated for potential reversals of impairment when events or changes in circumstances warrant such consideration.

 

The carrying values of all intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

 

21

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(t)Goodwill

 

Goodwill arising on a business acquisition is recognized as an asset at the date that control is acquired (the “acquisition date”). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the fair value of the identifiable net assets.

 

Goodwill is not amortized but is reviewed for impairment at least annually or sooner if indicators of impairment exist. Goodwill is tested for impairment at the group level representing the lowest level at which management monitors it, the operating segment level. Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed.

 

No impairment losses have been recognized in the consolidated statements of loss related to goodwill.

 

For the year ended December 31, 2022 and 2021, the Company did not experience any triggering events or additional information that the goodwill’s recoverable amount was significantly different than its carrying amount.

 

(u)Share capital

 

Financial instruments issued by the Company are classified as share capital only to the extent that they do not meet the definition of a financial liability. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Repurchases by the Company of its own common shares under a Normal Course Issuer Bid (“NCIB”) are accounted for in accordance with IAS 32, Financial Instruments: Presentation. Upon reacquiring common shares under a NCIB, the Company deducts from equity the purchase price of these common shares and any costs to acquire such common shares. Any such common shares held by the Company are considered treasury shares until they are cancelled.

 

(v)Provisions

 

Provisions are recognized when (a), the Company has a present obligation (legal or constructive) as a result of a past event, and (b), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

 

As at December 31, 2022, the Company recorded a legal provision of $2,000,000 (December 31, 2021, $Nil).

 

(w)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2023 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2022. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

22

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(w)New and future accounting change

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Investments, at fair value through profit and loss

 

At December 31, 2022, the Company’s investment portfolio consisted of one publicly traded investments and eight private investments for a total estimated fair value of $43,522,496 (December 31, 2021 – one publicly traded investment and seven private investments at a total estimated fair value of $10,275,906).

 

During the year ended December 31, 2022 the Company had a realized (loss) of ($12,077) and an unrealized losses of $(1,986,557) (December 31, 2021 – realized (loss) of ($207,532)) and an unrealized gains of $4,740,451) on private and public investments.

 

Public Investments

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer  Note   Security description  Cost   Value   %
of FV		 
Smart Valor AG             19,000 SDR   150,908    17,227    100.0%
Total public investments          $150,908   $17,227    100.0%

 

At December 31, 2021, the Company’s one publicly traded investments had a total fair value of $18,146.

 

Public Issuer  Note   Security description  Cost   Estimated Fair Value   %
of FV		 
Silo Wellness Inc.   (i)   403,250 common shares   40,325    18,146    100.0%
Total public investments          $40,325   $18,146    100.0%

 

(i) Investments in related party entities (Note 23)

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note   Security description  Cost   Estimated Fair Value   %
of FV		 
3iQ Corp.       187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.   (i)   404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.       85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation       201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC       1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG       3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.       16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation       Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments          $42,016,208   $43,505,269    100.0%

 

(i) Investments in related party entities (Note 23)

 

23

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

3.Investments, at fair value through profit and loss (continued)

 

Private Investments

 

At December 31, 2021, the Company’s seven private investments had a total fair value of $10,257,760.

 

Private Issuer  Note   Security description  Cost   Fair Value   %
of FV		 
3iQ Corp.       187,007 common shares  $1,122,042   $3,740,140    36.6%
Brazil Potash Corp.   (i)   404,200 common shares   1,998,668    2,049,779    20.0%
Earnity Inc.       85,142 preferred shares   130,946    198,356    1.9%
Luxor Technology Corporation       201,633 preferred shares   630,505    633,963    6.2%
SDK:meta, LLC       1,000,000 units   3,420,000    3,420,000    33.3%
Skolem Technologies Ltd.       16,354 preferred shares   177,488    177,488    1.7%
VolMEX Labs Corporation       Rights to certain preferred shares and warrants   37,809    38,034    0.4%
Total private investments          $7,517,458   $10,257,760    100.1%

 

4.Amounts receivable

 

   31-Dec-22   31-Dec-21 
Other receivable  $67,102   $32,565 

 

5.Prepaid expenses

 

   31-Dec-22   31-Dec-21 
Prepaid insurance  $61,064   $950,850 
Prepaid expenses   503,677    456,847 
   $564,742   $1,407,697 

 

24

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets

 

As at December 31, 2022, the Company’s digital assets consisted of the below digital currencies, with a fair value of $106,635,434 (December 31, 2021 - $370,053,740). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value for Bitcoin, Cardano, Ethereum, Polkadot, Solana and Uniswap is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for the other digital assets is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   December 31, 2022   December 31, 2021 
   Quantity   $   Quantity   $ 
Binance Coin   11.1000    3,678    0.3000    197 
Bitcoin   2,126.5130    47,498,630    1,837.5692    112,052,901 
Ethereum   21,141.7368    34,333,700    18,666.2358    89,582,049 
Cardano   36,438,339.0800    12,004,332    34,447,996.7900    59,079,245 
Polkadot   931,646.4544    5,407,239    1,133,717.2970    40,213,624 
Solana   428,280.68    5,537,534    294,114.51    65,591,792 
Mobilecoin   2,855.5045    -    2,854.9570    35,506 
Shyft   3,507,575.4684    37,530    1,137,025.7440    616,106 
Uniswap   148,734.0602    1,021,542    66,993.0000    1,557,232 
USDC        1,586         4,063 
USDT        14,134         8,055 
Doge   10,000.0000    914         - 
Cosmos   201.0000    2,531         - 
Avalanche   48,995.3900    712,745         - 
Matic   890.0000    906         - 
Shiba Inu   90,000,000.0000    975         - 
Ripple   2,000.0000    919         - 
Enjin   10,009.9900    3,180         - 
Terra Luna   199,195.3600    -         - 
Current        106,582,076         368,740,770 
Blocto   251,424.913    6,737    251,424.913    607,519 
Maps   285,713.000    -    285,713.000    92,478 
Oxygen   400,000.000    -    400,000.000    352,266 
Boba Network   250,000.00    -    -    - 
Saffron.finance   86.21    2,345    86.210    24,850 
Clover   310,000.00    13,216    190,000.000    118,032 
Sovryn   15,458.95    2,342    13,916.670    117,771 
Wilder World   148,810.00    28,660    -    - 
Pyth   2,500,000.00    -    -    - 
Volmex   2,925,878.00    58    2,925,878.000    54 
Long-Term        53,358         1,312,970 
Total Digital Assets        106,635,434         370,053,740 

 

The Company has classified digital assets as long-term where the digital assets acquired via SAFT which have terms where the digital assets are be released over time. SAFT is a contractual investment agreement that involves the agreement of the authorized investors to finance the crypto developers’ projects in exchange for crypto tokens at a future date. The SAFT contract is deemed a hybrid instrument where the host is a prepayment denominated in the Company’s functional currency and the embedded derivative is crypto asset forward contract. The embedded derivative is measured at fair with fair value changes recorded within statement of income. As at December 31, 2022, the embedded derivative component aggregate to $nil (2021: $284,404).

 

25

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

The continuity of digital assets for the year ended December 31, 2022 and 2021:

 

   December 31, 2022   December 31, 2021 
Opening balance  $370,053,740   $636,600 
Digital assets acquired   231,392,840    729,666,919 
Digital assets disposed   (191,092,048)   (331,176,366)
Realized gain on digital assets   (47,595,430)   2,291,313 
Digital assets earned from staking, lending and fees   5,955,456    3,356,020 
Net change in unrealized gains and losses on digital assets   (275,739,651)   (34,720,746)
Foregin exchange gain   13,660,527    - 
   $106,635,434   $370,053,740 

 

In the normal course of business, the Company enters into open-ended staking and lending arrangements with certain financial institutions, whereby the Company stakes and loans certain digital assets in exchange for interest income payable in the underlying digital asset loaned or staked. The Company can demand the repayment of the loans and accrued interest can be terminated within 5 days notice and staked coins can be returned on a 1 days notice. The digital assets staked and loaned are included in the balance above.

 

Digital Assets loaned

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions. As of December 31, 2021, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.82% to 11.00% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2021, digital assets on loan consisted of the following:

 

   Number of coins on loan    Fair Value   Fair Value Share 
Digital and fiat currencies on loan:               
Bitcoin   997.8835   $60,849,811    57%
Ethereum   8,541.8186    40,993,461    38%
Polkdot   151,662.7649    5,379,568    5%
Cardano   3,279.4500    5,624    0%
Total   164,481.9170   $107,228,464    100%

 

As of December 31, 2021, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins on loan   Fair Value 
Digital and fiat currencies on loan:               
Counterparty A   11.00%    154,942.2149   $5,385,193 
Counterparty C   4.0% - 5.125%   1,250.0000    20,043,867 
Counterparty D   2.85% - 4.25%   2,451.1958    37,044,530 
Counterparty F   0.82%-2.43%   5,838.5063    44,754,875 
Total        164,481.9170   $107,228,464 

 

26

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of December 31, 2021, digital assets loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2021		 
Digital and fiat currencies on loan:     
Counterparty A  London, UK   5%
Counterparty C  United States   19%
Counterparty D  London, UK   35%
Counterparty F  United States   42%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2022 and 2021, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions. As of December 31, 2021, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 1.5% to 12% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2021, digital assets staked consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value Share 
Digital and fiat currencies on loan:            
Polkdot   755,287.915    26,790,510    32%
Cardano   3,162,507.802    5,423,786    6%
Solana   231,732.350    51,679,668    62%
Euro   1,007.471    1,450    0%
Total   4,150,535.5383   $83,895,414    100%

 

As of December 31, 2021, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins on loan   Fair Value 
Digital and fiat currencies on loan:            
Counterparty B   1.50% - 12.0%    3,968,035.4883    73,623,935 
Counterparty E   2.10%   137,500.0000    235,816 
Counterparty G   7.76%   45,000.05    10,035,662 
Total       $4,150,536   $83,895,414 

 

27

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of December 31, 2021, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2021		 
Digital and fiat currencies on loan:      
Counterparty B  London, UK   88%
Counterparty E  Switzerland   0%
Counterparty G  United States   12%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2022 and 2021, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7.Convertible promissory note

 

On May 7, 2021, the Company subscribed for a convertible promissory note in Earnity Inc., a Delaware Corporation, for US$100,000 ($121,560). The convertible promissory note had a term of 36 months and earned 5% interest. Earnity Inc. is offered a discount rate upon conversion into a qualified equity financing of 15%. A qualified equity financing triggering conversion of the note is an equity financing with a minimum aggregate sales price of not less than $4,000,000. On December 3, 2021, the principal and outstanding interest of US$102,205 ($130,946) were converted in to 85,142 class A referred shares of Earnity Inc.

 

8.Right to use asset and lease liabilities

 

On April 1, 2022, the Company entered into a lease agreement for office space in Zug, Switzerland. The lease term is from April 1, 2022 to March 31, 2032. The Company recognized a right-of-use asset and a lease liability in the amount of $1,859,594 at inception of the lease. The amortization charge during the year was $69,322 calculated on a straight-line basis over the lease term.

 

   31-Dec-22   31-Dec-21 
Right of use assets           
Property   1,917,174    5,646 
Total Right of use assets   1,917,174    5,646 

 

   31-Dec-22   31-Dec-21 
Lease liabilities           
Current  $207,262   $- 
Non-Current   1,709,911    5,646 
Total Lease liabilities  $1,917,174   $5,646 

 

Current balances have been included in accounts payable and accrued liabilities.

 

28

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Acquisition of DeFi Capital Inc.

 

On December 10, 2020, the Company acquired 49% of DeFi Capital by issuing a total of 20,000,000 common shares of the Company to the shareholders of DeFi Capital in proportion to their pro rata shareholdings of DeFi Capital, in exchange for a 49% interest in DeFi Capital. The 20,000,000 common shares are fair valued at a price of $0.13 per share, based on the trading price of the common shares issued, for a total value of $2,600,000. On January 28, 2021, the Company acquired the remaining 51% of Defi Capital by issuing an additional 20,000,000 common shares of the Company. The 20,000,000 common shares are fair valued at a price of $0.99 per share, based on the trading price of the common shares issued, for a total value of $19,800,000. DeFi Capital is a company focused on investing, incubating, and managing trading technologies associated with the decentralized finance market. As a result of the control obtained through the acquisition of 100% of the outstanding shares of DeFi Capital, the asset and liabilities were consolidated into the Company’s financial statements. The assets consisted of one intangible asset being brand name. The Company paid total consideration of $22,400,000 in consideration of 100% ownership of DeFi Capital.

 

The acquisition of DeFi Capital is being treated as an asset acquisition for accounting purposes as DeFi Capital does not meet the definition of a business, as defined in IFRS 3, Business Combinations. The assets acquired and liabilities assumed were based on the fair value of consideration paid.

 

Purchase price consider paid:    
Fair value of shares issued on December 10, 2020  $2,600,000 
Fair value of shares issued on January 28, 2021   19,800,000 
Fair value of shares issued  $22,400,000 
      
Fair value of assets and liabilities assumed:   
Brand Name  $22,406,968 
Accounts payable   (6,968)
Total net assets aquired  $22,400,000 

 

The Company assessed that it held significant influence over DeFi Capital after the initial acquisition on December 10, 2020 and as such has accounted for this 49% investment using the equity accounting method from December 10, 2020 to January 28, 2021. Since the transaction is an asset acquisition, the Company did not remeasure the previously held equity interest in DeFi Capital when the remaining 51% equity interest in DeFi Capital was acquired.

 

During the year ended December 31, 2020, the Company did not record any equity loss during the year. No dividends or cash distributions were received by the Company from the associate during the year.

 

29

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

10.Acquisition of Valour Inc.

 

On February 12, 2021, the Company initially acquired 20% interest in Valour (formerly known as Valour Structured Products Inc.) by issuing 21,000,000 common shares and on April 1, 2021, the Company acquired the remaining 84% (including the 4% dilution of its previously held equity interest) in Valour by issuing 36,934,316 common shares of the Company. Valour is a private company incorporated in the Cayman Islands that operates as an issuer of exchange-traded certificates linked to various digital currencies and hedging thereof. The acquisition has provided the Company an entry into the exchange-traded certificates market.

 

Details of the consideration for acquisition, net assets acquired and goodwill are as follows:

 

Consideration for acquisition:    
Fair value of previously held equity interest  $11,694,200 
Fair value of shares issued on April 1, 2021   66,481,769 
Total consideration for the acquisition  $78,175,969 
Treasury shares acquired   (7,360,000)
Fair value of shares issued  $70,815,969 
      
Fair value of net assets acquired:     
Cash and cash equivalents   3,859,430 
Amounts receivable   21,677 
Investments at fair value through profit or loss   1,537,800 
Digital assets   67,831,424 
Prepaid expenses and accrued revenues   403,701 
Property, plant and equipment   10,443 
Right-of-use assets   53,899 
Accounts payable and accrued expenses   (1,094,855)
ETP holders payable   (68,848,678)
Lease liabilities   (53,899)
Brand Name   20,383,000 
    24,103,942 
Goodwill   46,712,027 
Net assets acquired  $70,815,969 

 

As consideration of the acquisition, the Company issued a total of 57,934,316 common shares with an estimated fair value of $78,175,969 based on the value of the common shares on the closing dates: January 19, 2021 and April 1, 2021.

 

The goodwill acquired as part of the Valour acquisition is made up of assembled workforce and implied goodwill related to Valour’s management and staff experiences and Valour’s reputation in the industry. It will not be deductible for tax purposes.

 

The carrying value of the Company’s interest in Valour held before the business combination amounted to $17,640,000. The Company recognized a loss of $5,945,800 as a result of measuring at fair value its 16% equity interest (20% less 4% dilution) in Valour before the business combination. The loss is included in other income in the Company’s consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. No acquisition-related costs were incurred in relation to the business combination.

 

The acquired business contributed revenue of $10,647,914 and net income of $4,707,541 to the group for the period from April 1, 2021 to December 31, 2021.

 

The revenue and net income of the combined entity for the current reporting period had the acquisition occurred at the beginning of the annual reporting period would be $13,481,643 and $6,158,594, respectively.

 

30

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

11.Intangibles and goodwill

 

Cost  Brand Name 
Balance, December 31, 2020  $- 
Acquisition of Defi Capital   22,406,968 
Acquisition of Valour Inc. (Cayman)   20,383,000 
Balance, December 31, 2021 and 2022   42,789,968 

 

Accumulated Amortization   Brand Name 
Balance, December 31, 2020  $- 
Amortization   (3,582,697)
Impairment loss   (17,483,284)
Balance, December 31, 2021  $(21,065,981)
Amortization   (2,277,443)
Impairment loss   (13,865,356)
Balance, December 31, 2022  $(37,208,780)
      
Balance, December 31, 2021  $21,723,987 
Balance, December 31, 2022  $5,581,188 

 

Impairment test of brand name

 

During the year ended December 31, 2022, as the result of the excess of consideration paid over the fair value of the brand name acquired from Defi Capital and Valour Inc. (Cayman), the Company carried out a review of the recoverable amount of that brand name, which is used in its governance business line in Canada and ETP business line on Cayman Islands. The review led to the recognition of an impairment loss of $13,865,356 (December 31, 2021 - $17,483,284), which has been recognized in profit or loss.

 

Impairment test of goodwill

 

Goodwill acquired through business combination of $46,712,027 (2021 - $46,712,027) has been allocated to the ETP CGU.

 

The Company tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The review led to the recognition of an impairment loss of $Nil (December 31, 2021 - $Nil).

 

Sensitivity

 

The Company has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount of the ETP CGU to which goodwill is allocated.

 

The recoverable amount of the ETP CGU would equal its carrying amount if the key assumptions were to change as follows:

 

   31-Dec-22  31-Dec-21
Growth in staking reward  From 4.00% to 2.78%  From 4.00% to 2.78%
Growth in average assets under management per listing  From 10.00% to 1.87%  From 10.00% to 1.87%
Pre-tax discount rate  From 23.7% to 31.7%  From 21.96% to 28.69%

 

31

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

11.Intangibles and goodwill (continued)

 

The directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the ETP CGU to exceed its recoverable amount.

 

12.Accounts payable and accrued liabilities

 

   31-Dec-22   31-Dec-21 
Corporate payables  $5,747,151   $4,377,352 
Related party payable (Note 23)   75,228    34,819 
   $5,822,379   $4,412,171 

 

13.Loan payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). Interest is accrued and calculated at rates between 8.15% to 8.27% per annum. Principal plus accrued interest are due and payable on April 14, 2022 and April 17, 2022. The loans were secured with 315 BTC and 7,330 ETH . The loans were extended with new maturity dates between May 14, 2022 and July 14, 2022 with interest rates ranging from 6.9% to 8.7%. The extended loans was secured with 415 BTC and 8,130 ETH. on April 4, 2022 the Company entered into a loan with a second digital asset provider for US$5,500,000. This second loan matures of June 4, 2022. The interest accrued interest at 7% annually and is payable monthly. The second loan was secured with 143 BTC. The Company partially repaid of one of the loans of $3,500,000 in April 2022, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. During the year ended December 31, 2022, the loans were extended with new maturity dates varying between open term, September 14, 2022 and October 14, 2022 with interest rates ranging from 7.6% to 8.65%. The extended loans were secured with 1895 BTC and 18216 ETH. On November 10, 2022, a partial payment on the loan was made in the amount of $1,150,000.

 

As of December 31, 2022, the loan principal of $52,821,600 (US$39,000,000) was outstanding. The loans were extended with new maturity dates varying between Open Term December 2, 2022, December 14, 2022 and January 31, 2023 with interest rates ranging from 5.7% to 7.25%. The extended loans were secured with 1,759 BTC and 18.093 ETH.

 

One of Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The next court hearing is scheduled for March 30, 2023. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at December 31, 2022, the value of the 475 BTC was US$7,833,570 and potential loan loss exposure is US$1,833,570.

 

32

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

14.ETP holders payable

 

The fair market value of the Company’s ETPs as at December 31, 2022 and December 31, 2021 were as follows:

 

   December 31,
2022
$		   December 31,
2021
$		 
BTC Zero EUR   3,063,222    6,968,354 
BTC Zero SEK   44,379,551    104,249,502 
ETH Zero EUR   120,319    318,280 
ETH Zero SEK   33,841,456    88,712,236 
Polkadot SEK   5,312,625    38,985,823 
Polkadot EUR   56    - 
Cardano SEK   1,308    57,873,343 
Cardano EUR   11,833,732    - 
UNI SEK   86,714    1,581,079 
UNI EUR   891,459    - 
Solana SEK   5,494,963    64,802,745 
Cosmos EUR   185      
Valour Digital Asset Basket 10 EUR   790      
Valour BTC Carbon Neutral EUR   1,107      
Solana EUR   12,010    - 
Avalanche EUR   697,454    - 
Avalanche SEK   872    - 
Enjin EUR   2,804    - 
    105,740,627    363,491,362 

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

15.Realized and net change in unrealized gains and (losses) on digital assets

 

   Years ended
December 31,		 
   2022   2021 
Realized gains / (loss) on digital assets  $(47,595,432)  $1,969,871 
Unrealized gains / (loss) on digital assets   (275,016,174)   (35,302,658)
   $(322,611,606)  $(33,332,787)

 

16.Realized and net change in unrealized gains and (losses) on ETP payables

 

   Years ended
December 31,		 
   2022   2021 
Realized gains / (loss) on ETPs  $169,239,764   $(20,162,713)
Unrealized gains / (loss) on ETPs   151,142,463    58,071,269 
   $320,382,227   $37,908,556 

 

33

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Expenses by nature

 

   Years ended
December 31,		 
   2022   2021 
Management and consulting fees  $7,218,330   $9,569,693 
Travel and promotion   2,331,176    2,234,553 
Office and rent   1,051,511    1,810,869 
Accounting and legal   4,103,581    837,611 
Regulatory and transfer agent   42,983    501,467 
Current income tax recovery   478    - 
   $14,748,059   $14,954,193 

 

18.Share Capital

 

a)As at December 31, 2022 and 2021, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non- retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

b)Issued and outstanding shares

 

   Number of
Common Shares		   Amount 
Balance, December 31, 2020   103,405,361   $23,357,691 
Private placement financing   5,000,000    10,000,000 
Share issuance costs allocated to shares   -    (309,901)
Acquisition of Defi Capital Inc. (Note 10)   20,000,000    19,800,000 
Acquisition of Valour Inc. (Note 11)   57,934,316    84,121,769 
Treasury shares acquired        (7,360,000)
Share exchange with Hive Blockchain Technologies Ltd   10,000,000    16,000,000 
Share exchange with SDK:meta 10% equity acquisition   3,000,000    3,420,000 
Warrants exercised   12,826,675    2,219,806 
Grant date fair value on warrants exercised   -    328,602 
Options exercised   1,514,400    238,940 
Grant date fair value on options exercised   -    166,120 
DSU exercised   4,500,000    15,830,000 
Grant date fair value on DSU excercised        1,005,000 
NCIB   (7,078,200)   (5,552,561)
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 

 

34

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Share Capital (continued)

 

b)Issued and outstanding shares (continued)

 

On March 9, 2021, the Company closed a non-brokered private placement financing and issued 5,000,000 shares for gross proceeds of $10,000,000 at a price of $2 per common share. The Company paid $309,902 in finders fees and other share issue costs. An officer of the Company subscribed 12,500 shares for $25,000.

 

Subscriptions for 189,900 Common Shares under the Offering constitute “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). For these transactions, the Company has relied on the exemption from the formal valuation requirement contained in Section 5.5(a) of MI 61-101 and has relied on the exemption from the minority shareholder requirements contained in Section 5.7(1)(a) of MI 61-101.

 

On November 14, 2022, the Company closed a non-brokered private placement financing and issued 7,736,865 unit for gross proceeds of $1,414,973 at a price of $0.20 per common unit, each unit consist of one common share of the Company and one-half warrant, each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.30 for a period of 24 months following the closing date. The transaction closed in 2 tranches with 3,724,926 warrants issued on November 14, 2022. At the issue date fair value of the warrants was estimated at $0.17 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The second tranche closed on November 19, 2022 with 331,000 warrants issued. At the issue date fair value of warrants was estimated at $13,183 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 69.4%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The Company also paid share and warrant issue costs of $14,490. Of the total subscriptions, 2,500,000 units were acquired by a former officer of the Company. Company paid $14,950 in finders fees and other share issue costs. A former officer of the Company subscribed 2,500,000 units for $500,000.

 

Subscriptions for 2,500,000 Common Shares under the Offering constitute “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). For these transactions, the Company has relied on the exemption from the formal valuation requirement contained in Section 5.5(a) of MI 61-101 and has relied on the exemption from the minority shareholder requirements contained in Section 5.7(1)(a) of MI 61-101.

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 13, 2021, the Company commenced a NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platforms. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the Exchange and/or other Canadian alternative trading platforms not to exceed up to 9.7% of the public float for the Common Shares as of April 9, 2021, or 18,162,177 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the Exchange as measured from November 9, 2020 to April 8, 2021.

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from Nov. 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

35

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Share Capital (continued)

 

c)Normal Course Issuer Bid (“NCIB”) (continued)

 

During the year ended December 31, 2022, the Company purchased and cancelled 8,560,100 shares at an average price of $1.54 per share (December 31, 2021 – purchased and cancelled 7,078,200 shares at an average price of $1.90).

 

Issued and outstanding preferred shares

 

   Number of
Preferred Shares		   Amount 
Balance, December 31, 2022 and 2021   4,500,000   $4,321,350 

 

Subject to the discretion of the board of directors, holders of preferred shares are entitled to receive a 9% cumulative, preferential cash dividend, payable annually on the last day of January following the relevant completed fiscal year, ending December 31. The Company has not declared any dividends to December 31, 2021.

 

19.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
   Number of
Options		   Weighted
average
exercise
prices		   Value of
options		   Number of
DSU		   Value of
DSU		   Number of
warrants		   Weighted
average
exercise
prices		   Value of
warrants		   Total Value 
December 31, 2020   5,465,000   $0.21   $276,407   $-   $-    32,259,485   $0.19   $914,588   $1,190,995 
Granted   21,420,000    1.54    21,898,191    13,125,000    23,886,948         -    -    45,785,139 
Exercised   (1,514,400)   0.16    (166,121)   (4,500,000)   (16,835,000)   (12,826,675)   0.13    (328,602)   (17,329,723)
Expired / cancelled   (5,062,500)   1.36    (3,775,802)   -    -    -    -    -    (3,775,802)
Treasury shares   -    -    27,453    -    -    -    -    -    27,453 
December 31, 2021   20,308,100   $1.27    18,260,128    8,625,000   $7,051,948    19,432,810   $0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,616    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (2,000,000)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (6,755,000)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
Treasury shares   -    -    -    -    -    -    -    -    - 
December 31, 2022   17,777,500   $1.27   $20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

The Company recorded $7,274,616 (2021 - $18,148,209) of share-based payments during the year ended December 31, 2022.

 

36

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

  

19.Share-based payments reserves (continued)

 

Stock options plan (continued)

 

The following share-based payment arrangements were in existence at December 31, 2022:

 

Number
outstanding		   Number
exercisable		   Grant
date		   Expiry
date		   Exercise
price		   Fair value
at grant date		   Grant date
shar
price		   Expected
volatility		     Expected life
(yrs)		   Expected
dividend yield		     Risk-free
interest rate		  
  542,500     542,500   16-Nov-20   16-Nov-25   $ 0.09   42,966   $ 0.09     138.70 %   5   0 %   0.46 %
  500,000     500,000   24-Feb-21   24-Feb-26   $ 1.58   1,149,500   $ 2.55     147.00 %   5   0 %   0.73 %
  1,000,000     1,000,000   22-Mar-21   22-Mar-26   $ 1.58   1,906,500   $ 2.12     145.70 %   5   0 %   0.99 %
  2,410,000     2,410,000   09-Apr-21   09-Apr-26   $ 1.58   3,852,626   $ 1.78     145.20 %   5   0 %   0.95 %
  3,200,000     3,200,000   18-May-21   18-May-26   $ 1.22   3,600,640   $ 1.25     145.60 %   5   0 %   0.95 %
  1,000,000     500,000   18-May-21   18-May-26   $ 1.22   1,125,200   $ 1.25     145.60 %   5   0 %   0.95 %
  750,000     750,000   25-May-21   25-May-26   $ 1.11   747,900   $ 1.11     145.50 %   5   0 %   0.86 %
  1,200,000     1,200,000   25-May-21   25-May-26   $ 1.11   1,196,640   $ 1.11     145.50 %   5   0 %   0.86 %
  1,150,000     1,150,000   13-Aug-21   13-Aug-26   $ 1.58   1,461,305   $ 1.43     143.70 %   5   0 %   0.84 %
  750,000     750,000   21-Sep-21   21-Sep-26   $ 1.70   1,141,125   $ 1.70     144.00 %   5   0 %   0.85 %
  250,000     250,000   13-Oct-21   13-Oct-26   $ 2.10   470,375   $ 2.10     144.00 %   5   0 %   1.27 %
  500,000     500,000   09-Nov-21   09-Nov-26   $ 3.92   1,758,050   $ 3.92     144.30 %   5   0 %   1.37 %
  425,000     425,000   31-Dec-21   31-Dec-26   $ 3.11   1,187,493   $ 3.11     145.00 %   5   0 %   1.25 %
  500,000     500,000   09-May-22   09-May-27   $ 2.00   591,950   $ 1.34     146.00 %   5   0 %   2.76 %
  1,200,000     1,200,000   09-May-22   09-May-27   $ 1.11   1,468,560   $ 1.34     146.00 %   5   0 %   2.76 %
  500,000     250,000   20-May-22   20-May-27   $ 1.00   334,300   $ 0.75     146.80 %   5   0 %   2.70 %
  400,000     100,000   21-Jul-22   21-Jul-27   $ 0.80   195,640   $ 0.50     147.50 %   5   0 %   3.00 %
  500,000     -   17-Oct-22   17-Oct-27   $ 0.17   73,350   $ 0.17     149.50 %   5   0 %   3.60 %
  1,000,000     -   19-Oct-22   19-Oct-27   $ 0.17   150,800   $ 0.17     149.40 %   5   0 %   3.71 %
  17,777,500     15,227,500                 22,454,920                              

 

The weighted average remaining contractual life of the options exercisable at December 31, 2022 was 3.5 years December 31, 2021 – 3.8 years).

 

On January 26, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.98 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $687,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.2.%; risk-free interest rate of 1.67%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On March 31, 2022, the Company granted 700,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.43 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $903,840 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.8.%; risk-free interest rate of 2.39%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On May 5, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $2 for a period of five years from the date of grant. The options shall vest 50% at the grant date and 50% six months from the date of grant. These options have an estimated grant date fair value of $591,950 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

On May 5, 2022, the Company granted 1,200,000 stock options to an officer of Company to purchase common shares of the Company for the price of $1.11 for a period of five years from the date of grant. The options shall vest immediately. These options have an estimated grant date fair value of $1,468,560 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

37

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Share-based payments reserves (continued)

 

Stock options plan (continued)

 

On May 20, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $334,300 using the Black- Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146.8%; risk-free interest rate of 2.70%; and an expected average life of 5 years.

 

On July 21, 2022, the Company granted 400,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.80 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $195,640 using the Black- Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 147.5%; risk-free interest rate of 3.00%; and an expected average life of 5 years.

 

On October 17, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $73,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.5%; risk-free interest rate of 3.60%; and an expected average life of 5 years.

 

On October 19, 2022, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $150,800 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.4%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

On January 19, 2021, the Company granted 500,000 stock options to a consultant of the Company pursuant to the Company’s stock option plan. The options vest immediately and may be exercised at a price of $0.82 per option for a period of five years from the date of grant. The options have an estimated grant date fair value of $367,450 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.1%; risk-free interest rate of 0.41%; and an expected average life of 5 years.

 

On February 16, 2021, the Company granted a total of 1,000,000 stock options to a consultant of the Company to purchase shares of the company for the price of $2.05 per option for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is twelve months from the date of grant. The options have an estimated grant date fair value of $1,844,400 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146.4%; risk- free interest rate of 0.57%; and an expected average life of 5 years. These options were forfeited and cancelled on May 25, 2021.

 

On February 19, 2021, the Company granted a total of 500,000 stock options to a consultant of the Company to purchase shares of the company for the price of $2.90 per option for a period of five years from the date of grant. The options shall vest in equal monthly instalments such that all options shall fully vest on the date that is twelve months from the date of grant. The options have an estimated grant date fair value of $1,308,500 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 147.5%; risk-free interest rate of 0.64%; and an expected average life of 5 years.

 

On February 24, 2021, the Company granted a total of 1,000,000 stock options to certain directors and advisor of the Company to purchase shares of the company for the price of $2.55 per option for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vest on the date that is twelve months from the date of grant. The options have an estimated grant date fair value of $2,299,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 147.0%; risk-free interest rate of 0.73%; and an expected average life of 5 years. Of the total grant, two directors of the Company were granted a total of 500,000 options. 500,000 of these options were forfeited and cancelled on May 25, 2021.

 

38

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Share-based payments reserves (continued)

 

Stock options plan (continued)

 

On March 22, 2021, the Company granted a total of 1,000,000 stock options to certain consultants of the Company to purchase commons shares of the Company for the price of $2.12 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $1,906,500 using the Black - Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.7.%; risk-free interest rate of 0.99%; and an expected average life of 5 years.

 

On April 9, 2021, the Company granted a total of 4,070,000 stock options to certain director, officers, and consultants of to purchase commons shares of the Company for the price of $1.78 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $6,506,302 using the Black - Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.2.%; risk-free interest rate of 0.95%; and an expected average life of 5 years. Of the total options, 1,000,000 were granted to directors and officers of the Company.

 

On May 18, 2021, the Company granted a total of 6,950,000 stock options to certain director, officers, and consultants of the Company pursuant to purchase commons shares of the Company for a price of $1.22 for the period of five years from the date of grant. 5,950,000 of these options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant and 1,000,000 options shall vest in four equal instalments, with (a) the first instalment vesting on the date that is 12 months from the date of grant, (b) the second instalment vesting on the date that is 16 months from the date of grant, (c) the third instalment vesting on the date that is 20 months from the date of grant and (d) the fourth instalment vesting on the date that is 24 months from the date of grant. These options have an estimated grant date fair value of $7,820,140 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.6%; risk-free interest rate of 0.95%; and an expected average life of 5 years. Of the total grant, 2,700,000 were granted to directors and officers of the Company.

 

On May 25, 2021, the Company granted a total of 3,150,000 stock options to certain director and consultant of the Company pursuant to purchase commons shares of the Company for the price of $1.11 for a period of five years from the date of grant. 1,500,000 of these options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant whereas 1,200,000 options shall vest in (a) vest four equal instalments every three months such that all options fully vest by the date that falls 12 months from the date of grant and (b) vest upon the closing price of the common shares of DeFi Technologies Inc., on the NEO Exchange (or similar Canadian stock exchange on which such common shares are listed) being greater than C$4.80 per common share for five consecutive trading days. These options have an estimated grant date fair value of $3,141,180 using the Black- Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.5%; risk-free interest rate of 0.86%; and an expected average life of 5 years. Of the total grant, 450,000 were granted to a director of the Company.

 

On August 13, 2021, the Company granted a total of 1,150,000 stock options to certain director, officers, and consultants of the Company pursuant to purchase commons shares of the Company for a price of $1.58 for the period of five years from the date of grant. These options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of

$1,461,305 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 143.7%; risk-free interest rate of 0.84%; and an expected average life of 5 years. Of the total grant, 650,000 were granted to directors and officers of the Company.

 

On September 21, 2021, the Company granted a total of 750,000 stock options to certain consultants of the Company pursuant to purchase commons shares of the Company for a price of $1.70 for the period of five years from the date of grant. These options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $1,141,125 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 144.1%; risk-free interest rate of 0.85%; and an expected average life of 5 years.

 

39

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Share-based payments reserves (continued)

 

Stock options plan (continued)

 

On October 13, 2021, the Company granted a total of 250,000 stock options to certain director, officers, and consultants of to purchase commons shares of the Company for the price of $2.10 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $470,375 using the Black - Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 144.0.%; risk-free interest rate of 1.27%; and an expected average life of 5 years.

 

On November 9, 2021, the Company granted a total of 500,000 stock options to certain director, officers, and consultants of to purchase commons shares of the Company for the price of $3.92 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $1,758,050 using the Black- Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 144.3.%; risk-free interest rate of 1.37%; and an expected average life of 5 years.

 

On December 31, 2021, the Company granted a total of 600,000 stock options to certain director, officers, and consultants of to purchase commons shares of the Company for the price of $3.11 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $1,676,460 using the Black- Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.0.%; risk-free interest rate of 1.25%; and an expected average life of 5 years.

 

Warrants

 

As at December 31, 2022, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		  Grant
date		  Expiry
date		  Exercise
price		   Fair value
at grant
date		   grant date
share
price		   Expected
volatility		   Expected
life (yrs)		  Expected
dividend
yield		   Risk-free
interest
rate		 
Warrants   12,684,560  16-Nov-20  13-Feb-23   $0.25    423,263   $0.09    151.0%  2   0%   0.27%
Warrants   3,537,433  14-Nov-22  14-Nov-24   $0.30    153,355   $0.17    69.4%  2   0%   3.87%
Warrants   187,493  14-Nov-22  14-Nov-24   $0.30    6,975   $0.17    69.4%  2   0%   3.87%
Warrants   331,000  29-Nov-22  29-Nov-24   $0.30    13,183                        
Warrant issue costs                 (8,662)                                     
    16,740,486              588,114                        

 

As at December 31, 2021, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		  Grant
date		  Expiry
date		  Exercise
price		   Fair value
at Grant
date		   grant date
share
price		   Expected
volatility		   Expected
life (yrs)		  Expected
dividend
yield		   Risk-free
interest
rate		 
Warrants   3,076,923  12-Jun-17  12-Jun-22  $0.20    129,432   $0.12    79.9%  5   0%   1.04%
Warrants   3,671,327  26-Jun-20  26-Jun-22  $0.05    40,367   $0.03    118.1%  2   0%   0.29%
Warrants   12,684,560  16-Nov-20  16-Nov-22  $0.25    423,262   $0.09    151.0%  2   0%   0.27%
Warrant issue costs                 (7,075)                       
    19,432,810              585,986                        

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

40

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Share-based payments reserves (continued)

 

Deferred Share Units Plan (DSUs) (continued)

 

On August 15, 2021, the Company has adopted the DSUs plan of the Corporation. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Corporation. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant. The DSUs fair value is based on the Company’s share price on the date the DSUs are granted.

 

On September 21, 2021, the Company granted 5,675,000 DSUs to certain directors, officers and consultants of the Company. These DSUs have a grant day fair value of $9,874,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On October 27, 2021, the Company granted 500,000 DSUs to certain directors, officers and consultants of the Company. These DSUs have a grant day fair value of $1,395,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On November 20, 2021, the Company granted 500,000 DSUs to certain directors, officers and consultants of the Company. These DSUs have a grant day fair value of $1,900,000 and vest in four equal installments every three months, with the first instalment vesting on the date that is three months from the grant day.

 

On December 31, 2021, the Company granted 500,000 DSUs to certain directors, officers and consultants of the Company. These DSUs have a grant day fair value of $1,510,000 and vest in six months from the grant day.

 

On January 26, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $990,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On March 31, 2022, the Company granted 600,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $858,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On May 3, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $555,000 and vest immediately.

 

On July 21, 2022, the Company granted 2,400,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,200,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

On October 6, 2022, the Company granted 2,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $460,000 and vest in four equal instalments every three months, with the first instalment vesting on the date that is three-months from the grant date.

 

On October 19, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $75,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

The Company recorded $8,614,838 in share-based compensation during the year ended December 31, 2022 (2021 - $23,886,948).

 

41

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments

 

Financial assets and financial liabilities as at December 31, 2022 and 2021 are as follows:

 

   Asset /
(liabilities)
at amortized
cost		   Assets /
(liabilities) at
fair value
through
profit/(loss)		   Total 
December 31, 2021        
Cash  $9,161,034   $-   $9,161,034 
Amounts receivable   32,565    -    32,565 
Public investments   -    18,146    18,146 
Private investments   -    10,257,760    10,257,760 
Derivative asset   -    284,404    284,404 
USDC   -    4,063    4,063 
Accounts payable and accrued liabilities   (4,412,171)   -    (4,412,171)
ETP holders payable   -    (363,491,362)   (363,491,362)
December 31, 2022                
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    43,505,269    43,505,269 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

42

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

Liquidity risk (continued)

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets.

 

The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at December 31, 2022, the Company had current assets of $112,137,312 (December 31, 2021 - $379,360,212) to settle current liabilities of $164,384,606 (December 31, 2021 -

$367,903,533).

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at December 31, 2022 and 2021.

 

December 31, 2021
 
   Total   Less than
1 year		   1-3 years 
Cash  $9,161,034   $9,161,034   $- 
Amounts receivable   32,565    32,565    - 
Public investments   18,146    18,146    - 
Prepaid expenses   1,407,697    800,962    606,735 
Digital assets   370,053,740    368,740,770    1,312,970 
Private investments   10,257,760    -    10,257,760 
Derivative asset   284,404    -    284,404 
Accounts payable and accrued liabilities   (4,412,171)   (4,412,171)   - 
ETP holders payable   (363,491,362)   (363,491,362)   - 
Lease liabilities   (5,646)   -    (5,646)
Total assets / (liabilities) - December 31, 2021  $23,306,166   $10,849,943   $12,456,222 

 

December 31, 2022
 
   Total   Less than
1 year		   1-3 years 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   106,635,434    106,582,076    53,358 
Private investments   43,505,269    -    43,505,269 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(10,398,578)  $(52,247,294)  $41,848,716 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

43

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At December 31, 2022, two investments made up approximately 19.1% (December 31, 2021 – two investment of 1.6%) of the total assets of the Company.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.02 per share.

 

For the year ended December 31, 2021, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $0.8 million, or $0.004 per share.

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at December 31, 2022, a 1% change in interest rates could result in $49,100 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at December 31, 2022 and 2021, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

December 31, 2022  
    United States
Dollars		     British
Pound		     Swiss
Franc		     European
Euro		  
Cash   $ 4,742,001     $ -     $ -     $ -  
Receivables     67,103       -       -       -  
Private investments     6,852,769       -       36,652,500       -  
Prepaid investment     551,379       -       -       -  
Digital assets     106,635,434       -       -       136,189  
Accounts payable and accrued liabilities     (2,649,621 )     (72,189 )     (23,685 )     (21,687 )
Loan payable     (52,821,600 )                        
ETP holders payable     (105,740,627 )     -       -       -  
Net assets (liabilities)   $ (42,363,163 )   $ (72,189 )   $ 36,628,815     $ 114,502  

 

44

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

(c)Currency risk (continued)

 

December 31, 2021

 

   United States
Dollars		   British
Pound		   European
Euro		 
Cash  $8,928,642   $-   $- 
Receivables   32,065    -    - 
Private investments   10,257,760    -    - 
Prepaid investment   34,436    -    2,409,710 
Accounts payable and accrued liabilities   (3,363,109)   80,782    - 
ETP holders payable   (363,491,362)          
Net assets (liabilities)  $(347,601,568)  $80,782   $2,409,710 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of December 31, 2022 would result in an estimated increase (decrease) in net income of approximately $562,800 (December 31, 2021 - $34,511,100).

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

45

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at December 31, 2022 and 2021.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market
price)		   (Valuation
technique -
observable
market Inputs)		   (Valuation
technique -
non-observable
market inputs)		   Total 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded investments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 
Publicly traded investments  $18,146   $-   $-   $18,146 
Privately traded investments   -    -    10,257,760    10,257,760 
Digital assets   -    4,063    -    4,063 
December 31, 2021  $18,146   $4,063   $10,257,760   $10,279,969 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended December 31, 2022 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss

 

Investments, fair value for the period ended   December 31,
2022		     December 31,
2021		  
Balance, beginning of period   $ 4,063     $ 636,600  
Disposal     (2,477 )     (632,537 )
Balance, end of period   $ 1,586     $ 4,063  

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended December 31, 2022 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

46

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Investments, fair value for the period ended   December 31,
2022		     December 31,
2021		  
Balance, beginning of period   $ 10,257,760     $ 3,018,493  
Purchases     34,498,750       4,710,797  
Transferred to Level 2     -       (1,051,233 )
Realized and unrealized gain/(loss) net     (1,251,241 )     3,579,703  
Balance, end of period   $ 43,505,269     $ 10,257,760  

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2022 and 2021.

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $3,740,473   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          
               
3iQ Corp.  $3,740,140    Recent financing   Marketability of shares   0% discount
Brazil Potash Corp.   2,049,779   Recent financing  Marketability of shares  0% discount
Earnity   198,356   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   633,963   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   3,420,000   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   177,488   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   38,034   Recent financing  Marketability of shares  0% discount
December 31, 2021  $10,257,760          

 

47

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour (see Note 3 and 10). As at December 31 2022, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,047 (December 31, 2021 - $374,014) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company (see Note 8 for details). As at December 31, 2022, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2021. As at December 31, 2021, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,979 (December 31, 2021 - $204,978) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at December 31 2022, the valuation of Earnity was based on the December 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31 2022, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $1,499 (December 31, 2021 - $19,836) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at December 31 2022, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31 2022. As at December 31 2022. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,727 (December 31, 2021 - $63,396) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31 2022, the valuation of SDK:Meta LLC was $Nil (December 31, 2021 - $3,420,000). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31 2022, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2021 +/- $342,000) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at December 31, 2022, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,665,250 change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at December 31, 2021, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2022. As at December 31, 2022, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,961 (December 31, 2021 - $17,749) change in the carrying amount.

 

48

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Financial instruments

 

(e)Fair value of financial instruments (continued)

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at December 31, 2021, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2022. As at December 31, 2022. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,063 (December 31, 2021 - $3,803) change in the carrying amount.

 

21.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

49

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements
Years ended December 31, 2022 and 2021
(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Digital asset risk (continued)

 

(c)Digital currency risk factors: Political, regulatory risk in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

22.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the year ended December 31, 2022.

 

50

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Related party disclosures

 

a)The consolidated financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest 
DeFi Capital Inc.   100 
DeFi Holdings (Bermuda) Ltd.   100 
Electrum Streaming Inc.   100 
Valour Inc. (Cayman)   100 
DeFi Europe AG   100 
Crypto 21 AB   100 
Valour Management Limited   100 

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non- executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the year ended December 31, 2022 and 2021 were as follows:

 

   Year ended
December 31,		 
   2022   2021 
Short-term benefits  $1,673,537   $773,004 
Shared-based payments   3,944,408    8,479,842 
   $5,617,945   $9,252,846 

 

As December 31,2022, the Company had $296,084 (December 31, 2021 - $11,124) owing to its current key management, and $356,340 (December 31, 2021 - $655,296) owing to its former key management. Such amounts are unsecured, non- interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the year ended December 31, 2022 and 2021, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Year ended December 31, 
   2022   2021 
2227929 Ontario Inc.  $120,000   $120,000 
   $120,000   $120,000 

 

**Excl. HST & incl. bonus

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at December 31, 2022, the Company had a payable balance of $90,400 (December 31, 2021 - $nil) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

51

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Related party disclosures (continued)

 

In August 2017, Forbes & Manhattan, Inc. (“Forbes”) became an insider of the Company owning approximately 34.9% (approximately 34.9% at December 31, 2021) outstanding shares of the Company. On March 9, 2021, Forbes ceased to be an insider. The Company is also part of the Forbes Group of Companies and continue to receive the benefits of such membership, including access to mining professionals, advice from Stan Bharti, the Executive Chairman of Forbes and strategic advice from the Forbes Board of Advisors. An administration fee of $10,000 per month is charged by Forbes pursuant to a consulting agreement. As at December 31, 2022, the Company had a payable balance of $90,400 (December 31, 2021 - $nil). Such amounts are unsecured, with no fixed terms of repayment. Forbes participated in the Company’s March 2021 private placement financing and subscribed for 189,900 common shares for gross proceeds of $379,800.

 

The Company incurred $41,086 (2021 - $nil) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $34,759 (2021 – $8,550) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($72,189) (December 31, 2021 - $75,731) expenses owed to Vik Pathak, a former director and officer of the Company. See Notes 24.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of December 31, 2022 and December 31, 2021.

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Director (Stan Bharti), officer (Ryan Ptolemy) of Investee  $2,049,779 
Silo Wellness Inc.***  Former Director and Officer (Fred Leigh), Former Officer (Kenny Choi, Ryan Ptolemy) and common shareholders of investee   18,146 
Total investment - December 31, 2021     $2,067,925 

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2022,

 

Valour Inc. (Cayman) holds 4,000,000 common shares of the Company.

 

52

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,198,960 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $1,117,164, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

25.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman islands where its operating business are located. Switzerland operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

December 31, 2022  Canada   Bermuda   Cayman Islands   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    106,491,188    106,635,434 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   92,017,379    40,632    5,657,647    97,715,658 
Total assets   92,419,715    203,205    117,304,032    209,926,952 

 

December 31, 2021  Canada   Bermuda   Cayman Islands   Total 
Cash   271,976    -    8,889,058    9,161,034 
Digital Assets   -    651,719    368,089,051    368,740,770 
Other current assets   68,017    2,594    436,947    507,558 
Property, plant and equipment   -    26,013    7,556    33,569 
Other non-current assets   74,902,703    2,586,259    3,758,682    81,247,644 
Total assets   75,242,696    3,266,585    381,181,294    459,690,575 

 

53

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

25.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the year ended December 31, 2022  Valour Inc.
(Canada)		   DeFi
Bermuda		   Valour Inc.
(Cayman)		   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (3,135,165)   (319,476,441)   (322,611,606)
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    320,382,227    320,382,227 
Realized (loss) of derivative asset   -    (434,072)   -    (434,072)
Staking and lending income   -    5,329    4,513,672    4,519,001 
Management fees   -    -    1,436,455    1,436,455 
Node revenue   -    347,758    -    347,758 
Realized (loss) on investments, net   (12,077)   -    -    (12,077)
Unrealized (loss) on investments, net   (1,231,993)   -    (754,564)   (1,986,557)
Interest income   2,641    -    52,623    55,264 
Total revenue   (1,241,429)   (3,216,150)   6,153,972    1,696,393 
Expenses                    
Operating, general and administration   9,282,891    43,889    5,421,279    14,748,059 
Share based payments   15,889,455    -    -    15,889,455 
Depreciation - property, plant and equipment   -    15,867    2,475    18,342 
Depreciation - right of use assets   -    -    69,322    69,322 
Amortization - intangibles   2,277,443    -    -    2,277,443 
Finance costs        -    4,014,038    4,014,038 
Transaction costs   140,886    -    973,055    1,113,941 
Foreign exchange (gain) loss   139,109    -    (463,808)   (324,699)
Impairment loss   13,865,356    -    -    13,865,356 
Total expenses   41,595,140    59,756    10,016,360    51,671,256 
(Loss) income before other item   (42,836,569)   (3,275,906)   (3,862,389)   (49,974,864)
Other comprehensive loss                    
Foreign currency translation (loss) gain   (1,779)   115,366    (3,350,869)   (3,237,282)

Net (loss) income and comprehensive (loss) income for the period

   (42,838,348)   (3,160,540)   (7,213,258)   (53,212,146)

 

 

For the year ended December 31, 2021

 

Valour Inc.
(Canada)

  

DeFi
Bermuda

  

Valour Inc.
(Cayman)

  

Total

 
Realized and net change in unrealized gains and losses on ETP payables   -    -    37,908,556    37,908,556 
Realized and net change in unrealized gains and losses on digital assets   -    1,024,688    (34,357,475)   (33,332,787)
Realized gain of derivative asset   -    284,604    -    284,604 
Other trading income   -    -    16,865    16,865 
Staking and lending income   -    4,530    3,351,502    3,356,032 
Management fees   -    -    1,116,597    1,116,597 
Node revenue   -    1,090,008    -    1,090,008 
Realized (loss) gain on investments, net   (231,626)   -    24,094    (207,532)
Unrealized gain on investments, net   2,255,278    -    2,485,173    4,740,451 
Interest income   5,682    -    102,602    108,284 
Total revenue   2,029,334    2,403,830    10,647,914    15,081,078 
Expenses                    
Operating, general and administration   11,540,053    37,869    3,376,271    14,954,193 
Share based payments   42,035,158    -    -    42,035,158 
Depreciation - property, plant and equipment   -    5,397    2,887    8,284 
Depreciation - right of use assets   -    -    49,217    49,217 
Amortization - intangibles   3,582,697    -    -    3,582,697 
Finance costs   7,057    -    1,179,351    1,186,408 
Transaction costs   -    -    1,315,775    1,315,775 
Foreign exchange (gain) loss   (1,417)   26    16,872    15,481 
Impariment loss   17,483,284    -    -    17,483,284 
Total expenses   74,646,832    43,292    5,940,373    80,630,497 
(Loss) income before other item   (72,617,498)   2,360,538    4,707,541    (65,549,419)
Loss on deemed disposal of an associate   (5,945,800)   -    -    (5,945,800)
Net (loss) income for the year   (78,563,298)   2,360,538    4,707,541    (71,495,219)
Other comprehensive loss                    
Foreign currency translation gain   -    19,752    221,312    241,064 
Net (loss) income and comprehensive (loss) income for the year   (78,563,298)   2,380,290    4,928,853    (71,254,155)

 

54

 

 

Valour Inc. (Formerly DeFi Technologies Inc.)

Notes to the Consolidated financial statements

Years ended December 31, 2022 and 2021

(Expressed in Canadian dollars unless otherwise noted)

 

 

26.Income taxes

 

a)Provision for Income Taxes

 

Major items causing the Company’s income tax rate to differ from the Canadian federal and provincial statutory rate of 26.5% (2021 – 26.5%) were as follows:

 

   2022
$		   2021
$		 
(Loss) before income taxes   (49,974,864)   (71,495,219)
Expected income tax recovery based on statutory rate   (13,243,000)   (18,946,000)
Adjustment to expected income tax recovery:          
Change in foreign exchange rates   (86,000)   (5,000)
Permanent difference from difference in foreign tax   (2,044,000)   (2,044,000)
Provision to return adjustment   (1,979,092)   1,774,000 
Share based compensation   4,211,000    11,139,000 
Other   (9,000)   (1,000)
Change in unrecorded deferred tax asset   13,150,092    8,083,000 
Deferred income tax provision (recovery)   -    - 

 

b)Deferred income tax

 

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences in Canada:

 

   2021
$		   2021
$		 
Non-capital loss carry-forwards   43,751,000    38,106,000 
Share issue costs   208,000    257,000 
Exploration and evaluation assets   7,002,000    7,002,000 
Investments   41,045,000    6,436,000 
Capital losses carried forward   22,687,000    22,757,000 
Total   114,693,000    74,558,000 

 

The deferred tax impact for Valour Inc. (Cayman) and DeFi Bermuda are nil as the corporate income tax rate is 0% in these two countries.

 

The Company has approximately $43,751,000 of non-capital loss carry-forwards in Canada which may be used to reduce the taxable income of future years. These losses expire from 2026 to 2042.

 

 

55

 

 

Exhibit 99.18

 

FORM 13-502F1

CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

 

MANAGEMENT CERTIFICATION

 

 

I, Olivier Roussy Newton, an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate.

 

(s) “Olivier Roussy Newton” March 6, 2023
Name:  Olivier Roussy Newton  Date: 
Title: CEO    

 

 

Reporting Issuer Name: Valour Inc.  
     
End date of previous financial year: December 31, 2022  
     
Type of Reporting Issuer: ☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
     
Highest Trading Marketplace: NEO  
(refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees)  

 

Market value of listed or quoted equity securities:

(in Canadian Dollars - refer to section 7.1 of OSC Rule 13-502 Fees)

 

Equity SymbolDEFI 
  
1st Specified Trading Period (dd/mm/yy) 
(refer to the definition of “specified trading period” under OSC Rule 13-502 Fees)  January 1, 2022 to March 31, 2022

 

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 1.43 (i)
       
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     212,174,319 (ii)
       
Market value of class or series (i) x (ii) $ 303,409,276.17 (A)

 

 

 

 

2nd Specified Trading Period (dd/mm/yy)

(refer to the definition of “specified trading period” under OSC Rule 13-502 Fees)   April 1, 2022 to June 30, 2022

 

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace

   $ 0.40 (iii)
       
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     217,389,236 (iv)
       
Market value of class or series (iii) x (iv) $ 86,955,694.4 (B)

 

3rd Specified Trading Period (dd/mm/yy)

(refer to the definition of “specified trading period” under OSC Rule 13-502 Fees)   July 1, 2022 to September 30, 2022

 

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.27 (v)
       
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     208,896,136 (vi)
       
Market value of class or series (v) x (vi) $ 56,401,956.72 (C)

 

4th Specified Trading Period (dd/mm/yy)

(refer to the definition of “specified trading period” under OSC Rule 13-502 Fees)   October 1, 2022 to December 31, 2022

 

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace     0.14 (vii)
       
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     219,010,501 (viii)
       
Market value of class or series (vii) x (viii) $ 30,661,470.14 (D)

 

5th Specified Trading Period (dd/mm/yy)

(if applicable - refer to the definition of “specified trading period” under OSC Rule 13-502 Fees)     to  

 

Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 119,357,099.36 (ix)
       
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     0 (x)
       
Market value of class or series (ix) x (x) $   (E)

 

 

 

 

Average Market Value of Class or Series  
(Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above))   $ 19,357,099.36 (1)
   
(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary pursuant to paragraph 2.8(1)(c) of OSC Rule 13-502 Fees, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)
 
Fair value of outstanding debt securities:  
(See paragraph 2.8(1)(b), and if applicable, paragraph 2.8(1)(c) of OSC Rule 13-502 Fees)   $ 0 (2)
   
(Provide details of how value was determined)  
   
Capitalization for the previous financial year (1) + (2) $ $19,357,099.36  
     
Participation Fee   $ 13,340  
(For Class 1 reporting issuers, from Appendix A of OSC Rule 13-502 Fees, select the participation fee)
   
(For Class 3B reporting issuers, from Appendix A.1 of OSC Rule 13-502 Fees, select the participation fee)  
   
Late Fee, if applicable  
(As determined under section 2.7 of OSC Rule 13-502 Fees)   $ 0  
   
Total Fee Payable
(Participation Fee plus Late Fee)   $ 13,340  

 

 

 

Exhibit 99.19

 

Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative.

 

FORM 13-501F1

CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

 

MANAGEMENT CERTIFICATION

 

 

I, Olivier Roussy Newton, an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate. 

 

“Olivier Roussy Newton”   March 6, 2023
Name:  Olivier Roussy Newton   Date:  
Title: CEO       

 

 

Reporting Issuer Name: Valour Inc.
     
End date of previous financial year: December 31, 2022  
     
Type of Reporting Issuer: ☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
     
Highest Trading Marketplace: NEO  

 

Market value of listed or quoted equity securities:

 

Equity Symbol DEFI   
     
1st Specified Trading Period (dd/mm/yy) January 1, 2022 to March 31, 2022
     
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ 1.4300
    (i)

 

 

 

 

Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period   212,174,319
    (ii)
     
Market value of class or series (i) x (ii) $ 303,409,276.17
    (A)
     
2nd Specified Trading Period (dd/mm/yy) April 1, 2022 to June 30, 2022
     
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.4000
    (iii)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     217,389,236
    (iv)  
     
Market value of class or series (iii) x (iv) $ 86,955,694.4
    (B)
     
3rd Specified Trading Period (dd/mm/yy) July 1, 2022 to September 30, 2022
     
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.2700
    (v)
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     208,896,136
    (vi)
     
Market value of class or series (v) x (vi) $ 56,401,956.72

 

 

 

 

4th Specified Trading Period (dd/mm/yy) October 1, 2022 to December 31, 2022
     
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.1400
    (vii)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period     219,010,501
    (viii)  
     
Market value of class or series (vii) x (viii) $ 30,661,470.14
    (D)  
       
5th Specified Trading Period (dd/mm/yy) to
     
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $  
    (ix)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period    
    (x)
     
Market value of class or series (ix) x (x) $  
    (E)  
     
Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above))   $ 119,357,099.36
    (1)  
     
(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)

 

 

 

 

Fair value of outstanding debt securities:    
     
(Provide details of how value was determined)   $0.0000
    (2)
      
Capitalization for the previous financial year (1) + (2) $119,357,099.36
      
Participation Fee   $6,500.0000
      
Late Fee, if applicable   $0.0000
      
Total Fee Payable   $6,500.0000
(Participation Fee plus Late Fee)     

 

 

 

 

 

Exhibit 99.20

 

 

Valour announces the launch of physically digital asset backed ETP issuance platform in Europe and a record increase of Assets under Management in 2023 of close to 90% year-to-date

 

●Valour launches its EU-wide offering of physically backed Exchange Traded Products on digital assets (ETPs) including white-label solutions for asset managers and family offices.

 

●Total AUM rose by $70 million in 2023 reaching a record high of almost $148 million - an increase of close to 90% year-to-date.

 

Toronto, Ontario, April 12, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology holding company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, is pleased to announce the launch of a new EU-wide issuance platform for physically stored digital assets in the form of exchange-traded product (ETP) securities.

 

On April 5, 2023, Valour Digital Securities Limited (“VDSL”), a Jersey-based securities issuer, obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain.

 

The new ETP products will be listed on regulated stock exchanges such as Deutsche Börse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland. The new ETP program adds to Valour’s already existing digital assets securities program, particularly focusing on the Nordic markets and covering a broad range of over 120 crypto currencies and digital assets in form of single underlyings, baskets or indices. Subject to the ultimate assessment by the tax authorities, investments in the new ETP products by private investors domiciled in Germany most likely should not qualify as taxable capital gains if the investment period exceeds one year. Hence, there should be no German tax withholding obligation with respect to the ETPs. VDSL aims to issue up to 15 new products under the name “1Valour” by the end of 2023.

 

The new ETP program is designed to attract institutional investors - such as corporates, pension funds, insurances, asset managers and family offices, providing them with a wide selection of secured digital asset securities that are aligned with internal and external investment guidelines and restrictions - as well as retail investors looking for long term holdings paired with asset security. VDSL also provides for joint “white-label” offerings which will allow asset managers and family offices to apply self-developed strategies and indices, satisfying the demand on their client side for certain digital asset products and exposures.

 

The ETPs will be secured by the respective digital assets that are physically stored with regulated custody providers. The initial custodians appointed are Komainu (Jersey) Limited, regulated by the Jersey Financial Services Commission, and Copper Technologies (Switzerland) AG, registered with the Financial Services Standard Association (VQF), a Self-Regulatory Organisation (SRO) officially recognised by the Federal Financial Market Supervisory Authority (FINMA).

 

 

 

 

 

Physical custody ensures that the underlying assets are stored separately from the issuer in a secure location. They are additionally secured by an independent third party acting as Trustee and pledged for the benefit of the ETP investors. This provides investors with an added layer of security and protection for their assets.

 

In addition, VDSL has entered into contractual arrangements with well-established market players as Market Makers, Authorized Participants and Index Providers, among them being: GHCO, based in the UK, one of the fastest-growing liquidity providers specializing in exchange traded funds and a market maker on all major European exchanges; Compass Financial Technologies SA, an independent Swiss-based company focused on the design, calculation, and administration of market benchmarks and tailor-made quantitative investment strategies through its French affiliate registered as a Benchmarks Administrator under the EU Benchmarks Regulations (EU BMR); as well as Invierno AB (“Vinter”), based in Sweden, being the benchmark administrator of the Vinter Valour benchmark family and the central recipient of input data with the ability to evaluate the integrity and accuracy of input data on a consistent basis.

 

“The launch of the digital asset backed issuance program is a milestone in Valour’s product strategy,” said Olivier Roussy Newton, CEO of Valour Inc. “It perfectly adds to Valour’s mission to offer investors a maximum level of security and facilitated access to the digital assets space. As well as further enhancing the Valour brand in Europe, the asset backed program may be especially of interest for our German investors, given its potential tax advantages.”

 

Valour further announces that total AUM increased by $70 million in 2023, reaching a record high of almost $148 million - an increase of close to 90% since the beginning of 2023. This number includes more than $6.6 million of net new sales in its existing ETP program - 8.5% organic growth next to ordinary market recovery figures.

 

Alongside this upcoming new issuance programme, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

2

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

3

 

Exhibit 99.21

 

April 14, 2023

 

Filed via SEDAR

 

To All Applicable Exchanges and Securities Administrators

 

Subject:Valour Inc. (the “Issuer”)
 Notice of Meeting and Record Date

 

Dear Sir/Madam:

 

We are pleased to confirm the following information with respect to the Issuer’s upcoming meeting of securityholders:

 

Meeting Type: Annual General Special Meeting
Meeting Date: June 20, 2023
Record Date for Notice of Meeting: May 9, 2023
Record Date for Voting (if applicable): May 9, 2023
Beneficial Ownership Determination Date: May 9, 2023
Class of Securities Entitled to Vote: Common Shares
ISIN: CA92027E1051
Issuer sending proxy materials directly to NOBOs: No
Issuer paying for delivery to OBOs: Yes
Notice and Access for Beneficial Holders: Yes
Beneficial Holders Stratification Criteria: N/A
Notice and Access for Registered Holders: Yes
Registered Holders Stratification Criteria: N/A

 

In accordance with applicable securities regulations we are filing this information with you in our capacity as agent of the Issuer.

 

Yours truly,  
   
Odyssey Trust Company  
as agent for Valour Inc.  

 

 

Exhibit 99.22

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of Valour Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Valour Inc. (the “issuer”) for the interim period ended March 31, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: May 15, 2023

 

(signed) “Ryan Ptolemy” 

Ryan Ptolemy

Chief Financial Officer

 

Exhibit 99.23

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Olivier Roussy Newton, the Chief Executive Officer of Valour Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Valour Inc. (the “issuer”) for the interim period ended March 31, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023 and ended on March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Dated: May 15, 2023  
   
(signed) “Olivier Roussy Newton”  
Olivier Roussy Newton  
Chief Executive Officer  

 

Exhibit 99.24

 

 

 

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 2023

 

 

 

 

 

 

 

 

 

 

1

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to Valour Inc. (“we”, “our”, “us”, “Valour” or the “Company”) containing information through May 15, 2023, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the three months ended March 31, 2023 and 2022. The financial statements and related notes of Valour have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Please refer to the notes of the December 31, 2022 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

2

 

 

Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through three distinct business lines: Valour ETPs, Valour Ventures and Valour Infrastructure.

 

The Company’s consolidated financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements.

 

Investment Pillars

 

Valour generates revenue through three core pillars:

 

Valour ETPs

 

The Company, through its 100% ownership of Valour Cayman Inc. (“Valour Cayman”), is developing Exchange Traded Notes (“ETNs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETNs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

Valour Venture

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

Valour Infrastructure

 

The Company’s Valour Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

3

 

 

Highlights For The Three Months Ended March 31, 2023 And Subsequent Events:

 

 

§On January 10, 2023, the Company announced approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments.

 

§On January 12, 2023, the Company announced the approval in principle by the Jersey regulator JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded (ETP) securities. Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holder

 

§On February 3, 2023, the Company announced that it has changed its auditors from RSM Canada LLP (“Former Auditor”) to BF Borgers CPA PC effective as of February 3, 2023. There were no reservations in the Former Auditor’s audit reports for any financial period during which the Former Auditor was the Company’s auditor. There are no “reportable events” (as the term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) between the Company and the Former Auditor.

 

§On March 2, 2023, the Company announced that they have agreed to enter into a strategic partnership in with Spirit Blockchain (CSE: SPIR), a Canadian company that offers shareholders diversified exposure to the Blockchain and Digital Asset Industry. Leading up to this strategic partnership, Valour will also participate Spirit Blockchain’s private placement. Spirit is listed on the Canadian Securities Exchange (CSE) under the symbol SPIR.CN. Spirit is a Canadian-Swiss group operating in the blockchain and digital asset sectors with the primary goal of creating value in a rapidly growing environment through recurring cash flows and capital appreciation. Spirit provides investors with direct exposure to the sector without the technical complexity or constraints of purchasing and holding the underlying crypto assets.

 

§On March 21, 2023, the Company’s launched its crypto product range to French investors.

 

§On April 5, 2023, Valour Digital Securities Ltd. (“VDSL”), a Jersey-based securities issuer, obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain.

 

§On April 12, 2023, the Company announced the launch of a new EU-wide (European Union) issuance platform for physically stored digital assets in the form of exchange-traded product (ETP) securities. The new ETP products will be listed on regulated stock exchanges such as Deutsche Borse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland. The new ETP program adds to Valour’s already-existing digital asset securities program, particularly focusing on the Nordic markets and covering a broad range of over 120 cryptocurrencies and digital assets in form of single underlyings, baskets or indices. VDSL aims to issue up to 15 new products under the name 1Valour by the end of 2023. The ETPs will be secured by the respective digital assets that are physically stored with regulated custody providers. The initial custodians appointed are Komainu (Jersey) Ltd., regulated by the Jersey Financial Services Commission, and Copper Technologies (Switzerland) AG, registered with the Financial Services Standard Association (VQF), a self-regulatory organization (SRO) officially recognized by the Federal Financial Market Supervisory Authority (FINMA).

 

4

 

 

Digital Assets

 

As at March 31, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $190,797,112 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

The Company’s holdings of digital assets consist of the following:

 

   March 31, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   11.0991    4,762    11.1000    3,678 
Bitcoin   2,172.8726    83,742,351    2,126.5130    47,498,630 
Ethereum   21,461.5486    52,918,077    21,141.7368    34,333,700 
Cardano   40,000,404.6881    21,593,473    36,438,339.0800    12,004,332 
Polkadot   1,109,176.9436    9,518,153    931,646.4544    5,407,239 
Solana   669,287.23    19,174,651    428,280.68    5,537,534 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Shyft   3,686,018.3904    34,315    3,507,575.4684    37,530 
Uniswap   163,542.0602    1,341,452    148,734.0602    1,021,542 
USDC        1,683         1,586 
USDT        14,121         14,134 
Litcoin   5.0000    603    -    - 
Doge   12,800.0000    1,292    10,000.0000    914 
Cosmos   200.9992    3,044    201.0000    2,531 
Avalanche   92,779.6107    2,224,899    48,995.3900    712,745 
Matic   891.0000    1,317    890.0000    906 
Shiba Inu   -    -    90,000,000.0000    975 
Ripple   2,000.0000    1,447    2,000.0000    919 
Enjin   243,660.1546    134,239    10,009.9900    3,180 
Terra Luna   199,896,558.0000    -    199,195.3600    - 
Current        190,709,880         106,582,076 
Blocto   260,284.161    8,949    251,424.913    6,737 
Maps   285,713.000    -    285,713.000    - 
Oxygen   400,000.000    -    400,000.000    - 
Boba Network   250,000.00    -    250,000.00    - 
Saffron.finance   86.21    3,608    86.21    2,345 
Clover   310,000.00    15,878    310,000.00    13,216 
Sovryn   15,458.95    10,370    15,458.95    2,342 
Wilder World   148,810.00    48,369    148,810.00    28,660 
Pyth   2,500,000.00    -    2,500,000.00    - 
Volmex   2,925,878.0000    58    2,925,878.0000    58 
Long-Term        87,232         53,358 
Total Digital Assets        190,797,112         106,635,434 

 

5

 

 

The continuity of digital assets for the three months ended March 31, 2023 and year ended December 31, 2022:

 

   March 31,
2023		   December 31,
2022		 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   90,978,084    231,392,840 
Digital assets disposed   (77,173,457)   (191,092,048)
Realized (loss) on digital assets   (12,013,224)   (47,595,430)
Digital assets earned from staking, lending and fees   787,490    5,955,456 
Net change in unrealized gains and losses on digital assets   82,787,051    (275,739,651)
Foregin exchange (loss) gain   (1,204,266)   13,660,527 
   $190,797,112   $106,635,434 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital Assets loaned

 

As of March 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.5% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of March 31, 2023, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value
Share		 
Digital on loan:                
Bitcoin   500.0000   $19,269,963    34%
Ethereum   5,000.0000    12,328,579    22%
Polkdot   973,835.0000    8,356,746    15%
Solana   547,441.0000    15,683,835    28%
Avalanche   45,009.0000    1,079,337    2%
Total   1,571,785.0000   $56,718,460    100%

 

As of March 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		   Number of
coins on loan		    Fair Value   Fair Value
Share		 
Digital on loan: Counterparty A   1.07% to 4.49%    500.0000   $19,269,963    34%
Counterparty B   0.5% to 9.7%    1,571,285.0000    37,448,497    66%
Total        1,571,785.0000   $56,718,460    100%

 

As of March 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  March 31,
2023		 
Digital on loan:         
Counterparty A  United States   34%
Counterparty B  Cayman Islands   66%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

6

 

 

Digital Assets Staked

 

As of March 31, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3% to 5% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

As of March 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:               
Ethereum   10.0000   $24,657    0%
Cardano   36,201,005.6550    19,542,438    100%
Total   36,201,015.6550   $19,567,096    100%

 

As of March 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest
rates		   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:                    
Counterparty B   3% to 5%    10.0000   $24,657    0%
Counterparty C   2.90%   36,201,005.6550    19,542,438    100%
Total        36,201,015.6550   $19,567,096    100%

 

As of March 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  March 31,
2023		 
Digital on staked: Counterparty B  Cayman Islands   0%
Counterparty C  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7

 

 

Third Party Custodians

 

 

As of March 31, 2023, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian   Location
Bitcoin Suisse AG   Switzerland
Anchorage Digital   United States
B2C2 Overseas LTD   Cayman Islands

  

Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of March 31, 2023, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian  Location  % of digital assets custodied by market value (1)   Regulatory Body
Bitcoin Suisse AG  Switzerland   10.32%  Financial Services Standards Association (VQF),
Zug, Switzerland
Anchorage Digital  United States   10.11%  Office of Comptroller of Currency
B2C2 Overseas LTD  Cayman Islands   35.48%  Cayman Islands Monetary Authority (CIMA)

 

Note 1: As at March 31, 2023; Residual digital assets served as collateral for loans with B2C2-Group (approx. 30.43%; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (9.6%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour Cayman diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.

 

●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.

 

●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.

 

●The counterparties are reviewed in regular intervals and re-evaluated.

 

●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.

 

●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

8

 

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

9

 

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

At March 31, 2023, the Company’s had self-custody of digital assets totaling $205,594 (December 31, 2022 - $2,326,139).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

Staking and Lending Policy

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

10

 

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower’s ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At March 31, 2023

 

 

At March 31, 2023, the Company’s investment portfolio consisted of one publicly traded investments and eight private investments for a total estimated fair value of $43,863,459 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

Public investments

 

At March 31, 2023, the Company’s one publicly-traded investments had a total estimated fair value of $3,518.

 

Public Issuer  Note   Security
description		  Cost   Estimated
Fair Value		   of FV 
Smart Valor AG     4,550 SDR  $36,139   $3,518    100.0%
Total public investments         $36,139   $3,518    100.0%

 

At December 31, 2022, the Company’s one publicly-traded investments had a total estimated fair value of $17,227.

 

Public Issuer  Note   Security
description		  Cost   Value   of FV 
Smart Valor AG     19,000 SDR   150,908    17,227    100.0%
Total public investments         $150,908   $17,227    100.0%

 

11

 

 

Private Investments

 

At March 31, 2023, the Company’s eight private investments had a total fair value of $43,859,941.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,140    8.5%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,188,015    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,979    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    676,717    1.5%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    37,010,000    84.4%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,457    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,859,941    100.0%

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG     3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

(i)Investments in related party entities

 

3iQ Corp (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of Valour. 3iQ is a leading bitcoin and digital asset fund manager. As at March 31, 2023, 3iQ was valued at $3,740,140 which was based on 3iQ’s February 2022 financing price resulting in an unrealized gain (loss) of $nil for the period. The investment represented 1.3% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to Valour of $374,014.

 

Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at March 31, 2023, BPC was valued at $2,188,015 which was based on BPC August 2022 financing prices resulting in an unrealized gain (loss) of $(1,778) for the period. The investment represented 0.8% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to Valour of $218,802.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at March 31, 2023, Earnity was valued at $14,979 which was based on Earnity’s December 2022 financing prices resulting in an unrealized gain (loss) of $(12) for the period. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to Valour of $1,498.

 

12

 

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at March 31, 2023, LTC was valued at $676,717 which was based on LTC December 2021 financing prices resulting in an unrealized gain (loss) of $(550) for the period. The investment represented 0.3% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to Valour of $67,672.

 

SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31, 2023, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to Valour of $0.

 

SEBA Bank AG (“SEBA”)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. SEBA is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at March 31, 2023, SEBA was valued at $37,010,000 which was based on SEBA 2022 secondary trades resulting in an unrealized gain (loss) of $357,500 for the period. The investment represented 12.7% of the total assets of the Company. A 10% decline in the fair market value of SEBA would result in an estimated increase in loss to Valour of $3,701,000.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at March 31, 2023, STL was valued at $189,457 which was based on STL October 2021 financing resulting in an unrealized gain (loss) of $(154) for the period. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to Valour of $18,946.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at March 31, 2023, VLC was valued at $40,632 which was based on VLC 2021 financing pricing resulting in an unrealized gain (loss) of $nil for the year. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to Valour of $4,063.

 

13

 

 

Financial Results

 

The following is a discussion of the results of operations of the Company for the three months ended March 31, 2023, and 2022. They should be read in conjunction with the Company’s consolidated financial statements for the three months ended March 31, 2023 and 2022 and related notes.

 

Three months ended March 31, 2023 and 2022:

 

   Three months ended
March 31,		 
   2023   2022 
Revenues        
Realized and net change in unrealized gains and losses on digital assets  $70,773,827   $(47,583,728)
Realized and net change in unrealized gains and losses on ETP payables   (75,513,491)   46,956,673 
Realized and unrealized loss on derivative asset   -    (587,015)
Staking and lending income   571,813    2,185,375 
Management fees   215,677    571,071 
Node revenue   5,821    287,548 
Realized (loss) on investments, net   (587)   (12,077)
Unrealized (loss) gain on investments, net   357,353    (24,985)
Interest income   829    28,146 
Total revenues   (3,588,758)   1,821,008 
Expenses          
Management and consulting fees   1,089,692    1,871,715 
Share based payments   941,286    8,724,908 
Travel and promotion   117,216    955,035 
Office and rent   628,628    454,904 
Accounting and legal   213,526    305,936 
Regulatory and transfer agent   67,407    82,879 
Depreciation - property, plant and equipment   3,236    3,236 
Depreciation - right of use assets   34,034    5,524 
Amortization- intangibles   509,575    589,289 
Finance costs   1,286,466    898,358 
Transaction costs   232,775    436,849 
Foreign exchange (gain) loss   10,461    (188,917)
Total expenses   5,134,302    14,139,716 
Net (loss) for the period   (8,723,060)   (12,318,708)
Other comprehensive loss          
Foreign currency translation loss   33,889    (233,307)
Net (loss) and comprehensive (loss) for the period  $(8,689,171)  $(12,552,015)

 

For the three months ended March 31, 2023, the Company recorded a net (loss) and comprehensive (loss) of $(8,689,171) ($(0.04) per basic share) on total revenues of $(3,588,758) compared to net (loss) and comprehensive (loss) of $(12,552,015) ($(0.06) per basic share) on total revenues of $1,821,008 for the three months ended March 31, 2022.

 

For the three months ended March 31, 2023, realized and net change in unrealized gains and loss on digital assets was $70,773,827 and realized and net change in unrealized gains and loss on ETP payables was $(75,513,491). Higher digital asset prices in Q1 2023 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

14

 

 

The Company earned staking and lending income of $571,813 for three months ended March 31, 2023 compared to $2,183,375 for the same periods in 2022. The Company actively stakes and lends its cryptocurrencies to earn additional revenue. The staking and lending income was lower in 2023 as the Company had approximately $76 million staked or lent compared to approximately $191 million in the prior period. Please see Digital Assets section for more details.

 

The Company had management fee revenue of $215,677 for three months ended March 31, 2023 compared to $571,071 for the same periods in 2022. Lower management fees in 2023 was due to lower AUM than in prior periods.

 

The Company had node revenue of $5,821 for three months ended March 31, 2023 compared to $287,548 for the same period in 2022. During the three months ended March 31, 2023, the Company earned 442,200.7678 (March 31, 2022 – 600,760.8802) Shyft tokens for its services. The decrease revenue in 2023 is due to lower token price of the Shyft token and lower rewards.

 

The Company had realized gain (loss) of $(587) on investments for the three months ended March 31, 2023 compared to $(12,077) for the same periods in 2022. The Company had unrealized (loss) gain of $357,353 on investments compared to $(24,985) in the prior period. The unrealized gain for the three months ended March 31, 2023 primarily consisted from SEBA due to CHF/CAD exchange rate change in the current period.

 

Management and consulting fees were $1,089,692 during the three months ended March 31, 2023 compared to $1,871,715 during the same periods in 2022. Management and consulting fees are lower in 2023 as the Company reduced the number of consultants in addition to no bonuses paid compared to Q1 2022.

 

Share based payments were $941,286 during the three months ended March 31, 2023 compared to $8,724,908 in the same periods in 2022. The Company granted 1,000,000 DSUs during 2023 compared to the 1,200,000 options and 1,100,000 of deferred share units to directors, officers and consultants of the Company during 2022. The higher share-based payments in 2022 is a result of a higher Black-Scholes Model price due to the Company’s higher share price in 2022.

 

Travel and promotion was $117,216 during the three months ended March 31, 2022 compared to $955,035 during the same period in 2022. Corporate activities and business development was lower 2023 as the Company focuses on expanding its ETP business line.

 

Office and rent was $628,628 during the three months ended March 31, 2023 compared to $454,904 during the same periods in 2022.

 

Accounting and legal was $213,526 during the three months ended March 31, 2023 and $305,836 during the same periods in 2022 due to lower accounting fees in 2023.

 

Regulatory and transfer agent costs were $67,407 during the three months ended March 31, 2023 compared to $82,879 during the prior periods in 2022 due to lower listing and regulatory fees incurred in 2023.

 

Total depreciation and amortization was $546,845 for the three months ended March 31, 2023 from $598,049 during the prior period in 2022. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of DeFi Capital and Valour.

 

Finance costs were $1,286,466 for the three months ended March 31, 2023 from compared to $898,358 during the prior periods in 2022. The increase in financing costs related the interest expense on the digital asset provider loans and other loans of the Company.

 

Transaction costs were $232,775 for the three months ended March 31, 2023 compared to $436,849 in the prior period. The decrease in transaction costs related to trading of digital assets as brokerage commission and ETP issuance costs.

 

15

 

 

Foreign exchange (gain) loss was $10,461 for the three months ended March 31, 2023 compared to $(188,917) in the prior period. The loss reflects the currency fluctuations in the Company’s assets and liabilities denominated in US dollars, British Pounds, Euro and Swiss Franc.

 

During the three months ended March 31, 2023, the Company used $14,498,854 in operations of which $1,798,919 was provided by change of working capital, $nil used to purchase the investments, $90,978,084 was used to purchase digital assets offset by $12,496 provided from sales of investment and $77,173,457 was provided from the disposal of digital assets. During the comparative three months ended March 31, 2022, the Company used $65,658,336 in operations of which $1,638,092 was used by the change of working capital, $34,649,658 used to purchase the Company’s SEBA investment, $28,248 provided from sale of investments, $110,772,976 was used to purchase digital assets offset by $92,424,637 was provided from the disposal of digital assets. The cash used from operations was lower in 2023 compared to 2022 due to lower net loss in 2023 as the Company decreased general and administrative costs as well as net purchase of digital assets in 2023 was $(13,804,627) compared in 2022 the net purchase of digital assets was $(18,438,339).

 

During the three months ended March 31, 2023, $13,999,153 was provided by financing activities compared to $64,914,616 in the prior period. The Company received proceeds of $49,015,215 from ETP holders and $4,319,901 was provided from proceeds from loans offset by $39,335,963 used for payments to ETP holders. During the three months ended March 31, 2022, the Company received proceeds of $127,194,184 from ETP holders, proceeds of $46,235,200 from loans, $45,000 from exercise of stock options offset by $100,668,088 used for payments to ETP holders and $7,891,679 used in NCIB purchases. The cash provide from financing was lower in 2023 compared to 2022 due a lower loan proceeds received and lower ETP sales in 2022.

 

Liquidity and Capital Resources

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on more or less the same terms (collateral and interest rate) throughout the year. The Company has successful raised approximately $1.5M from new investors in 2022 via private placements financings and in 2023 successfully raised $4.3M from new loans.

 

With the lower crypto prices in 2023 than in early 2022, the Company has been earning less revenue via staking and lending as well as its management fees on ETP products as the Company is paid in the cryptocurrency lend or staked or ETPs. The lower cryptocurrency prices resulted in lower recorded revenue.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

Valour relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

16

 

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of March 31, 2023, the loan principal of $52,778,700 (US$39,000,000) was outstanding. The loans mature on June 11, 2023 and have interest rates ranging from 3.6% to 4.5%. The extended loans are secured with 1223.404952 BTC and 11,833.365522 ETH.

 

One of Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The next court hearing is scheduled for March 30, 2023. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at March 31, 2023, the value of the 475 BTC was US$12,878,295 and potential loan loss exposure is US$6,878,295.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023.

 

Valour used cash of $14,498,854 in its operating activities during the three months ended March 31, 2023. Included in cash used in operations are $90,978,084 used in the purchase of digital assets, $1,798,919 provided from the changes of working capital, $12,496 generated from proceeds on sale of investment and $77,173,457 generated from the disposal of digital assets. Valour also provided $13,999,153 in financing activities. Included in cash provided in financing activities are $49,015,215 from proceeds from ETP holders, $4,319,901 was provided from proceeds from loans offset by $39,335,963 used for payments to ETP holders.

 

As at March 31, 2023, the Company’s sources of funds include the estimated fair value of its cash of $4,402,692, equity investments of $43,863,459 and digital assets of $190,797,112 offset by total liabilities of $255,260,822.

 

17

 

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

As at March 31, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   March 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,398,027   $-   $-   $- 
Receivables   82,217    -    -    - 
Private investments   3,109,801    -    37,010,000    - 
Prepaid investment   376,616    -    -    - 
Digital assets   190,797,112    -    -    - 
Accounts payable and accrued liabilities   (3,696,854)   (73,976)   (59,790)   (22,062)
Loan payable   (57,365,781)               
ETP holders payable   (190,895,482)   -    -    - 
Net assets (liabilities)  $(53,194,345)  $(73,976)  $36,950,210   $(22,062)

 

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

 

As at December 31, 2022, United States Dollar was converted at a rate of $1.3533 (December 31, 2022 - $1.3544) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.6726 (December 31, 2022 - $1.6322) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4708 (December 31, 2022 - $1.4456) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.4804 (December 31, 2022 - $1.4661).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

§to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

§to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

§taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

§raising capital through equity financings; and

 

§realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the three months ended March 31, 2023.

 

18

 

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,098,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $902,000, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

Summary of Quarterly Results

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun 
   2023   2022   2022   2022   2022   2021   2021   2021 
Revenue  $(3,588,758)  $4,799,325   $295,605   $(5,219,545)  $1,821,008   $5,113,702   $8,626,446   $(1,920,427)
Net (loss) income and comprehensive (loss) income  $(8,689,171)  $(12,778,631)  $(9,011,375)  $(18,870,125)  $(12,552,015)  $(50,243,623)  $(2,077,424)  $(12,321,876)
(Loss) income per Share - basic   (0.04)   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)  $(0.06)
 (Loss) income per Share - diluted   (0.04)   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)  $(0.06)
Total Assets  $291,345,370   $209,926,951   $263,678,822   $241,666,497   $468,623,726   $459,690,575   $372,062,311   $261,772,737 
Total Long Term Liabilities  $0   $1,681,358   $1,681,358   $Nil   $Nil   $5,646   $22,048   $38,240 

 

19

 

 

Selected Annual Information

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-22   31-Dec-21   31-Dec-20 
(a) Net Revenue   1,696,393   $15,081,078   $(46,776)
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (53,212,146)  $(71,495,219)  $2,073,533 
(ii) Income (loss) per share – basic   (0.25)  $(0.37)  $0.04 
(iii) Income (loss) per share – diluted   (0.25)  $(0.37)  $0.04 
(c) Total Assets   209,926,951   $459,690,575   $7,296,044 
(d) Total Liabilities   166,094,517   $367,909,179   $992,248 

 

Off Balance Sheet Arrangements

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

During the three months ended March 31, 2022, the Company paid or accrued $Nil (three months ended March 31, 2022 - $200,000) to directors of the Company and $292,593 (three months ended March 31, 2022 - $535,000) to officers of the Company in fees and share-based compensation.

 

As March 31,2022, the Company had $604,225 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

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Related Party Transactions

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of March 31, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.  Officer (Ryan Ptolemy) of Investee  $2,188,015 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   37,010,000 
Total investment - March 31, 2023  $39,198,015 

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022  $38,842,294 

 

Valour Inc. (Cayman) holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at March 31, 2023.

 

During the three months ended March 31, 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

§The Company incurred $30,000 (2022 - $30,000) of expenses for its proportionate share of shared office costs with other corporations that may have common directors and officers. The costs associated with this space are administered by 2227929 Ontario Inc. As at December 31, 2022, the Company had a payable balance of $124,300 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment and due on demand. Fred Leigh, a former officer and former director of the Company, is also a director of 2227929 Ontario Inc.

 

§The Company incurred $23,338 (2022 - $20,915) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $58,097 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

§Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($73,976) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of Valour.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

Management Change

 

On February 13, 2023, Russell Starr elected to step down from his role as Executive Chairman but remains head of capital markets.

 

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Financial Instruments and Other Instruments

 

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

§The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

§Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2022 and 2021.

 

§Digital assets classified as financial assets relate to USDC which is measured at fair value

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at March 31, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market price)   (Valuation technique -observable market Inputs)   (Valuation technique - non-observable market inputs)   Total 
Publicly traded investments  $3,518   $-   $-   $3,518 
Privately traded invesments   -    -    43,859,941    43,859,941 
Digital assets   -    1,683    -    1,683 
March 31, 2023  $3,518   $1,683   $43,859,941   $43,865,141 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 

 

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Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended March 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2023		   December 31,
2022		 
Balance, beginning of period  $1,586   $4,063 
Purchases   97    - 
Disposal   -    (2,477)
Balance, end of period  $1,683   $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended March 31, 2023 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2023		   December 31,
2022		 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   354,672    (1,251,241)
Balance, end of period  $43,859,941   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

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The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at March 31, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation technique  Significant unobservable input(s)  Range of significant unobservable input(s)
3iQ Corp.  $3,740,140   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,188,015   Recent financing  Marketability of shares  0% discount
Earnity   14,979   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   676,717   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   37,010,000   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,457   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,859,941          
               
3iQ Corp.  $3,740,473   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour Cayman. As at March 31 2023, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,014 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arm’s length party of the Company. As at March 31, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,802 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at March 31 2023, the valuation of Earnity was based on the December 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at March 31 2023, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $1,498 (December 31, 2022 - $1,499) change in the carrying amount.

 

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Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at March 31 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31 2023. As at March 31 2023, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,672 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK: Meta, LLC (“SDK”)

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31 2023, the valuation of SDK:Meta LLC was $Nil (December 31, 2022 - $Nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31 2023, a +/- 10% change in the fair value of SDK: Meta LLC will result in a corresponding +/- 0 (December 31, 2022 +/- $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at March 31, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,701,000 (December 31, 2022 - $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at March 31, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,946 (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at March 31, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at March 31, 2023. As at March 31, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,063 (December 31, 2022 - $4,063) change in the carrying amount.

 

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Outstanding Share Data

 

Authorized unlimited common shares without par value – 219,510,501 are issued and outstanding as at May 15, 2023.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at May 15, 2023

 

Stock options and convertible securities outstanding as at May 15, 2023 are as follows:

 

Stock Options:

 

16,577,500 with exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and October 19, 2027.

 

Warrants:

 

4,055,926 with exercise price ranging from $0.30 expiring between November 14, 2024 and November 29, 2024.

 

Deferred shares units:

 

6,870,000 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2022 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

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The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Valour Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

27

 

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

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Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, Valour relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

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Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

Valour Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

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Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

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●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

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Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

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Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at March 31, 2023, the Company’s investments through its Defi Venture business arm comprise of $43,985,005 represented approximately 15.1% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

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If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

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Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

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Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

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Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

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Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

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The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

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Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

Multilateral Instrument 52-109 Disclosure

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

We have not identified any changes to our internal control over financial reporting which would materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

 

The CEO and CFO, together with other members of Management, have evaluated the effectiveness of internal controls over financial reporting as defined by National Instrument 52-109, and have concluded, based on our evaluation that they are operating effectively as at March 31, 2023.

 

42

 

 

Significant Accounting Policies

 

The Company’s significant accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2022 and 2021.

 

Future accounting change

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

Critical Accounting Estimates and Assumptions

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”).Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price in the range (UTC time) from www.coinmarketcap.com.

 

43

 

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 6 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

 

44

 

Exhibit 99.25

 

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

For the three months ended March 31, 2023 and 2022

 

(expressed in Canadian dollars)

 

 

 

 

 

 

 

 

 

 

1

 

Valour Inc.

 

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (CPA Canada) for a review of interim financial statements by an entity’s auditor.

 

2

 

Valour Inc.

 

Table of Contents

 

Condensed consolidated interim statements of financial position 4
Condensed consolidated interim statements of operations and comprehensive (loss) 5
Condensed consolidated interim statements of cash flows 6
Condensed consolidated interim statements of changes in equity 7
Notes to the condensed consolidated interim financial statements 8-36

 

3

 

Valour Inc.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   Note  March 31, 2023
$		   December 31,
2022
$		 
Assets           
Current           
Cash and cash equivalents  16   4,402,692    4,906,165 
Amounts receivable  4,16   91,099    67,102 
Public investments, at fair value through profit and loss  3,16   3,518    17,227 
Prepaid expenses  5   389,979    564,742 
Digital assets  6   114,424,324    106,582,076 
Digital assets loaned  6   56,718,460    - 
Digital assets staked  6   19,567,096    - 
Total current assets      195,597,168    112,137,312 
Private investments, at fair value through profit and loss  3,16,19   43,859,941    43,505,269 
Digital assets  6   87,232    53,358 
Equipment      17,389    20,623 
Right of use assets      -    1,917,174 
Intangible assets  7   5,071,613    5,581,188 
Goodwill      46,712,027    46,712,027 
Total assets      291,345,370    209,926,951 
Liabilities and shareholders’ equity             
Current liabilities             
Accounts payable and accrued liabilities  8,16,19   7,263,149    5,822,379 
Loans payable  9,16   57,102,191    52,821,600 
ETP holders payable  10,16   190,895,482    105,740,627 
Total current liabilities      255,260,822    164,384,606 
Non-current liabilities             
Lease liabilities      -    1,709,911 
Total liabilities      255,260,822    166,094,517 
Shareholders’ equity             
Common shares  14(b)(c)   166,258,901    166,151,401 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  15   26,851,949    27,909,984 
Accumulated other comprehensive income      (2,962,329)   (2,996,218)
Deficit      (158,385,324)   (151,554,084)
Total equity      36,084,548    43,832,434 
Total liabilities and equity      291,345,370    209,926,951 
Nature of operations and going concern  1          
Commitments and contingencies  20          

 

Approved on behalf of the Board of Directors:

 

“Tito Gandhi”   “William Steers”
Director   Director

 

See accompanying notes to these condensed consolidated interim financial statements

 

4

 

Valour Inc.

Condensed Consolidated Interim Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

      Three months ended
March 31,		 
   Note  2023 $   2022 $ 
Revenues           
Realized and net change in unrealized gains and (losses) on digital assets  11   70,773,827    (47,583,728)
Realized and net change in unrealized gains and (losses) on ETP payables  12   (75,513,491)   46,956,673 
Realized and unrealized (loss) on derivative assets      -    (587,015)
Staking and lending income      571,813    2,185,375 
Management fees      215,677    571,071 
Node revenue      5,821    287,548 
Realized (loss) on investments, net  3   (587)   (12,077)
Unrealized gain (loss) on investments, net  3   357,353    (24,985)
Interest income      829    28,146 
Total revenues      (3,588,758)   1,821,008 
Expenses             
Operating, general and administration  13,19   2,116,469    3,670,469 
Share based payments  15   941,286    8,724,908 
Depreciation - property, plant and equipment      3,236    3,236 
Depreciation - right of use assets      34,034    5,524 
Amortization - intangibles  7   509,575    589,289 
Finance costs      1,286,466    898,358 
Transaction costs      232,775    436,849 
Foreign exchange loss (gain)      10,461    (188,917)
Total expenses      5,134,302    14,139,716 
Net (loss) for the year      (8,723,060)   (12,318,708)
Other comprehensive loss Foreign currency translation gain (loss)      33,889    (233,307)
Net (loss) and comprehensive (loss) for the year      (8,689,171)   (12,552,015)
(Loss) per share             
Basic      (0.04)   (0.06)
Diluted      (0.04)   (0.06)
Weighted average number of shares outstanding:             
Basic      219,010,501    210,016,792 
Diluted      219,010,501    210,016,792 

 

See accompanying notes to these condensed consolidated interim financial statements

 

5

 

Valour Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

      Three months ended
March 31,		 
   Note  2023 $   2022 $ 
Cash (used in) provided by operations:           
Net (loss) income for the period     $(8,723,060)  $(12,318,708)
Adjustments to reconcile net (loss) income to cash (used in)             
operating activities:             
Share-based payments  15   941,286    8,724,908 
Debt for shares           296,160 
Interest expense  9   3,590    - 
Interest income      (829)   (28,146)
Depreciation - Property, plant & equipment      3,236    3,236 
Depreciation - right of use assets      34,034    - 
Amortization - Intangible asset  7   509,575    589,289 
Realized loss on investments, net      587    12,077 
Unrealized loss (gain) on investments, net      (357,353)   24,985 
Realized and net change in unrealized (gains) and loss on digital assets  11   (70,773,827)   47,583,728 
Realized and net change in unrealized (gains) and loss on ETP  12   75,513,491    (46,956,673)
Realized and unrealized (loss) on derivative asset      -    587,015 
Staking and lending income      (571,813)   (2,185,375)
Node revenue      (5,821)   (287,548)
Management fees      (215,677)   (571,067)
Unrealized loss (gain) on foreign exchange      1,136,940    (6,524,376)
       (2,505,641)   (11,050,495)
Adjustment for:              
Purchase of digital assets      (90,978,084)   (110,772,976)
Disposal of digital assets      77,173,457    92,424,637 
Purchase of investments      -    (34,649,658)
Disposal of investments      12,496    28,248 
Change in amounts receivable      (24,048)   (12,394)
Change in prepaid expenses and deposits      174,420    (908,318)
Change in accounts payable and accrued liabilities      1,648,546    (717,380)
Net cash (used in) operating activities      (14,498,854)   (65,658,336)
Financing activities             
Proceeds from ETP holders      49,015,215    127,194,184 
Payments to ETP holders      (39,335,963)   (100,668,088)
Loan Payable      4,319,901    46,235,200 
Proceeds from exercise of options  14(b)   -    45,000 
Shares repurchased pursuant to NCIB      -    (7,891,679)
Net cash provided by financing activities      13,999,153    64,914,616 
Effect of exchange rate changes on cash and cash equivalents      (3,772)   (128,176)
Change in cash and cash equivalents      (503,473)   (871,896)
Cash, beginning of period      4,906,165    9,161,034 
Cash and cash equivalents, end of period     $4,402,692   $8,289,138 

 

See accompanying notes to these condensed consolidated interim financial statements

 

6

 

Valour Inc.

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

                   Share-based payments       Accumulated          
   Number of
Common
Shares		   Common
Shares		   Number of
Preferred
Shares		   Preferred
Shares		   Options   Deferred
Shares Unit
(DSU)		   Treasury
shares		   Warrants   Share-based
Payments
Reserve		   other
comprehensive
income		   Deficit   Total 
                                                 
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   (151,554,084)   43,832,433 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    423,261    - 
Options cancelled   -    -    -    -    (1,468,560)   -    -    -    (1,468,560)   -    1,468,560    - 
DSU exercised   500,000    107,500    -    -    -    (107,500)   -    -    (107,500)   -    -    - 
Share-based payments   -    -    -    -    189,449    751,837    -    -    941,286    -    -    941,286 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    33,889    (8,723,060)   (8,689,171)
Balance, March 31, 2023   219,510,501   $166,258,901    4,500,000   $4,321,350   $19,038,201   $7,621,443   $27,453   $164,852   $26,851,949   $(2,962,329)  $(158,385,324)  $36,084,547 
Balance, December 31, 2021   211,102,552   $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986    25,898,062   $241,064.00   $(101,944,546)  $91,781,396 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    296,160 
NCIB   4,155,900    (3,248,905)   -    -    -    -    -    -    -    -    (4,642,780)   (7,891,685)
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    - 
Options cancelled   500,000    775,000    -    -    -    (775,000)   -    -    (775,000)   -    -    - 
DSU exercised   -    1,125,000    -    -    -    (1,125,000)   -    -    (1,125,000)   -    -    - 
Share-based payments   -    -    -    -    3,642,276    5,082,633    -    -    8,724,908    -    -    8,724,908 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (233,307)   (12,318,708)   (12,552,015)
Balance, March 31, 2022   208,085,419   $162,297,321    4,500,000   $4,321,350   $21,835,351   $10,234,581   $27,453   $585,986   $32,683,370   $7,757   $(118,906,034)  $80,403,764 

 

See accompanying notes to these condensed consolidated interim financial statements

 

7

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

Valour Inc. (the “Company” or “Valour”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. Valour is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These condensed consolidated interim financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at March 31, 2023, the Company has working capital (deficiency) of ($59,663,654) (December 31, 2022 - $(52,247,294), including cash of $4,402,692 (December 31, 2022 - $4,906,165) and for the three months ended March 31, 2023 had a net loss and comprehensive loss of $8,689,171 (for the three months ended March 31, 2022 – $12,552,015). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These condensed consolidated interim financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

2.Significant accounting policies

 

(a)Statement of compliance

 

These condensed consolidated interim financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) applicable to the preparation of interim financial statements, including IAS 34 – Interim Financial Reporting. These condensed interim financial statements should be read in conjunction with the annual audited consolidated financial statements for the years ended December 31, 2022 and 2021, which was prepared in accordance with IFRS as issued by the IASB. These condensed consolidated interim financial statements of the Company were approved for issue by the Board of Directors on May 15, 2023.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These condensed consolidated interim financial statements of fiscal 2023 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc. (Cayman), DeFi Europe AG, Crypto 21 AB and Valour Management Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

8

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(b)Basis of consolidation

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the condensed consolidated interim financial statements.

 

(c)Basis of preparation and functional currency

 

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for Valour Inc., DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc. (Cayman), DeFi Europe AG, Crypto 21 AB and Valour Management Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Significant accounting judgements, estimates and assumptions

 

The preparation of these condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

9

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets was classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair Value for is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”). Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

(ii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 3 and 16 for further details.

 

(iii)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 3 and 16 for further details.

 

(iv)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

10

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vi)Contingencies (See Note 20 for details)

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii) Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 7 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

11

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2023 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2023. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Investments, at fair value through profit and loss

 

At March 31, 2023, the Company’s investment portfolio consisted of one publicly traded investment and eight private investments for a total estimated fair value of $43,863,459 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

During the three months ended March 31, 2023, the Company had a realized (loss) of ($587) and unrealized gains of $357,353 (March 31, 2022 – realized (loss) of ($12,077)) and an unrealized (loss) of $($24,985)) on private and public investments.

 

Public Investments

 

At March 31, 2023, the Company’s one public investment had a total fair value of $3,518.

 

Public Issuer  Note  Security
description		  Cost   Estimated
Fair Value		   of FV 
Smart Valor AG            4,550 SDR  $36,139   $3,518    100.0%
Total public investments        $36,139   $3,518    100.0%

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer  Note  Security
description		  Cost   Value   of FV 
Smart Valor AG     19,000 SDR   150,908    17,227    100.0%
Total public investments        $150,908   $17,227    100.0%

 

12

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

3.Investments, at fair value through profit and loss (continued)

 

Private Investments

 

At March 31, the Company’s eight private investments had a total fair value of $43,859,941

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,140    8.5%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,188,015    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,979    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    676,717    1.5%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    37,010,000    84.4%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,457    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,859,941    100.0%

 

(i)Investments in related party entities (Note 19)

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

4.Amounts receivable

 

   31-Mar-23   31-Dec-22 
Other receivable  $91,099   $67,102 

 

5.Prepaid expenses

 

   31-Mar-23   31-Dec-22 
Prepaid insurance  $-   $61,065 
Prepaid expenses   389,979    503,677 
   $389,979   $564,742 

 

13

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets

 

As at March 31, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $190,797,112 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   March 31, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   11.0991    4,762    11.1000    3,678 
Bitcoin   2,172.8726    83,742,351    2,126.5130    47,498,630 
Ethereum   21,461.5486    52,918,077    21,141.7368    34,333,700 
Cardano   40,000,404.6881    21,593,473    36,438,339.0800    12,004,332 
Polkadot   1,109,176.9436    9,518,153    931,646.4544    5,407,239 
Solana   669,287.23    19,174,651    428,280.68    5,537,534 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Shyft   3,686,018.3904    34,315    3,507,575.4684    37,530 
Uniswap   163,542.0602    1,341,452    148,734.0602    1,021,542 
USDC        1,683         1,586 
USDT        14,121         14,134 
Litcoin   5.0000    603    -    - 
Doge   12,800.0000    1,292    10,000.0000    914 
Cosmos   200.9992    3,044    201.0000    2,531 
Avalanche   92,779.6107    2,224,899    48,995.3900    712,745 
Matic   891.0000    1,317    890.0000    906 
Shiba Inu   -    -    90,000,000.0000    975 
Ripple   2,000.0000    1,447    2,000.0000    919 
Enjin   243,660.1546    134,239    10,009.9900    3,180 
Terra Luna   199,896,558.0000    -    199,195.3600    - 
Current        190,709,880         106,582,076 
Blocto   260,284.161    8,949    251,424.913    6,737 
Maps   285,713.000    -    285,713.000    - 
Oxygen   400,000.000    -    400,000.000    - 
Boba Network   250,000.00    -    250,000.00    - 
Saffron.finance   86.21    3,608    86.21    2,345 
Clover   310,000.00    15,878    310,000.00    13,216 
Sovryn   15,458.95    10,370    15,458.95    2,342 
Wilder World   148,810.00    48,369    148,810.00    28,660 
Pyth   2,500,000.00    -    2,500,000.00    - 
Volmex   2,925,878.0000    58    2,925,878.0000    58 
Long-Term        87,232         53,358 
Total Digital Assets        190,797,112         106,635,434 

 

14

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

The continuity of digital assets for the three months ended March 31, 2023 and year ended December 31, 2022:

 

   March 31, 2023   December 31, 2022 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   90,978,084    231,392,840 
Digital assets disposed   (77,173,457)   (191,092,048)
Realized (loss) on digital assets   (12,013,224)   (47,595,430)
Digital assets earned from staking, lending and fees   787,490    5,955,456 
Net change in unrealized gains and losses on digital assets   82,787,051    (275,739,651)
Foregin exchange (loss) gain   (1,204,266)   13,660,527 
   $190,797,112   $106,635,434 

 

In the normal course of business, the Company enters into open-ended staking and lending arrangements with certain financial institutions, whereby the Company stakes and loans certain digital assets in exchange for interest income payable in the underlying digital asset loaned or staked. The Company can demand the repayment of the loans and accrued interest can be terminated within 5 days notice and staked coins can be returned on a 1 days notice. The digital assets staked and loaned are included in the balance above.

 

Digital Assets loaned

 

As of March 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.5% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of March 31, 2023, digital assets on loan consisted of the following:

 

   Number of coins on loan    Fair Value   Fair Value Share 
Digital on loan:               
Bitcoin   500.0000    19,269,963    34%
Ethereum   5,000.0000    12,328,579    22%
Polkdot   973,835.0000    8,356,746    15%
Solana   547,441.0000    15,683,835    28%
Avalanche   45,009.0000    1,079,337    2%
Total   1,571,785.0000    56,718,460    100%

 

As of March 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of coins on loan    Fair Value   Fair Value
Share		 
Digital on loan:                  
Counterparty A  1.07% to 4.49%   500.0000   $19,269,963    34%
Counterparty B  0.5% to 9.7%   1,571,285.0000    37,448,497    66%
Total      1,571,785.0000   $56,718,460    100%

 

15

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of March 31, 2023, digital assets loan were concentrated with counterparties as follows:

 

   Geography  March 31,
2023		 
Digital on loan:         
Counterparty A  United States   34%
Counterparty B  Cayman Islands   66%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of March 31, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3% to 5% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

As of March 31, 2023, digital assets staked consisted of the following:

 

   Number of coins
staked		   Fair Value   Fair Value
Share		 
Digital on staked:                
Ethereum   10.0000    24,657    0%
Cardano   36,201,005.6550    19,542,438    100%
Total   36,201,015.6550    19,567,096    100%

 

As of March 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins
staked		    Fair Value   Fair Value
Share		 
Digital on staked:                     
Counterparty B   3% to 5%    10.0000   $24,657    0%
Counterparty C   2.90%    36,201,005.6550    19,542,438    100%
Total        36,201,015.6550   $19,567,096    100%

 

16

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of March 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  March 31,
2023		 
Digital on staked:        
Counterparty B  Cayman Islands   0%
Counterparty C  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7.Intangibles and goodwill

 

Cost  Brand Name   Total 
Balance, December 31, 2022 and March 31, 2023  $42,789,968   $42,789,968 

 

Accumulated Amortization  Brand Name   Total 
Balance, December 31, 2021  $(21,065,981)  $(21,065,981)
Amortization   (2,277,443)   (2,277,443)
Impairment loss   (13,865,356)   (13,865,356)
Balance, December 31, 2022  $(37,208,780)  $(37,208,780)
Amortization   (509,575)   (509,575)
Balance, March 31, 2023  $(37,718,355)  $(37,718,355)
Balance, December 31, 2022  $5,581,188   $5,581,188 
Balance, March 31, 2023  $5,071,613   $5,071,613 

 

8.Accounts payable and accrued liabilities

 

   31-Mar-23   31-Dec-22 
Corporate payables  $6,658,924   $5,747,151 
Related party payable (Note 19)   604,225    75,228 
   $7,263,149   $5,822,379 

 

17

 

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of March 31, 2023, the loan principal of $52,778,700 (US$39,000,000) (December 31, 2022 - $52,778,700 (US$39,000,000)) was outstanding. The loans mature on June 11, 2023 and have interest rates ranging from 3.6% to 4.5%. The extended loans are secured with 1223.404952 BTC and 11,833.365522 ETH.

 

One of Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The next court hearing is scheduled for March 30, 2023. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at March 31, 2023, the value of the 475 BTC was US$13,527,278 and potential loan loss exposure is US$6,878,295.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. As of March 31, 2023, the loan principal of $260,000 plus accrued interest of $3,590 was outstanding. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of March 31, 2023, the loan principal of $4,059,901 (US$3,000,001) was outstanding.

 

18

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

10.ETP holders payable

 

The fair market value of the Company’s ETPs as at March 31, 2023 and December 31, 2022 were as follows:

 

   March 31,
2023
$		   December 31,
2022
$		 
BTC Zero EUR   7,120,476    3,063,222 
BTC Zero SEK   76,602,098    44,379,551 
ETH Zero EUR   835,071    120,319 
ETH Zero SEK   52,340,685    33,841,456 
Polkadot EUR   1,124    56 
Polkadot SEK   9,530,811    5,312,625 
Cardano EUR   2,216    1,308 
Cardano SEK   21,817,500    11,833,732 
UNI EUR   107,754    86,714 
UNI SEK   1,231,501    891,459 
BNB ETP - EUR   563    - 
Solana EUR   118,168    12,010 
Solana SEK   18,841,147    5,494,963 
Cosmos EUR   1,199    185 
Valour Digital Asset Basket 10 EUR   2,031    790 
Valour BTC Carbon Neutral EUR   4,823    1,107 
Avalanche EUR   3,868    697,454 
Avalanche SEK   2,201,452    872 
Enjin EUR   132,996    2,804 
    190,895,482    105,740,627 

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

11.Realized and net change in unrealized gains and (losses) on digital assets

 

   31-Mar-23   31-Mar-22 
Realized gains / (loss) on digital assets  $(12,013,225)  $(16,943,686)
Unrealized gains / (loss) on digital assets   82,787,053    (30,640,042)
   $70,773,827   $(47,583,728)

 

12.Realized and net change in unrealized gains and (losses) on ETP payables

 

   31-Mar-23   31-Mar-22 
Realized gains / (loss) on ETPs  $27,677,678  $37,753,703
Unrealized gains / (loss) on ETPs   (103,191,170)   9,202,970
   $(75,513,491)  $46,956,673

 

19

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

13.Expenses by nature

 

   Three months ended
March 31,		 
   2023   2022 
Management and consulting fees  $1,089,615   $1,871,715 
Travel and promotion   117,293    955,035 
Office and rent   628,628    454,904 
Accounting and legal   213,526    305,936 
Regulatory and transfer agent   67,407    82,879 
   $2,116,469   $3,670,469 

 

14.Share Capital

 

a)As at March 31, 2023 and December 31, 2022, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

b)Issued and outstanding shares

 

   Number of
Common
Shares		   Amount 
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 
DSU exercised   500,000    70,000 
Grant date fair value on DSU excercised        37,500 
Balance, March 31, 2023   219,510,501   $166,258,901 

 

20

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

14.Share Capital (continued)

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from November 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the three months ended March 31, 2023, the Company purchased and cancelled no shares (December 31, 2022 – purchased and cancelled 8,560,100 shares at an average price of $1.54).

 

15.Share-based payments reserves

 

Stock options, DSUs and Warrants 

 

   Options   DSU   Warrants     
   Number of   Weighted average exercise   Value of   Number of   Value of   Number of   Weighted average exercise   Value of   Total 
   Options   prices   options   DSU   DSU   warrants   prices   warrants   Value 
December 31, 2021   20,308,100   $   1.27   $18,260,128   $8,625,000   $7,051,948    19,432,810   $   0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,617    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (2,000,000)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (6,755,000)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   -    1.34    189,449    1,000,000    751,837    -    -    -    941,286 
Exercised   -    -    -    (500,000)   (107,500)   -    -    -    (107,500)
Expired / cancelled   (1,200,000)   1.11    (1,468,560)   -    -    (12,684,560)   0.03    (423,261)   (1,891,821)
March 31, 2023   16,577,500   $1.36   $19,065,654    6,870,000   $7,621,443    4,055,926   $0.30   $164,852   $26,851,949 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

The Company recorded $189,449 (three months ended March 31, 2022 - $3,642,276) of share-based payments during the three months ended March 31, 2023.

 

21

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share-based payments reserves (continued)

 

The following share-based payment arrangements were in existence at March 31, 2023:

 

Number outstanding   Number exercisable   Grant
date		  Expiry date  Exercise price   Fair value at grant date   Grant date share price   Expected volatility   Expected
life
(yrs)		   Expected dividend yield   Risk-free interest rate 
 542,500    542,500   16-Nov-20  16-Nov-25   $0.09    42,966   $0.09    138.70%        5         0%   0.46%
 500,000    500,000   24-Feb-21  24-Feb-26   $1.58    1,149,500   $2.55    147.00%   5    0%   0.73%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26   $1.58    1,906,500   $2.12    145.70%   5    0%   0.99%
 2,410,000    2,410,000   09-Apr-21  09-Apr-26   $1.58    3,852,626   $1.78    145.20%   5    0%   0.95%
 3,200,000    3,200,000   18-May-21  18-May-26   $1.22    3,600,640   $1.25    145.60%   5    0%   0.95%
 1,000,000    500,000   18-May-21  18-May-26   $1.22    1,125,200   $1.25    145.60%   5    0%   0.95%
 750,000    750,000   25-May-21  25-May-26   $1.11    747,900   $1.11    145.50%   5    0%   0.86%
 1,200,000    1,200,000   25-May-21  25-May-26   $1.11    1,196,640   $1.11    145.50%   5    0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26   $1.58    1,461,305   $1.43    143.70%   5    0%   0.84%
 750,000    750,000   21-Sep-21  21-Sep-26   $1.70    1,141,125   $1.70    144.00%   5    0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26   $2.10    470,375   $2.10    144.00%   5    0%   1.27%
 500,000    500,000   09-Nov-21  09-Nov-26   $3.92    1,758,050   $3.92    144.30%   5    0%   1.37%
 425,000    425,000   31-Dec-21  31-Dec-26   $3.11    1,187,493   $3.11    145.00%   5    0%   1.25%
 500,000    500,000   09-May-22  09-May-27   $2.00    591,950   $1.34    146.00%   5    0%   2.76%
 500,000    250,000   20-May-22  20-May-27   $1.00    334,300   $0.75    146.80%   5    0%   2.70%
 400,000    100,000   21-Jul-22  21-Jul-27 $  $0.80    195,640   $0.50    147.50%   5    0%   3.00%
 500,000    -   17-Oct-22  17-Oct-27   $0.17    73,350   $0.17    149.50%   5    0%   3.60%
 1,000,000    -   19-Oct-22  19-Oct-27   $0.17    150,800   $0.17    149.40%   5    0%   3.71%
 16,577,500    14,027,500               20,986,360                          

 

The weighted average remaining contractual life of the options exercisable at March 31, 2023 was 3.4 years (December 31, 2022 – 3.5 years).

 

22

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share-based payments reserves (continued)

 

Warrants

 

As at March 31, 2023, the Company had share purchase warrants outstanding as follows:

 

   Number outstanding &   Grant  Expiry  Exercise   Fair value at grant   Grant date share   Expected   Expected life   Expected dividend   Risk-free interest 
   exercisable   date  date  price   date   price   volatility   (yrs)   yield   rate 
Warrants   3,537,433   14-Nov-22  14-Nov-24   $0.30    153,355   $0.17    69.4%   2    0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24   $0.30    6,975   $0.17    69.4%   2    0%   3.87%
Warrants   331,000   29-Nov-22  29-Nov-24   $0.30    13,183   $0.18    64.4%   2    0%   3.95%
Warrant issue costs                   (8,661)                         
    4,055,926               164,852                          

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

The Company recorded $751,837 in share-based compensation during the three months ended March 31, 2023 (three months ended March 31, 2022 - $5,082,632).

 

23

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments

 

Financial assets and financial liabilities as at March 31, 2023 and December 31, 2022 are as follows:

 

   Asset / (liabilities) at amortized cost   Assets /(liabilities) at fair value through profit/(loss)   Total 
December 31, 2022            
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    43,505,269    43,505,269 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)
March 31, 2023               
Cash  $4,402,692   $-   $4,402,692 
Amounts receivable   91,099    -    91,099 
Public investments   -    3,518    3,518 
Private investments   -    43,859,941    43,859,941 
USDC   -    1,683    1,683 
Accounts payable and accrued liabilities   (7,263,149)   -    (7,263,149)
Loan payable   (57,102,191)   -    (57,102,191)
ETP holders payable   -    (190,895,482)   (190,895,482)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

24

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Liquidity risk (continued)

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at March 31, 2023, the Company had current assets of $195,597,168 (December 31, 2022 - $112,137,312) to settle current liabilities of $255,260,822 (December 31, 2022 - $164,384,606).

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at March 31, 2023 and December 31, 2023

 

   December 31, 2022 
   Total   Less than
1 year		   1-3
years		 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   106,635,434    106,582,076    53,358 
Private investments   43,505,269    -    43,505,269 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(10,398,578)  $(52,247,294)  $41,848,716 

 

   March 31, 2023 
   Total   Less than
1 year		   1-3
years		 
Cash  $4,402,692   $4,402,692   $- 
Amounts receivable   91,099    91,099    - 
Public investments   3,518    3,518    - 
Prepaid expenses   389,979    389,979    - 
Digital assets   190,797,112    190,709,880    87,232 
Private investments   43,859,941    -    43,859,941 
Accounts payable and accrued liabilities   (7,263,149)   (7,263,149)   - 
Loans payable   (57,102,191)   (57,102,191)   - 
ETP holders payable   (190,895,482)   (190,895,482)   - 
Total assets / (liabilities) - March 31, 2023  $(15,716,481)  $(59,663,654)  $43,947,173 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

25

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At March 31, 2023, two investments made up approximately 14% (December 31, 2022 – two investment of 19.1%) of the total assets of the Company.

 

For the three months ended March 31, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.1 million, or $0.02 per share.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.02 per share.

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at March 31, 2023, a 1% change in interest rates could result in $44,027 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at March 31, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   March 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		    European
Euro		 
Cash  $4,398,027   $       -   $      -    $     - 
Receivables   82,217    -    -     - 
Private investments   3,109,801    -    37,010,000     - 
Prepaid investment   376,616    -    -     - 
Digital assets   190,797,112    -    -     - 
Accounts payable and accrued liabilities   (3,696,854)   (73,976)   (59,790)    (22,062)
Loan payable   (57,365,781)                
ETP holders payable   (190,895,482)   -    -     - 
Net assets (liabilities)  $(53,194,345)  $(73,976)  $36,950,210    $(22,062)

 

26

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(c)Currency risk (continued)

 

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $        -   $       -   $       - 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of March 31, 2023 would result in an estimated increase (decrease) in net income of approximately $1,628,000 (December 31, 2022 - $562,800).

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

27

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2022 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at March 31, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted
Market price)		   (Valuation
technique -
observable market Inputs)		   (Valuation
technique -
non-observable market
inputs)		   Total 
Publicly traded investments  $3,518   $-   $-   $3,518 
Privately traded invesments   -    -    43,859,941    43,859,941 
Digital assets   -    1,683    -    1,683 
March 31, 2023  $3,518   $1,683   $43,859,941   $43,865,141 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended March 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss

 

Investments, fair value for the period ended 

March 31,

2023

  

December 31,

2022

 
Balance, beginning of period  $1,586   $4,063 
Purchases   97    - 
Disposal   -    (2,477)
Balance, end of period  $1,683   $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended March 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

28

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

Investments, fair value for the period ended 

March 31,

2023

  

December 31,

2022

 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   354,672    (1,251,241)
Balance, end of period  $43,859,941   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at March 31, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation
technique		  Significant unobservable
input(s)		  Range of significant unobservable input(s)
3iQ Corp.  $3,740,140   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,188,015   Recent financing  Marketability of shares  0% discount
Earnity   14,979   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   676,717   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   37,010,000   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,457   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
March 31, 2023  $43,859,941          
               
3iQ Corp.  $3,740,473   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

29

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at March 31, 2023, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,014 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at March 31, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,802 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at March 31, 2023, the valuation of Earnity was based on the December 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $1,498 (December 31, 2022 - $1,499) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at March 31, 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,672 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31, 2023, the valuation of SDK:Meta LLC was $Nil (March 31, 2022 - $3,420,000). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31, 2023, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2022 - $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at March 31, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,701,000 (December 31, 2022 +/- $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at March 31, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,946 (December 31, 2022 - $18,961) change in the carrying amount.

 

30

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at March 31, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2023. As at March 31, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,063 (December 31, 2022 - $4,063) change in the carrying amount.

 

17.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

31

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Digital asset risk (continued)

 

(c)Digital currency risk factors: Political, regulatory risk in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

18.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the three months ended March 31, 2023.

 

32

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures

 

a)The condensed consolidated interim financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest 
DeFi Capital Inc.   100 
DeFi Holdings (Bermuda) Ltd.   100 
Electrum Streaming Inc.   100 
Valour Inc. (Cayman)   100 
DeFi Europe AG   100 
Crypto 21 AB   100 
Valour Management Limited   100 

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three months ended March 31, 2023 and 2022 were as follows:

 

   Three months ended
March 31,		 
   2023   2022 
Short-term benefits  $292,593   $735,000 
Shared-based payments   134,971    2,837,580 
   $427,564   $3,572,580 

 

As at March 31, 2023, the Company had $604,225 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the three months ended March 31, 2023 and 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended
March 31,		 
   2023   2022 
2227929 Ontario Inc.  $30,000   $30,000 
**Excl. HST & incl. bonus  $30,000   $30,000 

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at March 31, 2023 the Company had a payable balance of $124,300 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

33

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures (continued)

 

The Company incurred $23,338 (2022 - $20,915) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $58,097 (December 31, 2022 – $24,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($73,976) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of March 31, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.  Officer (Ryan Ptolemy) of Investee  $2,188,015 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   37,010,000 
Total investment - March 31, 2023     $39,198,015 

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at March 31, 2023,

 

Valour Inc. (Cayman) holds 4,000,000 common shares of the Company.

 

20.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,098,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $902,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

34

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

March 31, 2023  Canada   Bermuda   Cayman
Islands		   Total 
Cash   39,819    -    4,362,873    4,402,692 
Amounts receivable   8,882    -    82,217    91,099 
Public investments   -    -    3,518    3,518 
Prepaid expenses   38,155    9,290    342,534    389,979 
Digital Assets   -    121,546    190,675,566    190,797,112 
Property, plant and equipment   -    12,925    4,464    17,389 
Other non-current assets   91,862,809    40,599    3,740,173    95,643,581 
Total assets   91,949,665    184,360    199,211,345    291,345,370 

 

December 31, 2022  Canada   Bermuda   Cayman
Islands		   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    106,491,188    106,635,434 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   92,017,379    40,632    5,657,647    97,715,658 
Total assets   92,419,715    203,205    117,304,032    209,926,952 

 

35

 

Valour Inc.

Notes to the condensed consolidated interim financial statements

For the three months ended March 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the three months ended March 31, 2023  Valour Inc.
(Canada)		   DeFi
Bermuda		   Valour Inc.
(Cayman)		   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    24,880    70,748,947    70,773,827 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (75,513,491)   (75,513,491)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    14    571,799    571,813 
Management fees   -    -    215,677    215,677 
Node revenue   -    5,821    -    5,821 
Realized (loss) on investments, net   -    -    (587)   (587)
Unrealized (loss) on investments, net   355,005    -    2,348    357,353 
Interest income   488    -    341    829 
Total revenue   355,493    30,715    (3,974,966)   (3,588,758)
Expenses                    
Operating, general and administration   921,360    13,325    1,181,784    2,116,469 
Share based payments   941,286    -    -    941,286 
Depreciation - property, plant and equipment   -    2,617    619    3,236 
Depreciation - right of use assets   -    -    34,034    34,034 
Amortization - intangibles   509,575    -    -    509,575 
Finance costs        -    1,286,466    1,286,466 
Transaction costs   -    -    232,775    232,775 
Foreign exchange (gain) loss   7,116    -    3,345    10,461 
Total expenses   2,379,337    15,942    2,739,023    5,134,302 
(Loss) income before other item   (2,023,844)   14,772    (6,713,989)   (8,723,060)
Other comprehensive loss                     
Foreign currency translation (loss) gain   -    (168)   34,057    33,889 
Net (loss) income and comprehensive (loss) income for the period   (2,023,844)   14,604    (6,679,932)   (8,689,171)

 

For the three months ended March 31, 2022  Valour Inc.
(Canada)		   DeFi
Bermuda		   Valour Inc.
(Cayman)		   Total 
Realized and net change in unrealized gains and losses on digital assets   -    (966,804)   (46,616,924)   (47,583,728)
Realized and net change in unrealized gains and losses on ETP payables   -    -    46,956,673    46,956,673 
Realized loss of derivative asset   -    (587,015)   -    (587,015)
Staking and lending income   -    1,996    2,183,379    2,185,375 
Management fees   -    -    571,071    571,071 
Node revenue   -    287,548    -    287,548 
Realized (loss) on investments, net   -    (12,077)   -    (12,077)
Unrealized (loss) on investments, net   -    (21,743)   (3,242)   (24,985)
Interest income   43    -    28,103    28,146 
Total revenue   43    (1,298,095)   3,119,060    1,821,008 
Expenses                    
Operating, general and administration   2,693,822    8,797    967,850    3,670,469 
Share based payments   8,724,908    -    -    8,724,908 
Depreciation - property, plant and equipment   -    2,617    619    3,236 
Depreciation - right of use assets   -    -    5,524    5,524 
Amortization - intangibles   589,289    -    -    589,289 
Finance costs   -    -    898,358    898,358 
Transaction costs   87,128    -    349,721    436,849 
Foreign exchange (gain) loss   (89,594)   -    (99,323)   (188,917)
Total expenses   12,005,553    11,414    2,122,749    14,139,716 
(Loss) income before other item   (12,005,510)   (1,309,509)   996,311    (12,318,708)
Other comprehensive loss                    
Foreign currency translation gain   -    (204,662)   (28,645)   (233,307)
Net (loss) income and comprehensive (loss) income for the period   (12,005,510)   (1,514,171)   967,666    (12,552,015)

 

 

36

 

 

Exhibit 99.26

 

 

Valour Inc. Announces Q1 2023 Financial Results Finishing the Quarter with AUM at $191m CAD - up 80% from the Previous Quarter

 

TORONTO – May 17, 2023 – Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announces its financial performance for the three months ended March 31, 2023 (all amounts in Canadian dollars, unless otherwise indicated).

 

Key Highlights of Q1 2023

 

●The Company maintains a healthy cash balance at March 31, 2023 of $4.4 million compared to $4.9 million at December 31, 2022 and the Company’s venture portfolio investments stood at $43.9 million at the end of the quarter.
   
●AUM increased 80% to $191 million as at March 31, 2023 from $106 million as at December 31, 2022.
   
●Valour expanded product offering access in France, a key market for expansion.
   
●VALOUR VDAB10 became a benchmark index for crypto offerings at independent research provider MoneyMoon.
   
●Valour Digital Securities Limited, a Jersey-based securities issuance vehicle cooperating with Cayman-based Valour Inc. as arranger, obtained the approval in principle by the JFSC and subsequently submitted a new EU base prospectus documentation covering physically backed ETP-Products with the Swedish Regulator SFSA.
   
●Net (loss) for the three months ended March 31, 2023 was $(8.7) million compared to $(12.3) million for the same period in 2022. This represents an improvement of $3.6 million or 29% compared to the same period in 2022 in a quarter where reported revenues were down $5.4 million compared to March 31, 2022 reported revenues ($(3.6) million in 2023 vs. $1.8 million in 2022).
   
●Operating, general and administrative costs for the three months ended March 31, 2023 was $2.1 million compared to $3.7M for the same period in 2022, a decrease of $1.6 million or 43% as the Company continues to reduce costs across the business.
   
●Total expenses for the three months ended March 31, 2023 was $5.1 million compared to $14.1 million in 2022 representing a 64% decrease year over year. Total expenses less share-based payments for the three months ended March 31, 2023 was $4.2 million compared to $5.4 million in 2022 representing a 22% decrease year over year.

 

“We continue to witness strong demand and inflows into our Valour ETP business as the Web 3.0 ecosystem garners widespread adoption,” said Olivier Roussy Newton, Chief Executive Officer of Valour. “Our first-quarter financial results demonstrate significant progress, with AUM reaching $191 million, an impressive 80% increase from the previous quarter. With the approval and launch of our digital asset-backed issuance program, we anticipate additional growth for the ETP business going forward. Our reduction of expenses by 64% year over year exemplifies our commitment to cost reduction and operational efficiency. As we drive our vision forward, our unwavering focus remains on expanding our diverse range of ETP products across Europe and delivering value to our investors.”

 

 

 

 

ETPs/Valour

 

The Company’s ETP business, Valour Cayman, reported AUM of $191 million as of March 31, 2023, an increase of 80% from December 31, 2022 report AUM of $106 million.

 

Liquidity

 

The Company maintains a healthy cash balance at March 31, 2023 of $4.4 million compared to $4.9 million at December 31, 2022 and the Company’s venture portfolio investments stood at $43.9 million at the end of the quarter.

 

Financial Performance

 

For the three months ended March 31, 2023:

 

●Total revenues were $(3.6) million consisting of realized and net change in unrealized gains and (losses) on digital assets of $71 million, realized and net change in unrealized gains and (losses) on ETP payables of $(76) million, staking and lending income of $572 thousand, management fees on ETPs of $216 thousand and node validator revenue of $6 thousand and total realized and unrealized gains on investments of $356 thousand.
   
●Total expenses were $5.1 million compared to $14.1 million in the same period in 2022. The Company continues to reduce costs as it focuses on expanding its ETP products.
   
●Net loss was $8.7 million compared to $12.3 million in 2022. The lower net loss for the period was driven by the decrease in total expenses offset by weaker revenues in the period.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

2

 

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@valour.com

 

 

3 

 

 

Exhibit 99.27

 

 

DEFI TECHNOLOGIES INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF COMMON
SHAREHOLDERS

 

You are invited to the 2024 annual and special meeting (the “Meeting”) of common shareholders (the “Shareholders”) of DeFi Technologies Inc. (the “Corporation”).

 

When: Tuesday, June 20, 2023 at 10:00 a.m. (Toronto time)

 

Where: 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2

 

The purpose of the Meeting is as follows:

 

1.Financial Statements. Receive and consider the audited consolidated financial statements as at and for the fiscal year ended December 31, 2022;

 

2.Auditor Appointment. Appoint BF Borgers CPA PC as auditor of the Corporation;

 

3.Elect Directors. Consider and elect the directors for the ensuing year;

 

4.Name Change. The Corporation is proposing to change its name to “DeFi Technologies Inc.”; and

 

5.Other Business. Consider other business as may properly come before the Meeting or any postponement(s) or adjournment(s) thereof.

 

The details of all matters proposed to be put before the Shareholders at the Meeting are set forth in the management information circular (the “Circular”), under “Matters to be Considered”, accompanying this Notice of Meeting. At the Meeting, Shareholders will be asked to approve each of the foregoing items.

 

The board of directors of the Corporation unanimously recommends that the Shareholders vote FOR each of the appointment of BF Borgers CPA PC as auditor of the Corporation, the election of the directors of the Corporation for the ensuing year, and the Name Change.

 

Each common share of the Corporation (a “Common Share”) will entitle the holder thereof to one (1) vote at the Meeting.

 

The directors of the Corporation have fixed the close of business on May 9, 2023 as the record date, being the date for the determination of the registered Shareholders entitled to notice and to vote at the Meeting and any adjournments(s) or postponement(s) thereof.

 

Shareholders and/or their appointees may participate in the Meeting by way of conference call however votes cannot be cast on the conference call. Please register at https://us02web.zoom.us/meeting/register/tZAkd-6opz8vGdWDgKlwGoayED4TehafgdWk to receive conference call details. Electronic copies of the Meeting materials may be obtained at https://valour.com/investor-relations or under the Corporation’s profile on www.SEDAR.com.

 

1

 

 

The Corporation has elected to use the notice-and-access rules (“Notice and Access”) under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations for distribution of the Circular, this Notice of Meeting, the form of proxy and the voting instruction form (collectively, the “Meeting Materials”) to holders of Common Shares. Notice and Access is a set of rules that allows issuers to post electronic versions of its proxy-related materials on SEDAR and on one additional website, rather than mailing paper copies to shareholders.

 

Shareholders may obtain paper copies of the Meeting Materials by contacting the Corporation’s transfer agent, Odyssey Trust Company (“Odyssey”), at 1-587-885-0960 and 1-888-290-1175 (toll-free) from outside of North America. A request for paper copies should be received by Odyssey by June 6, 2023 in order to allow sufficient time for the shareholder to receive the paper copy and return the proxy by its due date.

 

Proxies are being solicited by management of the Corporation. A form of proxy for the Meeting accompanies this notice (the “Proxy”). Shareholders who are entitled to vote at the Meeting may vote either in person or by Proxy. Shareholders who are unable to be present in person at the Meeting are requested to complete, execute and deliver the enclosed Proxy to the Corporation’s registrar and transfer agent, Odyssey Trust Company, #702-67 Yonge Street, Toronto ON M5E 1J8 by no later than 10:00 a.m. (Toronto time) on June 16, 2023, or if the Meeting is adjourned or postponed, by no later than 48 hours prior to the time of such reconvened meeting (excluding Saturdays, Sundays and holidays). The Chairman of the Meeting may waive or extend the time limit for the deposit of Proxies. Beneficial owners of Common Shares registered in the name of a broker, custodian, nominee or other intermediary should follow the instructions provided by their broker, custodian, nominee or other intermediary in order to vote their Common Shares.

 

Registered holders of the potash stream preferred shares of the Corporation are hereby provided with notice of, and are entitled to attend, the Meeting and be heard at such Meeting.

 

DATED at Toronto, Ontario as of the 11th day of May, 2023

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “Olivier Roussy Newton”
  Chief Executive Officer and Executive Chairman

 

2

 

 

VALOUR INC.

 

MANAGEMENT INFORMATION CIRCULAR
May 11, 2023

 

FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 20, 2023

 

INFORMATION REGARDING CONDUCT OF MEETING

 

Solicitation of Proxies

 

This management information circular (“Circular”) is furnished in connection with the solicitation by the management of Valour Inc. (the “Corporation” or “Valour”) of proxies to be used at the annual general and special meeting (the “Meeting”) of holders of common shares of the Corporation to be held at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2 on June 20, 2023 at 10:00 a.m. and at any postponement(s) or adjournment(s) thereof for the purposes set forth in the accompanying notice of meeting (“Notice of Meeting”). References in this Circular to the “Meeting” include references to any postponement(s) or adjournment(s) thereof. It is expected that the solicitation will be primarily by mail but proxies may also be solicited through other means by employees, consultants and agents of the Corporation. The cost of solicitation by management will be borne by the Corporation.

 

The Corporation is sending proxy-related materials to holders (the “Shareholders”) of common shares (the “Common Shares”) using the notice-and-access rules (“Notice and Access”) under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations. Notice and Access is a set of rules for reducing the volume of materials that must be physically mailed to Shareholders by posting the circular and additional materials online. Shareholders will still receive a hard copy of the Notice of Meeting and form of proxy or voting instruction form, as the case may be, and may choose to receive a hard copy of this Circular (collectively, the “Meeting Materials”). Details are included in the Notice of Meeting. The Meeting Materials are available online at https://valour.com/investor-relations and under the Corporation’s profile on SEDAR at www.sedar.com. Shareholders are reminded to review the Meeting Materials before voting.

 

The board of directors of the Corporation (the “Board”) has by resolution fixed the close of business on May 9, 2023 as the record date for the meeting (the “Record Date”) being the date for the determination of the registered Shareholders entitled to notice of and to vote at the Meeting and any postponement(s) or adjournment(s) thereof. The Board has by resolution fixed 10:00 a.m. (Toronto time) on June 16, 2023, or 48 hours (excluding Saturdays, Sundays and holidays) before any postponement(s) or adjournment(s) of the Meeting, as the time by which proxies to be used or acted upon at the Meeting or any adjournment(s) thereof shall be deposited with the Corporation’s transfer agent, Odyssey Trust Company (“Odyssey”). The proxy cut-off time may be waived or extended by the Board or a person authorized by the Board in its sole discretion without notice.

 

The Corporation shall make a list of all persons who are registered holders of Common Shares on the Record Date and the number of Common Shares registered in the name of each person on that date. Each Shareholder is entitled to one (1) vote on each matter to be acted on at the Meeting for each Common Share registered in his or her name as it appears on the list.

 

These materials are being sent to both registered and non-registered owners of Common Shares. If you are a non-registered owner, and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with the applicable securities regulatory requirements from the Intermediary (as defined below) holding on your behalf. By choosing to send these materials to you directly, the Corporation (and not the Intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.

 

3

 

 

Unless otherwise stated, the information contained in this Circular is as of May 11, 2023. All dollar amount references in this Circular, unless otherwise indicated, are expressed in Canadian dollars.

 

Shareholders and/or their appointees may participate in the Meeting by way of conference call however votes cannot be cast on the conference call. Please register at https://us02web.zoom.us/meeting/register/tZAkd-6opz8vGdWDgKlwGoayED4TehafgdWk to receive conference call details. Electronic copies of the Meeting materials may be obtained under the Corporation’s profile on www.SEDAR.com.

 

Appointment and Revocation of Proxies

 

The persons named in the enclosed form of proxy are officers and/or directors of the Corporation. A Shareholder desiring to appoint some other person or entity to represent him at the Meeting may do so by inserting such person’s name in the blank space provided in that form of proxy or by completing another proper form of proxy and, in either case, depositing the completed proxy at the office of Odyssey, the transfer agent of the Corporation, as indicated on the enclosed envelope not later than the times set out above.

 

In addition to revocation in any other manner permitted by law, a Shareholder may revoke a proxy given pursuant to this solicitation by depositing an instrument in writing (including another proxy bearing a later date) executed by the Shareholder or by an attorney authorized in writing at 198 Davenport Road, Toronto, Ontario M5R 1J2 at any time up to and including the last business day preceding the day of the Meeting.

 

Voting of Proxies

 

Common Shares represented by properly executed proxies in favour of persons designated in the printed portion of the enclosed form of proxy will be voted for each of the matters to be voted on by Shareholders as described in this Circular or withheld from voting or voted against if so indicated on the form of proxy and in accordance with the instructions of the Shareholder on any ballot that may be called for and that, if the Shareholder specifies a choice with respect to any matter to be acted upon, the securities will be voted accordingly. In the absence of such election, the proxy will confer discretionary authority to be voted in favour of each matter for which no choice has been specified. The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting or other matters which may properly come before the Meeting. At the time of printing this Circular, management of the Corporation knows of no such amendments, variations or other matters to come before the Meeting. However, if any other matters that are not now known to management should properly come before the Meeting, the proxy will be voted on such matters in accordance with the best judgement of the named proxies.

 

Non-Registered Holders

 

Only registered Shareholders or the persons they appoint as their proxies are permitted to vote at the Meeting. However, in many cases, Common Shares beneficially owned by a holder who is not a registered Shareholder (a “Non-Registered Holder”) are registered either: (i) in the name of an intermediary with whom the Non-Registered Holder deals in respect of the Common Shares such as, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans (an “Intermediary”); or (ii) in the name of a clearing agency (such as The Canadian Depository for Securities Limited of which the Intermediary is a participant). In accordance with the requirements of National Instrument 54-101 of the Canadian Securities Administrators, the Corporation will distribute copies of the Notice of Meeting, forms of proxy and this Circular to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders.

 

Intermediaries are then required to forward the Meeting materials to Non-Registered Holders unless the Non-Registered Holder has waived the right to receive them. Non-Registered Holders will be given, in substitution for the proxy otherwise contained in proxy-related materials, a request for voting instructions (the “VIF”) which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary, will constitute voting instructions which the Intermediary must follow.

 

4

 

 

The purpose of this procedure is to permit Non-Registered Holders to direct the voting of the Common Shares they beneficially own. Should a Non-Registered Holder who receives the VIF wish to vote at a Meeting in person (or have another person attend and vote on behalf of the Non-Registered Holder), the Non-Registered Holder should so indicate in the place provided for that purpose in the VIF and a form of legal proxy will be sent to the Non-Registered Holder. In any event, Non-Registered Holders should carefully follow the instructions of their Intermediary set out in the VIF.

 

The Corporation intends to pay Intermediaries to forward the Meeting materials to objecting Non- Registered Holders.

 

Interest of Persons in Matters to be Acted Upon

 

No director or executive officer of the Corporation, nor any person who had held such a position since the beginning of the last completed financial year end of the Corporation, no nominee director nor any respective associates or affiliates of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise in any matter to be acted upon at the Meeting other than the election of directors and as possible recipients of stock options (“Stock Options”) under the Corporation’s stock option plan (the “Stock Option Plan”) and/or deferred share units (“DSUs”) under the Corporation’s deferred share unit plan (the “DSU Plan”).

 

Voting Securities and Principal Holder Thereof

 

The authorized capital of the Corporation consists of an unlimited number of Common Shares and 20,000,000 non-voting potash stream preferred shares. As of the Record Date, the Corporation had 219,010,501 Common Shares issued and outstanding. Each Common Share will entitle the holder thereof to one (1) vote at the Meeting.

 

To the knowledge of the directors and officers of the Corporation, as at the Record Date, no person beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to the Common Shares.

 

DIRECTOR AND EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Named Executive Officers

 

For the financial year ended December 31, 2022, the objectives of the Corporation’s compensation strategy were to ensure that compensation for its Named Executive Officers (as defined herein) is sufficiently attractive to recruit, retain and motivate high performing individuals to assist the Corporation in achieving its goals. The Corporation also ensures that compensation is fair, balanced and linked to the performance of the Corporation and the individual Named Executive Officer.

 

Compensation for the Named Executive Officers is composed primarily of three components: base fees, performance bonuses and the granting of Stock Options and DSUs. Performance bonuses are awarded from time to time having regard to the performance of the Corporation and the individual Named Executive Officer. In establishing the levels of monthly base fees, the award of Stock Options, the award of DSUs and performance bonuses, the Corporation takes into consideration individual performance, responsibilities, length of service and previous grants of Stock Options and DSUs. Performance is discussed informally by the directors in light of achievement of the Corporation’s strategic objective of growth and the enhancement of Shareholder value through increases in the trading price of its Common Shares.

 

5

 

 

The Compensation, Nomination and Governance Committee (the “CNG Committee”) recommends the monthly base fees, performance bonus, Stock Options and DSUs to be granted to the Named Executive Officers to the Board for approval. The CNG Committee and the Board does not have a pre-determined compensation plan, but rather reviews informally the performance of the Named Executive Officers when determining compensation levels. Factors considered include: the long-term interests of the Corporation and its Shareholders, the financial and operating performance of the Corporation and each Named Executive Officers individual performance, contribution towards meeting corporate objectives, responsibilities and length of service; however, these factors were informally discussed and there are no formal pre-determined goals or formal measures, nor does the CNG Committee or the Board conduct any survey of competitors or have any defined benchmarks.

 

The CNG Committee and the Board believes that an informal process for determining compensation of Named Executive Officers is appropriate for a company of its size and that the compensation paid to each Named Executive Officer during the last fiscal year was commensurate with the Named Executive Officer’s position, experience and performance.

 

Directors

 

Compensation of directors of the Corporation is determined on a case-by-case basis with reference to the role that each director provides to the Corporation. Directors may receive cash bonuses and in addition, are entitled to participate in the Stock Option Plan and the DSU Plan, which is designed to give each option holder an interest in preserving and maximizing Shareholder value. Such grants are determined by an informal assessment of an individual’s current and expected future performance, level of responsibilities and the importance of his/her position and contribution to the Corporation.

 

The Corporation does not currently prescribe a set of formal objective measures to determine discretionary bonus entitlements. Rather, the Corporation uses informal goals natural to development companies such as strategic acquisitions, advancement of exploration and development, equity and debt financing and other transactions and developments that serve to increase the Corporation’s valuation. Such goals are not pre-set.

 

Officers who also act as directors of the Corporation do not receive any additional compensation for services rendered in their capacity as directors.

 

Risks Associated with Compensation

 

In light of the Corporation’s size and the balance between long-term objectives and short-term financial goals with respect to the Corporation’s executive compensation program, the CNG Committee and the Board does not deem it necessary to consider at this time the implications of the risks associated with its compensation policies and practices.

 

Financial Instruments

 

The Corporation does not currently have a policy that restricts directors or NEOs from purchasing financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity. However, to the knowledge of the Corporation as of the date hereof, no director or NEO of the Corporation has participated in the purchase of such financial instruments.

 

Performance Graph

 

The following graph compares the yearly percentage change in the cumulative total shareholder return for C$100 invested in Common Shares on the S&P/TSX Composite Index for the period of January 31, 2021 (the month on which the Common Shares were listed on the Cboe Canada (formerly NEO Exchange Inc. (“Cboe Exchange”) to December 31, 2022, assuming the reinvestment of any dividends

 

 

6

 

 

The Common Shares were listed on the Cboe Exchange in January 2021. Since listing on the Cboe Exchange, the Corporation has expanded its management team to account for the growth of its business to sustain its operations in Europe and Canada as well as attracting new talent to develop its decentralized finance business. The value of the Common Shares have also corresponded to the fluctuations in the cryptocurrency market over the past few years.

 

NEO Summary Compensation Table

 

The following table summarizes the compensation paid during the three most recently completed financial years in respect of the individuals who were carrying out the role of the President & Chief Executive Officer (“CEO”) of the Corporation, Chief Financial Officer (“CFO”) or the Corporation, and the three most highly compensated executive officers of the Corporation (together with the CEO and CFO, the “Named Executive Officers” or “NEOs”). No other officer, employee or consultant of the Corporation received total compensation of $150,000 or greater.

 

                   Non-equity incentive
plan compensation ($)		         
Name and Principal Position   Year
Ended		    Salary
($)1		    Share
Awards
($)2		    Option
Awards
($)3		    Annual
incentive
plans(4)		    Long-term
incentive
plans		    All other
compensation
($)6		    Total
compensation
($)		 
Olivier Roussy Newton   2022    75,000    Nil    Nil    Nil    Nil    Nil    75,000 
Chief Executive Officer   2021    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
    2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
                                         
Russell Starr(2)   2022    300,000    Nil    1,745,821    300,000    Nil    Nil    2,345,821 
Former Chief Executive Officer   2021    150,000    1,511,270    548,693    NIL    NIL    NIL    2,209,963 
and Executive Chairman   2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
                                         
Wouter Witvoet(2)   2022    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
Former Chief Executive Officer   2021    249,003    NIL    NIL    150,000    NIL    NIL    399,003 
    2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
                                         
Ryan Ptolemy(6)   2022    120,000    567,998    Nil    50,000    Nil    Nil    737,998 
Chief Financial Officer   2021    80,000    251,878    1,714,586    20,000    NIL    NIL    2,066,464 
    2020    17,500    N/A    2,031    N/A    N/A    Nil    19,531 
                                         
Diana Biggs   2022    224,219    171,285    231,615    Nil    Nil    Nil    627,119 
Former Chief Strategy Officer   2021    95,704    62,970    2,014,533    NIL    NIL    NIL    2,173,207 
    2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
                                         
Johan Wattenstrom   2022    234,318    101,520    Nil    Nil    Nil    Nil    335,838 
Former Chief Operating Officer   2021    75,618    50,376    Nil    NIL    NIL    NIL    125,994 
    2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 
                                         
Kenny Choi(7)   2022    120,000    567,998    Nil    50,000    Nil    Nil    737,998 
Corporate Secretary   2021    74,000    251,878    1,339,870    20,000    NIL    NIL    1,685,748 
    2020    N/A    N/A    N/A    N/A    N/A    N/A    N/A 

 

Notes:

 

1.Compensation has been paid as consulting fees under the independent contractor agreement with the Named Executive Officer as described under the heading “Executive Compensation – Termination of Employment, Change in Responsibilities and Employment Contracts” of this Circular.

 

7

 

 

2.Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.
  
3.The value ascribed to option grants represents non-cash consideration and has been estimated using the Black-Sholes Models as at the date of grant, as follows: expected dividend yield — April 9, 2021 - 0%; expected volatility — 145.2%; risk-free interest rate — 0.95%; and expected life — 5 years, May 18, 2021 - 0%; expected volatility — 145.6%; risk-free interest rate — 0.95%; and expected life — 5 years, August 13, 2021 - 0%; expected volatility — 143.7%; risk-free interest rate — 0.84%; and expected life — 5 years,. This is consistent with the accounting values used in the Corporation’s financial statements. The Corporation selected the Black-Scholes model given its prevalence of use in North America.
  
4.Compensation paid in the form of discretionary performance based bonuses.
  
5.Other benefits did not exceed the lesser of $50,000 and 10% of the total annual compensation for the Named Executive Ostanfficer

 

Incentive Plan Awards

 

The following table provides information regarding the incentive plan awards for each Named Executive Officer outstanding as of December 31, 2022.

 

Outstanding Share-Based Awards and Option-Based Awards

 

    Option-Based Awards     Share-Based Awards  
Name   Number of securities underlying unexercised options (#)     Option
exercise
price ($)		     Option expiration date     Value of unexercised in-the-money options
($) (1)(2)		     Number of shares or units of shares that have not vested (#)     Market or payout value of share awards that have not vested ($)(3)     Market or payout value of vested share-based awards not paid out or distributed ($)  
Olivier Roussy Newton
Chief Executive Officer		   Nil     Nil     Nil     Nil     Nil     Nil     Nl  
                                           
Russell Starr
Former Chief Executive Officer and Executive Chairman  		   650,000
1,200,000		     650,000 options at $1.58
1,200,000 options at $1.11		     August 13, 2026
May 9, 2027		     Nil     Nil     Nil     Nil  
                                           
Wouter Witvoet
Former Chief Executive Officer  		   Nil     Nil     Nil     Nil     Nil     Nil     Nil  
                                           
Ryan Ptolemy
Chief Financial Officer  		     100,000 300,000 1,300,000       100,000 options at $0.09 300,000 options at $1.58 1,300,000 options at $1.22         November 16, 2025 April 9, 2026 May 18, 2026       5,000       250,000       35,000       37,800  
                                                         
Diana Biggs
Former Chief Strategy Officer  		     1,500,000 1,000,000       1,500,000 options at $1.58 1,000,000 options at $1.22       April 9, 2026 May 18, 2026       Nil       Nil       Nil       Nil  
                                                         
Johan Wattenstrom
Former Chief Operating Officer  		     Nil       Nil       Nil       Nil       50,000       7,000       9,800  
                                                         
Kenny Choi
Corporate Secretary  		     150,000 300,000 1,000,000        150,000 options at $0.09 300,000 options at $1.58 1,000,000 options at $1.22         November 16, 2025 April 9, 2026 May 18, 2026       7,500       250,000       35,000       37,800  

 

Notes:

 

1.Based on the closing market price of $0.14 of the Common Shares on December 30, 2022 and subtracting the exercise price of the options.
  
2.These options have not been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of exercise.
  
3.Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.

 

8

 

 

Value on Pay-Out or Vesting of Incentive Plan Awards

 

Name  Option-based
awards – Value
vested during
2022 fiscal
year ($)		  Share-based
awards – Value
vested during
the 2022 fiscal
year ($)		  Non-equity
incentive plan compensation – Value earned during the 2022 fiscal year ($)		 
Olivier Roussy Newton  Nil  Nil   Nil 
Ryan Ptolemy  Nil  Nil   50,000 
Russell Starr  Nil  Nil   300,000 
Diana Biggs  Nil  Nil   Nil 
Johan Wattenstrom  Nil  Nil   Nil 
Kenny Choi  Nil  Nil   50,000 

 

None of the Named Executive Officers exercised any Stock Options or had his or her DSUs pay-out during the year ended December 31, 2022.

 

Employment, Consulting and Management Agreements

 

The following describes the respective consulting and employment agreements entered into by the Corporation and its NEOs as of the date hereof.

 

Name  Termination Notice Period   Monthly
Fees		  Severance on Termination  Severance on Change of Control(1)
Olivier Roussy Newton
Chief Executive Officer		  30 days   US$ 25,000  12 months  36 months base fees plus aggregate cash bonuses paid in the 36 months prior to the Change of Control.
                
Russell Starr
Former Chief Executive Officer and Executive Chairman		  30 days   $ 25,000  24 months  36 months base fees plus aggregate cash bonuses paid in the 36 months prior to the Change of Control.
                
Ryan Ptolemy
Chief Financial Officer		  30 days   $ 10,000  6 months’ fees  24 months base fees plus aggregate cash bonuses paid in the 24 months prior to the Change of Control.
                
Johan Wattenstrom Former Chief Operating Officer  30 days   US$ 20,000  1 months fees  NIL
                
Kenny Choi
Corporate Secretary		  30 days   $ 10,000  6 months’ fees  24 months base fees plus aggregate cash bonuses paid in the 24 months prior to the Change of Control.

 

Notes:

 

(1)Severance upon a change of control becomes payable In the event of a Change of Control of the Corporation and within one year following the date of the Change of Control the Corporation or the officer elects to terminate the agreement.

 

9

 

 

For the purpose of the agreements set forth above, “Change of Control” shall be defined as (1) the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Business Corporations Act (Ontario)) or group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Corporation or securities which are convertible into shares of the Corporation or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) or more of the votes entitled to be cast at a meeting of the shareholders of the Corporation; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) of the material assets of the Corporation, including the acquisition of more than 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) of the material assets of any material subsidiary of the Corporation; or (2) as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Corporation or any of its Affiliates and another corporation or other entity, the nominees named in the most recent management information circular of the Corporation for election to the Corporation’s board of directors do not constitute a majority of the Corporation’s board of directors.

 

Summary of Termination Payments

 

The estimated incremental payments, payables and benefits that might be paid to the Named Executive Officers pursuant to the above noted agreements in the event of termination without cause or after a Change of Control (assuming such termination or Change of Control is effective as of the Record Date) are detailed below:

 

Named Executive Officer  Termination not for Cause ($)   Value of Unvested Options ($) upon termination not for cause  Termination on a Change of Control ($)   Value of Unvested Options Vested ($) upon Change in Control
Olivier Roussy Newton              
Salary and Quantified Benefits  US$ 300,000   Nil  US$ 900,000   Nil
Bonus    Nil   Nil    Nil   Nil
Total  US$ 300,000   Nil  US$ 900,000   Nil
Russell Starr                  
Salary and Quantified Benefits   600,000   Nil   900,000   Nil
Bonus   Nil   Nil   300,000   Nil
Total   600,000   Nil   1,200,000   Nil
Ryan Ptolemy                
Salary and Quantified Benefits   60,000   Nil   240,000   Nil
Bonus   Nil   Nil   50,000   Nil
Total   60,000   Nil   290,000   Nil
Johan Wattenstrom                
Salary and Quantified Benefits  US$20,000   Nil   Nil   Nil
Bonus   Nil   Nil   Nil   Nil
Total  US$20,000   Nil   Nil   Nil
Kenny Choi                
Salary and Quantified Benefits   60,000   Nil   240,000   Nil
Bonus   Nil   Nil   50,000   Nil
Total   60,0000   Nil   290,00   Nil

 

Notes:

 

(1)Severance upon a change of control becomes payable in the event of a Change of Control of the Corporation and within one year following the date of the Change of Control the Corporation or the officer elects to terminate the agreement.

 

10

 

 

Other Arrangements

 

Other than as disclosed below or elsewhere in this Circular, none of the officers or directors of the Corporation have compensation arrangements pursuant to any other arrangement or in lieu of any standard compensation arrangement.

 

Indebtedness of Directors and Executive Officers

 

As at the date of this Circular and during the financial year ended December 31, 2022, no director or executive officer of the Corporation (and each of their associates and/or affiliates) was indebted, including under any securities purchase or other program, to (i) the Corporation or its subsidiaries, or (ii) any other entity which is, or was at any time during the financial year ended December 31, 2022, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or its subsidiaries.

 

Directors’ and Officers’ Insurance and Indemnification

 

The Corporation maintains insurance for the benefit of its directors and officers against liability in their respective capacities as directors and officers. The Corporation has purchased in respect of directors and officers an aggregate of US$2,500,000 in coverage. The approximate amount of premiums paid by the Corporation in 2022 in respect of such insurance was US$106,848.

 

Interest of Informed Persons in Material Transactions

 

No informed person (as such term is defined under applicable securities laws) of the Corporation or nominee (and each of their associates or affiliates) has had any direct or indirect material interest in any transaction involving the Corporation since January 1, 2022 or in any proposed transaction which has materially affected or would materially affect the Corporation or its subsidiaries other than as may be disclosed herein.

 

Director Compensation

 

Compensation of directors for the financial year ended December 31, 2022 was determined on a case-by- case basis with reference to the role that each director provided to the Corporation. Executive officers who also act as directors of the Corporation do not receive any additional compensation for services rendered in their capacity as directors. The following information details compensation paid in the recently completed financial year.

 

11

 

 

Director Summary Compensation Table

 

The following table provides information regarding the compensation awarded to each director during the year ended December 31, 2022, other than any NEOs who are also directors, whose compensation was included above.

 

Name   Fees
earned ($)		     Share
awards ($)		     Option
awards ($)		     Non-equity incentive plan compensation ($)(1)     All other
compensation ($)(2)		     Total ($)  
Bernard Wilson(1)     Nil       104,754       47,163       50,000       NIL       201,917  
Tito Gandhi     Nil       104,754       28,715       50,000       Nil       183,469  
William C. Steers     Nil       104,754       47,163       50,000       Nil       201,917  
Krisztian Toth     Nil       104,754       67,329       50,000       Nil       222,083  
TOTALS     Nil       419,016       190.371       200,000       NIL       809,386  

 

Notes:

 

1.Bernard Wilson resigned as director on November 14, 2022

 

Incentive Plan Awards

 

The following table provides information regarding the incentive plan awards for each director outstanding as of December 31, 2022, other than any NEOs who are also directors, whose compensation was included above.

 

Outstanding Share-Based Awards and Option-Based Awards

 

      Option-Based Awards     Share-Based Awards  
Name     Number of securities underlying unexercised options (#)     Option exercise price ($)   Option expiration date   Value of unexercised
in-the-money
options ($)(1)(2)		     Number of shares or units of shares that have not vested (#)       Market or payout value of share awards that have not vested ($)(3)       Market or payout value of vested share-based awards not paid out or distributed  
Bernard Wilson(4)     450,000     250,000 options at $1.58 100,000 options at $1.58 100,000 options at $1.22   February 24, 2026
April 9, 2026
May 18, 2026		   Nil     25,000       3,500        6,300  
Tito Gandhi     100,000 100,000     100,000 options at $1.58 100,000 options at $1.22   April 9, 2026
May 18, 2026		   Nil     25,000       3,500        6,300  
William C. Steers     450,000     250,000 options at $1.58 100,000 options at $1.58 100,000 options at $1.22   February 24, 2026
April 9, 2026
May 18, 2026		   Nil     25,000       3,500        6,300  
Krisztian Toth     450,000     450,000 options at $1.11   May 25, 2025   Nil     25,000       3,500        6,300  

 

Notes:

 

(1)Based on the closing market price of $0.14 of the Common Shares on December 30, 2022 and subtracting the exercise price of the options.
  
(2)These options have not been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of exercise.
  
(3)Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.
  
(4)Bernard Wilson resigned as director on November 14, 2022.

 

12

 

 

Value on Pay-Out or Vesting of Incentive Plan Awards

 

Name  Option-based awards – Value vested during 2022 fiscal
year ($)		  Share-based awards – Value vested during the 2022 fiscal year ($)  Non-equity incentive plan compensation – Value earned during the 2022 fiscal year ($) 
Bernard Wilson(1)  Nil  Nil   50,000 
Tito Gandhi  Nil  Nil   50,000 
William C. Steers  Nil  Nil   50,000 
Krisztian Toth  Nil  Nil   50,000 

 

Notes:

 

(1)Bernard Wilson resigned as director on November 14, 2022.

 

No director exercised his or her Stock Options or were paid out his or her DSUs during the year ended December 31, 2022.

 

Stock Option Plan

 

The Corporation believes that granting stock options to officers, directors, consultants and employees encourages retention and more closely aligns the interests of such key personnel with the interests of shareholders while at the same time not drawing on the limited cash resources of the Corporation.

 

The Stock Option Plan is designed to advance the interests of the Corporation by encouraging employees, officers and consultants to have equity participation in the Corporation through the acquisition of Common Shares. The following is a summary of the terms of the proposed Stock Option Plan, which is qualified in its entirety by the provisions of the Stock Option Plan.

 

The Stock Option Plan is a “evergreen” stock option plan under NEO Exchange Listing Manual as under the Stock Option Plan the Corporation is authorized to grant Stock Options of up to 10% of its issued and outstanding Common Shares at the time of the Stock Option grant, from time to time, with no vesting provisions. As of the date hereof, there is an aggregate of 3,689,557 Stock Options outstanding under the Stock Option Plan, which represents approximately 1.7% of the outstanding Common Shares.

 

The terms and conditions of each Stock Option granted under the Stock Option Plan will be determined by the Board. Stock Options will be priced in the context of the market and in compliance with applicable securities laws and NEO Exchange guidelines. Consequently, the exercise price for any Stock Option shall not be lower than the market price of the underlying Common Shares at the time of grant. Vesting terms will be determined at the discretion of the Board. The Board shall also determine the term of Stock Options granted under the Stock Option Plan, provided that no Stock Option shall be outstanding for a period greater than five years. The Board shall also have complete discretion to set the terms of any vesting schedule of each Stock Option granted.

 

The Stock Option Plan provides for amendment procedures that specify the kind of amendments to the Stock Option Plan that will require Shareholder approval. The Board believes that except for certain material changes to the Stock Option Plan, it is important that the Board has the flexibility to make changes to the Stock Option Plan without Shareholder approval. Such amendments could include making appropriate adjustments to outstanding Stock Options in the event of certain corporate transactions, the addition of provisions requiring forfeiture of options in certain circumstances, specifying practices with respect to applicable tax withholdings and changes to enhance clarity or correct ambiguous provisions.

 

The Stock Option Plan does not provide for the transformation of Stock Options granted under the Stock Option Plan into stock appreciation right involving the issuance of securities from the treasury of the Corporation.

 

The Stock Option Plan provides that holders of Stock Options who are restricted from trading in securities of the Corporation during periodic black-out periods imposed by the Corporation shall be entitled to exercise a Stock Option that was set to expire during a black-out period imposed by the Corporation until the day that is five business days following the expiry of the black-out period.

 

Directors, officers, employees and certain consultants shall be eligible to receive Stock Options under the Stock Option Plan. Upon the termination of an optionholder’s engagement with the Corporation, the cancellation or early vesting of any Stock Option shall be in the discretion of the Board. In general, the Corporation expects that Stock Options will be cancelled 90 days following an optionholder’s termination from the Corporation. Stock Options granted under the Stock Option Plan shall not be assignable.

 

The Corporation will not provide financial assistance to any optionholder to facilitate the exercise of Stock Options under the Stock Option Plan.

 

13

 

 

Pursuant to Section 10.13 – Security Based Compensation of the NEO Exchange Listing Manual, the Corporation is required to obtain the approval of its Shareholders to any stock option plan that is a “evergreen” plan every three years at the Corporation’s annual meeting of Shareholders. The Stock Option Plan was last approved by Shareholders at the annual and special meeting of Shareholders held on September 13, 2021.

 

The table below sets out the outstanding options under the Stock Option Plan, being the Corporation’s only compensation plan under which Common Shares are authorized for issuance, as of the Record Date.

 

Plan Category  Number of securities to be issued upon exercise of outstanding options, warrants and rights   Weighted-average exercise price of outstanding options, warrants and rights  

Number of securities remaining available under equity compensation plans (excluding securities

reflected in column (a))

 
    (a)    (b)    (c) 
Equity compensation plans approved by security holders   18,211,493   $1.27    3,689,557 
Equity compensation plans not approved by security holders   N/A    N/A    N/A 
TOTAL   18,211,493    1.27    3,689,557 

 

Corporate Governance Policies

 

Management of the Corporation and the Board recognize the importance of corporate governance in effectively managing the Corporation, protecting employees and Shareholders, and enhancing Shareholder value.

 

The Board fulfills its mandate directly and through its Audit Committee and its Compensation, Nomination and Governance Committee (“CNG Committee”) and other ad hoc committees at regularly scheduled meetings or as required. The directors are kept informed regarding the Corporation’s operations at regular meetings and through reports and discussions with management on matters within their particular areas of expertise. Frequency of meetings may be increased and the nature of the agenda items may be changed depending upon the state of the Corporation’s affairs and in light of opportunities or risks that the Corporation faces.

 

The Corporation believes that its corporate governance practices are in compliance with applicable Canadian requirements. The Corporation is committed to monitoring governance developments to ensure its practices remain current and appropriate.

 

Board of Directors

 

Pursuant to National Instrument 58-101 – Corporate Governance, a director is independent if the director has no direct or indirect relationship with the issuer which could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of a member’s independent judgment. Certain directors are deemed to have a material relationship with the issuer by virtue of their position or relationship with the Corporation. The Board is currently comprised of three members, all of are independent. In assessing whether a director is independent for these purposes, the circumstances of each director have been examined in relation to a number of factors.

 

14

 

 

Other Public Corporation Directorships

 

To the best of the Corporation’s knowledge and based on publicly available information, as of the date hereof, the directors of the Corporation hold directorship positions with the following reporting issuers:

 

Director  Reporting Issuer
Tito Gandhi  Q-Gold Resources Ltd.
William C. Steers  Lara Exploration Ltd
Jade Power Trust
ARHT Media Inc.
Sulliden Mining Capital Inc.
Krisztián Tóth  Trillium Gold Mines Inc.
Leviathan Gold Ltd.
Voyager Digital Ltd.
Pasofino Gold Limited

 

Board Mandate

 

The duties and responsibilities of the Board are to supervise the management of the business and affairs of the Corporation, and to act with a view towards the best interests of the Corporation. In discharging its mandate, the Board is responsible for the oversight and review of:

 

●the strategic planning process of the Corporation;

 

●identifying the principal risks of the Corporation’s business and ensuring the implementation of appropriate systems to manage these risks;

 

●succession planning, including appointing, training and monitoring senior management;

 

●a communications policy for the Corporation to facilitate communications with investors and other interested parties; and

 

●the integrity of the Corporation’s internal control and management information systems.

 

The Board discharges its responsibilities directly and through its committees, currently consisting of the Audit Committee and the Compensation, Nomination and Governance Committee.

 

Orientation and Continuing Education

 

Directors are expected to attend all meetings of the Board and are also expected to prepare thoroughly in advance of each meeting in order to actively participate in the deliberations and decisions.

 

The Board recognizes the importance of ongoing director education and the need for each director to take personal responsibility for this process. The Board notes that it has benefited from the experience and knowledge of individual members of the Board in respect of the evolving governance regime and principles. The Board ensures that all directors are apprised of changes in the Corporation’s operations and business. All Board members are provided with copies of periodic reports on the business and operations of the Corporation.

 

Nomination of Directors

 

The Board is largely responsible for identifying new candidates for nomination to the Board. The process by which candidates are identified is through recommendations presented to the Board, which establishes and discusses qualifications based on corporate law and regulatory requirements as well as education and experience related to the business of the Corporation.

 

Compensation

 

The CNG Committee is responsible for recommending to the Board the compensation of the directors and Chief Executive Officer of the Corporation. The process for determining executive compensation is relatively informal, in view of the size and stage of the Corporation and its operations. The Corporation does not maintain specific performance goals or use benchmarks in determining the compensation of executive officers. Upon the recommendation of the CNG Committee, the Board may at its discretion award either a cash bonus or stock options for high achievement or for accomplishments that the Board deems as worthy of recognition.

 

The CNG Committee reviews and discusses proposals received by the Chief Executive Officer of the Corporation regarding the compensation of management and the directors. Please refer to the section “Compensation and Corporate Governance Committee”.

 

15

 

 

Board Assessments

 

The Board and its individual directors are assessed on an informal basis continually as to their effectiveness and contribution. The Chair of the Board encourages discussion amongst the Board as to evaluation of the effectiveness of the Board as a whole and of each individual director. All directors are free to make suggestions for improvement of the practice of the Board at any time and are encouraged to do so.

 

Majority Voting Policy

 

The Corporation has adopted a Majority Voting Policy to provide a meaningful way for the Corporation’s shareholders to hold individual directors accountable and to require the Corporation to closely examine directors that do not have the support of a majority of Shareholders who vote at the Meeting. The policy provides that forms of proxy for the election of directors will permit a Shareholder to vote in favour of, or to withhold from voting, separately for each director nominee and that where a director nominee has more votes withheld than are voted in favour of him or her, the nominee will be considered not to have received the support of the shareholders, even though duly elected as a matter of corporate law. Pursuant to the policy, such a nominee will forthwith submit his or her resignation to the Board, such resignation to be effective on acceptance by the Board. The Board will then establish an advisory committee (the “Committee”) to which it shall refer the resignation for consideration within an 90 day period. In such circumstances, the Committee will make a recommendation to the Board as to the director’s suitability to serve as a director after reviewing, among other things, the results of the voting for the nominee and the Board will consider such recommendation. Any director subject to the Majority Voting Policy will not be a member of the Committee or participate in any Board level discussion where his or her resignation is being considered. Absent exceptional circumstances the Committee and the Board will accept the resignation of the nominee director. Once the Board has made a final decision regarding the resignation, the Company will publicly disclose the Board’s decision regarding the resignation, including the reasons for not accepting the resignation, if applicable. If the resignation is accepted, the Board may leave the vacancy unfilled or appoint a new director to fill the vacancy.

 

This policy does not apply where an election involves a proxy battle (i.e., where proxy material is circulated in support of one or more nominees who are not part of the director nominees supported by the management of the Corporation).

 

Audit Committee

 

The purposes of the Audit Committee are to assist the Board’s oversight of: the integrity of the Corporation’s financial statements; the Corporation’s compliance with legal and regulatory requirements; the qualifications and independence of the Corporation’s independent auditors; and the performance of the independent auditors and the Corporation’s internal audit function.

 

Please see Schedule “A” for the text of the Audit Committee Charter.

 

Composition of the Audit Committee

 

The Corporation’s Audit Committee is comprised of three directors, William C Steers (Chair), Tito Ghandi and Krisztian Toth. Each member of the Audit Committee is considered to be financially literate and are considered independent, as such term is defined in NI 52-110.

 

Relevant Education and Experience

 

Please see page 19 for the biographies of each member of the Audit Committee.

 

Audit Committee Oversight

 

At no time since the commencement of the Corporation’s most recently completed financial year has there been a recommendation of the Audit Committee to nominate or compensate an external auditor which was not adopted by the Board.

 

16

 

 

Reliance on Certain Exemptions

 

At no time since the commencement of the Corporation’s most recently completed financial year has the Corporation relied on either (a) an exemption in section 2.4 of NI 52-110; or (b) an exemption from NI 52- 110, in whole or in part, granted under Part 8 (Exemptions) of NI 52-110.

 

Pre-Approval Policies and Procedures

 

The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.

 

External Auditor Service Fees

 

BF Borgers CPA PC are the current external auditors of the Corporation and were appointed on February 3, 2023. RSM Canada LLP were the former external auditors of the Corporation for the fiscal year ended December 31, 2022 and were appointed on August 13, 2021. The aggregate fees billed and estimated to be billed by the external auditors for the last two (2) fiscal years is set out in the table below. “Audit Fees” includes fees for audit services including the audit services completed for the Corporation’s subsidiaries. “Audit Related Fees” includes fees for assurance and related services by the Corporation’s external auditor that are reasonably related to the performance of the audit or review of the Corporation’s financial statements and not reported under Audit Fees including the review of interim filings and travel related expenses for the annual audit. “Tax Fees” includes fees for professional services rendered by the external auditor for tax compliance, tax advice, and tax planning. “All Other Fees” includes all fees billed by the external auditors for services not covered in the other three categories.

 

Year  Audit
Fees ($)		   Audit Related Fees   Tax
Fees ($)		   All Other Fees 
2022   297,177    Nil    Nil    Nil 
2021   224,160    NIL    9,583    Nil 

 

Compensation, Nomination and Governance Committee

 

The Compensation, Nomination and Governance Committee (the “CNG Committee”) is comprised of Mr. Krisztian Toth, Mr. Tito Gandhi and Mr. William C. Steers, each of whom is an independent director. Please see page 19 for the biographies of each member of the CNG Committee.

 

The CNG Committee’s responsibilities are twofold. First, with respect to compensation, the CNG Committee’s responsibility include (i) discharging the Board’s responsibilities relating to the compensation of the Corporation’s executive officers, (ii) administering the Corporation’s incentive compensation and equity-based plans, and (iii) assisting the Board with respect to management succession and development. In carrying out its duties with respect to compensation, the CNG Committee reviews and makes recommendations to the Board on an annual basis regarding (A) company-wide compensation programs and practices, (B) all aspects of the remuneration of the Corporation’s executive officers and directors, and (C) equity-based plans and any material amendments thereto (including increases in the number of securities available for grant as options or otherwise thereunder).

 

The primary function of the CNG Committee with respect to nomination and governance matters is to exercise the responsibilities and duties set forth below, including but not limited to: (i) advising the Board on corporate governance in general, (ii) identifying candidates to act as directors of the Corporation, (iii) recommending to the Board qualified candidates to nominate as a director of the Corporation for consideration by the shareholders of the Corporation at the next annual meeting of shareholders (iv) overseeing and assessing the functioning of the Board and the committees of the Board, and (v) developing and recommending to the Board, and overseeing the implementation and assessment of, effective corporate governance principles.

 

17

 

 

MATTERS TO BE CONSIDERED

 

Financial Statements

 

The financial statements for the fiscal year ended December 31, 2022 will be presented to Shareholders for review at the Meeting. No vote by the Shareholders is required with respect to this matter.

 

Election of Directors

 

The Board currently consists of four directors. The Corporation has nominated four persons (the “Nominees”) for election as a director at the Meeting. At the Meeting, Shareholders will be asked to elect each individual Nominee as a director. All directors so elected will hold office until the end of the next annual general meeting of shareholders of the Corporation or until their successors are elected or appointed, unless their office is vacated earlier in accordance with the by-laws of the Corporation or with the provisions of the Business Corporations Act (Ontario).

 

The following table provides the names of the Nominees and information concerning such Nominees. The persons in the enclosed form of proxy intend to vote for the election of the Nominees. Management does not contemplate that any of the Nominees will be unable to serve as a director.

 

Information in the table below regarding the number of Common Shares of the Corporation beneficially owned, directly or indirectly, or over which control or direction is exercised by the Nominees is based upon information furnished by the respective Nominee and is as at the Record Date.

 

Name and Municipality of Residence  Principal Occupation  Director Since 

Number of Common Shares Beneficially Owned or Over which

Control is Exercised(1)

 
William Steers(2)(3)
Toronto, Ontario
Canada		  International Business Consultant  March 14, 2018   Nil 
Krisztian Tóth(2)(3)
Toronto, Ontario
Canada		  Partner at Fasken Martineau DuMoulin LLP  May 14, 2021   Nil 
Olivier Roussy
Newton
Zug, Switzerland		  Chief Executive Officer of the Corporation  N/A   Nil. 
Mikael Tandetnik Geneva,
Switzerland		  Founder of Ariane Group SA  N/A   215,000 
Stefan Hascoet Geneva,
Switzerland		  Managing Partner of Deep Knowledge Ventures Suisse  N/A   268,000 

 

Notes:

 

(1)The Corporation has relied exclusively on the respective Nominee for this information.
  
(2)Member of the Audit Committee
  
(3)Member of the Compensation, Nomination and Governance Committee.

 

Biographical information for each of the nominated directors are set out below:

 

Mr. Steers has over 40 years of international business development and management experience. While resident in Rio de Janeiro, he was a Director and senior manager of Docas Investimentos, a Brazilian controlled investment group involved in real estate, ship building, telecoms and more recently, oil and gas. He is a partner at IMC Consultoria Representacao Com. Int. Ltda. that among other activities, successfully introduced IMAX to Brazil. Mr. Steers is an Independent Director of Brazilian oil and gas producer Petro Rio and Toronto based Lara Exploration Ltd. Formerly, Mr. Steers was Managing Partner at Weatherhaven Brasil (private manufacturer of temporary shelters). Mr. Steers holds an Honors BA from the Richard Ivey School of Business at Western University.

 

18

 

 

Mr. Tóth, is an experienced M&A lawyer and partner at the law firm of Fasken Martineau DuMoulin LLP, which is a leading international business law and litigation firm with eight offices with more than 700 lawyers across Canada and in the UK and South Africa. Mr. Tóth began his career at Fasken in 2003, eventually becoming a partner of the firm in 2009. He has been recognized by IFLR1000 for his capital markets work. Mr. Tóth holds a bachelor of arts in Politics Sociology from Queen’s University and an LLB from Dalhousie University.

 

Mr. Roussy Newton is the Chief Executive Officer of the Corporation. He is a technology entrepreneur who has made significant contributions to the fields of FinTech, Quantum Computing and Capital Markets. Mr. Roussy Newton founded and served as president of HIVE Blockchain Technologies, which made history by becoming the first crypto mining company to go public in 2017, and has also been involved in a number of other highly successful ventures. Mr. Roussy Newton also serves as the Managing Director of BTQ AG, where he is responsible for overseeing the company’s operations on research focused on post quantum technologies.

 

Mr. Tandetnik is a seasoned wealth manager and CEO with a strong background in finance. He embarked on his career as a Salesperson for equity and structured products at BNP Paribas, gaining valuable experience in the field. Subsequently, he transitioned to various brokerage firms, honing his expertise in investment management. After founding LS Advisor in Paris and driven by his passion for the cryptocurrency industry, Mr. Tandetnik established Ariane Group SA in Geneva, a wealth management companies specializing in catering to cryptocurrency clients and investments. He played a pivotal role in numerous fundraising initiatives for both listed and unlisted private crypto companies, demonstrating his deep involvement in the crypto space. Mr. Tandetnik’s academic qualifications include a Bachelor’s degree in Business from the Ecole Supérieure de Gestion et Finance (ESGF) in France and a Master’s degree from ESLSCA, where he specialized in Trading and Options.

 

Mr. Hascoet is a capital markets professional who spent 12 years in the City of London in the field of equity derivatives and cross-asset structured products working for three global investment banks, including at RBC Capital Markets, leading a team covering Swiss clients. After his initial training in the institutional finance world, Mr. Hascoet decided to focus on the dual fields of finance & blockchains through various entrepreneurial endeavors, focusing on making blockchain assets investible and building bridges with the established banking systems and capital markets frameworks. Mr. Hascoet is a Swiss resident, based in Geneva, Managing Partner of Deep Knowledge Ventures Suisse, a data-driven investment holding of commercial and non-profit organizations active in the fields of DeepTech, Fintech and Longevity. Mr. Hascoet is a graduate of the French Grande Ecole system, having studied at l’Ecole Ste Genevieve in Versailles and ESCP Business School in Paris.

 

Unless authority to do so is withheld, the persons named in the accompanying proxy intend to vote for the election of each of the Nominees. If prior to the Meeting any of such Nominees is unable to or unwilling to serve, the persons named in the accompanying form of proxy will vote for another nominee or nominees in their discretion if additional nominations are made at the Meeting. Each Nominee elected will hold office until his successor is elected at the next annual meeting of the Corporation, or any postponement(s) or adjournment(s) thereof, or until his successor is elected or appointed.

 

No proposed director is to be elected under any arrangement or understanding between the proposed director and any other person or corporation, except the directors and executive officers of the Corporation acting solely in such capacity.

 

19

 

 

The Board of Directors recommends that Shareholders vote in favour of electing each of the directors as set forth above. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE ELECTION OF EACH DIRECTOR.

 

Cease Trade Orders or Bankruptcies

 

No director or executive officer of the Corporation is, or within ten years prior to the date hereof has been, a director, chief executive officer or chief financial officer of any company (including the Corporation) that, (i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

 

Except as provided below, no director or executive officer of the Corporation is or has been, within the ten years before the date of this Circular, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

 

Mr. Tóth is a director of Voyager Digital Ltd. (“Voyager”). On July 5, 2022, Voyager commenced a voluntary Chapter 11 bankruptcy process with the U.S. Bankruptcy Court of the Southern District of New York and recognition of this order was obtained in the Ontario Superior Court of Justice (Commercial List) pursuant to the Companies’ Creditors Arrangement Act.

 

No director or executive officer has, within the ten years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer.

 

No proposed director has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for a proposed director.

 

Appointment of Auditors

 

On February 3, 2023, the board of directors of the Corporation appointed BF Borgers CPA PC (“Borgers”) as auditors of the Corporation following the resignation of RSM Canada LLP as auditors of the Corporation. At the Meeting, Shareholders will be asked to re-appoint Borgers as auditors of the Corporation until the close of the next annual meeting of and to authorize the directors to fix their remuneration.

 

PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE APPOINTMENT OF BF BORGERS CPA PC AS THE CORPORATION’S AUDITORS AND AUTHORIZING THE BOARD OF DIRECTORS TO FIX THEIR REMUNERATION, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER COMMON SHARES ARE TO BE VOTED AGAINST SUCH A RESOLUTION.

 

Name Change

 

The Corporation is proposing to change its name to “DeFi Technologies Inc.” Accordingly, at the Meeting, Shareholders will be asked to consider and, if thought fit, to pass a special resolution as set forth below authorizing the Board, in its sole discretion, to change the name of the Corporation to “DeFi Technologies Inc.”, or such other name as the Board, in its sole discretion, deems appropriate (the “Name Change”). Notwithstanding approval of the Name Change by the Shareholders, the Board may, in its sole discretion, revoke this special resolution, and abandon the Name Change without further approval or action by or prior notice to Shareholders. Any Name Change of the Corporation will be subject to the approval of the NEO Exchange.

 

20

 

 

At the Meeting, Shareholders will be asked to consider, and if deemed to be advisable approve, the following special resolution, which must be passed by two-thirds of the votes cast by the Shareholders in person or by proxy at the Meeting, subject to such amendments, variations or additions as may be approved at the Meeting:

 

“BE IT RESOLVED THAT:

 

1.subject to the Corporation first receiving all required regulatory and the Cboe Canada approvals, the name of the Corporation be changed to “DeFi Technologies Inc.” or such other name as may be approved by the directors of the Corporation and applicable regulatory authorities;
   
2.the articles of the Corporation be amended to reflect the foregoing;
   
3.the Board be and are authorized to file articles of amendment and all other requisite documents with all applicable regulatory authorities in order to give effect to the name change;
   
4.notwithstanding the passage of this resolution by the shareholders of the Corporation, the Board of the Corporation may, without any further notice or approval of the shareholders of the Corporation, decide not to proceed with the name change or to otherwise give effect to this resolution at any time prior to the sale becoming effective and may revoke this resolution without further approval of the shareholders at any time prior to the completion of the transactions authorized by this resolution; and
   
5.any one or more of the directors or officers of the Corporation is hereby authorized and directed, acting for, in the name of and on behalf of the Corporation, to execute or cause to be executed, under the seal of the Corporation or otherwise, and to deliver or cause to be delivered, such other documents and instruments, and to do or cause to be done all such other acts and things, as may in the opinion of such director or officer of the Corporation be necessary or desirable to carry out the intent of the foregoing resolution, the execution of any such document or the doing of any such other act or thing by any director or officer of the Corporation being conclusive evidence of such determination.”

 

PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE NAME CHANGE RESOLUTION UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT THE COMMON SHARES ARE TO BE VOTED AGAINST SUCH SPECIAL RESOLUTION.

 

Additional Information

 

Additional information relating to the Corporation may be found under the profile of the Corporation on SEDAR at www.sedar.com. Additional financial information is provided in the Corporation’s audited financial statements and related management’s discussion and analysis for the financial year ended December 31, 2022, which can be found at https://valour.com/investor-relations or under the profile of the Corporation on SEDAR. Shareholders may also request these documents by emailing kenny.choi@fmresources.ca or by telephone at (416) 861-2262.

 

Board of Directors Approval

 

The contents of this Circular and the sending thereof to the Shareholders of the Corporation have been approved by the Board.

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “Olivier Roussy Newton”
  Chief Executive Officer
  Toronto, Ontario May 11, 2023

 

21

 

 

SCHEDULE “A”

 

VALOUR INC. AUDIT
COMMITTEE CHARTER

 

 

 

Mandate

 

The primary function of the audit committee (the “Committee”) is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting and the Company’s auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary duties and responsibilities are to

(i) serve as an independent and objective party to monitor the Company’s financial reporting and internal control system and review the Company’s financial statements; (ii) review and appraise the performance of the Company’s external auditors; and (iii) provide an open avenue of communication among the Company’s auditors, financial and senior management and the board of directors.

 

Composition

 

The Committee shall be comprised of three directors as determined by the board of directors, the majority of whom shall be free from any relationship that, in the opinion of the board of directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.

 

At least one member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of this Charter, the definition of “financially literate” is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company’s financial statements.

 

The members of the Committee shall be elected by the board of directors at its first meeting following the annual shareholders’ meeting. Unless a Chair is elected by the full board of directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.

 

Meetings

 

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditors in separate sessions.

 

Responsibilities and Duties

 

To fulfil its responsibilities and duties, the Committee shall:

 

Documents/Reports Review

 

(a)Review and update this Charter annually.

 

(b)Review the Company’s financial statements, management discussion and analysis (“MD&A”) and any annual and interim earnings, press releases before the Company publicly discloses this informimation and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion or review rendered by the external auditors.

 

22

 

 

External Auditors

 

(a)Review annually the performance of the external auditors who shall be ultimately accountable to the board of directors and the Committee as representatives of the shareholders of the Company.

 

(b)Obtain annually a formal written statement of the external auditors setting forth all relationships between the external auditors and the Company, consistent with Independence Standards Board Standard 1.

 

(c)Review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors.

 

(d)Take or recommend that the full board of directors take appropriate action to oversee the independence of the external auditors.

 

(e)Recommend to the board of directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

 

(f)At each meeting, consult with the external auditors, without the presence of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of the Company’s financial statements.

 

(g)Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Company.

 

(h)Review with management and the external auditors the audit plan for the year- end financial statements and intended template for such statements.

 

(i)Review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company’s external auditors. The pre-approval requirement is waived with respect to the provision of non-audit services if:

 

(i)the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided;

 

(ii)such services were not recognized by the Company at the time of the engagement to be non-audit services; and

 

(iii)such services are promptly brought to the attention of the Committee by the Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the Committee.

 

Provided the pre-approval of the non-audit services is presented to the Committee’s first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.

 

23

 

 

Financial Reporting Processes

 

(a)In consultation with the external auditors, review with management the integrity of the Company’s financial reporting process, both internal and external.

 

(b)Consider the external auditor’s judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

 

(c)Consider and approve, if appropriate, changes to the Company’s auditing and accounting principles and practices as suggested by the external auditors and management.

 

(d)Review significant judgments made by management in the preparation of the financial statements and the view of the external auditors as to appropriateness of such judgments.

 

(e)Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

 

(f)Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

 

(g)Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

 

(h)Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

 

(a)Review certification process.

 

(b)Establish a procedure for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

 

Other

 

Review any related party transactions.

 

 

24

 

 

Exhibit 99.28

 

 

 

VALOUR INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF COMMON

SHAREHOLDERS

 

You are invited to the 2023 annual and special meeting (the “Meeting”) of common shareholders (the “Shareholders”) of Valour Inc. (the “Corporation”).

 

When: Tuesday, June 20, 2023 at 10:00 a.m. (Toronto time)

 

Where: 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2

 

The purpose of the Meeting is as follows:

 

1.Financial Statements. Receive and consider the audited consolidated financial statements as at and for the fiscal year ended December 31, 2022;

 

2.Auditor Appointment. Appoint BF Borgers CPA PC as auditor of the Corporation;

 

3.Elect Directors. Consider and elect the directors for the ensuing year;

 

4.Name Change. The Corporation is proposing to change its name to “DeFi Technologies Inc.”; and

 

5.Other Business. Consider other business as may properly come before the Meeting or any postponement(s) or adjournment(s) thereof.

 

The details of all matters proposed to be put before the Shareholders at the Meeting are set forth in the management information circular (the “Circular”), under “Matters to be Considered”, accompanying this Notice of Meeting. At the Meeting, Shareholders will be asked to approve each of the foregoing items.

 

The board of directors of the Corporation unanimously recommends that the Shareholders vote FOR each of the appointment of BF Borgers CPA PC as auditor of the Corporation, the election of the directors of the Corporation for the ensuing year, and the Name Change.

 

Each common share of the Corporation (a “Common Share”) will entitle the holder thereof to one (1) vote at the Meeting.

 

The directors of the Corporation have fixed the close of business on May 9, 2023 as the record date, being the date for the determination of the registered Shareholders entitled to notice and to vote at the Meeting and any adjournments(s) or postponement(s) thereof.

 

Shareholders and/or their appointees may participate in the Meeting by way of conference call however votes cannot be cast on the conference call. Please register at https://us02web.zoom.us/meeting/register/tZAkd-6opz8vGdWDgKlwGoayED4TehafgdWk to receive conference call details. Electronic copies of the Meeting materials may be obtained at https://valour.com/investor-relations or under the Corporation’s profile on www.SEDAR.com.

 

The Corporation has elected to use the notice-and-access rules (“Notice and Access”) under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations for distribution of the Circular, this Notice of Meeting, the form of proxy and the voting instruction form (collectively, the “Meeting Materials”) to holders of Common Shares. Notice and Access is a set of rules that allows issuers to post electronic versions of its proxy- related materials on SEDAR and on one additional website, rather than mailing paper copies to shareholders.

 

 

 

 

Shareholders may obtain paper copies of the Meeting Materials by contacting the Corporation’s transfer agent, Odyssey Trust Company (“Odyssey”), at 1-587 -885-0960 and 1-888-290-1175 (toll-free) from outside of North America. A request for paper copies should be received by Odyssey by June 6, 2023 in order to allow sufficient time for the shareholder to receive the paper copy and return the proxy by its due date.

 

Proxies are being solicited by management of the Corporation. A form of proxy for the Meeting accompanies this notice (the “Proxy”). Shareholders who are entitled to vote at the Meeting may vote either in person or by Proxy. Shareholders who are unable to be present in person at the Meeting are requested to complete, execute and deliver the enclosed Proxy to the Corporation’s registrar and transfer agent, Odyssey Trust Company, #702-67 Yonge Street, Toronto ON M5E 1J8 by no later than 10:00 a.m. (Toronto time) on June 16, 2023, or if the Meeting is adjourned or postponed, by no later than 48 hours prior to the time of such reconvened meeting (excluding Saturdays, Sundays and holidays). The Chairman of the Meeting may waive or extend the time limit for the deposit of Proxies. Beneficial owners of Common Shares registered in the name of a broker, custodian, nominee or other intermediary should follow the instructions provided by their broker, custodian, nominee or other intermediary in order to vote their Common Shares.

 

Registered holders of the potash stream preferred shares of the Corporation are hereby provided with notice of, and are entitled to attend, the Meeting and be heard at such Meeting.

 

DATED at Toronto, Ontario as of the 11th day of May, 2023

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “Olivier Roussy Newton”
  Chief Executive Officer and Executive Chairman

 

 

 

 

Exhibit 99.29

 

Valour Inc. Form of Proxy – Annual and Special Meeting to be held on Tuesday, June 20, 2023 at 10:00 a.m. (Toronto time) Trader’s Bank Building 702, 67 Yonge St. Toronto, ON M5E 1J8 Appointment of Proxyholder I/We being the undersigned holder(s) of Valour Inc. (the “ Corporation ”) hereby appoint Ryan Ptolemy or failing this person, Kenny Choi OR Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein: as my/our proxyholder with full power of substitution and to attend, act, and to vote for and on behalf of the holder in accordance with the following direction (or if no directions have been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual and Special Meeting of Valour Inc . to be held at 198 Davenport Road, Toronto, Ontario, M 5 R 1 J 2 on Tuesday, June 20 , 2023 at 10 : 00 a . m . (Toronto time) or at any adjournment thereof . 1. Election of Directors. a. Olivier Roussy Newton For Withhold For Withhold For Withhold b. William C. Steers c. Krisztian Tóth d. Mikael Tandetnik e. Stefan Hascoet 2. Appointment of Auditors. Appoint BF Borgers CPA PC as auditors of the Corporation for the ensuing year and authorizing the directors of the Corporation to fix their renumeration For W i t hh o l d 3. Name Change. a) subject to the Corporation first receiving all required regulatory and the Cboe Canada Exchange approvals, the name of the Corporation be changed to “DeFi Technologies Inc . ” or such other name as may be approved by the directors of the Corporation and applicable regulatory authorities ; b) the articles of the Corporation be amended to reflect the foregoing ; c) the Board be and are authorized to file articles of amendment and all other requisite documents with all applicable regulatory authorities in order to give effect to the name change ; d) notwithstanding the passage of this resolution by the shareholders of the Corporation, the Board of the Corporation may, without any further notice or approval of the shareholders of the Corporation, decide not to proceed with the name change or to otherwise give effect to this resolution at any time prior to the sale becoming effective and may revoke this resolution without further approval of the shareholders at any time prior to the completion of the transactions authorized by this resolution ; and e) any one or more of the directors or officers of the Corporation is hereby authorized and directed, acting for, in the name of and on behalf of the Corporation, to execute or cause to be executed, under the seal of the Corporation or otherwise, and to deliver or cause to be delivered, such other documents and instruments, and to do or cause to be done all such other acts and things, as may in the opinion of such director or officer of the Corporation be necessary or desirable to carry out the intent of the foregoing resolution, the execution of any such document or the doing of any such other act or thing by any director or officer of the Corporation being conclusive evidence of such determination . ” For A g a i n st Authorized Signature(s) – This section must be completed for your instructions to be executed. I/we authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, this Proxy will be voted as recommended by Management. Signature(s): D a t e / / MM / DD / YY Interim Financial Statements – Check the box to the right if you would like to receive interim financial statements and accompanying Management’s Discussion & Analysis by mail. See reverse for instructions to sign up for delivery by email. Annual Financial Statements – Check the box to the right if you would like to receive the Annual Financial Statements and accompanying Management’s Discussion and Analysis by mail . See reverse for instructions to sign up for delivery by email .

 

 

This form of proxy is solicited by and on behalf of Management. Proxies must be received by 10:00 a.m., Eastern Daylight Time, on June 16, 2023. Notes to Proxy 1. Each holder has the right to appoint a person, who need not be a holder, to attend and represent him or her at the Annual and Special Meeting. If you wish to appoint a person other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided on the reverse. 2. If the securities are registered in the name of more than one holder (for example, joint ownership, trustees, executors, etc.) then all of the registered owners must sign this proxy in the space provided on the reverse. If you are voting on behalf of a corporation or another individual, you may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated. 3. This proxy should be signed in the exact manner as the name appears on the proxy. 4. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder. 5. The securities represented by this proxy will be voted as directed by the holder; however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management. 6. The securities represented by this proxy will be voted or withheld from voting, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. 7. This proxy confers discretionary authority in respect of amendments to matters identified in the Notice of Meeting or other matters that may properly come before the meeting. 8. This proxy should be read in conjunction with the accompanying documentation provided by Management. INSTEAD OF MAILING THIS PROXY, YOU MAY SUBMIT YOUR PROXY USING SECURE ONLINE VOTING AVAILABLE ANYTIME: To Vote Your Proxy Online please visit: https://login.odysseytrust.com/pxlogin You will require the CONTROL NUMBER printed with your address to the right. If you vote by Internet, do not mai l this proxy. To request the receipt of future documents via email and/or to sign up for Securityholder Online services, you may contact Odyssey Trust Company at www.odysseycontact.com . Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. A return envelope has been enclosed for voting by mail.

 

Exhibit 99.30

 

 

Due to high demand: Valour and Autostock to launch a new automated strategy - Coinbot Zero STEP

 

●Valour announces extended partnership with Autostock with a new strategy, Coinbot Zero STEP

 

●The new strategy aims to give the investors a better average acquisition value and can be used on multiple Valour products

 

Toronto, Ontario, May 30, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announced today an extension of existing partnership with Autostock, a Swedish trading platform to launch a new automated trading strategy.

 

Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. The new strategy, known as Coinbot Zero STEP, will scale in and out in the positions, aiming to give the investor a better average acquisition value.

 

“After the great success of our current strategies, we are delighted to announce the further extension of our collaboration with Autostock”, said Johanna Belitz, Valour Head of Sales France and Nordics. “Coinbot Zero STEP stands out by offering automated trading capabilities not only with Bitcoin and Ethereum, but also with other crypto assets in Valour’s product suite. This empowers investors to automate their exposure to a wide range of underlying assets, including Solana or Cardano, with remarkable efficiency.”

 

“The performance of automated strategies on digital assets is notably impressive” said Rikard Nilsson, CEO of Autostock. “With Coinbot Zero STEP, we are opting for risk diversification through the utilisation of multiple cryptocurrencies which is both beneficial for the investor and increases user activity. Moreover, the STEP strategy capitalises on periods of weaker momentum by employing a sell condition rooted in price action. Automating trading decisions based on empirically derived algorithms effectively mitigates the influence of psychological factors that may otherwise affect trading choices.”

 

The strategy will be presented on Youtube on the 2nd of June at 12:00 CET.

https://www.youtube.com/watch?v=jLo5y9WlC5Y

 

Valour’s and Autostock’s strategies are available to clients of Autostock. For more information on how to become a client with Autostock, visit www.autostock.se

 

 

 

 

 

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

‍‍About Autostock

 

Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. The users can decide at what level they want to benefit from the Autotrader software assistance possibilities, and set up the software individually to suit their preferences. Autostock also offers support for traders to develop their own tools, help exploring their trading ideas, troubleshoot script based algorithms and much more. The community of users can be followed on the Autostock website and Facebook. For more information, please visit www.autostock.se‍‍.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access. www.valour.com

 

2

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

3

 

Exhibit 99.31

 

 

Valour announces the launch of first physically backed Bitcoin Carbon Neutral Product (ETP) on Frankfurter Wertpapierboerse XETRA

 

●Valour’s Bitcoin Physical Carbon Neutral ETP becomes the 12th ETP offered by Valour.

 

●1Valour Bitcoin Physical Carbon Neutral offers investors exposure to Bitcoin and presents a trusted investment method that benefits the environment and aligns with ESG goals by funding certified carbon removal and offset initiatives in order to neutralise the associated Bitcoin carbon footprint.

 

●Starting today, June 15th, investors in Germany will be able to purchase the 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN:GB00BQ991Q22) with a low management fee of 1.49% on the Frankfurter Wertpapierboerse XETRA, the largest exchange in Germany.

 

●Valour anticipates numerous other product launches in the very near future with launch of ABS (asset backed) structure.

 

TORONTO, June 15, 2023 /CNW/ - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology holding company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, is pleased to announce the launch of its first physically backed digital asset product.

 

The 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN: GB00BQ991Q22) is launched by Valour’s new EU-wide issuance platform for physically stored digital assetsValour Digital Securities Limited (“VDSL”), a Jersey-based securities issuer, has obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors. The ETPs are secured by the respective digital assets that are physically stored with regulated custody providers.

 

1Valour Bitcoin Physical Carbon Neutral ETP provides investors with sustainable and climate-friendly exposure to Bitcoin with the low management fee of 1.49%. The ETP presents a trusted investment method that benefits the environment and aligns with ESG goals by funding certified carbon removal and offset initiatives in order to neutralise the associated Bitcoin carbon footprint.

 

Valour has partnered with leading climate action infrastructure provider Patch in the structuring of the ETP. When investments are made in the 1Valour Bitcoin Physical Carbon Neutral ETP, all carbon emissions linked to the investment will be automatically targeted to achieve carbon neutral output using Patch’s API- based solution, which takes into account various inputs, such as the efficiency of mining equipment, distribution of hash power, and nation level carbon emission data, to estimate the corresponding amount of carbon emissions the VDSL portfolio has.

 

To offset these emissions, Patch only selects high integrity projects that prevent, remove and sequester carbon dioxide from the atmosphere. Patch carefully selects projects, and ensures they have been vetted by qualified and recognised organisations and standards, including; Gold Standard, Climate Action Reserve, Verified Carbon Standard, BCarbon, American Carbon Registry and Puro.Earth.

 

“Valour strives to ensure that its offerings promote sustainable practices and contribute to efforts to build a carbon neutral crypto industry”, said Olivier Roussy Newton, CEO of Valour. “As a proud signatory on the Crypto Climate Accord, Valour takes its ESG obligations seriously. We want to give retail and institutional investors, alike, the tools to partake in the exciting digital asset ecosystem and we are very proud to offer our first carbon neutral product on our new physically backed platform. With the launch of our first asset backed product we anticipate numerous future launches of new products which should help to grow our AUM substantially.”

 

 

 

 

Despite the new digital asset platform, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and decentralised finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

View original content to download multimedia:

 

https://www.prnewswire.com/news-releases/valour-announces-the-launch-of-first-physically-backed-bitcoin-carbon-neutral-product-etp-on-frankfurter-wertpapierboerse-xetra-301851828.html

 

SOURCE DeFi Technologies, Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/June2023/15/c0443.html

 

%SEDAR: 00007675E

 

For further information: Investor Relations: ir@valour.com

 

CO: DeFi Technologies, Inc.

 

CNW 07:30e 15-JUN-23

 

 

 

 

Exhibit 99.32

 

Valour Announces 2023 AGM Voting Results

 

TORONTO, June 20, 2023 /PRNewswire/ - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTCQB: DEFTF), a technology company bridging the gap between traditional capital markets and decentralized finance, is pleased to announce the voting results from the Annual General and Special Meeting of shareholders held on June 20, 2023. The nominees listed in the Management Information Circular dated May 11, 2023 for the 2023 Annual General and Special Meeting of shareholders of the Company (the “Meeting”) were elected as directors of the Company. A total of 14.60% of all of the issued and outstanding shares of the Company were represented at the Meeting.

 

Election of Directors

 

The shareholders approved the election as directors of the persons listed below, based on the following vote.

 

Nominee  % Votes
For		   % Votes
Withheld		 
Olivier Roussy Newton   99.07    0.93 
Krisztian Toth   94.09    5.91 
William Steers   85.23    14.77 
Mikael Tandetnik   99.10    0.90 
Stefan Hascoet   99.19    0.81 

 

Shareholders voted 98.8% in favour of the ratification and approval of the appointment of BF Borgers CPA PC, the Company’s auditors, with 1.12% of shareholders withholding their vote on the appointment of auditors.

 

Shareholders voted 98.26% in favour of the approval of the Company’s name change to “DeFi Technologies Inc.” (the “Name Change”), with 1.74% of shareholders withholding their vote on the Name Change.

 

The board of directors of the Company would like to express its gratitude to its shareholders for their high levels of participation and support.

 

 

 

 

 

About Valour

 

Valour Inc. is a technology company bridging the gap between traditional capital markets and decentralized finance. Our mission is to expand investor access to industry-leading decentralized technologies which we believe lie at the heart of the future of finance. On behalf of our shareholders and investors, we identify opportunities and areas of innovation and build and invest in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. For more information or to subscribe to receive company updates and financial information, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to: the Meeting; the Name Change; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

For further information, please contact:
Investor Relations
ir@valour.com

 

SOURCE DeFi Technologies, Inc.

 

 

 

 

Exhibit 99.33

 

 

Valour Inc. Provides Corporate Updates on AUM, Net Sales, and Other Corporate News for the month Ending May 2023

 

●For the month ending May ‘23, Valour’s total assets under management (AUM) stood at C$178.9 million, with net sales increasing to C$475.2 million.

 

●Valour’s investment valuation in partially owned bank, SEBA Bank AG, stands at C$37 million at March 31, 2023

 

●Mr. Stan Bharti and Forbes & Manhattan, Inc. have disposed of their shareholdings in the Company

 

TORONTO – June 21, 2023 – Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, are pleased to share updates on assets under management, net sales of its Exchange Traded Products (“ETPs”) and other corporate news for the month ending May 2023.

 

For the month ending May ‘23, Valour’s total assets under management (AUM) stood at C$178.9 million, with net sales increasing to C$475.2 million. These figures indicate a healthy interest in Valour’s suite of exchange traded products, and steady growth all around.

 

In other news, Valour’s investment valuation in partially owned bank, SEBA Bank AG, stands at C$37 million as of March 31, 2023.

 

“Despite AUM being up substantially since the beginning of the year our equity valuation has been underperforming the entire sector as we worked to clean out approximately 13 million shares as an aggressive seller hit our market,” said Olivier Roussey Newton, CEO of Valour. “Month over month we continue to bring in new customers and anticipate several new products being launched in the very near term which will enable Valour to grow assets over the balance of the year.“

 

The Company further announces that it has confirmed that Mr. Stan Bharti and Forbes & Manhattan, Inc. have disposed of all their shareholdings of the Company and have no interest whatsoever in the company.

 

Shares for Debt Settlement

 

The Company is pleased to announce that the Company has entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately C$674,837.78 of accrued fees owing to such officers and consultants of the Company (collectively, the “Debt”) by issuing common shares of the Company (the “Debt Shares”) at a price of C$0.085 per Debt Share for a total of 7,939,268 Debt Shares (the “Debt Settlement”).

 

 

 

 

The Company believes that the Debt Settlement will strengthen its balance sheet by reducing its liabilities as well as further align the interests of its officers and consultants with the shareholders of the Company. The Debt Settlement is subject to the acceptance of the Cboe Canada. The Debt Shares issued in connection with the Debt Settlement will be subject to a statutory hold period of four-months and one day.

 

The issuance of the Debt Shares to the officers of the Company constitutes a “related party transaction” as this term is defined in Multilateral Instrument 61-101: Protection of Minority Securityholders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of the Debt Shares nor the debt exceeds 25% of the Company’s market capitalization.

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Debt Settlement; the development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

CBOE CANADA DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

Investor Relations
ir@valour.com

 

 

 

 

Exhibit 99.34

 

FORM 51-102F3 MATERIAL CHANGE REPORT

 

ITEM 1Name and Address of Company:

 

Valour Inc. (“Valour” or the “Company”)

198 Davenport Road

Toronto, Ontario

M5R 1J2

 

ITEM 2Date of Material Change:

 

June 22, 2023

 

ITEM 3News Release:

 

A news release was issued by the Company on June 22, 2023 and subsequently filed on SEDAR.

 

ITEM 4Summary of Material Change:

 

Valour has appointed Suzanne Ennis as a member of the board of directors of the Company effective immediately.

 

ITEM 5Full Description of Material Change:

 

Valour has appointed Suzanne Ennis as a member of the board of directors of the Company effective immediately.

 

ITEM 6Reliance on subsection 7.1(2) or (3) of National Instrument 51-102:

 

Not applicable.

 

ITEM 7Omitted Information:

 

Not applicable.

 

ITEM 8Executive Officer:

 

Olivier Roussy Newton

Chief Executive Officer

olivier@valour.com

 

ITEM 9Date of Report:

 

June 22, 2023

Exhibit 99.35

 

 

Valour Inc. Appoints Sue Ennis to Board of Directors

 

●Award-winning emerging technology and innovation champion, Sue Ennis, joins Valour’s Board of Directors.

 

●Sue Ennis brings a wealth of experience, having driven retail and institutional investor interest in under-appreciated Canadian companies, transforming them into multi-billion market cap opportunities.

 

●She is currently the VP of Corporate Development at Hut 8, one of Canada’s leading data infrastructure operators and Bitcoin miners.

 

●Previous roles include leadership positions at Shyft Networks, Coinsquare, Voyager, and Invesco.

 

TORONTO – June 22, 2023 – Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, is delighted to announce the appointment of Sue Ennis to its board of directors (the “Board”).

 

Sue Ennis is an acclaimed leader in emerging technology and innovation, known for her passion in ushering global investor awareness and capital into opportunities within Canada’s thriving technology, natural resources, and small cap sectors. With over 15 years of experience, she has raised over a billion dollars for Canadian structured product and small cap companies, propelling hidden Canadian gems into significant market cap opportunities.

 

In her current role as the VP of Corporate Development at Hut 8, one of Canada’s largest data infrastructure operators and Bitcoin miners, Sue continues to influence the trajectory of technology and innovation in Canada. Her previous leadership roles at Shyft Networks, Coinsquare, Voyager, and Invesco reflect her dynamic career and dedication to the tech and financial sectors.

 

“Sue’s expansive knowledge in the technology and finance sectors, coupled with her commitment to driving innovation, perfectly aligns with Valour’s strategic direction,” stated Olivier Roussy Newton, CEO of Valour. “We are confident that her contributions will greatly enhance our board and positively impact our company’s path forward.”

 

The appointment of Ms. Ennis to the Board bolsters Valour’s leadership, reinforcing the Company’s pledge to pioneer the integration of traditional and decentralised finance. This move underscores Valour’s commitment to cultivating a leadership team that promotes innovation and sustainability amid an evolving financial landscape.

 

Please join us in welcoming Sue Ennis to her new role on the Board of Directors at Valour. Her expertise, leadership, and passion for innovation promise to guide Valour to new heights.

 

 

 

 

About Valour

 

Valour Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. Valour’s mission is to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the appointment of directors; the development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralized finance (“DeFi”) and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

CBOE CANADA DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

 

 

Exhibit 99.36

 

 

Valour Inc. Files Preliminary Base Shelf Prospectus

 

NOT FOR DISTRIBUTION TO THE UNITED STATES NEWS WIRE SERVICES OR FOR 

DISSEMINATION IN THE UNITED STATES

 

Toronto, Ontario, June 30, 2023 - Valour Inc. (the “Company” or “Valour”) (NEO: DEFI) (GR: RMJR) (OTCQB: DEFTF), a technology company bridging the gap between traditional capital markets and decentralized finance, is pleased to announce that it has filed a preliminary short form base shelf prospectus (the “Preliminary Base Shelf Prospectus”) with the securities regulators in each province and territory of Canada. When made final or effective, this filing will allow the Company and/or selling security holders to make offerings of common shares (including by way of an “at-the-market distribution” in accordance with applicable securities laws), debt securities, warrants, subscription receipts, convertible securities, units or any combination thereof for up to a maximum amount of C$20 million during the 25-month period over which the base shelf prospectus is effective.

 

The Company has filed this Preliminary Base Shelf Prospectus in order to have greater financial flexibility going forward but has no immediate plans to issue any securities under it at this time, and may never proceed with any such issuance. Should the Company and/or selling security holders decide to offer securities during the 25-month effective period, the specific terms, including the use of proceeds, will be set forth in a prospectus supplement to the final base shelf prospectus, which will be filed with the applicable Canadian securities regulatory authorities.

 

This news release does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any province, state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such province, state or jurisdiction.

 

A copy of the Preliminary Base Shelf Prospectus is available under the Company’s profile on SEDAR at www.sedar.com.

 

About Valour

 

Valour Inc. is a technology company bridging the gap between traditional capital markets and decentralized finance. Our mission is to expand investor access to industry-leading decentralized technologies which we believe lie at the heart of the future of finance. On behalf of our shareholders and investors, we identify opportunities and areas of innovation and build and invest in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. For more information or to subscribe to receive company updates and financial information, visit https://valour.com

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to: the filing of the Preliminary Base Shelf Prospectus; receipt of regulatory approval for the final base shelf prospectus; any future financings or filing of prospectus supplements; tokens in its venture portfolio; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralized finance (DeFi) and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of securities to, or for the account or benefit of, persons in the United States or “U.S. persons,” as such term is defined in Regulation S promulgated under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). The securities have not been and will not be registered under 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.

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@valour.com

 

 

 

 

Exhibit 99.37

 

A copy of this preliminary short form base shelf prospectus has been filed with the securities regulatory authorities in each of the provinces and territories of Canada, but has not yet become final for the purpose of the sale of securities. Information contained in this preliminary short form base shelf prospectus may not be complete and may have to be amended. The securities may not be sold until a receipt for the short form base shelf prospectus is obtained from the securities regulatory authorities. This preliminary short form base shelf prospectus has been filed under legislation in each of the provinces and territories of Canada that permits certain information about these securities to be determined after this prospectus has become final and that permits the omission from this prospectus of that information. The legislation requires the delivery to purchasers of a prospectus supplement containing the omitted information within a specified period of time after agreeing to purchase any of these securities.

 

No securities regulatory authority has expressed an opinion about these securities and it is an offence to claim otherwise. This short form base shelf prospectus constitutes an offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities. These 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. Accordingly, the securities may not be offered or sold in the United States, except in transactions exempt from registration under the U.S. Securities Act and applicable state securities laws. This short form prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby within the United States or its territories or possessions. See “Plan of Distribution”.

 

Information has been incorporated by reference in this short form prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of Valour Inc., 198 Davenport Road, Toronto, ON, Canada M5R 1J2, Telephone: (416)861-5882, and are also available electronically at www.sedar.com.

 

PRELIMINARY SHORT FORM BASE SHELF PROSPECTUS

 

NewIssueJune 30, 2023

 

 

 

VALOUR INC.

 

$20,000,000

Common Shares

Debt Securities

Warrants

Subscription Receipts

Convertible Securities

Units

 

Valour Inc. (“Valour” or the “Company”) may offer and sell, from time to time, the following securities: common shares in the capital of the Company (“Common Shares”); debt securities, which may consist of bonds, debentures, notes or other evidences of indebtedness of any kind, nature or description, and which may be issuable in series (“Debt Securities”); warrants to purchase Common Shares and other Securities (as defined below) (“Warrants”); subscription receipts convertible into Common Shares or other Securities (“Subscription Receipts”); securities convertible into or exchangeable for Common Shares or other Securities (“Convertible Securities”); and units comprised of one or more of any of the foregoing Securities, or any combination of such Securities (“Units”), or any combination of such securities (all of the foregoing being, collectively, the “Securities” and, individually, a “Security”), for up to an aggregate offering price of $20,000,000 (or the equivalent, at the date of issue, in any other currency or currencies, as the case may be), in one or more transactions during the 25-month period that this short form base shelf prospectus (this “Prospectus”), including any amendments to this Prospectus, remains effective.

 

 

 

 

The specific terms of any offering of Securities will be set forth in an applicable prospectus supplement (in each case, a “Prospectus Supplement”) and may include, where applicable: (i) in the case of Common Shares, the number of Common Shares offered and the issue price; (ii) in the case of Debt Securities, the specific designation, aggregate principal amount, maturity, interest provisions, authorized denominations, offering price, covenants, events of default, any terms for redemption or retraction, any exchange or conversion terms, and any other terms specific to the Debt Securities being offered; (iii) in the case of Convertible Securities, the number of Convertible Securities offered, the offering price, the procedures for the conversion or exchange of such Convertible Securities into or for Common Shares and/or other Securities, and any other specific terms; (iv) in the case of Warrants, the designation, number and terms of the Common Shares or other Securities issuable upon exercise of the Warrants, any procedures that will result in the adjustment of these numbers, the exercise price, dates and periods of exercise, and any other specific terms; and (v) in the case of Units, the designation, number and terms of the Common Shares, Warrants, Debt Securities, Subscription Receipts, or Convertible Securities forming part of the Units, any procedures that will result in the adjustment of these numbers, the exercise price, the dates and periods of exercise, the currency in which the Units are issued, and any other terms specific to the Units being offered. A Prospectus Supplement may include specific variable terms pertaining to the Securities that are not within the parameters described in this Prospectus.

 

In addition, Securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or a subsidiary of the Company. The consideration of any such acquisition may consist of any of the Securities separately, a combination of Securities, or any combination of, among other things, Securities, cash and assumption of liabilities.

 

All shelf information permitted under applicable securities legislation to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered to purchasers together with this Prospectus. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of applicable securities legislation as of the date of such Prospectus Supplement, and only for the purposes of the distribution of the Securities to which such Prospectus Supplement pertains. The offerings are subject to approval of certain legal matters on behalf of the Company by Fasken Martineau DuMoulin LLP.

 

This Prospectus constitutes a public offering of Securities only in those jurisdictions where they may be lawfully offered for sale, and therein only by persons permitted to sell the Securities. The Company may offer and sell the Securities to or through underwriters purchasing as principal, and may also sell the Securities to one or more purchasers directly, through applicable statutory exemptions, or through agents designated by the Company from time to time.

 

The Securities may be sold from time to time in one or more transactions at a fixed price or prices which may be changed or at non-fixed prices. This Prospectus may qualify an “at-the-market distribution”, as defined in National Instrument 44-102 Shelf Distributions (“NI 44-102”). If offered on a non-fixed price basis, the Securities may be offered at market prices prevailing at the time of sale, at prices determined by reference to the prevailing price of a specified security in a specified market, or at prices to be negotiated with purchasers, including sales in transactions that are deemed to be “at-the-market distributions”, sales made directly on the NEO Exchange Inc. (the “NEO”) or other existing trading markets for the Securities, and as set forth in an accompanying Prospectus Supplement, in which case the compensation payable to an underwriter, dealer or agent in connection with any such sale will be decreased by the amount, if any, by which the aggregate price paid for the Securities by the purchasers is less than the gross proceeds paid by the underwriter, dealer or agent to the Company. The price at which the Securities will be offered and sold may vary from purchaser to purchaser and during the period of distribution. See “Plan of Distribution”.

 

In connection with any offering of Securities, except as otherwise set out in a Prospectus Supplement relating to a particular offering of Securities, the underwriters, dealers or agents may over-allot or effect transactions which stabilize or maintain the market price of the Securities offered at a level above that which might otherwise prevail in the open market. Such transactions may be commenced, interrupted or discontinued at any time. However, no underwriter of an “at-the-market distribution”, as defined in NI 44-102, and no person or company acting jointly or in concert with such an underwriter, may, in connection with such a distribution, enter into any transaction that is intended to stabilize or maintain the market price of the Securities or Securities of the same class as the Securities distributed under this Prospectus and Prospectus Supplement, including selling an aggregate number or principal amount of Securities that would result in an underwriter creating an over-allocation position in the Securities. A purchaser who acquires Securities forming part of the underwriters’, dealers’ or agents’ over-allotment position acquires those Securities under this Prospectus and the Prospectus Supplement relating to the particular offering of Securities, regardless of whether the overallotment position is ultimately filled through the exercise of the over-allotment option or secondary market purchases. See “Plan of Distribution”.

 

The Common Shares are listed and posted for trading on the NEO under the symbol “DEFI”. On June 29, 2023, the last trading day prior to the date of this Prospectus, the closing price of the Common Shares on the NEO was $0.09.

 

 

 

 

Unless otherwise specified in the applicable Prospectus Supplement, the Debt Securities, Warrants, Subscription Receipts, Convertible Securities and Units will not be listed on any securities exchange. There is currently no market through which Securities other than Common Shares may be sold, and purchasers may not be able to resell such Securities purchased under this Prospectus. This may affect the pricing of the Securities in the secondary market, the transparency and availability of trading prices, the liquidity of the Securities, and the extent of issuer regulation. See “Risk Factors”.

 

Olivier Roussy Newton, a director and the Company’s Chief Executive Officer, and directors Mikael Tandetnik and Stefan Hascoet each reside outside of Canada. Each of the foregoing has appointed the Company, at 198 Davenport Road, Toronto, ON, Canada M5R 1J2, as agent for service of process. Prospective investors are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person who resides outside of Canada, even if the party has appointed an agent for service of process.

 

THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE OR CANADIAN SECURITIES COMMISSION OR REGULATORY AUTHORITY, NOR HAS THE SEC OR ANY STATE OR CANADIAN SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.

 

Prospective investors should be aware that the acquisition of the Securities may have tax consequences. Such consequences may not be described fully herein or in any applicable Prospectus Supplement. Prospective investors should read the discussion contained in this Prospectus under the heading “Certain Canadian Federal Income Tax Considerations” as well as the tax discussion, if any, contained in the applicable Prospectus Supplement with respect to a particular offering of Securities.

 

An investment in the Securities is highly speculative and involves significant risks that should be carefully considered by prospective investors before purchasing such Securities. The risks outlined in this Prospectus and in the documents incorporated by reference herein should be carefully reviewed and considered by prospective investors in connection with an investment in such Securities. See “Cautionary Note Regarding Forward Looking Information” and “Risk Factors”.

 

No underwriter has been involved in the preparation of this Prospectus or performed any review of the contents hereof.

 

No person is authorized by the Company to provide any information or to make any representation other than as contained in this Prospectus in connection with the issue and sale of the Securities offered hereunder. Prospective investors should assume that the information appearing in this Prospectus or any Prospectus Supplement is accurate only as of the date of such document unless otherwise specified. The Company’s business, financial condition, results of operations and prospects may have changed since such date.

 

The head office and registered office of the Company is located at 198 Davenport Road, Toronto, ON, Canada, M5R 1J2.

 

 

 

 

TABLE OF CONTENTS

 

GENERAL MATTERS 1
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION 1
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS 2
CURRENCY PRESENTATION 2
DOCUMENTS INCORPORATED BY REFERENCE 3
DESCRIPTION OF THE BUSINESS 5
CONSOLIDATED CAPITALIZATION 6
USE OF PROCEEDS 6
PLAN OF DISTRIBUTION 6
DESCRIPTION OF THE SECURITIES BEING DISTRIBUTED 7
EARNINGS COVERAGE RATIOS 10
PRIOR SALES 10
TRADING PRICE AND VOLUME 10
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 10
RISK FACTORS 10
ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS 11
INTERESTS OF EXPERTS 11
LEGAL MATTERS 12
PURCHASERS’ STATUTORY RIGHTS 12

 

i

 

 

GENERAL MATTERS

 

Unless otherwise noted or the context indicates otherwise, references to the “Company”, “Valour”, “we”, “us”, “our” or similar terms in this Prospectus refer to Valour Inc. together, where context requires, with its subsidiaries.

 

The Company has not authorized anyone to provide readers with information different from that contained in this Prospectus. The Company takes no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give readers of this Prospectus. The Company is not making an offer of Securities in any jurisdiction where the offer is not permitted.

 

Readers should not assume that the information contained or incorporated by reference in this Prospectus is accurate as of any date other than the date of this Prospectus or the respective dates of the documents incorporated by reference in this Prospectus, unless otherwise noted in this Prospectus or as required by law. It should be assumed that the information appearing in this Prospectus, any Prospectus Supplement and the documents incorporated by reference herein and therein, are accurate only as of their respective dates. The business, financial condition, results of operations and prospects of the Company may have changed since those dates.

 

This Prospectus shall not be used by anyone for any purpose other than in connection with an offering of Securities as described in one or more Prospectus Supplements. The Company does not undertake to update the information contained or incorporated by reference in this Prospectus, including any Prospectus Supplement, except as required by applicable securities laws. Information contained on, or otherwise accessed through, the website of the Company, www.valour.com, shall not be deemed to be a part of this Prospectus and such information is not incorporated by reference in this Prospectus.

 

Information contained in this Prospectus should not be construed as legal, tax or financial advice and readers are urged to consult their own professional advisors in connection with this Prospectus.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

 

This Prospectus and the documents incorporated by reference herein contain or incorporate by reference “forward-looking information” with respect to the Company. Forward-looking information is characterized by words such as “plan”, “expect”, “budget”, “target”, “project”, “intend”, “believe”, “anticipate”, “estimate” and other similar words, or statements that certain events or conditions “may”, “will”, “could” or “should” occur, or by discussions of strategy, and includes any guidance and forecasts appearing in this Prospectus, any Prospectus Supplement or in the documents incorporated by reference in this Prospectus. In order to give such forward-looking information, the Company has made certain assumptions about its business, operations, the economy and the decentralized finance industry in general. In this respect, the Company has assumed that its operations will remain consistent with management’s expectations, contracted parties will provide goods and services on agreed timeframes, required regulatory approvals will be received and maintained, no material adverse change will occur, and no significant events will occur outside of the Company’s normal course of business. No assurance can be given that the expectations in any forward-looking information will prove to be correct and, as such, the forward-looking information included in this Prospectus or any Prospectus Supplement should not be unduly relied upon.

 

Forward-looking information includes estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. Forward-looking information is based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and are inherently subject to a variety of risks and uncertainties and other known and unknown factors that could cause actual events or results to differ materially from those described in, or implied by, the forward-looking information.

 

Except for statements of historical fact relating to Valour, information contained in this Prospectus constitutes forward-looking information, , including but not limited to, statements with respect to:

 

●financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategies, profits or operating expenses;

 

●details and expectations regarding the Company’s investment strategy;

 

●details and expectations regarding the Company’s investments in the decentralized finance (“DeFi”) industry;

 

●expectations regarding revenue growth due to changes in the Company’s investment strategy;

 

1

 

 

●expansion and growth of the Company’s DeFi exchange traded products (“ETPs”), Valour Ventures and Valour Infrastructure business lines;

 

●investment performance of, DeFi protocols and portfolio companies that the Company has invested in;

 

●requirements for additional capital and future financing options;

 

●publishing and marketing plans;

 

●the availability of attractive investments that align with the Company’s investment strategy;

 

●future outbreaks of infectious diseases like the novel coronavirus (“COVID-19”);

 

●the impact of climate change; and

 

●other expectations of the Company.

 

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in, or implied by, the forward-looking information, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking information. The forward-looking information contained herein is presented for the purpose of assisting investors in understanding the Company’s expected financial and operational performance and its plans and objectives, and may not be appropriate for other purposes.

 

All forward-looking information contained in this Prospectus, any Prospectus Supplement and the documents incorporated by reference in this Prospectus is given as of the date hereof or thereof, as the case may be, and is based upon the opinions and estimates of management and information available to management of the Company as at the date hereof or thereof. The Company undertakes no obligation to update or revise the forward-looking information contained in this Prospectus, any Prospectus Supplement and the documents incorporated by reference herein, whether as a result of new information, future events or otherwise, except as required by applicable laws. Investors should read this entire Prospectus, and each applicable Prospectus Supplement and consult their own professional advisors to ascertain and assess the income tax and legal risks and other aspects of their investment in the Securities.

 

IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS

 

Investors should rely only on information contained in this Prospectus, each applicable Prospectus Supplement or any information incorporated by reference herein and therein. The Company has not authorized anyone to provide investors with different or additional information. If anyone provides the reader with different or additional information, the reader should not rely on it. The Company is not making an offer to sell the Securities in any jurisdiction where the offer or sale is not permitted. Investors should assume that the information contained in this Prospectus, any Prospectus Supplement or in any document incorporated or deemed to be incorporated by reference in this Prospectus and any Prospectus Supplement(s) is accurate only as of the respective date of the document in which such information appears. The business, financial condition, results of operations and prospects of the Company may have changed since those dates.

 

Market and industry data used throughout this Prospectus was obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainty inherent in any statistical survey of market size, conditions and prospects.

 

CURRENCY PRESENTATION

 

Unless otherwise indicated, all monetary amounts in this Prospectus are expressed in Canadian dollars. The financial statements of the Company incorporated herein by reference are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards.

 

2

 

 

The following table sets forth, for the periods indicated, the high, low, average and period-end rates of exchange for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada (in the case of the rates for the year ended December 31, 2022 and the year ended December 31, 2021, based on the daily average rates as reported by the Bank of Canada as being in effect at approximately 4:30 p.m. (Eastern time) on each trading day).

 

   Year Ended   Year Ended 
   December 31,
2022		   December 31,
2021		 
High   1.3856    1.2942 
Low   1.2451    1.2040 
Average rate per period   1.3011    1.2535 
Rate at end of period   1.3544    1.2678 

 

As of the date of filing of this Prospectus, the last available indicative rate of exchange posted by the Bank of Canada was on June 29, 2023. Such indicative rate of exchange for conversion of U.S. dollars into Canadian dollars was US$1.00 equals C$1.3255.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Information has been incorporated by reference in this Prospectus from documents filed with securities commissions or similar authorities in Canada. Copies of the documents incorporated herein by reference may be obtained on request without charge from the Chief Financial Officer of the Company, 198 Davenport Road, Toronto, ON, Canada, M5R 1J2, Telephone: (416) 861-5882, and are also available electronically under the issuer profile of the Company through the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. The filings under the Issuer’s profile at www.sedar.com are not incorporated by reference in this Prospectus except as specifically set out in this Prospectus.

 

The information incorporated by reference as described below is considered part of this Prospectus, and information filed with the securities commission or similar authorities in Canada subsequent to this Prospectus and prior to the termination of a particular offering of Securities referred to in any Prospectus Supplement will be deemed to update and, if applicable, supersede this information. Except as may be set forth in a Prospectus Supplement, the following documents of the Company, filed with securities commissions or similar authorities in Canada, are specifically incorporated by reference into, and form an integral part of, this Prospectus:

 

(a)the Company’s annual information form for the year ended December 31, 2022 dated March 31, 2023 (the “AIF”).

 

(b)the audited annual consolidated financial statements of the Company for the fiscal years ended December 31, 2022 and 2021, together with the notes thereto, and the auditors’ report of BF Borgers CPA PC for the fiscal year ended December 31, 2022;

 

(c)management’s discussion and analysis of financial position and results of operations of the Company for the fiscal years ended December 31, 2022 and 2021;

 

(d)the unaudited condensed consolidated interim financial statements of the Company dated May 15, 2023 for the three months ended March 31, 2023 and March 31, 2022, and the notes thereto;

 

(e)management’s discussion and analysis of the Company dated May 15, 2023 for the unaudited condensed consolidated interim financial statements referred to in paragraph (d) above;

 

(f)the management information circular of the Company dated May 11, 2023 in connection with the annual and general special meeting of shareholders of the Company to be held on June 22, 2023 (the “Circular”), other than any statements contained in the Circular to the extent that any statement contained in this Prospectus or in any other document incorporated or deemed to be incorporated by reference in this Prospectus filed after the Circular modifies or supersedes any such statements contained in the Circular;

 

(g)the material change report of the Company dated January 13, 2023; and

 

(h)the material change report of the Company dated June 22, 2023.

 

3

 

 

Any document of the type referred to in section 11.1 of Form 44-101F1 Short Form Prospectus filed by the Company after the date of this Prospectus and all Prospectus Supplements (only in respect to the offering of Securities to which that particular Prospectus Supplement relates) disclosing additional or updated information including the documents incorporated by reference therein, filed pursuant to the requirements of applicable securities legislation in Canada and during the period that this Prospectus is effective, shall be deemed to be incorporated by reference in, and form an integral part of, this Prospectus.

 

Upon a new annual information form, new audited annual consolidated financial statements (and accompanying management’s discussion and analysis) being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, the previous annual information form, the previous audited annual consolidated financial statements and all interim consolidated financial statements (and in each case the accompanying management’s discussion and analysis), and material change reports, filed prior to the commencement of the financial year of the Company in which the new annual information form is filed shall be deemed to no longer be incorporated into this Prospectus for purpose of future offers and sales of Securities under this Prospectus. Upon interim consolidated financial statements and the accompanying management’s discussion and analysis being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, all interim consolidated financial statements and the accompanying management’s discussion and analysis of financial condition and results of operations filed prior to such new interim consolidated financial statements and management’s discussion and analysis shall be deemed to no longer be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus. In addition, upon a new management information circular for an annual meeting of shareholders being filed by the Company with the applicable Canadian securities commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, the previous management information circular filed in respect of the prior annual meeting of shareholders shall no longer be deemed to be incorporated into this Prospectus for purposes of future offers and sales of Securities under this Prospectus.

 

A Prospectus Supplement containing the specific terms of an offering of Securities and other information relating to the Securities will be delivered to prospective purchasers of such Securities, together with this Prospectus, and will be deemed to be incorporated into this Prospectus as of the date of such Prospectus Supplement but only for the purpose of the offering of the Securities covered by that Prospectus Supplement.

 

In addition, certain marketing materials (as the term is defined in applicable Canadian securities legislation) may be used in connection with a distribution of Securities under this Prospectus and applicable Prospectus Supplement(s). Any “template version” of “marketing materials” (as those terms are defined in applicable Canadian securities legislation) pertaining to a distribution of Securities, and filed by the Company after the date of the Prospectus Supplement for the distribution and before the termination of the distribution of such Securities, will be deemed to be incorporated by reference in that Prospectus Supplement for the purposes of the distribution of Securities to which the Prospectus Supplement pertains.

 

Documents referenced in any of the documents incorporated by reference in this Prospectus but not expressly incorporated by reference therein or herein and not otherwise required to be incorporated by reference therein or in this Prospectus are not incorporated by reference in this Prospectus.

 

Notwithstanding anything in this Prospectus to the contrary, any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein, in any Prospectus Supplement hereto or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not constitute a part of this Prospectus, except as so modified or superseded. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document which it modifies or supersedes. The making of such a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made.

 

4

 

 

DESCRIPTION OF THE BUSINESS

 

The following is a summary of information about the Company and does not contain all the information about the Company that may be important to prospective investors. Prospective investors should read the more detailed information about the Company in documents, including the AIF, financial statements and management’s discussion and analysis, that are incorporated by reference into and are considered to be a part of this Prospectus.

 

The Company was incorporated in British Columbia pursuant to the Company Act (British Columbia) (the “BCCA”) under the name “Western Premium Resource Corp.” on April 14, 1986. On August 29, 1997, the Company filed a certificate of change of name under the BCCA and changed its name to “Zodiac Exploration Corp.” On December 18, 1998, the Company filed a certificate of change of name under the BCCA and changed its name to “Donnybrook Resources Inc.” On August 13, 2003, the Company filed a certificate of change of name under the BCCA and changed its name to “Rodinia Minerals Inc.” On November 3, 2009, the Company was continued under the Business Corporations Act (Ontario) (the “OBCA”), and on June 15, 2010, the Company filed articles of amendment under the OBCA and changed its name to “Rodinia Lithium Inc.” On August 16, 2016 the Company filed articles of amendment under the OBCA and changed its name to “Routemaster Capital Inc.” The Common Shares began trading on the TSX Venture Exchange (the “TSXV”) on June 30, 2010. The Company sold its sole subsidiary on December 29, 2015 and completed a change of business (“COB”) to a tier 2 investment issuer under the rules of the TSXV on September 16, 2016. On January 19, 2021, the Common Shares were uplisted to trade on the NEO Exchange Inc. (“NEO”), and on February 26, 2021, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” On June 1, 2022, the Company filed articles of amendment under the OBCA and changed its name to “Valour Inc.”.

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance through the development and listing of Exchange Traded Products (“ETPs”) through our ETPs business line, and by participating in decentralized blockchain networks by running nodes that contribute to network security and stability, governance, and transaction validation through our Valour Infrastructure business line. The Company also makes various investments in tokens of decentralized finance companies in early-stage ventures through its Valour Ventures business line.

 

On June 20, 2023, the Company held its annual and special meeting of its shareholders. At the meeting, the following individuals were elected as directors of the Company, to hold office until the Company’s next annual meeting or until their successors are elected or appointed: Olivier Roussy Newton, William C. Steers, Mikael Tandetnik, Stefan Hascoet, and Krisztian Toth. Also at the meeting, BF Borgers CPA PC, Chartered Accountants, were appointed as auditor of the Company for the ensuing year. In addition, the shareholders approved a change in name of the Company to “Defi Technologies Inc.” or such other name as the directors may decide, such name change to occur upon receipt of any required regulatory approval and the approval of the directors.

 

On June 22, 2023, the Company appointed Suzanne Ennis as a director of the Company.

 

Valour Asset Management

 

The Company’s wholly owned subsidiary Valour Inc. (Cayman) develops and lists ETPs on regulated stock exchanges in Europe that synthetically track the value of a cryptocurrency or DeFi protocol token, or an index or basket thereof. ETPs simplify the ability for retail and institutional investors to gain exposure to cryptocurrencies and decentralized finance as they remove the need to manage wallets, various logins, custody and other intricacies that are linked to managing a digital asset portfolio. Rather, retail and institutional investors can simply purchase the associated ETP with the cryptocurrency or DeFi protocol token they wish to gain exposure to through a bank or brokerage account with access to the relevant stock exchanges.

 

5

 

 

Valour Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the DeFi ecosystem to build a diversified portfolio of DeFi assets and venture investments, predominantly at Seed or Series A stage. The Company selects venture investments based on their innovative potential, high quality teams, growing and/or potential user bases and unique position in the market or market share, cutting edge technology, and/or leading investors. The ventures respective use cases include borrowing and lending, decentralized exchanges, derivatives and asset management, amongst others.

 

Valour Infrastructure

 

The Company’s Valour Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks. In connection with running nodes, the Company may be compensated for securing transactions on such networks as well as for providing governance services such as voting on code changes and other upgrades to the globally decentralized network. As a publicly-traded company that is regulated, audited and is transparent as to its operations and finances to the public markets, the Company is uniquely suited to support governance of decentralized networks.

 

CONSOLIDATED CAPITALIZATION

 

Other than as disclosed in the documents incorporated by reference in this Prospectus, there have been no material changes in the Company’s share capitalization since March 31, 2023.

 

The applicable Prospectus Supplement will describe any material change, and the effect of such material change, on the share and loan capitalization of the Company that will result from the issuance of Securities pursuant to such Prospectus Supplement.

 

USE OF PROCEEDS

 

Unless the Company otherwise indicates in a Prospectus Supplement relating to a particular offering, the Company currently intends to use the net proceeds from the sale of Securities for general corporate and working capital requirements, including, but not limited to, funding expansion of business and/or ongoing operations, repayment of indebtedness outstanding, completing future acquisitions or for other corporate purposes as set forth in the applicable Prospectus Supplement relating to the offering of the Securities.

 

More detailed information regarding the use of proceeds from the sale of Securities, including any determinable milestones at the applicable time, will be described in a Prospectus Supplement. The Company may also, from time to time, issue Securities otherwise than pursuant to a Prospectus Supplement to this Prospectus. All expenses relating to an offering of Securities and any compensation paid to underwriters, dealers or agents, as the case may be, will be paid out of the proceeds from the sale of such Securities, unless otherwise stated in the applicable Prospectus Supplement.

 

PLAN OF DISTRIBUTION

 

The Company may from time to time during the 25-month period that this Prospectus (including any amendments) remains valid, offer for sale and issue, as applicable, up to an aggregate of $20,000,000 (or the equivalent in other currencies based on the applicable exchange rate at the time of the offering) in Securities under this Prospectus.

 

The Company may offer and sell the Securities to or through underwriters or dealers purchasing as principals, and may also sell directly to one or more purchasers or through agents or pursuant to applicable statutory exemptions. The Prospectus Supplement relating to a particular offering of Securities will identify each underwriter, dealer or agent, as the case may be, engaged by the Company in connection with the offering and sale of the Securities, and will set forth the terms of the offering of such Securities, including, to the extent applicable, any fees, discounts or any other compensation payable to underwriters, dealers or agents in connection with the offering, the method of distribution of the Securities, the initial issue price, the proceeds that the Company will receive and any other material terms of the plan of distribution. Any initial offering price and discounts, concessions or commissions allowed or re-allowed or paid to dealers may be changed from time to time. In addition, the Securities may be offered and issued in consideration for the acquisition of other businesses, assets or securities by the Company or one of its subsidiaries. The consideration for any such acquisition may consist of the Securities separately, a combination of Securities or any combination of, among other things, Securities, cash and assumption of liabilities.

 

The Securities may be sold from time to time in one or more transactions at a fixed price or prices or at prices which may be changed or at market prices prevailing at the time of sale, at prices related to such prevailing prices or at negotiated prices. Such transaction may include those deemed to be an “at-the- market distributions”, including sales made directly on the NEO or other existing trading markets for the Common Shares. The price at which the Securities will be offered and sold may vary from purchaser to purchaser and during the period of distribution.

 

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In connection with the sale of the Securities, underwriters, dealers or agents may receive compensation from the Company or from other parties, including in the form of underwriters’, dealers’ or agents’ fees, commissions or concessions. Underwriters, dealers and agents that participate in the distribution of the Securities may be deemed to be underwriters for the purposes of applicable U.S. and/or Canadian securities legislation and any such compensation received by them from the Company and any profit on the resale of the Securities by them may be deemed to be underwriting commissions.

 

Subject to applicable securities legislation and except as set out in a Prospectus Supplement relating to a particular offering of Securities, in connection with any offering of Securities under this Prospectus, other than an offering of Securities deemed to be an “at-the-market distribution”, the underwriters, dealers or agents, as the case may be, may over-allot or effect transactions intended to fix, stabilize, maintain or otherwise affect the market price of the Securities at a level other than those which otherwise might prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time. A purchaser who acquires Securities forming part of the over-allocation position of any underwriter, broker, dealer or agent, acquires those securities under this Prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise of the over-allotment option or secondary market purchases.

 

No underwriter or dealer involved in an “at-the-market distribution”, no affiliate of such underwriter or dealer and no person acting jointly or in concert with such underwriter or dealer has over-allotted, or will over-allot, any securities of the Company in connection with an offering of Securities or effect any transactions that are intended to stabilize the market price of the Company’s securities.

 

Underwriters, dealers or agents who participate in the distribution of the Securities may be entitled, under agreements to be entered into with the Company, to indemnification by the Company against certain liabilities, including liabilities under U.S. and/or Canadian securities legislation, or to contribution with respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business.

 

Unless otherwise specified in the applicable Prospectus Supplement, each series or issue of Securities (other than Common Shares) will be a new issue of Securities with no established trading market. Accordingly, there is currently no market through which the Securities (other than Common Shares) may be sold and purchasers may not be able to resell such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities and the extent of issuer regulation. See “Risk Factors”.

 

DESCRIPTION OF THE SECURITIES BEING DISTRIBUTED

 

Common Shares

 

Valour is authorized to issue an unlimited number of Common Shares. As at the date of this Prospectus, there were 219,510,501 Common Shares issued and outstanding.

 

Holders of Common Shares are entitled to one vote for each share held at all meetings of shareholders, to receive dividends if, as and when declared by the Board, and, upon liquidation, to share equally in such assets of the Company as are distributable to the holders of the shares. The Common Shares carry no pre-emptive rights, conversion or exchange rights, redemption, retraction, purchase for cancellation or surrender provisions, sinking or purchase fund provisions, provisions permitting or restricting the issuance of additional securities, or provisions requiring a shareholder to contribute additional capital. Provisions as to the modification, amendment or variation of such rights or provisions are contained in Valour’s articles, by-laws and the OBCA.

 

Debt Securities

 

The following sets forth certain general terms and provisions of the Debt Securities. The particular terms and provisions of Debt Securities offered by a Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to such Debt Securities, will be described in such Prospectus Supplement. If there are differences between the Prospectus Supplement and this Prospectus, the Prospectus Supplement will prevail. As a result, the information in this section may not apply to all Debt Securities.

 

The Debt Securities will be direct unsecured obligations of the Company and will be senior or subordinated indebtedness of the Company, as described in the relevant Prospectus Supplement.

 

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The Debt Securities will be issued under one or more trust indentures between the Company and a trustee determined by the Company in accordance with applicable laws, as supplemented and amended from time to time. The applicable Prospectus Supplement will include, as applicable, disclosure regarding: (i) the designation, aggregate principal amount and authorized denominations of such Debt Securities; (ii) the currency or currency units for which the Debt Securities may be purchased and the currency or currency unit in which the principal and any interest is payable (in either case, if other than Canadian dollars); (iii) the percentage of the principal amount at which such Debt Securities will be issued; (iv) the date or dates on which such Debt Securities will mature; (v) the rate or rates per annum at which such Debt Securities will bear interest (if any), or the method of determination of such rates (if any); (vi) the dates on which interest will be payable and the record dates for such payments; (vii) the debenture trustee under the trust indenture pursuant to which the Debt Securities are to be issued; (viii) any redemption term or terms under which such Debt Securities may be defeased; (ix) whether such Debt Securities are to be issued in registered form, “book-entry only” form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof; (x) any exchange or conversion terms; (xi) whether such Debt Securities will be subordinated to other liabilities of the Company; and (xii) any other specific terms.

 

Debt Securities may be offered separately or together with Common Shares, Subscription Receipts, Warrants or Convertible Securities (see “Units”).

 

Subscription Receipts

 

The following sets forth certain general terms and provisions of the Subscription Receipts. The specific terms of the Subscription Receipts as described in a Prospectus Supplement will supplement and, if applicable, may modify or replace the general terms described in this section. If there are differences between the Prospectus Supplement and this Prospectus, the Prospectus Supplement will prevail. As a result, the information in this section may not apply to the Subscription Receipts as described in a Prospectus Supplement.

 

The Subscription Receipts will be issued under a subscription receipt agreement. The following sets forth certain general terms and provisions of the Subscription Receipts. The applicable Prospectus Supplement will include, where applicable, disclosure regarding: (i) the number of Subscription Receipts; (ii) the price at which the Subscription Receipts will be offered; (iii) the terms, conditions and procedures for the exchange of the Subscription Receipts into or for Common Shares and/or other securities of the Company; (iv) the number of Common Shares and/or other securities of the Company that may be issued or delivered upon exchange of each Subscription Receipt; (v) certain material income tax consequences of owning, holding and disposing of the Subscription Receipts; and (vi) any other material terms and conditions of the Subscription Receipts. Common Shares and/or other securities of the Company issued or delivered upon the exchange of Subscription Receipts will be issued for no additional consideration. Prior to exercise, holders of Subscription Receipts will not have any of the rights of holders of Common Shares or other underlying securities issuable upon exercise of the Subscription Receipts.

 

Under the subscription receipt agreement, an original purchaser of Subscription Receipts may have a contractual right of rescission following the issuance of Common Shares and/or other securities of the Company issued or delivered to such purchaser upon exchange of Subscription Receipts, entitling the purchaser to receive the amount paid for the Subscription Receipts upon surrender or deemed surrender of the Subscription Receipts, if this Prospectus, the relevant Prospectus Supplement, and any amendment thereto, contains a misrepresentation or is not delivered to such purchaser, provided such remedy for rescission is exercised within 180 days of the date the Subscription Receipts are issued.

 

Subscription Receipts may be offered separately or together with Common Shares, Debt Securities, Warrants or Convertible Securities (see “Units”).

 

Warrants

 

The following sets forth certain general terms and provisions of the Warrants. The specific terms of a series of Warrants as described in a Prospectus Supplement will supplement and, if applicable, may modify or replace the general terms described in this section. If there are differences between the Prospectus Supplement and this Prospectus, the Prospectus Supplement will prevail. As a result, the information in this section may not apply to a given series of Warrants.

 

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Each series of Warrants will be issued under a separate warrant indenture in each case between the Company and a warrant agent determined by the Company. The applicable Prospectus Supplement will include, where applicable, disclosure regarding: (i) the title or designation of the Warrants; (ii) the number of Warrants offered; (iii) the number of Common Shares and/or other securities of the Company purchasable upon exercise of the Warrants and the procedures for exercise; (iv) the exercise price of the Warrants; (v) the dates or periods during which the Warrants are exercisable and when they expire; (vi) the designation and terms of any other securities with which the Warrants will be offered, if any, and the number of Warrants that will be offered with each such security; (vii) certain material income tax consequences of owning, holding and disposing of the Warrants; and (viii) any other material terms and conditions of the Warrants including transferability and adjustment terms and whether the Warrants will be listed on a stock exchange. Prior to exercise, holders of Warrants will not have any of the rights of holders of Common Shares or other underlying securities issuable upon exercise of the Warrants.

 

The Company will not offer Warrants for sale separately to any member of the public in Canada unless the offering is in connection with and forms part of the consideration for an acquisition or merger transaction or unless the Prospectus Supplement containing the specific terms of the Warrants to be offered separately is first approved for filing by or on behalf of the securities commissions or similar regulatory authorities in each of the provinces and territories of Canada where the Warrants will be offered for sale.

 

Warrants may be offered separately or together with Common Shares, Debt Securities, Convertible Securities or Subscription Receipts (see “Units”).

 

Convertible Securities

 

The following sets forth certain general terms and provisions of the Convertible Securities. The specific terms of any Convertible Securities as described in a Prospectus Supplement will supplement and, if applicable, may modify or replace the general terms described in this section. If there are differences between the Prospectus Supplement and this Prospectus, the Prospectus Supplement will prevail. As a result, the information in this section may not apply to Convertible Securities as described in this section.

 

The Convertible Securities will be convertible or exchangeable into Common Shares and/or other securities of the Company, and may be offered separately or together with other Securities, as the case may be. The applicable Prospectus Supplement will include details of the agreement, indenture or other instrument to which such Convertible Securities will be created and issued.

 

Each applicable Prospectus Supplement will set forth the terms and other information with respect to the Convertible Securities being offered thereby, which may include disclosure regarding: (i) the number of such Convertible Securities offered; (ii) the price at which such Convertible Securities will be offered; (iii) the procedures for the conversion or exchange of such Convertible Securities into or for Common Shares and/or other securities of the Company; (iv) the number of Common Shares and/or other securities that may be issued upon the conversion or exchange of such Convertible Securities; (v) the period or periods during which any conversion or exchange may or must occur; (vi) the designation and terms of any other Convertible Securities with which such Convertible Securities will be offered, if any; (vii) the gross proceeds from the sale of such Convertible Securities; (viii) whether the Convertible Securities will be listed on any securities exchange; (ix) whether the Convertible Securities are to be issued in registered form, “book-entry only” form, bearer form or in the form of temporary or permanent global securities and the basis of exchange, transfer and ownership thereof; (x) certain material Canadian tax consequences of owning the Convertible Securities; and (xi) any other material terms and conditions of the Convertible Securities. Convertible Securities may be offered separately or together with Common Shares, Debt Securities, Warrants and/or Subscription Receipts (see “Units”).

 

Units

 

Units are a security comprised of more than one of the other Securities described in this Prospectus offered together as a “Unit”. A Unit is typically issued so the holder thereof is also the holder of each Security included in the Unit. As a result, the holder of a Unit will have the rights and obligations of a holder of each Security comprising the Unit. The agreement, if any, under which a Unit is issued may provide that the Securities comprising the Unit may not be held or transferred separately at any time or at any time before a specified date.

 

The particular terms and provisions of Units offered by any Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to them, will be described in the Prospectus Supplement filed in respect of such Units. This description will include, where applicable: (i) the designation and terms of the Units and of the Securities comprising the Units, including whether and under what circumstances those Securities may be held or transferred separately; (ii) any provisions for the issuance, payment, settlement, transfer or exchange of the Units or of the Securities comprising the Units; (iii) whether the Units will be issued in registered or global form; and (iv) any other material terms and conditions of the Units.

 

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EARNINGS COVERAGE RATIOS

 

If the Company offers Debt Securities having a term to maturity in excess of one year under this Prospectus and any applicable Prospectus Supplement, the applicable Prospectus Supplement will include earnings coverage ratios giving effect to the issuance of such Securities.

 

PRIOR SALES

 

Information in respect of prior sales of Common Shares and other Securities distributed under this Prospectus and for securities that are convertible or exchangeable into Common Shares or such other Securities within the previous 12-month period will be provided, as required, in the applicable Prospectus Supplement with respect to an issuance of Securities pursuant to such Prospectus Supplement.

 

TRADING PRICE AND VOLUME

 

On June 29, 2023, being the last trading day prior to the date of this Prospectus, the closing price of the Common Shares on the NEO was $0.09. Trading prices and volume of the Common Shares will be provided, as required, in each Prospectus Supplement.

 

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

 

Owning any of the Securities may subject holders to tax consequences. The applicable Prospectus Supplement may describe certain Canadian federal income tax considerations generally applicable to investors described therein of purchasing, holding and disposing of the applicable Securities offered thereunder, including, in the case of an investor who is not a resident of Canada, Canadian non-resident withholding tax considerations. Prospective investors should consult their own tax advisors prior to deciding to purchase any of the Securities.

 

RISK FACTORS

 

Before making an investment decision, prospective purchasers of Securities should carefully consider the information described in this Prospectus and the documents incorporated by reference herein (including under the heading “Risk Factors” in the AIF and any subsequently filed documents incorporated by reference in this Prospectus), including the applicable Prospectus Supplement, and consult with their professional advisors to assess any investment in the Company.

 

The risks and uncertainties described in this Prospectus, any applicable Prospectus Supplement and the documents incorporated by reference herein and therein are those the Company currently believes to be material, but they are not the only ones the Company faces. If any of such risks, or any other risks and uncertainties that the Company has not yet identified or that it currently considers not to be material, actually occur or become material risks, the Company’s business, prospects, financial condition, results of operations and cash flows, and consequently the price of the Common Shares or any other publicly traded Securities at the applicable time, could be materially and adversely affected. In all these cases, the trading price of such Securities could decline, and prospective investors could lose all or part of their investment.

 

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Additional risk factors relating to a specific offering of Securities may be described in the applicable Prospectus Supplement. Some of the risk factors described in this Prospectus and in the documents incorporated by reference herein (including subsequently filed documents incorporated by reference), including the applicable Prospectus Supplement, are interrelated and, consequently, investors should treat such risk factors as a whole. The Company cannot provide any assurance that it will successfully address any or all of these risks. There is no assurance that any risk management steps taken will avoid future loss due to the occurrence of any of the risks described or other unforeseen risks.

 

An investment in the Securities, as well as the Company’s prospects, are speculative due to the risky nature of its business and the present stage of its development. Investors may lose their entire investment.

 

No Market for Debt Securities, Subscription Receipts, Warrants, Convertible Securities or Units

 

There is currently no trading market for any Debt Securities, Subscription Receipts, Warrants, Convertible Securities or Units that may be offered. No assurance can be given that an active or liquid trading market for these Securities will develop or be sustained. If an active or liquid market for these Securities fails to develop or be sustained, the prices at which these Securities trade may be adversely affected. Whether or not these Securities will trade at lower prices may depend on many factors, including liquidity of these Securities, prevailing interest rates and the markets for similar securities, the market price of the Common Shares, general economic conditions, and the Company’s financial condition, historic financial performance and future prospects.

 

Loss of Entire Investment

 

An investment in the Securities is speculative and may result in the loss of an investor’s entire investment. Only potential investors who are experienced in high risk investments and who can afford to lose their entire investment should consider an investment in the Company.

 

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

 

The Company is a corporation governed by the OBCA. Some of the directors and officers of the Company are not residents of Canada or otherwise reside outside Canada, and all or a substantial portion of their assets are located outside Canada. The Company has appointed an agent for service of process in Canada, but it may be difficult for holders of Securities who reside in Canada to effect service within Canada upon those directors who are not residents of Canada. It may also be difficult for holders of Debt Securities who reside in Canada to realize in Canada upon judgments of courts of Canada predicated upon the Company’s civil liability and the civil liability of the directors and officers of the Company under applicable securities laws.

 

Olivier Roussy Newton, a director and the Company’s Chief Executive Officer, and directors Mikael Tandetnik and Stefan Hascoet each reside outside of Canada and have appointed the following agent as their agent for service of process:

 

Name of Person   Name and Address of Agent
Olivier Roussy Newton  

Valour Inc.

198 Davenport Road

Toronto, ON Canada M5R 1J2

Mikael Tandetnik  

Valour Inc.

198 Davenport Road

Toronto, ON Canada M5R 1J2

Stefan Hascoet  

Valour Inc.

198 Davenport Road

Toronto, ON Canada M5R 1J2

 

Purchasers are advised that it may not be possible for investors to enforce judgments obtained in Canada against any person or company that is incorporated, continued or otherwise organized under the laws of a foreign jurisdiction or resides outside of Canada, even if the party has appointed an agent for service of process.

 

Pursuant to a decision of the Autorité des marchés financiers dated May 29, 2023, the Company was granted a permanent exemption from the requirement to translate into French this Prospectus, as well as the documents incorporated by reference herein, and any Prospectus Supplement to be filed in relation to an “at-the-market distribution”. This exemption is granted on the condition that this Prospectus and any Prospectus Supplement (other than in relation to an “at-the-market distribution”) be translated into French if the Company offers the Securities to Québec purchasers in connection with an offering other than in relation to an “at-the-market distribution”.

 

INTERESTS OF EXPERTS

 

BF Borgers CPA PC audited the financial statements of the Company for the financial year ended December 31, 2022 and became the auditor of the Company effective as of February 3, 2023. BF Borgers CPA PC is independent with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation.

 

To the knowledge of management, as of the date of their applicable report incorporated by reference into this Prospectus, no expert, nor any associate or affiliate of such person, had any beneficial interest, direct or indirect, in the property of the Company or of any associate or affiliate of the Company, nor did they own more than 1% of the outstanding securities of the Company.

 

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LEGAL MATTERS

 

Unless otherwise specified in the Prospectus Supplement relating to an offering of Securities, certain legal matters relating to such offering of Securities will be passed upon on behalf of the Company by Fasken Martineau DuMoulin LLP with respect to matters of Canadian law. As at the date of this Prospectus, partners and associates of Fasken Martineau DuMoulin LLP, beneficially owned, directly or indirectly, less than 1% of any issued and outstanding securities of the Company or any associates or affiliates of the Company.

 

In addition, certain legal matters in connection with any offering of Securities will be passed upon for any underwriters, dealers or agents by counsel to be designated at the time of such offering by such underwriters, dealers or agents with respect to matters of Canadian and, if applicable, United States or other foreign law.

 

PURCHASERS’ STATUTORY RIGHTS

 

Unless provided otherwise in an applicable Prospectus Supplement, the following is a description of a purchaser’s statutory rights. Securities legislation in certain of the provinces and territories of Canada provides purchasers with the right to withdraw from an agreement to purchase securities. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. In several of the provinces and territories, securities legislation further provides a purchaser with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser, provided that the remedies for rescission, revision of the price or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of these rights or consult with a legal advisor.

 

In addition, original purchasers of Securities which are convertible, exchangeable or exercisable for other securities of the Company will have a contractual right of rescission against the Company in respect of the conversion, exchange or exercise of such Securities. The contractual right of rescission will be further described in any applicable Prospectus Supplement, but will, in general, entitle such original purchasers to receive, upon surrender of the underlying securities, the amount paid for the applicable convertible, exchangeable or exercisable Securities (and any additional amount paid upon conversion, exchange or exercise) in the event that this Prospectus, the relevant Prospectus Supplement or any amendment thereto contains a misrepresentation, provided that: (i) the conversion, exchange or exercise takes place within 180 days of the date of the purchase of such Securities under this Prospectus and the applicable Prospectus Supplement; and (ii) the right of rescission is exercised within 180 days of the date of the purchase of such Securities under this Prospectus and the applicable Prospectus Supplement. This contractual right of rescission will be consistent with the statutory right of rescission described under Section 130 of the Securities Act (Ontario), and is in addition to any other right or remedy available to original purchasers under Section 130 of the Securities Act (Ontario) or otherwise at law.

 

In an offering of Securities which are convertible, exchangeable or exercisable for other securities of the Company, investors are cautioned that the statutory right of action for damages for a misrepresentation contained in this Prospectus, the relevant Prospectus Supplement or an amendment thereto is limited, in certain provincial and territorial securities legislation, to the price at which the Securities which are convertible, exchangeable or exercisable for other securities of the Company are offered to the public under the prospectus offering. This means that, under the securities legislation of certain provinces and territories, if the purchaser pays additional amounts upon conversion, exchange or exercise of the security, those amounts may not be recoverable under the statutory right of action for damages that applies in those provinces and territories. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for the particulars of this right of action for damages, or consult with a legal adviser.

 

At-the-Market Distributions

 

Securities legislation in some provinces and territories of Canada provides purchasers of securities with the right to withdraw from an agreement to purchase securities and with remedies for rescission or, in some jurisdictions, revisions of the price, or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser are not sent or delivered to the purchaser. However, purchasers of Securities distributed under an at-the-market distribution under this Prospectus by the Company do not have the right to withdraw from an agreement to purchase the Securities and do not have remedies of rescission or, in some jurisdictions, revisions of the price, or damages for non-delivery of this Prospectus, the applicable Prospectus Supplement, and any amendment relating to any Securities purchased thereunder by such purchaser because this Prospectus, such Prospectus Supplement, and any amendment relating to the Securities purchased thereunder by such purchaser will not be sent or delivered, as permitted under Part 9 of NI 44-102.

 

Securities legislation in some provinces and territories of Canada further provides purchasers with remedies for rescission or, in some jurisdictions, revisions of the price or damages if the prospectus, prospectus supplement, and any amendment relating to securities purchased by a purchaser contains a misrepresentation. Those remedies must be exercised by the purchaser within the time limit prescribed by securities legislation. Any remedies under securities legislation that a purchaser of Securities distributed under an “at-the-market distribution” under this Prospectus by the Company may have against the Company or its agents for rescission or, in some jurisdictions, revisions of the price, or damages if this Prospectus, the applicable Prospectus Supplement, and any amendment relating to Securities purchased thereunder by a purchaser contain a misrepresentation will remain unaffected by the non-delivery of this Prospectus referred to above. A purchaser should refer to applicable securities legislation for the particulars of these rights and should consult a legal adviser.

 

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CERTIFICATE OF THE COMPANY

 

Dated: June 30, 2023

 

This short form prospectus, together with the documents incorporated by reference, will, as of the date of the last supplement to this prospectus relating to the securities offered by this prospectus and the supplement(s), constitute full, true and plain disclosure of all material facts relating to the securities offered by this prospectus and the supplement(s) as required by the securities legislation of each of the provinces and territories of Canada.

 

(signed) “Olivier Roussy Newton” (signed) “Ryan Ptolemy”
Olivier Roussy Newton Ryan Ptolemy
Chief Executive Officer Chief Financial Officer

 

On behalf of the Board of Directors:

 

(signed) “Krisztian Toth” (signed) “William C Steers”
Krisztian Toth William C. Steers
Director Director

 

C-1

Exhibit 99.38

 

QUALIFICATION CERTIFICATE

AS REQUIRED BY NATIONAL INSTRUMENT 44-101

 

VALOUR INC.

 

I, Kenny Choi, the Corporate Secretary of Valour Inc. (the “Issuer”), hereby certify that the Issuer satisfies all the following criteria set out in Section 2.2 of National Instrument 44-101 – Short Form Prospectus Distributions (“NI 44-101”) and Section 2.2 of National Instrument 44-102 – Shelf Distributions (“NI 44-102”) (capitalized terms utilized hereafter have the meanings assigned thereto in NI 44-101 and NI 44-102):

 

(a)the Issuer is an electronic filer under National Instrument 13-101 - System for Electronic Document Analysis and Retrieval (SEDAR);

 

(b)the Issuer is a reporting issuer in at least one jurisdiction of Canada;

 

(c)the Issuer has filed with the securities regulatory authority in each jurisdiction in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in the that jurisdiction (i) under applicable securities legislation, (ii) pursuant to an order issued by the securities regulatory authority, or (iii) pursuant to an undertaking to the securities regulatory authority, as applicable;

 

(d)the Issuer has, in at least one jurisdiction in which it is a reporting issuer, current annual financial statements and a current AIF; and

 

(e)the Issuer’s equity securities are listed and posted for trading on the NEO Exchange and the Issuer is not an issuer whose operations have ceased, or whose principal asset is cash, cash equivalents, or its exchange listing.

 

I also certify that all of the materials incorporated by reference in the preliminary short form base shelf prospectus and not previously filed are being filed with the preliminary short form base shelf form prospectus.

 

[Signature Page Follows]

 

 

 

 

DATED this 30th day of June, 2023.

 

  VALOUR INC.
       
  By:  “Kenny Choi”             
    Name:  Kenny Choi
    Title: Corporate Secretary

 

 

 

 

Exhibit 99.39

 

Ontario
Securities
Commission		 Commission des
valeurs mobilières
de l’Ontario		 22nd Floor
20 Queen Street West
Toronto ON M5H 3S8		 22e étage
20, rue queen ouest
Toronto ON M5H 3S8

 

 

 

 

 

 

RECEIPT

 

Valour Inc. (formerly DeFi Technologies Inc.)

 

This is the receipt of the Ontario Securities Commission for the Preliminary Base Shelf Prospectus of the above Issuer dated June 30, 2023 (the preliminary prospectus).

 

The preliminary prospectus has been filed under Multilateral Instrument 11-102 Passport System in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Northwest Territories, Yukon and Nunavut. A receipt for the preliminary prospectus is deemed to be issued by the regulator in each of those jurisdictions, if the conditions of the Instrument have been satisfied.

 

July 4, 2023

 

  /s/ Winnie Sanjoto
  Winnie Sanjoto
  Director, Corporate Finance Branch
   
  SEDAR Project # 3557443

 

Exhibit 99.40

 

VALOUR INC. ANNOUNCES NAME CHANGE TO DEFI TECHNOLOGIES INC.

 

Toronto, Ontario, July 7, 2023 - Valour Inc. (the “Company” or “Valour”): (NEO: DEFI), (GR: RMJR) (OTCQB: DEFTF), a technology company bridging the gap between traditional capital markets and decentralized finance, is pleased to announce that it has changed its name from “Valour Inc.” to “DeFi Technologies Inc.” (the “Name Change”)

 

At the opening of the markets on July 10, 2023, the Company’s common shares will commence trading under the new name “DeFi Technologies Inc.”. The Company’s new CUSIP number is 244916102 and its new ISIN is CA2449161025. The ticker symbol of the Company on Cboe Canada, the new business name of the NEO Exchange, and on the OTCQB Market remains unchanged.

 

The name change does not affect the Company’s share structure or the rights of the Company’s shareholders, and no further action is required by existing shareholders.

 

About Valour:

 

Valour Inc. is a technology company bridging the gap between traditional capital markets and decentralized finance. Our mission is to expand investor access to industry-leading decentralized technologies which we believe lie at the heart of the future of finance. On behalf of our shareholders and investors, we identify opportunities and areas of innovation and build and invest in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. For more information or to subscribe to receive company updates and financial information, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to: the Name Change; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by Valour and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

For further information, please contact:

Investor Relations
ir@valour.com

Exhibit 99.41

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.42

 

 

DeFi Technologies’ Wholly-Owned Subsidiary Valour Inc. announces the launch of Valour Digital Asset Basket 10 (ETP) on Nordic Growth Market

 

●Valour Digital Asset Basket (10) SEK offers investors the opportunity to get diversified exposure to the digital asset ecosystem with one single product.

 

●As of July 7th, investors in the Nordics were able to purchase Valour Digital Asset Basket (10) SEK (ISIN: CH1161139568), with a low management fee of 1.90%

 

●Valour anticipates numerous other product launches in the Nordics in the very near future

 

Toronto, Ontario, July 12, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announced today that Valour Inc. (“Valour”), its wholly owned subsidiary and a pioneer in digital asset exchange traded products (“ETPs”), has launched its digital asset basket ETP - Valour Digital Asset Basket 10 (VDAB10) SEK.

 

The Valour Digital Asset Basket 10 (VDAB10) ETP provides retail and institutional investors with trusted, secure, and diversified exposure to 10 of the largest cryptocurrencies by market capitalization. With a quarterly rebalancing, the multi-digital asset ETP enables investors to gain access to the largest disruptive digital assets, offering an expanded entry into the rapidly developing digital asset ecosystem, without the need to set up a dedicated trading account.

 

“As the digital asset ecosystem continues to evolve and grow, it’s paramount that we offer products that meet the diverse needs of our investors,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Our new ETP, Valour Digital Asset Basket 10 (VDAB10), is a testament to our commitment to innovation and diversification. This product allows investors to gain broad exposure to the leading cryptocurrencies in a secure and streamlined manner. At DeFi Technologies, we believe in the potential of digital assets and are dedicated to bringing a suite of accessible, trustworthy, and cost-effective products to our investors in the Nordics and beyond.”

 

“Valour’s VDAB10 product presents an excellent way for investors to get diversified and dynamic exposure to the digital asset ecosystem. With a maximal weight of 30% per constituent, the basket allows for higher exposure to altcoins and a more balanced investment, which of course enhances the diversification” said Johanna Belitz, Valour Head of Sales France and Nordics. “The constituents of the basket should also appeal to our Nordic investors, as it includes digital assets like Dogecoin, Binance BNB and Polygon - all of which there has been a great demand for in the market”

 

 

 

 

Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. DeFi Technologies is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. DeFi Technologies aims to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

About Valour

 

Valour Inc. issues exchange-listed financial products that enable retail and institutional investors to access investment in disruptive innovations, such as digital assets, in a simple and secure way. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF). For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the weighting and balancing of the VDAB10; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralized finance and cryptocurrency sector; rules and regulations with respect to decentralized finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

Investor Relations

ir@defi.tech

 

 

 

 

Exhibit 99.43

 

FORM 51-102F3

MATERIAL CHANGE REPORT

 

ITEM 1Name and Address of Company:

 

DeFi Technologies Inc. (“DeFi” or the “Company”)

198 Davenport Road

Toronto, Ontario

M5R 1J2

 

ITEM 2Date of Material Change:

 

July 10, 2023

 

ITEM 3News Release:

 

A news release was issued by the Company on July 7, 2023 and subsequently filed on SEDAR.

 

ITEM 4Summary of Material Change:

 

The Company changed its name from Valour Inc. to DeFi Technologies Inc.

 

ITEM 5Full Description of Material Change:

 

The Company changed its name from Valour Inc. to DeFi Technologies Inc.

 

At the opening of the markets on July 10, 2023, the Company’s common shares have commenced trading under the new name DeFi Technologies Inc. The Company’s new CUSIP number is 244916102 and its new ISIN is CA2449161025. The ticker symbol of the Company on Cboe Canada, the new business name of the NEO Exchange, and on the OTCQB Market remains unchanged.

 

ITEM 6Reliance on subsection 7.1(2) or (3) of National Instrument 51-102:

 

Not applicable.

 

ITEM 7Omitted Information:

 

Not applicable.

 

ITEM 8Executive Officer:

 

Olivier Roussy Newton

Chief Executive Officer

olivier@valour.com

 

ITEM 9Date of Report:

 

July 12, 2023

Exhibit 99.44

 

 

DeFi Technologies’ Wholly-Owned Subsidiary Valour Inc. Announces Groundbreaking Collaboration with Bitcoin Suisse AG on Physical Backed Digital Asset Exchange Traded Products

 

●Valour Inc. has entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (ETPs) backed 1:1 by digital assets, leveraging both Valour Inc.’s and Bitcoin Suisse AG’s unique capabilities and long standing expertise in the digital asset market.

 

●The primary focus of this joint initiative is to launch, list, operate, and distribute ETPs in the international and Swiss market where Bitcoin Suisse has already established a market-wide brand recognition in the crypto assets sector. Valour Inc. acts as an issuer of ETPs, providing an exchange listing platform for digital assets.

 

●The collaboration follows Valour Inc.’s recent launch of its first physically backed ETP, the 1Valour Bitcoin Physical Carbon Neutral ETP. Along with this, Valour Inc. maintains a diverse range of digital asset ETPs across various European exchanges, banks and broker platforms.

 

Zug, Switzerland and Toronto, Canada, July 18, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi), is pleased to announce the collaboration of its subsidiary Valour Inc. (“Valour”) Bitcoin Suisse AG (“Bitcoin Suisse”) aimed at the issuance of Exchange Traded Products (“ETPs”) backed by physical digital assets.

 

Bitcoin Suisse is the Swiss crypto-native investment partner and trusted gateway to crypto asset investing, offering institutional-grade crypto services at the forefront of technical innovation. Founded in 2013, the crypto investment house is celebrating its tenth anniversary this year and recently announced its new strategy towards asset management and advisory services.

 

This product partnership marks a significant step in the innovation and development of the digital asset market going forward. The collaboration would leverage Valour’s ABS issuance platform, its operational know-how in the ETP domain, and established marketing and sales distribution channels. Simultaneously, it would benefit from Bitcoin Suisse’s well established brand and longstanding experience in the crypto sector within Switzerland and internationally.

 

“The collaboration signifies an exciting development in the digital assets space,” said Olivier Roussy Newton, CEO of DeFi Technologies & Director of Valour. “The combination of our issuance platform and operational expertise in the ETP market, with Bitcoin Suisse’s impressive track record, high-quality service, and strong brand recognition as our established partner, will contribute to creating more robust and diversified investment opportunities for investors.”

 

 

 

 

Dr. Dirk Klee, CEO of Bitcoin Suisse, added “We are excited to cooperate with Valour and to provide them with our expertise to create leading crypto investments for professional and institutional partners. Valour is a trusted and established partner with a high-performing team that places equal value on security, reliable access to digital assets and transparency as Bitcoin Suisse does. For us, this partnership represents an important step towards becoming the leading crypto investment partner in Switzerland and other target markets.”

 

Valour recently announced on June 15, 2023, the launch of its first physical backed ETP in the 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN: GB00BQ991Q22). The ETPs are secured by the respective digital assets which are physically stored with regulated custody providers. In addition to the new physically backed digital asset platform, Valour offers fully hedged digital asset ETPs with product listings across European exchanges, banks and broker platforms.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit valour.com

 

About Bitcoin Suisse

 

Founded in 2013, Bitcoin Suisse AG is the Swiss crypto-finance and technology pioneer. As an enabler for the crypto and blockchain ecosystem in Switzerland, Bitcoin Suisse has been a driving force in the development of the ‘Crypto Valley’ and the ‘Crypto Nation Switzerland’. The crypto-financial services provider offers brokerage, custody, lending, staking, payment solutions and other crypto-related services for private and institutional clients. As a member of the self-regulatory organization Financial Services Standards Association (VQF), Bitcoin Suisse is a financial intermediary subject to Swiss AML/CFT regulations. Bitcoin Suisse consists of several companies under the parent company BTCS Holding Ltd. The company is headquartered in Zug and has built a team of over 200 highly qualified experts in Switzerland and Europe. | https://bitcoinsuisse.com/

 

2

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

Investor Relations DeFi Technologies

ir@defi.tech

 

Investor Relations Bitcoin Suisse
invest.advice@bitcoinsuisse.com

 

 

3

 

Exhibit 99.45

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Olivier Roussy Newton, the Chief Executive Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended June 30, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Dated: August 14, 2023 
  
(signed) “Olivier Roussy Newton” 
Olivier Roussy Newton 
Chief Executive Officer 

Exhibit 99.46

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended June 30, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2023 and ended on June 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: August 14, 2023 
  
(signed) “Ryan Ptolemy” 
Ryan Ptolemy 
Chief Financial Officer 

Exhibit 99.47

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

Six months ended June 30, 2023

 

 

 

 

 

 

 

 

 

1

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (formerly Valour Inc.) (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through August 14, 2023, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the six months ended June 30, 2023 and 2022. The financial statements and related notes of DeFi have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Please refer to the notes of the December 31, 2022 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

2

 

 

Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through three distinct business lines: Valour ETPs, DeFi Ventures and DeFi Infrastructure.

 

The Company’s condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated interim financial statements.

 

Investment Pillars

 

DeFi generates revenue through three core pillars:

 

Valour ETPs

 

The Company, through its 100% ownership of Valour Inc., is developing Exchange Traded Notes (“ETNs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETNs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

DeFi Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

DeFi Infrastructure

 

The Company’s DeFi Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

3

 

 

Highlights For The Six Months Ended June 30, 2023 And Subsequent Events:

 

 

●On January 10, 2023, the Company announced approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments.

 

●On January 12, 2023, the Company announced the approval in principle by the Jersey regulator JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded (ETP) securities. Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holder

 

●On February 3, 2023, the Company announced that it has changed its auditors from RSM Canada LLP (“Former auditor”) to BF Borgers CPA PC (“successor Auditor”) effective as of February 3, 2023. There were no reservations in the Former Auditor’s audit reports for any financial period during which the Former Auditor was the Company’s auditor. There are no “reportable events” (as the term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) between the Company and the Former Auditor.

 

●On March 21, 2023, the Company’s launched its crypto product range to French investors.

 

●On April 5, 2023, Valour Digital Securities Ltd. (“VDSL”), a Jersey-based securities issuer, obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain.

 

●On April 12, 2023, the Company announced the launch of a new EU-wide (European Union) issuance platform for physically stored digital assets in the form of exchange-traded product (ETP) securities. The new ETP products will be listed on regulated stock exchanges such as Deutsche Borse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland. The new ETP program adds to Valour’s already-existing digital asset securities program, particularly focusing on the Nordic markets and covering a broad range of over 120 cryptocurrencies and digital assets in form of single underlyings, baskets or indices. VDSL aims to issue up to 15 new products under the name 1Valour by the end of 2023. The ETPs will be secured by the respective digital assets that are physically stored with regulated custody providers. The initial custodians appointed are Komainu (Jersey) Ltd., regulated by the Jersey Financial Services Commission, and Copper Technologies (Switzerland) AG, registered with the Financial Services Standard Association (VQF), a self-regulatory organization (SRO) officially recognized by the Federal Financial Market Supervisory Authority (FINMA).

 

●On May 30, 2023, the Company announced an extension of existing partnership with Autostock, a Swedish trading platform to launch a new automated trading strategy. Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. The new strategy, known as Coinbot Zero STEP, will scale in and out in the positions, aiming to give the investor a better average acquisition value.

 

●On June 21, 2023, the Company announced that it had entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately $674,838 of accrued fees owing to such officer and consultants of the Company by issuing common shares of the company at a price of $0.085 per share fir a total of $7,939,268 Debt Shares.

 

●On July 7, 2023, the Company announced its name change to DeFi Technologies Inc.

 

4

 

 

Digital Assets

 

 

As at June 30, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $183,466,708 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

The Company’s holdings of digital assets consist of the following:

  

   June 30, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   24.0991    7,683    11.1000    3,678 
Bitcoin   2,135.7664    85,854,906    2,126.5130    47,498,630 
Ethereum   21,195.3984    51,898,660    21,141.7368    34,333,700 
Cardano   44,275,895.9700    16,226,763    36,438,339.0800    12,004,332 
Polkadot   1,218,386.2620    8,021,087    931,646.4544    5,407,239 
Solana   760,230.57    18,182,737    428,280.68    5,537,534 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Shyft   3,918,822.6534    16,966    3,507,575.4684    37,530 
Uniswap   163,942.0602    1,079,219    148,734.0602    1,021,542 
USDC        (1,000)        1,586 
USDT        13,817         14,134 
Litcoin   17.0000    2,427    -    - 
Doge   25,000.0000    2,178    10,000.0000    914 
Cosmos   1,816.8700    266    201.0000    2,531 
Avalanche   119,079.6119    1,992,210    48,995.3900    712,745 
Matic   1,891.0000    1,642    890.0000    906 
Shiba Inu   720.0000    -    90,000,000.0000    975 
Ripple   6,000.0000    3,768    2,000.0000    919 
Enjin   243,660.1546    91,424    10,009.9900    3,180 
Terra Luna   199,970.4285    3    199,195.3600    - 
Current        183,394,756         106,582,076 
Blocto   262,493.872    6,461    251,424.913    6,737 
Maps   285,713.000    -    285,713.000    - 
Oxygen   400,000.000    -    400,000.000    - 
Boba Network   250,000.00    -    250,000.00    - 
Saffron.finance   86.21    2,799    86.21    2,345 
Clover   370,000.00    10,872    310,000.00    13,216 
Sovryn   15,458.95    5,432    15,458.95    2,342 
Wilder World   148,810.00    46,328    148,810.00    28,660 
Pyth   2,500,000.00    -    2,500,000.00    - 
Volmex   2,925,878.0000    57    2,925,878.0000    58 
Long-Term        71,949         53,358 
Total Digital Assets        183,466,705         106,635,434 

 

5

 

 

The continuity of digital assets for the six months ended June 30, 2023 and year ended December 31, 2022:

 

   June 30,
2023		   December 31,
2022		 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   40,495,137    231,392,840 
Digital assets disposed   (34,356,040)   (191,092,048)
Realized (loss) on digital assets   (14,347,308)   (47,595,430)
Digital assets earned from staking, lending and fees   1,801,144    5,955,456 
Net change in unrealized gains and losses on digital assets   73,199,520    (275,739,651)
Foregin exchange (loss) gain   10,038,818    13,660,527 
   $183,466,705   $106,635,434 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital Assets loaned

 

As of June 30, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 3.0% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of June 30, 2023, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value
Share		 
Digital on loan:            
Bitcoin   503.7990   $20,252,035    51%
Polkdot   973,835.0000    6,411,115    16%
Solana   547,441.0000    13,093,364    33%
Total   1,521,779.7990   $39,756,515    100%

 

As of June 30, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins on loan		   Fair Value 
Digital on loan:           
Counterparty A  3% to 3.54%   503.7990   $20,252,035 
Counterparty B  3.6% to 9.7%   1,521,276.0000    19,504,480 
Total      1,521,779.7990   $39,756,515 

 

As of June 30, 2023, digital assets on loan were concentrated with counterparties as follows:

 

    Geography   June 30,
2023		  
Digital on loan:            
Counterparty A   US     0 %
Counterparty B   Cayman Islands     100 %
Total         100 %

 

6

 

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of June 30, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 0.5% to 3.54% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

As of June 30, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:            
Ethereum   5,000.0000   $12,242,907    47%
Cardano   38,201,004.8000    14,000,364    53%
Total   38,206,004.8000   $26,243,271    53%

 

As of June 30, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

    Interest
rates		   Number of
coins staked		     Fair Value  
Digital on staked:                
Counterparty B   0.50%     5,000.0000     $ 12,242,907  
Counterparty C   3% to 3.54%     38,201,004.8000       14,000,364  
Total         38,206,004.8000     $ 26,243,271  

 

As of June 30, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  June 30,
2023		 
Digital on staked:       
Counterparty B  Cayman Islands   0.01%
Counterparty C  Switzerland   99.99%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7

 

 

Third Party Custodians

 

 

As of June 30, 2023, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian  Location
Bitcoin Suisse AG  Switzerland
Anchorage Digital  United States
B2C2 Overseas LTD  Cayman Islands

 

Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of June 30, 2023, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian  Location  % of digital assets custodied by market value (1)   Regulatory Body
Bitcoin Suisse AG  Switzerland   7.74%  Financial Services Standards Association (VQF). Zug. Switzerland
Anchorage Digital  United States   11.04%  Office of Comptroller of Currency
B2C2 Overseas LTD  Cayman Islands   27.45%  Cayman Islands Monetary Authority (CIMA)

 

Note 1: As at June 30, 2023; Residual digital assets served as collateral for loans with B2C2-Group (approx. 39.5%; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (10.4%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.

 

●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.

 

●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.

 

●The counterparties are reviewed in regular intervals and re-evaluated.

 

●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.

 

●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

8

 

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

9

 

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

At June 30, 2023, the Company’s had self-custody of digital assets totaling $155,114 (December 31, 2022 - $2,326,139).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

10

 

 

Staking and Lending Policy

 

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower’s ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At June 30, 2023

 

At June 30, 2023, the Company’s investment portfolio consisted of no publicly traded investments and eight private investments for a total estimated fair value of $43,726,337 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

11

 

 

Public investments

 

At June 30, 2023, the Company’s had no publicly-traded investments.

 

At December 31, 2022, the Company’s one publicly-traded investments had a total estimated fair value of $17,227.

 

Public Issuer  Note Security description  Cost   Estimated Fair Value   of FV 
Smart Valor AG  19,000 SDR   150,908    17,227    100.0%
Total public investments     $150,908   $17,227    100.0%

 

Private Investments

 

At June 30, 2023, the Company’s eight private investments had a total fair value of $43,726,337.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,140    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,140,643    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    662,066    1.5%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,957,500    84.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    185,356    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,726,337    100.0%

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG     3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

3iQ Corp (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of DeFi. 3iQ is a leading bitcoin and digital asset fund manager. As at June 30, 2023, 3iQ was valued at $3,740,140 which was based on 3iQ’s February 2022 financing price resulting in an unrealized gain (loss) of $nil for the period. The investment represented 1.3% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to DeFi of $374,014.

 

Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at June 30, 2023, BPC was valued at $2,140,643 which was based on BPC August 2022 financing prices resulting in an unrealized gain (loss) of $(49,151) for the period. The investment represented 0.8% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to DeFi of $214,064.

 

12

 

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at June 30, 2023, Earnity was valued at $nil which was based on Earnity’s ceasing operations resulting in an unrealized gain (loss) of $(4,991) in the period. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to DeFi of $0.

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at June 30, 2023, LTC was valued at $662,066 which was based on LTC December 2021 financing prices resulting in an unrealized gain (loss) of $(15,202) for the period. The investment represented 0.2% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to DeFi of $66,207.

 

SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30, 2023, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to DeFi of $0.

 

SEBA Bank AG (“SEBA”)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. SEBA is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at June 30, 2023, SEBA was valued at $36,597,000 which was based on SEBA 2022 secondary trades resulting in an unrealized gain (loss) of $305,000 for the period. The investment represented 13% of the total assets of the Company. A 10% decline in the fair market value of SEBA would result in an estimated increase in loss to DeFi of $3,695,750.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at June 30, 2023, STL was valued at $185,356 which was based on STL October 2021 financing resulting in an unrealized gain (loss) of $(4,256) for the period. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to DeFi of $18,536.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at June 30, 2023, VLC was valued at $40,632 which was based on VLC 2021 financing pricing resulting in an unrealized gain (loss) of $nil for the year. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to DeFi of $4,063.

 

13

 

 

 

Financial Results

 

The following is a discussion of the results of operations of the Company for the three and six months ended June 30, 2023, and 2022. They should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2023 and 2022 and related notes.

 

Three and six months ended June 30, 2023 and 2022:

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2022   2021 
Revenues                
Realized and net change in unrealized gains and losses on digital assets  $(11,921,614)   $(238,618,654)  $ 58,852,213  $ (286,202,382)
Realized and net change in unrealized gains and losses on ETP payables   18,984,061    235,291,417    (56,529,430)   282,248,090 
Realized and unrealized loss on derivative asset   -    (11,119)   -    (598,134)
Staking and lending income   764,662    1,248,871    1,336,475    3,434,246 
Management fees   244,016    392,330    459,693    963,401 
Node revenue   (845)   26,011    4,976    313,559 
Realized (loss) on investments, net   (3,438)   -    (4,025)   (12,077)
Unrealized (loss) gain on investments, net   (42,491)   (3,547,831)   314,862    (3,572,816)
Interest income   (572)   (570)   257    27,576 
Total revenues   8,023,780    (5,219,545)   4,435,022    (3,398,537)
Expenses                    
Management and consulting fees   1,195,609    1,622,294    2,285,224    3,494,009 
Share based payments   501,594    6,973,394    1,442,880    15,698,302 
Travel and promotion   122,323    550,648    239,616    1,505,683 
Office and rent   224,026    227,377    852,654    682,281 
Accounting and legal   157,068    786,172    370,594    1,092,108 
Regulatory and transfer agent   56,441    33,124    123,848    116,003 
Depreciation - property, plant and equipment   3,236    3,240    6,472    6,476 
Depreciation - right of use assets   (34,034)   (54)   -    5,470 
Amortization- intangibles   509,575    589,289    1,019,150    1,178,578 
Finance costs   275,063    1,129,851    1,561,529    2,028,209 
Transaction costs   86,944    342,903    319,719    779,752 
Foreign exchange loss   4,743,568    448,191    4,754,029    259,274 
Total expenses   7,841,413    12,706,429    12,975,715    26,846,145 
Income (loss) before other item   182,366    (17,925,974)   (8,540,694)   (30,244,682)
Loss on settlement of debt   (198,482)   -    (198,482)   - 
Net (loss) for the period   (16,116)   (17,925,974)   (8,739,176)   (30,244,682)
Other comprehensive loss                    
Foreign currency translation loss   1,692,615    (944,151)   1,726,504    (1,177,458)
Net (loss) and comprehensive income (loss) for the period  $1,676,499   $(18,870,125)  $ (7,012,672)  $ (31,422,140)

 

For the three and six months ended June 30, 2023, the Company recorded a net (loss) (loss) of $(16,116) and $(8,739,176) ($0.00 and $(0.04) per basic share) on total revenues of $8,023,780 and $4,435,022 compared to net (loss) of $(17,925,974) and $(30,224,682) ($(0.09) and $(0.14) per basic share) on total revenues of $(5,219,545) and $(3,398,537) for the three and six months ended June 30, 2022.

 

For the three and six months ended June 30, 2023, realized and net change in unrealized gains and loss on digital assets was $(11,921,614) and $58,852,213 and realized and net change in unrealized gains and loss on ETP payables was $18,984,061 and $(56,529,430). Higher digital asset prices in H2 2023 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

The Company earned staking and lending income of $764,662 and 1,336,475 for the three and six months ended June 30, 2023 compared to $1,248,871 and $3,434,246 for the same periods in 2022. The Company actively stakes and lends its cryptocurrencies to earn additional revenue. The staking and lending income was lower in 2023 as the Company staked and lent less cryptocurrency in 2023 compared to 2022.

 

14

 

 

The Company had management fee revenue of $244,016 and $459,693 for the three and six months ended June 30, 2023 compared to $392,330 and $963,401 for the same periods in 2022. In 2023, the Company’s had lower AUM in ETPs that charge management fees than in prior periods.

 

The Company had node revenue of $(845) and $4,976 for the three and six months ended June 30, 2023 compared to $26,011 and $313,559 for the same period in 2022. During the six months ended June 30, 2023, the Company earned 834,125 (June 30, 2022 – 1,182,192) Shyft tokens for its services. The decreased revenue in 2023 is due to lower token price of the Shyft token and lower rewards.

 

The Company had realized gain (loss) of $(3,438) and $(4,025) on investments for the three and six months ended June 30, 2023 compared to $nil and $(12,077) for the same periods in 2022. The Company had unrealized (loss) gain of $(42,491) and $314,862 on investments compared to $(3,547,831) and $(3,572,816) in the prior period. The unrealized gain for the three and six months ended June 30, 2023 primarily consisted of SEBA due to CHF/CAD exchange rate change in the current period.

 

Management and consulting fees were $1,195,609 and $2,285,224 during the three and six months ended June 30, 2023 compared to $1,622,294 and $3,494,009 during the same periods in 2022. Management and consulting fees are lower in 2023 as the Company reduced the number of consultants in addition to no bonuses paid compared to Q1 2022.

 

Share based payments were $501,594 and $1,442,880 during the three and six months ended June 30, 2023 compared to $6,973,394 and $15,698,302 in the same periods in 2022. The Company granted 1,000,000 DSUs during 2023 compared to the 3,400,000 options and 1,600,000 of deferred share units to directors, officers and consultants of the Company during 2022. The higher share-based payments in 2022 also reflected a higher black-scholes model price due to a higher share price at the time.

 

Travel and promotion was $122,323 and $239,616 during the three and six months ended June 30, 2023 compared to $550,648 and $1,505,683 during the same period in 2022. Corporate activities and business development was lower 2023 as the Company focuses on expanding its ETP business line.

 

Office and rent was $224,026 and $852,653 during the three and six months ended June 30, 2023 compared to $227,377 and $682,281 during the same periods in 2022.

 

Accounting and legal was $157,068 and $370,594 during the three and six months ended June 30, 2023 and $786,172 and $1,092,108 during the same periods in 2022 due to lower accounting fees in 2023.

 

Total depreciation and amortization was $478,777 and $1,025,622 for the three and six months ended June 30, 2023 from $592,475 and $1,190,524 during the prior period in 2022. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of DeFi Capital and Valour.

 

Finance costs were $275,063 and $1,561,529 for the three and six months ended June 30, 2023 compared to $1,129,851 and $2,028,209 during the prior periods in 2022. The decrease in financing costs relates to the interest expense on the digital asset provider loans and other loans of the Company. The interest rates on the loans were slightly lower in 2023 compared to 2022 period.

 

Transaction costs were $86,944 and $319,719 for the three and six months ended June 30, 2023 compared to $342,903 and $779,752 in the prior period. The decrease in transaction costs relates to the trading of digital assets as brokerage commission and ETP issuance costs.

 

Foreign exchange loss was $4,743,568 and $4,754,029 for the three and six months ended June 30, 2023 compared to $448,191 and $259,274 in the prior period. The loss reflects the currency fluctuations primarily in Company’s digital asset and ETPs which are denominated in US dollars, Swedish Krona, Euro and Swiss Franc.

 

15

 

 

During the six months ended June 30, 2023, the Company used $14,801,499 in operations of which $1,168,623 was used by change of working capital, $nil used to purchase the investments, $40,495,137 was used to purchase digital assets offset by $12,496 provided from sales of investment and $34,356,040 was provided from the disposal of digital assets. During the comparative six months ended June 30, 2022, the Company used $82,717,710 in operations of which $2,097,850 was used by the change of working capital, $34,649,658 used to purchase the Company’s SEBA investment, $28,248 provided from sale of investments, $187,432,291 was used to purchase digital assets offset by $153,229,060 was provided from the disposal of digital assets. The cash used from operations was lower in 2023 compared to 2022 due to lower net loss in 2023 as the Company decreased general and administrative costs as well as net purchase of digital assets in 2023 was $(6,139,097) compared in 2022 the net purchase of digital assets was $(34,203,231) reflecting a less volatile cryptocurrency market.

 

During the six months ended June 30, 2023, $13,680,402 was provided by financing activities compared to $79,135,277 in the prior period. The Company received proceeds of $56,747,554 from ETP holders and $4,319,901 was provided from proceeds from loans offset by $47,487,053 used for payments to ETP holders. During the six months ended June 30, 2022, the Company received proceeds of $201,553,614 from ETP holders, proceeds of $50,255,400 from loans, $45,000 from exercise of stock options and $647,284 from the exercise of warrant offset by $160,211,446 used for payments to ETP holders and $13,154,574 used in NCIB purchases. The cash provide from financing was lower in 2023 compared to 2022 due to lower loan proceeds received and lower ETP sales in 2022.

 

Liquidity and Capital Resources

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any negative impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on similar terms throughout the year. The Company has successfully raised approximately $1.5M from new investors in 2022 via private placements financings and in 2023 successfully raised $4.3M from new loans.

 

The Company loaned and staked less cryptocurrency in 2023 compared to 2022 and as a result the Company has been earning less revenue via staking and lending. Lower AUM in the Company’s fee earning ETPs in 2023 compared to the same period 2022 resulted in lower management fees. Overall, the Company’s total revenues improved in Q2 2023 as a result of improving cryptocurrency markets.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

DeFi relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

16

 

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of March 31, 2023, the loan principal of $51,636,000 (US$39,000,000) was outstanding. The loans term ranges from open term to three months fixed term and have interest rates ranging from 6.4% to 7.9%. The extended loans are secured with 684.8893 BTC and 11564.9009 ETH.

 

One of Company’s digital assets liquidity provider loan payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, or trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The next court hearing is scheduled for March 30, 2023. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at June 30, 2023, the value of the 475 BTC was US$14,421,718 and potential loan loss exposure is US$8,421,718.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000. The principal and interest is due on or before August 2, 2023. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023.

 

DeFi used cash of $14,801,499 in its operating activities during the six months ended June 30, 2023. Included in cash used in operations are $40,495,137 used in the purchase of digital assets, $1,168,623 used from the changes of working capital, $12,496 generated from proceeds on sale of investment and $34,356,040 generated from the disposal of digital assets. DeFi also provided $13,680,402 in financing activities. Included in cash provided in financing activities are $56,747,554 from proceeds from ETP holders, $4,319,901 was provided from proceeds from loans offset by $47,387,053 used for payments to ETP holders.

 

As at June 30, 2023, the Company’s sources of funds include the estimated fair value of its cash of $3,680,828, equity investments of $43,726,337 and digital assets of $183,466,705 offset by total liabilities of $245,011,769.

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

17

 

 

As at June 30, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

 June 30, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $3,437,679   $-   $-   $- 
Receivables   184,600    -    -    - 
Private investments   3,028,697    -    36,957,500    - 
Prepaid investment   1,779,249    -    -    - 
Digital assets   183,466,705    -    -    - 
Accounts payable and accrued liabilities   (2,742,536)   (74,378)   (47,764)   (21,668)
Loan payable   (55,575,729)               
ETP holders payable   (183,159,061)   -    -    - 
Net assets (liabilities)  $(49,580,396)  $(74,378)  $36,909,736   $(21,668)

 

 December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

 

As at June 30, 2023, United States Dollar was converted at a rate of $1.3240 (December 31, 2022 - $1.3544) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.6817 (December 31, 2022 - $1.6322) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4445 (December 31, 2022 - $1.4456) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.4783(December 31, 2022 - $1.4661).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

●to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

●to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

●taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

●raising capital through equity financings; and

 

●realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the six months ended June 30, 2023.

 

18

 

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,072,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $826,000, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

Summary of Quarterly Results

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep 
   2023   2023   2022   2022   2022   2022   2021   2021 
Revenue  $8,023,780   $(3,558,758)  $4,799,325   $295,605   $(5,219,545)  $1,821,008   $5,113,702   $8,626,446 
Net (loss) income and comprehensive
(loss) income		  $1,676,499   $(8,689,171)  $(12,778,631)  $(9,011,375)  $(18,870,125)  $(12,552,015)  $(50,243,623)  $(2,077,424)
(Loss) income per Share - basic   (0.00)   0.04    (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)
(Loss) income per Share - diluted   (0.00)   0.04    (0.06)   (0.04)   (0.09)   (0.06)   (0.26)  $(0.01)
Total Assets  $284,147,732   $291,345,370   $209,926,951   $263,678,822   $241,666,497   $468,623,726   $459,690,575   $372,062,311 
Total Long Term Liabilities  $0   $0   $1,681,358   $1,681,358    $Nil    $Nil   $5,646   $22,048 

 

19

 

 

Selected Annual Information

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-22   31-Dec-21   31-Dec-20 
(a) Net Revenue   1,696,393   $15,081,078   $(46,776)
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (53,212,146)  $(71,495,219)  $2,073,533 
(ii) Income (loss) per share – basic   (0.25)  $(0.37)  $0.04 
(iii) Income (loss) per share – diluted   (0.25)  $(0.37)  $0.04 
(c) Total Assets   209,926,951   $459,690,575   $7,296,044 
(d) Total Liabilities   166,094,517   $367,909,179   $992,248 

 

Off Balance Sheet Arrangements

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

During the six months ended June 30, 2023, the Company paid or accrued $532,568 (six months ended June 30, 2022 - $1,170,544) to directors and officers of the Company and $197,331 (three months ended June 30, 2022 - $5,538,582) to directors and officers of the Company in share-based compensation.

 

As June 30,2023, the Company had $358,150 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

20

 

 

Related Party Transactions

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of June 30, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.  Officer (Ryan Ptolemy) of Investee  $2,140,643 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,957,500 
Total investment - June 30, 2023     $39,098,143 

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at June 30, 2023.

 

During the six months ended June 30, 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

●The Company incurred $60,000 (2022 - $60,000) of expenses for its proportionate share of shared office costs with other corporations that may have common directors and officers. The costs associated with this space are administered by 2227929 Ontario Inc. As at June 30, 2023, the Company had a payable balance of $158,200 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment and due on demand. Fred Leigh, a former officer and former director of the Company, is also a director of 2227929 Ontario Inc.

 

●The Company incurred $92,447 (2022 - $28,582) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $84,428 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

●Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($74,378) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of DeFi.

 

●During the six months ended June 30, 2023, the Company issued 2,286,588 common shares to officers of the Company at an issue price of $0.11 per share to settle existing debt of $194,360 resulting in a loss on settlement of debt in the amount of $57,165.

 

●During the six months ended June 30, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

21

 

 

Management Change

 

On February 13, 2023, Russell Starr elected to step down from his role as Executive Chairman but remains head of capital markets.

 

On June 22, 2023, Sue Ennis was appointed to the board. Ms. Ennis is the VP of Corporate Development at Hut 8, one of Canada’s largest data infrastructure operators and Bitcoin miners.

 

Financial Instruments and Other Instruments

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

●The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

●Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2022 and 2021.

 

●Digital assets classified as financial assets relate to USDC which is measured at fair value

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at June 30, 2023 and December 31, 2022.

 

    Level 1     Level 2     Level 3        
    (Quoted Market price     (Valuation technique -observable market Inputs)     (Valuation technique - non-observable market inputs)     Total  
Publicly traded investments   $ -     $ -     $ -     $ -  
Privately traded invesments     -       -       43,726,337       43,726,337  
Digital assets     -       (1,000 )     -       (1,000 )
June 30, 2023   $ -     $ (1,000 )   $ 43,726,337     $ 43,725,337  
Publicly traded investments   $ 17,227     $ -     $ -     $ 17,227  
Privately traded invesments     -       -       43,505,269       43,505,269  
Digital assets     -       1,586       -       1,586  
December 31, 2022   $ 17,227     $ 1,586     $ 43,505,269     $ 43,524,082  

 

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Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended June 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  June 30,
2023		   December 31,
2022		 
Balance, beginning of period  $1,586   $4,063 
Purchases   -    - 
Disposal   (2,586)   (2,477)
Balance, end of period  $(1,000)  $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended June 30, 2023 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  June 30,
2023		   December 31,
2022		 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   221,068    (1,251,241)
Balance, end of period  $43,726,337   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

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The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at June 30, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation technique  Significant unobservable input(s)  Range of significant unobservable input(s)
3iQ Corp.  $3,740,140   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,140,643   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   662,066   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,957,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   185,356   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
June 30, 2023  $43,726,337          
3iQ Corp.  $3,740,473    Recent financing   Marketability of shares   0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at June 30 2023, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,014 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arm’s length party of the Company. As at June 30, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $214,064 (December 31, 2022 - $218,979) change in the carrying amount.

 

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Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at June 30, 2023, the valuation of Earnity was zero as Earnity ceased operation in Q2 2023. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at June 30, 2023, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $0 (December 31, 2022 - $1,499) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at June 30 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $66,207 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK: Meta, LLC (“SDK”)

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30 2023, the valuation of SDK:Meta LLC was $Nil (December 31, 2022 - $Nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2023, a +/- 10% change in the fair value of SDK: Meta LLC will result in a corresponding +/- 0 (December 31, 2022 +/- $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at March 31, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,695,750 (December 31, 2022 - $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at June 30, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,536 (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at June 30, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,063 (December 31, 2022 - $4,063) change in the carrying amount.

 

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Outstanding Share Data

 

Authorized unlimited common shares without par value – 227,449,769 are issued and outstanding as at August 14, 2023.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at August 14, 2023

 

Stock options and convertible securities outstanding as at August 14, 2023 are as follows:

 

Stock Options:

 

15,952,500 with exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and October 19, 2027.

 

Warrants:

 

4,055,926 with exercise price ranging from $0.30 expiring between November 14, 2024 and November 29, 2024.

 

Deferred shares units:

 

6,870,000 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2022 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

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Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

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The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

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Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, DeFi relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

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While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

DeFi Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

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Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

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There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

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Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at June 30, 2023, the Company’s investments through its Defi Venture business arm comprise of $43,798,286 represented approximately 15.4% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

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Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

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Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

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Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

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Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

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Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

Multilateral Instrument 52-109 Disclosure

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

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Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

We have not identified any changes to our internal control over financial reporting which would materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

 

The CEO and CFO, together with other members of Management, have evaluated the effectiveness of internal controls over financial reporting as defined by National Instrument 52-109, and have concluded, based on our evaluation that they are operating effectively as at June 30, 2023.

 

Significant Accounting Policies

 

The Company’s significant accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2022 and 2021

 

Future accounting change

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

Critical Accounting Estimates and Assumptions

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

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Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”).Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price in the range (UTC time) from www.coinmarketcap.com.

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

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Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 6 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

 

42

 

Exhibit 99.48

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

For the three and six months ended June 30, 2023 and 2022

(expressed in Canadian dollars)

 

 

  

 

 

 

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (CPA Canada) for a review of interim financial statements by an entity’s auditor.

 

 

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

Table of Contents

 

Condensed consolidated interim statements of financial position 1
   
Condensed consolidated interim statements of operations and comprehensive (loss) 2
   
Condensed consolidated interim statements of cash flows 3
   
Condensed consolidated interim statements of changes in equity 4
   
Notes to the condensed consolidated interim financial statements 5-32

 

i

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   Note  June 30,
2023
$		   December 31,
2022
$		 
Assets           
Current           
Cash and cash equivalents  16   3,680,828    4,906,165 
Amounts receivable  4,16   193,034    67,102 
Public investments, at fair value through profit and loss  3,16   -    17,227 
Prepaid expenses  5   1,792,612    564,742 
Digital assets  6   117,394,970    106,582,076 
Digital assets loaned  6   39,756,515    - 
Digital assets staked  6   26,243,271    - 
Total current assets      189,061,230    112,137,312 
Private investments, at fair value through profit and loss  3,16,19   43,726,337    43,505,269 
Digital assets  6   71,949    53,358 
Equipment      14,151    20,623 
Right of use assets      -    1,917,174 
Intangible assets  7   4,562,038    5,581,188 
Goodwill      46,712,027    46,712,027 
Total assets      284,147,732    209,926,951 
Liabilities and shareholders’ equity             
Current liabilities             
Accounts payable and accrued liabilities  8,16,19   6,007,556    5,822,379 
Loans payable  9,16   55,845,153    52,821,600 
ETP holders payable  10,16   183,159,061    105,740,627 
Total current liabilities      245,011,769    164,384,606 
Non-current liabilities             
Lease liabilities      -    1,709,911 
Total liabilities      245,011,769    166,094,517 
Shareholders’ equity             
Common shares  14(b)(c)   167,132,221    166,151,401 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  15   25,990,572    27,909,984 
Accumulated other comprehensive income      (1,269,714)   (2,996,218)
Deficit      (157,038,466)   (151,554,084)
Total equity      39,135,963    43,832,434 
Total liabilities and equity      284,147,732    209,926,951 
Nature of operations and going concern  1          
Commitments and contingencies  20          

 

Approved on behalf of the Board of Directors:

 

“Olivier Roussy Newton”   “William Steers”
Director   Director

 

1

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

      Three months ended
June 30,		   Six months ended
June 30,		 
   Note  2023
$		   2022
$		   2023
$		   2022
$		 
Revenues                   
Realized and net change in unrealized gains and (losses) on digital assets  11   (11,921,614)   (238,618,654)   58,852,213    (286,202,382)
Realized and net change in unrealized gains and (losses) on ETP payables  12   18,984,061    235,291,417    (56,529,430)   282,248,090 
Realized and unrealized (loss) on derivative assets      -    (11,119)   -    (598,134)
Staking and lending income      764,662    1,248,871    1,336,475    3,434,246 
Management fees      244,016    392,330    459,693    963,401 
Node revenue      (845)   26,011    4,976    313,559 
Realized (loss) on investments, net  3   (3,438)   -    (4,025)   (12,077)
Unrealized gain (loss) on investments, net  3   (42,491)   (3,547,831)   314,862    (3,572,816)
Interest income      (572)   (570)   257    27,576 
Total revenues      8,023,780    (5,219,545)   4,435,022    (3,398,537)
Expenses                       
Operating, general and administration  13,19   1,755,467    3,219,615    3,871,936    6,890,084 
Share based payments  15   501,594    6,973,394    1,442,880    15,698,302 
Depreciation - property, plant and equipment      3,236    3,240    6,472    6,476 
Depreciation - right of use assets      (34,034)   (54)   -    5,470 
Amortization - intangibles  7   509,575    589,289    1,019,150    1,178,578 
Finance costs      275,063    1,129,851    1,561,529    2,028,209 
Transaction costs      86,944    342,903    319,719    779,752 
Foreign exchange loss      4,743,568    448,191    4,754,029    259,274 
Total expenses      7,841,413    12,706,429    12,975,715    26,846,145 
Income (loss) before other item      182,366    (17,925,974)   (8,540,694)   (30,244,682)
Loss on settlement of debt      (198,482)   -    (198,482)   - 
Net (loss) for the period      (16,116)   (17,925,974)   (8,739,176)   (30,244,682)
Other comprehensive loss                        
Foreign currency translation gain (loss)      1,692,615    (944,151)   1,726,504    (1,177,458)
Net (loss) and comprehensive income (loss) for the period      1,676,499    (18,870,125)   (7,012,672)   (31,422,140)
(Loss) per share                       
Basic      (0.00)   (0.09)   (0.04)   (0.14)
Diluted      (0.00)   (0.09)   (0.04)   (0.14)
Weighted average number of shares outstanding:                       
Basic      220,295,703    208,420,169    219,656,652    209,215,919 
Diluted      220,295,703    208,420,169    219,656,652    209,215,919 

 

See accompanying notes to these condensed consolidated interim financial statements

 

2

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

      Six months ended June 30, 
   Note  2023
$		   2022
$		 
Cash (used in) provided by operations:           
Net (loss) for the period     $(8,739,176)  $(30,244,682)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:             
Share-based payments  15   1,442,880    15,698,302 
Loss on debt for shares      198,482    - 
Interest expense  9   1,561,529    - 
Interest paid      (32,273)   - 
Depreciation - Property, plant & equipment      6,472    5,470 
Depreciation - right of use assets      -    - 
Amortization - Intangible asset  7   1,019,150    1,178,578 
Realized loss on investments, net      4,025    12,077 
Unrealized loss (gain) on investments, net      (314,862)   3,572,816 
Realized and net change in unrealized (gains) and loss on digital assets  11   (58,852,213)   286,202,381 
Realized and net change in unrealized (gains) and loss on ETP  12   56,529,430    (282,248,090)
Staking and lending income      (1,336,475)   (3,434,246)
Node revenue      (4,976)   (313,559)
Management fees      (459,693)   (963,401)
Unrealized loss (gain) on foreign exchange      1,471,425    (1,260,865)
       (7,506,275)   (11,795,219)
Adjustment for:             
Purchase of digital assets      (40,495,137)   (187,432,291)
Disposal of digital assets      34,356,040    153,229,060 
Purchase of investments      -    (34,649,658)
Disposal of investments      12,496    28,248 
Change in amounts receivable      (125,932)   (15,080)
Change in prepaid expenses and deposits      (1,227,869)   (882,853)
Change in accounts payable and accrued liabilities      185,178    (1,199,917)
Net cash (used in) operating activities      (14,801,499)   (82,717,710)
Financing activities             
Proceeds from ETP holders      56,747,554    201,553,614 
Payments to ETP holders      (47,387,053)   (160,211,446)
Loan Payable      4,319,901    50,255,400 
Proceeds from exercise of warrants  15        647,284 
Proceeds from exercise of options  15   -    45,000 
Shares repurchased pursuant to NCIB      -    (13,154,574)
Net cash provided by financing activities      13,680,402    79,135,277 
Effect of exchange rate changes on cash and cash equivalents      (104,240)   8,888 
Change in cash and cash equivalents      (1,225,337)   (3,573,545)
Cash, beginning of period      4,906,165    9,161,034 
Cash and cash equivalents, end of period     $3,680,828   $5,587,489 

 

3

  

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

                   Share-based payments                 
   Number of       Number of           Deferred
Shares		           Share-based   Accumulated
other		         
   Common   Common   Preferred   Preferred       Unit   Treasury       Payments   comprehensive         
   Shares   Shares   Shares   Shares   Options   (DSU)   shares   Warrants   Reserve   income   Deficit   Total 
Balance, December 31, 2022   219,010,501    $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   (151,554,084)   43,832,433 
Shares issued for debt settlement   7,939,268    873,319                                                 873,319 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    423,261    - 
Options cancelled   -    -    -    -    (2,831,533)   -    -    -    (2,831,533)   -    2,831,533    - 
DSU exercised   500,000    107,500    -    -    -    (107,500)   -    -    (107,500)   -    -    - 
Share-based payments   -    -    -    -    277,136    1,165,743    -    -    1,442,880    -    -    1,442,880 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    1,726,504    (8,739,176)   (7,012,672)
Balance, June 30, 2023   227,449,769    $167,132,220    4,500,000   $4,321,350   $17,762,916   $8,035,349   $27,453   $164,852   $25,990,570   $(1,269,714)  $(157,038,466)  $39,135,961 
Balance, December 31, 2021   211,102,552    $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986    25,898,062   $241,064.00   $(101,944,546)  $91,781,396 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    296,160 
NCIB   8,560,100    (6,743,038)   -    -    -    -    -    -    -    -    (6,411,536)   (13,154,574)
Warrants exercised   3,714,917    647,285    -    -    -    -    -    (136,447)   (136,447)   -    -    647,285 
Value of warrants exercised   -    136,447    -    -    -    -    -    (33,352)   (33,352)   -    -    - 
Warrants expired   -    -    -    -    -    -    -    -    -    -    33,352    - 
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    - 
Options cancelled             -    -    (1,593,722)   -    -    -    (1,593,722)   -    1,593,722    - 
DSU exercised   2,000,000    2,410,000    -    -    -    (2,410,000)   -    -    (2,410,000)   -    -    - 
Value of DSU exercised   -    3,535,000    -    -    -    (3,535,000)   -    -    (3,535,000)   -    -    - 
DSU cancelled                       -    (50,375)   -    -    (50,375)   -    50,375    - 
Share-based payments   -    -    -    -    7,141,109    8,557,193    -    -    15,698,302    -    -    15,698,302 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (1,177,458)   (30,244,682)   (31,422,140)
Balance, June 30, 2022   208,896,136    $163,631,920    4,500,000   $4,321,350   $23,740,462   $9,613,766   $27,453   $416,187   $33,797,868   $(936,394)  $(136,923,315)  $63,891,429 

 

See accompanying notes to these condensed consolidated interim financial statements

 

4

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (formerly Valour Inc.) (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These condensed consolidated interim financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at June 30, 2023, the Company has working capital (deficiency) of ($55,950,539) (December 31, 2022 - $(52,247,294), including cash of $3,680,828 (December 31, 2022 - $4,906,165) and for the six months ended June 30, 2023 had a net loss and comprehensive loss of $7,012,672 (for the six months ended June 30, 2022 – $31,422,140). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These condensed consolidated interim financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

2.Significant accounting policies

 

(a)Statement of compliance

 

These condensed consolidated interim financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) applicable to the preparation of interim financial statements, including IAS 34 – Interim Financial Reporting. These condensed interim financial statements should be read in conjunction with the annual audited consolidated financial statements for the years ended December 31, 2022 and 2021, which was prepared in accordance with IFRS as issued by the IASB. These condensed consolidated interim financial statements of the Company were approved for issue by the Board of Directors on August 14, 2023.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These condensed consolidated interim financial statements of fiscal 2023 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc., DeFi Europe AG, Crypto 21 AB and Valour Management Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

5

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(b)Basis of consolidation

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the condensed consolidated interim financial statements.

 

(c)Basis of preparation and functional currency

 

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for Valour Inc., DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc., DeFi Europe AG, Crypto 21 AB and Valour Management Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Significant accounting judgements, estimates and assumptions

 

The preparation of these condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

6

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets was classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair Value for is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”). Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

(ii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 3 and 16 for further details.

 

(iii)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 3 and 16 for further details.

 

(iv)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

7

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vi)Contingencies (See Note 20 for details)

 

(vii) Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii) Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 7 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

8

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2024 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2023. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Investments, at fair value through profit and loss

 

At June 30, 2023, the Company’s investment portfolio consisted of no publicly traded investment and eight private investments for a total estimated fair value of $43,726,337 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

During the three and six months ended June 30, 2023, the Company had a realized (losses) of ($3,438) and ($4,025) and unrealized (losses) gains of ($42,491) and $314,862 (three and six months ended June 30, 2022 – realized (loss) of ($12,077) and had unrealized (losses) of ($3,547,831) and ($3,572,816) on private and public investments.

 

Public Investments

 

At June 30, 2023, the Company had no public investments.

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer  Note  Security
description		  Cost   Value   of FV 
Smart Valor AG     19,000 SDR   150,908    17,227    100.0%
Total public investments        $150,908   $17,227    100.0%

 

9

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

3.Investments, at fair value through profit and loss (continued)

 

Private Investments

 

At June 30, 2023 the Company’s eight private investments had a total fair value of $43,726,337

 

Private Issuer  Note  Security description  Cost   Estimated
Fair
Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,140    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,140,643    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    662,066    1.5%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,957,500    84.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    185,356    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,726,337    100.1%

 

(i)Investments in related party entities (Note 19)

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair
Value		   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

(i)Investments in related party entities (Note 19)

 

4.Amounts receivable

 

   30-Jun-23   31-Dec-22 
Other receivable  $193,034   $67,102 

 

5.Prepaid expenses

 

   30-Jun-23   31-Dec-22 
Prepaid insurance  $114,524   $61,065 
Prepaid expenses   1,678,089    503,677 
   $1,792,612   $564,742 

 

10

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets

 

As at June 30, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $183,466,705 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   June 30, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
                 
Binance Coin   24.0991    7,683    11.1000    3,678 
Bitcoin   2,135.7664    85,854,906    2,126.5130    47,498,630 
Ethereum   21,195.3984    51,898,660    21,141.7368    34,333,700 
Cardano   44,275,895.9700    16,226,763    36,438,339.0800    12,004,332 
Polkadot   1,218,386.2620    8,021,087    931,646.4544    5,407,239 
Solana   760,230.57    18,182,737    428,280.68    5,537,534 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Shyft   3,918,822.6534    16,966    3,507,575.4684    37,530 
Uniswap   163,942.0602    1,079,219    148,734.0602    1,021,542 
USDC        (1,000)        1,586 
USDT        13,817         14,134 
Litcoin   17.0000    2,427    -    - 
Doge   25,000.0000    2,178    10,000.0000    914 
Cosmos   1,816.8700    266    201.0000    2,531 
Avalanche   119,079.6119    1,992,210    48,995.3900    712,745 
Matic   1,891.0000    1,642    890.0000    906 
Shiba Inu   720.0000    -    90,000,000.0000    975 
Ripple   6,000.0000    3,768    2,000.0000    919 
Enjin   243,660.1546    91,424    10,009.9900    3,180 
Terra Luna   199,970.4285    3    199,195.3600    - 
Current        183,394,756         106,582,076 
Blocto   262,493.872    6,461    251,424.913    6,737 
Maps   285,713.000    -    285,713.000    - 
Oxygen   400,000.000    -    400,000.000    - 
Boba Network   250,000.00    -    250,000.00    - 
Saffron.finance   86.21    2,799    86.21    2,345 
Clover   370,000.00    10,872    310,000.00    13,216 
Sovryn   15,458.95    5,432    15,458.95    2,342 
Wilder World   148,810.00    46,328    148,810.00    28,660 
Pyth   2,500,000.00    -    2,500,000.00    - 
Volmex   2,925,878.0000    57    2,925,878.0000    58 
Long-Term        71,949         53,358 
Total Digital Assets        183,466,705         106,635,434 

 

11

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

The continuity of digital assets for the three and six months ended June 30, 2023 and year ended December 31, 2022:

 

   June 30,
2023		   December 31,
2022		 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   40,495,137    231,392,840 
Digital assets disposed   (34,356,040)   (191,092,048)
Realized (loss) on digital assets   (14,347,308)   (47,595,430)
Digital assets earned from staking, lending and fees   1,801,144    5,955,456 
Net change in unrealized gains and losses on digital assets   73,199,520    (275,739,651)
Foregin exchange (loss) gain   10,038,818    13,660,527 
   $183,466,705   $106,635,434 

 

In the normal course of business, the Company enters into open-ended staking and lending arrangements with certain financial institutions, whereby the Company stakes and loans certain digital assets in exchange for interest income payable in the underlying digital asset loaned or staked. The Company can demand the repayment of the loans and accrued interest can be terminated within 5 days notice and staked coins can be returned on a 1 days notice. The digital assets staked and loaned are included in the balance above.

 

Digital Assets loaned

 

As of June 30, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 3.0% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of June 30, 2023, digital assets on loan consisted of the following:

 

   Number of coins       Fair Value 
   on loan   Fair Value   Share 
Digital on loan:            
Bitcoin   503.7990   $20,252,035    51%
Polkdot   973,835.0000    6,411,115    16%
Solana   547,441.0000    13,093,364    33%
Total   1,521,779.7990   $39,756,515    100%

 

As of June 30, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest  Number of coins   Fair 
   rates  on loan   Value 
Digital on loan:           
Counterparty A  3% to 3.54%   503.7990   $20,252,035 
Counterparty B  3.6% to 9.7%   1,521,276.0000    19,504,480 
Total      1,521,779.7990    39,756,515 

 

12

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of June 30, 2023, digital assets loan were concentrated with counterparties as follows:

 

   Geography  June 30,
2023		 
Digital on loan:       
Counterparty A  US   0%
Counterparty B  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of June 30, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 0.5% to 3.54% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

As of June 30, 2023, digital assets staked consisted of the following:

 

   Number of        Fair Value 
   coins staked   Fair Value   Share 
Digital on staked:            
Ethereum   5,000.0000   $12,242,907    47%
Cardano   38,201,004.8000    14,000,364    53%
Total   38,206,004.8000   $26,243,271    53%

 

As of June 30, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest  Number of     
   rates  coins staked   Fair Value 
Digital on staked:           
Counterparty B  0.50%   5,000.0000   $12,242,907 
Counterparty C  3% to 3.54%   38,201,004.8000    14,000,364 
Total      38,206,004.8000   $26,243,271 

 

13

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of June 30, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  June 30,
2023		 
Digital on staked:       
Counterparty B  Cayman Islands   0.01%
Counterparty C  Switzerland   99.99%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7.Intangibles

 

Cost  Brand
Name		   Total 
Balance, December 31, 2022 and June 30, 2023  $42,789,968   $42,789,968 

 

Accumulated Amortization  Brand
Name		   Total 
Balance, December 31, 2021  $(21,065,981)  $(21,065,981)
Amortization   (2,277,443)   (2,277,443)
Impairment loss   (13,865,356)   (13,865,356)
Balance, December 31, 2022  $(37,208,780)  $(37,208,780)
Amortization   (1,019,150)   (1,019,150)
Balance, June 30, 2023  $(38,227,930)  $(38,227,930)
Balance, December 31, 2022  $5,581,188   $5,581,188 
Balance, June 30, 2023  $4,562,038   $4,562,038 

 

8.Accounts payable and accrued liabilities

 

   30-Jun-23   31-Dec-22 
Corporate payables  $5,649,405   $5,747,151 
Related party payable (Note 19)   358,150    75,228 
   $6,007,556   $5,822,379 

 

14

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of June 30, 2023, the loan principal of $51,636,000 (US$39,000,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms range from open term to three months fixed term and have interest rates ranging from 6.4% and 7.9% The extended loans are secured with 684.8893 BTC and 11564.9009 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at June 30, 2023, the value of the 475 BTC was US$14,421,718 and potential loan loss exposure is US$8,421,718.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. As of June 30, 2023, the loan principal of $260,000 plus accrued interest of $9,424 was outstanding. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of June 30, 2023, the loan principal of $3,972,001 (US$3,000,001) was outstanding.

 

15

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

10.ETP holders payable

 

The fair market value of the Company’s ETPs as at June 30, 2023 and December 31, 2022 were as follows:

 

   30-Jun-23   31-Dec-22 
BTC Zero EUR  $7,850,534   $3,063,222 
BTC Zero SEK   77,952,364    44,379,551 
ETH Zero EUR   1,291,290    120,319 
ETH Zero SEK   50,585,820    33,841,456 
Polkadot EUR   859    56 
Polkadot SEK   8,013,641    5,312,625 
Cardano EUR   (2,068)   1,308 
Cardano SEK   16,208,013    11,833,732 
UNI EUR   86,194    86,714 
UNI SEK   973,337    891,459 
BNB EUR   496    - 
Solana EUR   171,566    12,010 
Solana SEK   17,949,123    5,494,963 
Avalanche SEK   2,069    872 
Avalanche EUR   1,976,350    697,454 
Enjin EUR   91,717    2,804 
Cosmos EUR   929    185 
Valour Digital Asset Basket 10 EUR   1,845    790 
Valour BTC Carbon Neutral EUR   4,983    1,107 
   $183,159,061   $105,740,627 

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

11.Realized and net change in unrealized gains and (losses) on digital assets

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2023   2022 
Realized gain/ (loss) on digital assets  $(2,334,083)  $(17,030,388)  $(14,347,308)  $(33,974,074)
Unrealized gain/ (loss) on digital assets   (9,587,532)  $(221,588,265)   73,199,521    (252,228,307)
   $(11,921,615)  $(238,618,654)  $58,852,213   $(286,202,382)

 

12.Realized and net change in unrealized gains and (losses) on ETP payables

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2023   2022 
Realized gain/( loss) on ETPs  $(5,156,938)  $45,426,610   $22,520,740   $83,180,313 
Unrealized gain/ (loss) on ETPs   24,140,999    189,864,807    (79,050,170)   199,067,777 
   $18,984,061   $235,291,417   $(56,529,430)  $282,248,090 

 

16

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

13.Expenses by nature

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2023   2022 
Management and consulting fees  $1,195,609   $1,622,294   $2,285,224   $3,494,009 
Travel and promotion   122,323    550,648    239,616    1,505,683 
Office and rent   224,026    227,377    852,654    682,281 
Accounting and legal   157,068    786,172    370,594    1,092,108 
Regulatory and transfer agent   56,441    33,124    123,848    116,003 
   $1,755,467   $3,219,615   $3,871,936   $6,890,084 

 

14.Share Capital

 

a)As at June 30, 2023 and December 31, 2022, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

b)Issued and outstanding shares

 

   Number of     
   Common
Shares		   Amount 
         
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 
DSU exercised   500,000    70,000 
Grant date fair value on DSU excercised        37,500 
Shares issued for debt settlement   7,939,268    873,319 
Balance, June 30, 2023   227,449,769   $167,132,221 

 

During the six months ended June 30, 2023, the Company issued 7,939,268 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $198,482. Officers of the Company received 2,286,588 common shares to settle $194,360 of outstanding payables.

 

17

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

14.Share Capital (continued)

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from November 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the six months ended June 30, 2023, the Company purchased and cancelled no shares (December 31, 2022 – purchased and cancelled 8,560,100 shares at an average price of $1.54).

 

15.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
       Weighted                   Weighted         
       average                   average         
   Number of   exercise   Value of   Number of   Value of   Number of   exercise   Value of   Total 
   Options   prices   options   DSU   DSU   warrants   prices   warrants   Value 
December 31, 2021   20,308,100   $1.27   $18,260,128   $8,625,000    7,051,948    19,432,810   $0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,617    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (2,000,000)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (6,755,000)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000    6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   -    1.31    277,137    1,000,000    1,165,744    -    -    -    1,442,881 
Exercised   -    -    -    (500,000)   (107,500)   -    -    -    (107,500)
Expired / cancelled   (1,825,000)   1.11    (2,831,533)   -    -    (12,684,560)   0.03    (423,261)   (3,254,793)
June 30, 2023   15,952,500   $1.33   $17,790,370    6,870,000    8,035,350    4,055,926   $0.30   $164,852   $25,990,572 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

The Company recorded $277,136 (six months ended June 30, 2022 - $7,141,109) of share-based payments during the six months ended June 30, 2023.

 

18

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share-based payments reserves (continued)

 

The following share-based payment arrangements were in existence at June 30, 2023:

 

Number   Number   Grant  Expiry  Exercise   Fair value
at grant		   Grant date share   Expected   Expected life   Expected
dividend		   Risk-free
interest		 
outstanding   exercisable   date  date  price   date   price   volatility   (yrs)   yield   rate 
 542,500    542,500   16-Nov-20  16-Nov-25  $0.09    42,966   $0.09    138.70%   5    0%   0.46%
 250,000    500,000   24-Feb-21  24-Feb-26  $1.58    574,750   $2.55    147.00%   5    0%   0.73%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26  $1.58    1,906,500   $2.12    145.70%   5    0%   0.99%
 2,310,000    2,310,000   09-Apr-21  09-Apr-26  $1.58    3,692,766   $1.78    145.20%   5    0%   0.95%
 3,100,000    3,100,000   18-May-21  18-May-26  $1.22    3,488,120   $1.25    145.60%   5    0%   0.95%
 1,000,000    1,000,000   18-May-21  18-May-26  $1.22    1,125,200   $1.25    145.60%   5    0%   0.95%
 750,000    750,000   25-May-21  25-May-26  $1.11    747,900   $1.11    145.50%   5    0%   0.86%
 1,200,000    1,200,000   25-May-21  25-May-26  $1.11    1,196,640   $1.11    145.50%   5    0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26  $1.58    1,461,305   $1.43    143.70%   5    0%   0.84%
 750,000    750,000   21-Sep-21  21-Sep-26  $1.70    1,141,125   $1.70    144.00%   5    0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26  $2.10    470,375   $2.10    144.00%   5    0%   1.27%
 500,000    500,000   09-Nov-21  09-Nov-26  $3.92    1,758,050   $3.92    144.30%   5    0%   1.37%
 250,000    250,000   31-Dec-21  31-Dec-26  $3.11    698,525   $3.11    145.00%   5    0%   1.25%
 500,000    500,000   09-May-22  09-May-27  $2.00    591,950   $1.34    146.00%   5    0%   2.76%
 500,000    500,000   20-May-22  20-May-27  $1.00    334,300   $0.75    146.80%   5    0%   2.70%
 400,000    400,000   21-Jul-22  21-Jul-27  $0.80    195,640   $0.50    147.50%   5    0%   3.00%
 500,000    250,000   17-Oct-22  17-Oct-27  $0.17    73,350   $0.17    149.50%   5    0%   3.60%
 1,000,000    500,000   19-Oct-22  19-Oct-27  $0.17    150,800   $0.17    149.40%   5    0%   3.71%
 15,952,500    15,452,500               19,650,262                          

 

The weighted average remaining contractual life of the options exercisable at June 30, 2023 was 3.1 years (December 31, 2022 – 3.5 years).

 

Warrants

 

As at June 30, 2023, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &		   Grant  Expiry  Exercise   Fair value
at grant		   Grant date
share		   Expected   Expected life   Expected
dividend		   Risk-free
interest		 
   exercisable   date  date  price   date   price   volatility   (yrs)   yield   rate 
Warrants   3,537,433   14-Nov-22  14-Nov-24  $0.30    153,355   $0.17    69.4%   2    0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24  $0.30    6,975   $0.17    69.4%   2    0%   3.87%
Warrants   331,000   29-Nov-22  29-Nov-24  $0.30    13,183   $0.18    64.4%   2    0%   3.95%
Warrant issue costs                   (8,661)                         
    4,055,926               164,852                          

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

The Company recorded $1,165,743 in share-based compensation during the three months ended June 30, 2023 (six months ended June 30, 2022 - $8,557,193).

 

19

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.   Financial instruments

 

Financial assets and financial liabilities as at June 30, 2023 and December 31, 2022 are as follows:

 

   Asset /
(liabilities)
at amortized
cost		   Assets /
(liabilities)
at fair
value through
profit/(loss)		   Total 
December 31, 2022            
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    43,505,269    43,505,269 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)
June 30, 2023               
Cash  $3,680,828   $-   $3,680,828 
Amounts receivable   193,034    -    193,034 
Public investments   -    -    - 
Private investments   -    43,726,337    43,726,337 
USDC   -    (1,000)   (1,000)
Accounts payable and accrued liabilities   (6,007,556)   -    (6,007,556)
Loan payable   (55,845,153)   -    (55,845,153)
ETP holders payable   -    (183,159,061)   (183,159,061)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

20

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Liquidity risk (continued)

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at June 30, 2023, the Company had current assets of $189,061,230 (December 31, 2022 - $112,137,312) to settle current liabilities of $245,011,769 (December 31, 2022 - $164,384,606).

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at June 30, 2023 and December 31, 2022

 

   December 31, 2022 
   Total   Less than
1 year		   1-3 years 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   106,635,434    106,582,076    53,358 
Private investments   43,505,269    -    43,505,269 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
                
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(10,398,578)  $(52,247,294)  $41,848,716 

 

   June 30, 2023 
   Total   Less than
1 year		   1-3 years 
Cash  $3,680,828   $3,680,828   $- 
Amounts receivable   193,034    193,034    - 
Public investments   -    -    - 
Prepaid expenses   1,792,612    1,792,612    - 
Digital assets   183,466,705    183,394,756    71,949 
Private investments   43,726,337    -    43,726,337 
Accounts payable and accrued liabilities   (6,007,557)   (6,007,557)   - 
Loans payable   (55,845,153)   (55,845,153)   - 
ETP holders payable   (183,159,061)   (183,159,061)   - 
Total assets / (liabilities) - June 30, 2023  $(12,152,254)  $(55,950,540)  $43,798,286 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

21

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At June 30, 2023, two investments made up approximately 14.3% (December 31, 2022 – two investment of 8.2%) of the total assets of the Company.

 

For the six months ended June 30, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.1 million, or $0.02 per share.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.02 per share.

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at June 30, 2023, a 1% change in interest rates could result in $36,808 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at June 30, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   June 30, 2023 
   United States   British   Swiss   European 
   Dollars   Pound   Franc   Euro 
Cash  $3,437,679   $-   $-   $- 
Receivables   184,600    -    -    - 
Private investments   3,028,697    -    36,957,500    - 
Prepaid investment   1,779,249    -    -    - 
Digital assets   183,466,705    -    -    - 
Accounts payable and accrued liabilities   (2,742,536)   (74,378)   (47,764)   (21,668)
Loan payable   (55,575,729)               
ETP holders payable   (183,159,061)   -    -    - 
Net assets (liabilities)  $(49,580,396)  $(74,378)  $36,909,736   $(21,668)

 

22

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(c)Currency risk (continued)

 

   December 31, 2022 
   United States   British   Swiss   European 
   Dollars   Pound   Franc   Euro 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of June 30, 2023 would result in an estimated increase (decrease) in net income of approximately $1,271,900 (December 31, 2022 - $562,800).

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

23

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2022 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at June 30, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
       (Valuation   (Valuation     
   (Quoted 
Market		   technique -observable   technique -
non-observable		     
Investments, fair value  price)   market Inputs)   market inputs)   Total 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,726,337    43,726,337 
Digital assets   -    (1,000)   -    (1,000)
June 30, 2023  $-   $(1,000)  $43,726,337   $43,725,337 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended June 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss

 

   June 30,   December 31, 
Investments, fair value for the period ended  2023   2022 
Balance, beginning of period  $1,586   $4,063 
Purchases        - 
Disposal   (2,586)   (2,477)
Balance, end of period  $(1,000)  $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended June 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

24

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

   June 30,   December 31, 
Investments, fair value for the period ended  2023   2022 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   221,068    (1,251,241)
Balance, end of period  $43,726,337   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at June 30, 2023 and December 31, 2022.

 

             Range of
          Significant  significant
       Valuation  unobservable  unobservable
Description  Fair vaue   technique  input(s)  input(s)
3iQ Corp.  $3,740,140   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,140,643   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   662,066   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,957,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   185,356   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
June 30, 2023  $43,726,337          
               
3iQ Corp.  $3,740,473   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

25

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at June 30, 2023, the valuation of 3iQ was based on the February 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $374,014 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at June 30, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $214,064 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at June 30, 2023, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2023 a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2022 - $1,499) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at June 30, 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $66,207 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30, 2023, the valuation of SDK:Meta LLC was $nil (December 31, 2022 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2023, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2022 - $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at June 30, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,695,750 (December 31, 2022 +/- $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at June 30, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,536 (December 31, 2022 - $18,961) change in the carrying amount.

 

26

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at June 30, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at June 30, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,063 (December 31, 2022 - $4,063) change in the carrying amount.

 

17.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

27

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Digital asset risk (continued)

 

(c)Digital currency risk factors: Political, regulatory risk in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

18.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the six months ended June 30, 2023.

28

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures

 

a)The condensed consolidated interim financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 
   % equity
interest		 
DeFi Capital Inc.   100 
DeFi Holdings (Bermuda) Ltd.   100 
Electrum Streaming Inc.   100 
Valour Inc. (Cayman)   100 
DeFi Europe AG   100 
Crypto 21 AB   100 
Valour Management Limited   100 

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three months ended June 30, 2023 and 2022 were as follows:

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2023   2022 
Short-term benefits  $239,975   $435,545   $532,568   $1,170,544 
Shared-based payments   72,360    2,701,002    197,331    5,538,582 
   $312,335   $3,136,547   $729,899   $6,709,126 

 

As at June 30, 2023, the Company had $358,150 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the three months ended June 30, 2023 and 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2023   2022   2023   2022 
2227929 Ontario Inc.  $30,000   $30,000   $60,000   $60,000 
   $30,000   $30,000   $60,000   $60,000 

 

**Excl. HST & incl. bonus

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at June 30, 2023 the Company had a payable balance of $158,200 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

29

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures (continued)

 

The Company incurred $92,447 (2022 - $28,582) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $84,428 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($74,378) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of June 30, 2023 and December 31, 2022.

 

      Estimated 
Investment  Nature of relationship to invesment  Fair value 
Brazil Potash Corp.  Officer (Ryan Ptolemy) of Investee  $2,140,643 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,957,500 
Total investment - June 30, 2023     $39,098,143 

 

*Private companies

 

      Estimated 
Investment  Nature of relationship to invesment  Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at March 31, 2023,

 

During the six months ended June 30, 2023, the Company issued 2,286,588 common shares of the Company to key management at an issue price of $0.11 per share to settle existing debt of $194,360 resulting in a loss on settlement of debt in the amount of $57,165.

 

During the six months ended June 30, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

20.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,072,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $826,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

30

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Commitments and contingencies (continued)

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company is currently appealing the ruling.

 

21.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

June 30, 2023  Canada   Bermuda   Cayman
Islands		   Total 
Cash   243,720    -    3,437,108    3,680,828 
Amounts receivable   8,434    -    184,600    193,034 
Public investments   -    -    -    - 
Prepaid expenses   142,873    6,193    1,643,546    1,792,612 
Digital Assets   -    88,916    183,377,789    183,466,705 
Property, plant and equipment   -    10,308    3,843    14,151 
Other non-current assets   91,216,188    39,720    3,744,493    95,000,401 
Total assets   91,611,215    145,137    192,391,379    284,147,732 

 

December 31, 2022  Canada   Bermuda   Cayman
Islands		   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    106,491,188    106,635,434 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   92,017,379    40,632    5,657,647    97,715,658 
Total assets   92,419,715    203,205    117,304,032    209,926,952 

 

31

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and six months ended June 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the six months ended June 30, 2023  DeFi   DeFi
Bermuda		   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (5,029)   58,857,242    58,852,213 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (56,529,430)   (56,529,430)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    122    1,336,353    1,336,475 
Management fees   -    -    459,693    459,693 
Node revenue   -    4,976    -    4,976 
Realized (loss) on investments, net   -    -    (4,025)   (4,025)
Unrealized (loss) on investments, net   221,401    -    93,461    314,862 
Interest income   570    -    (313)   257 
Total revenue   221,971    69    4,212,981    4,435,022 
Expenses                    
Operating, general and administration   1,677,555    16,346    2,178,035    3,871,936 
Share based payments   1,442,880    -    -    1,442,880 
Depreciation - property, plant and equipment   -    5,235    1,237    6,472 
Depreciation - right of use assets   -    -    -    - 
Amortization - intangibles   1,019,150    -    -    1,019,150 
Finance costs        -    1,561,529    1,561,529 
Transaction costs   -    -    319,719    319,719 
Foreign exchange (gain) loss   (44,754)   -    4,798,783    4,754,029 
Total expenses   4,094,831    21,581    8,859,303    12,975,715 
Income (loss) before other item   (3,872,860)   (21,512)   (4,646,322)   (8,540,694)
Loss on settlement of debt   (198,482)             (198,482)
Other comprehensive loss                    
Foreign currency translation (loss) gain   -    (2,378)   1,728,882    1,726,504 
Net (loss) income and comprehensive (loss) income for the period   (4,071,342)   (23,890)   (2,917,440)   (7,012,672)

 

For the six months ended June 30, 2022  DeFi
Technologies		   DeFi
Bermuda		   Valour   Total 
Realized and net change in unrealized gains and losses on digital assets   -    (1,993,634)   (284,208,747)   (286,202,381)
Realized and net change in unrealized gains and losses on ETP payables   -    -    282,248,090    282,248,090 
Realized loss of derivative asset   -    (598,134)   -    (598,134)
Staking and lending income   -    3,417    3,430,829    3,434,246 
Management fees   -    -    963,401    963,401 
Node revenue   -    313,559    -    313,559 
Realized (loss) on investments, net   (12,077)   -    -    (12,077)
Unrealized (loss) on investments, net   (3,572,816)   -    -    (3,572,816)
Interest income   2,442    -    25,134    27,576 
Total revenue   (3,582,451)   (2,274,792)   2,458,707    (3,398,537)
Expenses                    
Operating, general and administration   4,660,748    21,478    2,207,858    6,890,084 
Share based payments   15,698,302    -    -    15,698,302 
Depreciation - property, plant and equipment   -    5,235    1,241    6,476 
Depreciation - right of use assets   -    -    5,470    5,470 
Amortization - intangibles   1,178,578    -    -    1,178,578 
Finance costs        -    2,028,209    2,028,209 
Transaction costs   140,886    -    638,866    779,752 
Foreign exchange (gain) loss   (21,063)   -    280,337    259,274 
Total expenses   21,657,451    26,713    5,161,981    26,846,145 
(Loss) income before other item   (25,239,902)   (2,301,505)   (2,703,274)   (30,244,682)
Other comprehensive loss                    
Foreign currency translation gain   -    (155,393)   (1,022,065)   (1,177,458)
Net (loss) income and comprehensive (loss) income for the period   (25,239,902)   (2,456,898)   (3,725,339)   (31,422,140)

 

 

32

 

 

Exhibit 99.49

 

 

DeFi Technologies Inc.’s Wholly Owned Subsidiary Valour Inc. Unveils Ethereum Physical Staking ETP: Simplifying

Staking Innovation for Traditional Investors

 

●DeFi Technologies’ subsidiary, Valour Inc., introduces its innovative Ethereum Physical Staking ETP under the EU-wide issuance platform, Valour Digital Securities Limited (VDSL) on XETRA. Tax benefit for investors based in Germany after holding period of one year possible for the first time in ETH.

 

●The groundbreaking ETP, with a 1.49% management fee, provides investors with a simplified gateway to Ethereum staking while benefiting from robust security enhancements.

 

●Partnership with industry leaders like Copper Markets (Switzerland) AG and Blockdaemon ensures paramount security and a non-custodial staking environment for investors.   

 

Zug, Switzerland and Toronto, Canada, August 22nd, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (“DeFi”), is excited to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched its 1Valour Ethereum Physical Staking ETP, set to redefine and simplify the Ethereum investment landscape. This innovative product aims to harness the essence of Ethereum while offering investors access to additional yield income opportunities.

 

The 1Valour Ethereum Physical Staking ETP (ISIN GB00BRBMZ19) is issued by Valour’s new EU-wide issuance platform for physically stored digital assets Valour Digital Securities Limited (“VDSL”). This Jersey-based securities issuer has garnered approvals from both Swedish and Jersey regulatory entities and is underpinned by digital assets physically safeguarded by licensed custody providers.

 

Available for trading on the Frankfurter Wertpapierboerse XETRA, the new staking ETP is poised to simplify network participation for investors. With a fixed yield, undefined expiry and a 1.49% management fee, investors have the potential to earn passive returns, sidestepping the technical challenges involved with staking, and actively contributing towards the evolving DeFi landscape. Enhanced security measures including slashing insurance and full collateralization mean investors benefit from additional transparency and security measures.

 

Crypto staking represents a cornerstone in blockchain dynamics. It enables enthusiasts to immerse in the governance and consensus of Proof of Stake (PoS) blockchains, earning rewards for their contributions. Contrary to energy-hungry Proof-of-Work systems, PoS networks lean on validators who pledge assets to corroborate and usher new blocks. However, the staking landscape isn’t without its intricacies – validators often grapple with asset lock-ups during bonding periods, as well as enduring unbonding spells prior to rewards being unlocked.

 

 

 

 

Olivier Roussy Newton, CEO of Valour, comments, “The 1Valour Ethereum Physical Staking ETP exemplifies Valour’s commitment to creating innovative and trustworthy investment vehicles. We understand the challenges and complexities of crypto investments. Our mission is to bridge the gap, providing opportunities to enhance returns which are straightforward for our investors. In addition, all ETPs issued under the VDSL umbrella are endowed with the physical delivery option that might benefit investors based in Germany with a tax benefit after a holding period of one year.”

 

Partnering with elite entities like the VQF registered Copper Markets (Switzerland) AG for custody and industry stalwart Blockdaemon for staking services, Valour guarantees paramount security, ensuring a consistently collateralized, non-custodial staking environment.

 

Valour Inc. invites progressive investors to partake in this revolutionary venture, unlocking Ethereum’s potential in the most accessible and safeguarded manner.

 

In addition to their novel digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the launch of the 1Valour Ethereum Physical Staking ETP; the VDSL platform; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

Exhibit 99.50

 

 

DeFi Technologies Inc. Announces Q2 2023 Financial Results with AUM at CAD$183 million - up 73% from the Previous Year-End And Other Corporate Updates

 

TORONTO – August 23, 2023 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announces its financial performance for the six months ended June 30, 2023 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights of Q2 2023:

 

●The Company reported a healthy cash balance at June 30, 2023 of $3.7 million compared to $4.9 million at December 31, 2022. The Company’s venture portfolio investments were valued at $43.8 million by the end of the quarter.

 

●AUM grew 73% to $183 million as of June 30, 2023, up from $106 million as of December 31, 2022.

 

●DeFi Technologies wholly owned subsidiary, Valour Inc., announced the launch of first physically backed Bitcoin Carbon Neutral Product (ETP) on Frankfurter Wertpapierboerse XETRA

 

●Valour Inc. entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (ETPs) backed 1:1 by digital assets, leveraging both Valour Inc.’s and Bitcoin Suisse AG’s unique capabilities and long standing expertise in the digital asset market.

 

●Valour Inc. announced the launch of Valour Digital Asset Basket 10 (ETP) on Nordic Growth Market

 

●The Company appointed Sue Ennis to the Board of Directors

 

●Total revenues reached $8.0 million and $4.4 million for the three and six months ended June 30, 2023. This is a significant improvement from the revenues of $(5.2) million and $(3.4) million for the respective periods in 2022.

 

●The net loss for the three and six months ended June 30, 2023 was minimal at $(16) thousand and $(8.7) million. This shows a noteworthy recovery from the net loss of $(17.9) million and $(30.2) million for the same durations in 2022 – an improvement of $17.9 million and $21.5 million from the comparative periods in 2022.

 

●The Company’s commitment to prudent financial management is evident from its lower operating, general, and administrative costs in 2023. Operating, general, and administration costs for the three and six months ended June 30, 2023 were $1.8 million and $3.9 million, down from $3.2 million and $6.9 million in 2022.

 

●Total expenses for the three and six months ending June 30, 2023 stood at $7.8 million and $13 million, a decrease of 39% and 51% YoY. This decrease reflects from $12.7 million and $26.8 million for the same periods in 2022.

 

 

 

 

“We have once again delivered solid results this quarter, with our AUM reaching $183 million, indicating a 73% growth from the end of last year,” stated Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies. “Our financial performance, combined with the significant improvement in our net results and our continued focus on cost optimization, shows our dedicated approach to value creation. As we move forward, we remain committed to expanding our ETP offerings and solidifying our position as a leader in the evolving Web 3.0 space.”

 

ETPs/Valour:

 

Valour’s ETP business, Valour Inc., reported AUM of $183 million as of June 30, 2023, a 73% increase from December 31, 2022’s report of $106 million.

 

Liquidity:

 

The Company ended the quarter with a cash balance of $3.7 million, compared to $4.9 million at the close of 2022. Additionally, the venture portfolio investments stood firm at $43.8 million.

 

Financial Performance:

 

For the six months ending June 30, 2023:

 

●Revenues surged to $8.0 million and $4.4 million for the three and six months, compared to $(5.2) million and $(3.4) million reported for the same periods in 2022.

 

●Net loss was $(16) thousand and $(8.7) million, a significant improvement from the net loss of $(17.9) million and $(30.2) million during the corresponding periods in 2022.

 

●The Company continues to emphasize fiscal responsibility and growth, evident from the reduced operating costs and the enhanced ETP products portfolio.

 

Shares for Debt Settlement

 

The Company is also pleased to announce that the Company has entered into shares for debt settlement agreements with a lender, an officer and consultants of the Company to settle an aggregate amount of approximately C$604,543.34 of accrued debt obligations and accrued fees owing to such lender, officer and consultants of the Company (collectively, the “Debt”) by issuing common shares of the Company (the “Debt Shares”) at a price of C$0.105 per Debt Share for a total of 5,757,827 Debt Shares (the “Debt Settlement”).

 

The Company believes that the Debt Settlement will strengthen its balance sheet by reducing its liabilities as well as further align the interests of its lenders, officers and consultants with the shareholders of the Company. The Debt Settlement is subject to the acceptance of the Cboe Canada.

 

The issuance of the Debt Shares to an officer of the Company constitutes a “related party transaction” as this term is defined in Multilateral Instrument 61-101: Protection of Minority Securityholders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of the Debt Shares nor the debt exceeds 25% of the Company’s market capitalization.

 

2

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Debt Settlement; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

3

 

Exhibit 99.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.52

 

 

DeFi Technologies Inc.’s Wholly Owned Subsidiary Valour Inc. Launches 3 New Products on NGM

 

●DeFi Technologies' subsidiary, Valour Inc., introduces three EUR denominated products on NGM: Valour Ethereum Zero EUR, Valour Solana EUR and Valour Digital Asset Basket 10 (VDAB10) EUR. The products are available for trading as of 25/08/2023.

 

Zug, Switzerland and Toronto, Canada, August 29, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is excited to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched three euro-denominated products on NGM - Valour Ethereum Zero EUR (ISIN: CH1149139623), Valour Solana EUR (ISIN: CH1114178838) and Valour Digital Asset Basket 10 (VDAB10) EUR (ISIN: CH1149139623).

 

“After the exciting launch of our newest product in the Nordics, the VDAB10 SEK ETP, a diversified digital asset basket, it is only natural to offer this innovative and dynamic product to investors that prefer trading in Euro.” said Johanna Belitz, Head of Sales France and Nordics. “Similarly, simplifying access to our excellent Ethereum Zero EUR product to Nordic investors is a natural step in our expansion in the Nordics. The absence of a management fee in this product makes it extraordinary in its performance. As with funds, management fees are as important a factor as potential yields when making a choice on where to invest your capital.”

 

“Through the introduction of these three innovative products, we are strengthening our robust market stance within the Nordic region. Valour's deep-rooted associations with Sweden, from a historical and corporate standpoint, synergize with our latest product range to streamline cryptocurrency asset accessibility also to the Finnish investment community.” Said Johan Wattenström, Founder and Director of Valour.

 

About the products:

 

Valour Ethereum Zero EUR precisely tracks the price of ETH without charging management fees, making an investment in the world’s second largest digital asset easier, more secure and more cost-effective than all other options.

 

Valour Solana EUR precisely tracks the price of SOL, the native cryptocurrency fuelling the Solana network. Marketed as one the fastest blockchains, Solana has more than 400 live projects spanning its DeFi, NFT, and Web3 ecosystem. Valour's Solana ETP makes an investment in this leading decentralised platform cost-effective, simpler and more secure.

 

Valour Digital Asset Basket 10 (VDAB10) tracks the performance of the top 10 largest crypto assets based on market capitalisation with a maximum cap of 30% for any constituent. Valour’s VDAB10 ETP provides investors with a diversified and dynamic exposure to the ever evolving crypto landscape in a trusted and secure manner.

 

The new products are available for trading as of 25/08/2023 through online brokers such as Avanza and Nordnet.

 

 

 

 

In addition to its novel digital asset platform, which includes 1Valour Ethereum Physical Staking ETP and 1Valour Bitcoin Physical Carbon Neutral ETP, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the launch of Valour Ethereum Zero EUR, Valour Solana EUR, and Valour Digital Asset Basket 10 (VDAB10) EUR; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies
ir@defi.tech

 

 

Exhibit 99.53

 

Ontario
Securities
Commission		 Commission des
valeurs mobilières
de l’Ontario		 22nd Floor
20 Queen Street West
Toronto ON M5H 3S8		 22e étage
20, rue queen ouest
Toronto ON M5H 3S8

 

OSC NOTICE TO PUBLIC

 

ISSUER:

 

DeFi Technologies Inc.

Principal Jurisdiction – Ontario

 

DATES:

 

Preliminary Short Form Base Shelf Prospectus dated June 30, 2023

Withdrawn on August 26, 2023

 

FILING NUMBER:

 

3557443

Exhibit 99.54

 

 

DeFi Technologies Inc. and Neuronomics AG. Announce Landmark AI Joint Venture Agreement and Other Corporate Updates

 

●DeFi Technologies Inc. and Neuronomics AG have entered into a landmark Joint Venture Agreement to develop AI-based digital asset exchange traded products, actively managed certificates, and asset-backed tokens for global distribution.

 

●The crypto products promise a level of sophistication and efficiency previously unseen, leveraging Neuronomics’ advanced AI algorithmic trading strategies and DeFi Technologies’ expertise in listing and marketing on OTC markets or regulated stock exchanges.

 

TORONTO – October 24, 2023 – DeFi Technologies Inc. (the “Company” or “DeFi”) (NEO: DEFI) (GR: RMJR) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, are delighted to announce a Joint Venture Agreement (“JVA” or “JV”) to collaborate on the development of AI based exchange traded products, actively managed certificates, and asset-backed tokens for global distribution (the “Products”). The products will be powered by advanced AI algorithmic trading strategies, promising a level of sophistication and efficiency previously unseen.

 

Neuronomics AG is a Swiss-based company specializing in the development of advanced algorithmic trading strategies. Leveraging its deep expertise in financial markets and innovative technology, Neuronomics pioneers new avenues for investment opportunities leveraging AI and other advanced algorithmic technologies.

 

The JV will see Neuronomics primarily overseeing the Products’ management, strategy, and optimization of the investment thesis utilizing its algorithmic trading strategies. DeFi Technologies will list the Products on OTC markets or regulated stock exchanges, manage sales, pricing, marketing, and liaise with regulatory authorities on maintaining the listings. The range of planned Products includes exchange traded notes, exchange traded products, actively managed certificates, securities, decentralized finance protocols, and tokens.

 

A Joint Steering Committee (“JSC”) will be formed, overseeing the JV’s implementation and management. The JSC will review and approve third-party services for product development, the issuance of the Products, and any other material matters related to the Products.

 

“Our partnership with Neuronomics propels us further in our mission to innovate and transform the financial landscape,” said Olivier Roussy Newton, Chief Executive Officer of DeFi Technolgies. “By integrating Neuronomics’ superior algorithmic trading strategies into our product development, we can truly push the boundaries of decentralized finance and traditional capital markets, thereby creating a new wave of cutting-edge financial products.”

 

 

 

 

Share Exchange Agreements

 

To further align the interests of DeFi and Neuronomics, DeFi has entered into share exchange agreements with Olivier Roussy Newton, Chief Executive Officer of the DeFi and Johan Wattenstrom, Director of Valour Inc., a subsidiary of DeFi (together, the “Share Exchange Agreements”), pursuant to which DeFi will acquire from each of Mr. Newton and Mr. Wattenstrom 362 shares of Neuronomics with nominal value of CHF 1.- for a total of 724 shares of Neuronomics (the “Purchased Shares”).

 

Under the terms set out in the Share Exchange Agreements, DeFi shall issue 402,806 common shares of DeFi from treasury (together, the “Payment Shares”) to each of Mr. Newton and Mr. Wattenstrom for the Purchased Shares. The Payment Shares shall be issued at a deemed value of $0.12 per Payment Share, representing the same cost-basis paid by Mr. Newton and Mr. Wattenstrom for the Purchased Shares.

 

The completion of the transactions under the Share Exchange Agreements to acquire the Purchased Shares (the “Acquisition”) is subject to customary closing conditions. No finder fees are payable in connection with, and no change of control of the Company will result from the Acquisition. The Acquisition is subject to regulatory approval, including the acceptance of Cboe Canada. The Payment Shares issued in connection with the Acquisition will be subject to a statutory hold period of four-months and one day.

 

The issuance of the Payment Shares to Mr. Wattenstrom and Mr. Newton constitutes a “related party transaction” as this term is defined in Multilateral Instrument 61-101: Protection of Minority Securityholders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as neither the fair market value of the Payment Shares nor the debt exceeds 25% of the Company’s market capitalization.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets and finance. Founded in 2019, Valour is backed by an acclaimed and pioneering team with decades of experience in financial markets and digital assets. DeFi Technologies aims to expand investor access to industry-leading Web3 and technologies. This allows investors to access the future of finance via regulated equity exchanges using their traditional bank account and access.

 

DeFi Technologies through its wholly owned subsidiary, Valour Inc., offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on DeFi Technologies and Valour, to subscribe, or to receive company updates and financial information, visit defi.tech or valour.com

 

2

 

 

About Neuronomics

 

Neuronomics is an algorithmic asset management company dedicated to shaping the future of investing with its groundbreaking approach powered by artificial intelligence (AI) and computational neuroscience. Leveraging cutting-edge research, Neuronomics’s proprietary algorithms uncover potential market trends and lucrative opportunities that might otherwise remain hidden. With a strong commitment to clients and technology, Neuronomics offers personalised investment products and solutions to assist investors in navigating the complexities of financial markets and achieving their long-term financial goals.

 

For more information on Neuronomics, to subscribe, or to receive company updates and financial information, visit neuronomics.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the JVA; the Acquisition and the Share Exchange Agreements; the Debt Settlement; the development of Products; the development of ETPs; the completion of the Acquisitions; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

CBOE CANADA DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@defi.tech

 

 

3

Exhibit 99.55

 

 

DeFi Technologies Provides AUM Update - Approximately C$259 Million, Closing of $3 Million Private Placement and Other Corporate Updates

 

TORONTO – November 1, 2023 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announces its assets under management (“AUM”) increased to approximately C$259M since June 30, 2023 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights:

 

●AUM grew 40% to approximately C$259 million as of October 30, 2023, up from C$183 million as of June 30, 2023.

 

●DeFi Technologies and Valour Announce Closing of $3 Million Private Placement of Convertible Notes

 

●DeFi Technologies Inc. and Neuronomics AG entered into a landmark Joint Venture Agreement to develop AI-based digital asset exchange traded products, actively managed certificates, and asset-backed tokens for global distribution.

 

●DeFi Technologies’ subsidiary, Valour Inc., introduced three EUR denominated products on NGM: Valour Ethereum Zero EUR, Valour Solana EUR and Valour Digital Asset Basket 10 (VDAB10) EUR

 

●DeFi Technologies’ subsidiary, Valour Inc., introduced its innovative Ethereum Physical Staking ETP under the EU-wide issuance platform, Valour Digital Securities Limited (VDSL) on XETRA.

 

●Valour Inc. entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (ETPs) backed 1:1 by digital assets, leveraging both Valour Inc.’s and Bitcoin Suisse AG’s unique capabilities and long standing expertise in the digital asset market.

 

●Valour Inc. launched the Valour Digital Asset Basket 10 (ETP) on Nordic Growth Market

 

“With a 40% surge in our AUM to C$259 million in just a few months, and the successful introduction of innovative EUR denominated products by our subsidiary, Valour Inc., DeFi Technologies continues to solidify its position at the nexus of traditional finance and the Web3 ecosystem. Our collaboration with Bitcoin Suisse AG and the recent acquisition of Neuronomics AG further exemplify our strategic vision and commitment to driving the decentralized finance frontier. As we navigate this dynamic landscape, our mission remains clear: to provide cutting-edge solutions that bridge the old with the new, ensuring our stakeholders are always a step ahead in the financial evolution.” - Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies.

 

 

 

 

DeFi Technologies and Valour Announces Closing of $3 Million Private Placement of Convertible Notes

 

DeFi Technologies is also pleased to announce that its wholly-owned subsidiary, Valour Inc. (“Valour”), has completed a non-brokered private placement financing of unsecured convertible notes (the “Notes”) for gross proceeds of C$3,000,000 (the “Offering”). The Notes issued in connection with the Offering accrue interest at a rate of 8% per annum will mature on October 31, 2025 (“Maturity Date”). This was driven by incoming non-brokered interest as well as insider participation.

 

Upon the occurrence of certain trigger events, the principal amount of Notes and all accrued interest may be convertible (a “Conversion”), at the option of the holder, into (a) common shares in the capital of the Company (“Conversion Shares”) at a price of C$0.10 (“Conversion Price”) per Conversion Share and (b) an equal number of common share purchase warrants of the Company (“Conversion Warrants”) entitling the holder to acquire one common share (a “Common Share”) at a price of C$0.20 for a period of five years from the date of issuance. Upon the Conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of Notes and accrued interest converted pursuant to the Conversion.

 

The Company reserved the Conversion Price through a price reservation form submitted on October 13, 2023 to the Cboe Canada Exchange (“Cboe Canada”). No finder’s fees were paid in connection with the Offering. Valour intends to use the proceeds of the Offering for general corporate purposes. The Conversion Shares and Conversion Warrants will be distributed in offshore jurisdictions pursuant to Ontario Securities Commission Rule 72-503 - Distributions Outside Canada and, as such, will not be subject to a statutory hold period in accordance with applicable Canadian securities laws.

 

Mr. Olivier Roussy Newton, the Chief Executive Officer of the Company, and Mr. Johan Wattenstrom, a director of Valour participated in the Offering. The issuance of such Conversion Shares and Conversion Warrants constitutes “related party transaction” within Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the value of the issuance of such Conversion Shares and Conversion Warrants does not exceed 25% of the Company’s market capitalization.

 

Closing of Acquisition of Neuronomics

 

Further to the press release of the Company dated October 24, 2023, the Company is pleased to announce that it has closed the acquisition of 724 shares of Neuronomics AG (the “Neuronomics Acquisition”). Pursuant to the closing of the Neuronomics Acquisition, the Company issued 402,806 Common Shares (the “Payment Shares”) to each of Mr. Newton and Mr. Wattenstrom at a deemed value of C$0.12 per Payment Share. The issuance of the Payment Shares to Mr. Wattenstrom and Mr. Newton constitutes a “related party transaction” as this term is defined in MI 61-101. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the fair market value of the Payment Shares does not exceed 25% of the Company’s market capitalization.

 

2

 

 

Resignation of William C. Steers

 

The Company also announces that William C. Steers has resigned as a member of the board of directors effective immediately to pursue other opportunities. Mr. Steers has been a director of the Company since March 2018, and management and the board of directors of the Company would like to thank Mr. Steers for his services and continued support of the Company.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019 and based in Zug, Switzerland, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

3

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering and issuance of Conversion Shares and Conversion Warrants thereunder; growth of AUM; cost optimization efforts; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

4

 

Exhibit 99.56

 

FORM 51-102F3

MATERIAL CHANGE REPORT

 

ITEM 1Name and Address of Company:

 

DeFi Technologies Inc. (“DeFi” or the “Company”)

198 Davenport Road

Toronto, Ontario

M5R 1J2

 

ITEM 2Date of Material Change:

 

November 1, 2023

 

ITEM 3News Release:

 

A news release was issued by the Company on November 1, 2023 and subsequently filed on SEDAR.

 

ITEM 4Summary of Material Change:

 

The Company and its wholly-owned subsidiary Valour Inc. (“Valour”) completed a non-brokered private placement financing of unsecured convertible notes for gross proceeds of C$3,000,000, closed the acquisition of 724 shares of Neuronomics AG and also Company announced that William C. Steers has resigned as a member of the board of directors.

 

ITEM 5Full Description of Material Change:

 

The Company announced that its wholly-owned subsidiary, Valour, has completed a non-brokered private placement financing of unsecured convertible notes (the “Notes”) for gross proceeds of C$3,000,000 (the “Offering”). The Notes issued in connection with the Offering accrue interest at a rate of 8% per annum will mature on October 31, 2025 (“Maturity Date”).

 

Upon the occurrence of certain trigger events, the principal amount of Notes and all accrued interest may be convertible (a “Conversion”), at the option of the holder, into (a) common shares in the capital of the Company (“Conversion Shares”) at a price of C$0.10 (“Conversion Price”) per Conversion Share and (b) an equal number of common share purchase warrants of the Company (“Conversion Warrants”) entitling the holder to acquire one common share (a “Common Share”) at a price of C$0.20 for a period of five years from the date of issuance. Upon the Conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of Notes and accrued interest converted pursuant to the Conversion.

 

The Company reserved the Conversion Price through a price reservation form submitted on October 13, 2023 to the Cboe Canada Exchange (“Cboe Canada”). No finder’s fee were paid in connection with the Offering. Valour intends to use the proceeds of the Offering for general corporate purposes. The Conversion Shares and Conversion Warrants will be distributed in offshore jurisdictions pursuant to Ontario Securities Commission Rule 72-503 - Distributions Outside Canada and, as such, will not be subject to a statutory hold period in accordance with applicable Canadian securities laws.

 

Mr. Olivier Roussy Newton, the Chief Executive Officer of the Company, and Mr. Johan Wattenstrom, a director of Valour participated in the Offering. Each issuance of such Conversion Shares and Conversion Warrants constitutes a “related party transaction” within Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the value of the issuance of such Conversion Shares and Conversion Warrants does not exceed 25% of the Company’s market capitalization.

 

 

 

 

Closing of Acquisition of Neuronomics

 

to the Company also announced that it has closed the acquisition of 724 shares of Neuronomics AG (the “Neuronomics Acquisition”). Pursuant to the closing of the Neuronomics Acquisition, the Company issued 402,806 Common Shares (the “Payment Shares”) to each of Mr. Newton and Mr. Wattenstrom at a deemed value of C$0.12 per Payment Share. Each issuance of Payment Shares to Mr. Wattenstrom and Mr. Newton constitutes a “related party transaction” as this term is defined in MI 61-101. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 as the fair market value of the Payment Shares does not exceed 25% of the Company’s market capitalization.

 

Resignation of William C. Steers

 

The Company also announces that William C. Steers has resigned as a member of the board of directors effective immediately to pursue other opportunities.

 

ITEM 6Reliance on subsection 7.1(2) or (3) of National Instrument 51-102:

 

Not applicable.

 

ITEM 7Omitted Information:

 

Not applicable.

 

ITEM 8Executive Officer:

 

Olivier Roussy Newton

Chief Executive Officer

olivier@valour.com

 

ITEM 9Date of Report:

 

November 2, 2023

 

 

 

 

 

Exhibit 99.57

 

 

DeFi Technologies Inc. Portfolio Company SEBA Bank AG Awarded Licence by the SFC to Conduct Regulated Activities in Traditional Securities and Crypto-Related Services in Hong Kong

 

●DeFi Technologies Inc. announces that its venture portfolio company, SEBA Bank AG, has been granted a licence by the Securities and Futures Commission (SFC) to conduct regulated financial activities in Hong Kong, marking SEBA’s first regulated presence in the APAC region.

●The new licence enables SEBA Hong Kong to offer a range of services including dealing in and distributing securities and virtual asset-related products, providing advice on securities and virtual assets, and managing assets for both traditional and virtual securities.

●This development is a strategic advancement for SEBA Bank, enhancing its global operations from regulated hubs in Switzerland, Abu Dhabi, and now Hong Kong, and aligns with DeFi Technologies’ mission to bridge traditional finance with decentralized finance.

 

TORONTO – November 8, 2023 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, is proud to announce that its venture portfolio company, SEBA Bank AG (SEBA Bank), a fully licensed Swiss crypto bank, has received a licence from the Securities and Futures Commission (SFC). SEBA Bank, which provides a comprehensive suite of financial solutions for the digital age—including staking, lending, custody, investment, trading, banking, and deposit services in Switzerland—has established through its wholly owned subsidiary, SEBA (Hong Kong) Limited (SEBA Hong Kong), its first regulated footprint in APAC in line with its strategic vision.

 

This licence permits SEBA Hong Kong to conduct regulated activities in Hong Kong to deal in and distribute all securities, including virtual assets-related products, such as OTC derivatives and structured products with underlying virtual assets; advise on securities and virtual assets; and conduct asset management for discretionary accounts in both traditional securities and virtual assets. Institutional and professional investors, including corporate treasuries, funds, family offices and high-net-worth individuals, can begin availing of SEBA Hong Kong’s licensed services from today.

 

The granting of this official licence marks a significant leap forward in the SEBA Group’s mission to secure the future of the global crypto economy. This, in turn, validates SEBA Hong Kong’s position in the market as a trusted and regulated partner in APAC, being on the ground providing investment and advisory services for investors with the security and customer experience that accompanies a regulated institution.

 

DeFi Technologies CEO Olivier Roussy Newton commented, “The granting of the SFC licence to SEBA, marks a significant milestone in the evolution of the global crypto economy. As investors in SEBA, we at DeFi Technologies are excited about the expansion of regulated financial services in the APAC region. This achievement aligns with our mission to bridge the gap between the innovative world of decentralized finance and the established realm of traditional capital markets. It underscores our commitment to supporting our portfolio companies in navigating the complex regulatory environment, thereby providing our stakeholders with exposure to compliant and forward-thinking financial solutions.”

 

The SEBA Group continues to monitor closely the wider regulatory landscape and will work in collaboration with regulators across the globe to identify further opportunities for growth. Most importantly, this SFC licence means that the SEBA Group operates globally from its regulated hubs of Switzerland, Abu Dhabi and Hong Kong.

 

 

 

 

About SEBA Bank AG

 

Founded in April 2018 and headquartered in Zug, SEBA Bank is a pioneer in the financial industry providing a seamless, secure and easy-to-use bridge between digital and traditional assets. As a smart bank SEBA Bank offers a fully universal suite of regulated banking services in the emerging digital economy. In August 2019, SEBA Bank received a Swiss banking and securities dealer licence – the first time a reputed, regulatory authority such as FINMA has granted a licence to a financial services provider with a core capability in digital assets. The broad, vertically integrated spectrum of services combined with the highest security standards, make SEBA Bank’s value proposition unique – this is why Banque de France selected SEBA Bank to test the integration of Central Bank Digital Currency (CBDC). CVVC Global Report and CB Insights names SEBA Bank as Top 50 Companies within the blockchain ecosystem. For more information visit https://www.seba.swiss/.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Debt Settlement; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@defi.tech

 

 

3

 

Exhibit 99.58

 

FORM 72 - 503F REPORT OF DISTRIBUTIONS OUTSIDE CANADA Full name, address and telephone number of the Issuer. 1. a ) Ful l nam e of issuer DeFi Technologie s Inc. b ) Hea d office address Ontario Province/State 19 8 Davenport Rd. Stree t address M5 R 1J2 Posta l code/Zi p code Toronto Municipality + 1 (416 ) 861 - 2269 Telephon e number Canada Country c) Full legal name(s) of co - issuer(s) (if applicable) Type of security, the aggregate number or amount distributed and the aggregate purchase price. Canadia n $ Tota l amount Highest price Singl e or lowest price Numbe r of securities Description of security CUSIP numbe r (if applicable) Convertibl e / exchangeabl e securit y code $3,000,000.0000 $0.1000 $0.1000 30,000,000.0000 244916102 CVN $805,612.0000 $0.1200 $0.1200 805,612.0000 CMS Type s of securit y distributed Provide the following information for all distributions of securities relying on an exemption from section 2 . 3 or 2 . 4 of the Rule on a per security basis . Refer to the Instructions for how to indicate the security code . If providing the CUSIP number, indicate the full 9 - digit CUSIP number assigned to the security being distributed . Details of rights and convertible/exchangeable securities If any rights (e.g. warrants, options) were distributed, provide the exercise price and expiry date for each right. If any convertible/exchangeable securities were distributed, provide the conversion ratio and describe any other terms for each convertible/exchangeable security. Describe other terms (if applicable) Conversio n ratio Expir y dat e (YYYY - MM - DD) Exercis e price (Canadia n $) Underlying security code Security code Highest Lowest 1:1 2028 - 11 - 06 $0.2000 $0.2000 CMS WNT Date of distribution(s). Distribution date 2. 3.

 

06 11 2023 06 11 2023 State the distribution start and end dates. If the report is being filed for securities distributed on only one distribution date, provide the distribution date as both the start and end dates. If the report is being filed for securities distribued on a continuous basis, include the start and end dates for the distribution period covered by the report. Start dat e En d date YYYY MM DD YYYY MM DD

 

State the name and address of any person acting as dealer or underwriter (including an underwriter that is acting as agent) in connection with the distribution(s) of the securities. Dealer or underwrite r information (i f applicable) 4. Ful l lega l name Stree t address Municipality Country Telephon e number Province/State Posta l code/Zip code Website

 

Certification Kenny CHOI 13 11 2023 Certification Provide the following certification and business contact information of an officer, director or agent of the issuer. If the issuer is not a company, an individual who performs functions similar to that of a director or officer may certify the report. For example, if the issuer is a trust, the report may be certified by the issuer's trustee. If the issuer is an investment fund, a director or officer of the investment fund manager (or, if the investment fund manager is not a company, an individual who performs similar functions) may certify the report if the director or officer has been authorized to do so by the investment fund. The certification may be delegated, but only to an agent that has been authorized by an officer or director of the issuer to prepare and certify the report on behalf of the issuer. If the report is being certified by an agent on behalf of the issuer, provide the applicable information for the agent in the boxes below. The signature on the report must be in typed form rather than handwritten form. The report may include an electronic signature provided the name of the signatory is also in typed form. Securities legislation requires an issuer that makes a distribution of securities under certain prospectus exemptions to file a completed report of exempt distribution. By completing the information below, I certify, on behalf of the issuer/investment fund manager, to the securities regulatory authority or regulator, as applicable, that I have reviewed this report and to my knowledge, having exercised reasonable diligence, the information provided in this report is true and, to the extent required, complete. Nam e of Issuer / investment fun d manager/agen t DEFI TECHNOLOGIE S INC. Ful l lega l name Famil y nam e Firs t give n nam e Secondar y give n names Titl e CORPORAT E SECRETARY Telephone number +1 (416) 861 - 2267 Email address KCHOI@FMRESOURCES.CA Signature Kenny Choi Date YYYY MM DD 5.

 

Exhibit 99.59

 

DeFi Technologies Announces That its Subsidiary Valour Inc. Achieves Major Market Share Increase and AUM Growth, with Solana Surpassing Bitcoin

 

●Significant Market and AUM Growth: DeFi Technologies Inc.’s subsidiary, Valour Inc., increased its market share on Swedish exchanges to nearly 28% up 10% from the previous month. Its AUM rose to C$320 million in early November, up from C$259 million, marking a 23% increase since October 30th.

 

●Solana Surpasses Bitcoin: In a notable shift within the digital asset space, Valour saw its Solana holdings overtaking Bitcoin as the leading asset, commanding close to C$115 million of the AUM.

 

●Commitment to Innovation and Strategic Growth: DeFi Technologies, through its subsidiary Valour, demonstrates a strong commitment to innovation and strategic foresight in the digital asset industry. Their focus on bridging traditional finance with decentralised finance positioning Defi Technologies as a key player in offering accessible and diversified investment opportunities in the evolving ecosystem of digital assets.

 

TORONTO, November 13, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has recorded significant achievements in market share and asset under management (“AUM”) growth. In an additional development, Valour saw its Solana holdings overtaking Bitcoin as the leading asset.

 

In October, Valour demonstrated remarkable performance on Swedish exchanges, with its digital asset market share nearing 28%, marking a substantial 10% increase from the previous month.

 

Since the start of October, Valour has experienced a period of notable trade volume, including a substantial inflow of C$24.5 million, with C$7.5 million of this total arriving in the first five trading days of November. Additionally, since the start of November, Valour’s AUM continued its surge, reaching C$320 million — up from C$259 million a 23% increase since October 30th with Solana emerging as the top asset, commanding close to C$115 million of the AUM. This indicates not only an exceptionally strong trend for the quarter but also robust demand for Valour’s products in the Nordics.

 

 

 

 

Johanna Belitz, the Head of Sales for the Nordics, commented on this success, stating, “As October came to a close, our market share grew almost 10% month over month. This achievement is a result of our effective marketing strategies and Valour’s unique standing as the sole issuer offering a wide range of altcoins listed in the Nordics.” She further noted the traction gained by Valour’s new EUR-denominated products, which appeals to investors from Finland, Norway, Denmark, and Swedish investors looking for alternatives to the weak SEK.

 

Marco Infuso, Chief Sales Officer of Valour, added “In addition to our growing market share and continuous inflow in our products, we witnessed our Solana holdings surpassing Bitcoin in terms of AUM, driven by substantial investments from major players as well as a notable surge in its price.”

 

As DeFi Technologies and its subsidiary Valour look towards the future, their continued growth and strategic market positioning highlight the increasing relevance and potential of decentralised finance. The Company remains dedicated to providing innovative solutions in the digital asset space, fostering a more inclusive and efficient financial ecosystem.

 

*Market share data from NGM and Nasdaq Nordic includes issuers offering crypto derivatives only

 

DeFi Technologies Announces $1 million Private Placement

 

The Company is pleased to also announce a non-brokered private placement financing of up to 6,250,000 units (a “Unit”) at a price of $0.16 per Unit (the “Unit Price”) for gross proceeds of up to $1,000,000 (the “Offering”). Each Unit will consist of one common share of the Company (a “Unit Share”) and one common share purchase warrant (a “Warrant”), entitling the holder to acquire one additional common share of the Company (a “Warrant Share”) at an exercise price of $0.23 for a period of 24 months from issuance.

 

The Company reserved the Unit Price through a price reservation form submitted on November 10, 2023 to the Cboe Canada Exchange (“Cboe Canada”). The Company intends to use the proceeds of the Offering for general corporate purposes, including to satisfy liabilities of the Company. The Company intends that Units distributed in offshore jurisdictions pursuant to Ontario Securities Commission Rule 72-503 - Distributions Outside Canada will not be subject to a statutory hold period in accordance with applicable Canadian securities laws and any Units distributed otherwise under applicable exemptions will be subject to a statutory hold period of four-months and one day. All securities issued under the Offering are subject to the approval of the Cboe Canada Exchange.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

2

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

3

 

Exhibit 99.60

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended September 30, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: November 14, 2023 
  
(signed) “Ryan Ptolemy” 
Ryan Ptolemy 
Chief Financial Officer 

Exhibit 99.61

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Olivier Roussy Newton, the Chief Executive Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended September 30, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Dated: November 14, 2023 
  
(signed) “Olivier Roussy Newton” 
Olivier Roussy Newton 
Chief Executive Officer 

Exhibit 99.62

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

Nine months ended September 30, 2023

 

 

 
 
 

 

 

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (formerly Valour Inc.) (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through November 14, 2023, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the three and nine months ended September 30, 2023 and 2022. The financial statements and related notes of DeFi have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Please refer to the notes of the December 31, 2022 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

2

 

 

Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through three distinct business lines: Valour Asset Management, DeFi Ventures and DeFi Infrastructure.

 

The Company’s condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated interim financial statements.

 

Investment Pillars

 

 

DeFi generates revenue through three core pillars:

 

Valour Asset Management

 

The Company, through its 100% ownership of Valour Inc., is developing Exchange Traded Notes (“ETNs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETNs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

DeFi Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

DeFi Infrastructure

 

The Company’s DeFi Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

3

 

 

Highlights For The Nine Months Ended September 30, 2023 And Subsequent Events:

 

 

■On January 10, 2023, the Company announced approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments.

 

■On January 12, 2023, the Company announced the approval in principle by the Jersey regulator JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded (ETP) securities. Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holder

 

■On February 3, 2023, the Company announced that it has changed its auditors from RSM Canada LLP (“Former auditor”) to BF Borgers CPA PC (“successor Auditor”) effective as of February 3, 2023. There were no reservations in the Former Auditor’s audit reports for any financial period during which the Former Auditor was the Company’s auditor. There are no “reportable events” (as the term is defined in National Instrument 51-102 – Continuous Disclosure Obligations) between the Company and the Former Auditor.

 

■On March 21, 2023, the Company’s launched its crypto product range to French investors.

 

■On April 5, 2023, Valour Digital Securities Ltd. (“VDSL”), a Jersey-based securities issuer, obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain.

 

■On April 12, 2023, the Company announced the launch of a new EU-wide (European Union) issuance platform for physically stored digital assets in the form of exchange-traded product (ETP) securities. The new ETP products will be listed on regulated stock exchanges such as Deutsche Borse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland. The new ETP program adds to Valour's already-existing digital asset securities program, particularly focusing on the Nordic markets and covering a broad range of over 120 cryptocurrencies and digital assets in form of single underlyings, baskets or indices. VDSL aims to issue up to 15 new products under the name 1Valour by the end of 2023. The ETPs will be secured by the respective digital assets that are physically stored with regulated custody providers. The initial custodians appointed are Komainu (Jersey) Ltd., regulated by the Jersey Financial Services Commission, and Copper Technologies (Switzerland) AG, registered with the Financial Services Standard Association (VQF), a self-regulatory organization (SRO) officially recognized by the Federal Financial Market Supervisory Authority (FINMA).

 

■On May 30, 2023, the Company announced an extension of existing partnership with Autostock, a Swedish trading platform to launch a new automated trading strategy. Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. The new strategy, known as Coinbot Zero STEP, will scale in and out in the positions, aiming to give the investor a better average acquisition value.

 

■On June 21, 2023, the Company announced that it had entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately $674,838 of accrued fees owing to such officer and consultants of the Company by issuing common shares of the company at a price of $0.085 per share fir a total of $7,939,268 Debt Shares.

 

4

 

 

■On July 7, 2023, the Company announced its name change to DeFi Technologies Inc.

 

■On July 12, 2023, Valour Inc., Defi Technologies Inc.'s wholly owned subsidiary and a pioneer in digital asset exchange traded products (ETPs), launched its digital asset basket ETP - Valour Digital Asset Basket 10 (VDAB10) SEK. The Valour Digital Asset Basket 10 (VDAB10) ETP provides retail and institutional investors with trusted, secure, and diversified exposure to 10 of the largest cryptocurrencies by market capitalization.

 

■On July 18, 2023, Defi Technologies Inc.'s Valour Inc. entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (ETPs) backed 1:1 by digital assets, leveraging both Valour Inc.'s and Bitcoin Suisse AG's unique capabilities and long standing expertise in the digital asset market. The primary focus of this joint initiative is to launch, list, operate, and distribute ETPs in the international and Swiss market where Bitcoin Suisse has already established a market-wide brand recognition in the crypto assets sector.

 

■On August 22, 2023, Defi Technologies Inc.'s subsidiary Valour Inc. launched its 1Valour Ethereum Physical Staking ETP (exchange-traded product), set to redefine and simplify the ethereum investment landscape. This innovative product aims to harness the essence of ethereum while offering investors access to additional yield income opportunities. The 1Valour Ethereum Physical Staking ETP (ISIN GB00BRBMZ19) is issued by Valour's new European Union-wide issuance platform for physically stored digital assets, Valour Digital Securities Ltd. (VDSL).

 

■On August 29, 2023, Defi Technologies Inc.'s subsidiary, Valour Inc., launched three euro-denominated products on NGM - Valour Ethereum Zero EUR (ISIN: CH1149139623), Valour Solana EUR (ISIN: CH1114178838) and Valour Digital Asset Basket 10 (VDAB10) EUR (ISIN: CH1149139623).

 

■On October 24, 2023, Defi Technologies Inc. and Neuronomics AG signed a joint venture agreement to collaborate on the development of AI-based (artificial intelligence) exchange-traded products, actively managed certificates and asset-backed tokens for global distribution. The products will be powered by advanced AI algorithmic trading strategies, promising a level of sophistication and efficiency previously unseen. The joint venture will see Neuronomics primarily overseeing the Products' management, strategy, and optimization of the investment thesis utilizing its algorithmic trading strategies. DeFi Technologies will list the Products on OTC markets or regulated stock exchanges, manage sales, pricing, marketing, and liaise with regulatory authorities on maintaining the listings.

 

■On October 31, 2023, the Company’s subsidiary, Valour Inc., completed a non-brokered private placement financing of unsecured convertible notes for gross proceeds of $3 million. The notes issued in connection with the offering accrue interest at a rate of 8 per cent per annum will mature on October 31, 2025. Upon the occurrence of certain trigger events, the principal amount of notes and all accrued interest may be convertible, at the option of the holder, into (a) common shares in the capital of the Company at a price of $0.10 per conversion share and (b) an equal number of common share purchase warrants of the company entitling the holder to acquire one common share at a price of $0.20 for a period of five years from the date of issuance. Upon the conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of notes and accrued interest converted pursuant to the conversion.

 

5

 

 

■On November 11, 2023, Defi Technologies Inc.'s venture portfolio company, SEBA Bank AG, a fully licensed Swiss crypto bank, received a licence from the Securities and Futures Commission (SFC). This licence permits SEBA Hong Kong to conduct regulated activities in Hong Kong, to deal in and distribute all securities, including: virtual asset-related products, such as OTC (over-the-counter) derivatives and structured products with underlying virtual assets; advise on securities and virtual assets; and conduct asset management for discretionary accounts in both traditional securities and virtual assets. Institutional and professional investors, including corporate treasuries, funds, family offices and high-net-worth individuals, can begin availing of SEBA Hong Kong's licensed services from today.

 

Digital Assets

 

As at September 30, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $178,710,009 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

6

 

 

The Company’s holdings of digital assets consist of the following:

 

   September 30, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   116.5056    33,968    11.1000    3,678 
Bitcoin   2,211.3903    80,213,106    2,126.5130    47,498,630 
Ethereum   20,985.2141    47,372,042    21,141.7368    34,333,700 
Cardano   45,948,424.5599    15,847,391    36,438,339.0800    12,004,332 
Polkadot   1,238,753.6730    6,848,572    931,646.4544    5,407,239 
Solana   926,536.11    25,453,015    428,280.68    5,537,534 
Shyft   3,916,637.4174    31,798    3,507,575.4684    37,530 
Uniswap   170,852.0602    1,031,102    148,734.0602    1,021,542 
USDC        (1,022)        1,586 
USDT        14,109         14,134 
Litcoin   59.3553    5,264    -    - 
Doge   105,238.3262    8,807    10,000.0000    914 
Cosmos   200.9992    1,941    201.0000    2,531 
Avalanche   136,050.4109    1,692,746    48,995.3900    712,745 
Matic   7,798.4048    5,528    890.0000    906 
Shiba Inu             90,000,000.0000    975 
Ripple   37,901.7472    27,164    2,000.0000    919 
Enjin   243,660.1546    73,891    10,009.9900    3,180 
Tron   55,316.6520    6,664    -    - 
Terra Luna   199,970.4286    3    199,195.3600    - 
Current        178,666,089         106,582,076 
Blocto   264,559.703    4,975    251,424.913    6,737 
Boba Network   250,000.00    -    250,000.00    - 
Clover   370,000.00    10,058    310,000.00    13,216 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    -    2,500,000.00    - 
Saffron.finance   86.21    1,871    86.21    2,345 
Sovryn   15,458.95    2,912    15,458.95    2,342 
Wilder World   148,810.00    24,046    148,810.00    28,660 
Volmex   2,925,878.0000    58    2,925,878.0000    58 
Long-Term        43,920         53,358 
Total Digital Assets        178,710,009         106,635,434 

  

The continuity of digital assets for the nine months ended September 30, 2023 and year ended December 31, 2022:

 

   September 30,
2023		   December 31,
2022		 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   88,193,590    231,392,840 
Digital assets disposed   (64,269,115)   (191,092,048)
Realized (loss) on digital assets   (11,920,713)   (47,595,430)
Digital assets earned from staking, lending and fees   2,091,440    5,955,456 
Net change in unrealized gains and losses on digital assets   57,586,921    (275,739,651)
Foregin exchange (loss) gain   392,452    13,660,527 
   $178,710,009   $106,635,434 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

7

 

 

Digital Assets loaned

 

As of September 30, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.5% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of September 30, 2023, digital assets on loan consisted of the following:

 

   Number of
coins
on loan		   Fair Value   Fair Value
Share		 
Digital on loan:            
Bitcoin  508.1963   $18,433,655    30%
Ethereum   5,000.0000    11,287,005    19%
Cardano   4,000,000.0000    1,379,581    2%
Polkdot   1,073,835.0000    5,936,803    10%
Solana   847,441.0000    23,280,181    38%
Avalanche   45,009.0000    560,004    1%
Total   5,971,793.1963   $60,877,229    100%

 

As of September 30, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of
coins
on loan		   Fair Value 
Digital on loan:           
Counterparty A  3.21%   508.1963   $18,433,655 
Counterparty B  0.5% to 9.7%  $5,971,285.0000    42,443,574 
Total      5,971,793.1963   $60,877,229 

 

As of September 30, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  September 30,
2023		 
Digital on loan:       
Counterparty A  United States   30%
Counterparty B  Cayman Islands   70%
Total      100%

  

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of September 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of September 30, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

8

 

 

As of September 30, 2023, digital assets staked consisted of the following:

 

   Number of coins
staked		   Fair Value   Fair Value
Share		 
Digital on staked:            
Cardano   38,201,004.7950    13,175,343    100%
Total   38,201,004.7950   $13,175,343    100%

 

As of September 30, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins
on loan		   Fair Value 
Digital on loan:            
Counterparty C   3.15%   38,201,004.7950   $13,175,343 
Total        38,201,004.7950   $13,175,343 

 

As of September 30, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  September 30,
2023		 
Digital on staked:       
Counterparty C  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of September 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Third Party Custodians

 

 

As of September 30, 2023, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian   Location
Bitcoin Suisse AG   Switzerland
Anchorage Digital   United States
B2C2 Overseas LTD   Cayman Islands

 

Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

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Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of September 30, 2023, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian  Location  % of digital
assets
custodied by
market
value (1)		   Regulatory Body
Bitcoin Suisse AG  Switzerland   7.66%  Financial Services Standards Association (VQF). Zug. Switzerland
Anchorage Digital  United States   10.49%  Office of Comptroller of Currency
B2C2 Overseas LTD  Cayman Islands   24.73%  Cayman Islands Monetary Authority (CIMA)

 

Note 1: As at September 30, 2023; Residual digital assets served as collateral for loans with B2C2-Group (approx. 43.4%; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (9.81%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.

 

●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.

 

●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.

 

●The counterparties are reviewed in regular intervals and re-evaluated.

 

●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.

 

●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

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4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

11

 

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

At September 30, 2023, the Company’s had self-custody of digital assets totaling $134,232 (December 31, 2022 - $2,326,139).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

Staking and Lending Policy

 

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower's ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

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(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At September 30, 2023

 

 

At September 30, 2023, the Company’s investment portfolio consisted of no publicly traded investments and eight private investments for a total estimated fair value of $41,307,894 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

Public investments

 

At September 30, 2023, the Company’s had no publicly-traded investments.

 

At December 31, 2022, the Company’s one publicly-traded investments had a total estimated fair value of $17,227.

 

Public Issuer  Note Security description  Cost   Value   %
of FV		 
Smart Valor AG  19,000 SDR   150,908    17,227    100.0%
Total public investments     $150,908   $17,227    100.0%

 

Private Investments

 

At September 30, 2023, the Company’s eight private investments had a total fair value of $41,307,894.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   %
of FV		 
3iQ Corp.     187,007 common shares  $261,605   $1,251,077    3.0%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,185,914    5.3%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    676,067    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,965,000    89.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,275    0.5%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,560    0.1%
Total private investments        $41,155,771   $41,307,894    100.1%

 

(i)Investments in related party entities

 

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At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG     3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

(i)Investments in related party entities

 

3iQ Corp (“3iQ”)

 

On September 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of DeFi. 3iQ is a leading bitcoin and digital asset fund manager. As at September 30, 2023, 3iQ was valued at $1,251,077 which was based on 3iQ’s recent financing price resulting in an unrealized gain (loss) of approximately $2.4 million for the period. The investment represented 1.3% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to DeFi of $125,108.

 

Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at September 30, 2023, BPC was valued at $2,185,914 which was based on BPC August 2022 financing prices resulting in an unrealized gain (loss) of $(3,880) for the period. The investment represented 0.8% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to DeFi of $218,591.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at September 30, 2023, Earnity was valued at $nil which was based on Earnity’s ceasing operations resulting in an unrealized gain (loss) of $(14,991) in the period. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to DeFi of $0.

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at September 30, 2023, LTC was valued at $676,067 which was based on LTC December 2021 financing prices resulting in an unrealized gain (loss) of $(1,200) for the period. The investment represented 0.2% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to DeFi of $67,607.

 

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SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at September 30, 2023, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to DeFi of $0.

 

SEBA Bank AG (“SEBA”)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. SEBA is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at September 30, 2023, SEBA was valued at $36,965,000 which was based on SEBA 2022 secondary trades resulting in an unrealized gain (loss) of $312,500 for the period. The investment represented 13.5% of the total assets of the Company. A 10% decline in the fair market value of SEBA would result in an estimated increase in loss to DeFi of $3,695,500.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at September 30, 2023, STL was valued at $189,275 which was based on STL October 2021 financing resulting in an unrealized gain (loss) of $(336) for the period. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to DeFi of $18,928.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at September 30, 2023, VLC was valued at $40,560 which was based on VLC 2021 financing pricing resulting in an unrealized gain (loss) of $(72) for the year. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to DeFi of $4,056

 

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Financial Results

 

The following is a discussion of the results of operations of the Company for the three and nine months ended September 30, 2023, and 2022. They should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three and nine months ended September 30, 2023 and 2022 and related notes.

 

Three and nine months ended September 30, 2023 and 2022:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
Revenues                
Realized and net change in unrealized gains and losses on digital assets  $(13,186,005)  $5,905,183   $45,666,208   $(280,297,199)
Realized and net change in unrealized gains and losses on ETP payables   16,105,048    (6,966,869)   (40,424,382)   275,281,221 
Realized and unrealized loss on derivative asset   -    178,343    -    (419,791)
Staking and lending income   746,871    628,720    2,083,346    4,062,966 
Management fees   243,845    268,901    703,538    1,232,302 
Node revenue   3,280    20,288    8,256    333,847 
Realized (loss) on investments, net   (658)   -    (4,683)   (12,077)
Unrealized (loss) gain on investments, net   (2,493,106)   234,322    (2,178,244)   (3,338,494)
Interest income   552    26,717    809    54,293 
Total revenues   1,419,826    295,605    5,854,848    (3,102,932)
Expenses                    
Management and consulting fees   1,576,590    1,924,238    3,861,814    5,418,247 
Share based payments   387,329    (911)   1,830,209    15,697,391 
Travel and promotion   218,322    530,640    457,938    2,036,323 
Office and rent   247,180    65,447    1,099,834    747,728 
Accounting and legal   1,177,471    2,403,802    1,548,065    3,495,910 
Regulatory and transfer agent   27,193    (81,191)   151,041    34,812 
Depreciation - property, plant and equipment   3,236    3,237    9,709    9,713 
Depreciation - right of use assets   -    15,854    -    21,324 
Amortization- intangibles   509,575    589,290    1,528,725    1,767,868 
Finance costs   1,082,576    1,060,483    2,644,105    3,088,692 
Transaction costs   164,900    145,917    484,619    925,669 
Foreign exchange (gain) loss   3,526,454    (548,382)   8,280,483    (289,108)
Total expenses   8,920,825    6,108,424    21,896,541    32,954,569 
Income (loss) before other item   (7,500,999)   (5,812,819)   (16,041,693)   (36,057,501)
Loss on settlement of debt   26,389    -    (172,093)   - 
Net (loss) for the period   (7,474,610)   (5,812,819)   (16,213,786)   (36,057,501)
Other comprehensive loss                    
Foreign currency translation loss   (1,829,345)   (3,198,556)   (102,841)   (4,376,014)
Net (loss) and comprehensive (loss) for the period  $(9,303,955)  $(9,011,375)  $(16,316,627)  $(40,433,515)

 

For the three and nine months ended September 30, 2023, the Company recorded a net (loss) (loss) of $(7,474,610) and $(16,213,786) ($(0.03) and $(0.07) per basic share) on total revenues of $1,419,826 and $5,854,848 compared to net (loss) of $(9,011,375) and $(40,433,515) ($(0.03) and $(0.17) per basic share) on total revenues of $295,605 and $(3,102,932) for the three and nine months ended September 30, 2022.

 

For the three and nine months ended September 30, 2023, realized and net change in unrealized gains and loss on digital assets was $(13,186,005) and $45,666,208 and realized and net change in unrealized gains and loss on ETP payables was $16,105,048 and $(40,424,382). Higher digital asset prices in 2023 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

The Company earned staking and lending income of $746,871and $2,083,346 for the three and nine months ended September 30, 2023 compared to $628,720 and $4,026,966 for the same periods in 2022. The Company actively stakes and lends its cryptocurrencies to earn additional revenue. The staking and lending income was lower in 2023 as the Company staked and lent less cryptocurrency in 2023 compared to 2022.

 

The Company had management fee revenue of $243,845 and $703,538 for the three and nine months ended September 30, 2023 compared to $268,901 and $1,232,302 for the same periods in 2022. In 2023, the Company’s had lower AUM in ETPs that charge management fees than in prior periods.

 

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The Company had node revenue of $3,280 and $8,256 for the three and nine months ended September 30, 2023 compared to $20,288 and $333,847 for the same period in 2022. During the nine months ended September 30, 2023, the Company earned 1,312,080 (September 30, 2022 – 1,716,130) Shyft tokens for its services. The decreased revenue in 2023 is due to lower token price of the Shyft token and lower rewards.

 

The Company had realized gain (loss) of $(658) and $(4,683) on investments for the three and nine months ended September 30, 2023 compared to $nil and $(12,077) for the same periods in 2022. The Company had unrealized (loss) gain of $(2,493,106) and $(2,178,244) on investments compared to $234,322 and $(3,338,494) in the prior period. The unrealized gain for the three and nine months ended September 30, 2023 primarily consisted of SEBA due to CHF/CAD exchange rate change and unrealized loss of 3iQ in the current period.

 

Management and consulting fees were $1,576,590 and $3,861,814 during the three and nine months ended September 30, 2023 compared to $1,924,238 and $5,418,247 during the same periods in 2022. Management and consulting fees are lower in 2023 as the Company reduced the number of consultants in addition to no bonuses paid compared to Q1 2022.

 

Share based payments were $387,329 and $1,830,209 during the three and nine months ended September 30, 2023 compared to $(911) and $15,697,391 in the same periods in 2022. The Company granted 2,000,000 DSUs and 1,000,000 options during 2023 compared to the 3,800,000 options and 4,000,000 of deferred share units to directors, officers and consultants of the Company during 2022. The higher share-based payments in 2022 also reflected a higher black-scholes model price due to a higher share price at the time.

 

Travel and promotion was $218,322 and $457,938 during the three and nine months ended September 30, 2023 compared to $530,640 and $2,036,323 during the same period in 2022. Corporate activities and business development was lower 2023 as the Company focuses on expanding its ETP business line.

 

Office and rent was $247,180 and $1,099,834 during the three and nine months ended September 30, 2023 compared to $65,477 and $747,728 during the same periods in 2022.

 

Accounting and legal was $1,177,471 and $1,548,065 during the three and nine months ended September 30, 2023 and $2,403,802 and $3,495,910 during the same periods in 2022 due to lower accounting fees and legal provisions in 2023.

 

Total depreciation and amortization was $512,811 and $1,538,434 for the three and nine months ended September 30, 2023 from $608,381 and $1,798,905 during the prior period in 2022. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of DeFi Capital and Valour.

 

Finance costs were $1,082,576 and $2,644,105 for the three and nine months ended September 30, 2023 compared to $1,060,483 and $3,088,692 during the prior periods in 2022. The decrease in financing costs relates to the interest expense on the digital asset provider loans and other loans of the Company. The interest rates on the loans were slightly lower in 2023 compared to 2022 period.

 

Transaction costs were $164,900 and $484,619 for the three and nine months ended September 30, 2023 compared to $145,917 and $925,669 in the prior period. The decrease in transaction costs relates to the trading of digital assets as brokerage commission and ETP issuance costs.

 

Foreign exchange loss was $3,526,454 and $8,280,483 for the three and nine months ended September 30, 2023 compared to $(548,382) and $(289,108) in the prior period. The loss reflects the currency fluctuations primarily in Company’s digital asset and ETPs which are denominated in US dollars, Swedish Krona, Euro and Swiss Franc.

 

17

 

 

During the nine months ended September 30, 2023, the Company used $40,039,333 in operations of which $2,741,82 was provided by changes in working capital, $nil used to purchase the investments, $88,193,590 was used to purchase digital assets offset by $12,407 provided from sales of investment and $64,269,115 was provided from the disposal of digital assets. During the comparative nine months ended September 30, 2022, the Company used $93,218,279 in operations of which $1,137,565 was provided by the changes in working capital, $34,649,658 used to purchase the Company’s SEBA investment, $28,248 provided from sale of investments, $228,021,507 was used to purchase digital assets offset by $189,843,465 was provided from the disposal of digital assets. The cash used from operations was lower in 2023 compared to 2022 due to lower net loss in 2023 as the Company decreased general and administrative costs as well as net purchase of digital assets in 2023 was $(23,924,475) compared in 2022 the net purchase of digital assets was $(38,178,042) reflecting a less volatile cryptocurrency market.

 

During the nine months ended September 30, 2023, $37,450,213 was provided by financing activities compared to $88,203,112 in the prior period. The Company received proceeds of $150,736,395 from ETP holders and $4,260,870 was provided from proceeds from loans offset by $117,547,052 used for payments to ETP holders. During the nine months ended September 30, 2022, the Company received proceeds of $242,378,583 from ETP holders, proceeds of $54,803,331 from loans, $45,000 from exercise of stock options and $647,284 from the exercise of warrants offset by $196,516,517 used for payments to ETP holders and $13,154,570 used in NCIB purchases. The cash provide from financing was lower in 2023 compared to 2022 due to lower loan proceeds received and lower ETP sales in 2022.

 

Liquidity and Capital Resources

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any negative impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on similar terms throughout the year. The Company has successfully raised approximately $1.5M from new investors in 2022 via private placements financings and in 2023 successfully raised $4.3M from new loans.

 

The Company loaned and staked less cryptocurrency in 2023 compared to 2022 and as a result the Company has been earning less revenue via staking and lending. Lower AUM in the Company’s fee earning ETPs in 2023 compared to the same period 2022 resulted in lower management fees. Overall, the Company’s total revenues improved in 2023 as a result of improving cryptocurrency markets.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

18

 

 

DeFi relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of September 30, 2023, the loan principal of $52,728,000 (US$39,000,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms are open term and have interest rates ranging from 6.95% and 7.95% The extended loans are secured with 767.7983 BTC and 12,853.0083 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at September 30, 2023, the value of the 475 BTC was US$12,743,739 and potential loan loss exposure is US$6,743,739.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. On July 11, 2023, the Company issued 2,595,521 to settle the principal and accrued interest of $270,129 A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of September 30, 2023, the loan principal of $4,056,001 (US$3,000,001) was outstanding.

 

DeFi used cash of $40,039,333 in its operating activities during the nine months ended September 30, 2023. Included in cash used in operations are $88,193,590 used in the purchase of digital assets, $2,741,852 provided from the changes of working capital, $12,407 generated from proceeds on sale of investment and $64,269,115 generated from the disposal of digital assets. DeFi also provided $37,450,213 in financing activities. Included in cash provided in financing activities are $150,736,395 from proceeds from ETP holders, $4,260,870 was provided from proceeds from loans offset by $117,547,052 used for payments to ETP holders.

 

As at September 30, 2023, the Company’s sources of funds include the estimated fair value of its cash of $2,144,478, equity investments of $41,307,894 and digital assets of $178,710,009 offset by total liabilities of $242,566,070.

 

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Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

As at September 30, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   September 30, 2023 
   United States
Dollars		   British
Pound		   Swiss Franc   European Euro 
Cash  $2,112,509   $-   $-   $- 
Receivables   7,691    -    -    - 
Private investments   3,091,817    -    36,965,000    - 
Prepaid investment   403,913    -    -    - 
Digital assets   178,710,009    -    -    - 
Accounts payable and accrued liabilities   (3,394,875)   (73,020)   (71,660)   (21,456)
Loan payable   (56,718,091)               
ETP holders payable   (179,148,481)   -    -    - 
Net assets (liabilities)  $(54,935,509)  $(73,020)  $36,893,340   $(21,456)

  

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss Franc   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

  

As at September 30, 2023, United States Dollar was converted at a rate of $1.3520 (December 31, 2022 - $1.3544) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.6510 (December 31, 2022 - $1.6322) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4304 (December 31, 2022 - $1.4456) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.4786 (December 31, 2022 - $1.4661).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

■to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

■to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

■taking a conservative approach towards financial leverage and management of financial risks.

 

20

 

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

■raising capital through equity financings; and

 

■realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the nine months ended September 30, 2023.

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,097,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $908,000, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

In November 2021, the Company received a notice of application from two individuals (the “Plaintiffs”) seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Superior Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Superior Court ruled against any punitive damages. In September 2023, the Court of Appeal for Ontario dismissed the Company’s appeal of the Superior Court ruling and upheld the Superior Court’s ruling. The Company has fully accrued the judgment amount owing to the Plaintiffs.

 

21

 

 

Summary of Quarterly Results

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec 
   2023   2023   2023   2022   2022   2022   2022   2021 
Revenue  $1,419,826   $8,023,780   $3,558,758)  $4,799,325   $295,605   $5,219,545)  $1,821,008   $5,113,702 
Net (loss) income and comprehensive
(loss) income		  $(9,303,955)  $(1,676,499   $(8,689,171)  $(12,778,631)  $(9,011,375)  $(18,870,125)  $(12,552,015)  $(50,243,623)
(Loss) income per Share - basic   (0.03)   -    (0.04)   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)
(Loss) income per Share - diluted   (0.03)   -    (0.04)   (0.06)   (0.04)   (0.09)   (0.06)   (0.26)
Total Assets  $273,361,189   $284,147,731   $291,345,370   $209,926,951   $263,678,822   $241,666,497   $468,623,726   $459,690,575 
Total Long Term Liabilities  $0   $0   $0   $1,681,358   $1,681,358   $Nil   $Nil   $5,646 

  

Selected Annual Information

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-22   31-Dec-21   31-Dec-20 
(a) Net Revenue   1,696,393   $15,081,078   $46,776)
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (53,212,146)  $71,495,219)  $2,073,533 
(ii) Income (loss) per share – basic   (0.25)  $0.37)  $0.04 
(iii) Income (loss) per share – diluted   (0.25)  $0.37)  $0.04 
(c) Total Assets   209,926,951   $459,690,575   $7,296,044 
(d) Total Liabilities   166,094,517   $367,909,179   $992,248 

 

Off Balance Sheet Arrangements

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

 

During the nine months ended September 30, 2023, the Company paid or accrued $694,232 (nine months ended September 30, 2022 - $1,456,867) to directors and officers of the Company and $264,829 (nine months ended September 30, 2022 - $4,055,390) to directors and officers of the Company in share-based compensation.

 

As September 30,2023, the Company had $405,600 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

22

 

 

Related Party Transactions

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of September 30, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,185,914 
SEBA Bank AG*  Former Director (Olivier Roussy Newton) of investee   36,965,000 
Total investment - September 30, 2023     $39,150,914 

 

*Private companies

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at September 30, 2023.

 

During the nine months ended September 30, 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

■The Company incurred $90,000 (2022 - $90,000) of expenses for its proportionate share of shared office costs with other corporations that may have common directors and officers. The costs associated with this space are administered by 2227929 Ontario Inc. As at September 30, 2023, the Company had a payable balance of $158,200 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment and due on demand. Fred Leigh, a former officer and former director of the Company, is also a director of 2227929 Ontario Inc.

 

■The Company incurred $102,546 (2022 - $28,582) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $137,304 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

■Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($73,020) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of DeFi.

 

■During the nine months ended September 30, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

■During the nine months ended September 30, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

23

 

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

Management Change

 

On February 13, 2023, Russell Starr elected to step down from his role as Executive Chairman but remains head of capital markets.

 

On June 22, 2023, Sue Ennis was appointed to the board. Ms. Ennis is the VP of Corporate Development at Hut 8, one of Canada's largest data infrastructure operators and Bitcoin miners.

 

On November 1, 2023, William C Steers resigned as a member of the board of directors.

 

Financial Instruments and Other Instruments

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

■The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

■Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2022 and 2021.

 

■Digital assets classified as financial assets relate to USDC which is measured at fair value

 

24

 

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at September 30, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     

Investments, fair value

  (Quoted Market
price)		   (Valuation
technique
-observable
market Inputs)		   (Valuation
technique -
non-observable
market inputs)		   Total 
Publicly traded investments  $  -   $-   $-   $- 
Privately traded invesments   -    -    41,307,894    41,307,894 
Digital assets   -    (1,022)   -    (1,022)
September 30, 2023  $-   $(1,022)  $41,307,894   $41,306,872 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended September 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

   September 30,   December 31, 
Investments, fair value for the period ended  2023   2022 
Balance, beginning of period  $1,586   $4,063 
Disposal   (2,608)   (2,477)
Balance, end of period  $(1,022)  $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended September 30, 2023 and December 31, 2021. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

   September 30,   December 31, 
Investments, fair value for the period ended  2023   2022 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   (2,197,375)   (1,251,241)
Balance, end of period  $41,307,894   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

25

 

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at September 30, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $1,251,077   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,185,914   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   676,067   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,965,000   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,275   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,560   Recent financing  Marketability of shares  0% discount
September 30, 2023   $41,307,894         
3iQ Corp.  $3,740,473   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at September 30 2023, the valuation of 3iQ was based on the recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $125,108 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arm’s length party of the Company. As at September 30, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,591 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at September 30, 2023, the valuation of Earnity was zero as Earnity ceased operation in Q2 2023. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at September 30, 2023, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $0 (December 31, 2022 - $1,499) change in the carrying amount.

 

26

 

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at September 30 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,607 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK: Meta, LLC (“SDK”)

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at September 30 2023, the valuation of SDK:Meta LLC was $Nil (December 31, 2022 - $Nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at September 30, 2023, a +/- 10% change in the fair value of SDK: Meta LLC will result in a corresponding +/- 0 (December 31, 2022 +/- $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at September 3-, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,696,500 (December 31, 2022 - $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at September 30, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,928 (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at September 30, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at September 30, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,056 (December 31, 2022 - $4,063) change in the carrying amount.

 

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Outstanding Share Data

 

Authorized unlimited common shares without par value – 264,213,208 are issued and outstanding as at November 14, 2023.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at November 14, 2023

 

Stock options and convertible securities outstanding as at November 14, 2023 are as follows:

 

Stock Options:

16,080,000 with an exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and July 13, 2028.

 

Warrants:

34,055,926 with an exercise price ranging from $0.20 to $0.30 expiring between November 14, 2024 and November 6, 2028.

 

Deferred shares units:

7,870,000 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2022 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

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Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

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The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

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Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, DeFi relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

Regulatory Risks

 

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As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

DeFi Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

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Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

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Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

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There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

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Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at September 30, 2023, the Company’s investments through its Defi Venture business arm comprise of $41,351,814 represented approximately 15.1% of the Company’s total assets.

 

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We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively. The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

38

 

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

39

 

 

Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

40

 

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

41

 

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

42

 

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

43

 

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

Multilateral Instrument 52-109 Disclosure

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

44

 

 

We have not identified any changes to our internal control over financial reporting which would materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

 

The CEO and CFO, together with other members of Management, have evaluated the effectiveness of internal controls over financial reporting as defined by National Instrument 52-109, and have concluded, based on our evaluation that they are operating effectively as at September 30, 2023.

 

Significant Accounting Policies

 

The Company’s significant accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2022 and 2021

 

Future accounting change

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

Critical Accounting Estimates and Assumptions

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

45

 

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”).Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price in the range (UTC time) from www.coinmarketcap.com.

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

46

 

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 6 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

47

 

 

Exhibit 99.63

 

 

 

 

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

 

 

For the three and nine months ended September 30, 2023 and 2022

 

(expressed in Canadian dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (CPA Canada) for a review of interim financial statements by an entity’s auditor.

 

2

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

Table of Contents

 

Condensed consolidated interim statements of financial position 4
Condensed consolidated interim statements of operations and comprehensive (loss) 5
Condensed consolidated interim statements of cash flows 6
Condensed consolidated interim statements of changes in equity 7
Notes to the condensed consolidated interim financial statements 8-36

 

3

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   Note  September 30,
2023		   December 31,
2022		 
      $   $ 
Assets           
Current           
Cash and cash equivalents  16   2,144,478    4,906,165 
Amounts receivable  4,16   6,125    67,102 
Public investments, at fair value through profit and loss  3,16   -    17,227 
Prepaid expenses  5   417,276    564,742 
Digital assets  6,16   104,613,517    106,582,076 
Digital assets loaned  6   60,877,229    - 
Digital assets staked  6   13,175,343    - 
Total current assets      181,233,968    112,137,312 
              
Private investments, at fair value through profit and loss  3,16,19   41,307,894    43,505,269 
Digital assets  6   43,920    53,358 
Equipment      10,917    20,623 
Right of use assets      -    1,917,174 
Intangible assets  7   4,052,463    5,581,188 
Goodwill      46,712,027    46,712,027 
Total assets      273,361,189    209,926,951 
Liabilities and shareholders’ equity             
Current liabilities             
Accounts payable and accrued liabilities  8,16,19   6,699,498    5,822,379 
Loans payable  9,16   56,718,091    52,821,600 
ETP holders payable  10,16   179,148,481    105,740,627 
Total current liabilities      242,566,070    164,384,606 
Non-current liabilities             
Lease liabilities      -    1,709,911 
Total liabilities      242,566,070    166,094,517 
Shareholders’ equity             
Common shares  14(b)(c)   167,708,003    166,151,401 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  15   25,158,931    27,909,984 
Accumulated other comprehensive income      (3,099,059)   (2,996,218)
Non-controlling interest      1,179    - 
Deficit      (163,295,286)   (151,554,084)
Total equity      30,795,119    43,832,434 
Total liabilities and equity      273,361,189    209,926,951 
Nature of operations and going concern  1          
Commitments and contingencies  20          
Subsequent event  22          

 

Approved on behalf of the Board of Directors:    
     
“Olivier Roussy Newton”   “Stefan Hascoet”
Director   Director

 

4

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

      Three months ended
September 30,		   Nine months ended
September 30,		 
   Note 

2023

  

2022

  

2023

  

2022

 
      $   $   $   $ 
Revenues                   
Realized and net change in unrealized gains and (losses) on digital assets  11   (13,186,005)   5,905,183    45,666,208    (280,297,199)
Realized and net change in unrealized gains and (losses) on ETP payables  12   16,105,048    (6,966,869)   (40,424,382)   275,281,221 
Realized and unrealized (loss) on derivative assets      -    178,343    -    (419,791)
Staking and lending income      746,871    628,720    2,083,346    4,062,966 
Management fees      243,845    268,901    703,538    1,232,302 
Node revenue      3,280    20,288    8,256    333,847 
Realized (loss) on investments, net  3   (658)   -    (4,683)   (12,077)
Unrealized gain (loss) on investments, net  3   (2,493,106)   234,322    (2,178,244)   (3,338,494)
Interest income      552    26,717    809    54,293 
Total revenues      1,419,826    295,605    5,854,848    (3,102,932)
Expenses                       
Operating, general and administration  13,19   3,246,755    4,842,936    7,118,691    11,733,020 
Share based payments  15   387,329    (911)   1,830,209    15,697,391 
Depreciation - property, plant and equipment      3,236    3,237    9,709    9,713 
Depreciation - right of use assets      -    15,854    -    21,324 
Amortization - intangibles  7   509,575    589,290    1,528,725    1,767,868 
Finance costs      1,082,576    1,060,483    2,644,105    3,088,692 
Transaction costs      164,900    145,917    484,619    925,669 
Foreign exchange loss      3,526,454    (548,382)   8,280,483    (289,108)
Total expenses      8,920,825    6,108,424    21,896,541    32,954,569 
Income (loss) before other item      (7,500,999)   (5,812,819)   (16,041,693)   (36,057,501)
Loss on settlement of debt      26,389    -    (172,093)   - 
Net (loss) for the period      (7,474,610)   (5,812,819)   (16,213,786)   (36,057,501)
Other comprehensive loss                       
Foreign currency translation gain (loss)      (1,829,345)   (3,198,556)   (102,841)   (4,376,014)
Net (loss) and comprehensive income (loss) for the period      (9,303,955)   (9,011,375)   (16,316,627)   (40,433,515)
                        
Net (loss) attributed to:                       
Owners of the parent      (7,475,789)   (5,812,819)   (16,214,965)   (36,057,501)
Non-controlling interests      1,179    -    1,179    - 
       (7,474,610)   (5,812,819)   (16,213,786)   (36,057,501)
Other comprehensive (loss) attributed to:                       
Owners of the parent      (9,305,134)   (9,011,375)   (16,317,806)   (40,433,515)
Non-controlling interests      1,179    -    1,179    - 
       (9,303,955)   (9,011,375)   (16,316,627)   (40,433,515)
(Loss) per share                       
Basic      (0.03)   (0.03)   (0.07)   (0.17)
Diluted      (0.03)   (0.03)   (0.07)   (0.17)
                        
Weighted average number of shares outstanding:                       
Basic      224,661,137    208,896,136    223,084,360    209,108,153 
Diluted 

   224,661,137    208,896,136    223,084,360    209,108,153 

 

See accompanying notes to these condensed consolidated interim financial statements

 

5

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

      Nine months ended
September 30,		 
   Note  2023   2022 
     $   $ 
Cash (used in) provided by operations:           
Net (loss) for the period     $(16,213,786)  $(36,057,501)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:             
Share-based payments  15   1,830,209    15,697,391 
Loss on debt for shares      172,093    - 
Interest expense  9   2,644,105    - 
Interest paid      (2,644,105)   - 
Depreciation - Property, plant & equipment      9,709    9,713 
Depreciation - right of use assets      -    - 
Amortization - Intangible asset  7   1,528,725    1,767,868 
Realized loss on investments, net      4,683    12,077 
Unrealized loss (gain) on investments, net      2,178,244    3,338,494 
Realized and net change in unrealized (gains) and loss on digital assets  11   (45,666,208)   280,297,199 
Realized and net change in unrealized (gains) and loss on ETP  12   40,424,382    (275,281,221)
Realized and unrealized loss of derivative assets      -    419,791 
Staking and lending income      (2,083,346)   (4,062,966)
Node revenue      (8,256)   (333,847)
Management fees      (703,538)   (1,232,302)
Unrealized loss (gain) on foreign exchange      (342,028)   (6,131,088)
       (18,869,117)   (21,556,392)
Adjustment for:             
Purchase of digital assets      (88,193,590)   (228,021,507)
Disposal of digital assets      64,269,115    189,843,465 
Purchase of investments      -    (34,649,658)
Disposal of investments      12,407    28,248 
Change in amounts receivable      60,977    (111,011)
Change in prepaid expenses and deposits      147,418    440,160 
Change in accounts payable and accrued liabilities      2,533,457    808,416 
Net cash (used in) operating activities      (40,039,333)   (93,218,279)
Financing activities             
Proceeds from ETP holders      150,736,395    242,378,583 
Payments to ETP holders      (117,547,052)   (196,516,517)
Loan Payable      4,260,870    54,803,331 
Proceeds from exercise of warrants  15   -    647,284 
Proceeds from exercise of options  15   -    45,000 
Shares repurchased pursuant to NCIB      -    (13,154,570)
Net cash provided by financing activities      37,450,213    88,203,112 
              
Effect of exchange rate changes on cash and cash equivalents      (172,567)   509,986 
Change in cash and cash equivalents      (2,761,687)   (4,505,181)
Cash, beginning of period      4,906,165    9,161,034 
Cash and cash equivalents, end of period     $2,144,478   $4,655,853 

 

6

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

                   Share-based payments                     
   Number of Common Shares   Common Shares   Number of Preferred Shares   Preferred Shares   Options   Deferred Shares Unit
(DSU)		   Treasury shares   Warrants   Share-based Payments Reserve   Accumulated other comprehensive income   Non-controlling interest   Deficit   Total 
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   -    (151,554,084)   43,832,433 
Shares issued for debt settlement   13,697,095    1,449,103    -    -    -    -    -    -    -    -    -    -    1,449,103 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    -    423,261    - 
Options cancelled   -    -    -    -    (4,050,502)   -    -    -    (4,050,502)   -    -    4,050,502    - 
DSU exercised   500,000    107,500    -    -    -    (107,500)   -    -    (107,500)   -    -    -    - 
Share-based payments   -    -    -    -    321,541    1,508,667    -    -    1,830,209    -    -    -    1,830,209 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (102,841)   1,179    (16,214,965)   (16,316,627)
Balance, September 30, 2023   233,207,596   $167,708,004    4,500,000   $4,321,350   $16,588,351   $8,378,273   $27,453   $164,852   $25,158,930   $(3,099,059)  $1,179   $(163,295,285)  $30,795,119 
                                                                  
Balance, December 31, 2021   211,102,552   $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986    25,898,062   $241,064   $-   $(101,944,546)  $91,781,396 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    -    296,160 
NCIB   8,560,100    (6,743,038)   -    -    -    -    -    -    -    -    -    (6,411,536)   (13,154,574)
Warrants exercised   3,714,917    647,285    -    -    -    -    -    (136,447)   (136,447)   -    -    -    647,285 
Value of warrants exercised   -    136,447    -    -    -    -    -    -    -    -    -    -    - 
Warrants expired   -    -    -    -    -    -    -    (33,352)   (33,352)   -    -    33,352    - 
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    -    - 
Options cancelled   -    -    (1,826,115)   -    -    -    (1,826,115)   -    -    1,826,115    -           
DSU exercised   2,000,000    5,945,000    -    -    -    (5,945,000)   -    -    (5,945,000)   -    -    -    - 
DSU cancelled   -    (1,561,646)   -    -    (1,561,646)   -    -    1,561,646    -                     
Share-based payments   -    -    -    -    8,522,126    7,175,265    -    -    15,697,391    -    -    -    15,697,391 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (4,376,014)   -    (36,057,501)   (40,433,515)
Balance, September 30, 2022   208,896,136   $163,631,919    4,500,000   $4,321,350   $24,889,086   $6,720,567   $27,453   $416,187   $32,053,293   $(4,134,950)  $-   $(140,992,470)  $54,879,142 

 

See accompanying notes to these condensed consolidated interim financial statements

7

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (formerly Valour Inc.) (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These condensed consolidated interim financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at September 30, 2023, the Company has working capital (deficiency) of ($61,332,102) (December 31, 2022 - $(52,247,294), including cash of $2,144,478 (December 31, 2022 - $4,906,165) and for the nine months ended September 30, 2023 had a net loss and comprehensive loss of $16,312,627 (for the nine months ended September 30, 2022 – $40,433,515). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These condensed consolidated interim financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

2.Significant accounting policies

 

(a)Statement of compliance

 

These condensed consolidated interim financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) applicable to the preparation of interim financial statements, including IAS 34 – Interim Financial Reporting. These condensed interim financial statements should be read in conjunction with the annual audited consolidated financial statements for the years ended December 31, 2022 and 2021, which was prepared in accordance with IFRS as issued by the IASB. These condensed consolidated interim financial statements of the Company were approved for issue by the Board of Directors on November 14, 2023.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These condensed consolidated interim financial statements of fiscal 2023 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

8

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(b)Basis of consolidation

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the condensed consolidated interim financial statements.

 

(c)Basis of preparation and functional currency

 

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Significant accounting judgements, estimates and assumptions

 

The preparation of these condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

9

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets was classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 6) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair Value for is determined by taking the price at 17:30 CET from Kraken, Bitstamp, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the Exchange Trade Products (“ETP”). Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

(ii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 3 and 16 for further details.

 

(iii)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 3 and 16 for further details.

 

(iv)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

10

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(d)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vi)Contingencies (See Note 20 for details)

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii)Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 7 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

(xi)Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

11

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Significant accounting policies (continued)

 

(e)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2024 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2023. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Investments, at fair value through profit and loss

 

At September 30, 2023, the Company’s investment portfolio consisted of no publicly traded investment and eight private investments for a total estimated fair value of $41,307,894 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $43,522,496).

 

During the three and nine months ended September 30, 2023, the Company had a realized (losses) of ($658) and ($4,683) and unrealized (losses) of ($2,493,106) and $(2,178,244) (three and nine months ended September 30, 2022 – realized (loss) of ($12,077) and had unrealized gain (losses) of $234,322 and ($3,338,494)) on private and public investments.

 

Public Investments

 

At September 30, 2023, the Company had no public investments.

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer    Note   Security description  Cost   Value   %
of FV		 
Smart Valor AG        19,000 SDR   150,908    17,227    100.0%
Total public investments           $150,908   $17,227    100.0%

 

12

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

3.Investments, at fair value through profit and loss (continued)

 

Private Investments

 

At September 30, 2023 the Company’s eight private investments had a total fair value of $41,307,894.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value  

%

of FV

 
3iQ Corp.     187,007 common shares  $261,605   $1,251,077    3.0%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,185,914    5.3%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    676,067    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,965,000    89.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,275    0.5%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,560    0.1%
Total private investments        $41,155,771   $41,307,894    100.0%

 

(i) Investments in related party entities (Note 19)

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $43,505,269.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value  

%

of FV

 
3iQ Corp.     187,007 common shares  $1,122,042   $3,740,473    8.6%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    5.0%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    1.6%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    36,652,500    84.2%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.4%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $43,505,269    100.0%

 

(i) Investments in related party entities (Note 19)

 

4.Amounts receivable

 

   30-Sep-23   31-Dec-22 
Other receivable  $6,125   $67,102 

 

5.Prepaid expenses

 

   30-Sep-23   31-Dec-22 
Prepaid insurance  $78,358   $61,065 
Prepaid expenses   338,917    503,677 
   $417,276   $564,742 

 

13

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets

 

As at September 30, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $178,710,009 (December 31, 2022 - $106,635,434). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the price at 17:30 CET from Kraken, Bitfinex, Binance and Coinbase exchanges consistent with the pricing of the ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   September 30, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   116.5056    33,968    11.1000    3,678 
Bitcoin   2,211.3903    80,213,106    2,126.5130    47,498,630 
Ethereum   20,985.2141    47,372,042    21,141.7368    34,333,700 
Cardano   45,948,424.5599    15,847,391    36,438,339.0800    12,004,332 
Polkadot   1,238,753.6730    6,848,572    931,646.4544    5,407,239 
Solana   926,536.11    25,453,015    428,280.68    5,537,534 
Shyft   3,916,637.4174    31,798    3,507,575.4684    37,530 
Uniswap   170,852.0602    1,031,102    148,734.0602    1,021,542 
USDC        (1,022)        1,586 
USDT        14,109         14,134 
Litcoin   59.3553    5,264    -    - 
Doge   105,238.3262    8,807    10,000.0000    914 
Cosmos   200.9992    1,941    201.0000    2,531 
Avalanche   136,050.4109    1,692,746    48,995.3900    712,745 
Matic   7,798.4048    5,528    890.0000    906 
Shiba Inu             90,000,000.0000    975 
Ripple   37,901.7472    27,164    2,000.0000    919 
Enjin   243,660.1546    73,891    10,009.9900    3,180 
Tron   55,316.6520    6,664    -    - 
Terra Luna   199,970.4286    3    199,195.3600    - 
Current        178,666,089         106,582,076 
Blocto   264,559.703    4,975    251,424.913    6,737 
Boba Network   250,000.00    -    250,000.00    - 
Clover   370,000.00    10,058    310,000.00    13,216 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    -    2,500,000.00    - 
Saffron.finance   86.21    1,871    86.21    2,345 
Sovryn   15,458.95    2,912    15,458.95    2,342 
Wilder World   148,810.00    24,046    148,810.00    28,660 
Volmex   2,925,878.0000    58    2,925,878.0000    58 
Long-Term        43,920         53,358 
Total Digital Assets        178,710,009         106,635,434 

 

14

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

The continuity of digital assets for the nine months ended September 30, 2023 and year ended December 31, 2022:

 

   September 30,
2023		   December 31, 2022 
Opening balance  $106,635,434   $370,053,740 
Digital assets acquired   88,193,590    231,392,840 
Digital assets disposed   (64,269,115)   (191,092,048)
Realized (loss) on digital assets   (11,920,713)   (47,595,430)
Digital assets earned from staking, lending and fees   2,091,440    5,955,456 
Net change in unrealized gains and losses on digital assets   57,586,921    (275,739,651)
Foregin exchange (loss) gain   392,452    13,660,527 
   $178,710,009   $106,635,434 

 

In the normal course of business, the Company enters into open-ended staking and lending arrangements with certain financial institutions, whereby the Company stakes and loans certain digital assets in exchange for interest income payable in the underlying digital asset loaned or staked. The Company can demand the repayment of the loans and accrued interest can be terminated within 5 days notice and staked coins can be returned on a 1 days notice. The digital assets staked and loaned are included in the balance above.

 

Digital Assets loaned

 

As of September 30, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 0.5% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of September 30, 2023, digital assets on loan consisted of the following:

 

  

Number of

coins on loan

   Fair Value   Fair Value Share 
Digital on loan:            
Bitcoin   508.1963   $18,433,655    30%
Ethereum   5,000.0000    11,287,005    19%
Cardano   4,000,000.0000    1,379,581    2%
Polkdot   1,073,835.0000    5,936,803    10%
Solana   847,441.0000    23,280,181    38%
Avalanche   45,009.0000    560,004    1%
Total   5,971,793.1963   $60,877,229    100%

 

As of September 30, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins on loan   Fair Value 
Digital on loan:            
Counterparty A   3.21%   508.1963   $18,433,655 
Counterparty B   0.5% to 9.7%    5,971,285.0000    42,443,574 
Total        5,971,793.1963   $60,877,229 

 

15

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of September 30, 2023, digital assets loan were concentrated with counterparties as follows:

 

   Geography  September 30,
2023		 
Digital on loan:        

Counterparty A

  United States   30%
Counterparty B  Cayman Islands   70%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of September 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of September 30, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

As of September 30, 2023, digital assets staked consisted of the following:

 

  

Number of coins

staked

   Fair Value   Fair Value Share 
Digital on staked:            
Cardano   38,201,004.7950    13,175,343    100%
Total   38,201,004.7950   $13,175,343    100%

 

As of September 30, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of coins staked   Fair Value 
Digital on staked:            
Counterparty C   3.15%   38,201,004.7950    13,175,343 
Total        38,201,004.7950   $13,175,343 

 

16

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Digital Assets (continued)

 

As of September 30, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  September 30,
2023		 
Digital on staked:        
Counterparty C  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of September 30, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

7.Intangibles

 

Cost  Brand Name   Total 
Balance, December 31, 2022 and 2021 and September 30, 2023  $42,789,968   $42,789,968 

 

Accumulated Amortization  Brand Name   Total 
Balance, December 31, 2021  $(21,065,981)  $(21,065,981)
Amortization   (2,277,443)   (2,277,443)
Impairment loss   (13,865,356)   (13,865,356)
Balance, December 31, 2022  $(37,208,780)  $(37,208,780)
Amortization   (1,528,725)   (1,528,725)
Balance, September 30, 2023  $(38,737,505)  $(38,737,505)
           
Balance, December 31, 2022  $5,581,188   $5,581,188 
Balance, September 30, 2023  $4,052,463   $4,052,463 

 

8.Accounts payable and accrued liabilities

 

   30-Sep-23   31-D ec-22 
Corporate payables  $6,177,558   $5,747,151 
Related party payable (Note 19)   521,940    75,228 
   $6,699,498   $5,822,379 

 

17

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been rolled and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of September 30, 2023, the loan principal of $52,728,000 (US$39,000,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms are open term and have interest rates ranging from 6.95% and 7.95% The extended loans are secured with 767.7983 BTC and 12,853.0083 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan payable is US$6,000,000 and secured with 475 BTC. As at September 30, 2023, the value of the 475 BTC was US$12,743,739 and potential loan loss exposure is US$6,743,739.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. On July 11, 2023, the Company repayment the loan and outstanding interest of $270,129 by issuing 2,595,521 common shares. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of September 30, 2023, the loan principal of $4,056,001 (US$3,000,001) was outstanding.

 

18

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

10.ETP holders payable

 

The fair market value of the Company’s ETPs as at September 30, 2023 and December 31, 2022 were as follows:

 

   30-Sep-23   31-Dec-22 
BTC Zero EUR  $7,574,022   $3,063,222 
BTC Zero SEK   72,965,307    44,379,551 
ETH Zero EUR   1,263,487    120,319 
ETH Zero SEK   46,514,581    33,841,456 
Polkadot EUR   710    56 
Polkadot SEK   6,587,405    5,312,625 
Cardano EUR   (1,923)   1,308 
Cardano SEK   15,562,781    11,833,732 
UNI EUR   100,779    86,714 
UNI SEK   928,679    891,459 
BNB EUR   669    - 
Solana EUR   230,758    12,010 
Solana SEK   25,077,652    5,494,963 
Avalanche SEK   1,506    872 
Avalanche EUR   1,695,857    697,454 
Enjin EUR   85,899    2,804 
Cosmos EUR   76,338    185 
Valour Digital Asset Basket 10 EUR   311,625    790 
Valour BTC Carbon Neutral EUR   3,977    1,107 
1Valour Bitcoin Physcial Carbon Neutral   77,795    - 
1Valour Ethereum Physical Staking   90,576    - 
   $179,148,481   $105,740,627 

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

11.Realized and net change in unrealized gains and (losses) on digital assets

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
Realized gain/ (loss) on digital assets  $3,024,573   $(202,146,097)   (11,322,735)  $(236,120,171)
Unrealized gain/ (loss) on digital assets  $(16,210,578)  $208,051,280   $56,988,943    (44,177,028)
   $(13,186,005)  $5,905,183   $45,666,208   $(280,297,199)

 

19

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

12.Realized and net change in unrealized gains and (losses) on ETP payables

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
Realized gain/( loss) on ETPs  $42,580,969   $44,799,092   $65,101,709   $127,979,405 
Unrealized gain/ (loss) on ETPs   (26,475,921)   (51,765,962)   (105,526,091)   147,301,815 
   $16,105,048   $(6,966,869)  $(40,424,382)  $275,281,221 

 

13.Expenses by nature

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
Management and consulting fees  $1,576,590   $1,924,238   $3,861,814   $5,418,247 
Travel and promotion   218,322    530,640    457,938    2,036,323 
Office and rent   247,180    65,447    1,099,834    747,728 
Accounting and legal   1,177,471    2,403,802    1,548,065    3,495,910 
Regulatory and transfer agent   27,193    (81,191)   151,041    34,812 
   $3,246,755   $4,842,936   $7,118,691   $11,733,020 

 

14.Share Capital

 

a)As at September 30, 2023 and December 31, 2022, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

b)Issued and outstanding shares

 

   Number of Common Shares   Amount 
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 
DSU exercised   500,000    107,500 
Shares issued for debt settlement   13,697,095    1,449,102 
Balance, September 30, 2023   233,207,596   $167,708,003 

 

During the nine months ended September 30, 2023, the Company issued 13,697,095 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $172,093. Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

20

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

14.Share Capital (continued)

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from November 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the nine months ended September 30, 2023, the Company purchased and cancelled no shares (December 31, 2022 – purchased and cancelled 8,560,100 shares at an average price of $1.54).

 

15.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
   Number of Options   Weighted average exercise prices   Value of options   Number of DSU   Value of DSU   Number of Warrants   Weighted average exercise prices   Value of warrants   Total Value 
December 31, 2021   20,308,100   $1.27   $18,260,128   $8,625,000   $7,051,948    19,432,810   $0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,617    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (2,000,000)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (6,755,000)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   1,000,000    0.32    321,541    2,000,000    1,508,667    -    -    -    1,830,209 
Exercised   -    -    -    (500,000)   (107,500)   -    -    -    (107,500)
Expired / cancelled   (2,697,500)   1.11    (4,050,502)   -    -    (12,684,560)   0.03    (423,261)   (4,473,763)
June 30, 2023   16,080,000   $1.25   $16,615,804    7,870,000   $8,378,273    4,055,926   $0.30   $164,852   $25,158,930 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

On July 13, 2023, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.115 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $105,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

The Company recorded $321,541 of share-based payments during the nine months ended September 30, 2023 (nine months ended September 30, 2022 - $8,522,126).

 

21

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share-based payments reserves (continued)

 

The following share-based payment arrangements were in existence at September 30, 2023:

 

Number
outstanding		   Number exercisable   Grant
date		  Expiry
date		  Exercise
price		   Fair value at grant date   Grant date share
price		   Expected volatility   Expected life
(yrs)		  Expected
dividend yield		   Risk-free
interest
rate		 
 510,000    510,000   16-Nov-20  16-Nov-25   $0.09    40,392   $0.09    138.70%  5   0%   0.46%
 250,000    250,000   24-Feb-21  24-Feb-26$  $1.58    574,750   $2.55    147.00%  5   0%   0.73%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26   $1.58    1,906,500   $2.12    145.70%  5   0%   0.99%
 2,170,000    2,170,000   09-Apr-21  09-Apr-26   $1.58    3,468,962   $1.78    145.20%  5   0%   0.95%
 2,900,000    2,900,000   18-May-21  18-May-26   $1.22    3,263,080   $1.25    145.60%  5   0%   0.95%
 1,000,000    1,000,000   18-May-21  18-May-26   $1.22    1,125,200   $1.25    145.60%  5   0%   0.95%
 1,950,000    750,000   25-May-21  25-May-26   $1.11    1,944,540   $1.11    145.50%  5   0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26   $1.58    1,461,305   $1.43    143.70%  5   0%   0.84%
 250,000    250,000   21-Sep-21  21-Sep-26   $1.70    380,375   $1.70    144.00%  5   0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26   $2.10    470,375   $2.10    144.00%  5   0%   1.27%
 500,000    500,000   09-Nov-21  09-Nov-26   $3.92    1,758,050   $3.92    144.30%  5   0%   1.37%
 250,000    250,000   31-Dec-21  31-Dec-26   $3.11    698,525   $3.11    145.00%  5   0%   1.25%
 500,000    500,000   09-May-22  09-May-27   $2.00    591,950   $1.34    146.00%  5   0%   2.76%
 500,000    500,000   20-May-22  20-May-27   $1.00    334,300   $0.75    146.80%  5   0%   2.70%
 400,000    400,000   21-Jul-22  21-Jul-27  $0.80    195,640   $0.50    147.50%  5   0%   3.00%
 500,000    375,000   17-Oct-22  17-Oct-27   $0.17    75,350   $0.17    149.50%  5   0%   3.60%
 1,000,000    750,000   19-Oct-22  19-Oct-27   $0.17    150,800   $0.17    149.40%  5   0%   3.71%
 1,000,000    -   13-Jul-23  13-Jul-28  $0.12    105,000   $0.12    149.10%  5   0%   3.71%
 16,080,000    13,505,000               18,545,094                        

 

The weighted average remaining contractual life of the options exercisable at September 30, 2023 was 3.0 years (December 31, 2022 – 3.5 years).

 

Warrants

 

As at September 30, 2023, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		   Grant date  Expiry date  Exercise price  

Fair value

at grant date

   Grant date share price   Expected volatility   Expected life
(yrs)		  Expected dividend yield   Risk-free interest rate 
Warrants   3,537,433   14-Nov-22  14-Nov-24   $0.30    153,355   $0.17    69.4%  2   0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24   $0.30    6,975   $0.17    69.4%  2   0%   3.87%
Warrants   331,000   29-Nov-22  29-Nov-24   $0.30    13,183   $0.18    64.4%  2   0%   3.95%
Warrant issue costs                   (8,661)                       
    4,055,926               164,852                        

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

On July 13, 2023, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

22

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share-based payments reserves (continued)

 

The Company recorded $1,508,668 in share-based compensation during the nine months ended September 30, 2023 (nine months ended September 30, 2022 - $7,175,265).

 

16.Financial instruments

 

Financial assets and financial liabilities as at September 30, 2023 and December 31, 2022 are as follows:

 

   Asset / (liabilities)
at amortized cost		   Assets /(liabilities) at fair
value through profit/(loss)		   Total 
December 31, 2022            
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    43,505,269    43,505,269 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)
               
September 30, 2023               
Cash  $2,144,478   $-   $2,144,478 
Amounts receivable   6,125    -    6,125 
Private investments   -    41,307,894    41,307,894 
USDC   -    (1,022)   (1,022)
Accounts payable and accrued liabilities   (6,699,498)   -    (6,699,498)
Loan payable   (56,718,091)   -    (56,718,091)
ETP holders payable   -    (179,148,481)   (179,148,481)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

23

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Liquidity risk (continued)

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at September 30, 2023, the Company had current assets of $181,233,968 (December 31, 2022 - $112,137,312) to settle current liabilities of $242,566,070 (December 31, 2022 - $164,384,606).

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at September 30, 2023 and December 31, 2022

 

    December 31, 2022 
   Total   Less than
1 year		   1-3 years 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   106,635,434    106,582,076    53,358 
Private investments   43,505,269    -    43,505,269 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(10,398,578)  $(52,247,294)  $41,848,716 

 

    September 30, 2023 
   Total   Less than
1 year		   1-3 years 
Cash  $2,144,478   $2,144,478   $- 
Amounts receivable   6,125    6,125    - 
Prepaid expenses   417,276    417,276    - 
Digital assets   178,710,009    178,666,089    43,920 
Private investments   41,307,894    -    41,307,894 
Accounts payable and accrued liabilities   (6,699,498)   (6,699,498)   - 
Loans payable   (56,718,091)   (56,718,091)   - 
ETP holders payable   (179,148,481)   (179,148,481)   - 
Total assets / (liabilities) - September 30, 2023  $(19,980,288)  $(61,332,102)  $41,351,814 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

24

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At September 30, 2023, two investments made up approximately 14.3% (December 31, 2022 – two investment of 8.2%) of the total assets of the Company.

 

For the nine months ended September 30, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $3.9 million, or $0.02 per share.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.02 per share.

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at September 30, 2023, a 1% change in interest rates could result in $21,445 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at September 30, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   September 30, 2023 
   United States Dollars   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $2,112,509   $-   $-   $- 
Receivables   7,691    -    -    - 
Private investments   3,091,817    -    36,965,000    - 
Prepaid investment   403,913    -    -    - 
Digital assets   178,710,009    -    -    - 
Accounts payable and accrued liabilities   (3,394,875)   (73,020)   (71,660)   (21,456)
Loan payable   (56,718,091)   -    -    - 
ETP holders payable   (179,148,481)   -    -    - 
Net assets (liabilities)  $(54,935,509)  $(73,020)  $36,893,340   $(21,456)

 

25

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(c)Currency risk (continued)

 

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European Euro 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   6,852,769    -    36,652,500    - 
Prepaid investment   551,379    -    -    - 
Digital assets   106,635,434    -    -    136,189 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(42,363,163)  $(72,189)  $36,628,815   $114,502 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of September 30, 2023 would result in an estimated increase (decrease) in net income of approximately $1,806,500 (December 31, 2022 - $562,800).

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

26

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2022 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at September 30, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market price)   (Valuation technique -observable market Inputs)   Valuation technique - non-observable market inputs)   Total 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    41,307,894    41,307,894 
Digital assets   -    (1,022)   -    (1,022)
September 30, 2023  $-   $(1,022)  $41,307,894   $41,306,872 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    43,505,269    43,505,269 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $43,505,269   $43,524,082 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended September 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss

 

Investments, fair value for the period ended  September 30,
2023		   December 31,
2022		 
Balance, beginning of period  $1,586   $4,063 
Disposal   (2,608)   (2,477)
Balance, end of period  $(1,022)  $1,586 

 

27

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended September 30, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  September 30,
2023		   December 31,
2022		 
Balance, beginning of period  $43,505,269   $10,257,760 
Purchases   -    34,498,750 
Unrealized gain/(loss) net   (2,197,375)   (1,251,241)
Balance, end of period  $41,307,894   $43,505,269 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at September 30, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation technique  Significant unobservable input(s) 

Range of significant unobservable

input(s)

3iQ Corp.  $1,251,077   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,185,914   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   676,067   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,965,000   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,275   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,560   Recent financing  Marketability of shares  0% discount
September 30, 2023  $41,307,894          
3iQ Corp.  $3,740,473    Recent financing   Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   36,652,500   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $43,505,269          

 

28

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

3iQ Corp. (“3iQ”)

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at September 30, 2023, the valuation of 3iQ was based on the recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $125,108 (December 31, 2022 - $374,047) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at September 30, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $218,591 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at September 30, 2023, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at September 30, 2023 a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2022 - $1,499) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at September 30, 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,607 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK:Meta LLC

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at September 30, 2023, the valuation of SDK:Meta LLC was $nil (December 31, 2022 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at September 30, 2023, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2022 - $0) change in the carrying amount.

 

SEBA Bank AG (“SEBA”)

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of SEBA. As at September 30, 2023, the valuation of SEBA was based on the 2022 secondary trades which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,696,500 (December 31, 2022 +/- $3,665,250) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at September 30, 2023, the valuation of STL was based on the October 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $18,928 (December 31, 2022 - $18,961) change in the carrying amount.

 

29

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Financial instruments (continued)

 

Fair value of financial instruments (continued)

 

VolMEX Labs Corporation (“VLC”) 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at September 30, 2023, the valuation of VLC was based on the most recent financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at September 30, 2023. As at September 30, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $4,056 (December 31, 2022 - $4,063) change in the carrying amount.

 

17.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

30

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Digital asset risk (continued)

 

(c)Digital currency risk factors: Political, regulatory risk in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

18.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the nine months ended September 30, 2023.

 

31

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures

 

a)The condensed consolidated interim financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest
DeFi Capital Inc.  100
DeFi Holdings (Bermuda) Ltd.  100
Electrum Streaming Inc.  100
Valour Inc. (Cayman)  100
 DeFi Europe AG  100
Crypto 21 AB  100
Valour Management Limited  100
Valour Digital Securities Limited  0

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three and nine months ended September 30, 2023 and 2022 were as follows:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
Short-term benefits  $161,664   $435,545   $694,232   $1,456,867 
Shared-based payments   67,498    2,701,002    264,829    4,055,390 
   $229,162   $3,136,547   $959,061   $5,512,257 

 

As at September 30, 2023, the Company had $358,150 (December 31, 2022 - $296,084) owing to its current key management, and $356,340 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the nine months ended September 30, 2023 and 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
   2023   2022   2023   2022 
2227929 Ontario Inc.  $30,000   $30,000   $90,000   $90,000 
   $30,000   $30,000   $90,000   $90,000 

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at September 30, 2023 the Company had a payable balance of $158,200 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

32

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Related party disclosures (continued)

 

The Company incurred $102,546 (2022 - $28,582) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $137,304 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($73,020) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of September 30, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment 

Estimated

Fair value

 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,185,914 
SEBA Bank AG*  Former Director (Olivier Roussy Newton) of investee   36,965,000 
Total investment - September 30, 2023     $39,150,914 

 

*Private companies

 

Investment  Nature of relationship to invesment 

Estimated

Fair value

 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   36,652,500 
Total investment - December 31, 2022     $38,842,294 

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at September 30, 2023,

 

During the nine months ended September 30, 2023, Officers of the Company received 4,377,139 common shares to settle

$413,868 of outstanding payables.

 

During the nine months ended September 30, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

20.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,097,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $908,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

33

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Commitments and contingencies (continued)

 

In November 2021, the Company received a notice of application from two individuals (the “Plaintiffs”) seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual. On November 8, 2022, the Superior Court of Justice (the “Superior Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Superior Court ruled against any punitive damages. In September 2023, the Court of Appeal for Ontario dismissed the Company’s appeal of the Superior Court ruling and upheld the Superior Court’s ruling. The Company has fully accrued the judgment amount owing to the Plaintiffs.

 

21.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

September 30, 2023  Canada   Bermuda   Cayman Islands   Total 
Cash   32,081    -    2,112,397    2,144,478 
Amounts receivable   8,434    -    (2,309)   6,125 
Public investments   -    -    -    - 
Prepaid expenses   131,965    3,097    282,214    417,276 
Digital Assets   -    75,718    178,634,291    178,710,009 
Property, plant and equipment   -    7,690    3,227    10,917 
Other non-current assets   90,780,747    40,560    1,251,077    92,072,384 
Total assets   90,953,227    127,065    182,280,897    273,361,189 

 

December 31, 2022  Canada   Bermuda   Cayman Islands   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    106,491,188    106,635,434 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   92,017,379    40,632    5,657,647    97,715,658 
Total assets   92,419,715    203,205    117,304,032    209,926,952 

 

34

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Operating segments

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the nine months ended September 30, 2023  DeFi   DeFi Bermuda   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (19,184)   45,685,392    45,666,208 
Realized and net change in  unrealized gains and (losses on ETP payables   -    -    (40,424,382)   (40,424,382)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    162    2,083,184    2,083,346 
Management fees   -    -    703,538    703,538 
Node revenue   -    8,256    -    8,256 
Realized (loss) on investments, net   -    -    (4,683)   (4,683)
Unrealized (loss) on investments, net   292,092    -    (2,470,336)   (2,178,244)
Interest income   809    -    -    809 
Total revenue   292,901    (10,766)   5,572,713    5,854,848 
Expenses                    
Operating, general and administration   2,434,496    30,321    4,653,874    7,118,691 
Share based payments   1,830,209    -    -    1,830,209 
Depreciation – property  plant and equipment   -    7,852    1,856    9,709 
Amortization - intangibles   1,528,725    -    -    1,528,725 
Finance costs        -    2,644,105    2,644,105 
Transaction costs   -    -    484,619    484,619 
Foreign exchange (gain) loss   (13,346)   -    8,293,829    8,280,483 
Impairment loss   -    -    -    - 
Income (loss before other item   (5,487,183)   (48,939)   (10,505,570)   (16,041,693)
Loss on settlement of debt   (172,093)             (172,093)
Income (loss) before other item   (5,659,276)   (48,939)   (10,505,570)   (16,213,786)
Other comprehensive loss                    
Foreign currency translation (loss) gain   -    (399)   (102,442)   (102,841)
Net (loss) income and comprehensive (loss) income for the period   (5,659,276)   (49,338)   (10,608,012)   (16,316,627)

 

35

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the condensed consolidated financial statements

For the three and nine months ended September 30, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Operating segments (continued)

 

For the nine months ended September 30, 2022  Valour Inc. (Canada)   DeFi Bermuda   Valour Inc. (Cayman Islands)   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (2,932,931)   (277,364,268)   (280,297,199)
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    275,281,221    275,281,221 
Realized (loss) of derivative asset   -    (419,791)   -    (419,791)
Staking and lending income   -    5,114    4,057,852    4,062,966 
Management fees   -    -    1,232,302    1,232,302 
Node revenue   -    333,847    -    333,847 
Realized (loss) on investments, net   (12,077)   -    -    (12,077)
Unrealized (loss) on investments, net   (2,683,242)   -    (655,252)   (3,338,494)
Interest income   2,442    -    51,851    54,293 
Total revenue   (2,692,877)   (3,013,761)   2,603,706    (3,102,932)
Expenses                    
Operating, general and administration   8,038,225    31,101    3,663,694    11,733,020 
Share based payments   15,697,391    -    -    15,697,391 
Depreciation - property, plant and equipment   -    7,852    1,861    9,713 
Depreciation - right of use assets   -    -    21,324    21,324 
Amortization - intangibles   1,767,868    -    -    1,767,868 
Finance costs        -    3,088,692    3,088,692 
Transaction costs   140,886    -    784,783    925,669 
Foreign exchange (gain) loss   167,953    -    (457,061)   (289,108)
Total expenses   25,812,323    38,953    7,103,293    32,954,569 
(Loss) income before other item   (28,505,200)   (3,052,714)   (4,499,588)   (36,057,501)
Other comprehensive loss                    
Foreign currency translation (loss) gain   (1,780)   44,125    (4,418,359)   (4,376,014)
Net (loss) income and comprehensive (loss) income for the period   (28,506,979)   (3,008,589)   (8,917,947)   (40,433,515)

 

22.Subsequent event

 

On October 31, 2023, the Company’s subsidiary, Valour Inc., completed a non-brokered private placement financing of unsecured convertible notes for gross proceeds of $3 million. The notes issued in connection with the offering accrue interest at a rate of 8 per cent per annum will mature on October 31, 2025. Upon the occurrence of certain trigger events, the principal amount of notes and all accrued interest may be convertible, at the option of the holder, into (a) common shares in the capital of the Company at a price of $0.10 per conversion share and (b) an equal number of common share purchase warrants of the company entitling the holder to acquire one common share at a price of $0.20 for a period of five years from the date of issuance. Upon the conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of notes and accrued interest converted pursuant to the conversion.

 

 

36

 

 

 

Exhibit 99.64

 

 

DeFi Technologies Inc. Announces Q3 2023 Financial Results:
AUM Increases to $179 Million as of Sept. 30/23, marking 69%
Yearly Growth, Revenues to $5.9 Million and Notable Strategic Developments

 

TORONTO – November 14, 2023 – DeFi Technologies Inc. (the "Company" or "DEFI") (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the nine months ended September 30, 2023 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights of Q3 2023:

 

●The Company reported a cash balance at September 30, 2023 of $2.1 million compared to $4.9 million at December 31, 2022.

 

●The Company’s venture portfolio investments were valued at $41.3 million by the end of the quarter.

 

●AUM grew 69% to approximately $179 million as of September 30, 2023, up from $107 million as of December 31, 2023, and currently sits at $339 million as of November 13th, 2023.

 

●Total revenues were $5.9 million for the nine months ended September 30, 2023. This is a significant improvement from the revenues of $(3.1) million for the respective period in 2022.

 

●The net loss for the nine months ended September 30, 2023 was $(16.2) million. This shows a noteworthy recovery from the net loss of $(36.1) million for the same period in 2022.

 

●Adjusted net loss (net loss excluding unrealized loss on investments and share based payments) was $4.6 million and $12.2 million for the three and nine months ended September 30, 2023 compared to $6.0 million and $17.0 million during the same period in 2022. The year over year improvement is due to a combination of increased revenues along with lower expenses.

 

●The Company’s commitment to prudent financial management is evident from its lower operating, general, and administrative costs in 2023. Operating, general, and administration costs for the nine months ended September 30, 2023 were $7.2 million, down from $11.7 million in 2022.

 

 

 

 

●Total expenses for the nine months ending September 30, 2023 stood at $21.9 million, a decrease of 33% YoY. This decrease reflects from $33.0 million for the same period in 2022.

 

●DeFi Technologies and its subsidiary Valour Inc. (“Valour”) Announce Closing of $3 Million Private Placement of Convertible Notes.

 

●DeFi Technologies Inc. and Neuronomics AG entered into a landmark Joint Venture Agreement to develop AI-based digital asset exchange traded products, actively managed certificates, and asset-backed tokens for global distribution.

 

●Valour introduced three EUR denominated products on NGM: Valour Ethereum Zero EUR, Valour Solana EUR and Valour Digital Asset Basket 10 (VDAB10) EUR.

 

●Valour introduced its innovative Ethereum Physical Staking ETP under the EU-wide issuance platform, Valour Digital Securities Limited (VDSL) on XETRA.

 

●Valour entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (“ETPs”) backed 1:1 by digital assets, leveraging both Valour’s and Bitcoin Suisse AG's unique capabilities and long standing expertise in the digital asset market.

 

●Valour launched the Valour Digital Asset Basket 10 (ETP) on Nordic Growth Market

 

“DeFi Technologies has demonstrated robust growth in assets under management and our venture portfolio, in a year that's been challenging for digital assets," stated Olivier Roussy Newton, CEO of DeFi Technologies. "In an environment of market volatility and dwindling trust in centralized exchanges, retail and institutional investors have had to navigate a landscape rife with bad actors. Over the last six years, we've built a regulated market infrastructure, emphasizing trust and transparent digital asset offerings, which have seen increasingly more demand. Our strategic partnership with Bitcoin Suisse, coupled with our advances in product innovation, are crucial in fortifying our market position. As we continue to expand our ETPs and delve into AI-based asset management with Neuronomics AG, we remain dedicated to maintaining our role as leaders in innovative, regulated financial solutions."

 

ETPs/Valour:

 

Valour’s ETP business reported AUM of $179 million as of September 30, 2023, a 69% increase from December 31, 2022’s report of $106 million. AUM currently sits at $339 million as of November 13, 2023.

 

Liquidity:

 

The Company ended the quarter with a cash balance of $2.1 million, compared to $4.9 million at the close of 2022. Additionally, the venture portfolio investments stood firm at $41.3 million.

 

2

 

 

Financial Performance:

 

For the nine months ending September 30, 2023:

 

●Revenues were to $1.4 million and $5.9 million for the three and nine months, compared to $0.3 million and $(3.1) million reported for the same periods in 2022.

 

●Net loss was $(7.5) million and $(16.2) million, an improvement from the net loss of $(5.8) million and $(36.1) million during the corresponding periods in 2022.

 

●Adjusted net loss (net loss excluding unrealized loss on investments and share based payments) was $4.6 million and $12.2 million for the three and nine months ended September 30, 2023 compared to $6.0 million and $17.0 million during the same period in 2022. The year over year improvement is due to a combination of increased revenues along with lower expenses. The Company will continue its plan to reduce expenses in Q4 2023.

 

●The Company continues to emphasize fiscal responsibility and growth, evident from the reduced operating costs and the enhanced ETP products portfolio.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

3

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

4

 

 

Exhibit 99.65

 

 

 

DeFi Technologies Inc. Announces Upcoming Launch of
Valour Inc.’s Ripple (XRP) ETP and Other Corporate Updates

 

●Launch of XRP ETP: Valour plans to introduce a Ripple (XRP) Exchange Traded Product on a European exchange in early December 2023, expanding its range of digital asset investment products.

 

●Investment Access and Expansion: The Ripple (XRP) ETP will allow investors to gain exposure to XRP, the native cryptocurrency of the Ripple ecosystem, through banks or brokers, meeting the growing demand for diverse digital asset investments in European markets. Valour continues to prioritize product innovation and development, and it has plans to list additional traditional and physically backed ETPs in the coming months.

 

Toronto, Canada, November 22, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is excited to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, plans to launch a Ripple (XRP) ETP on a European exchange in early December 2023.

 

The Valour Ripple XRP ETP will enable investors to gain exposure to XRP, the native cryptocurrency in Ripple’s ecosystem, simply and securely, via their bank or broker. XRP has a market cap of $31.6 Billion and ranks fifth among all cryptocurrencies globally.

 

“The introduction of the Ripple (XRP) ETPs by Valour is a significant expansion of our product offerings,” said Marco Infuso, Chief Sales Officer of Valour. “Adding XRP to our suite of products caters to the growing demand for diverse digital asset investments in European markets. These ETPs provide European investors with access to leading cryptocurrencies, aligning with our commitment to democratizing and pioneering the digital asset market for traditional investors.”

 

Ripple XRP is a key player in the digital currency space, known for its use in facilitating rapid and low-cost international money transfers. Operating on RippleNet, XRP serves as a bridge currency in Ripple’s payment network, allowing for seamless currency exchanges worldwide. This has positioned XRP as a preferred choice for financial institutions seeking efficient alternatives to traditional cross-border payment methods.

 

Valour continues to prioritize product innovation and development, and it has plans to list additional traditional and physically backed ETPs in the coming months.

 

In addition to its novel digital asset platform, which includes 1Valour Ethereum Physical Staking ETP and 1Valour Bitcoin Physical Carbon Neutral ETP, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

 

 

 

 

 

Closing of Oversubscribed Private Placement

 

DeFi Technologies is also pleased to announce that further to its press release dated November 13, 2023, it has closed a non-brokered, oversubscribed, private placement of 11,812,500 units of the Company (“Units”) at a price per Unit of C$0.16 for aggregate gross proceeds of C$1,890,000 (the “Offering”). Each Unit consists of one common share of the Company (each, a “Common Share”) and one Common Share purchase warrant (each, a “Warrant”). Each Warrant will entitle the holder thereof to acquire one Common Share at an exercise price of C$0.23 per Common Share until November 22, 2025. No finder’s fees were paid in connection with the Offering.

 

The Company intends to use the proceeds of the Offering for general corporate purposes, including to satisfy liabilities of the Company. Certain Units, Common Shares and Warrants purchased will be subject to a four-month hold period commencing on the closing date of the Offering pursuant to National Instrument 45-102 – Resale of Securities, and the remaining Units, Common Shares and Warrants were distributed in offshore jurisdictions pursuant to Ontario Securities Commission Rule 72-503 - Distributions Outside Canada and, as such, will not be subject to a statutory hold period in accordance with applicable Canadian securities laws.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

2

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; launch of the Valour Ripple XRP ETP; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

 

Exhibit 99.66

 

DeFi Technologies’ Subsidiary Valour Inc. Announces Plans to Launch a Physical Backed ETP for the Internet Computer Protocol (ICP) Token in Collaboration with DFINITY Foundation

 

●Expansion of Physical Backed ETPs: DeFi Technologies’ subsidiary, Valour Inc., announces a new product offering launching a physical backed Exchange Traded Product (ETP) for the Internet Computer Protocol (ICP) token in collaboration with DFINITY Foundation. This comes on the heels of a recent collaboration between Valour Inc., and Bitcoin Suisse AG to demonstrate Valour’s dedication to expanding physically backed digital asset products and broadening market accessibility for cryptocurrencies on traditional exchanges like XETRA.

 

●Pioneering Blockchain Innovation: The Internet Computer Protocol (ICP) is a blockchain platform designed to extend the functionality of Web3. With a significant market capitalization of around $2 billion, DFINITY has positioned itself as a major innovator in the blockchain space, with the ICP token ranking among the top 50 cryptocurrencies globally.

 

TORONTO, November 28, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, will offer a physical backed ETP for the ICP token in Collaboration with DFINITY Foundation.

 

The fast growing Internet Computer community is focused on building out a new Web3 Internet ecosystem and moving the vast majority of online systems and services on-chain. This enables the replacement of traditional IT with unrivaled cost-efficiency, security and performance, paving the way towards blockchain singularity.

 

“This offering signifies an exciting development in the digital assets space,” said Olivier Roussy Newton, CEO of DeFi Technologies and Director of Valour. “Through our asset-backed issuance platform and operational expertise in the ETP market, we aim to create robust and diversified investment opportunities for investors.”

 

Marco A. Infuso, CSO at Valour Europe AG, added, “This collaboration enables safe and easy access to ICP tokens via traditional brokers, banks, and platforms. In this way, ICP can be integrated into every portfolio, just as shares and bonds have been for decades.”

 

Valour also recently announced the launch of the 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN: GB00BQ991Q22) on June 15, 2023. This ETP, secured by the respective digital assets physically stored with regulated custodians like Copper, is part of Valour’s commitment to providing physically backed digital asset platforms. Additionally, Valour offers fully hedged digital asset ETPs, with listings across European exchanges, banks, and broker platforms.

 

 

 

 

About the Internet Computer

 

The Internet Computer is powered by novel “chain-key cryptography”, which allows it to run at web speed with efficiency, its smart contracts to serve the web directly to end users, and its on-chain compute to scale without bound. With these capabilities, mass market Web3 services can run entirely on-chain, opening up the possibility for blockchain to become an alternative to traditional IT, such as cloud services. The Internet Computer is governed and updated by the Network Nervous System (NNS), a protocol-integrated DAO that decides to use liquid democracy. Supporting the mission are more than 200 world-renowned scientists and engineers specializing in cryptography, distributed systems, execution environments, programming languages, and more. For more details, visit https://internetcomputer.org

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@defi.tech

 

 

3

 

 

Exhibit 99.67

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended September 30, 2023.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

5.2 ICFR – material weakness relating to design: N/A

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2023 and ended on September 30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: November 14, 2023

 

(signed) “Ryan Ptolemy”  
Ryan Ptolemy  
Chief Financial Officer  

 

 

 

 

Exhibit 99.68

 

 

 

 

 

 

2

 

 

 

3

 

 

 

4

 

Exhibit 99.69

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.70

 

DeFi Technologies Subsidiary Valour Inc.
Provides updates on AUM and Market Share for the
Month Ending November 2023

 

●Remarkable Market Share Growth: Valour Inc., a subsidiary of DeFi Technologies, has significantly increased its market share on Swedish exchanges to 42.71% as of November 2023, up from 28% in October, marking a substantial 52.54% month-over-month growth.

 

●Increase in Assets Under Management: Valour’s AUM has risen to CAD $356.5 million, representing an 11.41% increase from early November and building on a 23% growth since October 30th.

 

●High Demand for Digital Asset Products: The growth in market share and AUM underscores the strong regional demand for Valour’s diverse range of exchange-traded digital asset products, reflecting a successful strategy in developing offerings that align with investor interests in the Nordics.

 

●Expanding Product Portfolio in 2024: Valour Inc. aims to introduce up to 20 new exchange-traded products (ETPs) in 2024, capitalizing on the growing global demand from both retail and institutional investors for crypto and blockchain ETPs. The planned offerings include collaborations with foundations like the recent ICP ETP, thematic baskets, short and long leverage products, and ETPs based on active crypto/blockchain investment strategies. (Note: All new products are subject to exchange approval).

 

TORONTO, December 4, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has seen significant progress in both market share and asset under management (“AUM”) in the last month.

 

As of the end of November 2023, Valour’s market share on Swedish exchanges has soared to an impressive 42.71%, up substantially from 28% at the end of October. This remarkable growth represents a 52.54% increase in market share month over month. Valour’s AUM also experienced significant growth, escalating to CAD $356.5 million from CAD $320 million early in November. This increase marks an 11.41% rise in AUM, up from a 23% increase since October 30th.

 

“Valour’s remarkable market share growth and increased assets under management underscore the strong regional demand for our diverse range of exchange-traded digital asset products. This success reflects our commitment to developing offerings that align with investor interests in the Nordics, and we are proud to contribute to a more accessible and dynamic financial ecosystem.” - Johanna Belitz, Head of Nordics, Valour

 

Valour’s significant growth is a testament to the high demand for its innovative digital asset products in the region. Valour aims to introduce up to 20 new exchange-traded products (ETPs) in 2024, capitalizing on the growing global demand from both retail and institutional investors for crypto and blockchain ETPs. The planned offerings include collaborations with foundations like the recent ICP ETP, thematic baskets, short and long leverage products, and ETPs based on active crypto/blockchain investment strategies. All new products are subject to exchange approval.

 

*Note: Market share data from NGM and Nasdaq Nordic includes issuers offering crypto derivatives only.

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

3

 

 

Exhibit 99.71

 

 

DeFi Technologies Presents at Singular Research’s Best of the Uncovereds Conference in San Francisco

 

TORONTO – December 7, 2023 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its participation in the prestigious Singular Research’s Best of the Uncovereds conference. The event is set to take place in San Francisco on Thursday, December 7, 2023, from 8:30 AM to 5:00 PM PST.

 

We cordially invite investors, analysts, and enthusiasts to join us for a live stream of Track 1 of the conference. This gathering will showcase some of the most innovative and promising companies in today’s market. DeFi Technologies is scheduled to present at 1:00 PM PST, offering insights into our latest developments and strategic direction.

 

Event Details:

 

Date: Thursday, December 7, 2023

 

Time: 8:30 AM - 5:00 PM PST

 

Location: San Francisco (Live Stream Available)

 

DeFi Technologies Presentation Time: 1:00 PM PST

 

Registration Link: https://register.gotowebinar.com/register/4673218422208122970

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

 

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and Valour Digital Asset Basket 10, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

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For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

 

Exhibit 99.72

 

DeFi Technologies Subsidiary Valour Inc. Hits $421M CAD AUM, Record $13.6M CAD Daily Turnover, Wins at XENIX Awards

 

●Impressive Financial Milestones: Valour Inc. reached an exceptional Assets Under Management (AUM) milestone in 2023, exceeding $421 million CAD, demonstrating its robust growth and investor trust in its offerings.

 

●Significant Daily Turnover Achievement: The company also achieved a notable daily turnover on December 8th, surpassing $13.6 million CAD in both certificates and ABS, showcasing its strong market presence and investor engagement.

 

●Award-Winning Innovation and Sustainability: Recognized with the “Most Innovative Bitcoin Tracker ETP including CO2 compensation” at the XENIX ETF AWARDS Germany 2024, Valour Inc. consolidates its position as a leader in innovative and eco-friendly digital asset exchange-traded products (ETPs).

 

TORONTO, December 11, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has been honored at the XENIX ETF AWARDS Germany 2024. The prestigious event, held at the Munich Stock Exchange, recognized Valour for the “Most Innovative Bitcoin Tracker ETP including CO2 compensation,” a significant accolade that highlights the company’s commitment to innovative and sustainable financial solutions.

 

The XENIX ETF AWARDS Germany 2024, hosted by XENIX, a provider of qualitative ETF ratings, celebrated the achievements of pioneers in the ETF sector. The event honored a selection of other distinguished entities in the field as well, including Xtrackers, Vanguard, Deka Investment, iShares, Amundi, Invesco EMEA, and Legal & General Investment Management (LGIM).

 

This achievement marks a landmark moment in Valour’s journey, underscoring an extraordinary financial year and establishing Valour as a leading issuer of exchange-traded products (ETPs) in the digital assets space. The award is a testament to Valour’s relentless pursuit of pioneering financial products that meet the evolving needs of investors while contributing positively to environmental sustainability.

 

Valour’s award-winning Bitcoin Tracker ETP, inclusive of CO2 compensation (Valour Bitcoin Carbon Neutral ISIN:GB00BQ991Q22), is a prime example of the company’s innovative approach to digital assets. This product reflects Valour’s dedication to integrating sustainability with financial innovation, catering to a market that increasingly values responsible and forward-thinking investment options.

 

 

 

 

Record-Breaking Achievements in 2023

 

Valour Inc. has achieved two significant records in 2023. Firstly, the company reached an Assets Under Management (AUM) milestone, exceeding $421 million CAD. Secondly, Valour witnessed a daily turnover surpassing $13.6 million CAD on December 8th in both certificates and ABS, reflecting robust market engagement and investor confidence.

 

“This year has been transformative for Valour, with our record-breaking daily volumes and rapidly expanding AUM showcasing our dynamic growth in the regulated digital asset space. Our achievements, from these significant financial milestones to receiving prestigious recognition at the XENIX Awards, are a testament to our relentless pursuit of innovation and excellence. These developments affirm our position in an industry that’s evolving at an unprecedented pace.” said Olivier Roussy Newton, CEO of DeFi Technologies

 

About XENIX ®

 

XENIX is a provider of qualitative ETF ratings, publisher of the XENIX ETF AWARDS and organizer of the XENIX ETF DAYS 2024 in Berlin. XENIX’s qualitative ETF ratings fully cover the ETF markets in Germany, Italy, Great Britain, Northern Europe and Switzerland. The XENIX team evaluates the quality of over 2,600 ETFs in a multi-stage process and classifies all sustainability ETFs in Europe according to regulatory requirements. For more information visit https://xenix.eu/

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

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In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:


Investor Relations
ir@defi.tech

 

3

 

Exhibit 99.73

 

 

DeFi Technologies Inc. Announces Strategic Acquisition of Leading Solana Trading Systems IP

 

●Strategic Acquisition: DeFi Technologies Inc. has completed an agreement to acquire intellectual property (“IP”) central to the Solana blockchain, aligning with its strategic goal to enhance its presence in the Solana ecosystem.

 

●Technology Integration: The acquired IP includes advanced features such as liquidity provisioning and innovative trading strategies, crucial for the company’s growth in blockchain technology.

 

●Enhancing Trading Solutions: This IP is specifically tailored for the Solana-focused trading desk, a collaboration between DeFi Technologies and Valour Inc., aimed at elevating their trading solutions on the high-performance Solana platform.

 

●Solana AUM: Solana is a cornerstone in Valour Inc.’s asset management, leading the company’s Assets Under Management (“AUM”) with over C$168.8 million.

 

Toronto, Canada, December 18, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that it has entered into a definitive purchase agreement (the “Agreement”) to acquire intellectual property (“IP”) from prominent Solana developer Stefan Jørgensen (the “Acquisition”). This Acquisition marks a significant milestone in DeFi Technologies’ expansion strategy, focusing on enhancing its offerings in the Solana ecosystem.

 

The IP acquired by DeFi Technologies encompasses a suite of sophisticated features including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management, and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both DeFi Technologies and Valour Inc. This strategic acquisition positions DeFi Technologies to significantly elevate its capabilities, offering cutting-edge trading solutions and unique strategies specifically designed for Solana, a blockchain platform rapidly gaining recognition for its outstanding performance capabilities.

 

Following the completion of the acquisition, Mr. Stefan Jørgensen, who has played a pivotal role in developing this IP, will join the DeFi Technologies group. He will take the lead in driving the Company’s expansion in DeFi Trading, development, and governance. Mr. Jørgensen’s notable background includes being a part of the initial engineering team at Bitcoin Suisse from 2017 to 2021, where he contributed to the development of a high-security digital asset custody and a core banking system for cryptocurrencies. Additionally, from 2021 to 2023, he was involved in creating various types of smart contracts across different blockchains, including financial contracts like those for trading and settling options on the Solana Blockchain. Post-acquisition, DeFi Technologies plans to expand its team and intensify its efforts in DeFi trading, development, and governance, specifically in areas relating to the newly acquired IP.

 

Solana is a cornerstone in Valour Inc.’s asset management, leading the Company’s Assets Under Management (“AUM”) with over C$168.8 million. As a blockchain platform, Solana stands out for its high performance, characterized by swift and efficient processing capabilities. It is adeptly engineered to support decentralized applications (dApps) and cryptocurrencies. The platform’s distinctive consensus mechanism, Proof of History (PoH) in conjunction with Proof of Stake (PoS), underpins its ability to process transactions rapidly. This feature positions Solana as an attractive option for developers and users who prioritize speed and cost-effectiveness in blockchain solutions. Currently, Solana boasts a market capitalization of approximately $30.6 billion, placing it as the sixth-largest cryptocurrency in the global market.

 

 

 

 

“This strategic acquisition of Solana-based intellectual property is a key milestone for DeFi Technologies and Valour, significantly enhancing our capabilities in the decentralized finance landscape,” said Olivier Roussy Newton, CEO of DeFi Technologies. “By integrating this advanced technology, Valour is positioned to deliver superior trading solutions, demonstrating our commitment to leveraging cutting-edge innovations for tangible benefits in our Solana ecosystem offerings.”

 

Pursuant to the Agreement, DeFi Technologies will issue a total of 7,297,090 common shares of the Company (the “Payment Shares”) at a deemed price of $0.55 per Payment Share to Mr. Jørgensen in exchange for all of the IP. The Payment Shares will be issued in five tranches over a period of two years, and be subject to the continued involvement of Mr. Jørgensen with DeFi Technologies and its subsidiaries at the time of issuance. No finder fees will be paid in connection with the Acquisition. Closing of the Acquisition is subject to the acceptance of the Cboe Canada Exchange and satisfaction of closing conditions.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the closing of the Acquisition; benefits of the IP; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:


Investor Relations DeFi Technologies

ir@defi.tech

 

 

 

 

Exhibit 99.74

 

 

January 8, 2024

 

British Columbia Securities Commission

Alberta Securities Commission

Ontario Securities Commission

Nova Scotia Securities Commission

Cboe Canada (previously Neo Exchange)

 

DeFi Technologies Inc.

198 Davenport Road

Toronto, ON, M5R 1J2

 

Attention: Mr. Ryan Ptolemy, CFO and Mr. Olivier Newton, CEO

 

Dear Sirs/Mesdames:

 

Re: DeFi Technologies Inc. – Notice of Change of Auditors

 

 

 

This letter is delivered to you in connection with the change of auditor of DeFi Technologies Inc. (the “Corporation”), from BF Borgers CPA PC, (“Borgers”) to HDCPA Professional Corporation (“HDCPA”) pursuant to National Instrument 51-102 (“NI 51-102”).

 

As required by NI 51-102, we have reviewed the information contained in the Notice of Change of Auditors, dated January 8, 2024 prepared by the Corporation. Based upon our knowledge as at the date hereof, we hereby confirm that we do not disagree with any of the information contained in such Notice.

 

We trust you will find the foregoing to be in order. If you have any questions or comments relating to this matter, please do not hesitate to contact the undersigned directly at your convenience.

 

Yours truly,

 

HDCPA Professional Corporation

 

Per:/s/ Harpreet Dhawan  
Harpreet Dhawan, CPA  

 

 

www.hdcpa.ca | 647-793-8100
5250 Solar Drive, Suite 206, Mississauga, ON, L4W 0G4

 

Exhibit 99.75

 

Change of Auditor Notice

 

TO: Alberta Securities Commission
  British Columbia Securities Commission
  Ontario Securities Commission
  Nova Scotia Securities Commission

 

On December 20, 2023, BF Borgers CPA PC, (“Borgers”), resigned as auditors of DeFi Technologies Inc. (the “Corporation”) on its own initiative, and the Audit Committee and the Board of Directors of the Corporation accepted such resignation. On the recommendation of the Audit Committee, the Board of Directors approved a proposal to engage the accounting firm of HDCPA Professional Corporation (“HDCPA”) as auditors for the Corporation for the audit of the Corporation’s financial statements for the fiscal year ending December 31, 2023. The Corporation will ask that the shareholders of the Corporation ratify the appointment of HDCPA at the next annual meeting of the shareholders of the Corporation, to be held in 2024.

 

Borgers did not express any modified opinion in its auditor’s report for the financial statements of the Corporation for the fiscal year ended December 31, 2022 (the “2022 Statements”), during which Borgers was the Corporation’s auditor.

 

The Corporation has requested Borgers and HDPCA to each furnish a letter addressed to the securities administrators in each province in which the Corporation is a reporting issuer stating whether or not they agree with the information contained in this notice. A copy of each such letter to the securities administrators will be filed with this notice.

 

On October 23, 2023, the Corporation was advised of an engagement findings report dated October 12, 2023 (the “CPAB Report”) from the Canadian Public Accountability Board (“CPAB”) with respect to Borgers that impacts the 2022 Statements. In addition, on December 7, 2023, CPAB issued an enforcement report (the “Enforcement Report”), a copy of which can be accessed here, which identified multiple significant inspection findings in relation to its audit of the Corporation, each of which constitute a separate Violation Event (as defined in the Rules of CPAB). The various enforcement actions imposed on Borgers included that the firm terminate its engagement with two of its Canadian reporting issuers and a prohibition from assigning a certain unnamed partner to audits of financial statements of reporting issuers in any Canadian jurisdiction in which the unnamed partner is not properly licensed to provide public accounting services by the relevant provincial Chartered Professional Accountant (“CPA”) regulatory body. These enforcement actions were a factor in Borger’s resignation.

 

The Audit Committee has received and reviewed a copy of the CPAB Report, which detailed a variety of significant findings in relation to CPAB’s inspection of the audit of the 2022 Statements. A summary of the findings in the CPAB Report that may affect the assurances placed on the 2022 Statements is set forth in Appendix A. As a result of the significant findings outlined in the CPAB Report, the Corporation has received information requests from Borgers on its remediation plan, including third party confirmations from all of the Corporation’s digital asset custodians to confirm existence of the digital assets and fair market value, confirmations for all the private investments confirming the existence of the Corporation’s holdings and their latest financing details, management forecast files and schedules including all assumptions used in the goodwill impairment analysis, confirmation of exchange traded products, working papers on the calculation of staking and lending revenue, management fees and node revenue. To date, the Corporation has provided all requested information available to it and will continue to provide information as required.

 

The Corporation has delivered a copy of the CPAB Report and Enforcement Report to HDCPA.

 

 

 

 

The CPAB Report also states that:

 

“A significant inspection finding identified by CPAB is defined as a significant deficiency in the application of generally accepted auditing standards related to a material financial balance or transaction stream where the audit firm must perform additional audit work in the current year to support the audit opinion and/or is required to make significant changes to its audit approach. CPAB requires the audit firm to respond in writing to all significant inspection findings.

 

In responding to most significant inspection findings, the audit firm usually performs additional audit work to be satisfied the issued audit opinion remains appropriate.

 

If a potential material error in the RI financial statements is not identified, the audit firm would report the written communications required by the Protocol to the audit committee at its next scheduled meeting. If a potential material error is identified, the audit firm will advise the RI, including its audit committee, on a priority basis”

 

The fact of the CPAB Report, the underlying findings as set forth in Appendix A, the Enforcement Report and the outstanding remediation actions is an “unresolved issue” constituting a “reportable event” pursuant to National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) as it could have a material impact on the auditor report provided on the 2022 Statements. The Audit Committee has discussed the CPAB Report and the remediation plan with Borgers and authorizes Borgers to respond fully to inquiries by HDCPA concerning the CPAB Report, Enforcement Report and remediation plan. While the Corporation continues to respond to information requests by Borgers with respect to the remediation plan, CPAB has advised the Corporation that Borgers has not consulted with CPAB on Borgers’ remediation plan or any remediation activities.

 

HDCPA has provided a “consultation” (as such term is defined in NI 51-102), which is a “reportable event” (as such term is defined in NI 51-102), with respect to the CPAB Report, Borgers’ remediation plan and the impact on the scope of the audit for Fiscal 2023. Pursuant to such consultation, HDCPA has advised that it may perform additional procedures on year-end 2022 balances and transactions and/or modify its independent auditor’s report to the extent that any remediation plan is not completed in a timely manner. The Corporation has consulted with Borgers on this issue and continues to work with Borgers to carry out the remediation plan.

 

DATED the 8th day of January, 2024

 

  DEFI TECHNOLOGIES INC.
   
  (Signed) “Ryan Ptolemy”               
  Name: Ryan Ptolemy
  Title: Chief Financial Officer

 

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Appendix A

 

Topic Significant Findings Impact on Assurance Placed on the 2022 Statements
Digital Assets

The engagement team did not design and perform audit procedures that respond to risks related to existence, completeness, accuracy, valuation and rights/ownership of the digital assets.

 

There was no evidence of the engagement team’s understanding of how digital assets transactions are initiated, and how information about them is recorded, processed, corrected as necessary, incorporated in the general ledger and reported in the financial statements. The engagement team did not obtain evidence to evaluate the nature and significance of the services provided by the custodians and liquidity providers that held material digital assets, which were integral to the company’s processes. Similarly, there was no evidence that the engagement team understood how management safeguards the digital assets in self-custody. Given the nature of the digital assets and the relationships with the service providers, the engagement team should have considered whether substantive testing alone was sufficient to address the risk of material misstatement.

 

There was no indication that the engagement team considered how fraud may be perpetrated and the engagement team did not document the nature, timing and extent of audit procedures, and the linkage of those procedures with the assessed risks of material misstatement due to fraud at the assertion level.

 

No procedures were performed by the engagement team to evidence the safeguarding of the digital assets by the service providers, and that the records kept by the service providers were complete and accurate. Therefore, the engagement team did not establish that the screenshots, statements, and information viewed on-screen from the accounts were reliable evidence supporting the risks identified.

 

There were no substantive audit procedures to respond to the significant risks as they relate to the digital assets in self-custody There was no evidence that the engagement team considered whether digital asset pricing sources were representative of the principal market for the purposes of an input into the estimation of the fair value of the digital assets.

 

There was no evidence in the work papers that the engagement team evaluated the company’s accounting policy and whether it was in accordance with IFRS,

 Potential restatement of the Corporation’s Digital Assets as at December 31, 2022.

 

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ETP Holders

The engagement team did not design and perform audit procedures that respond to risks related to existence, completeness, accuracy, valuation and rights/obligations of the ETP holders payable.

 

There was no evidence of the engagement team’s understanding of how ETP transactions are initiated and how information about them is recorded, processed, corrected as necessary, incorporated in the general ledger and reported in the financial statements.

 

There was no indication that the engagement team considered how fraud may be perpetrated and the engagement team did not document the nature, timing and extent of audit procedures, and the linkage of those procedures with the assessed risks of material misstatement due to fraud at the assertion level

 

There was no evidence in the file that the engagement team confirmed the existence of the securities with the securities depositories, custodians or transfer agents, as applicable.

 

 Potential restatement of the Corporation’s ETP Holder Liability as at December 31, 2022.
Private Investments

There was insufficient appropriate audit evidence to support that investments were within the company’s custody and that the company owned the investments. The company used recent transactions as a basis to estimate the fair value of the investments at year end. There was insufficient appropriate audit evidence of the engagement team’s evaluation of the valuation technique and no evidence to support that the recent transactions occurred and the accuracy and completeness of recent transactions and reasonability of other valuation assumptions to support management’s valuation.

 

 Potential restatement of the Corporation’s Private Investments as at December 31, 2022.
Revenue

The engagement team did not design and perform audit procedures that respond to risks related to occurrence, completeness, accuracy, and cut-off of revenues.

 

There was no evidence of the engagement team’s understanding of how revenue transactions are initiated, and how information about them is recorded, processed, corrected as necessary, incorporated in the general ledger and reported in the financial statements.

 

There were no tests of details of staking and lending income For management fees, there were no audit procedures to establish the accuracy and completeness of the management fee tracking document used as audit evidence, including the assets under management and the applicable fee rates. The company is the calculating agent for the securities but there was no evaluation of whether management’s calculations were correct at December 31, 2022

 

There were no procedures to ensure the completeness and accuracy of reward tokens information from the service provider.

 Potential restatement of the Corporation’s Revenue, Staking Income, Management Fees and/or Node Revenue as at December 31, 2022.

 

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Goodwill

There was no evidence that the engagement team evaluated the competence, capabilities and objectivity of management’s expert and the engagement team did not document their understanding of the expert’s work or an evaluation of the appropriateness of the work as audit evidence. The valuation models used by the expert relied on various assumptions and inputs from management. There was no documentation of the engagement team’s understanding of how management developed the assumptions and no assessment of the reasonability of the estimates.

 

 Potential restatement of the Corporation’s Goodwill as at December 31, 2022.
Fraud and Journal Entries

The engagement team did not make required management and audit committee inquiries, specifically related to the company’s fraud risk assessment process, where fraud could occur, and whether the individuals were aware of any fraud alleged or suspected. Other required risk assessment procedures were not completed, including, analytical procedures performed to identify unusual or unexpected relationships, and identification of the entity’s controls that address fraud risks.

 

 The Corporation does not believe that this significant finding would have a material impact on the assurances placed on the 2022 Statements
Law and Regulations

There was insufficient appropriate audit evidence of the engagement team’s understanding of the legal and regulatory framework applicable to the company in the various jurisdictions in which it operates, and how the company is complying with that framework. Inquiries as to whether the company complied with such laws and regulations were not made of appropriate individuals in management or with those charged with governance. There was no inspection of correspondence with relevant licensing or regulatory authorities.

 

 The Corporation does not believe that this significant finding would have a material impact on the assurances placed on the 2022 Statements
Audit Documentation and File Assembly

CPAB found information that indicated audit evidence was added to the final audit file after the file assembly date and after the firm was notified about the file inspection. There was no audit documentation explaining the specific reasons for adding and modifying audit evidence and by whom modifications were made and reviewed.

 The Corporation does not believe that this significant finding would have a material impact on the assurances placed on the 2022 Statements
Key Audit Matters The engagement team did not communicate key audit matters in the auditor’s report and did not evidence their determination that there were no key audit matters to communicate. Specifically, the engagement team did not document and assess whether the matters that were communicated with those charged with governance that required significant auditor attention in performing the audit should have been key audit matters The Corporation does not believe that this significant finding would have a material impact on the assurances placed on the 2022 Statements

 

5

Exhibit 99.76

 

 

January 8, 2024

 

Alberta Securities Commission

British Columbia Securities Commission

Ontario Securities Commission

Nova Scotia Securities Commission

 

Re: DeFi Technologies Inc. (the “Company”)

Notice Pursuant to National Instrument 51-102 – Change of Auditor (“Notice”)

 

As required by the National Instrument 51-102, we have reviewed the information contained in the Company’s Notice of Change of auditor, dated January 8, 2024, and agree with the information contained therein, based upon our knowledge of the information related to the Notice in as far as they relate to us.

 

Sincerely,

 

 

 

Certified Public Accountants

Lakewood, CO

Exhibit 99.77

 

 

DeFi Technologies Subsidiary Valour Inc. Provides Monthly Corporate Update: Set Record High C$530.9 Million in Assets Under Management

 

●Record High in AUM: Valour Inc., a subsidiary of DeFi Technologies (“Valour”), reached a new record in Assets Under Management (“AUM”), totaling C$530.9 Million on January 2, 2024, reflecting significant growth in the value of assets underpinning Valour’s exchange traded products (“ETPs”) and an increase in investor demand.

 

●Strong December 2023 Market Performance and Impressive Sales Achievement: Valour achieved a robust performance in December with a daily average turnover of C$8.1 million. Additionally, Valour ended the month with C$507.2 million in AUM, representing a gain of 217% for the year, and achieved an all-time net sales of C$521.9 million. These figures highlight Valour’s notable presence in the digital assets market and its commitment to offering innovative financial products that align with emerging investment trends.

 

Toronto, Canada, January 8, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, set a record high in assets under management (“AUM”) of C$530.9 Million on January 2, 2024.

 

This recent uptick in AUM is driven by an increase in the value of the assets underpinning Valour’s ETP offerings, coupled with an increase in demand for Valour’s ETPs, which the Company believes is due to the growing investor interest and confidence in digital assets as viable investment options. With an impressive average daily turnover of C$8.2 million in January and all-time net sales reaching C$521.9 million, Valour’s substantial year-end AUM of C$507.2 million – an increase of 217% on the year – reflects its commitment to offering innovative financial products. These products resonate with evolving investment trends and the evolving landscape of digital assets.

 

“We’re pleased that Valour has achieved a remarkable milestone, setting a new record in Assets Under Management by reaching C$530.9 Million and ending the year with C$507.2 million, marking a 217% gain.,” said DeFi Technologies CEO, Olivier Roussy Newton. “This accomplishment is not just a testament to our innovative approach to offering digital assets but also a clear indicator of the interest and confidence in these assets as legitimate investment avenues. A strong close to 2023, with December delivering our highest turnover for the year and an influx in net sales further bolsters our optimism. We are committed to continuing our trajectory of offering additional products in addition to our current suite of cutting-edge financial products that align with the rapidly evolving digital asset landscape and the modern investor’s needs.”

 

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; listing of future ETPs; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies
ir@defi.tech

 

 

 

Exhibit 99.78

 

 

DeFi Technologies Announces Change of Auditor

 

TORONTO, Jan. 08, 2024 -- DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralized finance, announced that it has changed its auditors from BF Borgers CPA PC (“Former Auditor”) to HDCPA Professional Corporation (“Successor Auditor”) effective December 20, 2023. The Former Auditor resigned as the auditor of the Company on its own initiative effective December 20, 2023 and the board of directors of the Company appointed the Successor Auditor as the Company’s auditor effective December 20, 2023, until the next Annual General Meeting of the Company.

 

The Company confirms that, at this time, there have been no reservations or modified opinions in the Former Auditor’s reports for the most recently completed financial year or for any period subsequent to the most recently completed period for which an audit report was issued. The Company’s board of directors and audit committee each approved the resignation of the Former Auditor and the appointment of the Successor Auditor in place of the Former Auditor.

 

On December 7, 2023, the Canadian Public Accountability Board (“CPAB”) issued an enforcement report (the “Enforcement Report”) against the Former Auditor resulting from an engagement findings report dated October 12, 2023 (the “CPAB Report”) with respect to the audit of the Company’s financial statements for the fiscal year ended December 31, 2022 (“2022 Statements”).

 

The Enforcement Report identified multiple significant inspection findings, each of which constitute a separate Violation Event (as defined in the Rules of CPAB) with respect to the Former Auditor. A summary of the findings in the CPAB Report that impact the 2022 Statements and how such findings may affect the assurances placed on the 2022 Statements is set forth the change of auditor notice that was filed today and is available on SEDAR+.

 

In addition, among the various enforcement actions, the Former Auditor is prohibited from assigning a certain unnamed partner to audits of financial statements of reporting issuers in any Canadian jurisdiction in which the unnamed partner is not properly licensed to provide public accounting services by the relevant provincial Chartered Professional Accountant regulatory body, which was a factor in the Former Auditor’s resignation. A copy of the Enforcement Report is available here.

 

As a result of the CPAB Report, a remediation plan for is required for the audit of the 2022 Statements. The Corporation has received information requests from the Former Auditor on its remediation plan, including third party confirmations from all of the Company’s digital asset custodians to confirm existence of the digital assets and fair market value, confirmations for all the private investments confirming the existence of the Company’s holdings and their latest financing details, management forecast files and schedules including all assumptions used in the goodwill impairment analysis, confirmation of exchange traded products, working papers on the calculation of staking and lending revenue, management fees and node revenue. To date, the Company has provided all requested information available to it and will continue to provide information as required.

 

The fact of the CPAB Report, the Enforcement Report and remediation plan is an “unresolved issue” constituting a “reportable event” pursuant to National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) as it could have a material impact on the auditor report provided on the 2022 Statements. The Audit Committee has discussed the CPAB Report and remediation plan with the Former Auditor and authorizes the Former Auditor to respond fully to inquiries by the Successor Auditor concerning the CPAB Report, Enforcement Report and remediation plan. The Successor Auditor has provided a “consultation” NI 51-102, which is a “reportable event” (as such term is defined in NI 51-102), with respect to the CPAB Report, remediation plan requested by CPAB and the impact on the scope of the audit for fiscal 2023. Pursuant to such consultation, the Successor Auditor has advised that it may perform additional procedures on year-end 2022 balances and transactions and/or modify its independent auditor’s report to the extent that any remediation plan requested by CPAB is not completed in a timely manner.

 

The Company has consulted with the Former Auditor on this issue and the Former Auditor continues to carry out remediation plan requested by CPAB. The Company will continue to update the market with respect to material developments in the remediation plan of the audit of the 2022 Statements.

 

In accordance with NI 51-102, the change of auditor notice, together with the required letters from the Former Auditor and the Successor Auditor, have been reviewed by the audit committee and the board of directors and have been filed on SEDAR+.

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the appointment of auditors of the Company; remediation plan undertaken by the Former Auditor with respect to the CPAB Report; the Successor Auditor’s audit of fiscal 2023 financial statements; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

 

 

 

Exhibit 99.79

 

 

 

DeFi Technologies Inc. Announces Strategic Acquisition of Private Research Firm, Reflexivity Research LLC,

Co-Founded by Anthony Pompliano and Will Clemente

 

Toronto, Canada, January 9, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the signing of a binding letter of intent (the “LOI”) to acquire Reflexivity Research LLC (“Reflexivity”), a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry (the “Acquisition”).

 

Reflexivity, co-founded by Anthony Pompliano and Will Clemente, offers high-quality crypto-native research designed for traditional finance investors. The firm is known for unique bitcoin analysis, along with counting some of the most well-known cryptocurrency organisations as clients, including eToro, Solana, Avalanche, NEAR, Fantom, Sei Network, and many more. The company’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors.

 

Reflexivity has also focused on creating a large third-party distribution channel for their research, which has been accomplished by partnering with platforms such as TradingView, eToro, and others.

 

The acquisition signifies DeFi Technologies’ inaugural foray into the research domain, underscoring its dedication to fostering knowledge and understanding in the dynamic cryptocurrency sector. With the acquisition, DeFi Technologies not only reinforces its role as a pivotal bridge between traditional and decentralized finance but will now also offer valuable insights and intelligence to its clientele, further enhancing its comprehensive suite of services in the financial ecosystem.

 

Pursuant to the LOI, DeFi Technologies will acquire all issued and outstanding securities of Reflexivity Research in return for 5 million common shares of DeFi Technologies (the “Payment Shares”). The Payment Shares will be subject to a lock-up schedule of 12 months, with the Payment Shares being released in equal tranches every three months, underscoring mutual confidence in the enduring value of this joint venture. No finder fees will be paid in connection with the Acquisition. The parties intend to enter into a definitive agreement in respect of the Acquisition (the “Definitive Agreement”) by January 31, 2024.

 

Anthony Pompliano, co-founder of Reflexivity Research, commented, “As traditional finance continues to allocate to this new asset class and structured products become more important in 2024, we are excited to partner with DeFi and the pioneers of the ETP market at Valour. This collaboration will enhance our research and bring insightful, actionable intelligence to our clients, bridging the gap between traditional finance and the burgeoning potential of cryptocurrency markets.”

 

 

 

 

 

 

Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies, commented, “This acquisition marks the beginning of a new chapter for us as we establish our presence in the research sector. Joining forces with Reflexivity Research is a strategic step that will greatly enhance our offerings and provide our clients with access to premier insights in the cryptocurrency market.”

 

About Reflexivity Research LLC

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

2

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the entering into of a Definitive Agreement; closing of the Acquisition; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

 

Exhibit 99.80

 

DeFi Technologies’ Subsidiary Valour Inc.
Announces Plans to Launch a Physical Backed ETP, the Valour HBAR Staking ETP
in Collaboration with The Hashgraph Association (THA)

 

●Expansion of Physically Backed ETPs: DeFi Technologies’ subsidiary, Valour Inc., announces a new product offering launching a physically backed Exchange Traded Product (ETP) the Valour HBAR Staking ETP in collaboration with The Hashgraph Association (THA) – a Swiss-based independent and non-profit organization focused on empowering a digital future for all by, leveraging Hedera’s eco-friendly distributed ledger technology (DLT) that is governed by the world’s leading organizations. This comes on the heels of a recent collaboration between Valour Inc. and Bitcoin Suisse to demonstrate Valour’s dedication to expanding physically backed digital asset products and broadening market accessibility for cryptocurrencies to institutional investors on traditional exchanges like XETRA.

 

●Hedera’s Significance: Hedera is a leading decentralized and open-source public network, notable for its energy-efficient Proof-of-Stake (PoS) consensus mechanism. It is governed by a council of independent, global organizations consisting of Fortune 500 enterprises and prestigious universities, including major corporations such as Google, IBM, Boeing, Dell, Deutsche Telekom, Standard Bank, and LG Electronics. HBAR, the native currency of Hedera, is used for network utilization fees and network security and ranks amongst the world’s top forty cryptocurrencies globally with a market cap of $2.5 Billion.

 

TORONTO, January 22, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, will offer a physical backed ETP, the Valour HBAR Staking ETP in Collaboration with The Hashgraph Association (THA).

 

HBAR is the native, energy-efficient cryptocurrency of the public Hedera DLT network. HBARs are used to pay application transaction fees and protect the network from attack through proof-of-stake and its asynchronous byzantine fault tolerant (aBFT) hashgraph consensus algorithm. HBAR has a market cap of $2.5 Billion and ranks amongst the top 40 cryptocurrencies globally.

 

Hedera is a decentralized, open-source, proof-of-stake public ledger that utilizes the leaderless, asynchronous Byzantine Fault Tolerance (aBFT) hashgraph consensus algorithm. It is governed by a collusion-resistant, decentralized council of leading enterprises, universities, and web3 projects from around the world. Hedera is built differently from other blockchains. It has high throughput with fast finality; low, predictable fees; fair transaction ordering with consensus timestamps; and a robust codebase that ensures scalability and reliability at every layer of its network infrastructure. Hedera is governed responsibly by the world’s leading organizations to ensure the network is collusion-resistant.

 

Valour also recently announced the launch of the 1Valour Bitcoin Physical Carbon Neutral ETP (ISIN: GB00BQ991Q22) on June 15, 2023. This ETP, secured by the respective digital assets physically stored with regulated custodians like Copper, is part of Valour’s commitment to providing physically backed digital asset platforms. Additionally, Valour offers fully hedged digital asset ETPs, with listings across European exchanges, banks, and broker platforms.

 

 

 

 

About Hedera

 

Hedera is the open source, leaderless proof-of-stake network powering the next generation of Web3. Hedera’s robust ecosystem is built by a global community, on a network governed by a diverse council of industry-leading organizations, including abrdn, Avery Dennison, Boeing, Chainlink, COFRA, DBS Bank, Dell, Dentons, Deutsche Telekom, DLA Piper, EDF (Électricité de France), eftpos, FIS (WorldPay), Google, Hitachi America, IBM, the Indian Institute of Technology (IIT), LG Electronics, The London School of Economics (LSE), Magalu, Nomura Holdings, ServiceNow, Shinhan Bank, Standard Bank Group, Swirlds, Tata Communications, Ubisoft, University College London (UCL), Wipro, and Zain Group. For more details, visit https://hedera.com/

 

About The Hashgraph Association

 

The Hashgraph Association is at the forefront of the digital enablement and empowerment of organisations through the broad adoption of Hedera-powered enterprise-grade solutions and decentralized applications, which includes supporting and funding of training, innovation, and venture building programs globally. As a non-profit organization headquartered in Switzerland, The Hashgraph Association provides funding for innovation, research, and development that enables economic inclusion and a digital future for all, with a positive environmental, social, and governance (ESG) impact. For further information about The Hashgraph Association, visit www.hashgraph-association.com.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:


Investor Relations
ir@defi.tech

 

 

3

 

 

Exhibit 99.81

 

 

DeFi Technologies to Host Corporate Webinar on January 30th, 2024 at 10:00 AM PT / 1:00 PM ET

 

TORONTO, Jan. 30, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce a corporate webinar scheduled for January 30, 2024, at 10:00 AM PT / 1:00 PM ET.

 

The webinar will feature a Company overview and update, including the Company’s strategic outlook in the months ahead. The presentation will include insights from Olivier Roussy Newton, Chief Executive Officer, and Russell Starr, Head of Capital Markets. Additionally, Anthony Pompliano, the co-founder of Reflexivity Research LLC, which has recently entered into an agreement to be acquired by DeFi Technologies, will be contributing to the discussion.

 

Individual and institutional investors, advisors, and analysts are cordially invited to attend this 30-minute session, followed by a Q&A segment.

 

Please register for the webinar using the following link: https://t.co/gWQEtFgimi

 

Corporate Highlights:

 

●DeFi Technologies is a technology company that enables traditional investors to participate in a diversified portfolio of digital assets across the decentralized finance and Web3 sector.

 

●The Company aims to capture the potential for growth in digital assets and the future of finance through regulated equity instruments.

 

●DeFi Technologies stands out as a publicly traded company specifically constructed to provide investors with direct exposure to these nascent markets.

 

●DeFi Technologies is the parent company of Valour Inc, an issuer of exchange-traded products (“ETPs”) tracking the performance of digital assets with listings across leading European stock exchanges including Euronext (Paris & Amsterdam), Frankfurt Stock Exchange and Nordic Growth Market.

 

About DeFi Technologies:

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) ( OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the webinar; the acquisition of Reflexivity Research LLC; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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https://www.prnewswire.com/news-releases/defi-technologies-to-host-corporate-webinar-on-january-30th-2024-at-1000-am-pt--100-pm-et-302047655.html

 

SOURCE DeFi Technologies Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/January2024/30/c4445.html

 

%SEDAR: 00007675E

 

For further information:

 

please contact: Investor Relations DeFi Technologies: ir@defi.tech CO: DeFi Technologies Inc.

 

CNW 07:30e 30-JAN-24

 

 

 

Exhibit 99.82

 

 

 

DeFi Technologies Subsidiary Valour Inc. Provides Monthly Corporate Update: C$497 Million in Assets Under Management and Net Inflows Into ETPs

 

●Robust AUM and Net Inflows: DeFi Technologies Inc.’s subsidiary, Valour Inc., continues to see robust net inflows, maintaining a strong assets under management (“AUM”) of C$497 Million as of January 31, 2024, signifying growing investor confidence in digital assets.

 

●Exceptional Market Activity and Growth: Valour recorded an average daily turnover of approximately C$7.1 million in January 2024, nearly matching the total turnover from the first four months of 2023, and saw a substantial inflow of approximately C$3.6 million into its Bitcoin ETP, indicating a significant market engagement and growth trajectory.

 

Toronto, Canada, February 5, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, continues to see robust net inflows, maintaining a strong assets under management AUM of C$497 Million as of January 31, 2024.

 

Valour’s steadfast AUM, amounting to C$497 Million, indicates ongoing net inflows and rising investor confidence in digital assets. The AUM’s slight fluctuation from the previous month mirrors the typical volatility in the digital asset markets. Valour’s success in sustaining significant AUM levels underscores the enduring demand for its ETPs.

 

January 2024 showcased exceptional market activity for Valour, with an average daily turnover reaching approximately C$7.1 million. This turnover nearly matches the total turnover from January to April 2023, highlighting a significant growth trajectory and engagement in the market. Additionally, January 2024 saw a substantial inflow of approximately C$3.6 million into Valour’s Bitcoin ETP alone. Valour’s all-time net sales also climbed to C$532.9 million from C$521.9 million in December, further illustrating the strong alignment of Valour’s ETPs with current investment trends and the dynamic digital asset environment.

 

“We continue to be encouraged by Valour’s achievements, particularly the maintenance of our AUM. This, combined with the significant net inflows into our ETPs and average increased daily turnovers over the last several months, underscores our innovative approach in the digital asset sector and the growing investor confidence in these assets,” said Olivier Roussy Newton, CEO of DeFi Technologies.

 

 

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; listing of future ETPs; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

 

 

Exhibit 99.83

 

 

DeFi Technologies Inc. Completes Strategic Acquisition of Private Research Firm, Reflexivity Research LLC,

Co-Founded by Anthony Pompliano and Will Clemente

 

●Acquisition Completed: DeFi Technologies Inc. has successfully acquired Reflexivity Research LLC, a private research firm known for its high-quality, crypto-native research and significant client base including major cryptocurrency organizations. This marks DeFi Technologies’ first venture into the research domain, aiming to bridge traditional and decentralized finance.

 

●Strategic Implications: The acquisition allows DeFi Technologies to enhance its service offerings with valuable insights and intelligence in the cryptocurrency market, strengthening its role as a pivotal connector between traditional and decentralised finance sectors.

 

●Transaction Details: The acquisition involved DeFi Technologies acquiring all issued and outstanding securities of Reflexivity Research for 5 million common shares, subject to a 12-month lock-up schedule. This move reflects a mutual confidence in the long-term value of this partnership, with no finder fees paid for the acquisition.

 

Toronto, Canada, February 7, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the successful completion of its acquisition of Reflexivity Research LLC (“Reflexivity”), a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry (the “Acquisition”).

 

Reflexivity, co-founded by Anthony Pompliano and Will Clemente, offers high-quality crypto-native research designed for traditional finance investors. The firm is known for unique Bitcoin analysis, along with counting some of the most well-known cryptocurrency organisations as clients, including eToro, Solana, Avalanche, NEAR, Fantom, Sei Network, and many more. Reflexivity’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors which generates a positive cash flow for Reflexivity.

 

Reflexivity has also focused on creating a large third-party distribution channel for their research, which has been accomplished by partnering with platforms such as TradingView, eToro, and others.

 

Reflexivity is set to host its annual Bitcoin Investor Day, scheduled for March 22, 2024, in New York City. This event promises to be a gathering of industry luminaries, featuring key leaders from prominent firms such as Blackrock, Fidelity, VanEck, ARK, Bitwise, Galaxy Digital, and Skybridge, among others. The day will be an opportunity for in-depth discussions and insights into the Bitcoin market, led by some of the most influential figures in the field.

 

The Acquisition signifies DeFi Technologies’ inaugural foray into the research domain, underscoring its dedication to fostering knowledge and understanding in the dynamic cryptocurrency sector. With the Acquisition, DeFi Technologies not only reinforces its role as a pivotal bridge between traditional and decentralized finance but will now also offer valuable insights and intelligence to its clientele, further enhancing its comprehensive suite of services in the financial ecosystem.

 

 

 

 

In connection with the Acquisition, DeFi Technologies acquired all issued and outstanding securities of Reflexivity Research for 5 million common shares of DeFi Technologies (the “Payment Shares”). The Payment Shares are subject to a lock-up schedule of 12 months, with the Payment Shares being released in equal tranches every three months, underscoring mutual confidence in the enduring value of this joint venture. No finder fees were paid in connection with the Acquisition.

 

Anthony Pompliano, co-founder of Reflexivity Research, commented, “As traditional finance continues to allocate to this new asset class and structured products become more important in 2024, we are excited to partner with DeFi and the pioneers of the ETP market at Valour. This collaboration will enhance our research and bring insightful, actionable intelligence to our clients, bridging the gap between traditional finance and the burgeoning potential of cryptocurrency markets.”

 

Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies, commented, “This acquisition marks the beginning of a new chapter for us as we establish our presence in the research sector. Joining forces with Reflexivity Research is a strategic step that will greatly enhance our offerings and provide our clients with access to premier insights in the cryptocurrency market.”

 

About Reflexivity Research LLC

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

2

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the benefits of the Acquisition; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

Exhibit 99.84

 

  

 

DeFi Technologies Inc. Completes Strategic Acquisition of Leading Solana Trading Systems IP

 

●Strategic Acquisition: DeFi Technologies Inc. has completed the acquisition of intellectual property (“IP”) central to the Solana blockchain, aligning with its strategic goal to enhance its presence in the Solana ecosystem.

●Technology Integration: The acquired IP includes advanced features such as liquidity provisioning and innovative trading strategies, crucial for the Company’s growth in blockchain technology.

●Enhancing Trading Solutions: This IP is specifically tailored for the Solana-focused trading desk, a collaboration between DeFi Technologies and Valour Inc., aimed at elevating their trading solutions on the high-performance Solana platform.

●Solana AUM: Solana is a cornerstone in Valour Inc.’s asset management, leading the company’s Assets Under Management (“AUM”).

 

Toronto, Canada, February 9, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that it has completed the acquisition of intellectual property (“IP”) from prominent Solana developer Stefan Jørgensen (the “Acquisition”). This Acquisition marks a significant milestone in DeFi Technologies’ expansion strategy, focusing on enhancing its offerings in the Solana ecosystem.

 

The IP acquired by DeFi Technologies encompasses a suite of sophisticated features including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management, and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both DeFi Technologies and Valour Inc. This acquisition positions DeFi Technologies to significantly elevate its capabilities, offering cutting-edge trading solutions and unique strategies specifically designed for Solana, a blockchain platform rapidly gaining recognition for its outstanding performance capabilities.

 

Mr. Stefan Jørgensen, who has played a pivotal role in developing this IP, joins the DeFi Technologies group. He will take the lead in driving the Company’s expansion in DeFi Trading, development, and governance. Mr. Jørgensen’s notable background includes being a part of the initial engineering team at Bitcoin Suisse from 2017 to 2021, where he contributed to the development of a high-security digital asset custody and a core banking system for cryptocurrencies. Additionally, from 2021 to 2023, he was involved in creating various types of smart contracts across different blockchains, including financial contracts like those for trading and settling options on the Solana blockchain. DeFi Technologies plans to expand its team and intensify its efforts in DeFi trading, development, and governance, specifically in areas relating to the newly acquired IP.

 

 

 

 

  

 

Solana is a cornerstone in Valour Inc.’s asset management, leading the Company’s Assets Under Management (“AUM”). As a blockchain platform, Solana stands out for its high performance, characterized by swift and efficient processing capabilities. It is adeptly engineered to support decentralized applications (dApps) and cryptocurrencies. The platform’s distinctive consensus mechanism, Proof of History (PoH) in conjunction with Proof of Stake (PoS), underpins its ability to process transactions rapidly. This feature positions Solana as an attractive option for developers and users who prioritize speed and cost-effectiveness in blockchain solutions. Currently, Solana boasts a market capitalization of approximately $45.7 billion, placing it as the fifth-largest cryptocurrency in the global market.

 

“This strategic acquisition of Solana-based intellectual property is a key milestone for DeFi Technologies and Valour, significantly enhancing our capabilities in the decentralized finance landscape,” said Olivier Roussy Newton, CEO of DeFi Technologies. “By integrating this advanced technology, Valour is positioned to deliver superior trading solutions, demonstrating our commitment to leveraging cutting-edge innovations for tangible benefits in our Solana ecosystem offerings.”

 

Pursuant to the Agreement, DeFi Technologies issued a total of 7,297,090 common shares of the Company (the “Payment Shares”) at a deemed price of $0.55 per Payment Share to Mr. Jørgensen in exchange for all of the IP. The Payment Shares are subject to a lock-up and will be released in five tranches over a period of two years, and be subject to the continued involvement of Mr. Jørgensen with DeFi Technologies and its subsidiaries. No finder fees were paid in connection with the Acquisition.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

2

 

 

  

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the development and benefits of the IP; the Solana blockchain; expansion of DeFi Technologies trading, development and governance lines of business; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

#  #  #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

Exhibit 99.85

 

FORM 72 - 503F REPORT OF DISTRIBUTIONS OUTSIDE CANADA Full name, address and telephone number of the Issuer. 1. a ) Ful l nam e of issuer DeFi Technologie s Inc . / DeFi Technologie s Inc. b ) Hea d office address Ontario Province/State 19 8 Davenport Rd. Stree t address M5 R 1J2 Posta l code/Zi p code Toronto Municipality + 1 (416 ) 861 - 2267 Telephon e number Canada Country c) Full legal name(s) of co - issuer(s) (if applicable) Type of security, the aggregate number or amount distributed and the aggregate purchase price. Canadia n $ Total amount Highest price Singl e or lowes t price Numbe r of securities Description of security CUSIP numbe r (if applicable) Convertibl e / exchangeabl e securit y code $0.0000 $0.5500 $0.5500 7,297,090.0000 244916102 CMS Type s of securit y distributed Provide the following information for all distributions of securities relying on an exemption from section 2 . 3 or 2 . 4 of the Rule on a per security basis . Refer to the Instructions for how to indicate the security code . If providing the CUSIP number, indicate the full 9 - digit CUSIP number assigned to the security being distributed . Details of rights and convertible/exchangeable securities If any rights (e.g. warrants, options) were distributed, provide the exercise price and expiry date for each right. If any convertible/exchangeable securities were distributed, provide the conversion ratio and describe any other terms for each convertible/exchangeable security. Describe other terms (if applicable) Conversio n ratio Expir y dat e (YYYY - MM - DD) Exercis e price (Canadia n $) Underlying security code Security code Highest Lowest Date of distribution(s). Distribution date State the distribution start and end dates. If the report is being filed for securities distributed on only one distribution date, provide the distribution date as both the start and end dates. If the report is being filed for securities distribued on a continuous basis, 2. 3.

 

09 02 2024 09 02 2024 include the start and end dates for the distribution period covered by the report. Start dat e En d date YYYY M M DD YYYY MM DD

 

State the name and address of any person acting as dealer or underwriter (including an underwriter that is acting as agent) in connection with the distribution(s) of the securities. Dealer or underwrite r information (i f applicable) 4. Ful l lega l name Stree t address Municipality Country Telephon e number Province/State Posta l code/Zip code Website

 

Certification Kenny CHOI 15 02 2024 Certification Provide the following certification and business contact information of an officer, director or agent of the issuer. If the issuer is not a company, an individual who performs functions similar to that of a director or officer may certify the report. For example, if the issuer is a trust, the report may be certified by the issuer's trustee. If the issuer is an investment fund, a director or officer of the investment fund manager (or, if the investment fund manager is not a company, an individual who performs similar functions) may certify the report if the director or officer has been authorized to do so by the investment fund. The certification may be delegated, but only to an agent that has been authorized by an officer or director of the issuer to prepare and certify the report on behalf of the issuer. If the report is being certified by an agent on behalf of the issuer, provide the applicable information for the agent in the boxes below. The signature on the report must be in typed form rather than handwritten form. The report may include an electronic signature provided the name of the signatory is also in typed form. Securities legislation requires an issuer that makes a distribution of securities under certain prospectus exemptions to file a completed report of exempt distribution. By completing the information below, I certify, on behalf of the issuer/investment fund manager, to the securities regulatory authority or regulator, as applicable, that I have reviewed this report and to my knowledge, having exercised reasonable diligence, the information provided in this report is true and, to the extent required, complete. Nam e of Issuer / investment fun d manager/agen t DeFi Technologie s Inc. Ful l lega l name Famil y nam e Firs t give n nam e Secondar y give n names Titl e CORPORAT E SECRETARY Telephone number +1 (416) 861 - 2267 Email address KCHOI@FMRESOURCES.CA Signature Kenny Choi Date YYYY MM DD 5.

 

Exhibit 99.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.87

 

 

DeFi Technologies’ Subsidiary Valour Inc. Announces Launch of Physical Backed Staking ETP for the Internet Computer Protocol (ICP) Token

 

●Expansion of Physical Backed ETPs: DeFi Technologies’ subsidiary, Valour Inc., announces a new product offering launching a physical backed Exchange Traded Product (ETP) for the Internet Computer Protocol (ICP) token (ISIN: GB00BS2BDN04) The ETP is available for trading as of February 14, 2024.

 

●Pioneering Blockchain Innovation: The Internet Computer Protocol (ICP) is a blockchain platform designed to extend the functionality of Web3. With a significant market capitalization of around $6 billion, the Internet Computer has positioned itself as a major innovator in the blockchain space, with the ICP token ranking among the top 20 cryptocurrencies globally.

 

TORONTO, Feb. 20, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched its physical backed staking ETP for the ICP token

 

The Valour Internet Computer Protocol (ICP) ETP (ISIN: GB00BS2BDN04) provides retail and institutional investors with trusted, secure, and diversified exposure to the innovative and fast-growing Internet Computer ecosystem, enabling participation in a decentralized web platform that aims to redefine the future of the digital landscape.

 

The Internet Computer adds autonomous serverless cloud functionality to the public Internet – making it possible to build almost any system or service entirely on a decentralized network. Developers and enterprises no longer have to rely on legacy IT systems that are susceptible to hacks and down time. The Internet Computer is a tamper proof and unstoppable network, a new paradigm of computing power.

 

“Through the launch of the Valour Internet Computer Protocol (ICP) ETP, we are expanding our portfolio and offering investors a broader spectrum of high-quality digital assets,” said Olivier Roussy Newton, CEO of DeFi Technologies and Director of Valour. “This initiative is a testament to our commitment to diversity and innovation in the investment landscape. By continuously broadening our range of offerings, we aim to empower investors with the flexibility and opportunity to diversify their portfolios with cutting-edge digital assets, fostering a more inclusive and versatile financial market.”

 

“Copper is proud to provide the necessary institutional support on the ICP network, allowing Valour to securely store and stake ICP tokens within Copper’s secure infrastructure. This setup provides the required framework for investors to gain exposure to the underlying technology of ICP, relying on the highest tech standards for digital assets,” comments Mr. Benitez Rubianes, BD Director at Copper.co, Valour’s trusted industry-grade custodian for digital assets.

 

Marco A. Infuso, Chief Sales Officer at Valour Europe AG, added, “This collaboration enables safe and easy access to ICP tokens via traditional brokers, banks, and platforms. In this way, ICP can be integrated into every portfolio, just as shares and bonds have been for decades. Another milestone in crypto adoption for European clients.”

 

About the Internet Computer

 

The Internet Computer is powered by novel “chain-key cryptography”, which allows it to run at web speed with efficiency, its smart contracts to serve the web directly to end users, and its on-chain compute to scale without bound. With these capabilities, mass market Web3 services can run entirely on-chain, opening up the possibility for blockchain to become an alternative to traditional IT, such as cloud services. The Internet Computer is governed and updated by the Network Nervous System (NNS), a protocol-integrated DAO that decides to use liquid democracy. Supporting the mission are more than 200 world-renowned scientists and engineers specializing in cryptography, distributed systems, execution environments, programming languages, and more. For more details, visit https://internetcomputer.org

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and

 

1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

View original content to download multimedia:

 

https://www.prnewswire.com/news-releases/defi-technologies-subsidiary-valour-inc-announces-launch-of-physical-backed-staking-etp-for-the-internet-computer-pro

 

SOURCE DeFi Technologies Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/February2024/20/c6508.html

 

%SEDAR: 00007675E

 

For further information: please contact: Investor Relations, ir@defi.tech

 

CO: DeFi Technologies Inc.

 

CNW 07:30e 20-FEB-24

 

 

 

 

Exhibit 99.88

 

 

DeFi Technologies’ Subsidiary Valour Inc. Announces Record AUM of C$590 Million, Launch of Valour Inc.’s Ripple (XRP) and Binance (BNB) ETPs

 

●New AUM Record: Valour reports a significant increase in assets under management (“AUM”), reaching C$590 million, up from C$497 million as of January 31, 2024. This 18.7% growth reflects strong market confidence and Valour's expanding influence in the digital asset space.

 

●Launch of XRP and BNB ETPs: Valour has introduced Ripple (“XRP”) and Binance (“BNB”) Exchange Traded Products on Nordic Growth Market (“NGM”) exchange expanding its range of digital asset investment products.

 

●Investment Access and Expansion: The Valour Ripple (XRP) SEK ETP (ISIN: CH1161139584) and Valour Binance SEK ETP (ISIN: CH1149139698) will allow investors to gain exposure to XRP and BNB, through banks or brokers, meeting the growing demand for diverse digital asset investments in European markets. Valour continues to prioritize product innovation and development, and it has plans to list additional traditional and physically backed ETPs in the coming months.

 

Toronto, Canada, February 22, 2023 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has achieved a record assets under management (“AUM”) of C$590 million. Additionally, Valour has launched Ripple (“XRP”) and Binance (“BNB”) ETPs on the Nordic Growth Market (“NGM”) exchange.

 

Valour has achieved a new record with its AUM reaching C$590 million, up from the previously announced figure of C$497 million as of January 31, 2024. This increase to C$590 million represents a notable growth of 18.7%, reflecting Valour's solid trajectory in the market and the growing investor trust in its digital asset products. This progress emphasizes the sustained interest and confidence in digital assets among investors, positioning Valour as a key player in offering simplified access to the evolving landscape of digital investments.

 

Additionally, Valour has launched Ripple (XRP) and Binance (BNB) ETPs on the NGM exchange. Trading of the ETPs began on February 21, 2024. The Valour Ripple (XRP) SEK (ISIN: CH1161139584) and Binance (BNB) SEK (ISIN: CH1149139698) ETPs will enable investors to gain exposure to XRP and BNB, simply and securely, via their bank or broker.

 

XRP has a market cap of US$29.57 Billion and ranks sixth among all cryptocurrencies globally. Ripple XRP is a key player in the digital currency space, known for its use in facilitating rapid and low-cost international money transfers. Operating on RippleNet, XRP serves as a bridge currency in Ripple's payment network, allowing for seamless currency exchanges worldwide. This has positioned XRP as a preferred choice for financial institutions seeking efficient alternatives to traditional cross-border payment methods.

 

 

 

 

 

BNB has a market cap of US$54.64 Billion and ranks fourth among all cryptocurrencies globally. BNB, previously also known as Binance Coin, is a cryptocurrency coin created and issued by the cryptocurrency exchange Binance. BNB can be used to pay for fees when trading on Binance, and usually at a discounted rate. Due to the primary utility, BNB has seen significant growth in interest throughout the years. Several rounds of token burn events have appreciated BNB price and pushed it up as one of the top 5 cryptocurrencies by market capitalization.

 

"The introduction of the Ripple (XRP) and Binance (BNB) ETPs by Valour marks a significant expansion of our product offerings," said Olivier Roussy Newton, CEO of DeFi Technologies. “These products underscore our commitment to making digital asset investment accessible and seamless for investors across Europe. This initiative goes beyond merely expanding our product line; it represents a strategic move towards democratizing finance and providing our clients with diversified investment opportunities in the world's leading cryptocurrencies, amidst the evolving digital asset landscape."

 

"We're thrilled to announce the arrival of Valour BNB and Valour XRP to the vibrant investor community in the Nordics. With these additions, we proudly claim the title of the most comprehensive provider of crypto ETPs listed in the Nordics, presenting options both as singular assets and bundled within our VDAB10 product," said Johanna Belitz, Valour Head of Nordics. "This places us in a unique position to accommodate investors keen on navigating the cryptoverse conveniently, securely, and with ease."

 

Valour continues to prioritize product innovation and development, and it has plans to list additional traditional and physically backed ETPs in the coming months.

 

Q4 2023 Financials

 

The company would also like to announce that its Q4 2023 Financials will be released towards the end of March 2024. When the exact date is known the company will issue an announcement.

 

In addition to its novel digital asset platform, which includes 1Valour Ethereum Physical Staking ETP and 1Valour Bitcoin Physical Carbon Neutral ETP, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN) and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and X/Twitter, and for more details, visit https://defi.tech/

 

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About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes,; launch of the Valour XRP ETP and Valour BNB ETP; filing date of the Company’s financial statements; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

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Exhibit 99.89

 

 

 

DeFi Technologies Provides Monthly Corporate Update: Subsidiary Valour Scales to Record C$699.5 Million in Assets Under Management Up 40.7% from Previous Month

 

●Record-Setting AUM Growth: Valour reached a historic high with C$699.5 million in Assets Under Management (“AUM”), reflecting a 40.7% increase from the previous month, which underscores strong investor confidence and significant market growth.

 

●Exceptional Market Activity and Growth: February showcased robust market activities for Valour, with a reported total turnover of approximately C$148.36 million and substantial total inflows of C$16.62 million. This demonstrates active market engagement and a strong alignment with current investment trends.

 

●The Success of Valour’s Solana ETP: The Valour Solana ETP has significantly contributed to both the overall AUM and the Company's revenues, with net inflows of C$4.89 million recorded in February. The AUM for the Valour Solana ETP has seen considerable growth, now standing at C$290.3 million, which also reflects positively on the company-wide AUM.

 

Toronto, Canada, March 4, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, "Valour"), a leading issuer of exchange traded products ("ETPs") that provide simplified access to digital assets, scales to record C$699.5 Million in assets under management (“AUM”) as of February 28, 2024, an increase of 40.7% from the previous month.

 

The significant ascent in AUM to C$699.5 Million, marking a notable 40.7% month-over-month growth, not only reflects continuous net inflows but also the increase in the prices of underlying assets. This substantial growth underscores the enduring appeal and market demand for Valour's ETPs. In February, Valour's market activities were highlighted by a total turnover of approximately C$148.36 million with an average daily turnover of C$7.81 million, indicating strong market performance and active investor engagement. Additionally, this period saw significant total inflows of about C$16.62 million, pushing Valour's cumulative net sales to C$554.5 million, up from January's C$532.9 million, further demonstrating Valour's ETPs' alignment with prevailing investment trends and the vibrant digital asset ecosystem.

 

A particular highlight of February was Valour Solana ETP, which saw net inflows of C$4.89 million, increasing its AUM to C$290.3 million. This product's performance is a key component of the Company’s overall success, showcasing the financial viability and growing investor interest in this specific digital asset offering.

 

"We are immensely proud of Valour's historic achievement this month, with our AUM soaring to a record C$699.5 million, up over 40% from the previous month, demonstrating our commitment and the increasing trust from our investors. Particularly noteworthy is the performance of our Solana-based ETP, which attracted net inflows of C$4.89 million, contributing significantly to this growth. This success not only highlights the strong market demand for our innovative ETP products but also our ability to provide investors with diversified, secure, and accessible digital asset investment options. We are committed to continuing this trajectory and enhancing our digital asset offerings," said Olivier Roussy Newton, CEO of DeFi Technologies.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

 

 

 

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; listing of future ETPs; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

Investor Relations DeFi Technologies

ir@defi.tech

 

 

 

 

Exhibit 99.90

 

 

 

DeFi Technologies Announces Inaugural Bitcoin Investor
Day Hosted by Subsidiary Reflexivity Research

 

●Inaugural Bitcoin Investor Day: DeFi Technologies’ subsidiary Reflexivity Research is hosting its inaugural Bitcoin Investor Day on March 22nd, 2024, in New York City, aimed at bridging the power of traditional finance with the innovation of Bitcoin.

 

●Event Highlights and Participation: The event, moderated by Anthony Pompliano, co-founder of Reflexivity, will feature discussions on Bitcoin's future in traditional and institutional finance, with speakers like Cathie Wood, Anthony Scaramucci, and Mike Novogratz, targeting institutional investors, capital allocators, and entrepreneurs.

 

Toronto, Canada, March 07, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Reflexivity Research, will be hosting its inaugural Bitcoin Investor Day. This premier event is set to take place on Friday, March 22nd from 9:30 AM to 4:30 PM EST in New York City.

 

The Bitcoin Investor Day, orchestrated by Reflexivity Research, aims to assemble hundreds of institutional investors, capital allocators, and forward-thinking entrepreneurs. The day-long event, moderated by the co-founder of Reflexivity, Anthony Pompliano, promises a lineup of top-tier speakers, unmatched networking opportunities, and a series of profound discussions on the future of Bitcoin in the realms of traditional and institutional finance.

 

Reflecting on the importance of insightful discourse, the event will feature a stellar lineup of speakers, including Cathie Wood of ARK Invest, Anthony Scaramucci of SkyBridge Capital, Mike Novogratz of Galaxy Digital, and many other executives from the digital asset sector.

 

Bitcoin Investor Day will be in New York, New York, with doors opening at 9:30 AM. The event schedule promises a full day of engaging programming, culminating in a closing happy hour at 5 PM. Interested parties are encouraged to secure their spots promptly, as tickets are priced at $50.00. Registration details and additional information can be found on the event's official webpage.

 

DeFi Technologies and Reflexivity Research would like to express their sincere thanks to the event's sponsors—Copper, Arch, Amberdata, Valour, Dream Startup Job, and Eden—for their steadfast support and significant contributions, ensuring the Bitcoin Investor Day is poised for success.

 

About Reflexivity Research LLC

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. Reflexivity Research is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF). For more information please visit https://www.reflexivityresearch.com/

 

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the benefits of the Acquisition; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

Exhibit 99.91

 

DeFi Technologies’ Subsidiary Valour Inc. Reaches a Record of $C838 Million in AUM

 

●Assets Under Management Growth: Valour has experienced a significant rise in its AUM, reaching a record of C$838 million. This represents an increase of 19.8% since February 28th and builds upon a 57.8% growth from January 2, 2024.

 

●Surging Demand for Regulated Digital Asset Products: The surge in AUM highlights robust demand for Valour’s comprehensive suite of regulated exchange-traded digital asset products. This indicates the effectiveness of the company’s strategy in aligning offerings with investor interests. Recently launched ETPs include Valour Internet Computer (ICP), Valour Ripple (XRP), and Valour Binance (BNB) ETPs.

 

TORONTO, March 14, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has reached $C838 million in assets under management (“AUM”) as of March 14th, up 19.8% from February 28th and marking a significant 57.8% increase since the beginning of the year.

 

This noteworthy growth underscores the increasing interest and confidence in the digital asset market. Valour’s expansion in AUM can be attributed to the consistent demand for its innovative ETP solutions among investors looking to gain exposure to digital assets in a regulated framework.

 

In addition to the notable growth in AUM, Valour has recently expanded its product lineup with the launch of several new exchange-traded products. These include Valour Internet Computer (ICP) Physical Staking, Valour Ripple (XRP), and Valour Binance (BNB) ETPs. These recent additions demonstrate Valour’s commitment to providing a diverse range of top investment opportunities in the digital asset space.

 

DeFi Technologies and Valour remain at the forefront of the evolving digital asset market, contributing to the mainstream adoption of digital assets through regulated, secure, and accessible investment products.

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem.

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP and 1Valour Ethereum Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour Internet Computer (ICP) Physical Staking ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, subscribe, or receive company updates and financial information, visit valour.com.

 

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Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; growth of AUM; breakdown of AUM holdings; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

Investor Relations

ir@defi.tech

 

 

3

 

 

Exhibit 99.92

 

DeFi Technologies’ Wholly-Owned Subsidiary Valour Inc., Bitcoin Suisse AG, and STOXX Launch the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP

 

●Launch of 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP: DeFi Technologies Inc. announces a collaborative product from Valour Inc., Bitcoin Suisse AG, and STOXX, offering a diversified investment in top blue-chip digital assets through a new Exchange Traded Product (ETP).

 

●Innovative Methodology and Partnerships: The ETP, tracking the STOXX Digital Asset Blue Chip X Index, is based on a rule-based passive index methodology, leveraging Bitcoin Suisse’s Global Crypto Taxonomy for asset classification. It represents the deepening partnership between Valour Inc. and Bitcoin Suisse AG, aimed at distributing ETPs in international and Swiss markets.

 

●Strategic Asset Selection and Management: The ETP ensures a balanced investment portfolio with quarterly rebalancing, a market cap-weighted index, and a target weight cap of 30% for any single token. This initiative combines Valour Inc.’s expertise in ETP issuance, Bitcoin Suisse’s experience in crypto-finance, and STOXX’s proficiency in index management.

 

Zug, Switzerland and Toronto, Canada, March 18, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has partnered with Bitcoin Suisse AG, and STOXX in launching the innovative 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP. This pioneering product marks a significant step forward in the digital asset market, providing a diversified investment approach to the top blue-chip digital assets in a simple and secure manner.

 

This new ETP is built upon the existing partnership between Valour and Bitcoin Suisse AG (“Bitcoin Suisse”), initially formed to develop Exchange Traded Products (ETPs) backed 1:1 by digital assets. This collaboration has been leveraging the unique capabilities and extensive expertise of both Valour and Bitcoin Suisse in the digital asset market. The primary focus of their joint efforts is to launch, list, operate, and distribute ETPs in both the international and Swiss markets. Swiss crypto-finance and technology pioneer Bitcoin Suisse, with its established brand recognition in the crypto assets sector, complements Valour’s role as an issuer of ETPs and provider of an exchange listing platform for digital assets.

 

Andrej Majcen, Chief Executive Officer of Bitcoin Suisse, commented “With this index based ETP, we are excited to be able to offer the possibility to passively diversify into the digital asset market. Our goal is to enable investors to make more informed investment decisions by providing them with professional tools in a maturing market. The Blue-Chip Index is derived methodically from a systematic rule set, making digital asset selection for portfolio diversification more accessible and less complex. Once more, Bitcoin Suisse continues to demonstrate its strength as a pioneer by delivering the first leading smart beta investment product for digital assets. With a rule based asset selection, the Blue-Chip Index is Europe’s first investment alternative to pure top market cap crypto asset strategies. We are proud to collaborate with well established and trusted partners in the global financial markets for the launch of this innovative product.”

 

 

 

 

The 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP is uniquely structured to track the performance of the STOXX Digital Asset Blue Chip X Index. This index offers exposure to leading assets within the broader STOXX Digital Asset Blue Chip Index, specifically those trading on Xetra. The ETP employs a rule-based passive index methodology, meticulously designed to encompass a comprehensive spectrum of the cryptocurrency market.

 

Assets are classified into sectors such as Cryptocurrency, General Purpose Smart Contract Platform, Decentralized Finance (DeFi), Utility, and Culture, using the Bitcoin Suisse Global Crypto Taxonomy (GCT). The selection of assets is based on a rigorous multi-step process aimed at identifying the most influential and representative assets in each sector. This selection is re-evaluated quarterly, ensuring the ETP remains reflective of the dynamic digital asset market.

 

“With a maximum weighting limit of 30% for each underlying crypto, the new 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP serves as the perfect tool for entering the crypto world with just one position in your portfolio,” adds Marco Infuso, Chief Sales Officer at Valour. “It can be used as a kind of satellite approach in an institutional portfolio and is ideal as a monthly savings plan solution for retail customers.”

 

This ETP is the result of a synergistic collaboration between Valour, Bitcoin Suisse, and STOXX, each bringing unique strengths to the table. Valour provides its proven expertise in ETP issuance, Bitcoin Suisse offers its deep-rooted experience in the crypto-finance and technology domain, and STOXX contributes its renowned capabilities in index creation and management.

 

About Bitcoin Suisse

 

Founded in 2013, Bitcoin Suisse AG is the Swiss crypto-finance and technology pioneer. As an enabler for the crypto and blockchain ecosystem in Switzerland, Bitcoin Suisse has been a driving force in the development of the ‘Crypto Valley’ and the ‘Crypto Nation Switzerland’. The crypto-financial services provider offers brokerage, custody, lending, staking, payment solutions and other crypto-related services for private and institutional clients. As a member of the self-regulatory organization Financial Services Standards Association (VQF), Bitcoin Suisse is a financial intermediary subject to Swiss AML/CFT regulations. Bitcoin Suisse consists of several companies under the parent company BTCS Holding Ltd. The company is headquartered in Zug, with offices in Copenhagen, Vaduz and Bratislava and has built a team of over 200 highly qualified experts in Switzerland and Europe. | https://bitcoinsuisse.com/

 

About STOXX

 

STOXX® and DAX® indices comprise a global and comprehensive family of more than 17,000 strictly rules-based and transparent indices. Best known for the leading European equity indices EURO STOXX 50®, STOXX® Europe 600 and DAX®, the portfolio of index solutions consists of total market, benchmark, blue-chip, sustainability, thematic and factor-based indices covering a complete set of world, regional and country markets. STOXX and DAX indices are licensed to more than 550 companies around the world for benchmarking purposes and as underlyings for ETFs, futures and options, structured products, and passively managed investment funds. STOXX Ltd., part of the ISS STOXX group of companies, is the administrator of the STOXX and DAX indices under the European Benchmark Regulation.

 

2

 

 

About ISS STOXX

 

ISS STOXX GmbH, through its group companies, is a leading provider of comprehensive and data-centric research and technology solutions that help capital market participants identify investment opportunities, detect qualitative and quantitative portfolio company risks, and meet evolving regulatory requirements. With roots dating back to 1985, we today deliver world-class benchmark and custom indices across asset classes and geographies and serve as a premier source of independent corporate governance, sustainability, cyber risk, and fund intelligence research, data, and related offerings. Our products and services give clients the scale and leverage they need to grow their business more effectively and efficiently. ISS STOXX, which is majority owned by Deutsche Börse Group, is comprised of more than 3,400 professionals operating across 33 global locations in 19 countries. Its approximately 6,400 clients include many of the world’s leading institutional investors who turn to ISS STOXX for its objective and varied offerings, as well as companies focused on ESG, cyber, and governance risk mitigation as a shareholder value enhancing measure. Clients rely on ISS STOXX’s expertise to help them make informed decisions to benefit their stakeholders.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Offering; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

 # # # 

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech 

 

Investor Relations Bitcoin Suisse

invest.advice@bitcoinsuisse.com

 

 

3

 

Exhibit 99.93

 

 

 

DeFi Technologies to Join Coinbase and Grayscale in Upcoming Panel Discussion at Bitcoin Investor Day, Moderated by Anthony Pompliano

 

Toronto, Canada, March 20, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce its upcoming participation in a Bitcoin Investor Day panel discussion.

 

DeFi Technologies will be represented by Russell Starr, Head of Capital Markets at DeFi Technologies, who will participate in a panel alongside Zach Pandl, Managing Director of Research at Grayscale, and Brett Tejpaul, Head of Coinbase Institutional. The discussion will be moderated by Anthony Pompliano. This engaging session is scheduled to take place from 3:10 PM to 3:40 PM EST on Friday, March 22. Johan Wattenström, Co-Founder and Board Director of Valour Inc., a subsidiary of DeFi Technologies, will also be participating in the conference.

 

The Bitcoin Investor Day, orchestrated by Reflexivity Research LLC (“Reflexivity”), aims to assemble hundreds of institutional investors, capital allocators, and forward-thinking entrepreneurs. The day-long event, moderated by the co-founder of Reflexivity, Anthony Pompliano, promises a lineup of top-tier speakers, unmatched networking opportunities, and a series of profound discussions on the future of Bitcoin in the realms of traditional and institutional finance.

 

Reflecting on the importance of insightful discourse, the event will feature a stellar lineup of speakers, including Cathie Wood of ARK Invest, Anthony Scaramucci of SkyBridge Capital, Mike Novogratz of Galaxy Digital, and many other executives from the digital asset sector.

 

Bitcoin Investor Day will be held in New York, New York, with doors opening at 9:30 AM. The event schedule promises a full day of engaging programming. Registration details and additional information can be found on the event’s official webpage: https://lu.ma/btcinvestorday

 

About Reflexivity Research LLC

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. Reflexivity Research is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF). For more information please visit https://www.reflexivityresearch.com/

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

 

 

 

 

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), and Valour Digital Asset Basket 10 (VDAB10) ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the the Company and other parties participating in the Bitcoin Investor Day conference ; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

For further information, please contact:

 

Investor Relations DeFi Technologies:

ir@defi.tech 

 

 

 

 

Exhibit 99.94

 

 

DeFi Technologies Announces Shareholder Call to Discuss Q4 2023 Financial Results

 

TORONTO – March 28, 2024 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance,today announces it will conduct a shareholder call on Thursday, April 4, 2024 at 1:00 p.m. EST to discuss its financial performance for the twelve-month period ending December 31, 2023. The Company’s 2023 financials will be available after market close on April 1, 2024.

 

IMPORTANT – To register for the webcast see below:

 

When: Apr 4, 2024

Time: 1:00 PM Eastern Time

Topic: DeFi Q4 Financials

 

Register in advance for this webinar:

https://us06web.zoom.us/webinar/register/WN_IY1xOWC0RBeIRBOG2Gk3hQ

 

After registering, you will receive a confirmation email containing information about joining the webinar.

 

Learn more about DeFi Technologies and Valour at defi.tech and valour.com.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

 

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; shareholder call of the Company future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

2

 

 

THE NEO STOCK EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

3

 

Exhibit 99.95

 

 

DeFi Technologies Inc. Announces 2023 Financial Results:
Revenues Exceed C$10.4 Million, Notable Strategic
Developments and Restatement of Fiscal 2022 Financial Results

 

TORONTO – April 1, 2024 – DeFi Technologies Inc. (the “Company” or “DEFI”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the twelve months ended December 31, 2023 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights of Q4 2023:

 

●The Company reported a cash balance at December 31, 2023 of $6.7 million compared to $4.9 million at December 31, 2022.

 

●The Company’s venture portfolio investments were valued at $44.1 million by the end of the year.

 

●Assets Under Management (“AUM”) grew 476% to approximately $508 million as of December 31, 2023, up from $106 million as of December 31, 2022. Valour Inc. and Valour Digital Securities Limited’s (“Valour’s”) current AUM stands at C$880 million.

 

●Total revenues were $10.4 million for the twelve months ended December 31, 2023 (“Fiscal 2023”). A significant improvement from the revenues of $(14.2) million for the twelve months ended December 31, 2022 (“Fiscal 2022”).

 

○This notable improvement is especially significant considering that the majority of this revenue was generated in Q4, particularly in December, as digital assets prices underlying the Company’s ETPs —and consequently AUM — saw substantial increases from the end of November through December.

 

●The Company’s management fees increased in Q4 2023 driven by the increase in the Company’s exchange traded product’s (“ETP’s”) net asset values with October, November and December 2023 management fee revenue being $114,362 $240,956 and $402,737 respectively.

 

●The Company’s commitment to prudent financial management is evident from its lower operating, general, and administrative costs in 2023. Operating, general, and administration costs for Fiscal 2023 was $10 million, down from $14.7 million in Fiscal 2022.

 

●Total expenses for Fiscal 2023 stood at $30.5 million, a decrease of 41% YoY (being $51.7 million for Fiscal 2022) and is broken down as follows:

 

 

 

○Operating and G&A – $10 million
   
○Share based comp – $3 million
   
○Amortization – $2 million
   
○Interest costs on debt – $4.2 million
   
○Transaction on ETP issuance and digital assets trading fees - $1 million
   
○Mark to market FX loss – $10 million

 

●DeFi Technologies Inc. and Neuronomics AG entered into a landmark Joint Venture Agreement to develop AI-based digital asset exchange traded products, actively managed certificates, and asset-backed tokens for global distribution.

 

●DeFi Technologies Inc. announced the launch of Valour Inc.’s Ripple (XRP) ETP, which was listed in February 2024

 

●DeFi Technologies’ subsidiary Valour Inc. announced the launch of a physical backed ETP for the Internet Computer Protocol (ICP) Token in collaboration with DFINITY Foundation, which was listed in February 2024

 

●DeFi Technologies Inc. announced the strategic acquisition of leading Solana trading systems IP, completed in January 2024

 

“Despite a prolonged period of challenges in the digital assets sector, DeFi Technologies has navigated these difficulties and achieved significant growth, especially in the fourth quarter of 2023,” stated Olivier Roussy Newton, CEO of DeFi Technologies. “Our success underscores the resilience of our infrastructure and the increasing demand for trustworthy and transparent digital asset offerings. As we look to 2024, we are enthusiastic about the prospects for continued expansion, highlighted by the substantial growth of our ETPs and the introduction of innovative products and offerings. Our commitment is to enhance our market presence through strategic partnerships, geographic expansion, and diversification of our product lineup, aiming to maximize AUM.”

 

ETPs/Valour:

 

Valour’s ETP business had AUM of $508 million as of December 30, 2023, a 476% increase from December 31, 2022’s AUM of $106 million. Valour’s current AUM stands at $880 million.

 

Liquidity:

 

The Company ended Fiscal 2023 with a cash balance of $6.7 million, compared to $4.9 million at the end of Fiscal 2022.

 

Financial Performance:

 

For Fiscal 2023:

 

●Revenues were $10.4 million compared to $(14.2) million reported for Fiscal 2022.

 

●Net loss was $(20.3) million, an improvement from the net loss of $(65.9) million Fiscal 2022.

 

●The Company continues to emphasise fiscal responsibility and growth, evident from the reduced operating costs and the enhanced ETP products portfolio.

 

2

 

 

Outlook for 2024:

 

The Company has experienced significant revenue growth since the end of 2023, continuing rapidly through the first quarter of 2024. Valour’s ETPs have witnessed an 800% increase in AUM from the market lows in late 2022, alongside growth in trading volumes. As of March 28, 2024, Valour’s AUM stood at approximately C$880 million (US$650 million), with daily trading volumes exceeding C$20.3 million (US$15 million). Staking and lending income, as well as management fees, are closely correlated with Valour’s product capital inflow and the price of digital assets underlying Valour’s ETPs, which has grown substantially in the last few months. Revenue from arbitrage and liquidity provision is highly linked to overall market activity and turnover in Valour’s listed ETPs. Given the current AUM, price of digital assets and activity level in the digital asset market, the Company’s annualized top-line revenue is forecasted to be approximately C$63.3 Million (USD 46.8 million) for 20241. Growth in AUM is expected to lead to proportional increases in revenue. Since there is a strong correlation between the Company’s revenues and the digital asset market’s price levels and activity, revenue trajectories will fluctuate with market conditions, while costs remain stable, reflecting Valour’s business’ scalability.

 

Furthermore, the continuous improvement in product mix is a crucial driver of monetization levels. The ETP business aims to maximize AUM through increased ETP launches and geographical expansion. The Company plans on launching approximately 15 ETP products in 2024 and an additional 30 in 2025 as the Company continues to take advantage of extremely positive macro fundamentals for the ecosystem in general.

 

Restatement of Fiscal 2022 Financial Results

 

Further to the press release of the Company dated January 8, 2024 with respect to the Company’s change of auditor from BF Borgers CPA PC (the “Former Auditor”) to HDCPA Professional Corporation (the “Successor Auditor”), the Company also announces that it has filed its financial statements of the Company for fiscal-year 2023 with restated comparative information for fiscal 2022 and the corresponding management’s discussion and analysis.

 

The Company became aware of an enforcement report issued by the Canadian Public Accountability Board (“CPAB”) on December 7, 2023 against the Former Auditor (the “Enforcement Report”) resulting from an engagement findings report dated October 12, 2023 (the “CPAB Report”). As a result of the Enforcement Report, the Successor Auditor provided a consultation with respect to the CPAB Report, remediation plan requested by CPAB and the impact on the scope of the audit for fiscal 2023 (the “Consultation”)

 

As a result of the Consultation, the Company reassessed the application of IFRS on the accounting the valuation of the Company’s holdings in 3iQ and AMINA Bank AG (formerly SEBA Bank AG) as well as the valuation of Valour’s Genesis loan and collateral posted to secure such loan. Compared with the previously filed fiscal 2022 financial statement of the Company, the Amended and Restated Financial Statements reflected a (i) reduction in digital assets by $2,433,348 to $104,148,728 as at December 31, 2022; and (ii) reduction in private investments, at fair value through profit and loss, by $13,489,824 to $30,015,445 as at December 31, 2022, with an opening retained earnings impact at January 1, 2023 of $15,923,172.

 

For more details, please refer to Note 24 of the consolidated financial statements of the Company for years ended December 31, 2023 and the Amended and Restated Financial Statements.

 

 
1This projection is based on the assumption that no new ETPs are introduced and that AUM remains constant at current levels throughout 2024. Should AUM increase, revenues are expected to rise accordingly; conversely, a decrease in AUM would lead to a reduction in revenues.

 

3

 

 

“We are pleased to have completed the audit for Fiscal 2023 and the restatement of the Fiscal 2022 statement of the Company,” said Ryan Ptolemy, Chief Financial Officer of the Company.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; revenue outlook of the Company; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

4

 

 

Financial Outlook Assumptions

 

The financial outlook on revenue of the Company is based on a number of assumptions, including assumptions related to inflation, changes in interest rates, volatility of the digital asset market, current and projected market prices of digital assets, in particular the digital assets underlying the Company’s ETPs, continued capital inflows into the Company’s ETPs, the Company’s ability to realize staking and lending income from digital assets held by the Company, the return realized by the Company on staking and lending income, management fees earned by the Company, arbitrage revenue earned by the Company, consumer interest in the Company’s ETPs, foreign exchange rates and other macroeconomic conditions, the regulatory environment with respect to ETPs and digital assets in the jurisdictions that the Company operates in, introduction of future ETPs, “black swan events” in the digital asset industry, competitors that offer competing ETP products and market acceptance of the Company’s ETP offerings. The Company’s financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information above. Many factors may cause the Company’s actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including the risks and uncertainties related to: macroeconomic factors affecting the digital asset industry, including inflation, changes in interest rates, investor confidence in digital assets; volatility of the digital assets and fluctuation in market value of digital assets; exchange rate fluctuations; any pandemic such as the COVID-19 pandemic; fraud, misconduct or gross negligence by individuals within the digital asset industry; a negative regulatory environment with respect to digital assets; the Russian invasion of Ukraine and reactions thereto; the Israel-Hamas war and reactions thereto; the Company’s inability to attract purchasers of its ETPs; decrease in AUM as a result of investor selling the Company’s ETPs or a fall in the value of the underlying digital assets; The Company’s inability to launch attractive ETPs; the Company’s inability to increase ETP sales; the Company’s inability to implement our growth strategy; the Company’s reliance on a small number of custodian and market participants to operate its ETP programs; the Company’s ability to prevent and manage information security breaches or other cyber-security threats; the Company’s ability to compete against competitors; strategic relations with third parties; changes to technologies on which ETPs are purchased and sold is reliant; the Company’s ability to distribute ETPs in jurisdictions it is not currently operating in; the Company’s ability to obtain, maintain and protect our intellectual property; the Company’s liquidity and capital resources; pending and threatened litigation and regulatory compliance; changes in tax laws and their application; the Companys ability to expand our sales, marketing and support capability and capacity; and maintaining our customer service levels and reputation. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding the Company’s financial performance and may not be appropriate for other purposes.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

5

 

Exhibit 99.96

 

FORM 52-109F1
CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

 

I, Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies Inc., certify the following:

 

1.I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in those documents (together, the “annual filings”) of DeFi Technologies Inc. (the “issuer”) for the financial year ended December 31, 2023.

 

2.Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3.Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a)a description of the material weakness;

 

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

 

 

 

5.3N/A

 

6.The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7.The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: April 1, 2024  
   
(Signed) “Olivier Roussy Newton”  
Olivier Roussy Newton  
Chief Executive Officer  

 

 

 

 

 

Exhibit 99.97

 

FORM 52-109F1

CERTIFICATION OF ANNUAL FILINGS

FULL CERTIFICATE

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc., certify the following:

 

1. I have reviewed the AIF, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in those documents (together, the “annual filings”) of DeFi Technologies Inc. (the “issuer”) for the financial year ended December 31, 2023.

 

2. Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3. Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a)a description of the material weakness;

 

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3N/A

 

 

 

 

6. The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7. The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: April 1, 2024

 

(Signed) “Ryan Ptolemy”  
Ryan Ptolemy  
Chief Financial Officer  

 

 

 

 

Exhibit 99.98

 

 

 

DEFI TECHNOLOGIES INC.

 

ANNUAL INFORMATION FORM

 

FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2023

 

Dated: April 1, 2024

 

 

 

 

 

TABLE OF CONTENTS

 

EXPLANATORY NOTES AND CAUTIONARY STATEMENTS 1
   
CORPORATE STRUCTURE 3
   
GENERAL DEVELOPMENT OF THE BUSINESS 4
   
DESCRIPTION OF THE BUSINESS 14
   
Risk Factors 25
   
DIVIDENDS 45
   
DESCRIPTION OF SHARE CAPITAL 45
   
MARKET FOR SECURITIES 45
   
Escrowed securities 46
   
DIRECTORS AND OFFICERS 47
   
AUDIT COMMITTEE DISCLOSURE 49
   
PROMOTER 50
   
LEGAL PROCEEDINGS AND REGULATORY ACTIONS 50
   
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 51
   
TRANSFER AGENT AND REGISTRAR 51
   
MATERIAL CONTRACTS 51
   
INTERESTS OF EXPERTS 51
   
ADDITIONAL INFORMATION 51
   

i

 

 

EXPLANATORY NOTES AND CAUTIONARY STATEMENTS

 

Explanatory Notes

 

In this Annual Information Form (the “AIF”), the term “Company” or “DeFi Technologies” refers to DeFi Technologies Inc. and its subsidiaries as a whole, unless otherwise specified or the context otherwise requires.

 

Information contained in this AIF is given as of December 31, 2023, the financial year end of the Company, unless otherwise specifically stated.

 

Unless otherwise indicated, all currency amounts in this AIF and references to “$” are stated in Canadian dollars.

 

Market and industry data used throughout this AIF was obtained from various publicly available sources. Although the Company believes that these independent sources are generally reliable, the accuracy and completeness of such information are not guaranteed and have not been verified due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and the limitations and uncertainty inherent in any statistical survey of market size, conditions and prospects.

 

This AIF should be read in conjunction with the Company’s audited consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2023. The financial statements and management’s discussion and analysis are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) website at www.sedar.com. The Company’s financial statements are prepared in accordance with International Financial Reporting Standards.

 

Caution Regarding Forward-Looking Information

 

This AIF contains “forward-looking information” within the meaning of that term under Canadian securities laws. This information relates to future events or future performance and reflects the Company’s expectations and assumptions regarding such future events and performance. In particular, all statements, other than statements of historical facts, included in this AIF that address activities, events or developments that management of the Company expects or anticipates will or may occur in the future contain forward-looking information, including but not limited to, statements with respect to:

 

●financial, operational and other projections and outlooks as well as statements or information concerning future operation plans, objectives, performance, revenues, growth, acquisition strategies, profits or operating expenses;

 

●details and expectations regarding the Company’s investments in the decentralized finance (“DeFi”) industry;

 

●expectations regarding revenue growth due to changes in the Company’s business strategy;

 

●expansion and growth of the Company’s Asset Management, Ventures and Infrastructure business lines;

 

●development of ETPs and partnerships and joint ventures with other companies;

 

●growth of assets under management (“AUM”);

 

●anticipated lending and staking income and management fees charged on ETPs;

 

●investment performance of ETPs, DeFi protocols and digital assets underlying ETPs and portfolio companies that the Company has invested in;

 

●development of laws and regulations governing the DeFi industry;

 

●requirements for additional capital and future financing options;

 

●publishing and marketing plans;

 

●the availability of attractive investments that align with the Company’s investment strategy;

 

●future outbreaks of infectious diseases like the novel coronavirus (“COVID-19”);

 

●the impact of climate change; and

 

●other expectations of the Company.

 

Forward-looking information can be identified by the use of words such as, but not limited to, “plans”, “expects”, “project”, “predict”, “potential”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

 

1

 

 

Forward-looking information involves various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Important factors that could cause actual results to differ materially from the Company’s expectations are described in the Company’s documents filed from time to time with the applicable regulatory authorities and such factors include, but are not limited to, risks related to investment performance, minority investments, market fluctuations, fluctuations in commodity prices, uncertainties relating to the availability and costs of financing needed in the future, the strength of the global economy and financial system, foreign exchange fluctuations, competition, social, political, environmental and economic risks in the countries in which the Company’s investment interests are located, risks inherent to the DeFi industry, risks inherent to the mining industry, risks inherent to the technological industry, including the emergence of disruptive technologies and other risks described herein including under the heading “Risk Factors – Risks Relating to the Business and Industry of the Company”.

 

When relying on forward-looking information to make decisions, readers should ensure that the preceding information, the risks and uncertainties described in “Risk Factors” and the other contents of this AIF are all carefully considered. The forward-looking information contained herein is current as of the date of this AIF, and, except as may be required by applicable law, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking information contained herein to reflect any change in expectations, estimates and projections with regard thereto or any changes in events, conditions or circumstances on which any information is based. Readers should not place undue importance on such forward-looking information and should not rely upon this information as of any other date. In addition to the disclosure contained herein, for more information concerning the Company’s various risks and uncertainties, please refer to the Company’s public filings available under its profile on SEDAR at www.sedar.com and at www.cboe.ca.

 

With regard to all information included herein relating to companies in the Company’s investment portfolio, the Company has relied on information provided by the investee companies and on publicly available information disclosed by the respective companies.

 

2

 

 

CORPORATE STRUCTURE

 

Name, Address and Incorporation

 

The Company was incorporated in British Columbia pursuant to the Company Act (British Columbia) (the “BCCA”) under the name “Western Premium Resource Corp.” on April 14, 1986. On August 29, 1997, the Company filed a certificate of change of name under the BCCA and changed its name to “Zodiac Exploration Corp.” On December 18, 1998, the Company filed a certificate of change of name under the BCCA and changed its name to “Donnybrook Resources Inc.” On August 13, 2003, the Company filed a certificate of change of name under the BCCA and changed its name to “Rodinia Minerals Inc.” On November 3, 2009, the Company was continued under the Business Corporations Act (Ontario) (the “OBCA”), and on June 15, 2010, the Company filed articles of amendment under the OBCA and changed its name to “Rodinia Lithium Inc.” On August 16, 2016 the Company filed articles of amendment under the OBCA and changed its name to “Routemaster Capital Inc.” The common shares of the Company (the “Common Shares”) began trading on the TSX Venture Exchange (the “TSXV”) on June 30, 2010. The Company sold its sole subsidiary on December 29, 2015 and completed a change of business (“COB”) to a tier 2 investment issuer under the rules of the TSXV on September 16, 2016. On January 19, 2021, the Common Shares were uplisted to trade on the Cboe Canada Exchange (formerly NEO Exchange Inc.) (“Cboe Canada”), and on February 26, 2021, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” On April 19, 2022, the Common Shares were listed for trading on the OTCQB Venture Market. On June 1, 2022, the Company filed articles of amendment under the OBCA and changed its name to “Valour Inc.” On July 10, 2023, the Company filed articles of amendment under the OBCA and changed its name to “DeFi Technologies Inc.” The Company’s head office and registered office is located at 198 Davenport Road, Toronto, Ontario, M5R 1J2.

 

As of the date of this AIF, the Company holds 100% of the issued and outstanding shares of DeFi Holdings Inc. (“DeFi Holdings”), 100% of the issued and outstanding shares of DeFi Holdings (Bermuda) Inc., 100% of Electrum Streaming Inc., 100% of Valour Inc. (“Valour Cayman”) and 100% of the membership interest in Reflexivity Research, LLC. The following is an organizational chart illustrating the inter-corporate relationships between the Company and its subsidiaries and the jurisdiction of organization of each such entity, as at the date hereof:

 

 

 

Note: Valour Digital Securities Limited (“VDSL”), is owned by the charitable trust VLR Charitable Trust in Jersey. VDSL and Valour Cayman are together referred to as “Valour”.

 

3

 

 

GENERAL DEVELOPMENT OF THE BUSINESS

 

The Company is a publicly listed company on Cboe Canada trading under the symbol “DEFI”. The Company operates three lines of business: Asset Management, Ventures and Infrastructure, each of which is explained further below under their respective headings in “Description of Business”.

 

Three Year History

 

The following is a summary of the general development of the Company’s business over the three most recently completed financial years.

 

Subsequent to Fiscal 2023

 

On January 9, 2024, the Company announced that it has signed a binding letter of intent to acquire Reflexivity Research LLC (“Reflexivity”), a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry (the “Reflexivity Acquisition”). Reflexivity, co-founded by Anthony Pompliano and Will Clemente, offers high-quality crypto-native research designed for traditional finance investors. The firm is known for unique bitcoin analysis, along with counting some of the most well-known cryptocurrency organisations as clients, including eToro, Solana, Avalanche, NEAR, Fantom, Sei Network, and many more. The company’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors. Pursuant to the Reflexivity Acquisition, the Company acquired all issued and outstanding securities of Reflexivity Research in return for five million Common Shares (the “Reflexivity Payment Shares”). The Reflexivity Payment Shares are subject to a lock-up schedule of 12 months, released in equal tranches every three months. The Reflexivity Acquisition closed on February 7, 2024.

 

On January 8, 2024, the Company announced that it has changed its auditor from BF Borgers CPA PC (“Former Auditor”) to HDCPA Professional Corporation (“Successor Auditor”) effective December 20, 2023. On December 7, 2023, the Canadian Public Accountability Board (“CPAB”) issued an enforcement report (the “Enforcement Report”) against the Former Auditor resulting from an engagement findings report dated October 12, 2023 (the “CPAB Report”) with respect to the audit of the Company’s financial statements for the fiscal year ended December 31, 2022 (“2022 Statements”).

 

The Enforcement Report identified multiple significant inspection findings, each of which constitute a separate Violation Event (as defined in the Rules of CPAB) with respect to the Former Auditor. As a result of the CPAB Report, a remediation plan for is required for the audit of the 2022 Statements. The Company has received information requests from the Former Auditor on its remediation plan, including third party confirmations from all of the Company’s digital asset custodians to confirm existence of the digital assets and fair market value, confirmations for all the private investments confirming the existence of the Company’s holdings and their latest financing details, management forecast files and schedules including all assumptions used in the goodwill impairment analysis, confirmation of exchange traded products, working papers on the calculation of staking and lending revenue, management fees and node revenue.

 

As a result of the Enforcement Report, the Successor Auditor provided a consultation with respect to the CPAB Report, remediation plan requested by CPAB and the impact on the scope of the audit for fiscal 2023 (the “Consultation”). From this Consultation, the Successor Auditor identified three adjustments to be made to the fiscal 2022 financial statements. These adjustments were recorded in the amended and restated 2022 financial statements of the Company, filed on SEDAR+ on April 1, 2024.

 

Fiscal 2023

 

Asset Management

 

On August 29, 2023, the Company announced that Valour launched three new products on the Nordic Growth Market Exchange (“NGM”). Valour Ethereum Zero EUR precisely tracks the price of ETH without charging management fees, making an investment in the world’s second largest digital asset easy, secure and cost-effective. Valour Solana EUR precisely tracks the price of SOL, the native cryptocurrency fuelling the Solana network. Marketed as one the fastest blockchains, Solana has more than 400 live projects spanning its DeFi, NFT, and Web3 ecosystem. Valour’s Solana ETP makes an investment in this leading decentralised platform cost-effective, simple and secure. Valour Digital Asset Basket 10 (VDAB10) tracks the performance of the top 10 largest crypto assets based on market capitalisation with a maximum cap of 30% for any constituent. Valour’s VDAB10 ETP provides investors with a diversified and dynamic exposure to the ever-evolving crypto landscape in a trusted and secure manner.

 

4

 

 

On August 22, 2023, the Company announced that VDSL launched 1Valour Ethereum Physical Staking ETP. The 1Valour Ethereum Physical Staking ETP simplifies network participation for investors. With a fixed yield, undefined expiry and a 1.49% management fee, investors have the potential to earn passive returns, sidestepping the technical challenges involved with staking, and actively contributing towards the evolving decentralized finance landscape. Enhanced security measures including slashing insurance and full collateralization mean investors benefit from additional transparency and security measures.

 

On July 12, 2023, the Company announced that Valour launched its digital asset basket ETP - Valour Digital Asset Basket 10 (VDAB10) SEK. The Valour Digital Asset Basket 10 (VDAB10) ETP provides retail and institutional investors with trusted, secure, and diversified exposure to 10 of the largest cryptocurrencies by market capitalization. With a quarterly rebalancing, the multi-digital asset ETP enables investors to gain access to certain of the largest disruptive digital assets, offering an expanded entry into the rapidly developing digital asset ecosystem, without the need to set up a dedicated trading account.

 

On June 15, 2023, the Company announced that VDSL launched its first physically backed digital asset product, the 1Valour Bitcoin Physical Carbon Neutral ETP. The 1Valour Bitcoin Physical Carbon Neutral ETP provides investors with sustainable and climate-friendly exposure to Bitcoin with the low management fee of 1.49%. The ETP presents a trusted investment method that benefits the environment and aligns with environmental, social and governance (“ESG”) goals by funding certified carbon removal and offset initiatives in order to neutralise the associated Bitcoin carbon footprint.

 

On April 12, 2023, the Company announced the launch of VDSL, a Jersey-based securities issuer of ETPs for physically stored digital assets. VDSL obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain, and its products will be listed on regulated stock exchanges such as Deutsche Börse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland.

 

On March 21, 2023, the Company announced the listing of certain ETPs on Euronext Paris, providing availability to French investors.

 

On January 23, 2023, the Company announced that on January 19, 2023, Genesis Global Capital LLC (“Genesis”) and its group companies filed for bankruptcy protection in the US and listed Valour as a creditor. Valour clarified that Valour Cayman, its wholly-owned subsidiary, is a borrower of funds under a master loan agreement with Genesis dated January 22, 2022. The loan amount borrowed by Valour Cayman under the loan agreement is US$6 million which is collateralised.

 

On January 10, 2023, the Company announced the approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish Financial Supervisory Authority (“SFSA”).

 

Partnerships and Acquisitions

 

On December 18, 2023, the Company announced that it has entered into a definitive purchase agreement (the “Solana IP Agreement”) to acquire intellectual property (“Solana IP”) from prominent Solana developer Stefan Jørgensen (the “Solana IP Acquisition”). Pursuant to the Solana IP Agreement, the Company issued a total of 7,297,090 Common Shares at a deemed price of $0.55 per Common Share to Mr. Jørgensen in exchange for all of the Solana IP. The Payment Shares will be issued in five tranches over a period of two years, and be subject to the continued involvement of Mr. Jørgensen with the Company and its subsidiaries at the time of issuance. The Solana IP acquired by the Company encompasses a suite of sophisticated features including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management, and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both the Company and Valour. The Solana IP Acquisition positions the Company to significantly elevate its capabilities, offering cutting-edge trading solutions and unique strategies specifically designed for Solana, a blockchain platform rapidly gaining recognition for its outstanding performance capabilities. The Solana IP Acquisition closed on February 9, 2024.

 

5

 

 

On October 24, 2023, the Company announced that it has entered into a joint venture agreement with Neuronomics AG (“Neuronomics”) to collaborate on the development of AI based exchange traded products, actively managed certificates, and asset backed tokens for global distribution. To further align the interests of the Company and Neuronomics, the Company entered into share exchange agreements with Olivier Roussy Newton, Chief Executive Officer of the Company and Johan Wattenstrom, Director of Valour, pursuant to which DeFi acquired from each of Mr. Newton and Mr. Wattenstrom 362 shares of Neuronomics with nominal value of CHF 1.- for a total of 724 shares of Neuronomics.

 

Management, Board, Auditor Changes and Name Change

 

On January 8, 2024, the Company announced the change of its auditors from BF Borgers CPA PC to HDCPA Professional Corporation effective December 20, 2023.

 

On July 7, 2023, the Company announced that it had changed its name from “Valour Inc.” to “DeFi Technologies Inc.”

 

On February 13, 2023, the Company announced that Russell Starr has elected to step down from his role as Executive Chairman but will remain as Head of Capital Markets. Olivier Francois Roussy Newton, CEO of Valour, assumed the role of Executive Chairman replacing Russell Starr.

 

On February 3, 2023, the Company announced the change of its auditors from RSM Canada LLP to BF Borgers CPA PC.

 

Financings

 

On November 13, 2023, the Company announced a non-brokered private placement financing of up to 6,250,000 units (a “Unit”) at a price of $0.16 per Unit (the “Unit Price”) for gross proceeds of up to $1,000,000 (the “Nov 2023 Offering”). Each Unit consisted of one common share of the Company (a “Unit Share”) and one common share purchase warrant (a “Warrant”), entitling the holder to acquire one additional common share of the Company (a “Warrant Share”) at an exercise price of $0.23 for a period of 24 months from issuance. The Nov 2023 Offering closed on an oversubscribed basis for 11,812,500 Units, representing aggregate gross proceeds of $1,890,000.

 

On November 1, 2023, the Company announced that Valour completed a non-brokered private placement financing of unsecured convertible notes (the “Notes”) for gross proceeds of C$3,000,000 (the “Convertible Offering”). The Notes issued in connection with the Convertible Offering accrue interest at a rate of 8% per annum and will mature on October 31, 2025 (“Maturity Date”). Upon the occurrence of certain trigger events, the principal amount of Notes and all accrued interest may be convertible (a “Conversion”), at the option of the holder, into (a) Common Shares (“Conversion Shares”) at a price of C$0.10 (“Conversion Price”) per Conversion Share and (b) an equal number of common share purchase warrants of the Company (“Conversion Warrants”) entitling the holder to acquire Common Shares at a price of C$0.20 for a period of five years from the date of issuance. Upon the Conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of Notes and accrued interest converted pursuant to the Conversion. As of the date hereof, all of the Notes were converted into Conversion Shares and Conversion Warrants.

 

On August 23, 2023, the Company announced that it has entered into shares for debt settlement agreements with a lender, an officer and consultants of the Company to settle an aggregate amount of approximately C$604,543.34 of accrued debt obligations and accrued fees owing to such lender, officer and consultants of the Company by issuing Common Shares at a price of C$0.105 per Common Share for a total of 5,757,827 Common Shares.

 

On June 30, 2023, the Company announce that it filed a preliminary short form base shelf prospectus (the “Preliminary Base Shelf Prospectus”) with the securities regulators in each province and territory of Canada. When made final or effective, this filing will allow the Company and/or selling security holders to make offerings of common shares (including by way of an “at-the-market distribution” in accordance with applicable securities laws), debt securities, warrants, subscription receipts, convertible securities, units or any combination thereof for up to a maximum amount of C$20 million during the 25-month period over which the base shelf prospectus is effective. The filing of the Preliminary Base Shelf Prospectus was subsequently withdrawn.

 

6

 

 

On June 12, 2023, the Company announced that it entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately C$674,837.78 of accrued fees owing to such officers and consultants of the Company by issuing Common Shares at a price of C$0.085 per Common Share for a total of 7,939,268 Common Shares.

 

Fiscal 2022

 

Management, Board and Advisory Board Changes

 

On November 14, 2022, the Company announced the resignation of Bernard Wilson as director of the Company.

 

On October 6, 2022, the Company announced the appointment of Olivier Roussy Newton as Chief Executive Officer of the Company following the resignation of Russell Starr. In addition, the Company announced Russell Starr will re-assume the role of Head of Capital Markets and maintain his role as Executive Chairman of the Company.

 

On July 5, 2022, the Company announced Diana Biggs stepped down from her role as Chief Strategy Officer of the Company.

 

Financings

 

On November 29, 2022, the Company announced the closing of the second tranche of the October 2022 Unit (as defined below) offering for gross proceeds of $132,400 through the sale of 662,000 October 2022 Units. No finders fees were paid in connection with the closing of the second tranche. The securities underlying the second tranche closing were subject to a statutory hold period of four months and one day following the closing date, expiring March 30, 2023.

 

On November 14, 2022, the Company announced the closing of the first tranche of the October 2022 Unit offering, for gross proceeds of $1,414,973 through the sale of 7,074,865 October 2022 Units. A director of the Company purchased 2,500,000 October 2022 Units under the first tranche closing. In connection with the November 14, 2022 first tranche closing of the October 2022 Unit offering, the Company paid aggregate finder’s fees of C$ 7,499.73 in cash to certain finders and 187,493 broker warrants, each broker warrant entitling the holder to acquire one Share at a price of $0.30 for a period of two years from issuance. The securities underlying the first tranche closing were subject to a statutory hold period of four months and one day following the closing date, expiring March 15, 2023.

 

On October 11, 2022, the Company announced its non-brokered private placement financing of 25,000,000 units (the “October 2022 Units”), at an offering price of $0.20 per October 2022 Unit, for aggregate gross proceeds of $5,000,000. Each October 2022 Unit was comprised of one Common Share and one-half Common Share purchase warrant, entitling the holder of a whole warrant to acquire one Common Share, at an exercise price of $0.30, for a period of 24 months from issuance.

 

SEBA Bank Partnership and Investment

 

On January 25, 2022, the Company announced that it closed its investment of CHF 25 million in SEBA, acting as the co-lead in the oversubscribed CHF 110 million Series C funding round of SEBA. SEBA is a fully integrated, Swiss Financial Market Supervisory Authority (“FINMA”) licensed, digital assets banking platform providing a seamless, secure, and easy-to-use bridge between digital and traditional assets.

 

On January 5, 2022, the Company announced that it has entered into a commercial agreement (the “Preferred Partnership Agreement”) to establish a preferred partnership relationship with SEBA. The Preferred Partnership Agreement outlines a framework for the Company to become a preferred provider of staking services, client referrals, market making and liquidity to SEBA, and SEBA to become a preferred provider of custody services to the Company. The Preferred Partnership Agreement also outlines further cooperation between SEBA and the Company with respect to asset and investment management, mining services, tokenization, digital capital markets and institutional research.

 

7

 

 

Additions to Indices

 

On January 26, 2022, the Company announced that it will be added to the CoinShares Blockchain Global Equity Index, administered by Solactive AG, on February 8, 2022. The index aims to offer exposure to listed companies that participate or have the potential to participate in the blockchain or cryptocurrency ecosystem. It also aims to capture the potential investment upside generated by earnings related to the adoption of blockchain technologies or cryptocurrencies.

 

On January 24, 2022, the Company announced that it has been added to the Melanion Bitcoin Exposure Index. This unique index, sponsored by Melanion Capital and administered by Bita GmbH, marks the first milestone in the development of an innovative Digital Asset business for Melanion Capital.

 

ESG Initiatives

 

On January 18, 2022, the Company announced that it joined the Crypto Climate Accord, an industry initiative whose objective is to decarbonise the global crypto industry by prioritizing climate stewardship and supporting the entire crypto industry’s transition to net zero greenhouse gas emissions by 2040, as a supporter.

 

Asset Management

 

On December 23, 2022, the Company announced its products were listed on the independent comparison platform MoneyMoon, a major European ETP comparison platform.

 

On December 1, 2022, the Company announced its partnership with Autostock, a Swedish trading platform, to launch an automated trading strategy designed to capture weekly effects of Bitcoin.

 

On October 28, 2022, the Company announced it had filed a new EU-base prospectus covering digital assets ETP-products with the SFSA.

 

On October 18, 2022, the Company announced the consolidation of its full pro-rated ETHW allocation received as a result of the Ethereum proof-of-work to proof-of-stake forking event. Net proceeds from the consolidation were reinvested into the underlying asset of the Company’s Ethereum Zero certificate products. The change was reflected through an adjustment to the net asset value of both Valour Cayman Ethereum Zero certificates (SEK and EUR denominated).

 

On October 12, 2022, the Company announced its partnership with Swedish index provider Vinter to launch the Company’s first multi-asset crypto ETP, the Valour Digital Asset Basket 10 ETP (VDAB10). The Valour Digital Asset Basket 10 ETP tracks the 10 largest digital assets weighted by their market capitalisation, with a maximum portfolio allocation of 30% per asset.

 

On September 23, 2022, the Company announced the debut and trading of its Carbon Neutral Bitcoin ETP on the Boerse Frankfurt Zertifikate AG (the “Frankfurt Exchange”).

 

On August 24, 2022, the Company announced the debut and trading of its new Binance Coin Exchange traded product, Valour (BNB) EUR ETP, on the Frankfurt Exchange. The Valour (BNB) EUR ETP tracks the price of BNB, the native token behind the BNB Chain, a decentralized open-source, multi-chain platform being used to build parallel virtual ecosystem infrastructure.

 

On August 18, 2022, the Company announced an agreement with German banks, Comdirect and Onvista, that will enable banking clients to integrate Valour Cayman ETPs into their investment portfolios.

 

On August 16, 2022, the Company announced its partnership with German online brokerage firm justTrade, whereby the Company was retained to provide physically-backed crypto ETPs to justTrade’s savings plan program (Sparplan) by the end of the year.

 

8

 

 

On July 26, 2022, the Company announced trading of its ETP products on the Lang and Schwarz Exchange, based in Germany. Trading of Bitcoin Zero, Etherium Zero, Valour Uniswap ETP, Valour Polkadot ETP, Valour Cardano ETP, Valour Solana ETP, Valour Avalanche ETP, and Valour Cosmos ETP began July 25, 2022.

 

On May 26, 2022, the Company announced Valour Cayman received approval to begin trading of the Valour Enjin (ENJ) EUR ETP and Valour Cosmos (ATOM) EUR ETP on the Frankfurt Exchange. Trading began on May 26, 2022.

 

On May 2, 2022, the Company announced that Valour Cayman received approval from the SFSA to extend its distribution from the Top 75 single digital assets by market capitalization to the Top 125.

 

On April 6, 2022, the Company announced that Valour Cayman began trading of its Polkadot (DOT) EUR ETP, Cardano (ADA) EUR ETP, and Solana (SOL) EUR ETP on the Euronet Exchange in Paris and Amsterdam. Trading began on April 6, 2022.

 

On February 17, 2022, the Company announced a strategic partnership with RockX, a Singapore-based institutional gateway to crypto finance and blockchains, to enhance the staking components of the Company’s current respective ETP infrastructures, co-develop ETP products, provide institutional staking services, custodian services and real time data yield oracle.

 

On February 16, 2022, the Company announced that Valour Cayman received approval to begin trading of its Terra (LUNA) SEK ETP and Avalanche (AVAX) SEK ETP on the Nordic Growth Market Exchange (“NGM”). Trading on the NGM began on February 28, 2022 and trading on the Frankfurt Exchange began on March 25, 2022.

 

On February 14, 2022, the Company announced that Valour Cayman received approval to begin trading of the Polkadot (DOT) EUR ETP and Cardano (ADA) EUR ETP on Frankfurt Stock Exchange. Trading began on February 21, 2022.

 

On February 2, 2022, the Company announced that Valour Cayman applied for a Swiss Verein zur Qualitätssicherung von Finanzdienstleistungen (“VQF”) membership through its Swiss subsidiary Valour Europe AG (formerly known as DeFI Europe AG). The VQF membership is awarded by the Verein zur Qualitätssicherung von Finanzdienstleistungen (Financial Services Standards Association), a self-regulatory association for the financial industry in Switzerland. Approval for the VQF membership was granted on April 11, 2022.

 

On February 1, 2022, the Company announced that Valour Cayman received approval to begin trading its Solana ETP on the Frankfurt Exchange, with trading to begin February 2, 2022.

 

Ventures

 

On April 5, 2022, the Company announced it had participated in the $45 million Series A raise for Boba Network, a blockchain Layer-2 scaling solution and Hybrid Compute platform that integrates smart contracts with Web2 API.

 

On January 19, 2022, the Company announced that it has made a block purchase of $WILD tokens, the native token of Wilder World, an immersive 5D Metaverse built on Ethereum, Unreal Engine 5 and open protocol ZERO.

 

Normal Course Issuer Bid

 

On April 8, 2022, the Company announced the extension of its Normal Course Issuer Bid (“NCIB”), previously launched on April 13, 2021, to buy back Common Shares through the facilities NEO Exchange and/or other Canadian alternative trading platforms. The actual number of Common Shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the Company. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms not to exceed up to 10% of the public float for the Common Shares as of April 8, 2022, or 20,359,513 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with NEO Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the NEO Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the NEO Exchange as measured from November 8, 2021 to April 8, 2022.

 

9

 

 

Fiscal 2021

 

Valour Asset Management

 

On December 16, 2021, the Company announced that Valour Cayman received approval to launch a Top 10 Digital Assets and Top 5 Defi ETP. The approval from Finansinspektionen, the SFSA, enables Valour Cayman to distribute the ETPs across key European markets. The ETPs will consist of an index of the top 10 digital assets and top 5 DeFi specific digital assets.

 

On December 15, 2021, the Company announced that Valour Cayman listed its Bitcoin Zero ETP and Ethereum Zero ETP on the Euronext Amsterdam and Paris exchanges.

 

On December 13, 2021, the Company announced that Valour Cayman received approval to launch a Metaverse and Gaming Index ETP from the SFSA. The ETP will consist of an index of the top five digital assets related to the metaverse and has regulatory approval for distribution across key European markets.

 

On November 29, 2021, the Company announced that Valour Cayman’s Uniswap ETP began trading on NGM.

 

On October 26, 2021, the Company announced that Valour Cayman will launch the world’s first Uniswap ETP on the Frankfurt Exchange, with the product going live on October 28, 2021. Uniswap, the world’s most popular decentralized exchange (“DEX”), is a liquidity provider for the trading of tokens on the Ethereum network. As of September 2021, Uniswap Labs shared that the Uniswap protocol passed $500bn USD in total trading volume since its launch in November 2018.

 

On September 20, 2021, the Company announced that Valour Cayman received approval for listing of its Bitcoin Zero and Ethereum Zero ETPs in Frankfurt, with trading of its Bitcoin Zero and Ethereum Zero products to begin on the Boerse Frankfurt Zertifikate AG that week.

 

On September 16, 2021, the Company announced that Valour Cayman launched its Solana ETP on the NGM stock exchange. Solana is the fastest blockchain in the world and the fastest growing ecosystem in the crypto universe, with more than 400 projects spanning DeFi, non-fungible tokens (“NFTs”), Web3, and more. It sat among the top 10 cryptocurrencies in the world by market capitalization at USD $52.36 billion as of September 13, 2021.

 

On June 16, 2021, the Company announced that Valour Cayman signed a letter of intent with Arcane Assets AS with the intention to explore the issuance and listing of an exchange-traded product based on Arcane’s cryptocurrency fund.

 

On June 1, 2021, the Company announced that Valour Cayman launched its Polkadot ETP on the NGM stock exchange. Polkadot is a next generation blockchain protocol that enables interoperability and scalability for multiple blockchains. An open-source project founded by the Web3 Foundation, Polkadot’s native token, DOT, carries out three essential functions: providing governance for the network, operating the network via staking, and supporting the creation of parachains, specialized blockchains that connect to Polkadot.

 

On May 18, 2021, the Company announced that Valour Cayman launched the Cardano (ADA) ETP on the NGM. Cardano is an open-source, proof-of-stake blockchain platform which facilitates decentralized applications and peer-to-peer transactions via its native token, ADA. With a research-driven approach and focus on the security, scalability and programmability, Cardano’s development has been propelled in the past year.

 

On April 7, 2021, the Company announced that Valour Cayman launched Ethereum Zero, an ETP with Ethereum’s native token as an underlying, on the NGM stock exchange. Until now, people wanting to gain exposure to ether (ETH) through an ETP had to pay up to 2.5% management fees with competitor products, which can reduce the value of the investment. With the launch of Ethereum Zero, Valour Cayman provides investors with an ETP tracking the performance of the world’s second largest digital asset without any management fee.

 

10

 

 

On March 23, 2021, the Company announced that it entered into a binding Letter of Intent (“Second Valour LOI”) to acquire the remaining 80% equity interest in Valour Cayman that it did not own. The Second Valour LOI contemplated that the Company and Valour Cayman would promptly negotiate and enter into a definitive agreement, together with such other documents that may be required in order to formalize and execute the terms of the acquisition as outlined in the Valour LOI (the “80% Valour Acquisition”). In consideration for the acquisition, the Company agreed to, upon closing, issue 36,934,315 Common Shares at a deemed price of $2.05 per DeFi Share to the shareholders of Valour Cayman in exchange for 80% of the common shares in the capital of Valour Cayman. On January 19, 2021, the Company entered into a definitive agreement with respect to the 20% Valour Acquisition (defined below), and on February 12, 2021, the Company completed the 20% Valour Acquisition. On April 1, 2021, the Company announced that it had completed the 80% Valour Acquisition. Together, the 20% Valour Acquisition and the 80% Valour Acquisition constituted a “significant acquisition” for the Company as defined in National Instrument 51-102 – Continuous Disclosure Obligations. The Company filed a Form 51-102F4 in respect of the acquisition of Valour Cayman on April 9, 2021.

 

On February 12, 2021, the Company announced that Ms. Diana Biggs was appointed as Chief Executive Officer of Valour Cayman.

 

On January 4, 2021, the Company announced that it has entered into a binding Letter of Intent (“Valour LOI”) to acquire a 20% equity interest in Valour Cayman The Valour LOI contemplated that the Company and Valour Cayman would promptly negotiate and enter into a definitive agreement, together with such other documents that may be required in order to formalize and execute the terms of the acquisition as outlined in the Valour LOI (the “20% Valour Acquisition”). In consideration for the acquisition, the Company shall upon closing issue 21,000,000 Common Shares at a deemed price of $0.66 per share to the shareholders of Valour Cayman in exchange for 20% of the common shares in the capital of Valour Cayman. On January 19, 2021, the Company entered into a definitive agreement with respect to the 20% Valour Acquisition, and on February 12, 2021, the Company completed the 20% Valour Acquisition.

 

Ventures

 

On June 8, 2021, the Company announced that it entered into a definitive agreement to acquire a 10% equity interest in SDK:meta (“SDK”) (the “SDK Acquisition”), a privately held web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. Pursuant to the agreement, the Company issued 3,000,000 Common Shares to SDK in exchange for a 10% of the units in the capital of SDK upon closing of the SDK Acquisition. No finders’ fee were paid in connection with the SDK Acquisition. The SDK Acquisition was completed on June 14, 2021.

 

On April 14, 2021, the Company announced that it has co-invested alongside Pomp Investments (Anthony Pompliano’s investment fund) into SOVRYN, one of the first implementations of decentralized finance technologies specifically designed for the Bitcoin network. SOVRYN’s decentralized protocol extends the functionality of Bitcoin beyond permissionless, monetary sovereignty to include financial services such as trading, lending, liquidity insurance, and many other forms of trustless finance.

 

On March 19, 2021, the Company announced that it has finalized an investment in Volmex Finance one of the first implementations of decentralized volatility index strategies. Volmex Finance is the leading volatility index platform in crypto. Volatility derivatives are a core pillar of modern finance, as they provide a cost-effective means for hedging market volatility risk. Volmex Finance brings volatility hedging to Ethereum, unlocking a myriad of new decentralized finance applications and building blocks.

 

On January 27, 2021, the Company announced that it finalized an investment in Maps.me, one of the first implementations of decentralized finance technologies for a large international user base of customers.

 

On January 14, 2021, the Company announced that it has entered into a definitive agreement (the “DeFi Holdings Definitive”) to acquire the remaining 51% equity interest in DeFi Holdings that it did not own at such time (the “51% DeFi Holdings Acquisition”). In consideration for the acquisition, the Company issued 20,000,000 Common Shares to the shareholders of Defi Holdings in exchange for 51% of the common shares in the capital of Defi Holdings. The 51% DeFi Holdings Acquisition was completed on January 28, 2021.

 

11

 

 

On January 12, 2021, the Company announced that DeFi Bermuda had purchased tokens in the SNX, AAVE, UNI and YFI protocols, among others.

 

On January 8, 2021, the Company announced that it has set up an investment and trading subsidiary in Bermuda, DeFi Holdings Bermuda Ltd (“DeFi Bermuda”). The Company also entered into an agreement with Neversink River Capital, LLC an innovative cryptocurrency manager led by asset management and technology veterans of Deutsche Bank and MIO Partners to advise and actively manage its portfolio.

 

Infrastructure

 

On December 1, 2021, the Company announced that it deployed a Solana validator node that will act as an independent validator for the network. By processing transactions and participating in consensus, DeFi Technologies will be supporting the growth and performance of the Solana network. In connection with running the node, DeFi Technologies can receive rewards from securing transactions on Solana as well as for providing governance services such as voting on code changes and other upgrades to the globally decentralized network.

 

On November 22, 2021, the Company announced that it began staking the Company’s Blocto Tokens. Blocto, a portfolio company of the Company, is a blockchain wallet hub that allows users to conveniently and securely access blockchains, use DApps, send and receive their crypto and digital assets. BLT, the utility and governance token of Blocto, serves as the foundation of the ecosystem and the interconnective link between the wallet, Blocto-made products, and their users.

 

On November 18, 2021, the Company announced that it selected Bison Trails, the leading blockchain infrastructure platform-as-a-service company, to enhance the node infrastructure for the Valour Infrastructure business line. As part of the agreement, Bison Trails will begin by openly implementing validator nodes leveraging Bison Trails’ infrastructure and protocol expertise. The effort will contribute to the DeFi ecosystem by further establishing secure and reliable networks, voting, and increasing overall decentralization.

 

On November 15, 2021, the Company announced that it would deploy Solana nodes and act as an independent validator for the network. By processing transactions and participating in consensus, the Company will be supporting the growth and performance of the Solana network. In addition, the Company plans to participate in staking, thereby earning staking rewards.

 

On November 3, 2021, the Company announced that it will be joining the Pyth network, a decentralized financial market data distribution platform built on the Solana blockchain. As an active participant of the Pyth community, the Company will be bringing its real-time cryptocurrency pricing data to the Pyth network to improve DeFi market transparency.

 

On March 12, 2021, the Company announced that it launched a new product, DeFi Governance (now Valour Infrastructure). DeFi Governance seeks to work with decentralized networks, running nodes to provide governance to networks and validate transactions globally.

 

Management, Board and Advisory Board Changes

 

On November 1, 2021, the Company announced that Valour Cayman appointed Tommy Fransson to the role of Chief Executive Officer starting January 1, 2022. Mr. Fransson was previously at the NGM where he was Deputy CEO for ten years and Head of the Nordic Derivatives Exchange. Mr. Fransson replaced Diana Biggs, who moved into the role of Valour Cayman Chief Strategy Officer.

 

On October 4, 2021, the Company announced an expansion of its management team, with (a) Mr. Russell Starr, who has been serving as Executive Chairman of the Company, assuming the role of Chief Executive Officer, (b) Mr. Johan Wattenstrom, who is a co-founder and director of Valour Cayman, assuming the role of Chief Operating Officer, (c) Ms. Diana Biggs, who was then the Chief Executive Officer of Valour Cayman, assuming the role of Chief Strategy Officer as of November 1, 2021 and (d) Mr. Wouter Witvoet, formerly the Chief Executive Officer of the Company, assuming the role as President.

 

12

 

 

On July 20, 2021, the Company announced that it had appointed Mr. Russell Starr as Executive Chairman of the Company.

 

On May 14, 2021, the Company announced that it appointed Mr. Krisztian Tóth to the Board of Directors and Mr. Starr to the management team as Head of Capital Markets.

 

Mr. Tóth, is an experienced M&A lawyer and partner at the law firm of Fasken Martineau DuMoulin LLP, which is a leading international business law and litigation firm with eight offices with more than 700 lawyers across Canada and in the UK and South Africa. Mr. Tóth began his career at Fasken in 2003, eventually becoming a partner of the firm in 2009. He currently focuses on mergers and acquisitions and corporate finance with an emphasis on international and cross-border transactions, proxy contests and other contested matters, public and private financings, securities regulations and corporate governance. He has been recognized by IFLR1000 for his capital markets work. Mr. Tóth is also a director of a number of public companies, including Voyager Digital, a publicly listed crypto-asset broker that provides retail and institutional investors with a turnkey solution to trade crypto assets.

 

Mr. Starr is an established CEO, entrepreneur and financier with deep capital markets and industry expertise. Mr. Starr is a trusted leader and advisor focused on forging meaningful, high stakes, high return business development connections. Mr. Starr is also a co-founder and part owner of Echelon Wealth Partners, a large Canadian investment dealer. After leaving Bay Street, Mr. Starr has held executive positions and board roles with numerous TSX and TSXV listed companies.

 

On March 2, 2021, the Company announced that Mr. Anthony Pompliano was appointed as an advisory to the Company. Mr. Pompliano manages an investment portfolio valued at approximately $500 million. He is the Managing Partner at Pomp Investments and previously co-founded asset management firm Morgan Creek Digital. Mr. Pompliano hosts the popular “Pomp Podcast” and writes a daily letter to more than 135,000 investors about bitcoin and digital assets. His interests lie at the intersection of finance, technology, entrepreneurship, and economics, which he tweets about extensively. Mr. Pompliano has long been a staunch proponent of bitcoin and has deep conviction that the world, including financial applications, will run on open, decentralized protocols.

 

On February 16, 2021, the Company announced that Mr. Wouter Witvoet was appointed as Chief Executive Officer of the Company. Mr. Witvoet previously was Founder and CEO at Secfi, Inc., the first platform offering financing secured by private company stock. Secfi raised two rounds of venture capital as well as a facility of US$550 million from a leading New York based hedge fund. Under his leadership the company grew from 1 to 40 employees and has helped many employees from Snowflake, Uber, Pinterest, DoorDash and others with the money they need to exercise their stock options.

 

On February 3, 2021, the Company announced that Mr. Thibaut Ceyrolle, EMEA founder and VP of Snowflake Inc., had join the board of advisors of the Company. Thibaut has a wealth of experience in growing and scaling Software and Cloud industries companies for more than 20 years. He was Snowflake’s first employee outside the United States. Under Thibaut’s leadership, Snowflake EMEA grew from zero to a presence in 14 countries, and several hundred new customers and employees with an unprecedented growth in the Software industry. Snowflake is one of the most successful IPOs in the software industry and the largest software initial public offering in Q4 last year. Thibaut has been named the #1 Sales leader 2020 in the sales confidence community.

 

On January 19, 2021, the Company announced the appointment of Bernie Wilson as an additional independent director of the Company. Mr. Wilson is a senior financial professional. He is the former Vice-Chairman of PriceWaterhouseCoopers LLP and is the Chairman of the Founders Board of the Institute of Corporate Directors. Mr. Wilson has served as Chairman of the Canadian Chamber of Commerce; Chairman of the International Chamber of Commerce - Canada; and Member of the Canada/US Trade Committee. Mr. Wilson is currently a director of a number of other public Canadian companies.

 

Financings

 

On March 9, 2021, the Company announced that it had closed its previously announced non-brokered private placement financing of Common Shares for gross proceeds of $10,000,000 (the “March 2021 Offering”). Pursuant to the closing of the March 2021 Offering, the Company issued 5,000,000 Common Shares. In connection with the Offering, the Company paid aggregate finder’s fees of $274,120 in cash to certain finders. The securities issued under the March 2021 Offering were subject to a statutory hold period of four months and one day following the closing date, expiring July 10, 2021.

 

13

 

 

Normal Course Issuer Bid

 

On April 9, 2021, the Company announced its intention to commence a NCIB to buy back Common Shares through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms. The actual number of Common Shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the Company. Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the NEO Exchange and/or other Canadian alternative trading platforms not to exceed up to 9.7% of the public float for the Common Shares as of April 9, 2021, or 18,162,177 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with NEO Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the NEO Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the NEO Exchange as measured from November 9, 2020 to April 8, 2021.


Name Change and Listing of Common Shares

 

On November 10, 2021, the Company announced that it filed a Form 40-F Registration Statement with the United States Securities and Exchange Commission to list the Common Shares on the Nasdaq Stock Market.

 

On February 26, 2021, the Company announced that the shareholders of the Company approved the change of name of the Company to “DeFi Technologies Inc.”.

 

On January 19, 2021, the Company announced that effective January 21, 2021, the Common Shares will be listed on the NEO Exchange under the symbol “DEFI” and that the Common Shares would delist from the TSX Venture Exchange.

 

HIVE Blockchain Share Exchange

 

On March 25, 2021, the Company announced that it entered into a letter of intent with HIVE Blockchain Technologies Ltd. (“HIVE”) for a share swap arrangement, by which HIVE will receive ten (10) million Common Shares representing 6.5% of the existing outstanding common shares of the Company at such time, in exchange for four (4) million HIVE common shares, representing 1.1% of Hive’s issued and outstanding common shares at such time. In addition, HIVE and DeFi Technologies plan to create a partnership surrounding the decentralized finance (DeFi) ecosystem with specific applications around Ethereum and Miner Extractable Value (MEV). The new partnership, which follows three months of discussions, will provide the Company with a strategic stake in HIVE and a broader partnership surrounding the DeFi ecosystem with a specific focus on the Ethereum based MEV space and developments surrounding it. The share swap arrangement with HIVE was completed on April 21, 2021.

 

DESCRIPTION OF THE BUSINESS

 

General

 

The Company is a publicly listed issuer on Cboe Canada trading under the symbol “DEFI”. The Company is a technology company bridging the gap between traditional capital markets and decentralized finance through three primary business lines: (a) the development and listing of Exchange Traded Products (“ETPs”), investment vehicles providing indirect exposure to underlying cryptocurrencies, digital asset indexes, or other decentralized finance instruments, through our Asset Management business line, (b) participating in decentralized blockchain networks by processing data transactions that contribute to network security and stability, governance, and transaction validation through our Infrastructure business line, and (c) through our investments in decentralized finance companies in early-stage ventures through our Ventures business line.

 

“Decentralized finance” or “DeFi” refers to a financial system that seeks to operate as an alternative to the traditional financial system. DeFi seeks to allow people and companies to effect transactions on a “peer to peer” basis, typically employing blockchain or other distributed ledger technology to allow participants to interact with one another directly between each other. Because transactions are effected peer to peer, DeFi does not rely on traditional intermediaries such as banks, brokerages, and stock exchange, so transactions can be completed on a more timely basis and without the fees typically charged by intermediaries.

 

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Asset Management

 

Valour ETPs

 

The Company’s wholly owned subsidiary Valour develops and lists ETPs on regulated stock exchanges in Europe that synthetically track the value of a cryptocurrency or DeFi protocol token, or an index or basket thereof. ETPs simplify the ability for retail and institutional investors to gain exposure to cryptocurrencies and decentralized finance as they remove the need to manage wallets, various logins, custody and other intricacies that are linked to managing a digital asset portfolio. Rather, retail and institutional investors can simply purchase the associated ETP with the cryptocurrency or DeFi protocol token they wish to gain exposure to through a bank or brokerage account with access to the relevant stock exchanges.

 

As of the date hereof, Valour has listed the following ETPs:

 

Name of ETP (Currency) Exchange Listings ISIN No.
Valour Bitcoin Zero (EUR) NGM, Borse Frankfurt Zertifikate AG, Euronext Amsterdam and Euronext Paris CH0573883474
Valour Bitcoin Zero (SEK) NGM CH0585378661
Valour Bitcoin Zero (SEK) NGM

CH0585378661

 

Valour Ethereum Zero (EUR)  Borse Frankfurt Zertifikate AG, NGM, Euronext Amsterdam and Euronext Paris CH0585378752
Valour Ethereum Zero (SEK) NGM

CH1104954362

 

Valour Cardano ETP (SEK) NGM CH1114178796

Valour Cardano ETP (EUR)

 

 Borse Frankfurt Zertifikate AG, Euronext Amsterdam and Euronext Paris CH1114178820
Valour Polkadot ETP (SEK) NGM CH1114178770
Valour Polkadot ETP (EUR) Frankfurt Exchange, Euronext Amsterdam and Euronext Paris CH1114178812
Valour Solana ETP (SEK) NGM CH1114178762
Valour Solana ETP (EUR) NGM, Borse Frankfurt Zertifikate AG, Euronext Amsterdam and Euronext Paris CH1114178838
Valour Uniswap ETP (EUR) Borse Frankfurt Zertifikate AG

CH1114178846

 

Valour Uniswap ETP (SEK) NGM CH1114178754
Valour Avalanche (AVAX) ETP (SEK) NGM CH1114178788
Valour Avalanche (AVAX) ETP (EUR) Borse Frankfurt Zertifikate AG CH1149139615
Valour Enjin (ENJ) ETP (EUR) Borse Frankfurt Zertifikate AG CH1149139656
Valour Cosmos (ATOM) (EUR) Borse Frankfurt Zertifikate AG CH1149139664
Valour Binance (BNB) (EUR) Borse Frankfurt Zertifikate AG CH1149139672
Valour Bitcoin Carbon Neutral (EUR) Borse Frankfurt Zertifikate AG CH1149139706
Valour Digital Asset Basket 10 (VDAB10) (EUR) NGM and Borse Frankfurt Zertifikate AG

CH1149139623

 

Valour Digital Asset Basket 10 (VDAB10) (SEK) NGM CH1161139568
Valour Ripple (XRP) (SEK) NGM CH1161139584

 

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Products and Services

 

Valour Cayman ETPs are issued under a base prospectus dated December 15, 2022 (the “Base Prospectus”), as supplemented by supplements or final terms from time to time (“Final Terms”), which together govern the ETP program (the “Program”). The Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in France, Germany, Italy, Austria, Belgium, Denmark, Finland, Luxembourg, The Netherlands, Norway and Spain. Valour Cayman may also request the SFSA to publicize the approval of the Base Prospectus to other European Economic Area (“EEA”) states in accordance with Regulation (EU) 2017/1129. For further details on the terms and conditions of the ETPs, a copy of the Base Prospectus may be obtained at https://www.fi.se/en/our-registers/prospektregistret/details/?id=21-25431.

 

Valour Cayman’s current ETP range are all open-ended certificates that provide exposure to a single digital asset, or an index or a basket thereof, as specified in the relevant Final Terms. The Final Terms and for each of Valour Cayman’s ETPs are available on the company website on the respective ETP pages: https://valour.com/products. Valour Cayman is the issuer of the ETPs offered under the Program and also acts as calculation agent.

 

Valour Cayman’s policy is always to hedge 100% of the market risk in the underlying asset. Hedging is done continuously and in direct correspondence to the issuance of ETPs to investors. In order to hedge its exposure to each digital asset, Valour Cayman relies on cryptocurrency exchanges to be able to buy and sell the digital assets which the ETPs track.

 

For its Bitcoin Zero and Ethereum Zero products, Valour Cayman charges zero management fees and for all other products, a management fee of 1.9% applies.

 

Valour Cayman currently lists its ETPs, on the following European stock exchanges: NGM, Euronext Amsterdam, Euronext Paris, Lang and Schwarz Exchange, and Borse Frankfurt Zertifikate AG. The listing of ETPs are subject to exchange approval by the relevant exchange.

 

16

 

 

Valour Digital Securities Limited ETPs

 

VDSL is a special purpose vehicle incorporated as a public limited liability company under the laws of Jersey. VDSL is owned by the charitable trust VLR Charitable Trust in Jersey. In April 2023, VDSL obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering of physically backed ETPs to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. Valour Cayman acts as arranger for all ETPs issued by VDSL.

 

As of the date hereof, VDSL has listed the following ETPs:

 

Name of ETP (Currency) Exchange Listings ISIN No.
1Valour Ethereum Physical Staking Deutsche Börse Xetra GB00BRBMZ190
Valour Bitcoin Carbon Neutral (SEK) Deutsche Börse Xetra GB00BQ991Q22
1Valour Internet Computer Staking (EUR) Deutsche Börse Xetra GB00BS2BDN04
1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip Deutsche Börse Xetra GB00BPDX1969

 

Products and Services

 

VDSL ETPs are issued under a base prospectus dated April 5, 2023 (the “VDSL Base Prospectus”), as supplemented by supplements or final terms from time to time (“VDSL Final Terms”), which together govern the VDSL ETP program (the “VDSL Program”). The VDSL Base Prospectus has been approved by the SFSA, the Swedish financial authority, and is passport eligible in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain. VDSL may also request the SFSA to publicize the approval of the VDSL Base Prospectus to other EEA states in accordance with Regulation (EU) 2017/1129. In addition, VDSL may decide to register this VDSL Base Prospectus in Switzerland with the reviewing body SIX Exchange Regulation AG or another FINMA approved reviewing body, as a foreign prospectus that is also deemed to be approved in Switzerland pursuant to Article 54 paragraph 2 FinSA, for the purposes of making a public offer of VDSL ETPs in Switzerland or admission to trading of all or a series of VDSL ETPs on a regulated stock exchange in Switzerland. For further details on the terms and conditions of the ETPs, a copy of the VDSL Base Prospectus may be obtained at https://1valour.com/hubfs/Issuer%20Reporting/Prospectus/Valour%20ABS%20Base%20Prospectus%2005%2004%202023.pdf.

 

The VDSL Program permits VDSL to issue VDSL ETPs related to any one of 124 underlying digital currencies (“Digital Currencies”) (or more subject to supplements to the VDSL Base Prospectus), to a “basket” comprising two or more of such Digital Currencies or to an index linked to Digital Currencies, as specified in the relevant VDSL Final Terms. The VDSL Final Terms and for each of VDSL’s ETPs are available on the company website on the respective ETP pages: https://valour.com/products. The VDSL ETPs are designed to offer investors a means of investing in Digital Currencies without having to acquire digital assets themselves and to enable investors to buy and sell that interest through the trading of a security on a stock exchange.

 

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Each VDSL ETP is an undated secured limited recourse debt obligation of VDSL, which ranks equally with all other VDSL ETPs of the same class. VDSL ETP holders only have recourse to the assets of the class of VDSL ETP of which they are a holder. If the net proceeds are insufficient for VDSL to make all payments due, neither the trustee nor any person acting on behalf of the trustee will be entitled to take any further steps against the VDSL, and no debt shall be owed by the VDSL in respect of such further sum.

 

The underlying assets for the VDSL ETP of each class, by which they are backed and on which they are secured, comprise private keys evidencing ownership of Digital Currencies. These private keys are held in the name of the VDSL in secure vaults at the premises of the relevant custodian of VDSL (“VDSL Custodian”) and are not fungible with other digital assets held by the relevant VDSL Custodian.

 

The VDSL ETPs are constituted under the trust instrument dated April 5, 2023 between VDSL and The Law Debenture Trust Corporation p.l.c. as trustee (the “Trustee”) for the holders of VDSL ETPs (“VDSL ETP Holders”) (the “Trust Instrument”). The Trustee holds all rights and entitlements under the Trust Instrument on trust for VDSL ETP Holders. In addition, VDSL and the Trustee have entered into a single security deed (the “Security Deed”) in respect of all pools of VDSP ETPs (“Pools”). The rights and entitlements held by the Trustee under the Security Deed, to the extent attributable to a Pool, are held by the Trustee on trust for the VDSL ETP Holders of that particular class of VDSL ETP. Under the terms of the Security Deed, VDSL has charged to the Trustee for the benefit of the Trustee and the relevant VDSL ETP Holders by way of first fixed charge the Digital Currencies held in custody attributable to the relevant class of VDSL ETP and all rights of VDSP in respect of the respective custody accounts to the extent attributable to the relevant Pool. VDSL has also, under the terms of the Security Deed, assigned to the Trustee by way of security the contractual rights of the issuer relating to such class under the custody agreements entered into by VDSL and has granted a first-ranking floating charge in favour of the Trustee over all of VDSL’s rights in relation to the secured property attributable to the applicable Pool, including but not limited to its rights under the custody agreements and the custody accounts attributable to that Pool.

 

VDSL charges management fees ranging from 0% to 1.9% on the VDSL ETPs.

 

VDSL ETPs are currently listed on the Deutsche Börse Xetra. The listing of ETPs are subject to exchange approval by Deutsche Börse Xetra.

 

Staking of Cryptocurrency and Defi Protocol Tokens

 

As part of Valour’s policy to hedge 100% of the market risk, Valour purchases and sells the digital assets which its ETPs track. Valour may lend or stake such digital assets on its balance sheet to generate revenue in accordance with the policies in the Base Prospectus and VDSL Base Prospectus. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour’s Lending and Staking Policy.

 

Pursuant to the Lending and Staking Policy, lending and staking activities are overseen by its Allocation Committee, which is comprised of its Head of Asset Management and Trading, currently John Wattenstrom and its Head of Finance. Prior to entering into any lending or staking transaction, due diligence will be conducted on all potential counterparties, and in particular counterparties in the following situations:

 

●Custody of assets of Valour by third parties, without legal separation from assets of such third party

 

●Deposits of cash with banks and investment firms

 

●Bilateral FX transactions (settlement risk)

 

●Bilateral transactions in digital assets (settlement risk)

 

●Lending and borrowing transactions relating to digital assets (settlement risk)

 

In order to evaluate a counterparty the following information is collected and documented in the counterparty scorecard:

 

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Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date.

 

Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc are documented.

 

Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty.

 

Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

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Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders. If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

When deciding whether to lend or stake a particular asset, the Lending and Staking Policy provides that the decision will initially be made based on the risk profile of the potential counterparties, then the highest yield available, then prioritizing staking over lending.

 

The Lending and Staking Policy requires that assets be lent or staked for an open term, with no fixed duration lock-up, thereby allowing Valour Cayman to withdraw from the lending or staking transaction. The Lending and Staking Policy also sets limits on how much of a particular digital asset can be lent or staked of 55% in the case of assets under management of less than US$10 million, and 80% for over US$10 million. Allocations by counterparty will be limited to 33% of Valour Cayman’s aggregate assets. Exceptions to these rules can be made with Valour Board approval.

 

“Staking” refers to the process of dedicating digital assets to a particular blockchain for a set period of time so as to verify transactions on that blockchain. The act of staking typically results in the staking person or company receiving newly-created digital assets of the same type as a reward verifying the transactions. In addition, having digital assets staked improves the integrity and security of the applicable blockchain ledger.

 

Custody of Digital Assets

 

The policies of Valour require the application of internal multi-signature cold-storage and external custody. External custody solutions include specialized third-party custody providers within the United States and Europe. Valour currently utilizes the following third-party custody providers to hold and safeguard Valour’s digital assets:

 

Valour Cayman

 

Custodian Location % of digital assets custodied by market value(1) Regulatory Body
Bitcoin Suisse AG Switzerland 6.04% Financial Services Standards Association (VQF), Zug, Switzerland
Anchorage Digital United States 2.33% Office of the Comptroller of Currency
B2C2 Overseas LTD Cayman Island 71.82% Cayman Islands Monetary Authority

 

Note 1: As at December 31, 2023; Residual digital assets served as collateral for loans with B2C2-Group (approx. 11.38 %; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (5.24%; subject to bankruptcy proceeding/filing as of 19 January 2023).

VDSL

 

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Custodian Location % of digital assets custodied by market value(1) Regulatory Body
Copper Markets (Switzerland) AG Switzerland 100% Financial Services Standards Association (VQF), Zug, Switzerland
Komainu (Jersey) Limited Jersey   Jersey Financial Services Commission

 

 

Prior to engaging any prospective third-party to perform custody services, Valour conducts diligence and counterparty risk analysis of such third-party. Such measures include:

 

●verifying contact information of the third-party and the responsible onboarding owner on the Valour Cayman side.

 

●reviewing current status of the relationship with the third-party, the connection type, as well as the services, products and currency pairs used by the third-party.

 

●documenting the prospective third-party’s regulatory regime and licenses.

 

●assessing the third-party’s jurisdiction of incorporation and regulatory regime for compliance to international anti-terrorism and money laundering guidelines such as the Financial Action Task Force country evaluation, Transparency.org Corruption Perception Index as well as the VQF SRO country risk recommendations.

 

●collecting and documenting public exchange scores, such as Coinmarketcap and Coingecko, of the third-party

 

●assessment of the third-party’s information security certification, such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001.

 

●assessment and documentation of the third-party’s insurance coverage with respect to investor protection.

 

●verifying if the third-party has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

●searching for any adverse public media results regarding the third-party

 

●analyzing risk exposure and business restrictions through engaging the third-party.

 

●recurring review of third-party custody providers.

 

Valour’s current third-party custody providers do not engage sub-custodians to provide custody services. None of Valour ’s current third-party custody providers are Canadian financial institutions or related parties of the Company. Each of Valour’s third-party custody providers maintain general commercial insurance on its own behalf and would be subject to their respective jurisdiction’s bankruptcy laws in the event of such an event. The Company and Valour are not aware of any aspect of the above custody providers that would adversely affect the Company from obtaining an unqualified audit opinion on its audited financial statements. The Company and Valour are not aware of any security breaches or similar incidents with respect to its third-party custody providers.

 

In addition, Valour utilizes custody solutions offered by institutional quality exchanges. The exchanges typically store between 95% and 100% of the assets in multi-signature cold storage. Different exchanges store different proportions of their assets in online wallets, and the proportion of assets in cold storage is one of the factors determining their risk weight in our model for capital adequacy. Cold storage means storage facilities where the private keys of a wallet are held off-line protected physically as well as by the multi-signature features of the wallet. By comparison, hot storage means storage facilities or platforms that are connected to the internet, which provide greater accessibility to digital assets for users, but are subject to greater cybersecurity risks.

 

The Company does self custody some of the Company’s venture portfolio using meta mask and other hot wallets. The total value of the Company’s digital assets under self custody was approximately $4.5M in 2023 (December 31, 2022 – 2.3m). Some digital assets related to the Valour Cayman ETPs are self-custodied.

 

The controls around the meta mask and other hot wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

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The following principles are applied with regards to Valour’s internal safe keeping of digital assets:

 

a.The quantities that are kept by means of hot storage shall be limited to what is reasonably estimated as required for hedging of potential transactions in the near future;

 

b.The quantities that are kept by means of hot storage shall be distributed between a reasonable number of the approved counterparties for such storage, taking practical aspects into consideration; and
   
c.The allocation of assets between Valour’s counterparties shall be optimized with respect to security and quality of Valour’s products within the limits set forth by the model for capital adequacy.

 

Specialized Skill and Knowledge

 

Valour has assembled a team of employees, officers, directors and consultants with specialized skill and knowledge of regulated exchanges in Europe, investment banking, cryptocurrencies, digital assets and decentralized finance. In particular, Valour Cayman has retained Johan Wattenstrom, Co-Founder & Director at Nortide Capital and previously the Founder of XBT Provider (now known as Coinshares), which created the world’s first ever Bitcoin ETP in 2015, and has served on the management committees of several Nordic investment banks.

 

Valour also retains external legal counsel with respect to regulatory compliance of its ETP programs. Additional information can be found in the Base Prospectus and the VDSL Base Prospectus.

 

Competitive Conditions

 

There are several other issuers that have listed similar tracker-products in various forms and markets, including in Europe. Valour holds a strong competitive position, particularly in the Nordics, due to its competitive and transparent pricing model. Valour’s Bitcoin and Ethereum Zero ETPs are the first and only of their kind to track the two largest digital assets by market capitalisation and charge zero management fees. For its other products, Valour charges 1.9% management fees, whereas competitor products in the same markets charge up to 2.5% management fees.

 

Valour innovative product range is also a competitive advantage. As of the date of this AIF, Valour is the most comprehensive provider of crypto ETPs listed in the Nordics.

 

Cycles

 

As Valour’s products are financial markets products tracking digital assets of finite supply, the demand for ETPs may experience cycles resulting from fluctuating supply and demand, and as an alternative asset class, although the correlation between traditional markets and cryptocurrencies has been seen to be increasing.

 

Employees

 

Valour employs 9 employees and 1 consultant.

 

Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the DeFi ecosystem to build a diversified portfolio of DeFi assets and venture investments, predominantly at Seed or Series A stage. As of December 31, 2023 the Company has participated in equity or token raises from the following ventures:

 

●AMINA Bank is one of the first FINMA-regulated institutions to provide crypto banking services. The broad, vertically integrated spectrum of services, combined with the highest security standards, make AMINA’s value proposition unique. AMINA operates globally from its regulated hubs of Switzerland, Abu Dhabi and Hong Kong to offer fiat and crypto services to progressive investors, traditional and crypto-native alike, whether individuals, corporates or institutions.

 

●Clover is a substrate-based smart contracts platform with Ethereum Virtual Machine (EVM) compatibility, providing cross-chain infrastructure for scaling decentralised applications (dApps).

 

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●Sovyrn provides DeFi infrastructure for Bitcoin via a non-custodial and permissionless smart contract based system that enables lending, borrowing and margin trading.

 

●Saffron Finance is a peer-to-peer (P2P) risk exchange and decentralised marketplace for risk arbitrage, built on Ethereum.

 

●Blocto is a UX-focused interoperable ecosystem that enables users to easily access dApps, crypto and NFTs cross-chain.

 

●Luxor Technologies provides a range of solutions for scaling blockchain infrastructure including a globally distributed mining pool, a hashrate network-switching engine, and a wide variety of blockchain related software.

 

●Oxygen Protocol is a Solana based DeFi prime brokerage service that democratises borrowing, lending, and leverage trading.

 

●Maps.me is the world’s leading offline mapping application. With over 140M users, Maps.me 2.0 aims to become the global passport to the new financial system.

 

●Mobliecoin is an open-source, encryption-focused cryptocurrency designed for use in everyday transactions, addressing security, transaction speed, energy consumption, and optimization for mobile devices.

 

●Volmex Labs offers a tokenised volatility protocol built on Ethereum that enables the creation of volatility indexes (VIX) for crypto assets.

 

●3iQ Corp. is a Bitcoin and digital asset fund manager that offers digital asset investment products

 

●Wilder World is the first full-scale, immersive 5D Metaverse being built out on Ethereum with full augmented reality (AR) and virtual reality (VR) integration.

 

●Boba Network is a blockchain Layer-2 scaling solution and Hybrid Compute platform offering lightning fast transactions and fees up to 100x less than Layer-1.

 

Each of these ventures were selected for their innovative potential, high quality teams, growing and / or potential user bases and unique position in the market or market share, cutting edge technology, and/or leading investors. The ventures respective use cases include borrowing and lending, decentralized exchanges, derivatives and asset management, amongst others.

 

Specialized Skill and Knowledge

 

The Company believes that the success of its Ventures line of business is dependent on the performance of its management team and the ability of the Company to leverage the network of its management, directors and advisory board. Management of the Company and its subsidiaries have extensive knowledge and understanding of evolving DeFi industry and have a strong track record of identifying sound investment opportunities and making prudent business decisions. In addition, the members of the advisory board have also been selected due to their wealth of experience in the crypto and DeFi industry. The Company has adequate personnel with the specialized skills required to successfully carry out its operations.

 

Competitive Conditions

 

As the DeFi industry is an emerging industry, competition in the space is constantly evolving. With respect to investment in DeFi projects, protocols and other ventures, the Company’s competitors range from established DeFi protocol trading companies to crypto and / or traditional VCs to individual angel investors. The Company may also compete with other emerging companies in the DeFi industry and established mutual funds, investment funds, hedge funds, investment companies, management companies and other investment vehicles for investment opportunities. Many of these competitors have greater financial, technical and other resources than the Company. To compete, the Company depends on the knowledge, experience and network of business contacts of the management, directors and the Advisory Board of the Company.

 

Infrastructure

 

The Company’s Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for networks, in addition to partnering with other companies and institutions to further improved governance within specific projects.

 

Node management refers to the practice of acting as a “node”, which is a stakeholder that verifies transactions on a decentralized blockchain network. In exchange for such activities, the node is compensated by the network, usually in the form of the digital assets native to the applicable blockchain network.

 

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As of the date hereof, the Company has:

 

●acquired the Solana IP to bolster its staking and node revenues;

 

●staked the Company’s Blocto Tokens. Blocto, a portfolio company of the Company through its Ventures business, is a blockchain wallet hub that allows users to conveniently and securely access blockchains;

 

●Partnered with Pyth network to provide real-time cryptocurrency pricing data to the Pyth network to improve DeFi market transparency.

 

Reflexivity Research

 

Reflexivity Research LLC (“Reflexivity Research”) is a digital asset research firm seeking to bridge traditional finance into the ever-evolving world of crypto. Reflexivity Research produces research reports on the crypto market, cryptocurrencies and DeFi protocols. Reflexivity Research operates on a subscription model, whereby retail and commercial users pay a subscription fee to access Reflexivity Research’s research reports, and also produces commissioned reports. Reflexivity Research does not produce research reports on any equity securities. Additionally, Reflexivity Research holds conferences in the cryptocurrency sector, such as Bitcoin Investor Day held in New York on March 22, 2024, bringing together institutional investors, capital allocators, and entrepreneurs.

 

Specialized Skill and Knowledge

 

Anthony Pompliano and Will Clemente have both been operating in the cryptocurrency market for numerous years, have built large digital audiences, and are sought out by mainstream media outlets for their knowledge and opinions.

 

Competitive Conditions

 

The digital asset research space is new and there are low barriers to entry. Furthermore, there are no geographic restrictions on where digital asset research firms can be located. As a result, there are numerous competitors to Reflexivity Research, some of which include Messari, Blockworks Research, Delphi Digital, and The Block PRO.

 

Employees

 

Reflexivity Research employs 2 employees and 5 consultants.

 

Employees

 

In addition to the 9 employees and 1 consultant at Valour and 2 employees and 5 consultants at Reflexivity Research, the Company has 9 employees and 10 consultants.

 

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Risk Factors

 

The Company’s business, operations, financial results and prospects are subject to the normal risks of its industry and are subject to various factors which are beyond the control of the Company. Certain of these risk factors are described below. The risks described below are not the only ones facing the Company. Additional risks not currently known to the Company, or that it currently considers immaterial, may also adversely impact the Company’s business, operations, financial results or prospects, should any such other events occur.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

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●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of digital assets, cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such digital assets, cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

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Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s crytocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

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Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, Valour relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

The Company has not received any exemptive relief from regulators in Canada. The Company discusses regulatory compliance with its external legal counsel on a regular basis. Investments in the ETPs in the light of their exposure to digital assets must always be assessed by every investor based on the circumstances and legal and regulatory conditions applicable to that investor. An investor governed by such conditions may be subject to limited possibilities to invest in the ETPs and/or experience unforeseeable consequences of a holding in the ETPs. The combination of the nature of Valour’s activities, the markets to which it is exposed, the institutions with which it does business and the securities which it issues makes it particularly exposed to national, international and supranational regulatory action and taxation changes. The scope and requirements of regulation and taxation applicable to the issuer continues to change and evolve and there is a risk that as a result it may prove more difficult or impossible, or more expensive, for Valour to continue to carry on their functions in the manner currently contemplated. This may require that changes are made in the future to the agreements applicable to Valour and may result in changes to the commercial terms of the ETPs and/or the inability to apply for and redeem ETPs and/or compulsory redemption of some or all of the ETPs and/or disruption to the pricing thereof.

 

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Valour Cayman and VDSL are companies which are regulated by various laws and regulations of the Cayman Islands and Jersey, respectively. Valour Cayman and VDSL cannot fully anticipate all changes that in the future may be made to laws and regulations to which Valour Cayman and VDSL are subject to in the future, nor the possible impact of all such changes. Valour Cayman and VDSL’s ability to conduct its business is dependent on the ability to comply with rules and regulations.

 

If the Company was found to be in breach of regulations applicable to Valour Cayman or VDSL, it could result in fines or adverse publicity which could have a material adverse effect on the business which in turn may lead to decreased results of operations and the company’s financial condition.

 

Valour Cayman or VDSL’s involvement in such proceedings or settlements as well as potential new legislation or regulations, decisions by public authorities or changes regarding the application of or interpretation of existing legislation, regulations or decisions by public authorities applicable to Valour Cayman or VDSL’s operations, the ETPs and/or the underlying assets, may adversely affect Valour Cayman or VDSL’s business or an investment in the ETPs.

 

The impact of any detrimental developments in the underlying crypto asset’s regulation on Valour Cayman and VDSL’s ETPs becomes evident by considering an ETP’s product nature: An Exchange Traded Product is a financial instrument traded – like a share - on a stock exchange whereby typically the aim is to provide the same return as a specified benchmark or asset (before fees). Although ETPs can take a number of forms (ETFs/ETCs/ETNs), they share some common characteristics. ETPs are designed to replicate the return of an underlying benchmark or asset, with the easy access and tradability of a share or digital asset (that otherwise may only be bought via a decentralized exchange wallet-setup). Investors can benefit from the broad diversification of a benchmark, gaining exposure to hundreds or thousands of individual underlying securities – or digital assets - in a single transaction. Additionally, the wide range of asset classes covered by ETPs opens up more exotic investment areas which historically could only be accessed by institutional investors (such as individual commodities, emerging markets or digital/crypto assets). ETPs generally do all this with a lower fee than actively managed funds and therefore compete with traditional index funds on cost.

 

Valour’s ETPs are non-interest-bearing debt securities that are designed to track the return of an underlying digital/crypto asset. The current Valour ETP program in place does not provide that those securities are collateralised. Although their yield references an underlying benchmark or asset, the ETPs are similar to unsecured, listed bonds. As such, Valour ETPs are entirely reliant on the creditworthiness of Valour as issuing entity. Hence, generally a change in that creditworthiness might negatively impact the value of the ETP, irrespective of the performance of the underlying benchmark or digital/crypto asset.

 

However, the primary appeal of these types of ETPs is that they guarantee exposure to a benchmark or an asset’s return (minus fees) even when the underlying markets or sectors suffer from liquidity shortages. The return is guaranteed by the issuing entity and not reliant on the access (direct or via a directive) to the underlying assets. Unlike physical replication, a synthetic ETP does not hold the underlying assets the product is designed to track. Instead, an ETP issuer like Valour enters into hedging transactions thereby directly and trading in the underlying assets, entering into swap agreements etc. with a range of counterparties to provide the return of the underlying assets. Consequently, a negative change of regulation (tightening/restriction/prohibition) can have a direct impact on Valour’s issuer activity or – indirectly – by affecting its contractual counterparties. Restrictive of prohibitive regulation may lead to counterparty default, known as counterparty risk. If a counterparty defaults on its obligations under the hedging transactions described above, the ETP would not provide the return of the asset it is designed to track which could also expose investors to losses.

 

Canada

 

In Canada, the Canadian Securities Administrators (the “CSA”), the umbrella group for the provincial and territorial securities regulators, have generally taken the position that securities laws apply to cryptocurrencies. The CSA, beginning in 2017, has published a series of Staff Notices outlining their position and explaining how securities laws apply to various aspects of the cryptocurrency industry. The majority of those Staff Notices have dealt with cryptocurrency trading platforms and other businesses that hold cryptocurrencies on behalf of clients, which the Company does not do as part of its business.

 

The CSA has also, however, published Staff Notices focused on the analysis of when a cryptocurrency constitutes a security for securities law purposes. On August 24, 2017 and June 11, 2018, the CSA published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws. While the Company does not create or sell digital assets of its own issue, through its Valour Venture and Valour Infrastructure business lines it holds a number of digital assets from a variety of issuers. In the event that any of these were determined to be securities, it could negatively impact the issuers of those digital assets by making trading subject to prospectus requirements, which could reduce the market price of such assets and therefore devalue the holdings of the Company.

 

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While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

U.S. Classification of Crypto Assets and Investment Company Act of 1940

 

The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular crypto asset as a security. Furthermore, the SEC’s views in this area have evolved over time and it is difficult to predict the direction or timing of any continuing evolution. It is also possible that a change in the governing administration or the appointment of new SEC commissioners could substantially impact the views of the SEC and its staff. Public statements by senior officials at the SEC indicate that the SEC does not intend to take the position that Bitcoin or Ether are securities (in their current form). Bitcoin and Ether are the only crypto assets as to which senior officials at the SEC have publicly expressed such a view. Moreover, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other crypto asset. With respect to all other crypto assets, there is currently no certainty under the applicable legal test that such assets are not securities, notwithstanding the conclusions we may draw based on our risk-based assessment regarding the likelihood that a particular crypto asset could be deemed a “security” under applicable laws. Similarly, though the SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given crypto asset is a security in April 2019, this framework is also not a rule, regulation or statement of the SEC and is not binding on the SEC.

 

Several foreign jurisdictions have taken a broad-based approach to classifying crypto assets as “securities,” while other foreign jurisdictions, such as Switzerland, Malta, and Singapore, have adopted a narrower approach. As a result, certain crypto assets may be deemed to be a “security” under the laws of some jurisdictions but not others. Various foreign jurisdictions may, in the future, adopt additional laws, regulations, or directives that affect the characterization of crypto assets as “securities.” The classification of a crypto asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets.

 

Additionally, we do not currently intend to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If certain crypto assets that form a part of our ETPs are determined to be crypto assets, we may be obligated to register as an investment company under the Investment Company Act, and we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

 

●limitations on capital structure;

 

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●restrictions on specified investments;

 

●prohibitions on transactions with affiliates; and

 

●compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

 

Further, the classification of certain crypto assets as securities could draw negative publicity and a decline in the general acceptance of the crypto asset, which could have a negative effect on our ETPs that contain such crypto assets.

 

Issuance of Crypto ETPs in the EU

 

As mentioned above, the Valour Base Prospectus and VDSL Base Prospectus covering the public offering of the ETPs in the EU has been approved by the SFSA, the Swedish financial authority, and is passported to Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain where the ETPs can be offered and sold via the respective stock exchange listings.

 

The following provides an overview on the digital/crypto assets regulatory landscape on supra-national EU level, the various EU countries in which Valour issued ETPs are available or the primary EU countries where Valour may issue ETPs in the future.

 

EU

 

The EU is the first major jurisdiction worldwide to provide a comprehensive, dedicated regulatory framework for crypto-assets, the EU Markets in Crypto-Asset Regulation (MiCA). MiCA has four specific objectives. The first is to provide a legal framework for crypto-assets not covered by existing EU legislation on financial services. Secondly, by setting up a sound and transparent legal framework, it would support innovation, promote crypto-assets and the wider use of distributed ledger technology (DLT). Thirdly, the proposal would secure an appropriate level of consumer and investor protection and market integrity. Finally, it would enhance financial stability, as some of the crypto-assets may ‘become widely accepted and potentially systemic’.

 

MiCA is set to regulate crypto-assets, including so-called stablecoins that do not already fall under existing EU rules, by setting regulatory requirements for the public offer and marketing of crypto-assets and the provision of services related to them. In addition, MiCA includes provisions to prevent market abuse involving crypto-assets. More specifically, with regard to stablecoins and with a view to mitigate risks to investors and financial stability, MiCA provides that issuers of stablecoins will need to be authorised (either as a credit institution or an e-money institution for e-money tokens, or under MiCA for asset-referenced tokens) and have in place a robust and segregated reserve of assets to support the peg, and in the case of e-money tokens enable holders to redeem at par. For issuers of significant so-called stablecoins, supplemental requirements and EU-level (instead of national) supervision apply. The final text of MiCA is expected to be published in the Official Journal in spring 2023 and will enter into force between 12 and 18 months thereafter. Yet, while MiCA is intended to create a comprehensive regulatory framework for cryptoassets, continuous monitoring will remain necessary. As the system continues to evolve quickly, with novel business models and emerging risks, further regulatory actions may be required through time. A wider crypto adoption among European citizens and institutions may also expand intersystem exposures.

 

Sweden

 

The Financial Supervisory Authority (FSA) and the central bank have publicly declared that bitcoin is legal but not an official form of payment or legal tender. From a tax perspective they are viewed as an asset, not a currency or cash. The FSA has warned of the risks associated with cryptos and investment products with cryptos as underlying assets such as exchange-traded products (ETPs). Sweden has imposed registration requirements that mean custodians, wallet providers and exchanges must comply with the Swedish Currency Exchange Act. The act requires certain types of financial institutions (which are otherwise largely unregulated and unsupervised) to comply with AML provisions. The scope of the Currency Exchange Act now includes custodian wallet providers and providers of virtual currency exchange services in accordance with the implementation of the Fifth Anti-Money Laundering Directive (AMLD5). Mining activities are not regulated under Swedish law. There are no licensing or registration requirements specifically applicable to virtual currency mining activities. Sweden’s Central Bank, the Riksbanken, has been a leader in developing a CBDC, the e-krona. Swedish income tax law has different categories of income such as employment income, self-employment income, business income and investment income. Capital gains are treated as investment income. Sweden imposes capital gains tax on cryptocurrencies at a flat rate of 30%. Losses are deductible up to 70%. Income tax is based on a progressive model with average rates around 32%.

 

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France

 

In April 2019, the French National Assembly adopted the Plan d’Action pour la Croissance et la Transformation de Enterprises (PACTE – Action Plan for Business Growth and Transformation) that will establish a framework for digital asset services providers. France’s Financial Market Authority (AMF) has adopted new rules and regulations for cryptocurrency service providers and ICOs, related to the (PACTE). Ordinance № 2020-154452, was issued on December 9, 2020, to compliment France’s cryptocurrency regulations. In June 2021, the regulations were finalized and went into effect. Firms are now subject to mandatory registration and subject to stricter KYC regulations. The rules established new AML/CFT rules related to digital assets. They imposed new requirements on crypto exchanges and prohibit anonymous accounts, expand AML/CFT and KYC obligations to better harmonize the French AML framework with Financial Action Task Force (FATF) principles and respond to new risks associated with digital assets. Lawmakers in France have recently debated changing the tax structure related to cryptos. Cryptos are taxed similar to movable property. Occasional traders are charged a flat tax of 30% while miners and professional traders are taxed 45%.

 

Germany

 

The German government was one of the first countries to provide legal certainty to financial institutions, allowing them to hold crypto-assets. Regulations stipulate that citizens and legal entities can buy or trade crypto-assets as long as it is done through licensed exchanges and custodians. Firms must be licensed with the German Federal Financial Supervisory Authority (BaFin). BaFin views and classifies cryptos as “units of account” within the meaning of the German Banking Act. They are therefore not legal tender, money, or foreign exchange notes or coins. The regulators have agreed, however, that they are deemed “crypto-assets” in accordance with the definition of financial instruments. Germany has signed up to requirements under AMLD5. It has established licensing requirements for custody services. Crypto-assets are, however, based on agreement and accepted as a means of exchange or payment or as an investment, and can be transferred, stored, and traded electronically. The German Federal Central Tax Office considers cryptocurrencies as private money for tax purposes. For individuals, gains of less than 600 euros held for less than a year are considered tax-free. Sales of cryptos held for more than a year are tax-exempt in Germany. If neither of the conditions are met, the gains are taxed subject to ordinary income rates.

 

Italy

 

In February 2022, Italy published new AML rules for crypto firms which outline registration and reporting requirements for VASPs that align with the EU AMLD5 and the Financial Action Task Force (FATF) guidelines for crypto firms. The new rules also require virtual asset service providers to register in a special roster for crypto firms. Registration is required if firms offer any digital asset-related services in the country. Italy joined the European Blockchain Partnership (EBP) along with 22 other countries in April 2018. The EBP was established to enable member states to work together with the European Commission on blockchain technology. Cryptocurrencies and blockchain are regulated at the legislative level in Italy under Legislative Act no. 90. The decree in 2017 grouped cryptocurrency exchanges with foreign currency exchanges. Although the decree states that cryptocurrencies are not issued by the central bank and are not correlated with other currencies, it is a virtual currency used as a medium of exchange for goods and services.

 

Austria

 

The Financial Market Authority (FMA) has warned investors that cryptocurrencies are risky and that the FMA does not supervise or regulate virtual currencies, including bitcoin, or cryptocurrency trading platforms. The FMA’s regulations follow Austria’s implementation of the Fifth Money Laundering Directive (AMLD5), defining crypto-assets as “financial instruments.” The FMA regulations provide registration requirements with respect to the issuance and selling of virtual currencies as well as transferring them, trading and exchange platforms for them as well as providers of custodian wallets. Cryptocurrencies are legal but are not considered as legal tender. The Austrian Ministry of Finance classes cryptocurrencies as “other (intangible) commodities.” As part of a nationwide tax overhaul, Austria will apply a 27.5% capital gains tax on digital currencies, bringing the treatment of cryptos into line with that of stocks and bonds, to “streamline” conditions between asset classes.

 

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Belgium

 

The Belgian Financial Services and Markets Authority and the National Bank of Belgium are the primary regulatory bodies for financial services in Belgium. The regulators have published guidance and warnings to the public that cryptocurrencies are not legal tender and have also issued statements regarding scams and investor protection. Belgium has, however, fostered a strong fintech community involved in digital assets and blockchain. The minister of justice has announced plans to establish a legal framework related to cryptos. In February 2022 Belgium announced new rules for certain virtual asset service providers. The rules, which took effect in May 2022, require service providers “to meet a series of conditions, including ones relating to their professional integrity and compliance with the anti-money laundering legislation.” Gains on cryptocurrencies are taxable by as “miscellaneous income.”

 

Denmark

 

The Danish Financial Supervisory Authority is the main regulator in Denmark. Cryptocurrency regulation is, however, influenced by EU law. An amendment in January 2020 to the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism defines a virtual currency as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” There is no regulation of mining for virtual currencies in Denmark. Denmark amended the AML Act in 2020 to implement AMLD5, which is designed to bring virtual currencies within the scope of the the existing AML-laws. The Danish central bank, the Nationalbanken, is researching the development of a digital currency, the “e-krone.”

 

Finland

 

In May 2019, Finland’s Financial Supervisory Authority (FSA) began regulating virtual currency exchange providers, wallets and issuers of virtual currencies. Registration is required to ensure compliance with statutory requirements surrounding reliability of the provider, protection of client money, segregation of assets, marketing and compliance with AML/CFT regulations. The FSA has warned consumers of the risky, volatile and speculative nature of the investments. The Finnish FSA has published stricter rulings regarding crypto marketing saying “Only registered virtual currency providers can market virtual currencies and related services in Finland. The marketing of virtual currencies in Finnish and in Finland is only allowed for entities registered as virtual currency providers in Finland.” The list of supervised entities operating in the cryptocurrency and digital currency sector is small; although, the FSA does not advise on or restrict Finnish customers visiting foreign websites. Finland has joined the European Blockchain Partnership and agreed to AMLD5.

 

Luxembourg

 

In the Luxembourg, there is not yet a formal regulatory stance on crypto-assets, but the “Virtual Assets – FAQ” document published in November 2021 and updated in January 2022 by the Commission de Surveillance du Secteur Financier (CSSF) has shed a light on some aspects.

 

For instance, it clarified that Undertaking for Collective Investment in Transferable Securities (UCITS) funds and Undertakings for Collective Investment (UCIs) addressing non-professional customers and pension funds are forbidden to invest directly or indirectly in Virtual Assets. The document also outlines the conditions under which Alternative Investment Funds (AIFs) may invest in crypto-assets, as well as the requirements for the Alternative Investment Fund Manager (AIFM) and the specific Anti-Money Laundering (AML) considerations.

 

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Lastly, in a FAQ document on virtual assets for credit institutions issued in January 2022 by the CSSF, the regulator states that credit institutions may directly invest in virtual assets and open accounts that allow customers to invest in virtual assets. On the other hand, credit institutions cannot open bank accounts in virtual assets, must submit a business case as well as an application file to the CSSF to provide virtual assets services and must set up an effective investor protection framework.

 

The Netherlands

 

The Dutch Central National Bank De Nederlandsche N.V. (DNB) requires crypto firms to register with it. Dutch regulations require VASPs to provide identifying information on themselves and their customers. The DNB also supervises crypto service providers’ compliance with the Sanctions Act 1977. The DNB defines cryptos as “a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically.” In May 2020 the Dutch Implementation Act amended Dutch AML rules and implemented AMLD5. The Netherlands does not impose taxes on capital gains, but rather imposes a deemed interest on the value of all assets minus all liabilities. The deemed interest is taxable against a flat rate of 31% (in 2021, 30% in 2020).

 

Norway

 

Cryptocurrencies are legal. They are defined as an asset and not any type of money. Norway has been an attractive location for blockchain start-ups. The Financial Supervisory Authority of Norway “Finanstilsynet” and the country’s Ministry of Finance has established money laundering regulations which apply to “Norwegian providers of virtual currency exchange and storage services.” The legislation requires firms such as storage services and exchanges that convert cryptos to fiat currency to comply with AML rules, but it does not impose regulatory obligations on other crypto services. “Finanstilsynet will ensure that virtual currency exchange and storage providers comply with the money laundering rules. However, FSA does not have any tasks monitoring other areas of these providers, such as investor protection,” the regulator said. In June 2021, Finanstilsynet published a warning which said, “Most cryptocurrencies are subject to extreme price fluctuations. The risk of loss is high… Price formation is in many cases not transparent.” It also warned of significant criminal activity. “Scammers use spam, computer viruses, fake drawings and a variety of other techniques to deceive consumers,” the warning stated. Bitcoin profits are subject to wealth tax and use of cryptos falls under sales tax regulations The Central Bank of Norway is exploring the development of a CBDC.

 

Spain

 

Like its neighbor Portugal, Spain was a notable early hot spot for cryptocurrencies among EU members, with merchants accepting payments and bitcoin kiosks in the streets. Despite having no formal legal status, virtual currencies in Spain are taxable as income and under VAT. In 2021 the Spanish Securities and Exchange Commission, the Comision Nacional del Mercado de Valores (CNMV) and the Bank of Spain issued a joint statement warning of the risks and volatility associated with cryptos. The joint statement also highlighted that, from a legal standpoint, cryptocurrencies are not a means of payment and are not backed by a central bank or other customer protection mechanisms or authority. Spain issued the Royal Decree Law 5/202176 which included a provision giving the CNMV power to regulate advertising related to cryptocurrencies. In January 2022, the CNMV published a circular saying it would begin to regulate rampant advertising of crypto assets, including by social media influencers, to make sure investors are aware of risks.

 

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No ETP issuance into non-EU countries

 

Although some of its operational staff is located in Switzerland, Valour does not yet offer any ETPs in Switzerland.

 

Switzerland

 

Switzerland is known as one of the most cryptocurrency-friendly nations in the world. Switzerland’s financial markets regulator, the Swiss Financial Market Supervisory Authority (FINMA) has defined licensing requirements for cryptocurrency businesses of all types including bitcoin kiosk operations, and has created requirements for blockchain companies. Cryptocurrency businesses are subject to AML regulations and licensing requirements under FINMA. FINMA’s regulatory environment complies with the FATF’s digital asset regulation issued in June 2019. Switzerland further improved its regulations surrounding tokens with the July 2021 implementation of the Federal Act on the Adaptation of Federal Law to Developments in Distributed Ledger Technology (the DLT Act). In Switzerland capital gains arising from a “private wealth asset” are exempt from income tax. This applies to capital gains from cryptos. Realized gains arising from the disposal of cryptocurrency are therefore not subject to tax. Losses arising from the disposal of cryptocurrency assets are not tax-deductible. Under Swiss tax law, cryptocurrencies are considered items that can be valued and traded. They are therefore assets that are subject to wealth tax. Tax rates vary on regional level.

 

United Kingdom

 

Valour does not offer any ETPs in the UK. However, UK-domiciled investors may purchase Valour ETPs on the respective EU stock exchanges where they are listed as Valour ETPs are registered for a preferential tax treatment with the HM Revenue & Customs authority.

 

The UK Financial Conduct Authority (FCA), HM Treasury and the Bank of England make up the country’s Crypto-assets Taskforce. The FCA has created regulations to cover KYC, AML and CFT tailored for crypto-assets. It has also created regulations to cover VASPs, but has been careful to not stifle innovation. Crypto exchanges must register with the FCA unless they have applied for an e-money license. Cryptocurrencies are not considered legal tender and taxes are levied based on activities. The FCA has banned the trading of cryptocurrency derivatives. The Law Commission published a call for evidence on digital assets in April 2021. The request seeks input from stakeholders ahead of publication of a consultation paper on digital assets which will make proposals for new legislation. In February 2022, the UK government and the FCA published complementary reform proposals to bring financial promotions for some “qualifying crypto-assets” into HM Treasury’ financial promotions regime and into the FCA financial promotions rules. There is no specific UK regulatory regime that captures the activities of crypto miners. Although there is no specific UK tax legislation applicable to cryptos, HM Revenue and Customs has set out its view of the treatment based on normal principles. Receipt of cryptos from an employer are treated as “money’s worth” and are taxed as income based on the value of the assets at the time of receipt. Where cryptos are held as personal investments, capital gains tax applies upon disposal. In cases where frequent trading is involved, income tax rather than capital gains may apply.

 

Venture Portfolio Exposure

 

Given the nature of the Company’s Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

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Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

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Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets.

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. Digital assets of Valour that are held internally via multi-signature cold storage may be prone to loss or theft as a result of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

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Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and open source contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at December 31, 2023, the Company’s investments through its Venture business arm comprise of C$44,184,021, which represented approximately 7.5% of the Company’s total assets.

 

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Competition

 

The Company operates in a highly competitive industry and competes against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. The Asset Management and Infrastructure business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If the Company is unable to compete successfully, or if competing successfully requires the Company to take costly actions in response to the actions of the Company’s competitors, the Company’s business, operating results, and financial condition could be adversely affected.

 

Harm to the Company’s brand and reputation could adversely affect the Company’s business. The Company’s reputation and brand may be adversely affected by complaints and negative publicity about the Company, even if factually incorrect or based on isolated incidents. Damage to the Company’s brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about the Company, its ETPs, its management team, its other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by its management team, its other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into its business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in its financial strength or liquidity;

 

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●any regulatory action that results in changes to or prohibits certain lines of its business;

 

●a failure to operate our business in a way that is consistent with its values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to its competitors, to the extent the resulting negative perception affects the public’s perception of the Company or its industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

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Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

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No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

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Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

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The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future. See “Dividends”.

 

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DIVIDENDS

 

The Company has not paid any dividends since its incorporation. Any determination to pay any future dividends will be at the discretion of the Board and will be made based on the Company’s financial condition and other factors deemed relevant by the Board. There are currently no restrictions on the ability of the Company to pay dividends except as set out under the OBCA.

 

DESCRIPTION OF SHARE CAPITAL

 

The Company is authorized to issue an unlimited number of Common Shares without par value. The holders of Common Shares are entitled to dividends, subject to the rights of holders of any other class of shares of the Company, if, as and when declared by the Board. The holders of Common Shares are also entitled to one vote per Common Share at meetings of the shareholders of the Company and, subject to the rights of holders of any other class of shares of the Company, to share, on a pro rata basis with the other holders of Common Shares, the net assets of the Company, upon liquidation, dissolution or winding up of the Company. The Common Shares are not subject to call or assessment nor do they carry any pre-emptive or conversion rights. There are no provisions attached to such shares for redemption, purchase for cancellation, surrender or sinking or purchase funds.

 

As of the date hereof, 290,169,503 Common Shares are issued and outstanding.

 

As of the date hereof, the Company also has 23,530,000 options, 45,680,932 warrants and 8,607,005 deferred share units (“DSUs”) issued and outstanding. See the notes to the Company’s audited financial statements for the year ended December 31, 2023 for additional information regarding the Company’s convertible securities.

 

MARKET FOR SECURITIES

 

Trading Price and Volume

 

The Common Shares are listed and posted for trading on the NEO Exchange under the symbol “DEFI” following the uplisting of the Common Shares on January 19, 2021. Previously, the Common Shares were listed and posted for trading on the TSX Venture Exchange under the symbol “RM.V”. The following table sets forth, on a monthly basis, the reported high and low sale prices (which are not necessarily closing prices) and the aggregate volume of trading of the Common Shares on the NEO Exchange during the financial year ended December 31, 2023.

 

 

Date

 

High

($)

Low

($)

Volume

 

January 2023 0.25 0.12 7,607,034
February 2023 0.24 0.13 5,310,071
March 2023 0.18 0.125 4,481,819
April 2023 0.185 0.115 4,333,649
May 2023 0.13 0.07 18,059,217
June 2023 0.12 0.075 8,075,287
July 2023 0.175 0.095 5,123,462
August 2023 0.145 0.07 7,553,771
September 2023 0.125 0.09 3,630,352
October 2023 0.16 0.09 2,367,481
November 2023 0.36 0.13 6,719,209
December 2023 0.79 0.33 9,725,252

 

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Prior Sales

 

During the financial year ended December 31, 2023, with respect to each class of securities of the Company that is outstanding as of the date of this AIF and not listed or quoted on a marketplace, the Company issued the following securities:

 

Date of Issuance

 

Security

 

Number of Securities Issued

 

Exercise Price Per Security

($)

February 1, 2023 DSUs 1,000,000 N/A
 July 13, 2023 Options  1,000,000  $0.115
July 13, 2023 DSUs 1,000,000 N/A
 November 24, 2023 Options  2,650,000  $0.29
 December 4, 2023 Options  4,500,000  $0.45
 December 11, 2028 Options  750,000  $0.52
November 24, 2023 DSUs 2,359,286 N/A

 

 

Escrowed securities

 

To the Company’s knowledge, no securities of the Company are held in escrow or that are subject to a contractual restriction.

 

46

 

 

DIRECTORS AND OFFICERS

 

The following table sets forth for each director and executive officer of the Company as at the date of this AIF, each such individual’s name, province or state and country of residence, position(s) held with the Company, principal occupation(s) for the last five years, if currently a director, period(s) during which such individual has served as a director of the Company, and the number and percentage of issued and outstanding Common Shares beneficially owned, or controlled or directed, directly or indirectly, by such individual (for avoidance of doubt, excluding any convertible securities in the capital of the Company held by such individual). The statements as to principal occupation(s) for the last five years of, and the number and percentage of Common Shares beneficially owned, or controlled or directed, directly or indirectly, by, the directors and executive officers of the Company are in each instance based upon information furnished by the individuals concerned. All directors of the Company hold office until the next annual meeting of shareholders of the Company or until their successors are elected or appointed.

 

Name, Province/State and Country of Residence and Position(s)
with the Company		 Principal Occupation(s) for the Last Five Years Period(s) Served
as a Director		 Number of
Common Shares
Beneficially Owned or Controlled or Directed		 Percentage of Common Shares Beneficially Owned or Controlled or Directed

Olivier Roussy Newton

Zug, Switzerland

Chief Executive Officer and Executive Chairman

President of EV Technology Group since September 2021.

 

Founder and Partner of Latent Capital since July 2015.

 

Managing Director of BTQ since March 2021.

 June 30, 2023  17,504,410  6.32%

Ryan Ptolemy

Toronto, Canada

Chief Financial Officer

Chief Financial Officer of Belo Sun Mining Corp., Aberdeen International Inc., Savanna Capital Corp., EV Technology Group Ltd., Consolidated Lithium Metals Inc., AmmPower Corp. and Euro Sun Mining Inc. N/A 1,353,294 0.07%

Kenny Choi

Toronto, Canada

Corporate Secretary

 Lawyer N/A 1,345,795 0.07%

Krisztian Toth
Ontario, Canada

Director

 Partner at Fasken Martineau Dumolin LLP Since May 14, 2021 0 Nil

Stefan Hascoet(1) (3)

Geneva, Switzerland

Director

 Managing Partner of Deep Knowledge Ventures Suisse Since June 20, 2023 618,000 0.22%

Mikael Tandetnik(1) (3)

Geneva, Switzerland

Director

 Founder of Ariane Group SA Since June 20, 2023 440,455 0.16%

Suzanne Ennis(1) (3)

Ontario, Canada

Director

 VP of Corporate Development at Hut 8 Since June 22, 2023 18,948 > 0.01%

 

Notes:

 

(1)Member of the Corporation’s audit committee.
(2)Member of the Compensation, Nomination and Governance Committee
(3)Independent director

 

As of the date hereof, the directors and executive officers of the Company, as a group, beneficially owned, or controlled or directed, directly or indirectly, 21,280,902 Common Shares, representing 7.69% of the total issued and outstanding Common Shares.

 

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

 

No director or executive officer of the Company is, as at the date hereof, or has been, within the ten years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:

 

(a)was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days and that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

 

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(b)was subject to a cease trade or similar order, or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer or chief financial officer.

 

No director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

 

(a)is, as at the date hereof, or has been, within the ten years before the date hereof, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or

 

(b)has, within the ten years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

 

As at the date hereof, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:

 

(a)any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or

 

(b)any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

 

Conflicts of Interest

 

The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interests that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in a conflict is required to disclose his interest and abstain from voting on such matter in accordance with the OBCA. In appropriate cases, the Company will establish a special committee of independent non-executive directors to review a matter in which one or more directors or officers may have a conflict.

 

To the best of the Company’s knowledge, and other than as disclosed herein, there are no known existing or potential material conflicts of interest between the Company or a subsidiary of the Company and any director or officer of the Company or a subsidiary of the Company, except that certain of the directors and officers serve as directors and officers of other public or private companies and therefore it is possible that a conflict may arise between their duties as a director or officer of the Company and their duties as a director or officer of such other companies.

 

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AUDIT COMMITTEE DISCLOSURE

 

National Instrument 52-110 – Audit Committees of the Canadian Securities Administrators (“NI 52 110”) requires the Company to have a written audit committee charter and to make the disclosure required by Form 52-110F1.

 

Audit Committee Charter

 

A copy of the Charter of the Audit Committee of the Board, which has been adopted by the Board in order to comply with NI 52 110 and to more properly define the role of the Audit Committee in the oversight of the financial reporting process of the Company is attached hereto as Schedule “A”. Nothing in the Charter is intended to restrict the ability of the Board or Committee to alter or vary procedures in order to comply more fully with the Instrument, as amended from time to time.

 

The Audit Committee is comprised of Suzanne Ennis, Mikael Tandetnik and Stefan Hascoet. Each member of the Audit Committee is independent of the Company and financially literate, as such terms are defined in NI 52 110.

 

Relevant Education and Experience

 

The following is a brief summary of the education and experience of each member of the Audit Committee that is relevant to the performance of his or her responsibilities as a member of the Audit Committee.


Sue Ennis is an award-winning technology and innovation advocate, currently serving as Head of Investor Relations at Hut 8, a major U.S data infrastructure operator and Bitcoin miner. With over 15 years of experience, she has raised over a billion dollars for Canadian and U.S structured product and small cap companies, emphasizing the fintech and digital asset sectors. Before Hut 8, she held roles at Shyft Networks, Coinsquare, Voyager, and Invesco. A chartered investment manager and certified blockchain expert, Sue is known for simplifying complex concepts as a global keynote speaker. She advises Locera Vision, a health tech spin-out from Tufts University. Ms. Ennis obtained a Bachelor of Arts degree from McMaster University.

 

Mr. Tandetnik is a seasoned wealth manager and CEO with a strong background in finance. He embarked on his career as a Salesperson for equity and structured products at BNP Paribas, gaining valuable experience in the field. Subsequently, he transitioned to various brokerage firms, honing his expertise in investment management. After founding LS Advisor in Paris and driven by his passion for the cryptocurrency industry, Mr. Tandetnik established Ariane Group SA in Geneva, a wealth management companies specializing in catering to cryptocurrency clients and investments. He played a pivotal role in numerous fundraising initiatives for both listed and unlisted private crypto companies, demonstrating his deep involvement in the crypto space. Mr. Tandetnik’s academic qualifications include a Bachelor’s degree in Business from the Ecole Supérieure de Gestion et Finance (ESGF) in France and a Master’s degree from ESLSCA, where he specialized in Trading and Options.

 

Mr. Hascoet is a capital markets professional who spent 12 years in the City of London in the field of equity derivatives and cross-asset structured products working for three global investment banks, including at RBC Capital Markets, leading a team covering Swiss clients. After his initial training in the institutional finance world, Mr. Hascoet decided to focus on the dual fields of finance & blockchains through various entrepreneurial endeavors, focusing on making blockchain assets investible and building bridges with the established banking systems and capital markets frameworks. Mr. Hascoet is a Swiss resident, based in Geneva, Managing Partner of Deep Knowledge Ventures Suisse, a data-driven investment holding of commercial and non-profit organizations active in the fields of DeepTech, Fintech and Longevity. Mr. Hascoet is a graduate of the French Grande Ecole system, having studied at l’Ecole Ste Genevieve in Versailles and ESCP Business School in Paris.

 

Audit Committee Oversight

 

At no time since the commencement of the Company’s most recently completed financial year has there been a recommendation of the Audit Committee to nominate or compensate an external auditor that was not adopted by the Board.

 

Reliance on Certain Exemptions

 

At no time since the commencement of the Company’s most recently completed financial year has the Company relied on any available exemption regarding the composition, responsibilities, independence, financial literacy or otherwise of the Audit Committee.

 

49

 

 

Pre-Approval Policies and Procedures

 

The Audit Committee has not adopted specific policies and procedures for the engagement of non audit services. In accordance with its charter, all non-audit services are pre-approved by the Audit Committee.

 

External Auditor Service Fees

 

Audit Fees

 

The Company’s external auditors, HDCPA Professional Corporation, billed the Company $186,450 in the financial year ended December 31, 2023 for audit fees.

 

The Company’s former external auditors,. BF Borgers CPA P.C. billed the Company $296,701 in the financial year ended December 31, 2022 for audit fees.

 

Audit-Related Fees

 

The Company’s external auditors, HDCPA Professional Corporation, billed the Company $Nil in the financial year ending December 31, 2023 for assurance and related services related to the performance of the audit or review of the Company’s financial statements, which are not included in audit fees.

 

The Company’s former external auditors, BF Borgers CPA P.C., billed the Company $Nil in the financial year ending December 31, 2022 for assurance and related services related to the performance of the audit or review of the Company’s financial statements, which are not included in audit fees.

 

Tax Fees

 

The Company’s external auditors, HDCPA Professional Corporation, billed the Company $Nil in the financial year ending December 31, 2023 for tax compliance, tax advice and tax planning.

 

The Company’s former external auditors, BF Borgers CPA P.C., billed the Company $Nil in the financial year ending December 31, 2022 for tax compliance, tax advice and tax planning.

 

All Other Fees

 

No other fees were charged by the external auditors for the financial years ended December 31, 2023 and December 31, 2022.

 

PROMOTER

 

The Company does not have a promoter.

 

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

 

Except as described below, the Company has not been since, and was not during, the financial year ended December 31, 2023 a party to any legal proceedings, nor has any of its property been since nor was any of its property during the financial year ended December 31, 2023, subject of any legal proceedings.

 

In November 2021, the Company received a notice of application from two individuals seeking the enforceability of certain incentive stock option agreements between the respective individual and the Company and an additional $500,000 in punitive damages per individual (the “Claim”). On November 8, 2022, the Superior Court of Justice (the “Court”) issued a ruling that the incentive stock option agreement between the respective individual and Company was enforceable. The Court ruled against any punitive damages. The Company filed an appeal, regarding the Court’s November 8, 2022 decision, to the Court of Appeal for Ontario on January 26, 2023. On September 11, 2023, the Court of Appeal dismissed the Company’s appeal. The Company paid the judgement resulting from the Claim.

 

50

 

 

There have been no penalties or sanctions imposed against the Company by a court relating to securities legislation or by any securities regulatory authority since or during the financial year ended December 31, 2023, or any other penalties or sanctions imposed by a court or regulatory body against the Company that would likely be considered important to a reasonable investor in making an investment decision, and the Company has not entered into any settlement agreements with a court relating to securities legislation or with a securities regulatory authority since or during the financial year ended December 31, 2023.

 

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

 

Other than as disclosed herein, none of the directors or executive officers of the Company, nor any person or company that beneficially owns, or controls or directs, directly or indirectly, more than 10% of the issued and outstanding Common Shares, nor any associate or affiliate of the foregoing persons or companies, has or has had any material interest, direct or indirect, in any transaction within the three most recently completed financial years or during the current financial year that has materially affected or is reasonably expected to materially affect the Company.

 

TRANSFER AGENT AND REGISTRAR

 

The transfer agent and registrar for the Common Shares is TSX Trust, at its offices in Toronto, Ontario located at 100 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 4H1.

 

MATERIAL CONTRACTS

 

The Company has no material contracts.

 

INTERESTS OF EXPERTS

 

The Company’s external auditor during the financial year ended December 31, 2023 was HDCPA Professional Corporation. HDCPA Professional Corporation has advised the Company that it is independent of the Company in accordance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

 

ADDITIONAL INFORMATION

 

Additional information relating to the Company may be found under the Company’s profile on SEDAR at www.sedar.com and at www.cboe.ca.

 

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, is contained in the Company’s management information circular dated May 11, 2023 prepared in connection with the Company’s annual and special meeting of shareholders held on June 20, 2023.

 

Additional financial information is provided in the Company’s annual consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2023, both of which are available under the Company’s profile on SEDAR at www.sedar.com and at www.aequitasneo.com.

 

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Schedule “A”

 

Audit Committee Charter

 

Mandate

 

The primary function of the audit committee (the “Committee”) is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting and the Company’s auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary duties and responsibilities are to

(i) serve as an independent and objective party to monitor the Company’s financial reporting and internal control system and review the Company’s financial statements; (ii) review and appraise the performance of the Company’s external auditors; and (iii) provide an open avenue of communication among the Company’s auditors, financial and senior management and the board of directors.

 

Composition

 

The Committee shall be comprised of three directors as determined by the board of directors, all of whom shall be free from any relationship that, in the opinion of the board of directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.

 

At least one member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of this Charter, the definition of “financially literate” is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company’s financial statements.

 

The members of the Committee shall be elected by the board of directors at its first meeting following the annual shareholders’ meeting. Unless a Chair is elected by the full board of directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.

 

Meetings

 

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditors in separate sessions.

 

Responsibilities and Duties

 

To fulfil its responsibilities and duties, the Committee shall:

 

Documents/Reports Review

 

(a)Review and update this Charter annually.

 

(b)Review the Company’s financial statements, management discussion and analysis (“MD&A”) and any annual and interim earnings, press releases before the Company publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion or review rendered by the external auditors.

 

52

 

 

External Auditors

 

(a)Review annually the performance of the external auditors who shall be ultimately accountable to the board of directors and the Committee as representatives of the shareholders of the Company.

 

(b)Obtain annually a formal written statement of the external auditors setting forth all relationships between the external auditors and the Company, consistent with Independence Standards Board Standard 1.

 

(c)Review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors.

 

(d)Take or recommend that the full board of directors take appropriate action to oversee the independence of the external auditors.

 

(e)Recommend to the board of directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

 

(f)At each meeting, consult with the external auditors, without the presence of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of the Company’s financial statements.

 

(g)Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Company.

 

(h)Review with management and the external auditors the audit plan for the year- end financial statements and intended template for such statements.

 

(i)Review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company’s external auditors. The pre-approval requirement is waived with respect to the provision of non-audit services if:

 

(i)the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided;

 

(ii)such services were not recognized by the Company at the time of the engagement to be non-audit services; and

 

(iii)such services are promptly brought to the attention of the Committee by the Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the Committee.

 

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Provided the pre-approval of the non-audit services is presented to the Committee’s first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.

 

Financial Reporting Processes

 

(a)In consultation with the external auditors, review with management the integrity of the Company’s financial reporting process, both internal and external.

 

(b)Consider the external auditor’s judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

 

(c)Consider and approve, if appropriate, changes to the Company’s auditing and accounting principles and practices as suggested by the external auditors and management.

 

(d)Review significant judgments made by management in the preparation of the financial statements and the view of the external auditors as to appropriateness of such judgments.

 

(e)Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

 

(f)Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

 

(g)Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

 

(h)Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

 

(i)Review certification process.

 

(j)Establish a procedure for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

 

Other

 

Review any related party transactions.

 

 

54

 

 

Exhibit 99.99

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

Year ended December 31, 2023

 

 

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (formerly Valour Inc.) (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through April 1, 2024, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the years ended December 31, 2023 and 2022. The financial statements and related notes of DeFi have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). Please refer to the notes of the December 31, 2023 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

1

 

 

Restatement of Previously Issued Consolidated Financial Statements

 

In conjunction with preparation of the Company’s financial statements for the year ended December 31, 2023 and further to the press release of the Company dated January 8, 2024 with respect to the Company’s change of auditor from BF Borgers CPA PC (the “Former Auditor”) to HDCPA Professional Corporation (the “Successor Auditor”), the Company also announces that it has filed its annual financial statements of the Company for fiscal-year ended 2023 with comparative restated 2022 financial information and the corresponding management’s discussion and analysis.

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $2,433,348 to $104,148,728; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,015,445 as at December 31, 2022, with an opening retained earnings impact at January 1, 2023 of $15,923,172. For more details, please refer to Note 24 of the consolidated financial statements of the Company for years ended December 31, 2023 and 2022. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the year ended December 31, 2022. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis, will not be prevented or detected on a timely basis.

 

Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a crypto-native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through three distinct business lines: Valour Asset Management, DeFi Ventures and DeFi Infrastructure.

 

The Company’s consolidated financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying consolidated financial statements.

 

Investment Pillars

 

 

DeFi generates revenue through three core pillars:

 

2

 

 

Valour Asset Management

 

The Company, through its 100% ownership of Valour Inc., is developing Exchange Traded Products (“ETPs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETPs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

DeFi Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

DeFi Infrastructure

 

The Company’s DeFi Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

Highlights For The Year Ended December 31, 2023 And Subsequent Events:

   
§On January 10, 2023, the Company announced approval of its renewed EU-base prospectus covering digital assets ETP-products by the Swedish regulator SFSA. These new products will allow investors to diversify their portfolios by combining digital asset exposure with other asset classes such as equities and commodities, and will also provide access to benefits of derivative tools like leveraged or capital protection investments.

 

§On January 12, 2023, the Company announced the approval in principle by the Jersey regulator JFSC and the submission of an EU base prospectus with the Swedish regulator SFSA for the issuance of physically stored digital assets wrapped by exchange-traded (ETP) securities. Once approved, the new ETP-securities will be available on regular exchanges in Europe such as Deutsche Boerse Xetra, Euronext, SIX Swiss Exchange etc. being secured by the respective digital assets that are physically stored with regulated custody providers. Physical custody ensures that the underlying assets are stored in a secure location and are pledged for the benefit of the security holder

 

§On March 21, 2023, the Company’s launched its crypto product range to French investors.

 

§On April 5, 2023, Valour Digital Securities Ltd. (“VDSL”), a Jersey-based securities issuer, obtained all regulatory approvals by the Swedish and Jersey regulators for an EU-wide offering to investors domiciled in Austria, Belgium, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, Norway, Malta, Poland, Portugal, Romania, Slovakia and Spain.

 

§On April 12, 2023, the Company announced the launch of a new EU-wide (European Union) issuance platform for physically stored digital assets in the form of exchange-traded product (ETP) securities. The new ETP products will be listed on regulated stock exchanges such as Deutsche Borse/Xetra in Frankfurt, Euronext in Paris and Amsterdam and SIX Swiss Exchange in Switzerland. The new ETP program adds to Valour’s already-existing digital asset securities program, particularly focusing on the Nordic markets and covering a broad range of over 120 cryptocurrencies and digital assets in form of single underlyings, baskets or indices. VDSL aims to issue up to 15 new products under the name 1Valour by the end of 2023. The ETPs will be secured by the respective digital assets that are physically stored with regulated custody providers. The initial custodians appointed are Komainu (Jersey) Ltd., regulated by the Jersey Financial Services Commission, and Copper Technologies (Switzerland) AG, registered with the Financial Services Standard Association (VQF), a self-regulatory organization (SRO) officially recognized by the Federal Financial Market Supervisory Authority (FINMA).

 

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§On May 30, 2023, the Company announced an extension of existing partnership with Autostock, a Swedish trading platform to launch a new automated trading strategy. Autostock AB is a Swedish analysis/trading platform exclusively connected to Nordnet Bank, offering advanced technical analysis methods, automated trading facilities and algorithmic strategies. The new strategy, known as Coinbot Zero STEP, will scale in and out in the positions, aiming to give the investor a better average acquisition value.

 

§On June 21, 2023, the Company announced that it had entered into shares for debt settlement agreements with various officers and consultants of the Company to settle an aggregate amount of approximately $674,838 of accrued fees owing to such officer and consultants of the Company by issuing common shares of the company at a price of $0.085 per share fir a total of $7,939,268 Debt Shares.

 

§On July 7, 2023, the Company announced its name change to DeFi Technologies Inc.

 

§On July 12, 2023, Valour Inc., Defi Technologies Inc.’s wholly owned subsidiary and a pioneer in digital asset exchange traded products (ETPs), launched its digital asset basket ETP - Valour Digital Asset Basket 10 (VDAB10) SEK. The Valour Digital Asset Basket 10 (VDAB10) ETP provides retail and institutional investors with trusted, secure, and diversified exposure to 10 of the largest cryptocurrencies by market capitalization.

 

§On July 18, 2023, Defi Technologies Inc.’s Valour Inc. entered into a collaboration with Bitcoin Suisse AG, the Swiss crypto-finance and technology pioneer. The product partnership aims to issue Exchange Traded Products (ETPs) backed 1:1 by digital assets, leveraging both Valour Inc.’s and Bitcoin Suisse AG’s unique capabilities and long standing expertise in the digital asset market. The primary focus of this joint initiative is to launch, list, operate, and distribute ETPs in the international and Swiss market where Bitcoin Suisse has already established a market-wide brand recognition in the crypto assets sector.

 

§On August 22, 2023, Defi Technologies Inc.’s subsidiary Valour Inc. launched its 1Valour Ethereum Physical Staking ETP (exchange-traded product), set to redefine and simplify the ethereum investment landscape. This innovative product aims to harness the essence of ethereum while offering investors access to additional yield income opportunities. The 1Valour Ethereum Physical Staking ETP (ISIN GB00BRBMZ19) is issued by Valour’s new European Union-wide issuance platform for physically stored digital assets, Valour Digital Securities Ltd. (VDSL).

 

§On August 29, 2023, Defi Technologies Inc.’s subsidiary, Valour Inc., launched three euro-denominated products on NGM - Valour Ethereum Zero EUR (ISIN: CH1149139623), Valour Solana EUR (ISIN: CH1114178838) and Valour Digital Asset Basket 10 (VDAB10) EUR (ISIN: CH1149139623).

 

§On October 24, 2023, Defi Technologies Inc. and Neuronomics AG signed a joint venture agreement to collaborate on the development of AI-based (artificial intelligence) exchange-traded products, actively managed certificates and asset-backed tokens for global distribution. The products will be powered by advanced AI algorithmic trading strategies, promising a level of sophistication and efficiency previously unseen. The joint venture will see Neuronomics primarily overseeing the Products’ management, strategy, and optimization of the investment thesis utilizing its algorithmic trading strategies. DeFi Technologies will list the Products on OTC markets or regulated stock exchanges, manage sales, pricing, marketing, and liaise with regulatory authorities on maintaining the listings.

 

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§On October 31, 2023, the Company’s subsidiary, Valour Inc., completed a non-brokered private placement financing of unsecured convertible notes for gross proceeds of $3 million. The notes issued in connection with the offering accrue interest at a rate of 8 per cent per annum will mature on October 31, 2025. Upon the occurrence of certain trigger events, the principal amount of notes and all accrued interest may be convertible, at the option of the holder, into (a) common shares in the capital of the Company at a price of $0.10 per conversion share and (b) an equal number of common share purchase warrants of the company entitling the holder to acquire one common share at a price of $0.20 for a period of five years from the date of issuance. Upon the conversion, the Company will subscribe for such additional equity of Valour equal to the principal amount of notes and accrued interest converted pursuant to the conversion. These notes were converted into common shares of the Company on November 2, 2023.

 

§On November 11, 2023, Defi Technologies Inc.’s venture portfolio company, SEBA Bank AG, a fully licensed Swiss crypto bank, received a licence from the Securities and Futures Commission (SFC). This licence permits SEBA Hong Kong to conduct regulated activities in Hong Kong, to deal in and distribute all securities, including: virtual asset-related products, such as OTC (over-the-counter) derivatives and structured products with underlying virtual assets; advise on securities and virtual assets; and conduct asset management for discretionary accounts in both traditional securities and virtual assets. Institutional and professional investors, including corporate treasuries, funds, family offices and high-net-worth individuals, can begin availing of SEBA Hong Kong’s licensed services.

 

§On February 7, 2024, the Company has completed its acquisition of Reflexivity Research LLC, a premier private research firm that specializes in producing research reports for the cryptocurrency industry. Reflexivity , co-founded by Anthony Pompliano and Will Clemente, offers crypto-native research designed for traditional finance investors. Reflexivity’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors which generates a positive cash flow for Reflexivity

 

§On February 9, 2024, the Company completed the acquisition of intellectual property (IP) from prominent Solana developer Stefan Jorgensen. The IP acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both Defi Technologies and Valour Inc

 

§On February 20, 2024, the Company  launched its physical-backed staking exchange-traded product (ETP) for the Internet Computer Protocol (ICP) token. The Valour Internet Computer Protocol ETP (ISIN: GB00BS2BDN04) provides retail and institutional investors with trusted, secure and diversified exposure to the innovative and fast-growing Internet Computer ecosystem. The Internet Computer adds autonomous serverless cloud functionality to the public Internet -- making it possible to build almost any system or service entirely on a decentralized network. Developers and enterprises no longer have to rely on legacy information technology systems that are susceptible to hacks and downtime. The Internet Computer is a tamper-proof and unstoppable network, a new paradigm of computing power.

 

§On March 18, 2024, the Company’s subsidiary Valour Inc. partnered with Bitcoin Suisse AG and Stoxx in launching the innovative 1Valour Stoxx Bitcoin Suisse Digital Asset Blue Chip ETP. This pioneering product marks a significant step forward in the digital asset market, providing a diversified investment approach to the top blue-chip digital assets in a simple and secure manner.

 

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Digital Assets

As at December 31, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $489,865,638 (December 31, 2022 - $104,202,086). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each ETP. The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.The Company’s holdings of digital assets consist of the following:

 

   December 31, 2023    December 31, 2022  
   Quantity   $   Quantity   $ 
Binance Coin   236.4452    97,710    11.1000    3,678 
Bitcoin   2,271.3329    108,983,280    2,126.5130    45,065,282 
Ethereum   21,537.4066    65,956,320    21,141.7368    34,333,700 
EthereumPoW   0.2000    1    -    - 
Cardano   54,210,783.1700    43,306,306    36,438,339.0800    12,004,332 
Polkadot   1,666,147.7880    18,371,365    931,646.4544    5,407,239 
Solana   1,682,112.49    235,733,109    428,280.68    5,537,534 
Shyft   4,539,407.2792    78,314    3,507,575.4684    37,530 
Uniswap   296,352.0602    2,932,687    148,734.0602    1,021,542 
USDC        673         1,586 
USDT        111,856         14,134 
Litcoin   17.3931    1,719    -    - 
Doge   220,474.3947    26,652    10,000.0000    914 
Cosmos   11,700.0000    171,497    201.0000    2,531 
Avalanche   248,151.6644    13,148,105    48,995.3900    712,745 
Matic   0.0003    -    890.0000    906 
Shiba Inu   -    -    90,000,000.0000    975 
Ripple   76,029.7317    62,737    2,000.0000    919 
Enjin   432,342.3671    223,237    10,009.9900    3,180 
Tron   118,490.5094    16,581    -    - 
Terra Luna   202,302.5360    -    199,195.3600    - 
Current   63,728,357    489,222,151         104,148,728 
Blocto   264,559.703    10,503    251,424.913    6,737 
Boba Network   250,000.00    -    250,000.00    - 
Clover   430,000.00    19,831    310,000.00    13,216 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    503,669    2,500,000.00    - 
Saffron.finance   86.21    2,619    86.21    2,345 
Sovryn   15,458.95    12,863    15,458.95    2,342 
Wilder World   148,810.00    94,002    148,810.00    28,660 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    58 
Long-Term        643,487         53,358 
Total Digital Assets        489,865,638         104,202,085 

 

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The continuity of digital assets for the twelve months ended December 31, 2023 and year ended December 31, 2022:

 

   December 31,
2023		   December 31,
2022		 
Opening balance  $104,202,085   $370,053,740 
Digital assets acquired   318,355,007    231,392,840 
Digital assets disposed   (244,656,544)   (191,092,048)
Realized (loss) on digital assets   (1,017,247)   (55,746,548)
Digital assets earned from staking, lending and fees   3,554,587    5,955,456 
Net change in unrealized gains and losses on digital assets   324,976,115    (270,021,882)
Foregin exchange (loss) gain   (15,548,363)   13,660,527 
   $489,865,638   $104,202,085 

 

Digital assets held by counterpart for the years ended December 31, 2023 and 2022 is the following:

 

   December 31,   December 31, 
   2023   2022 
   Fair Value   Fair Value 
Counterparty A   421,687,911    59,579,414 
Counterparty B   30,592,947    11,926,180 
Counterparty C   2,775,287    348,441 
Counterparty D   11,785,440    23,212,486 
Counterparty E   8,633,491    8,176,439 
Counterparty F   837,948    - 
Counterparty G   8,840,988    - 
Other   248,294    19,508 
Self custody   4,463,332    939,618 
Total  $489,865,638   $104,202,085 

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

   Number of coins
on loan		    Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2022, digital assets held as collateral consisted of the following:

 

   Number of coins
on loan		    Fair Value 
Bitcoin   1,763.8300    28,787,772 
Ethereum   18,051.9700    29,315,988 
Total   19,815.8000   $58,103,760 

 

As at December 31, 2022, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,176,439 (US$6,036,945), the fair value of the loan and interest held with Genesis.

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

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Digital Assets loaned

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

   Number of coins
on loan		    Fair Value   Fair Value Share 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

  Interest rates  Number of coins
on loan		   Fair Value 
Digital on loan:           
Counterparty A  2.4% to 9.7%   11,578,285.0000    270,362,684 
Total      11,578,285.0000   $270,362,684 

 

As of December 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on loan:        
Counterparty A  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of December 31, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets staked with certain financial institutions.

 

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As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of coins
staked		   Fair Value   Fair Value
Share		 
Digital on staked:               
Cardano  38,201,004.7950   30,516,888    100%
Total   38,201,004.7950    30,516,888    100%

 

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

  Interest rates   Number of coins
staked		   Fair Value 
Digital on staked            
Counterparty B   3.15%  $38,201,004.7950    30,516,888 
Total        38,201,004.7950   $30,516,888 

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked: Counterparty B   Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Third Party Custodians

 

 

As of December 31, 2023, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian   Location
Bitcoin Suisse AG   Switzerland
Anchorage Digital   United States
B2C2 Overseas LTD   Cayman Islands

 

Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

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Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of December 31, 2023, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian   Location   % of digital assets custodied by market value (1)   Regulatory Body
Bitcoin Suisse AG   Switzerland   6.04%   Financial Services Standards Association (VQF). Zug. Switzerland
Anchorage Digital   United States   2.33%   Office of Comptroller of Currency
B2C2 Overseas LTD   Cayman Islands   71.82%   Cayman Islands Monetary Authority (CIMA)

 

Note 1: As at December 31, 2023; Residual digital assets served as collateral for loans with B2C2-Group (approx. 11.38%; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (5.24%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.
   
●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.
   
●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.
   
●The counterparties are reviewed in regular intervals and re-evaluated.
   
●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.
   
●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

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4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

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13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

At December 31, 2023, the Company’s had self-custody of digital assets totaling $4,463,332 (December 31, 2022 - $2,326,139).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held two members of the senior management in different locations.

 

Staking and Lending Policy

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower’s ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

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(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At December 31, 2023

 

 

At December 31, 2023, the Company’s investment portfolio consisted of zero publicly traded investments and nine private investments for a total estimated fair value of $43,540,535 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $30,032,672).

 

Public investments

 

At December 31, 2023, the Company’s had no publicly-traded investments.

 

At December 31, 2022, the Company’s one publicly-traded investments had a total estimated fair value of $17,227. 

 

Public Issuer  Note Security
description		  Cost   Value   of FV 
Smart Valor AG  19,000 SDR   150,908    17,227    100.0%
Total public investments     $150,908   $17,227    100.0%

 

Private Investments

 

At December 31, 2023, the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note   Security description  Cost   Estimated Fair Value   % of FV 
3iQ Corp.    187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

(i)Investments in related party entities

 

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At December 31, 2022, the Company’s eight private investments had a total fair value of $30,015,445.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $1,246,149    4.2%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    7.3%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    2.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    25,657,000    85.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.6%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $30,015,445    100.0%

 

3iQ Corp (“3iQ”)

 

On September 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of DeFi. 3iQ is a leading bitcoin and digital asset fund manager. As at December 31, 2023, 3iQ was valued at $1,216,890 which was based on 3iQ’s recent transaction price resulting in an unrealized gain (loss) of approximately $29,259 for the year. The investment represented 0.2% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to DeFi of $121,689.

 

Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at December 31, 2023, BPC was valued at $2,138,380 which was based on BPC August 2022 financing prices resulting in an unrealized gain (loss) of $(51,414) for the year. The investment represented 0.4% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to DeFi of $213,838.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at December 31, 2023, Earnity was valued at $nil which was based on Earnity’s ceasing operations resulting in an unrealized gain (loss) of $(14,991) in the period. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to DeFi of $0.

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at December 31, 2023, LTC was valued at $661,366 which was based on LTC December 2021 financing prices resulting in an unrealized gain (loss) of $(15,902) for the period. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to DeFi of $66,137.

 

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SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31, 2023, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to DeFi of $0.

 

Amina Bank AG (“Amina”) (formerly SEBA Bank AG)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. Amina is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at December 31, 2023, Amina was valued at $39,395,000 which was based a market approach resulting in an unrealized gain (loss) of $2,742,500 for the period. The investment represented 6.7% of the total assets of the Company. A 10% decline in the fair market value of Amina would result in an estimated increase in loss to DeFi of $3,939,500.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at December 31, 2023, STL was valued at $nil which was based on STL ceasing operations resulting in an unrealized gain (loss) of $(189,611) in the period. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to DeFi of $0.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at December 31, 2023, VLC was valued at $0 resulting in an unrealized gain (loss) of $(40,872) for the year. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to DeFi of $0.

 

15

 

 

Financial Results

 

The following is a discussion of the results of operations of the Company for the three and twelve months ended December 31, 2023, and 2022. They should be read in conjunction with the Company’s consolidated financial statements for the three and twelve months ended December 31, 2023 and 2022 and related notes.

 

Three and twelve months ended December 31, 2023 and 2022:

 

   Three months ended
December 31,		   Years months ended
December 31,		 
   2023   2022   2023   2022 
Revenues                
Realized and net change in unrealized gains and losses on digital assets  $278,292,658   $(44,747,755)  $323,958,866   $(325,044,954)
Realized and net change in unrealized gains and losses on ETP payables   (291,676,484)   45,101,006    (332,100,866)   320,382,227 
Realized and unrealized loss on derivative asset   -    (14,282)   -    (434,073)
Staking and lending income   1,456,006    456,035    3,539,352    4,519,001 
Management fees   758,056    204,153    1,461,594    1,436,455 
Node revenue   6,979    13,911    15,235    347,758 
Realized (loss) on investments, net   533    -    (4,150)   (12,077)
Unrealized (loss) gain on investments, net   15,662,748    (12,137,887)   13,484,504    (15,476,381)
Interest income   671    971    1,480    55,264 
Total revenues   4,501,166    (11,123,848)   10,356,014    (14,226,780)
Expenses                    
Management and consulting fees   1,707,540    1,800,083    5,569,354    7,218,330 
Share based payments   1,090,010    192,064    2,920,219    15,889,455 
Travel and promotion   260,428    294,853    718,366    2,331,176 
Office and rent   368,141    304,261    1,467,975    1,051,989 
Accounting and legal   452,298    607,671    2,000,363    4,103,581 
Regulatory and transfer agent   68,169    8,171    219,210    42,983 
Depreciation - property, plant and equipment   3,236    8,629    12,945    18,342 
Depreciation - right of use assets   -    47,998    -    69,322 
Amortization- intangibles   509,575    509,575    2,038,300    2,277,443 
Finance costs   1,517,031    925,346    4,161,136    4,014,038 
Transaction costs   544,823    188,272    1,029,442    1,113,941 
Foreign exchange (gain) loss   2,058,092    (35,591)   10,338,575    (324,699)
Impairment loss             -    13,865,355 
Total expenses   8,579,344    4,851,332    30,475,884    51,671,256 
Income (loss) before other item   (4,078,177)   (15,975,180)   (20,119,870)   (65,898,036)
Loss on settlement of debt   -    -    (172,093)   - 
Net (loss) for the period   (4,078,177)   (15,975,180)   (20,291,963)   (65,898,036)
Other comprehensive loss                    
Foreign currency translation loss   1,446,511    1,138,732    1,343,670    (3,237,282)
Net (loss) and comprehensive (loss) for the period  $(2,631,666)  $(14,836,448)  $(18,948,293)  $(69,135,318)

 

For the three and twelve months ended December 31, 2023, the Company recorded a net (loss) of $(4,078,177) and $(20,291,963) ($(0.01) and $(0.09) per basic share) on total revenues of $4,501,166 and $10,356,014 compared to net income (loss) of $(15,975,180) and $(65,898,036) ($(0.00) and $(0.32) per basic share) on total revenues of $(11,123,848) and $(14,226,780) for the three and twelve months ended December 31, 2022.

 

For the three and twelve months ended December 31, 2023, realized and net change in unrealized gains and loss on digital assets was $278,292,658 and $323,958,866 and realized and net change in unrealized gains and loss on ETP payables was $(291,676,484) and $(332,100,866). Higher digital asset prices in 2023 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

The Company earned staking and lending income of $1,456,006 and $3,539,352 for the three and twelve months ended December 31, 2023 compared to $456,035 and $4,519,001 for the same periods in 2022. The Company actively stakes and lends its cryptocurrencies to earn additional revenue. The staking and lending income was slightly lower for the twelve months ended 2023 as the Company staked and lent less cryptocurrency in Q1 2023 compared to 2022.

 

16

 

 

The Company had management fee revenue of $758,056 and $1,461,594 for the three and twelve months ended December 31, 2023 compared to $204,153 and $1,436,455 for the same periods in 2022. In 2023, the Company’s had lower AUM in the first half of 2023 compared to 2022 in ETPs that charge management fees.

 

The Company had node revenue of $6,979 and $15,235 for the three and twelve months ended December 31, 2023 compared to $13,911 and $347,758 for the same period in 2022. During the twelve months ended December 31, 2023, the Company earned 2,000,192 (December 31, 2022 – 2,370,550) Shyft tokens for its services. The decreased revenue in 2023 is due to lower token price of the Shyft token and lower rewards.

 

The Company had realized gain (loss) of $533 and $(4,150) on investments for the three and twelve months ended December 31, 2023 compared to $nil and $(12,077) for the same periods in 2022. The Company had unrealized gain (loss) of $15,662,748 and $13,484,504 on investments compared to $(12,137,887) and $(15,476,381) in the prior period. The unrealized gain for the three and twelve months ended December 31, 2023 primarily consisted of unrealized gains on SEBA.

 

Management and consulting fees were $1,707,540 and $5,569,354 during the three and twelve months ended December 31, 2023 compared to $1,800.083 and $7,218,330 during the same periods in 2022. Management and consulting fees are lower in 2023 as the Company reduced the number of consultants in addition to no bonuses paid compared to Q1 2022.

 

Share based payments were $1,090,010 and $2,920,219 during the three and twelve months ended December 31, 2023 compared to $192,064 and $15,889,455 in the same periods in 2022. The Company granted 4,359,266 DSUs and 8,900,000 options during 2023 compared to the 5,300,000 options and 6,500,000 of deferred share units to directors, officers and consultants of the Company during 2022. The higher share-based payments in 2022 also reflected a higher black-scholes model price due to a higher share price at the time.

 

Travel and promotion was $260,428 and $718,366 during the three and twelve months ended December 31, 2023 compared to $294,853 and $2,331,176 during the same period in 2022. Corporate activities and business development was lower 2023 as the Company focuses on expanding its ETP business line.

 

Office and rent was $368,141 and $1,467,975 during the three and twelve months ended December 31, 2023 compared to $304,261 and $1,051,989 during the same periods in 2022.

 

Accounting and legal was $452,298 and $2,000,363 during the three and twelve months ended December 31, 2023 and $607,671 and $4,103,581 during the same periods in 2022 due to lower accounting fees and legal provisions in 2023.

 

Total depreciation and amortization was $512,811 and $2,051,245 for the three and twelve months ended December 31, 2023 from $566,202 and $2,365,107 during the prior period in 2022. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of DeFi Capital and Valour.

 

Finance costs were $1,517,031 and $4,161,136 for the three and twelve months ended December 31, 2023 compared to $925,346 and $4,014,038 during the prior periods in 2022. The increase in financing costs relates to the interest expense on the digital asset provider loans and other loans of the Company. The interest rates on the loans were slightly higher in 2023 compared to 2022 period.

 

Transaction costs were $544,823 and $1,029,442 for the three and twelve months ended December 31, 2023 compared to $188,272 and $1,113,941 in the prior period. The slight decrease in transaction costs relates to the trading of digital assets as brokerage commission and ETP issuance costs.

 

17

 

 

Foreign exchange loss was $2,058,092 and $10,338,575 for the three and twelve months ended December 31, 2023 compared to $(35,591) and $(324,699) in the prior period. The loss reflects the currency fluctuations primarily in Company’s digital asset and ETPs which are denominated in US dollars, Swedish Krona, Euro and Swiss Franc.

 

During the twelve months ended December 31, 2023, the Company used $92,518,511 in operations of which $4,265,661 was provided by changes in working capital, $nil used to purchase the investments, $318,355,007 was used to purchase digital assets offset by $13,180 provided from sales of investment and $244,656,544 was provided from the disposal of digital assets. During the comparative twelve months ended December 31, 2022, the Company used $90,079,724 in operations of which $4,451,527 was provided by the changes in working capital, $34,649,658 used to purchase the Company’s SEBA investment, $28,248 provided from sale of investments, $231,392,840 was used to purchase digital assets offset by $191,092,048 was provided from the disposal of digital assets. The cash used from operations was higher in 2023 compared to 2022 due to lower net loss in 2023 as the Company decreased general and administrative costs offset but increased net purchase of digital assets in 2023 was $(73,698,463) compared in 2022 the net purchase of digital assets was $(40,300,792) reflecting an increased activity in cryptocurrency market.

 

During the twelve months ended December 31, 2023, $94,615,330 was provided by financing activities compared to $88,057,398 in the prior period. The Company received proceeds of $308,595,496 from ETP holders and $4,629,099 was provided from proceeds from loans and $4,528,740 from private placement financing offset by $223,232,891 used for payments to ETP holders. During the twelve months ended December 31, 2022, the Company received proceeds of $242,378,583 from ETP holders, proceeds of $53,117,760 from loans, $45,000 from exercise of stock options and $647,284 from the exercise of warrants offset by $196,516,517 used for payments to ETP holders and $13,154,570 used in NCIB purchases. The cash provide from financing was higher in 2023 compared to 2022 due to additional loan proceeds and private placement financing and higher net ETP sales in 2022.

 

Liquidity and Capital Resources

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any negative impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on similar terms throughout the year. The Company has successfully raised approximately $1.5M from new investors in 2022 via private placements financings and in 2023 successfully raised $4.6M from new loans and $4.5M from private placement financings.

 

The Company loaned and staked more cryptocurrency in Q4 2023 compared to Q4 2022 and as a result the Company earned more revenue via staking and lending. Higher AUM in the Company’s fee earning ETPs in Q4 2023 compared to the same period 2022 resulted in higher management fees in Q4. Overall, the Company’s total revenues improved in 2023 as a result of improving cryptocurrency markets.

 

18

 

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

DeFi relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of $3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As Of December 31, 2023, the loan principal of $52,242,700 (US$39,500,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms are open term and have interest rates ranging from 10.2% and 14.05% The extended loans are secured with 1,000 BTC and 9,264 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,570,863 and secured with 475 BTC.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. On July 11, 2023, the Company repayment the loan and outstanding interest of $270,129 by issuing 2,595,521 common shares. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of December 31, 2023, the loan principal of $3,967,801 (US$3,000,001) was outstanding.

 

DeFi used cash of $92,518,511 in its operating activities during the twelve months ended December 31, 2023. Included in cash used in operations are $318,355,007 used in the purchase of digital assets, $4,265,661 provided from the changes of working capital, $13,180 generated from proceeds on sale of investment and $244,656,544 generated from the disposal of digital assets. DeFi also provided $94,615,330 in financing activities. Included in cash provided in financing activities are $308,595,496 from proceeds from ETP holders, $4,629,099 was provided from proceeds from loans and $4,528,750 from private placement financings offset by $223,232,891 used for payments to ETP holders.

 

As at December 30, 2023, the Company’s sources of funds include the estimated fair value of its cash of $6,727,482, equity investments of $43,540,534 and digital assets of $489,865,637 offset by total liabilities of $573,516,045.

 

19

 

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

As at December 31, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   December 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   4,358,445    -    25,657,000    - 
Prepaid investment   551,379    -    -    136,189 
Digital assets   104,202,086    -    -    - 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(47,290,835)  $(72,189)  $25,633,315   $114,502 

 

As at December 31, 2023, United States Dollar was converted at a rate of $1.3226 (December 31, 2022 - $1.3544) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.6837 (December 31, 2022 - $1.6322) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4626 (December 31, 2022 - $1.4456) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.5758 (December 31, 2022 - $1.4661).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

§to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

§to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

§taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

§raising capital through equity financings; and

 

§realizing proceeds from the disposition of its investments

 

20

 

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the twelve months ended December 31, 2023.

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,070,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $900,000, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

Summary of Quarterly Results

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar 
   2023   2023   2023   2023   2022   2022   2022   2022 
Revenue  $8,353,626   $6,003,995   $7,147,292   $(11,148,899)  $(11,123,848)  $295,605   ($(5,219,545)  $1,821,008 
Net (loss) income and comprehensive (loss) income  $1,220,793   $(4,719,786)  $800,012   $(16,249,312)  $(25,464,521)  $(9,011,375)  $(18,870,125)  $(12,552,015)
(Loss) income per Share - basic   (0.01)   (0.01)   -    (0.07)   (0.13)   (0.04)   (0.09)   (0.06)
(Loss) income per Share - diluted   (0.01)   (0.01)   -    (0.07)   (0.13)   (0.04)   (0.09)   (0.06)
Total Assets  $591,960,107   $253,585,558   $259,787,932   $267,862,058   $194,003,779   $263,678,822   $241,666,497   $468,623,726 
Total Long Term Liabilities  $0   $0   $0   $0   $1,709,911   $1,681,358   $Nil   $Nil 

 

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Selected Annual Information

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-23   31-Dec-22   31-Dec-21 
(a) Net Revenue   10,356,014    (14,226,780)  $15,081,078 
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (18,948,293)   (69,135,318)  $(71,254,155)
(ii) Income (loss) per share – basic   (0.09)   (0.32)   (0.37)
(iii) Income (loss) per share – diluted   (0.09)   (0.32)   (0.37)
(c) Total Assets   591,960,108    194,003,779   $459,690,575 
(d) Total Liabilities   573,516,045    166,094,517   $367,909,179 

 

Off Balance Sheet Arrangements

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

During the twelve months ended December 31, 2023, the Company paid or accrued $862,208 (twelve months ended December 31, 2022 - $609,398) to directors and officers of the Company and $574,361(twelve months ended December 31, 2022 - $4,650,086) to directors and officers of the Company in share-based compensation.

 

As December 31,2023, the Company had $147,485 (December 31, 2022 - $296,084) owing to its current key management, and $314,136(December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

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Related Party Transactions

 

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of December 31, 2023 and December 31, 2022.

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - September 30, 2023     $41,533,380 

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   25,657,000 
Total investment - December 31, 2022     $27,846,794 

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2023.

 

During the twelve months ended December 31, 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

●The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at December 31, 2023 the Company had a payable balance of $226,000 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

●The Company incurred $173,917 (2022 - $41,086) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $165,868 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

●Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($74,466) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

●On August 10, 2023, the Company entered into a share purchase agreement to sell its subsidiary Crypto 21 AB for 50,000 SEK. One of the purchasers was an officer of the Company.

 

§During the twelve months ended December 31, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

§During the twelve months ended December 31, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

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Management Change

 

On February 13, 2023, Russell Starr elected to step down from his role as Executive Chairman but remains head of capital markets.

 

On June 22, 2023, Sue Ennis was appointed to the board. Ms. Ennis is the VP of Corporate Development at Hut 8, one of Canada’s largest data infrastructure operators and Bitcoin miners.

 

On November 1, 2023, William C Steers resigned as a member of the board of directors.

 

Financial Instruments and Other Instruments

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

§The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

§Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2023 and 2022.

 

§Digital assets classified as financial assets relate to USDC which is measured at fair value

 

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The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at December 31, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market
price)		   (Valuation
technique-
observable
market Inputs)		   (Valuation
technique -
non-observable
market inputs)		   Total 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    30,015,445    30,015,445 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $30,015,445   $30,034,258 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  2023   2022 
Balance, beginning of period  $1,586   $4,063 
Disposal   (913)   (2,477)
Balance, end of period  $673   $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  December 31, 2023   December 31, 2022 
Balance, beginning of period  $30,015,445   $10,257,760 
Purchases   128,898    34,498,750 
Unrealized gain/(loss) net   13,396,191    (14,741,065)
Balance, end of period  $43,540,534   $30,015,445 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

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The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2023 and December 31, 2022.

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   39,395,000   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          
3iQ Corp.  $1,246,149   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   25,657,000   Market approach  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $30,015,445          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at September 30 2023, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $121,689 (December 31, 2022 - $124,615) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arm’s length party of the Company. As at December 31, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $213,838 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at December 31, 2023, the valuation of Earnity was zero as Earnity ceased operation in Q2 2023. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly As at December 31, 2023, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $0 (December 31, 2022 - $1,499) change in the carrying amount.

 

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Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at December 31 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of LTC will result in a corresponding +/- $66,137 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK: Meta, LLC (“SDK”)

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31 2023, the valuation of SDK:Meta LLC was $Nil (December 31, 2022 - $Nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31, 2023, a +/- 10% change in the fair value of SDK: Meta LLC will result in a corresponding +/- 0 (December 31, 2022 +/- $0) change in the carrying amount.

 

Aminia Bank AG (“Amina”) (formerly SEBA Bank AG (“SEBA”))

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at December 31, 2023, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of Amina will result in a corresponding +/- $3,939,500 (December 31, 2022 - $2,565,700) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at December 31, 2023, the valuation of STL was zero as STL ceased operation in 2024. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $0 (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at December 31, 2023, VLC valued at $0. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2023. As at December 31, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- $0 (December 31, 2022 - $4,063) change in the carrying amount.

 

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Outstanding Share Data

 

Authorized unlimited common shares without par value – 290,169,503 are issued and outstanding as at April 1, 2024.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at April 1, 2024.

 

Stock options and convertible securities outstanding as at April 1, 2024 are as follows:

 

Stock Options:

23,530,000 with an exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and May 12, 2029.

 

Warrants:

45,504,008 with an exercise price ranging from $0.20 to $0.30 expiring between November 14, 2024 and November 6, 2028.

 

Deferred shares units:

8,607,005 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2023 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

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Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

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The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

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Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, DeFi relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

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Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

DeFi Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

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Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

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●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

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Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

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Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at December 31, 2023, the Company’s investments through its Defi Venture business arm comprise of $44,184,021 represented approximately 7.5% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

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If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

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The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

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Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

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Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

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Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

42

 

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

43

 

 

Multilateral Instrument 52-109 Disclosure

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

In conjunction with preparation of the Company’s financial statements for the year ended December 31, 2023 and further to the press release of the Company dated January 8, 2024 with respect to the Company’s change of auditor from BF Borgers CPA PC (the “Former Auditor”) to HDCPA Professional Corporation (the “Successor Auditor”), the Company also announces that it has filed its annual financial statements of the Company for fiscal-year ended 2023 with comparative restated 2022 financial information and the corresponding management’s discussion and analysis.

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $2,433,348 to $104,148,728; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,015,445 as at December 31, 2022, with an opening retained earnings impact at January 1, 2023 of $15,923,172. For more details, please refer to Note 24 of the consolidated financial statements of the Company for years ended December 31, 2023 and 2022. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the year ended December 31, 2022. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis, will not be prevented or detected on a timely basis.

 

Remediation of Material Weaknesses in Internal Control over Financial Reporting

 

Management is committed to the planning and implementation of remediation efforts to address the material weaknesses, as well as to continuously enhance the Company’s internal controls. These remediation efforts to-date have included engaging and consulting with the external accounting and valuation advisors, considering authoritative and non-authoritative guidance available in the accounting literature.

 

The management team, including the Chief Executive Officer and Chief Financial Officer, have reaffirmed and re-emphasized the importance of internal control, control consciousness and a strong control environment.

 

44

 

 

Material Accounting Policies

 

The Company’s material accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2023 and 2022

 

Future accounting change

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

Critical Accounting Estimates and Assumptions

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

45

 

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

46

 

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 8 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

 

46

 

 

Exhibit 99.100

 

Note: [01 Mar 2017] – The following is a consolidation of 13-501F1. It incorporates amendments to this document that came into effect on March 1, 2017. This consolidation is provided for your convenience and should not be relied on as authoritative.

 

FORM 13-501F1

CLASS 1 REPORTING ISSUERS AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

 

MANAGEMENT CERTIFICATION

 

 

I, PTOLEMY, Ryan, an officer of the reporting issuer noted below have examined this Form 13-501F1 (the Form) being submitted hereunder to the Alberta Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate.

 

(s) PTOLEMY, Ryan   21 Feb 2024
     
Name:  PTOLEMY, Ryan   Date:                                          
Title: CFO    

 

 

Reporting Issuer Name: DeFi Technologies Inc. / DeFi Technologies Inc. (000007675)
   
End date of previous financial year: 31 Dec 2023
   
Type of Reporting Issuer: ☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
   
Highest Trading Marketplace: Cboe Canada

 

 

 

Market value of listed or quoted equity securities:

 

Equity Symbol DEFI
   
1st Specified Trading Period (dd/mm/yy) 01/01/23 to 31/03/23
   
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ 0.145
(i)
   
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period   219510501
(ii)
   
Market value of class or series (i) x (ii)   $ 31829022.65
(A)
   
2nd Specified Trading Period (dd/mm/yy) 01/04/23 to 30/06/23
   
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ 0.09
(iii)
   
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period   227449769
(iv)
   
Market value of class or series (iii) x (iv)   $ 20470479.21
(B)
   
3rd Specified Trading Period (dd/mm/yy) 01/07/23 to 30/09/23
   
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ 0.1
(v)
   
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period   233207596
(vi)
   
Market value of class or series (v) x (vi)   $ 23320759.60
(C)

 

2

 

4th Specified Trading Period (dd/mm/yy) 01/10/23 to 31/12/23
   
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ 0.66
(vii)
   
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period 276658208
(viii)
   
Market value of class or series (vii) x (viii)   $ 182594417.28
(D)
   
5th Specified Trading Period (dd/mm/yy) N/A
   
Closing price of the security in the class or series on the last trading day of the specified trading period in which such security was listed or quoted on the highest trading marketplace $ N/A (ix)
   
Number of securities in the class or series of such security outstanding at the end of the last trading day of the specified trading period N/A (x)
   
Market value of class or series (ix) x (x) $ N/A
(E)
   
Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable specified trading period (i.e. A through E above)) $ 64553669.69
(1)

 

(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary, if applicable) that was listed or quoted on a marketplace at the end of the previous financial year)

 

Fair value of outstanding debt securities:  
   
(Provide details of how value was determined) $ 0.00
(2)
   
Capitalization for the previous financial year (1) + (2) $ 64,553,669.69
   
Participation Fee $ 3,000.00
   
Late Fee, if applicable $ N/A
   

Total Fee Payable

(Participation Fee plus Late Fee)

 $ 3,000.00

 

 

3

 

Exhibit 99.101

 

FORM 13-502F1

CLASS 1 AND CLASS 3B REPORTING ISSUERS – PARTICIPATION FEE

 

MANAGEMENT CERTIFICATION

 

 

I, PTOLEMY, Ryan, an officer of the reporting issuer noted below have examined this Form 13-502F1 (the Form) being submitted hereunder to the Ontario Securities Commission and certify that to my knowledge, having exercised reasonable diligence, the information provided in the Form is complete and accurate.

 

  (s) PTOLEMY, Ryan   21 Feb 2024
  Name:  PTOLEMY, Ryan   Date:  
  Title: CFO    

 

 

Reporting Issuer Name: DeFi Technologies Inc. / DeFi Technologies Inc.
(000007675)
   
End date of previous financial year: 31 Dec 2023
   
Type of Reporting Issuer: ☒ Class 1 reporting issuer ☐ Class 3B reporting issuer
   
Highest Trading Marketplace: Cboe Canada

 

(refer to the definition of “highest trading marketplace” under OSC Rule 13-502 Fees)

 

Market value of listed or quoted equity securities:

(in Canadian Dollars - refer to section 36 of OSC Rule 13-502 Fees)

 

Equity Symbol   DEFI
     
1st Quarterly Trading Period (dd/mm/yy)
(refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)		   01/01/23 to 31/03/23
     
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.145
(i)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period   219510501
    (ii)

 

 

 

 

Market value of class or series (i) x (ii) $ 31829022.65
(A)

 

2nd Quarterly Trading Period (dd/mm/yy)
(refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)		   01/04/23 to 30/06/23
     
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.09
(iii)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period   227449769
(iv)
     
Market value of class or series (iii) x (iv) $ 20470479.21
(B)
     
3rd Quarterly Trading Period (dd/mm/yy)
(refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)		   01/07/23 to 30/09/23
     
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.1
(v)
     
Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period   233207596
(vi)
     
Market value of class or series (v) x (vi) $ 23320759.60
(C)
     
4th Quarterly Trading Period (dd/mm/yy)
(refer to the definition of “quarterly period” under OSC Rule 13-502 Fees)		   01/10/23 to 31/12/23
     
Closing price of the security in the class or series on the last trading day of the quarterly trading period in which such security was listed or quoted on the highest trading marketplace   $ 0.66
(vii)

 

2

 

 

Number of securities in the class or series of such security outstanding at the end of the last trading day of the quarterly trading period   276658208
(viii)
     
Market value of class or series (vii) x (viii) $ 182594417.28
(D)
     
Average Market Value of Class or Series (Calculate the simple average of the market value of the class or series of security for each applicable quarterly period (i.e. A through D above))   $ 64553669.69
(1)

 

(Repeat the above calculation for each other class or series of equity securities of the reporting issuer (and a subsidiary pursuant to paragraph 9(1)(b) of OSC Rule 13-502 Fees, if applicable) that was listed or quoted on a marketplace at the end of the last trading day of each quarterly period in the previous financial year of the reporting issuer)

 

Fair value of outstanding debt securities:  
   
(See paragraph 9(1)(c), and if applicable, paragraphs 9(1)(d) and (e) of OSC Rule 13-502 Fees)  
   
(Provide details of how value was determined) $ 0.00
(2)
   
Capitalization for the previous financial year (1) + (2) $ 64,553,669.69
   
Participation Fee
(For Class 1 reporting issuers, from Appendix A of OSC Rule 13-502 Fees, select the participation fee) (For Class 3B reporting issuers, from Appendix B of OSC Rule 13-502 Fees, select the participation fee)		 $ 6,100.00
   
Late Fee, if applicable
(As determined under section 8 of OSC Rule 13-502 Fees)		 $ 0.00
   
Total Fee Payable
(Participation Fee plus Late Fee)		 $ 6,100.00

 

 

3

 

 

Exhibit 99.102

 

 

 

 

 

 

CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

For the years ended December 31, 2023 and 2022

 

(expressed in Canadian dollars)

 

 

 

1

 

 

  206-5250 Solar Drive, Mississauga, ON, L4W 0G4
Phone: (647) 793-8100 | Fax: (905) 497-1190
Web: www.hdcpa.ca

 

 

Independent Auditors’ Report

 

 

To the Shareholders of DeFi Technologies Inc. (formerly Valour Inc.)

 

Opinion

 

We have audited the consolidated financial statements of DeFi Technologies Inc. and its subsidiaries (the “Group” or the “Company”), which comprise the consolidated statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of loss and comprehensive loss, changes in shareholders’ equity and cash flows for the years then ended, and notes to the consolidated financial statements, including material accounting policy information.

 

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

 

Material Uncertainty Related to Going Concern

 

We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

Emphasis of Matter – Restatement of Consolidated Financial Statements

 

We draw attention to Note 24 to the consolidated financial statements which describes i) that the consolidated financial statements that originally reported on March 31, 2023 have been amended, and ii) the matter that gives rise to the amendment of the consolidated financial statements. Our opinion is not modified in respect of this matter.

 

Other Matter – Comparative Information

 

The consolidated financial statements of DeFi Technologies Inc. for the year ended December 31, 2022, excluding the adjustments that were applied to restate certain comparative information, were audited by another auditor who expressed an unmodified audit opinion on those statements on March 31, 2023

 

As part of our audit of the consolidated financial statements for the year ended December 31, 2022, we also audited the adjustments that were applied to restate certain comparative information presented as at December 31, 2022. In our opinion, such adjustments are appropriate and have been properly applied. Other than with respect to the adjustments that were applied to restate certain comparative information, we were not engaged to audit, review or apply any procedures to the consolidated financial statements as at and for the year ended December 31, 2022. Accordingly, we do not express an opinion or any other form of assurance on those consolidated financial statements taken as a whole.

 

2

 

 

Key Audit Matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

In addition to the matter described in the Material Uncertainty Related to Going Concern, we have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.

 

1.Digital Assets held at a Counterparty

 

Description of the key audit matter

 

One of the Counterparties is a custodian/exchange that had custody of digital assets amounting to $421,687,911 (2022 – $59,579,414). Through testing of relevant internal controls performed by the auditor’s expert at this Counterparty, significant deficiencies were identified.

 

Why the matter is a key audit matter

 

Since sufficient appropriate audit evidence could not be obtained with respect to the operating effectiveness of relevant internal controls, we were unable to place reliance on systems that produce statements and other information relating to the Company’s digital assets held at this counterparty that support the existence and rights & ownership assertion.

 

How our audit addressed the key audit matter

 

We performed additional audit procedures in order to assess the existence and rights & ownership to the digital assets held by this Counterparty as at December 31, 2022 and December 31, 2023, and digital asset transactions for the years then ended. Specifically, our work included, but was not limited to, the following procedures:

 

●Performing walkthroughs and testing the Company’s key controls related to reconciliation of and hedging position analysis of Exchange Traded Products (ETP’s) and Digital Assets;

 

●Obtaining detail of all transaction history from an Application Programming Interface (“API”), re- performing a roll-forward of digital asset balances held with this Counterparty from January 1, 2022 to December 31, 2023 and agreeing to the Company’s roll-forward;

 

●Testing the completeness and accuracy of reports produced from the API;

 

●Agreeing balances as of December 31, 2022 and December 31, 2023 from the roll-forward to the Counterparty confirmation and financial statements of the Company.

 

●Observing the withdrawal of all digital assets by the Company from the Counterparty subsequent to year-end, excluding digital assets held as collateral and minimum requirement for active trading; and

 

●Re-performing the roll-back of digital asset balances held with this Counterparty from the withdrawal date to December 31, 2023 and agreeing it to the Company’s roll-back.

 

3

 

 

2.Digital Assets – Recoverability of Coins held at Genesis Global Capital LLC (“Genesis”)

 

Description of the key audit matter

 

One of the Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and held 475 Bitcoin as collateral for the loans with a fair value as of December 31, 2023 of $26,513,019 (2022 - $10,609,787). The loans payable as at December 31, 2023 amounted to $8,690,623 (2022- $8,176,439).

 

Why the matter is a key audit matter

 

The assessment of the recoverability of the digital assets held as collateral requires management to apply judgement and estimates in assessing whether any of the digital assets will be recovered as a result of the claim from the bankruptcy proceedings.

 

How our audit addressed the key audit matter

 

To address the recoverability of digital assets held as collateral with Genesis, we performed the following procedures:

 

●Reviewing supporting documents for the loan as well as the collateral held with Genesis;

 

●Obtaining an understanding of the Company’s claim through review of legal documents as part of the bankruptcy proceedings;

 

●Sending legal confirmations to determine the current status of the bankruptcy proceedings;

 

●Assessing the client’s write-down of the digital assets to the recoverable amount for completeness and accuracy; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

3.Goodwill – Impairment

 

Description of the key audit matter:

 

The carrying value of Goodwill amounted to $46,712,027 as at December 31, 2023 (2022 - $46,712,027). Under IAS 36, Goodwill shall be assessed for impairment annually. The Company performed an assessment of Goodwill for impairment and concluded that it was not impaired for the year-ended December 31, 2022 and December 31, 2023.

 

Why the matter is a key audit matter:

 

The assessment of the carrying value requires management to apply judgement and estimates in assessing whether any impairment has arisen at year end, and in quantifying any such impairment. The principal risks relate to the assessment of management’s cash flow forecast and the methodology used to value the Goodwill.

 

How our audit addressed the key audit matter:

 

We evaluated management’s assessment of the carrying value of Goodwill performed with reference to the criteria of IAS 36 and the Company’s accounting policy. Specifically, our work included, but was not limited to, the following procedures:

 

●Evaluating whether the expert engaged by management to value Goodwill has the appropriate expertise;

 

4

 

 

●Evaluating the work of the expert engaged by management to value Goodwill including the valuation techniques and assumptions used in the valuation;

 

●For forecasts prepared by management and used by the valuation expert, performed an analysis to assess the reasonability of key assumptions in the forecast;

 

●We confirmed that the forecasts used as basis for the valuation were appropriately approved by management and the board of directors; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

4.Private Investments – Valuation

 

Description of the key audit matter:

 

The carrying value of Private Investments amounted to $43,540,534 as at December 31, 2023 (2022 - $30,015,445). The Company accounts for these investments at fair value through profit and loss.

 

Why the matter is a key audit matter:

 

The assessment of the fair value requires management to apply judgement and estimates in assessing the fair value of the investment. The principal risks relate to the assessment of management’s methodology used to value the investment as well as assessing the fair value of the investment.

 

How our audit addressed the key audit matter:

 

We evaluated management’s assessment of the fair value of investments with reference to the Company’s accounting policy. Specifically, our work included, but was not limited to, the following procedures:

 

●Evaluating the fair value of the investments against subsequent sales of the investments after year-end, where applicable;

 

●Engaging an expert to value private investments with the appropriate expertise;

 

●Evaluating the work of the auditor’s expert to value investments including the valuation technique and assumptions used;

 

●Comparing the valuation from the expert to the valuation prepared by management; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

Other Information

 

Management is responsible for the other information. The other information comprises:

 

●The information included in the Management’s Discussion and Analysis of Financial Conditions and Results of Operations for the year ended December 31, 2023.

 

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

 

5

 

 

We obtained the Management’s Discussion and Analysis of Financial Conditions and Results of Operations for the year ended December 31, 2023 prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

 

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

●Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

●Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

 

●Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

●Conclude on the appropriateness of management’s use of the going concern basis of accounting and, base on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

6

 

 

 

·Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

·Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2023, and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

The engagement partner on the audit resulting in this independent auditor’s report is Harpreet Dhawan.

 

 
  HDCPA Professional Corporation
Mississauga, ON Chartered Professional Accountants,
April 1, 2024 Authorized to practice public accounting by CPA Ontario

 

7

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

Table of Contents  
   
Consolidated statements of financial position 9
Consolidated statements of operations and comprehensive (loss) 10
Consolidated statements of cash flows 11
Consolidated statements of changes in equity 12
Notes to the consolidated financial statements 13-59

 

8

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   Note  December 31,
2023		   December 31,
2022		 
      $   $ 
          (Restated - See Note 24) 
Assets           
Current           
Cash and cash equivalents  3,17   6,727,482    4,906,165 
Amounts receivable  5,17   54,036    67,102 
Public investments, at fair value through profit and loss  4,17   -    17,227 
Prepaid expenses  6   1,509,824    564,742 
Digital assets  7,17   188,342,579    104,148,728 
Digital assets loaned  7   270,362,684    - 
Digital assets staked  7   30,516,888    - 
Total current assets      497,513,493    109,703,964 
              
Private investments, at fair value through profit and loss  4,17,20   43,540,534    30,015,445 
Digital assets  7   643,487    53,358 
Equipment      7,679    20,623 
Right of use assets      -    1,917,174 
Intangible assets  8   3,542,888    5,581,188 
Goodwill  8   46,712,027    46,712,027 
Total assets      591,960,108    194,003,779 
Liabilities and shareholders’ equity             
Current liabilities             
Accounts payable and accrued liabilities  9,17,20   9,174,846    5,822,379 
Loans payable  10,17   56,210,709    52,821,600 
ETP holders payable  11,17   508,130,490    105,740,627 
Total current liabilities      573,516,045    164,384,606 
Non-current liabilities             
Lease liabilities      -    1,709,911 
Total liabilities      573,516,045    166,094,517 
Shareholders’ equity             
Common shares  15(b)(c)   170,687,476    166,151,401 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  16   28,631,887    27,909,984 
Accumulated other comprehensive income      (1,652,547)   (2,996,218)
Non-controlling interest      (4,871)   - 
Deficit      (183,539,232)   (167,477,256)
Total equity      18,444,063    27,909,262 
Total liabilities and equity      591,960,108    194,003,779 
Nature of operations and going concern  1          
Commitments and contingencies  21          
Subsequent event  25          

 

Approved on behalf of the Board of Directors:    
     
“Olivier Roussy Newton”   “Stefan Hascoet”
Director   Director

 

See accompanying notes to these consolidated financial statements

 

9

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

      Years ended December 31 
   Note  2023$   2022 $ (Restated - see Note 24) 
Revenues           
Realized and net change in unrealized gains and (losses) on digital assets  12   323,958,866    (325,044,954)
Realized and net change in unrealized gains and (losses) on ETP payables  13   (332,100,866)   320,382,227 
Realized and unrealized (loss) on derivative assets      -    (434,073)
Staking and lending income      3,539,352    4,519,001 
Management fees      1,461,594    1,436,455 
Node revenue      15,235    347,758 
Realized (loss) on investments, net  4   (4,150)   (12,077)
Unrealized (loss) on investments, net  4   13,484,504    (15,476,381)
Interest income      1,480    55,264 
Total revenues      10,356,014    (14,226,780)
Expenses             
Operating, general and administration  14,20   9,975,267    14,748,059 
Share based payments  16   2,920,219    15,889,455 
Depreciation - property, plant and equipment      12,945    18,342 
Depreciation - right of use assets      -    69,322 
Amortization - intangibles  8   2,038,300    2,277,443 
Finance costs      4,161,136    4,014,038 
Transaction costs      1,029,442    1,113,941 
Foreign exchange loss (gains)      10,338,575    (324,699)
Impairment loss      -    13,865,355 
Total expenses      30,475,884    51,671,256 
Income (loss) before other item      (20,119,870)   (65,898,036)
(Loss) on settlement of debt      (172,093)   - 
Net (loss) for the period      (20,291,963)   (65,898,036)
Other comprehensive loss Foreign currency translation gain (loss)      1,343,670    (3,237,282)
Net (loss) and comprehensive income (loss) for the period      (18,948,293)   (69,135,318)
Net (loss) attributed to:             
Owners of the parent      (20,287,092)   (65,898,036)
Non-controlling interests      (4,871)   - 
       (20,291,963)   (65,898,036)
Net (loss) and comprehensive (loss) attributed to:             
Owners of the parent      (18,943,422)   (69,135,318)
Non-controlling interests      (4,871)   - 
       (18,948,293)   (69,135,318)
              
(Loss) per share             
Basic      (0.09)   (0.32)
Diluted      (0.09)   (0.32)
Weighted average number of shares outstanding:             
Basic      231,599,905    209,054,713 
Diluted      231,599,905    209,054,713 

 

See accompanying notes to these consolidated financial statements

 

10

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

      Years ended December 31, 
   Note  2023   2022 
      $   $ 
      (Restated - See Note 24) 
Cash (used in) provided by operations:             
Net (loss) for the year     $(20,291,963)  $(65,898,036)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:             
Share-based payments  16   2,920,219    15,889,455 
Impairment loss      -    13,865,356 
Loss on debt for shares      172,093    - 
Interest income      -    (55,264)
Interest expense  10   4,161,136    4,014,038 
Interest paid      (3,517,580)   - 
Depreciation - Property, plant & equipment      12,945    18,342 
Depreciation - right of use assets      -    69,322 
Amortization - Intangible asset  8   2,038,300    2,277,443 
Realized loss on investments, net      4,150    12,077 
Unrealized (gain) loss on investments, net      (13,484,504)   15,476,381 
Realized and net change in unrealized (gains) and loss on digital assets  12   (323,958,866)   325,044,954 
Realized and net change in unrealized (gains) and loss on ETP  13   332,100,866    (320,382,227)
Realized and unrealized loss on derivative assets  13   -    434,072 
Staking and lending income      (3,539,352)   (4,519,001)
Node revenue      (15,235)   (347,758)
Management fees      (1,461,594)   (1,436,455)
ETP paid in digital assets      1,320,155    - 
Unrealized loss on foreign exchange      440,341    (4,071,748)
       (23,098,889)   (19,609,049)
Adjustment for:             
Purchase of digital assets      (318,355,007)   (231,392,840)
Disposal of digital assets      244,656,544    191,092,048 
Purchase of investments      -    (34,649,658)
Disposal of investments      13,180    28,248 
Change in amounts receivable      13,065    (34,537)
Change in prepaid expenses and deposits      (945,069)   693,287 
Change in accounts payable and accrued liabilities      5,197,664    3,792,777 
Net cash (used in) operating activities      (92,518,511)   (90,079,724)
Investing activities             
Additions to right of use assets      -    (1,411,062)
Lease payment      -    (1,258,033)
Net cash (used in) investing activities      -    (2,669,095)
Financing activities             
Proceeds from ETP holders      308,595,496    242,378,583 
Payments to ETP holders      (223,232,891)   (196,516,517)
Loan Payable      4,629,099    53,117,760 
Proceeds from private placements      4,528,750    1,554,348 
Share issuance costs      -    (14,490)
Proceeds from exercise of warrants  16   -    647,284 
Proceeds from exercise of options  16   94,875    45,000 
Shares repurchased pursuant to NCIB      -    (13,154,570)
Net cash provided by financing activities      94,615,330    88,057,398 
              
Effect of exchange rate changes on cash and cash equivalents      (275,502)   436,552 
Change in cash and cash equivalents      1,821,317    (4,254,869)
Cash, beginning of year      4,906,165    9,161,034 
Cash and cash equivalents, end of year     $6,727,482   $4,906,165 

 

See accompanying notes to these consolidated financial statements

 

11

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

                   Share-based payments                     
   Number
of
Common
Shares		   Common
Shares		   Number of
Preferred Shares		   Preferred
Shares		   Options   Deferred Shares
Unit
(DSU)		   Treasury
shares		   Warrants   Share-based
Payments
Reserve		   Accumulated
other
comprehensive
income		   Non-controlling
interest		   Deficit   Total 
                                                                  
Balance, December 31, 2022  219,010,501   $166,151,401   4,500,000   $4,321,350   $20,317,312    6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)        -    (167,477,256)   27,909,261 
Warant allocation   -    (243,330)   -    -    -    -    -    243,330    243,330    -    -    -    - 
Private Placement   11,812,500    1,117,145    -    -    -    -    -    772,855    772,855    -    -    -    1,890,000 
Shares issued for debt settlement   13,697,095    1,449,103    -    -    -    -    -    -    -    -    -    -    1,449,103 
Shares issued on convertible debt   30,000,000    1,585,524    -    -    -    -    -    1,414,476    1,414,476    -    -    -    3,000,000 
Shares issued on purchase of investment   805,612    128,898    -    -    -    -    -    -    -    -    -    -    128,898 
Option exercised   575,000    94,875    -    -    -    -    -    -    -    -    -    -    94,875 
Value of options exercised   -    86,710    -    -    (86,710)   -    -    -    (86,710)   -    -    -    - 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    -    423,261    - 
Options cancelled   -    -    -    -    (3,138,267)   -    -    -    (3,138,267)   -    -    3,138,267    - 
DSU exercised   757,500    317,150    -    -    -    (317,150)   -    -    (317,150)   -    -    -    - 
DSU cancelled   -    -    -    -    -    (663,587)   -    -    (663,587)   -    -    663,587    - 
Share-based payments   -    -    -    -    875,928    2,044,291    -    -    2,920,219    -          -    -    2,920,219 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    1,343,670    (4,871)   (20,287,092)   (18,948,293)
Balance, December 31, 2023   276,658,208   $170,687,476    4,500,000   $4,321,350   $17,968,263   $8,040,660   $27,453   $ 2,595,513   $ 28,631,889   $(1,652,548)  $(4,871)  $ (183,539,232)  $18,444,063 
                                                                  
Balance, December 31, 2021   211,102,552   $ 163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986    25,898,062   $241,064   $-   $(101,944,546)  $91,781,396 
Private Placement   7,736,865   $1,367,932    -    -    -    -    -    171,926    171,926    -    -    -    1,539,858 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    -    296,160 
NCIB   (8,560,100)   (6,743,038)   -    -    -    -    -    -    -    -    -    (6,411,536)   (13,154,574)
Warrants exercised   3,714,917    647,285    -    -    -    -    -    (136,447)   (136,447)   -    -    -    647,285 
Value of warrants exercised   -    136,447    -    -    -    -    -    -    -    -    -    -    - 
Warrants expired   -    -    -    -    -    -    -    (33,352)   (33,352)   -    -    33,352    - 
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    -    - 
Options cancelled             -    -    (5,150,380)   -    -    -    (5,150,380)   -    -    5,150,380    - 
DSU exercised   4,377,500    3,561,550    -    -    -    (3,561,550)   -    -    (3,561,550)   -    -    -    - 
Value of DSU exercised   -    3,535,000    -    -    -    (3,535,000)   -    -    (3,535,000)   -    -    -    - 
DSU cancelled   -    -    -    -    -    (1,593,130)   -    -    (1,593,130)   -    -    1,593,130    - 
Share-based payments   -    -    -    -    7,274,617    8,614,838    -    -    15,889,455    -    -    -    15,889,455 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (3,237,282)   -    (65,898,036)   (69,135,318)
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $ 4,321,350   $ 20,317,312   $6,977,106   $27,453   $588,113   $27,909,984   $(2,996,218)  $-   $(167,477,256)  $27,909,262 

 

See accompanying notes to these consolidated financial statements

 

12

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (formerly Valour Inc.) (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at December 31, 2023, 2023, the Company has working capital (deficiency) of $(76,002,552) (December 31, 2022 - $(54,680,642), including cash of $6,727,482 (December 31, 2022 - $4,906,165) and for the year ended December 31, 2023 had a net loss and comprehensive loss of $18,948,293 (for the year ended December 31, 2022 – $69,135,318). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These consolidated financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global commodity and financial markets and supply chains. Russia’s invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result in additional sanctions or other international action and the escalation of war between Israel and Hamas in Gaza, any of which may have a destabilizing effect on commodity prices, supply chains, and global economies more broadly. Volatility in digital asset prices and supply chain disruptions may adversely affect the Corporation’s business, financial condition, financing options, and results of operations. The extent and duration of the current Russia-Ukraine conflict or the Israel and Hamas conflict in Gaza and related international action cannot be accurately predicted at this time and the effects of such conflict may magnify the impact of the other risks, including those relating to digital asset price volatility and global financial conditions. The situation is rapidly changing and unforeseeable impacts, including on shareholders of the Corporation, and third parties with which the Corporation relies on or transacts, may materialize and may have an adverse effect on the Corporation’s business, results of operation, and financial condition.

 

2.Material accounting policy information

 

(a)Statement of compliance

 

These consolidated financial statements of the Company were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”) The policies as set out below were consistently applied to all the periods presented unless otherwise noted. These consolidated financial statements of the Company were approved for issue by the Board of Directors on April 1, 2024.

 

13

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These consolidated financial statements of fiscal 2023 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements.

 

(c)Basis of preparation and functional currency

 

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

14

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(d)Change in accounting policy

 

During the year ended December 31, 2023, the Company changed its accounting policy regarding the treatment for when the Company sells a portion of its digital asset holdings or when there’s redemptions of its ETP payables. The Company has adopted first in, first out (“FIFO”) to identify the units sold and determine the cost basis to use. As a result, for the year ended December 31, 2023 and 2022, realized gains (loss) on digital assets increase (decreased) by $54,543,334 and $(8,151,116), respectively and unrealized gains (loss) (decreased) increased by $(54,543,334) and $8,151,116, respectively. As a result, for the year ended December 31, 2023 and 2022, realized gains (loss) on ETP payables (decreased) increase by $(44,112,584) and $66,031,477, respectively and unrealized gains (loss) (decreased) increased by $(44,112,584 and $(66,031,477), respectively.

 

There were no changes to the consolidated statements of financial position, consolidated statements of operations and comprehensive (loss) or consolidated statements of cash flow.

 

(e)Significant accounting judgements, estimates and assumptions

 

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets were classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each exchange traded product (“ETP”). The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Counbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company revalues its digital assets quarterly.

 

15

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(ii)Accounting for ETP holder payables

 

Financial liabilities at fair value through profit or loss held includes ETP holders payable. Liabilities arising in connection with ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company elected not to designate this as a hedging instrument. The ETPS are actively traded on the Nordic Growth Market (“NGM”) and Germany Borse Frankfurt Zertifikate AG.

 

(iii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 4 and 17 for further details.

 

(iv)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 4 and 17 for further details.

 

(v)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

(vi)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

16

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(viii)Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 7 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

(xi)Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

(xii)Accounting for digital assets held as collateral

 

The Company has provided digital assets as collateral for loans provided by digital asset liquidity provider. These digital assets held as collateral are included with digital assets and valued at fair value consistent with the Company’s accounting policy for its digital assets. See note 2(e)(i) and note 2(t).

 

(f)Financial instruments

 

Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company has become a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Company’s financial instruments consist of cash, amounts receivable, public investments, private investments, derivative asset, accounts payable and accrued liabilities and ETP holders payable.

 

17

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments

 

Purchases and sales of investments where the Company cannot exert control or significant influence are recognized on a trade date basis. Public and private investments at fair value through profit or loss are initially recognized at fair value, with changes in fair value reported in profit (loss). At each financial reporting period, the Company’s management estimates the fair value of its investments based on the criteria below and reflects such valuations in the financial statements.

 

Transaction costs are expensed as incurred in the statements of loss. The determination of fair value requires judgment and is based on market information where available and appropriate. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such changes in valuations in the statements of loss. The Company is also required to present its investments (and other financial assets and liabilities reported at fair value) into three hierarchy levels (Level 1, 2, or 3) based on the transparency of inputs used in measuring the fair value, and to provide additional disclosure in connection therewith (see Note 17, “Financial instruments”). The three levels are defined as follows:

 

Level 1 – investment with quoted market price;

 

Level 2 – investment which valuation technique is based on observable market inputs; and

 

Level 3 – investment which valuation technique is based on non-observable market inputs.

 

Publicly traded investments:

 

1. Securities, including shares, options, and warrants which are traded on a recognized securities exchange and for which no sales restrictions apply are recorded at fair values based on quoted closing prices at the statement of financial position date or the closing price on the last day the security traded if there were no trades at the statement of financial position date. The Company utilizes the quoted closing prices. These are included in Level 1 as disclosed in Note 17.

 

2. Securities which are traded on a recognized securities exchange but which are escrowed or otherwise restricted as to sale or transfer are recorded at amounts discounted from market value. Shares that are received as part of a private placement that are subject to a standard four-month hold period are not discounted due the short term of the hold period. In determining the discount for such investments, the Company considers the nature and length of the restriction, business risk of the investee corporation, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. These are included in Level 2 in Note 17.

 

3. Warrants or options of publicly traded securities which do not have a quoted price are carried at an estimated fair value calculated using the Black-Scholes option pricing model if sufficient and reliable observable market inputs are available. These are included in Level 2 as disclosed in Note 17.

 

4. Securities which are traded on a recognized securities exchange but which do not have an active market are recorded at the most recent transaction price. These are included in Level 3 in Note 17.

 

The amounts at which the Company’s publicly traded investments could be disposed of may differ from carrying values based on market quotes, due to market price changes and the fair value was determined at a specific time, the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Such differences could be material.

 

18

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments (continued)

 

Privately held investments:

 

1. Securities in privately held companies (other than options and warrants) are initially recorded at cost, being the fair value at the time of acquisition. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such valuations in the financial statements. These are included in Level 3 as disclosed in Note 17. Options and warrants of private companies are carried at fair value using valuation technique.

 

With respect to valuation, the financial information of private companies in which the Company has investments may not always be available, or such information may be limited and/or unreliable. Use of the valuation approach described below may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these may not be realized or realizable. In addition to the events described below, which may affect a specific investment, the Company will take into account general market conditions when valuing the privately held investments in its portfolio. In the absence of occurrence of any of these events or any significant change in general market conditions indicates generally that the fair value of the investment has not materially changed.

 

2. An upward adjustment is considered appropriate and supported by pervasive and objective evidence such as significant subsequent equity financing by an unrelated investor at a transaction price higher than the Company’s carrying value; or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a positive impact on the investee company’s prospects and therefore its fair value. In these circumstances, the adjustment to the fair value of the investment will be based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which, for example, reduce the corporate tax burden, or to an extent that, it was not previously allowed, or reduce or eliminate the need for approvals;

 

●receipt by the investee company of approvals, which allow the investee company to proceed with its project(s);

 

●release by the investee company of positive operational results, which either proves or expands their investee’s prospects; and

 

●important positive management changes by the investee company that the Company’s management believes will have a very positive impact on the investee company’s ability to achieve its objectives and build value for shareholders.

 

3. Downward adjustments to carrying values are made when there is evidence of a decline in value as indicated by the assessment of the financial condition of the investment based on third party financing, operational results, forecasts, and other developments since acquisition, or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a negative impact on the investee company’s prospects and therefore its fair value. The amount of the change to the fair value of the investment is based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which increases the tax burden on companies;

 

●denial of the investee company’s application for approvals which prohibit the investee company from proceeding with its projects;

 

●the investee company releases negative operating results;

 

●changes to the management of the investee company take place which the Company believes will have a negative impact on the investee company’s ability to achieve its objectives and build value for shareholders;

 

●the investee company is placed into receivership or bankruptcy; and

 

●based on financial information received from the investee company, it is apparent to the Company that the investee company is unlikely to be able to continue as a going concern.

 

19

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments (continued)

 

Privately held investments (continued):

 

The resulting values may differ from values that would be realized had a ready market existed. The amounts at which the Company’s privately held investments could be disposed of may differ from the carrying value assigned. Such differences could be material.

 

(ii)Financial assets other than investments at fair value and liabilities

 

Financial assets

 

Initial recognition and measurement

 

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either fair value through profit or loss (“FVPL”) or fair value through other comprehensive income (“FVOCI”), and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

 

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

 

Financial assets with embedded derivatives are considered in their entirety when determining their classification at FVPL or at amortized cost. Other accounts receivable held for collection of contractual cash flows are measured at amortized cost.

 

Subsequent measurement – financial assets at amortized cost

 

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Subsequent measurement – financial assets at FVPL

 

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of earnings (loss). The Company’s investments are classified as financial assets at FVPL.

 

Subsequent measurement – financial assets at FVOCI

 

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.

 

After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive income (loss). When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.

 

Dividends from such investments are recognized in other income in the statements of earnings (loss) when the right to receive payments is established.

 

Derecognition

 

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

 

20

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(ii)Financial assets other than investments at fair value and liabilities (continued)

 

Financial assets (continued)

 

Impairment of financial assets

 

The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, accounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

 

(iii)Financial assets other than investments at fair value and liabilities

 

Financial liabilities

 

Initial recognition and measurement

 

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL. ETP holders payable are designated as financial liability at fair value through profit or loss on initial recognition. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s financial liabilities also include accounts payable and liabilities and loans payable, which are measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.

 

Subsequent measurement – financial liabilities at amortized cost

 

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Derecognition

 

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of earnings (loss).

 

(g)Cash

 

Cash is comprised of cash on hand and deposits that generally mature within 90 days from the date of acquisition. Deposits are held in Canadian chartered banks or in a financial institution controlled by a Canadian chartered bank.

 

(h)Revenue recognition

 

Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct service to be delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the Company. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.

 

21

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(h)Revenue recognition (continued)

 

Management fees

 

The Company recognizes revenue from management fees earned on various ETP products. The management fee percentage is outlined in each ETP prospectus. The management fee is calculated daily based on the daily ETP net asset value and is recognized daily when the management fee is calculated. The management fee is deducted from the net asset value of the ETPs. The management fees are valued in the underlying ETPs base currency and converted into USD daily.

 

Other revenues

 

The Company earns revenue from aggregating small individual trades during the day to facilitate hedging and optimize liquidity and hedging them periodically. These are computed as net fiat receivables and are measured based on the average daily USD rates at the end of each day.

 

Public and private investments

 

Realized gains and losses on the disposal of investments and unrealized gains and losses in the value of investments are reflected in the statement of loss on a trade date basis. Upon disposal of an investment, previously recognized unrealized gains or losses are reversed, so as to recognize the full realized gain or loss in the period of disposition. All transaction costs are expensed as incurred.

 

(i)Lending, staking and node revenue

 

Lending and Staking

 

The Company earns a yield based on digital assets that are lent or staked with various reputable digital asset exchanges. The Company transfers digital asset to either staking account within the exchange platform and into staking custody accounts. The Company transfers the digital assets to those staking accounts and the counterparty delivers staking and lending rewards in return. The digital assets rewards are based on the rewards offered at the time the Company enters into staking or lending arrangements. The transaction price is an interest rate offered for the digital asset deposit. Over the period that the digital assets are staked or lent, the digital assets rewards are deposited into the Company’s custody accounts. The rewards are based on the amount of digital assets staked or lent and the rate offered by the custodian at that time.

 

Staking and lending rewards are recognized as revenue as they are earned over the period the digital assets are staked or loaned. Staking allows the Company to earn income through a process that is used to verify cryptocurrency transactions. It involves committing holdings to support a blockchain network and confirming transactions. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle.

 

(j)Node revenue

 

Node Revenue

 

Node revenue is earned as transactions are validated on a blockchain. When transactions are validated on the blockchain, the Company receives rewards from that blockchain. The transaction price are the rewards earned by the Company as transactions are validated by the Company’s node. The Company receives rewards for these services provided to the blockchain. The blockchain token rewards are only earned when the Company validates transactions that take place on the blockchain. When a transaction is validated by the Company’s node, rewards are deposited to the Company’s account. As the tokens are earned, revenue is calculated by summing up the tokens earned each day and multiplying the value of reward tokens for that day.

 

22

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(k)Leases

 

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company, as a lessee, recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made to branches or office premises. The right-of-use asset is subsequently amortized using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

 

(l)Leases (continued)

 

The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in net income if the carrying amount of the right-of-use asset has been reduced to zero. The Company presents right-of-use assets and lease liabilities in the Consolidated Statement of Financial Position. The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

(m)Operating segments

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and Chief Operating Officer.

 

The Company’s material operating segments are located in Canada, Bermuda and Cayman Islands (See Note 21 for details).

 

(n)Income (loss) per share

 

Basic income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of the Company’s common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing the applicable net income (loss) by the sum of the weighted-average number of common shares outstanding if dilutive common shares had been issued during the period. The calculation of diluted income (loss) per share assumes that outstanding stock options and warrants with an average exercise price below market price of the underlying shares are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price for the period. Diluted income per share for the year ended December 31, 2023 and 2022 all stock options and warrants were anti-dilutive and excluded from the calculation of dilutive loss per share.

 

23

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(o)Comprehensive income (loss)

 

Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity’s whose functional currency differs from the presentation currency.

 

(p)Income taxes

 

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

 

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

(q)Share-based payments

 

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity reserve.

 

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For options that expire unexercised, the recorded value is transferred to deficit.

 

(r)Investment in Associate

 

Associates are entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments over which the Company has the ability to significantly influence are initially recorded at cost. When the initial recognition of the investment in the associate occurs as a result of a loss of control of a former subsidiary, the fair value of the retained interest in the former subsidiary on the date of the loss of control is deemed to be the cost on initial recognition. Investment income (loss) is calculated using the equity method. The Company’s share of the associate’s profit or loss is recognized in the consolidated statements of operations and its share of movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

 

24

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(s)Investment in Associate (continued)

 

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the consolidated statements of operations. Profits and losses resulting from upstream and downstream transactions between the Company and its associate are recognised in the Company’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Company. Dilution gains and losses arising in investments in associates are recognized in the consolidated statements of operations. The investment account of the investor reflects: i) the cost of the investment in the investee; ii) the investment income or loss (including the investor’s proportionate share of discontinued operations) relating to the investee subsequent to the date when the use of the equity method first became appropriate; and iii) the investor’s proportion of dividends paid by the investee subsequent to the date when the use of the equity method first became appropriate

 

(t)Digital Assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss.

 

Digital assets consist of cryptocurrency denominated assets (see Note 7) and are included in current assets. Digital assets are measured using unadjusted quoted prices taken from active markets, where available. Fair value measurement for digital assets with available active market prices has been classified as Level 1 in the fair value hierarchy. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. The Company revalues its digital assets quarterly.

 

Disclosure

 

The Company applies the disclosure requirements in the IFRS Standard applicable to its holding of cryptocurrencies. Accordingly, the Company applies the disclosure requirements in IAS 2 – Inventories for holdings of cryptocurrencies. If an entity measures its holding in cryptocurrencies at fair value, IFRS 13 Fair Value Measurement specifies applicable disclosure requirements. In applying IAS 1 Presentation of Financial Statements, the Company discloses judgements that its management has made regarding its accounting for holdings of cryptocurrencies if those are part of the judgements that had a significant effect on the amounts recognized in the consolidated financial statements.

 

The Company has evaluated the impact of the Agenda Paper and has determined that cryptocurrencies with an active market should be classified as digital assets and measured at fair value through other profit or loss.

 

Increases and decreases in the fair value of digital assets are recognized through profit or loss. Digital assets are derecognized when the Company has transferred substantially all the risks and rewards of ownership on disposal.

 

25

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(u)Digital Asset Loaned

 

Initial recognition and measurement

 

The Company enters into loan agreements with various digital asset exchanges to earn yield based on the digital assets that are lent. At the time the Company enters into the loan agreement, the digital asset is derecognized from digital assets as the borrower obtains the rights to direct the use of the digital asset and the Company recognizes this as digital assets loaned, measured at the fair value of the loaned digital asset.

 

Subsequent measurement

 

During the term of the digital asset loan, the digital asset loaned is measured at the fair value based on the fair market value of loaned digital assets with any gains / (losses) resulting from remeasuring the digital asset loaned to the realized and net change in unrealized gains and losses on digital assets.

 

Derecognition

 

At the end of the digital asset loan, the digital asset loaned is derecognized and re-recorded as digital assets at the carrying amount of the digital asset loaned.

 

(v)Intangible assets

 

Intangible assets consist of brand names. The Company has estimated the brand name will contribute cash flows for 10 years.

 

Intangible assets are carried at cost less accumulated amortization and impairment losses.

 

Impairment

 

Impairments are recorded when the recoverable amounts of assets are less than their carrying amounts. The recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Impairment losses are evaluated for potential reversals of impairment when events or changes in circumstances warrant such consideration.

 

The carrying values of all intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

 

(w)Goodwill

 

Goodwill arising on a business acquisition is recognized as an asset at the date that control is acquired (the “acquisition date”). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the fair value of the identifiable net assets.

 

Goodwill is not amortized but is reviewed for impairment at least annually or sooner if indicators of impairment exist. Goodwill is tested for impairment at the group level representing the lowest level at which management monitors it, the operating segment level. Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed.

 

No impairment losses have been recognized in the consolidated statements of loss related to goodwill.

 

For the year ended December 31, 2023 and 2022, the Company did not experience any triggering events or additional information that the goodwill’s recoverable amount was significantly different than its carrying amount.

 

26

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(x)Share capital

 

Financial instruments issued by the Company are classified as share capital only to the extent that they do not meet the definition of a financial liability. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Repurchases by the Company of its own common shares under a Normal Course Issuer Bid (“NCIB”) are accounted for in accordance with IAS 32, Financial Instruments: Presentation. Upon reacquiring common shares under a NCIB, the Company deducts from equity the purchase price of these common shares and any costs to acquire such common shares. Any such common shares held by the Company are considered treasury shares until they are cancelled.

 

(y)Provisions

 

Provisions are recognized when (a), the Company has a present obligation (legal or constructive) as a result of a past event, and (b), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

 

As at December 31, 2023, the Company recorded a legal provision of $nil (December 31, 2022, $2,000,000).

 

(z)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2024 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2023. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Cash and cash equivalents

 

   31-Dec-23   31-Dec-22 
Cash at banks  $306,920   $1,339,665 
Cash at brokers   6,417,725    3,425,834 
Cash at digital currency exchanges   2,837    140,665 
   $6,727,482   $4,906,165 

 

27

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

4.Investments, at fair value through profit and loss

 

At December 31, 2023, the Company’s investment portfolio consisted of zero publicly traded investment and nine private investments for a total estimated fair value of $43,540,534 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $30,032,672).

 

During the year ended December 31, 2023, the Company had a realized (loss) of $(4,150) and an unrealized gains of $13,484,504 (December 31, 2022 – realized (loss) of ($12,077)) and an unrealized losses of ($15,476,381) on private and public investments.

 

Public Investments

 

At December 31, 2023, the Company had no public investments.

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer  Note  Security
description		  Cost   Value   of FV 
Smart Valor AG            19,000 SDR  150,908   17,227    100.0%
Total public investments        $150,908   $17,227    100.0%

 

Private Investments

 

At December 31, 2023 the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   % of FV 
3iQ Corp.     187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $30,015,445.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   of FV 
3iQ Corp.     187,007 common shares  $1,122,042   $1,246,149    4.2%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    7.3%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    2.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    25,657,000    85.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.6%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $30,015,445    100.0%

 

5.Amounts receivable

 

   31-Dec-23   31-Dec-22 
Other receivable  $54,036   $ 67,102 

 

6.Prepaid expenses

 

   31-Dec-23   31-Dec-22 
Prepaid insurance  $42,335   $61,065 
Prepaid expenses   1,467,489    503,677 
   $1,509,824   $564,742 

 

28

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets

 

As at December 31, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $489,865,638 (December 31, 2022 - $104,202,085). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   December 31, 2023   December 31, 2022 
  

Quantity

   $  

Quantity

   $ 
Binance Coin   236.4452    97,710    11.1000    3,678 
Bitcoin   2,271.3329    108,983,280    2,126.5130    45,065,282 
Ethereum   21,537.4066    65,956,320    21,141.7368    34,333,700 
EthereumPoW   0.2000    1    -    - 
Cardano   54,210,783.1700    43,306,306    36,438,339.0800    12,004,332 
Polkadot   1,666,147.7880    18,371,365    931,646.4544    5,407,239 
Solana   1,682,112.49    235,733,109    428,280.68    5,537,534 
Shyft   4,539,407.2792    78,314    3,507,575.4684    37,530 
Uniswap   296,352.0602    2,932,687    148,734.0602    1,021,542 
USDC        673         1,586 
USDT        111,856         14,134 
Litcoin   17.3931    1,719    -    - 
Doge   220,474.3947    26,652    10,000.0000    914 
Cosmos   11,700.0000    171,497    201.0000    2,531 
Avalanche   248,151.6644    13,148,105    48,995.3900    712,745 
Matic   0.0003    -    890.0000    906 
Shiba Inu   -    -    90,000,000.0000    975 
Ripple   76,029.7317    62,737    2,000.0000    919 
Enjin   432,342.3671    223,237    10,009.9900    3,180 
Tron   118,490.5094    16,581    -    - 
Terra Luna  202,302.5360   -   199,195.3600   - 
Current   63,728,357    489,222,151         104,148,728 
Blocto   264,559.703    10,503    251,424.913    6,737 
Boba Network   250,000.00    -    250,000.00    - 
Clover   430,000.00    19,831    310,000.00    13,216 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    503,669    2,500,000.00    - 
Saffron.finance   86.21    2,619    86.21    2,345 
Sovryn   15,458.95    12,863    15,458.95    2,342 
Wilder World   148,810.00    94,002    148,810.00    28,660 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    58 
Long-Term        643,487         53,358 
Total Digital Assets        489,865,638         104,202,085 

 

29

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

The continuity of digital assets for the years ended December 31, 2023 and 2022:

 

   December 31,
2023		   December 31,
2022		 
Opening balance  $104,202,085   $370,053,740 
Digital assets acquired   318,355,007    231,392,840 
Digital assets disposed   (244,656,544)   (191,092,048)
Realized (loss) on digital assets   (1,017,247)   (55,746,548)
Digital assets earned from staking, lending and fees   3,554,587    5,955,456 
Net change in unrealized gains and losses on digital assets   324,976,115    (270,021,882)
Foregin exchange (loss) gain   (15,548,363)   13,660,527 
   $489,865,638   $104,202,085 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital assets held by counterparty for the years ended December 31, 2023 and 2022 is the following:

 

   December 31,   December 31, 
   2023   2022 
   Fair Value   Fair Value 
Counterparty A   421,687,911    59,579,414 
Counterparty B   30,592,947    11,926,180 
Counterparty C   2,775,287    348,441 
Counterparty D   11,785,440    23,212,486 
Counterparty E   8,633,491    8,176,439 
Counterparty F   837,948    - 
Counterparty G   8,840,988    - 
Other   248,294    19,508 
Self custody   4,463,332    939,618 
Total  $489,865,638   $104,202,085 

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

   Number of coins on loan   Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2022, digital assets held as collateral consisted of the following:

 

   Number of coins on loan    Fair Value 
Bitcoin   1,763.8300    28,787,772 
Ethereum   18,051.9700    29,315,988 
Total   19,815.8000   $58,103,760 

 

30

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As at December 31, 2022, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,176,439 (US$6,036,945), the fair value of the loan and interest held with Genesis.

 

Digital Assets loaned

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value Share 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of
coins on loan		   Fair Value 
Digital on loan:             
Counterparty A  2.4% to 9.7%   11,578,285.0000   270,362,684 
Total      11,578,285.0000   $270,362,684 

 

   Geography  December 31,
2023		 
Digital on loan:         
Counterparty A  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of December 31, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

31

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:               
Cardano   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950   $30,516,888    100%

 

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

    Interest
rates		     Number of
coins staked		     Fair Value  
Digital on staked:                        
Counterparty B     3.15 %     38,201,004.7950       30,516,888  
Total             38,201,004.7950     $ 30,516,888  

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:        
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

32

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

8.Intangibles and goodwill

 

Cost  Brand Name   Total 
Balance, December 31, 2022 and December 31, 2023  $42,789,968   $42,789,968 

 

Accumulated Amortization  Brand Name   Total 
Balance, December 31, 2021  $(21,065,981)  $(21,065,981)
Amortization   (2,277,443)   (2,277,443)
Impairment loss   (13,865,356)   (13,865,356)
Balance, December 31, 2022  $(37,208,780)  $(37,208,780)
Amortization   (2,208,780)   (2,208,780)
Balance, December 31, 2023  $(39,247,080)  $(39,247,080)
           
Balance, December 31, 2022  $5,581,188   $5,581,188 
Balance, December 31, 2023  $3,542,888   $3,542,888 

 

Impairment test of brand name

 

During the year ended December 31, 2023, as the result of the excess of consideration paid over the fair value of the brand name acquired from Defi Capital and Valour Inc., the Company carried out a review of the recoverable amount of that brand name, which is used in its governance business line in Canada and ETP business line on Cayman Islands. The review led to the recognition of an impairment loss of $nil (December 31, 2022 - $13,865,356), which has been recognized in profit or loss.

 

Impairment test of goodwill

 

Goodwill acquired through business combination of $46,712,027 (2022 - $46,712,027) has been allocated to the ETP CGU.

 

The Company tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The review led to the recognition of an impairment loss of $Nil (December 31, 2022 - $Nil). The recoverable amount of the Company’s CGU has been assessed by reference to the value in use (“VIU”).

 

Sensitivity

 

The Company has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount of the ETP CGU to which goodwill is allocated.

 

The recoverable amount of the ETP CGU would equal its carrying amount if the key assumptions were to change as follows:

 

   31-Dec-23  31-Dec-22
Growth in reward rates  From 9.00% to 3.25%  From 11.50% to 1.5%
Growth in assets under management  From 49.00% to 9.0%   From 97.00% to 56.0%
Pre-tax discount rate  From 23.6% to 31.6%   From 23.7% to 31.7%

 

The directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the ETP CGU to exceed its recoverable amount.

 

33

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Accounts payable and accrued liabilities

 

   31-Dec-23   31-Dec-22 
Corporate payables  $4,443,937   $5,505,689 
Digital asset liquidity provider   4,402,557    - 
Related party payable (Note 20)   328,352    316,690 
   $9,174,846   $5,822,379 

 

10.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As Of December 31, 2023, the loan principal of $52,242,700 (US$39,500,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms are open term and have interest rates ranging from 10.2% and 14.05% The extended loans are secured with 1,000 BTC and 9,264 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,570,863 and secured with 475 BTC. See Note 7.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. On July 11, 2023, the Company repayment the loan and outstanding interest of $270,129 by issuing 2,595,521 common shares. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of December 31, 2023, the loan principal of $3,967,801 (US$3,000,001) was outstanding.

 

34

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

11.ETP holders payable

 

The fair market value of the Company’s ETPs as at December 30, 2023 and December 31, 2022 were as follows:

 

   December 31,
2023 $		   December 31,
2022 $		 
BTC Zero EUR   13,325,026    3,063,222 
BTC Zero SEK   113,727,037    44,379,551 
ETH Zero EUR   1,426,174    120,319 
ETH Zero SEK   64,723,237    33,841,456 
Polkadot EUR   217,017    56 
Polkadot SEK   18,056,128    5,312,625 
Cardano EUR   105,209    1,308 
Cardano SEK   43,131,123    11,833,732 
UNI EUR   132,960    86,714 
UNI SEK   2,780,982    891,459 
BNB ETP - EUR   1,560    - 
Solana EUR   4,215,658    12,010 
Solana SEK   232,410,677    5,494,963 
Cosmos EUR   159,572    185 
Valour Digital Asset Basket 10 EUR   301,427    790 
Valour Digital Asset Basket 10 SEK   42,770    - 
Valour BTC Carbon Neutral EUR   5,288    1,107 
Avalanche EUR   137,447    697,454 
Avalanche SEK   13,034,136    872 
Enjin EUR   197,061    2,804 
    508,130,490    105,740,627 

  

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

35

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

12.Realized and net change in unrealized gains and (losses) on digital assets

 

   31-Dec-23   31-Dec-22 
Realized gains / (loss) on digital assets  $(1,017,247)  $(55,746,548)
Unrealized gains / (loss) on digital assets   324,976,113    (269.298,406)
   $323,958,865   $(325,044,954)

 

 

13.Realized and net change in unrealized gains and (losses) on ETP payables

 

   31-Dec-23   31-Dec-22 
Realized gains / (loss) on digital assets  $15,580,180  $(55,746,548)
Unrealized gains / (loss) on digital assets   (347,681,046)   85,110,986
   $(332,100,866)  $320,382,227

 

14.Expenses by nature

 

   Years ended
December 31		 
   2023   2022 
Management and consulting fees  $5,569,354   $7,218,330 
Travel and promotion   718,366    2,331,176 
Office and rent   1,467,975    1,051,511 
Accounting and legal   2,000,363    4,103,581 
Regulatory and transfer agent   219,210    42,983 
Current income tax recovery        478 
   $9,975,267   $14,748,059 

 

15.Share Capital

 

a)As at December 31, 2023 and December 31, 2022, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

36

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share Capital (continued)

 

b)Issued and outstanding shares

 

   Number of
Common
Shares		   Amount 
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 
Private placement financings   11,812,500    1,117,145 
Shares issued for debt settlement   13,697,095    1,449,102 
Warrants allocation        (24,330)
Options exercised   575,000    181,585 
Grant date fair value on options exercised          
DSU exercised   757,500    317,150 
Issued on convertible debt   30,000,000    1,585,524 
Shares issued on acquisiton of investment   805,612    128,898 
Balance, December 31, 2023   276,658,208   $170,687,476 

 

During the year ended December 31, 2023, the Company issued 13,697,095 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $172,093. Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

On October 24, 2023, the Company issued convertible debt in exchange for $3,000,000, the notes mature two years from issuance and accrue interest at 8% per annum. Upon conversion or at the maturity of the note the notes were convertible for an equal number of common shares and share purchase warrants, of the Company with an exercise price of $0.20. An officer of the Company subscribed for $361,250 convertible debt.

 

On November 6, 2023, the conversion option was exercised resulting in the issuance of 30,000,000 common shares of the Company and 30,000,000 warrants, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.20 for a period of 60 months following the closing date. At the issue date, the fair value of the warrants was estimated at $0.10 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 151.9%; risk-free interest rate of 3.87% and an expected life of 5 years. As a result of the conversion option, an officer of the Company received 3,612,500 common shares and 3,612,500 warrants for his convertible debenture.

 

On November 6, 2023, the Company issued 805,612 common shares of the Company in exchange for an $128,898 investment in Neuronomics AG, the shares were valued based on the closing price of the Company’s stock at the date of the exchange. An officer of the Company received 402,808 common shares in exchange for 362 shares of Neuromomics AG.

 

37

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share Capital (continued)

 

b)Issued and outstanding shares (continued)

 

On November 22, 2023, the Company closed a non-brokered private placement financing and issued 11,812,500 units for gross proceeds of $1,890,000 at a price of $0.16 per unit, each unit consists of one common shares of the company and one warrant, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.23 for a period of 24 months following the closing date. An officer of the Company subscribed 3,125,000 units for $335,167. At the issue date, the fair value of the warrants was estimated at $0.16 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 139.6%; risk-free interest rate of 4.40% and an expected life of 2 years.

 

On November 14, 2022, the Company closed a non-brokered private placement financing and issued 7,736,865 unit for gross proceeds of $1,414,973 at a price of $0.20 per common unit, each unit consist of one common share of the Company and one-half warrant, each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.30 for a period of 24 months following the closing date. The transaction closed in 2 tranches with 3,724,926 warrants issued on November 14, 2022. At the issue date, the fair value of the warrants was estimated at $0.17 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 152.7%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The second tranche closed on November 19, 2022 with 331,000 warrants issued. At the issue date fair value of warrants was estimated at $13,183 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 141.7%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The Company also paid share and warrant issue costs of $14,490. Of the total subscriptions, 2,500,000 units were acquired by a former officer of the Company. Company paid $14,950 in finders fees and other share issue costs. A former officer of the Company subscribed 2,500,000 units for $500,000.

 

Subscriptions for 2,500,000 Common Shares under the Offering constitute “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). For these transactions, the Company has relied on the exemption from the formal valuation requirement contained in Section 5.5(a) of MI 61-101 and has relied on the exemption from the minority shareholder requirements contained in Section 5.7(1)(a) of MI 61-101.

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from November 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the year ended December 31, 2023, the Company purchased and cancelled no shares (December 31, 2022 – purchased and cancelled 8,560,100 shares at an average price of $1.54).

 

38

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
   Number of   Weighted average exercise   Value of   Number of   Value of   Number of   Weighted average exercise   Value of   Total 
   Options   prices   options   DSU   DSU   warrants   prices   warrants   Value 
December 31, 2021   20,308,100   $   1.27   $18,260,128   $8,625,000   $7,051,948    19,432,810   $   0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,617    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (4,377,500)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (4,377,500)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   8,900,000    1.10    875,928    4,359,286   2,044,291    41,812,500    0.21    2,430,661    5,350,880 
Exercised   (575,000)   0.15    (86,710)   (757,500)   (317,150)   -    -    -    (403,860)
Expired / cancelled   (2,697,000)   1.11    (3,138,269)   (327,500)   (663,587)   (12,684,560)   0.03    (423,261)   (4,225,117)
December 31, 2023   23,405,000   $0.99   $17,995,714    6,870,000   $8,040,660    45,868,426   $0.30   $2,596,513   $28,631,887 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

On July 13, 2023, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.115 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $105,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

On November 24, 2023, the Company granted 2,650,000 stock options to a consultant and directors of the Company to purchase common shares of the Company for the price of $0.29 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $731,400 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.7%; risk-free interest rate of 3.83%; and an expected average life of 5 years. Directors of the received 2,500,000 options.

 

On December 4, 2023, the Company granted 4,500,000 stock options to an officer of the Company to purchase common shares of the Company for the price of $0.45 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $2,162,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.9%; risk-free interest rate of 3.54%; and an expected average life of 5 years.

 

On December 11, 2023, the Company granted 750,000 stock options to a consult and directors of the Company to purchase common shares of the Company for the price of $0.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $308,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 153.1%; risk-free interest rate of 3.53%; and an expected average life of 5 years. Directors of the received 500,000 options.

 

39

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

On January 26, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.98 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $687,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.2.%; risk-free interest rate of 1.67%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On March 31, 2022, the Company granted 700,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.43 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $903,840 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.8.%; risk-free interest rate of 2.39%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On May 5, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $2 for a period of five years from the date of grant. The options shall vest 50% at the grant date and 50% six months from the date of grant. These options have an estimated grant date fair value of $591,950 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

On May 5, 2022, the Company granted 1,200,000 stock options to an officer of Company to purchase common shares of the Company for the price of $1.11 for a period of five years from the date of grant. The options shall vest immediately. These options have an estimated grant date fair value of $1,468,560 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

On May 20, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $334,300 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146.8%; risk-free interest rate of 2.70%; and an expected average life of 5 years. On July 21, 2022, the Company granted 400,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.80 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $195,640 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 147.5%; risk-free interest rate of 3.00%; and an expected average life of 5 years.

 

On October 17, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $73,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.5%; risk-free interest rate of 3.60%; and an expected average life of 5 years.

 

On October 19, 2022, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $150,800 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.4%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

The Company recorded $875,928 of share-based payments during the year ended December 31, 2023 (2022 - $7,274,616).

 

40

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

The following share-based payment arrangements were in existence at December 31, 2023:

 

Number outstanding   Number exercisable   Grant
date		  Expiry
date		  Exercise price   Fair value at grant date   Grant date share price   Expected volatility   Expected life (yrs)   Expected dividend yield   Risk-free interest rate 
 510,000    510,000   16-Nov-20  16-Nov-25   $0.09    40,392   $0.09    138.70%   5    0%   0.46%
 250,000    250,000   24-Feb-21  24-Feb-26   $1.58    574,750   $2.55    147.00%   5    0%   0.73%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26   $1.58    1,906,500   $2.12    145.70%   5    0%   0.99%
 2,170,000    2,170,000   09-Apr-21  09-Apr-26   $1.58    3,468,962   $1.78    145.20%   5    0%   0.95%
 2,900,000    2,900,000   18-May-21  18-May-26   $1.22    3,263,080   $1.25    145.60%   5    0%   0.95%
 1,000,000    1,000,000   18-May-21  18-May-26   $1.22    1,125,200   $1.25    145.60%   5    0%   0.95%
 1,950,000    1,950,000   25-May-21  25-May-26   $1.11    1,944,540   $1.11    145.50%   5    0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26   $1.58    1,461,305   $1.43    143.70%   5    0%   0.84%
 250,000    250,000   21-Sep-21  21-Sep-26   $1.70    380,375   $1.70    144.00%   5    0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26   $2.10    470,375   $2.10    144.00%   5    0%   1.27%
 500,000    500,000   09-Nov-21  09-Nov-26   $3.92    1,758,050   $3.92    144.30%   5    0%   1.37%
 250,000    250,000   31-Dec-21  31-Dec-26   $3.11    698,525   $3.11    145.00%   5    0%   1.25%
 500,000    500,000   09-May-22  09-May-27   $2.00    591,950   $1.34    146.00%   5    0%   2.76%
 500,000    500,000   20-May-22  20-May-27   $1.00    334,300   $0.75    146.80%   5    0%   2.70%
 400,000    400,000   21-Jul-22  21-Jul-27   $0.80    195,640   $0.50    147.50%   5    0%   3.00%
 500,000    500,000   17-Oct-22  17-Oct-27   $0.17    75,350   $0.17    149.50%   5    0%   3.60%
 425,000    425,000   19-Oct-22  19-Oct-27   $0.17    64,090   $0.17    149.40%   5    0%   3.71%
 1,000,000    250,000   13-Jul-23  13-Jul-28   $0.115    105,000   $0.12    149.10%   5    0%   3.71%
 2,650,000    -   24-Nov-23  24-Nov-28   $0.29    731,400   $0.29    151.70%   5    0%   3.83%
 4,500,000    -   04-Dec-23  04-Dec-28   $0.45    2,162,700   $0.45    151.90%   5    0%   3.54%
 750,000    -   11-Dec-23  11-Dec-28   $0.52    308,700   $0.52    153.10%   5    0%   3.53%
 23,405,000    14,755,000               21,661,184                          

 

The weighted average remaining contractual life of the options exercisable at December 31, 2023 was 3.46 years (December 31, 2022 – 3.5 years).

 

Warrants

 

As at December 31, 2023, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		   Grant
date		  Expiry
date		  Exercise
price		   Fair value
at grant
date		   Grant
date
share price		   Expected
volatility		   Expected
life
(yrs)		   Expected
dividend
yield		   Risk-free
interest
rate		 
Warrants   3,537,433   14-Nov-22  14-Nov-24   $0.30    366,968   $0.17    152.7%   2    0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24   $0.30    19,865   $0.17    152.7%   2    0%   3.87%
Warrants   331,000   29-Nov-22  29-Nov-24   $0.30    30,010   $0.18    141.7%   2    0%   3.95%
Warrants   30,000,000   06-Nov-23  06-Nov-28   $0.20    1,414,476   $0.17    151.9%   5    0%   3.87%
Warrants   11,812,500   22-Nov-23  22-Nov-25   $0.23    772,855   $0.33    139.6%   2    0%   4,40%
Warrant issue costs             $     (8,661)                         
    45,868,426               2,595,512                          

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

41

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Deferred Share Units Plan (DSUs) (continued)

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

On July 13, 2023, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On November 24, 2023, the Company granted 1,434,286 DSUs to consultants of the Company. These DSUs have a grant day fair value of $277,500 and vest immediately.

 

On November 24, 2023, the Company granted 925,000 DSUs to officers and consultants of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day. Officers of the Company received 400,000 DSUs.

 

On January 26, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $990,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On March 31, 2022, the Company granted 600,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $858,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On May 3, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $555,000 and vest immediately.

 

On July 21, 2022, the Company granted 2,400,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,200,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

On October 6, 2022, the Company granted 2,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $460,000 and vest in four equal instalments every three months, with the first instalment vesting on the date that is three-months from the grant date.

 

On October 19, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $75,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

The Company recorded $2,044,291 in share-based compensation during the year ended December 31, 2023 (2022 - $8,614,838).

 

42

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments

 

Financial assets and financial liabilities as at December 31, 2023 and December 31, 2022 are as follows:

 

  

Asset /

(liabilities) at amortized cost

  

Assets /

(liabilities) at fair value through profit/(loss)

   Total 
December 31, 2022            
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    30,015,445    30,015,445 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)
December 31, 2023               
Cash  $6,727,482   $-   $6,727,482 
Amounts receivable   54,036    -    54,036 
Private investments   -    43,540,534    43,540,534 
USDC   -    (1,000)   (1,000)
Accounts payable and accrued liabilities   (9,174,846)   -    (9,174,846)
Loan payable   (56,210,709)   -    (56,210,709)
ETP holders payable   -    (508,130,490)   (508,130,490)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

43

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

Custodian Risks

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Valour Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at December 31, 2023, the Company had current assets of $497,513,493 (December 31, 2022 - $109,703,964) to settle current liabilities of $573,516,046 (December 31, 2022 - $164,384,606).

 

44

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

Liquidity risk (continued)

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at December 31, 2023 and December 31, 2022

 

   December 31, 2022 
   Total   Less than
1 year		   1-3 years 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   104,202,086    104,148,728    53,358 
Private investments   30,015,445    -    30,015,445 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(26,321,750)  $(54,680,642)  $28,358,892 

 

   December 31, 2023 
   Total   Less than
1 year		   1-3 years 
Cash  $6,727,482   $6,727,482   $- 
Amounts receivable   54,036    54,036    - 
Prepaid expenses   1,509,824    1,509,824    - 
Digital assets   489,865,637    489,222,151    643,487 
Private investments   43,540,534    -    43,540,534 
Accounts payable and accrued liabilities   (9,174,846)   (9,174,846)   - 
Loans payable   (56,210,709)   (56,210,709)   - 
ETP holders payable   (508,130,490)   (508,130,490)   - 
Total assets / (liabilities) – December 31, 2023  $(31,818,532)  $(76,002,552)  $44,184,021 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At December 31, 2023, two investments made up approximately 7.0% (December 31, 2022 – two investment of 13.9%) of the total assets of the Company.

 

For the year ended December 31, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.2 million, or $0.02 per share.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $2.7 million, or $0.02 per share.

 

45

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

Market risk (continued)

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at December 31, 2023, a 1% change in interest rates could result in $6,700 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro Swiss Franc and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at December 31, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   December 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

   December 31, 2022 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   4,358,445    -    25,657,000    - 
Prepaid investment   551,379    -    -    136,189 
Digital assets   104,202,086    -    -    - 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(47,290,835)  $(72,189)  $25,633,315   $114,502 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of December 31, 2023 would result in an estimated increase (decrease) in net income of approximately $2,601,500 (December 31, 2022 - $2,159,200).

 

46

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2023 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at December 31, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted
Market
price)		   (Valuation
technique-
observable
market Inputs)		   (Valuation
technique -
non-observable
market inputs)		   Total 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    30,015,445    30,015,445 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $30,015,445   $30,034,258 

 

47

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  December 31,
2023		   December 31,
2022		 
Balance, beginning of period  $1,586   $4,063 
Disposal   (913)   (2,477)
Balance, end of period  $673   $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  December 31,
2023		   December 31,
2022		 
Balance, beginning of period  $30,015,445   $10,257,760 
Purchases   128,898    34,498,750 
Unrealized gain/(loss) net   13,396,191    (14,741,065)
Balance, end of period  $43,540,534    30,015,445 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

48

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2023 and December 31, 2022.

 

Description  Fair value   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   39,395,000   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          
3iQ Corp.  $1,246,149   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   25,657,000   Market approach  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $30,015,445          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at December 31, 2023, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $121,689 (December 31, 2022 - $124,615) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at December 31, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $213,828 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at December 31, 2023, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31, 2023 a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2022 - $1,499) change in the carrying amount.

 

49

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at December 31, 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $66,137 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31, 2023, the valuation of SDK:Meta LLC was $nil (December 31, 2022 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31, 2023, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2022 - $0) change in the carrying amount.

 

Amina Bank AG (formerly SEBA Bank AG) (“Amina”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at December 31, 2023, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,939,500 (December 31, 2022 +/- $2,565,700) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at December 31, 2023, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at December 31, 2023, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2022 - $4,063) change in the carrying amount.

 

50

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

(c)Digital currency risk factors: Political, regulatory risk and technology in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

51

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the year ended December 31, 2023.

 

20.Related party disclosures

 

a)The consolidated financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest
DeFi Capital Inc.  100
DeFi Holdings (Bermuda) Ltd.  100
Electrum Streaming Inc.  100
Valour Inc. (Cayman)  100
DeFi Europe AG  100
Crypto 21 AB  100
Valour Management Limited  100
Valour Digital Securities Limited  0

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the years ended December 31, 2023 and 2022 were as follows:

 

   Years Ended
December 31,		 
   2023   2022 
Short-term benefits  $862,208   $1,673,537 
Shared-based payments   574,361    3,944,408 
   $1,436,569   $5,617,945 

 

52

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Related party disclosures (continued)

 

As at December 31, 2023, the Company had $147,485 (December 31, 2022 - $296,084) owing to its current key management, and $314,136 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the years ended December 30, 2023 and 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

 

   Years Ended
December 31,		 
   2023   2022 
2227929 Ontario Inc.  $120,000   $120,000 
   $120,000   $120,000 

 

**Excl. HST & incl. bonus

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at December 31, 2023 the Company had a payable balance of $226,000 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

The Company incurred $173,917 (2022 - $41,086) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $165,868 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($74,466) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

On August 10, 2023, the Company entered into a share purchase agreement to sell its subsidiary Crypto 21 AB for 50,000 SEK. One of the purchasers is an officer of the Company.

 

See note 16.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of December 31, 2023 and December 31, 2022.

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - December 31, 2023     $41,533,380 

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794 
SEBA Bank AG  Director (Olivier Roussy Newton) of investee   25,657,000 
Total investment - December 31, 2022     $27,846,794 

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2023,

 

53

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Related party disclosures (continued)

 

During the year ended December 31, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

During the year ended December 31, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

21.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,070,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $900,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

22.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

December 31, 2023  Canada   Bermuda   Cayman Islands   Total 
Cash   59,069    -    6,668,412    6,727,481 
Amounts receivable   6,878    -    47,159    54,037 
Public investments   -    -    -    - 
Prepaid expenses   77,521    -    1,432,303    1,509,824 
Digital Assets   503,669    218,131    489,143,837    489,865,637 
Property, plant and equipment   -    5,073    2,606    7,679 
Other non-current assets   92,578,559    -    1,216,890    93,795,449 
Total assets   93,225,696    223,204    498,511,207    591,960,107 

 

December 31, 2022  Canada   Bermuda   Cayman Islands   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    104,057,840    104,202,086 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   81,021,879    40,632    3,163,323    84,225,834 
Total assets   81,424,215    203,205    112,376,360    194,003,780 

 

54

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

22.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

   DeFi   DeFi
Bermuda		   Valour Inc.   Total 
For the year ended December 31, 2023                
Realized and net change in unrealized gains and (losses) on digital assets   503,669    122,096    323,333,102    323,958,867 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (332,100,866)   (332,100,866)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    164    3,539,188    3,539,352 
Management fees   -    -    1,461,594    1,461,594 
Node revenue   -    15,235    -    15,235 
Realized (loss) on investments, net   -    -    (4,150)   (4,150)
Unrealized (loss) on investments, net   13,466,082    (40,872)   59,294    13,484,504 
Interest income   1,480    -    -    1,480 
Total revenue   13,971,231    96,622    (3,711,838)   10,356,015 
Expenses                    
Operating, general and administration   3,476,710    33,863    6,464,694    9,975,267 
Share based payments   2,920,219    -    -    2,920,219 
Depreciation - property, plant and equipment   -    10,470    2,475    12,945 
Amortization - intangibles   2,038,300    -    -    2,038,300 
Finance costs   8,789    -    4,152,347    4,161,136 
Transaction costs   -    -    1,029,442    1,029,442 
Foreign exchange (gain) loss   (34,696)   -    10,373,271    10,338,575 
Income (loss) before other item   5,561,909    52,289    (25,734,067)   (20,119,869)
Loss on settlement of debt   (172,093)             (172,093)
Income (loss) before other item   5,389,816    52,289    (25,734,067)   (20,291,962)
Other comprehensive loss                    
Foreign currency translation (loss) gain   -    (4,611)   1,348,281    1,343,670 
Net (loss) income and comprehensive (loss) income for the period   5,389,816    47,678    (24,385,786)   (18,948,292)

 

   Valour Inc.
(Canada)		   DeFi
Bermuda		   Valour Inc.
(Cayman)		   Total 
For the year ended December 31, 2022                
Realized and net change in unrealized gains and (losses) on digital assets   -    (3,135,165)   (321,909,789)   (325,044,954)
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    320,382,227    320,382,227 
Realized (loss) of derivative asset   -    (434,072)   -    (434,072)
Staking and lending income   -    5,329    4,513,672    4,519,001 
Management fees   -    -    1,436,455    1,436,455 
Node revenue   -    347,758    -    347,758 
Realized (loss) on investments, net   (12,077)   -    -    (12,077)
Unrealized (loss) on investments, net   (12,227,493)   -    (3,248,888)   (15,476,381)
Interest income   2,641    -    52,623    55,264 
Total revenue   (12,236,929)   (3,216,150)   1,226,300    (14,226,779)
Expenses                    
Operating, general and administration   9,282,891    43,889    5,421,279    14,748,059 
Share based payments   15,889,455    -    -    15,889,455 
Depreciation - property, plant and equipment   -    15,867    2,475    18,342 
Depreciation - right of use assets   -    -    69,322    69,322 
Amortization - intangibles   2,277,443    -    -    2,277,443 
Finance costs        -    4,014,038    4,014,038 
Transaction costs   140,886    -    973,055    1,113,941 
Foreign exchange (gain) loss   139,109    -    (463,808)   (324,699)
Impairment loss   13,865,356    -    -    13,865,356 
Total expenses   41,595,140    59,756    10,016,360    51,671,256 
(Loss) income before other item   (53,832,069)   (3,275,906)   (8,790,061)   (65,898,036)
Other comprehensive loss                    
Foreign currency translation (loss) gain   (1,779)   115,366    (3,350,869)   (3,237,282)
Net (loss) income and comprehensive (loss) income for the period   (53,833,848)   (3,160,540)   (12,140,930)   (69,135,318)

 

55

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Income Taxes

 

a)Provision for Income Taxes

 

Major items causing the Company’s income tax rate to differ from the Canadian federal and provincial statutory rate of 26.5% (2022 – 26.5%) were as follows:

 

   2023
$		   2022
$		 
(Loss) before income taxes   (20,291,963)   (65,898,036)
Expected income tax recovery based on statutory rate   (5,377,000)   (17,463,000)
Adjustment to expected income tax recovery:          
Change in foreign exchange rates   -    (86,000)
Permanent differences   2,130,873    2,175,641 
Provision to return adjustment   (284,000)   (1,979,092)
Share based compensation   728,000    4,211,000 
Other   (90,000)   (9,000)
Change in unrecorded deferred tax asset   2,892,127    13,150,092 
Deferred income tax provision (recovery)   -    - 

 

b) Deferred income tax

 

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences in Canada:

 

   2023
$		   2022
$		 
Non-capital loss carry-forwards   49,321,000    43,751,000 
Undepreciated capital cost (UCC)   33,000    33,000 
Reserves   360,000      
Share issue costs   207,000    208,000 
Exploration and evaluation assets   7,002,000    7,002,000 
Investments   40,985,000    41,045,000 
Capital losses carried forward   23,348,000    22,687,000 
Total   121,256,000    114,726,000 

 

The deferred tax impact for Valour Inc. and DeFi Bermuda are nil as the corporate income tax rate is 0% in these two countries.

 

The Company has approximately $49,321,000 of non-capital loss carry-forwards in Canada which may be used to reduce the taxable income of future years. These losses expire from 2026 to 2043.

 

56

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results

 

The Company has restated its December 31, 2022 consolidated statement of financial position, consolidated statement of operations and comprehensive loss and consolidated statement of cash flow to correct material errors and omissions in its prior filing. The following tables present the impact of the restatement adjustments on the Company's previously issued consolidated financial statements for the year ended December 31, 2022:

 

a.To impair the digital assets held at Genesis to its recoverable amount of $8,176,439 (US$6,036,945).

 

b.To revalue the fair value 3iQ investments to $1,246,149.

 

c.To revalue the fair value of SEBA Bank AG to $25,657,000.

 

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

 

 

    December 31,
2022
$
As previously
reported		   Restatement   December 31,
2022
$
As Restated		 
Assets            
Current            
Cash and cash equivalents   4,906,165         4,906,165 
Amounts receivable   67,102         67,102 
Public investments, at fair value through profit and loss   17,227         17,227 
Prepaid expenses   564,742         564,742 
Digital assets   106,582,076    (2,433,348)   104,148,728 
Digital assets loaned   -         - 
Digital assets staked   -         - 
Total current assets   112,137,312    2,433,348    109,703,964 
Private investments, at fair value through profit and loss   43,505,269    (13,489,824)   30,015,445 
Digital assets   53,358         53,358 
Equipment   20,623         20,623 
Right of use assets   1,917,174         1,917,174 
Intangible assets   5,581,188         5,581,188 
Goodwill   46,712,027         46,712,027 
Total assets   209,926,951    15,923,172    194,003,779 
Liabilities and shareholders' equity               
Current liabilities               
Accounts payable and accrued liabilities   5,822,379         5,822,379 
Loans payable   52,821,600         52,821,600 
ETP holders payable   105,740,627         105,740,627 
Total current liabilities   164,384,606    -    164,384,606 
Non-current liabilities               
Lease liabilities   1,709,911         1,709,911 
Total liabilities   166,094,517    -    166,094,517 
Shareholders' equity               
Common shares   166,151,401         166,151,401 
Preferred shares   4,321,350         4,321,350 
Share-based payments reserves   27,909,984         27,909,984 
Accumulated other comprehensive income   (2,996,218)        (2,996,218)
Non-controlling interest   -         - 
Deficit   (151,554,084)   (15,923,172)   (167,477,256)
Total equity   43,832,434    15,923,172    27,909,262 
Total liabilities and equity   209,926,951    15,923,172    194,003,779 

 

57

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Operations and Comprehensive (Loss)  
(Expressed in Canadian dollars)  

    Years ended December 31  
    2022
$
reported		     Restatement     2022
$
As Restated		  
Revenues                  
Realized and net change in unrealized gains and (losses) on digital assets     (322,611,606 )     (2,433,348 )     (325,044,954 )
Realized and net change in unrealized gains and (losses) on ETP payables     320,382,227               320,382,227  
Realized and unrealized (loss) on derivative assets     (434,073 )             (434,073 )
Staking and lending income     4,519,001               4,519,001  
Management fees     1,436,455               1,436,455  
Node revenue     347,758               347,758  
Realized (loss) on investments, net     (12,077 )             (12,077 )
Unrealized (loss) on investments, net     (1,986,557 )     (13,489,824 )     (15,476,381 )
Interest income     55,264               55,264  
Total revenues     1,696,392       (15,923,172 )     (14,226,780 )
                         
Expenses                        
Operating, general and administration     14,748,059               14,748,059  
Share based payments     15,889,455               15,889,455  
Depreciation - property, plant and equipment     18,342               18,342  
Depreciation - right of use assets     69,322               69,322  
Amortization - intangibles     2,277,443               2,277,443  
Finance costs     4,014,038               4,014,038  
Transaction costs     1,113,941               1,113,941  
Foreign exchange gains (loss)     (324,699 )             (324,699 )
Impairment loss     13,865,355               13,865,355  
Total expenses     51,671,256       -       51,671,256  
Income (loss) before other item     (49,974,864 )     (15,923,172 )     (65,898,036 )
Loss on settlement of debt     -       -       -  
Net (loss) for the period     (49,974,864 )     (15,923,172 )     (65,898,036 )
Other comprehensive loss                        
Foreign currency translation loss     (3,237,282 )     -       (3,237,282 )
                         
Net (loss) and comprehensive income (loss) for the period     (53,212,146 )     (15,923,172 )     (69,135,318 )
                         
Net (loss) attributed to:                        
Owners of the parent     (49,974,864 )             (65,898,036 )
Non-controlling interests     -               -  
      (49,974,864 )             (65,898,036 )
Net (loss) and comprehensive (loss) attributed to:                        
Owners of the parent     (53,212,146 )             (69,135,318 )
Non-controlling interests     -               -  
      (53,212,146 )             (69,135,318 )
(Loss) per share                        
Basic     (0.24 )             (0.32 )
Diluted     (0.24 )             (0.32 )
                         
Weighted average number of shares outstanding:            
Basic   209,054,713        209,054,713 
Diluted   209,054,713         209,054,713 

 

58

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

 

   Years ended December 31, 
   2022
$
As previously reported		   Restatement   2022
$
As Restated		 
Cash (used in) provided by operations:            
Net (loss) for the year  $(49,974,864)  $(15,923,172)  $(65,898,036)
Adjustments to reconcile net (loss) income to cash (used in)               
operating activities:               
Share-based payments   15,889,455         15,889,455 
Impairment loss   13,865,356         13,865,356 
Loss on debt for shares   -         - 
Interest income   (55,264)        (55,264)
Interest expense   -         - 
Interest paid   -         - 
Depreciation - Property, plant & equipment   18,342         18,342 
Depreciation - right of use assets   69,322         69,322 
Amortization - Intangible asset   2,277,443         2,277,443 
Realized loss on investments, net   12,077         12,077 
Unrealized (gain) loss on investments, net   1,986,557    13,489,824    15,476,381 
Realized and net change in unrealized (gains) and loss on digital assets   322,611,606    2,433,348    325,044,954 
Realized and net change in unrealized (gains) and loss on ETP   (320,382,227)        (320,382,227)
Realized and unrealized loss on derivative assets   434,072         434,072 
Staking and lending income   (4,519,001)        (4,519,001)
Node revenue   (347,758)        (347,758)
Management fees   (1,436,455)        (1,436,455)
ETP paid in digital assets   -         - 
Unrealized loss on foreign exchange   3,735,067         

3,735,067

 
Unrealized loss on foreign exchange   (15,816,272)   0    (15,816,272)
                
Adjustment for:               
Purchase of digital assets   (231,392,840)        (231,392,840)
Disposal of digital assets   191,092,048         191,092,048 
Purchase of investments   (34,649,658)        (34,649,658)
Disposal of investments   28,248         28,248 
Change in amounts receivable   (34,537)        (34,537)
Change in prepaid expenses and deposits    693,287         693,287 
Change in accounts payable and accrued liabilities   -         - 
Net cash (used in) operating activities   (90,079,724)   0    (90,079,724)
Investing activities               
Additions to right of use assets   (1,411,062)        (1,411,062)
Lease payment   (1,258,033)        (1,258,033)
Net cash (used in) investing activities   (2,669,095)   -    (2,669,095)
Financing activities               
Proceeds from ETP holders   242,378,583         242,378,583 
Payments to ETP holders   (196,516,517)        (196,516,517)
Loan Payable   53,117,760         53,117,760 
Proceeds from private placements   1,554,348         1,554,348 
Share issuance costs   (14,490)        (14,490)
Proceeds from exercise of warrants   647,284         647,284 
Proceeds from exercise of options   45,000         45,000 
Shares repurchased pursuant to NCIB   (13,154,570)        (13,154,570)
Net cash provided by financing activities   88,057,398    -    88,057,398 
                
Effect of exchange rate changes on cash and cash equivalents   436,552    -    436,552 
Change in cash and cash equivalents   (4,254,869)   -    (4,254,869)
Cash, beginning of year   9,161,034    -    9,161,034 
Cash and cash equivalents, end of year  $4,906,165   $-   $4,906,165 

 

59

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

25.Subsequent event

 

On February 7, 2024, the Company completed its acquisition of Reflexivity Research LLC, a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry acquiring all the issued and outstanding shares of Reflexivity Research LLC for five million common shares of the Company.

 

On February 9, 2024, the Company completed its the acquisition of intellectual property (IP) from prominent Solana developer Stefan Jorgensen. This acquisition marks a significant milestone in Defi Technologies' expansion strategy, focusing on enhancing its offerings in the Solana ecosystem by issuing a total of 7,297,090 common shares of the company at a deemed price of 55 cents per payment share to Mr. Jorgensen in exchange for all of the IP. The payment shares are subject to a lock-up and will be released in five tranches over a period of two years and be subject to the continued involvement of Mr. Jorgensen with Defi Technologies and its subsidiaries. No finders' fees were paid in connection with the acquisition.

 

Subsequent to December 31, 2023, the Company agreed to sell some of its shares in 3iQ.

 

 

59

 

Exhibit 99.103

 

 

DeFi Technologies Inc. Subsidiary, Valour Inc., Launches Trading Desk in UAE to Expand ETP Listings and Presence in the Middle East

 

●New Trading Desk in UAE: DeFi Technologies Inc.’s subsidiary, Valour Inc., has opened a new trading desk in the United Arab Emirates, marking the initial step in its strategy to make ETPs globally accessible and expand its presence in the Middle East.

 

●Strategic Expansion for Growth: This move into the UAE, selected for its progressive regulatory environment and high cryptocurrency adoption rate, is crucial to Valour’s plan to broaden its product offerings and increase its global footprint, aiming to capitalize on the region’s dynamic financial landscape.

 

●Ambitious Product Launch Plans: Valour plans to expand its AUM by introducing 15 new ETP products in 2024—adding to the 17 already listed in Europe—and another 30 in 2025, leveraging the growth potential of the digital asset ecosystem and affirming its leadership in innovation.

 

TORONTO – April 8, 2024 – DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance is pleased to announce that its subsidiary, Valour Inc., a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has opened a new trading desk in the United Arab Emirates (“UAE”). This initiative marks a significant stride in the Company’s mission to enhance global accessibility to regulated digital assets and underscores its commitment to global growth through Valour and Valour Digital Securities Limited’s (and, together with Valour Inc., “Valour”) exchange-traded products (“ETPs”).

 

This expansion into the Middle East is a key element of Valour’s strategy to increase its product offerings and global footprint. The UAE was specifically chosen for its progressive regulatory environment, high cryptocurrency adoption rate—where an estimated 27% of the population engages in crypto ownership — and its embrace of blockchain technology across multiple sectors. These factors make it an ideal location for fostering growth and extending Valour’s reach into new markets.

 

As part of this strategic initiative, Valour aims to expand its assets under management (“AUM”) by launching 15 new ETP products in 2024, in addition to the 17 already listed in Europe, followed by another 30 in 2025. This ambitious expansion plan capitalizes on the growth potential of the digital asset ecosystem, demonstrating Valour’s commitment to innovation and its leading role in the digital asset market.

 

 

 

 

Olivier Roussy Newton, CEO of DeFi Technologies, comments on the expansion: “The launch of our trading desk in the UAE signifies a pivotal moment for both Valour and DeFi Technologies as we expand our global outreach. This is more than just entering a new market; it’s about integrating into a dynamic and evolving financial landscape that the Middle East represents. We are excited to embark on this journey, leveraging the UAE as a gateway to broader horizons and setting the stage for growth and opportunity.”

 

The establishment of a trading desk in the UAE represents the first phase of Valour’s plans for geographical expansion. Valour is ideally positioned to leverage the increasing global demand for regulated and trusted access to digital assets and the rapidly expanding Web 3 ecosystem.

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to future development and listings of ETPs; geographic expansion; adoption rate of crypto currency in the Middle East; the UAE trading desk; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour ETPs by exchanges and regulatory authorities; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations

ir@defi.tech

 

 

3

 

 

Exhibit 99.104

 

April 15, 2024

 

Filed via SEDAR+

 

To All Applicable Exchanges and Securities Administrators

 

Subject:DEFI TECHNOLOGIES INC. (the “Issuer”)
 Notice of Meeting and Record Date

 

Dear Sir/Madam:

 

We are pleased to confirm the following information with respect to the Issuer’s upcoming meeting of securityholders:

 

Meeting Type: Annual General and Special Meeting
Meeting Date: June 25, 2024
Record Date for Notice of Meeting: May 10, 2024
Record Date for Voting (if applicable): May 10, 2024
Beneficial Ownership Determination Date: May 10, 2024
Class of Securities Entitled to Vote: Common Shares
ISIN: CA2449161025
Issuer sending proxy materials directly to NOBOs: No
Issuer paying for delivery to OBOs: Yes
Notice and Access for Beneficial Holders: Yes
Notice and Access for Registered Holders: Yes

 

In accordance with applicable securities regulations we are filing this information with you in our capacity as agent of the Issuer.

 

Yours truly,  
   
Odyssey Trust Company  
as agent for DEFI TECHNOLOGIES INC.  

 

 

Exhibit 99.105

 

 

DeFi Technologies Subsidiary, Valour, Forges Strategic Collaboration with Core Foundation to Launch Innovative Bitcoin ETPs

 

●Innovative Bitcoin ETPs Launch: DeFi Technologies Inc. and Valour partner with the Core Foundation to launch groundbreaking Exchange Traded Products (“ETPs”), including a first-of-its-kind Yield Bearing BTC ETP and a novel Core ETP, leveraging Core Chain’s unique blockchain features.

 

●Yield Opportunities Through BTC: The Yield Bearing BTC ETP introduces a new era for Bitcoin as an actively yielding investment, utilizing Core Chain’s block rewards and expanding Bitcoin’s utility without leaving the network.

 

●Validator Node Management and BTC Staking: Valour Inc. will manage a validator node on the Core Blockchain, enhancing network security and efficiency while planning to stake $100 million in BTC, further solidifying the collaboration’s commitment to integrating traditional finance with blockchain innovation.

 

TORONTO – April 17, 2024 – DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, “Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has entered into a collaboration with the Core Foundation, an organization dedicated to the development of the Core blockchain network (“Core Chain”). Core Chain is a cutting-edge, Bitcoin-powered, EVM-compatible blockchain that incorporates Bitcoin miners and BTC stakers into its security in exchange for rewards.

 

This collaboration is set to develop innovative ETPs that leverage Core Chain’s unique blockchain capabilities, introducing a first-of-its-kind Yield Bearing BTC ETP and a novel Core ETP. These ETPs aim to redefine Bitcoin’s utility as an investment opportunity within the digital asset ecosystem, granting BTC native yield through non-custodial BTC staking.

 

The Yield Bearing BTC ETP will offer yield directly from Core Chain’s block rewards. This groundbreaking initiative marks a first in the market, as the previously passive BTC asset becomes productive and yield-bearing without moving off the Bitcoin Network.

 

 

 

 

The Core ETP will provide investors with yield-bearing opportunities through Core Chain’s native staking rewards, aimed at enhancing investor returns. This ETP is designed to widen investor access to Core’s innovative staking mechanisms.

 

In this strategic collaboration, Valour will also manage a validator node on the Core Blockchain. This effort will not only bolster the security and efficiency of the Core network but also enable Valour to earn validator commissions, highlighting the synergistic potential between Valour and Core Chain.

 

Valour additionally plans to stake $100 million in BTC with Core Chain through the BTC staking product.

 

“We are at a pivotal moment in the evolution of digital assets, where the boundaries between traditional finance and decentralized finance are not just blurring but merging,” said Olivier Roussy Newton, CEO of DeFi Technologies. “This collaboration with the Core Foundation and the launch of our innovative ETPs are emblematic of our commitment to leading this charge. By introducing yield-bearing opportunities to Bitcoin through these ETPs, we’re not only enhancing its utility but also offering investors novel ways to engage with the world’s premier cryptocurrency. Our move to manage a validator node and our significant BTC stake in the Core Chain are testament to our belief in a future where Bitcoin’s foundational technology and DeFi innovations converge to create unparalleled investment opportunities.”

 

“We’re thrilled to announce our collaboration with DeFi Technologies and Valour. Their inspiring vision of enabling access to innovative digital products through traditional offerings perfectly aligns with our ethos at Core Foundation.” said Brendon Sedo, a contributor at Core Foundation. “This collaboration not only signals Bitcoin’s growth as an ecosystem but also showcases the growing potential of BTC as a yield-bearing asset. Core Foundation is proud to be the first and most reliable ecosystem to power these new offerings, underscoring Core Chain’s position as the most Bitcoin-aligned blockchain. We’re excited about the future and warmly welcome the DeFi Technologies team in our collective journey forward.”

 

About Core Chain

 

The Core blockchain network is a Bitcoin-powered layer-one blockchain for EVM-Compatible smart contracts. With 50% of Bitcoin mining hash power contributing to Core’s security in exchange for unlocking Bitcoin utility and rewards, Core Chain is the most Bitcoin-aligned EVM blockchain (BTCfi, Bitcoin staking, and more).

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

2

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (NEO: DEFI) (GR: MB9) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to future development and listings of ETPs; staking of Bitcoin within the Core Chain; development and management of a validator node on the Core Chain; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour ETPs by exchanges and regulatory authorities; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Investor Relations
ir@defi.tech

 

3

Exhibit 99.106

 

 

DeFi Technologies Subsidiary Valour Inc. Launches the First Short Spot Bitcoin ETP in the Nordics

 

●Innovative Bitcoin Financial Product: DeFi Technologies, through its subsidiary Valour, has launched the first Short Spot Bitcoin ETP in the Nordics, known as Valour Short Bitcoin (SBTC) SEK (ISIN: CH1149139649), providing a novel way for investors to profit from or hedge against Bitcoin’s price movements.

 

●Strategic Market Placement: The Short Spot Bitcoin ETP is now trading on the Nordic Growth Market, featuring inverse tracking of Bitcoin’s price and offering experienced investors strategic opportunities for portfolio management

 

Toronto, Canada, April 18, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, is breaking new ground in the Nordic financial markets with the launch of the region’s first Short Spot Bitcoin ETP.

 

The Valour Short Bitcoin ETP, known as Valour Short Bitcoin (SBTC) SEK (ISIN: CH1149139649), is an innovative financial instrument that inversely tracks the price movements of Bitcoin. This ETP allows investors to profit from, or hedge against, declines in Bitcoin’s market price. Designed with experienced investors in mind, Valour Short Spot Bitcoin offers strategic investment opportunities and the flexibility to make timely adjustments to portfolios based on daily market movements.

 

“As the first to offer a Short Spot Bitcoin ETP in the Nordics, we are setting a new standard for investment products in the region,” said Johanna Belitz, Valour’s Head of Sales in the Nordics. “Tailored for short-term strategic use, such as hedging existing portfolios, we are confident that this innovative product will strongly appeal to our trading-savvy community.”

 

The introduction of the Valour Short Bitcoin ETP marks a significant milestone in the availability of diverse financial products in the Nordic markets, offering high levels of transparency, security, and reliability, along with competitive management fees.

 

1

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

2

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Valour Short Bitcoin ETP, the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

Exhibit 99.107

 

 

DeFi Technologies Subsidiary Valour Inc. Announces Rebalancing of the Valour Digital Asset Basket 10

(VDAB10) to Include Toncoin and Shiba Inu Coin

 

Toronto, Canada, April 30, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has rebalanced its Valour Digital Asset Basket 10 (“VDAB10”) EUR and SEK baskets to include Toncoin and Shiba Inu, effective April 30th, 2024.

 

The VDAB10 ETP tracks the performance of the top 10 largest digital assets based on market capitalization with a cap of 30% for any one constituent. The recent adjustments reflect changes in the top 10 assets by market cap, ensuring that the VDAB10 continues to mirror the current composition of the digital assets market.

 

The inclusion of Toncoin, a cryptocurrency pioneered by the encrypted messaging platform Telegram and now managed by the TON Foundation, introduces a robust payment solution known for its speed and low transaction fees into the VDAB10. Similarly, the addition of Shiba Inu Coin, a token that has garnered a massive following and sparked significant interest in meme-based cryptocurrencies, provides investors with exposure to emerging trends within the digital asset market.

 

Polkadot and Tron have been automatically excluded from the basket due to their current market capitalization rankings, which no longer place them within the top ten. This automatic adjustment is part of Valour’s rule-based methodology, ensuring that the VDAB10 ETP remains a passive, yet precise reflection of the top digital assets.

 

This update underscores Valour’s commitment to offering a transparent, rule-based ETP that meets the evolving needs and interests of investors, further affirming Valour Inc.’s role in enabling retail and institutional investors to access digital assets simply and securely through their traditional bank accounts.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

 

 

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the composition of the VDAB10, the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

 

 

Exhibit 99.108

 

   

 

DeFi Technologies Subsidiary Valour Inc. Pays Down US$19.5 Million in Outstanding Loans, Thereby Increasing Digital Asset Collateral for Revenue Generation

 

Toronto, Canada, May 7, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has successfully repaid US$19.5 million in outstanding loans (the “Loans”). As of April 30, 2024, and due to favourable business conditions, Valour has fully repaid balances of US$6 million and US$13.5 million, which were secured by BTC and ETH collateral, respectively. No further equity or debt was raised to repay the Loan.

 

The Loans, which were structured with “open term” tenures allowing for flexible repayment, were fully repaid on April 30, 2024. This strategic financial management will result in substantial savings for Valour, eliminating monthly interest expense of approximately US$226,000, or US$2,712,000 annually.

 

Furthermore, the repayment of the Loans released digital asset collateral back into Valour’s operational fold (approximately 100 BTC and 5,000 ETH). These digital assets, previously tied up as collateral, are now available to be staked and generate additional top-line revenue for Valour.

 

This development is a testament to Valour’s financial health and prudent capital management. By freeing up additional digital assets and reducing financial liabilities, Valour has continued its commitment to leveraging its financial agility to enhance its market position and capitalize on emerging opportunities within the digital assets space.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

 

 

 

   

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information, to subscribe, or to receive company updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the ability of Valour to generate revenue on its digital assets; future interest expenses; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

 

 

 

Exhibit 99.109

 

  

 

DeFi Technologies Provides Monthly Corporate Update: Subsidiary Valour Reports Assets Under Management at C$748 Million, Up 47.2% This Fiscal Year, Bolstered by Strong Net Inflows of C$6.6 Million, Among Other Key Developments

 

●Significant Growth in Assets Under Management: Valour Inc., a subsidiary of DeFi Technologies, reports assets under management of C$748 million as of May 7, 2024, marking a notable year-on-year increase of 47.2%. This growth is further bolstered by strong net inflows of C$6.6 million during April, demonstrating robust investor confidence and continued demand for Valour’s ETP products despite the recent downturn in digital asset markets.
●Strategic Initiatives and Global Expansion: Valour has expanded its operations by launching a new trading desk in the United Arab Emirates, capitalizing on the region’s progressive regulatory environment and high cryptocurrency adoption rates. This expansion is aimed at making ETPs globally accessible and tapping into the Middle East’s dynamic financial landscape.
●Innovative Product Launches and Blockchain Integration: Innovative Product Launches and Blockchain Integration: In collaboration with the Core Foundation, Valour plans to introduce groundbreaking ETPs, including the first-of-its-kind Yield Bearing BTC ETP and a novel Core ETP. Additionally, Valour has launched the first Short Spot Bitcoin ETP in the Nordics, known as Valour Short Bitcoin (SBTC) SEK, independently from the Core collaboration.

Toronto, Canada, May 8, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, “Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, reports assets under management (“AUM”) of C$748 million as of May 7, 2024. This figure represents a significant year-on-year increase of 47.2%.

 

Despite a decrease from March’s AUM of C$880 million due to a downturn in digital asset prices since March 2024, the Company and Valour’s strategic initiatives continue to drive substantial growth. Notably, despite a significant fall in digital asset markets during April, with Solana down 37% over the period, Valour’s AUM was only 22% lower at the end of the month, buoyed by a strong net inflow of C$6.6 million.

 

Q1 2024 Financials: The Company would also like to announce that the Q1 2024 financials will be available after market close on May 15, 2024, with an announcement of a shareholder call to follow.

 

 

 

  

 

 

Strategic Expansion and New Trading Desk in UAE: Valour has launched a new trading desk in the United Arab Emirates, marking a strategic expansion into the Middle East. This move leverages the UAE’s progressive regulatory framework and high cryptocurrency adoption rate. It represents a critical step in Valour’s ongoing strategy to make ETPs globally accessible and to broaden its product offerings, aiming to tap into the region’s dynamic financial landscape.

 

Innovative Bitcoin ETPs in Collaboration with the Core Foundation: In collaboration with the Core Foundation, DeFi Technologies and Valour announced plans for new innovative ETPs, including the first-of-its-kind Yield Bearing BTC ETP, and a novel Core ETP, leveraging the unique features of the Core Chain. Additionally, Valour will manage a validator node on the Core Blockchain and plans to stake US$100 million in BTC. This integration of blockchain technology with traditional financial strategies represents a pioneering approach to Bitcoin investment, offering actively yielding opportunities within the digital asset space.

 

Short Spot Bitcoin ETP: The launch of the first Short Spot Bitcoin ETP in the Nordics, known as Valour Short Bitcoin (SBTC) SEK (ISIN: CH1149139649), now trading on the Nordic Growth Market, provides experienced investors with strategic opportunities to profit from or hedge against Bitcoin’s price movements.

 

“We are very encouraged by the strong year-on-year growth of our AUM, which reflects the sustained demand for our innovative ETP products and trust from our investors,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Our strategic expansions and the introduction of groundbreaking products this month underscore our commitment to providing secure, diversified, and accessible digital asset investment options. We are excited about our future prospects and remain dedicated to advancing our position in the digital asset space.”

 

About DeFi Technologies

 

DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF) is a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (DeFi).

 

With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of professionals with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem.

 

2

  

 

 

Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. issues exchange traded products (ETPs) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Established in 2019, Valour is a wholly owned subsidiary of DeFi Technologies Inc. (NEO: DEFI) (GR: RB9) (OTC: DEFTF).

 

For more information on Valour, visit https://valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; listing of future ETPs; collaboration with Core Foundation; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Investor Relations DeFi Technologies

ir@defi.tech

 

 

3

 

Exhibit 99.110

 

   

 

DeFi Technologies Subsidiary Valour Inc. Launches Internet Computer (ICP) and Toncoin (TON) ETPs, Landmark Offerings in the Nordics Alongside Chainlink (LINK) ETP

 

Subsidiary Reflexivity Research Initiates Coverage of TON

 

●Launch of Landmark ETPs: DeFi Technologies’ subsidiary Valour Inc. unveils three groundbreaking Exchange Traded Products (“ETPs”) including the Valour Internet Computer (ICP) ETP, Valour Toncoin (TON) ETP, and Valour Chainlink (LINK) ETP, marking significant milestones in the Nordic investment landscape.

●Nordics’ First of Their Kind: The Valour Internet Computer (ICP) ETP and Valour Toncoin (TON) ETP are the first offerings of their kind in the Nordics, providing investors unprecedented access to innovative ecosystems.

●Simplified Access to Cutting-Edge Assets: Trading of all three ETPs commenced on May 10, 2024, with a 1.9% management fee. These ETPs enable seamless access to cutting-edge digital assets, offering investors simplified avenues to engage with the transformative potential of ICP, TON, and LINK.

●Toncoin (TON) Research Coverage: DeFi Technologies subsidiary, Reflexivity Research, a leading research firm specializing in creating high-quality, in-depth research reports for the bitcoin and cryptocurrency industry to empower investors with valuable insights, has initiated research coverage on TON.

 

Toronto, Canada, May 13, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched three ETPs. Among these offerings are the Valour Internet Computer (ICP) ETP and the Valour Toncoin (TON) ETP, the first of their kind in the Nordics. These are accompanied by the Valour Chainlink (LINK) ETP, providing simplified access to cutting-edge digital assets.

 

Trading of all three ETPs commenced on May 10, 2024, with a 1.9% management fee.

 

Valour Internet Computer (ICP) ETP

 

Valour Internet Computer (ICP) SEK ETP (ISIN: CH1213604510) offers investors unprecedented access to the future of web development by tracking the price of ICP, the native token powering the Internet Computer ecosystem. With its unique focus on simplicity and security, investors can seamlessly engage with ICP through their traditional bank or brokerage accounts. ICP has a market cap of $5.5 Billion and ranks twenty-fourth among all cryptocurrencies globally.

 

 

 

  

 

The Internet Computer project is pioneering a new era of web development by creating a decentralized and scalable internet infrastructure. By enabling smart contracts to run directly on its network, the Internet Computer eliminates the need for traditional server-based architectures, ushering in a paradigm shift in web development. This innovative approach ensures greater security, efficiency, and accessibility for developers and users alike.

 

Valour Toncoin (TON) ETP

 

The Valour Toncoin (TON) SEK ETP (ISIN: CH1161139600) enables investors to access Toncoin, the native token of TON, seamlessly and securely through their traditional bank or brokerage account. Toncoin, with its focus on rapid transaction speeds and low fees, provides an efficient solution for both domestic and international payments, making it an attractive option for various financial applications. TON has a market cap of $23.25 Billion and ranks ninth among all cryptocurrencies globally.

 

Toncoin, the native token of TON, offers a robust and efficient means of exchanging value, aimed at streamlining payment processes across diverse financial landscapes. With its emphasis on swift transaction speeds and minimal transaction fees, Toncoin stands as a promising solution for individuals and businesses alike seeking seamless payment experiences.

 

The company is also pleased to announce that its subsidiary, Reflexivity Research, a leading research firm specializing in creating high-quality, in-depth research reports for the bitcoin and cryptocurrency industry to empower investors with valuable insights, has initiated research coverage on TON. The report can be found here.

 

Valour Chainlink (LINK) ETP

 

The Valour Chainlink (LINK) SEK (ISIN: CH1161139592) ETP will enable investors to gain exposure to LINK, simply and securely, via their bank or broker. LINK has a market cap of $13.63 Billion and ranks eighteenth among all cryptocurrencies globally.

 

Chainlink, renowned as a decentralized oracle network, plays a pivotal role in enabling smart contracts on blockchain platforms to securely interact with real-world data. By acting as a bridge between blockchain-based smart contracts and external data sources, Chainlink facilitates the execution of trustless and tamper-proof agreements. Its decentralized nature ensures the reliability and integrity of data, thereby enhancing the efficiency and security of blockchain transactions.

 

“Valour remains steadfast in our commitment to offering investors a wide array of digital asset investment opportunities,” said Olivier Roussy Newton, CEO of DeFi Technologies.” “The inclusion of these pioneering ETPs in our product lineup underscores our dedication to delivering innovative solutions that meet the evolving needs of investors in the digital asset space. We are excited to have coverage from our recently acquired subsidiary, Reflexivity Research, to coincide with the product launches, providing investors with valuable insights and enhancing their understanding of the market landscape.”

 

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“Our unique ETP offerings in the Nordics solidify our leading position as the issuer with the widest array of products, said Johanna Belitz,” Valour’s Head of Sales, Nordics. “As demand for altcoins rises, we eagerly anticipate the reception of our three new offerings in the region.”

 

Valour continues to lead the charge in driving innovation in the digital asset space and expanding its product offerings to cater to the evolving needs of investors in the Nordics. In addition to the Valour Toncoin (TON), Internet Computer (ICP), and Chainlink (LINK) ETPs, Valour plans to introduce a diverse range of digital asset investment products in the coming months, further enhancing accessibility and convenience for traditional investors.

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

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About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the Internet Computer project, Chainlink and Toncoin; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

 

4

 

 

Exhibit 99.111

 

 

 

 

DeFi Technologies Inc. Announces Q1 2024 Financial Results: Achieving Its Strongest Financial Quarter to Date, Operating Revenues up to a Record C$13.4 Million, Operating Net Income of C$5.3 Million, and Notable Strategic Developments

 

●Record Operating Revenues and Net Income: DeFi Technologies recorded its strongest quarter ever, achieving Operating Revenues of C$13.4 million and Operating Net Income of C$5.3 million for Q1 2024.
   
●Strategic Advancements and Product Launches: The quarter featured the launch of multiple Exchange Traded Products (“ETPs”) by subsidiary Valour Inc, and Valour Digital Securities Limited (together, “Valour”) alongside strategic acquisitions such as Reflexivity Research LLC, significantly enhancing the company’s product offerings and market position.
   
●Substantial Growth in Assets Under Management (AUM): AUM grew by 78.7% to approximately C$908 million, driven by favorable market conditions, new product launches, and strategic corporate actions that enhanced trading volumes and overall financial performance.
   
●2024 Outlook: Looking ahead, DeFi Technologies projects its annualized Operating Revenues to reach approximately C$119 million (US$87.45 million) for 2024, supported by ongoing AUM growth, upcoming ETP launches, and the integration of new acquisitions, which are poised to capitalize on the favorable conditions in the digital asset sector.

 

TORONTO – May 15, 2024 – DeFi Technologies Inc. (the “Company” or “DEFI”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the three months ended March 31, 2024 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights of Q1 2024:

 

  ● The Company reported a cash balance as of March 31, 2024 of $9.4 million compared to $6.7 million on December 31, 2023.

 

 

 

 

  ● The Company’s venture portfolio investments were valued at $41.8 million as of March 31, 2024.
     
  ● AUM grew 78.7% to approximately $908 million as of March 31, 2024, up from $508 million as of December 31, 2023.
     
  ● Total Operating Revenues were $13.4 million for Q1 2024. This is a significant improvement from the Operating Revenues of $(3.6) million for the same period in 2023. Total Revenues were $(4.9) million for Q1 2024, compared to $(11.3) million for the same period in 2023. Operating, general, and administration costs for Q1, 2024 were $3.0 million, up from $2.1 million for the same period in 2023.ch
     
  ● DeFi Technologies’ Subsidiary Valour Inc. announced the launches of a Physical Backed Staking ETP for the Internet Computer Protocol (ICP) Token, Valour Ripple (XRP), Valour Binance (BNB) ETPs, and the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP. Valour Inc. also announced plans to launch a Physical Backed ETP, the Valour HBAR Staking ETP in collaboration with The Hashgraph Association (“THA”)
     
  ● DeFi Technologies Inc. Completed the Acquisition of Private Research Firm, Reflexivity Research LLC, Co-Founded by Anthony Pompliano and Will Clemente
     
  ● DeFi Technologies Inc. Completed Strategic Acquisition of Leading Solana Trading Systems IP
     
  ● DeFi Technologies Announced Inaugural Bitcoin Investor Day Hosted by Subsidiary Reflexivity Research
     
  ● DeFi Technologies Joined Coinbase and Grayscale in a Panel Discussion at Bitcoin Investor Day, Moderated by Anthony Pompliano

 

“Q1 2024 stands as our most successful quarter ever, marking a period of remarkable achievement and financial strength for DeFi Technologies,” stated Olivier Roussy Newton, CEO of DeFi Technologies. “This quarter is a testament to our resilient financial performance, reflecting an impressive 78.7% growth in assets under management and a record Operating Revenue of C$13.4 million. Our success this quarter is not just in numbers, but also in strategic advancements, exemplified by significant enhancements in our product offerings and the strengthening of our market position through key partnerships and acquisitions.

 

At DeFi Technologies, we are constantly evolving to meet our ambitions while keeping a sharp focus on our strategic and financial goals. This quarter’s results highlight the effectiveness of our approach and underscore our commitment to excellence and leadership in the regulated digital asset market. Our achievements this quarter set a new benchmark for us, reinforcing our dedication to being at the forefront of innovation in the financial technology sector.”

 

ETPs/Valour:

 

Valour’s ETP business reported assets under management (“AUM”) of $908 million as of March 31, 2024, a 78.7% increase from December 31, 2023 AUM of $508 million.

 

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Liquidity:

 

The Company ended Q1 2024 with a cash balance of $9.4 million, compared to $6.7 million at the close of 2023. Additionally, the venture portfolio investments stood firm at $41.8 million.

 

Financial Performance:

 

For the three months ending March 31, 2024:

 

●Operating Revenues were $13.4 million for Q1 2024, compared to $(3.6) million for the same period in 2023. Revenues were $(4.9) million for Q1 2024 compared $(11.3) million in 2023. Increased staking and lending, management fees and new revenue from its recently acquired Reflexivity LLC helped improve the 2024 revenues.

 

●Operating Net Income was $5.3 million for Q1 2024 compared to $(8.7) million for the same period in 2023. Net income was $(18.0) million, compared with net income of $(16.5) million million during the same period in 2023.

 

Outlook for 2024:

 

The outlook that follows supersedes all prior financial outlook statements made by the Company, constitutes forward-looking information within the meaning of applicable securities laws, and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond the Company’s control. Please see “Cautionary note regarding forward-looking information” and “Financial Outlook Assumptions” below for more information.

 

The Company has experienced significant revenue growth since the end of 2023, continuing rapidly through the first quarter of 2024. Valour’s ETPs have witnessed a nearly 800% increase in AUM from the market lows in late 2022, alongside growth in trading volumes. As of March 31, 2024, Valour’s AUM stood at approximately C$908 million (US$670 million), with daily trading volumes exceeding C$20.3 million (US$15 million).

 

The Company’s staking and lending income, changes in gains and losses on digital assets and ETP payables, as well as management fees, are closely correlated with capital inflow for Valour’s ETPs and the price of digital assets underlying Valour’s ETPs, which has grown substantially in the last few months. Furthermore, revenue from arbitrage and liquidity provision is highly linked to overall market activity and turnover in Valour’s listed ETPs. Given the current AUM, price of digital assets and activity level in the digital asset market, the Company’s annualized Operating Revenue is forecasted to be approximately C$119 Million (US$87.45 million) for 20241. Further growth in AUM may lead to proportional increases in Operating Revenue. Since there is a strong correlation between the Company’s Operating Revenues and the digital asset market’s price levels and activity, Operating Revenue trajectories will fluctuate with market conditions while costs remain relatively stable, reflecting Valour’s business’ scalability.

 

 

1This projection is based on the assumption that no new ETPs are introduced and that AUM remains constant at current levels throughout 2024. Should AUM increase, revenues are expected to rise accordingly; conversely, a decrease in AUM would lead to a reduction in revenues.

 

3 

 

 

For Q2 2024, it is anticipated that new ETP launches, improved ETP mix and continuous inflow of funds into Valour’s ETPs and accretive acquisitions of the Company, will more than compensate for the decrease in prices of digital assets. In addition to the Company’s existing business units, a new alpha-generating business (“DeFi Alpha”) unit was formed in Q2 2024 in order to generate yield on the Company’s excess liquidity. The focus is on arbitrage trading opportunities in the digital asset space with low risk in both centralized and decentralized markets (with minimal market or protocol exposure), thereby minimizing downside revenue volatility. DeFi Alpha has come off to a promising start, generating approximately US$40 million thus far in 2024.

 

Furthermore, the continuous improvement in Valour’s ETP mix is a crucial driver of monetization levels. The ETP business aims to maximize AUM through increased ETP launches and geographical expansion. The Company maintains its plans to launch approximately 15 ETP products in 2024 and an additional 30 in 2025 as the Company continues to take advantage of extremely positive macro fundamentals for the digital asset ecosystem in general.

 

Non-IFRS and Other Financial Measures

 

To supplement the Company’s consolidated financial statements, which are prepared and presented in accordance with IFRS Accounting Standards (“IFRS”), the Company uses certain non-IFRS and other financial measures to provide additional information in order to assist investors in understanding our financial and operating performance. These measures are not recognized measures for financial presentation under IFRS do not have standardized meanings, and may not be comparable to similar measures presented by other public companies.

 

Operating Revenue is a non-IFRS financial measure that excludes the one-time effect of the adjustment in the value the BTC collateral held by Genesis Global Capital LLC (“Genesis”) to $9,050,472, being the fair value of the loan and interest held with Genesis (the “Genesis Adjustment”). Due to the ongoing bankruptcy related to Genesis, the Company is adjusting the BTC collateral position to the value of the loan and interest held at Genesis in accordance with the principles of IFRS. The Company continues to monitor and participate in the Genesis proceedings to determine the magnitude of the expected recovery as the proceedings progress.

 

Operating Net Income is a non-IFRS financial measure that excludes the Genesis Adjustment and the one-time effect of the impairment loss of $4,953,021 as a result of its acquisition on February 9, 2024 of intellectual property tailored to support the Solana-focused trading desk operated by the Company. At the time of acquisition, the intangible assets were in an early stage of research and development, with significant uncertainties surrounding its future market demand, sales price and production costs, and as such, the full amount was impaired.

 

These foregoing adjustments are non-IFRS measures, and the Company believes that they provide a focused view of its operational performance. The reconciliation of these adjustments helps stakeholders understand the impact of non-cash items on the Company’s financial results. The non-IFRS and other financial measures used herein be considered as a supplement to, and not a substitute for, or superior to, the corresponding measures calculated in accordance with IFRS. See the financial tables below for a reconciliation of the non-IFRS measures.

 

4 

 

 

DeFi Technologies Inc.

Reconciliation from IFRS to Non-IFRS Results

(Expressed In Canadian dollars)

 

   Three months ended
March 31,		 
   2024   2023 
   $   $ 
         
IFRS Revenue   (4,922,567)   (11,344,052)
Bitcoin collateral held by Genesis Global Capital LLC   18,333,545    7,755,294 
Operating Revenue   13,410,977    (3,588,758)
           
IFRS Net Income (Loss)   (18,041,756)   (16,478,354)
Bitcoin collateral held by Genesis Global Capital LLC   18,333,545    7,755,294 
One-time effect of impariment loss of its acquisition of Solana IP   4,962,021    - 
Operating Net Income (loss)   5,253,809   (8,723,060)

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

5 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; Operating Revenue outlook of the Company; revenue generation by DeFi Alpha; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

Financial Outlook Assumptions

 

The financial outlook on Operating Revenue of the Company is based on a number of assumptions, including assumptions related to inflation, changes in interest rates, volatility of the digital asset market, current and projected market prices of digital assets, in particular the digital assets underlying the Company’s ETPs, the Company’s ability to realize staking and lending income from digital assets held by the Company, the ability of DeFi Alpha to generate yield on the Company’s excess liquidity, the return realized by the Company on staking and lending income, the return on management fees earned by the Company, ongoing subscriptions of Reflexivity Research, consumer interest in the Company’s ETPs, foreign exchange rates and other macroeconomic conditions, the regulatory environment with respect to ETPs and digital assets in the jurisdictions that the Company operates in, introduction of future ETPs, “black swan events” in the digital asset industry, competitors that offer competing ETP products and market acceptance of the Company’s ETP offerings. The Company’s financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information above. Many factors may cause the Company’s actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including the risks and uncertainties related to: macroeconomic factors affecting the digital asset industry, including inflation, changes in interest rates, investor confidence in digital assets; volatility of the digital assets and fluctuation in market value of digital assets; exchange rate fluctuations; any pandemic such as the COVID-19 pandemic; fraud, misconduct or gross negligence by individuals within the digital asset industry; a negative regulatory environment with respect to digital assets; the Russian invasion of Ukraine and reactions thereto; the Israel-Hamas war and reactions thereto; the Company’s inability to attract purchasers of its ETPs; decrease in AUM as a result of investor selling the Company’s ETPs or a fall in the value of the underlying digital assets; The Company’s inability to launch attractive ETPs; the Company’s inability to increase ETP sales; the Company’s inability to implement our growth strategy; the Company’s reliance on a small number of custodian and market participants to operate its ETP programs; the Company’s ability to prevent and manage information security breaches or other cyber-security threats; the Company’s ability to compete against competitors; strategic relations with third parties; changes to technologies on which ETPs are purchased and sold is reliant; the Company’s ability to distribute ETPs in jurisdictions it is not currently operating in; the Company’s ability to obtain, maintain and protect our intellectual property; the Company’s liquidity and capital resources; pending and threatened litigation and regulatory compliance; changes in tax laws and their application; the Companys ability to expand our sales, marketing and support capability and capacity; and maintaining our customer service levels and reputation. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding our financial performance and may not be appropriate for other purposes.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

6

 

 

Exhibit 99.112

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies Inc., certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended March 31, 2024.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

 

 

 

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing for the interim period ended March 31, 2024;

 

(a) a description of the material weakness;

 

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3 Limitation on scope of design: N/A

 

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: May 15, 2024  
   
(signed) “Olivier Roussy Newton”  
Olivier Roussy Newton  
Chief Executive Officer  

 

 

 

 

 

Exhibit 99.113

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended March 31, 2024.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

 

 

5.2  ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing for the interim period ended March 31, 2024;

 

(a)  a description of the material weakness;

 

(b)   the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)   the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3 Limitation on scope of design: N/A

 

6.  Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on March 31, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: May 15, 2024  
   
(signed) “Ryan Ptolemy”  
Ryan Ptolemy  
Chief Financial Officer  

 

 

 

 

 

Exhibit 99.114

 

 

 

 

 

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

Three months ended March 31, 2024

 

 

 

 

 

 

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through May 15, 2024, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the three months ended March 31, 2024 and 2023. The financial statements and related notes of DeFi have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). Please refer to the notes of the December 31, 2023 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

2

 

 

Restatement of Previously Issued Condensed Interim Consolidated Financial Statements

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $10,188,642 to $104,235,682; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,370,117 as at March 31, 2023, with an retained earnings impact at March 31, 2023 of $23,678,466. For more details, please refer to Note 24 of the condensed consolidated interim financial statements of the Company for three months ended March 31, 2024 and 2023. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the three months ended March 31, 2023. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis will not be prevented or detected on a timely basis.

 

Overview of the Company

 

The Company is a publicly listed issuer on the NEO Exchange trading under the symbol “DEFI”. The Company is a crypto-native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through four distinct business lines: Valour Asset Management, DeFi Ventures, DeFi Infrastructure and Reflexivity LLC.

 

The Company’s condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated interim financial statements.

 

Investment Pillars

 

DeFi generates revenue through four core pillars:

 

Valour Asset Management

 

The Company, through its 100% ownership of Valour Inc., is developing Exchange Traded Products (“ETPs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETPs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

DeFi Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

DeFi Infrastructure

 

The Company’s DeFi Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

  

3

 

 

Reflexivity LLC

 

The Company’s Reflexivity LLC line of business specializes in producing cutting-edge research reports for the cryptocurrency industry. Reflexivity has also focused on creating a large third-party distribution channel for its research, which has been accomplished by partnering with platforms such as TradingView, eToro and others.

 

Highlights For The Three Months Ended March 31, 2024 And Subsequent Events:

 

●On February 7, 2024, the Company has completed its acquisition of Reflexivity Research LLC, a premier private research firm that specializes in producing research reports for the cryptocurrency industry. Reflexivity , co-founded by Anthony Pompliano and Will Clemente, offers crypto-native research designed for traditional finance investors. Reflexivity's research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors which generates a positive cash flow for Reflexivity.

 

●On February 9, 2024, the Company completed the acquisition of intellectual property (IP) from prominent Solana developer Stefan Jorgensen. The IP acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both Defi Technologies and Valour Inc

 

●On February 20, 2024, the Company  launched its physical-backed staking exchange-traded product (ETP) for the Internet Computer Protocol (ICP) token. The Valour Internet Computer Protocol ETP (ISIN: GB00BS2BDN04) provides retail and institutional investors with trusted, secure and diversified exposure to the innovative and fast-growing Internet Computer ecosystem. The Internet Computer adds autonomous serverless cloud functionality to the public Internet -- making it possible to build almost any system or service entirely on a decentralized network. Developers and enterprises no longer have to rely on legacy information technology systems that are susceptible to hacks and downtime. The Internet Computer is a tamper-proof and unstoppable network, a new paradigm of computing power.

 

●On March 18, 2024, the Company's subsidiary Valour Inc. partnered with Bitcoin Suisse AG and Stoxx in launching the innovative 1Valour Stoxx Bitcoin Suisse Digital Asset Blue Chip ETP. This pioneering product marks a significant step forward in the digital asset market, providing a diversified investment approach to the top blue-chip digital assets in a simple and secure manner.

 

●On April 8, 2024, the Company opened a new trading desk in the United Arab Emirates (UAE). As part of this strategic initiative, the Company aims to expand its assets under management (AUM) by launching 15 new ETP products in 2024, in addition to the 17 already listed in Europe, followed by another 30 in 2025.

 

●On April 17, 2024, the Company entered into a collaboration with the Core Foundation to develop innovative ETPs (exchange-traded products) that leverage Core Chain's unique blockchain capabilities, introducing a first-of-its-kind yield-bearing BTC ETP and a novel Core ETP. The yield-bearing BTC ETP will offer yield directly from Core Chain's block rewards. This groundbreaking initiative marks a first in the market, as the previously passive BTC asset becomes productive and yield-bearing without moving off the bitcoin network.

 

●On April 18, 2024, the Company launches the first short spot bitcoin (BTC) ETP.

 

●On May 7, 2024, the Company's subsidiary, Valour Inc. successfully repaid US$19.5 million in outstanding loans. As of April 30, 2024, and due to favourable business conditions, Valour has fully repaid balances of US$6 million and US$13.5 million, which were secured by bitcoin (BTC) and Ethereum (ETH) collateral, respectively. No further equity or debt was raised to repay the loan. The loans, which were structured with open-term tenures allowing for flexible repayment, were fully repaid on April 30, 2024. This strategic financial management will result in substantial savings for the Company.

 

4

 

 

●On May 13, 2024, the Company's subsidiary Valour Inc. launched three new ETPs. Among these offerings are the Valour Internet Computer (ICP) ETP and the Valour Toncoin (TON) ETP, the first of their kind in the Nordics. These are accompanied by the Valour Chainlink (LINK) ETP, providing simplified access to cutting-edge digital assets. Trading of all three ETPs commenced on May 10, 2024, with a 1.9 per cent management fee.

 

Digital Assets

 

As at March 31, 2024, the Company’s digital assets consisted of the below digital currencies, with a fair value of $875,418,425 (December 31, 2023 - $489,865,638). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each ETP. The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.The Company’s holdings of digital assets consist of the following:

 

   March 31,
2024
Quantity		  $  December 31,
2023
Quantity		  $
Binance Coin   1,513.1116    1,197,048    236.4452    97,710 
Bitcoin   2,381.8503    192,744,913    2,271.3329    108,983,280 
Ethereum   21,676.5143    104,937,646    21,537.4066    65,956,320 
EthereumPoW   0.2000    1.3550    0.2000    1 
Cardano   61,168,793.2691    54,197,047    54,210,783.1700    43,306,306 
Polkadot   2,027,300.6397    26,185,430    1,666,147.7880    18,371,365 
Solana   1,699,772.18    429,694,885    1,682,112.49    235,733,109 
Shyft   4,539,407.2792    58,143    4,539,407.2792    78,314 
Uniswap   318,909.1202    5,408,351    296,352.0602    2,932,687 
USDC        691         673 
USDT        24,858         111,856 
Litcoin   -    -    17.3931    1,719 
Doge   373,126.4335    111,280    220,474.3947    26,652 
Cosmos   11,245.3147    188,145    11,700.0000    171,497 
Avalanche   421,146.8852    31,249,900    248,151.6644    13,148,105 
Matic   18,786.3068    25,463    0.0003    - 
Ripple   5,229,376.9426    4,403,827    76,029.7317    62,737 
Enjin   56,055.3285    38,388    432,342.3671    223,237 
Tron   584,329.3077    95,263    118,490.5094    16,581 
Terra Luna   203,002.3956    -    202,302.5360    - 
ICP   911,662.5358    22,988,977    -    - 
AAVE   28.7781    4,924    -    - 
LINK   1,330.8496    34,389    -    - 
Current   77,589,845    873,589,568    63,728,357    489,222,151 
Blocto   264,559.703    9,464    264,559.703    10,503 
Boba Network   250,000.00    -    250,000.00    - 
Clover   450,000.00    46,426    450,000.00    19,831 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    1,495,483    2,500,000.00    503,669 
Saffron.finance   86.21    5,206    86.21    2,619 
Sovryn   15,458.95    42,189    15,458.95    12,863 
Wilder World   148,810.00    230,089    148,810.00    94,002 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    - 
Long-Term        1,828,857         643,487 
Total Digital Assets        875,418,425         489,865,638 

  

5

 

 

The continuity of digital assets for the three months ended March 31, 2024 and year ended December 31, 2023:

 

   March 31,
2024		  December 31,
2023
Opening balance  $489,865,638   $104,202,085 
Digital assets acquired   200,399,402    318,355,007 
Digital assets disposed   (149,972,147)   (244,656,544)
Realized gain (loss) on digital assets   69,689,782    (1,017,247)
Digital assets earned from staking, lending and fees   5,808,001    3,554,587 
Net change in unrealized gains and losses on digital assets   247,433,275    324,976,115 
Foreign exchange gain (loss)   12,194,474    (15,548,363)
   $875,418,425   $489,865,638 

 

Digital assets held by counterpart for the three months ended March 31, 2024 and year ended December 31, 2023:

 

   March 31,
2024		  December 31,
2023
Counterparty A  $400,829,962   $421,687,911 
Counterparty B   34,162,937    30,592,947 
Counterparty C   5,017,256    2,775,287 
Counterparty D   24,187,888    11,785,440 
Counterparty E   9,430,477    8,633,491 
Counterparty F   25,810,607    837,948 
Counterparty G   15,214,935    8,840,988 
Counterparty H   24,443,622    - 
Other   1,640,342    248,294 
Self custody   334,680,399    4,463,332 
Total  $875,418,425   $489,865,638 

 

As of March 31, 2024, digital assets held as collateral consisted of the following:

 

   Number of
coins on loan		  Fair Value
Bitcoin   816.4876   $41,880,406 
Ethereum   9,946.4729    48,148,787 
Total   10,762.9605   $90,029,194 

 

As at March 31, 2024, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $9,050,472 (US$6,679,315), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

   Number of
coins on loan		  Fair Value
Bitcoin   1,158.2614   $46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcon held by Genesis as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital Assets loaned

 

As of March 31, 2024, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

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As of March 31, 2024, digital assets on loan consisted of the following:

 

   Number of
coins on loan		  Fair Value  Fair Value
Share
Digital assets on loan:         
Ethereum
   8,500.0000    41,146,716    32%
Cardano
   19,000,000.0000    16,834,655    13%
Polkadot
   1,800,000.0000    23,249,524    18%
Uniswap
   150,000.0000    2,543,836    2%
Avalanche
   300,000.0000    22,261,810    17%
Bitcoin
   250.0365    24,038,007    18%
Total
   21,258,750.0365   $130,074,548    100%

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

   Number of
coins on loan		    Fair Value   Fair Value
Share		 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of March 31, 2024, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of
coins on loan		  Fair Value  
Digital assets on loan:           
Counterparty A   2.4% to  9.7%   21,258,500.0000    106,036,541  
Counterparty D   3.79%   250.0365    24,038,007  
Total       21,258,750.0365   $130,074,548  

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of
coins on loan		   Fair Value 
Digital on loan:           
Counterparty A  2.4% to 9.7%   11,578,285.0000    270,362,684 
Total      11,578,285.0000   $270,362,684 

 

As of March 31, 2024, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  March 31,
2024		 
Digital assets on loan:       
Counterparty A  Cayman Islands   82%
Counterparty D  United States   18%
Total      100%

 

As of December 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on loan:       
Counterparty A  Cayman Islands   100%
Total     $100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

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Digital Assets Staked

 

As of March 31, 2024, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.12% to 8.88% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of March 31, 2024, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value Share 
Digital assets on staked:            
Cardano   38,201,004.7950    33,847,408    9%
Solana   1,315,000.0000    332,426,181    91%
Total   39,516,004.7950   $366,273,589    100%

  

As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value Share 
Digital on staked:            
Cardano   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950   $30,516,888    100%

 

As of March 31, 2024, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of
coins staked		   Fair Value 
Digital on staked:            
Counterparty B   3.12%   38,201,004.7950    33,847,408 
Self custody   8.88%   1,315,000.0000    332,426,181 
Total       39,516,004.7950    366,273,589 

 

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of
coins staked		   Fair Value 
Digital on staked:            
Counterparty B   3.15%   38,201,004.7950    30,516,888 
Total       38,201,004.7950   $30,516,888 

 

As of March 31, 2024, digital assets staked were concentrated with counterparties as follows:

 

   Geography  March 31,
2024		 
Digital on staked:     
Counterparty B  Switzerland   9%
Self custody  Switzerland   91%
Total      9%

  

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As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:     
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Third Party Custodians

 

As of March 31, 2024, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian Location
Bitcoin Suisse AG Switzerland
Anchorage Digital United States
B2C2 Overseas LTD Cayman Islands

 

Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of March 31, 2024, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

 

Custodian

  Location  % of digital assets custodied by market value (1)  Regulatory Body
Bitcoin Suisse AG  Switzerland  3.9%  Financial Services Standards Association (VQF). Zug. Switzerland
Anchorage Digital  United States  2.7%  Office of Comptroller of Currency
B2C2 Overseas LTD  Cayman Islands  45.3%  Cayman Islands Monetary Authority (CIMA)

 

9

 

 

Note 1: As at March 31, 2024; Residual digital assets served as collateral for loans with B2C2-Group (approx. 10.2%; B2C2 UK FCA-regulated) and Genesis Global Capital LLC (5.2%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.

 

●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.

 

●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.

 

●The counterparties are reviewed in regular intervals and re-evaluated.

 

●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.

 

●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

10

 

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

11

 

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

At March 31, 2024, the Company’s had self-custody of digital assets totaling $334,680,399 (December 31, 2022 - $4,463,332).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held by two members of the senior management in different locations.

 

Staking and Lending Policy

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower's ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

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Investments, At Fair Value, Through Profit and Loss, As At March 31, 2024

 

At March 31, 2024, the Company’s investment portfolio consisted of nine private investments for a total estimated fair value of $41,793,929 (December 31, 2023 – nine private investments for a total estimated fair value of $43,540,534).

 

Private Investments

 

At March 31, 2024, the Company’s nine private investments had a total fair value of $41,793,929.

 

Private Issuer  Note   Security description  Cost   Estimated Fair Value   %
 of FV		 
3iQ Corp.       187,007 common shares   261,605   $1,246,700    3.0%
Brazil Potash Corp.   (i)   404,200 common shares   1,998,668    2,190,763    5.2%
Earnity Inc.       85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation       201,633 preferred shares   630,505    677,568    1.6%
Neuronomics AG       724 common shares   128,898    128,898    0.3%
SDK:meta, LLC       1,000,000 units   3,420,000    -    0.0%
Amina Bank AG       3,906,250 non-voting shares   34,498,750    37,550,000    89.9%
Skolem Technologies Ltd.       16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation       Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments          $41,284,669   $41,793,929    100.0%

 

(i)Investments in related party entities

 

At December 31, 2023, the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note   Security description  Cost   Estimated Fair Value  

%

of FV

 
3iQ Corp.       187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.   (i)   404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.       85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation       201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG       724 common shares   128,898    128,898    0.3%
SDK:meta, LLC       1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)   (i)   3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.       16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation       Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments          $41,284,669   $43,540,534    100.0%

 

(i)Investments in related party entities

 

3iQ Corp (“3iQ”)

 

On September 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of DeFi. 3iQ is a leading bitcoin and digital asset fund manager. As at March 31, 2024, 3iQ was valued at $1,246,700. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to DeFi of $124,670.

 

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Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at March 31, 2024, BPC was valued at $2,190,764 which was based on BPC August 2022 financing prices. The investment represented 0.2% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to DeFi of $219,076.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at March 31, 2024, Earnity was valued at $nil which was based on Earnity’s ceasing operations. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to DeFi of $0.

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at March 31, 2023, LTC was valued at $677,568 which was based on LTC December 2021 financing prices. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to DeFi of $67,757.

 

SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31, 2024, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to DeFi of $0.

 

Amina Bank AG (“Amina”)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. Amina is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at March 31, 2024, Amina was valued at $37,550,000 which was based on a market approach. The investment represented 3.8% of the total assets of the Company. A 10% decline in the fair market value of Amina would result in an estimated increase in loss to DeFi of $3,755,000.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at March 31, 2024, STL was valued at $nil which was based on STL ceasing operations. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to DeFi of $0.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at March 31, 2024, VLC was valued at $0. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to DeFi of $0.

 

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Financial Results

 

The following is a discussion of the results of operations of the Company for the three months ended March 31, 2024, and 2023. They should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three months ended March 31, 2024 and 2023 and related notes.

 

Three months ended March 31, 2024 and 2023:

 

   Three months ended
March 31		 
   2024   2024 
Revenues        
Realized and net change in unrealized gains and losses on digital assets  $317,123,056   $63,018,533 
Realized and net change in unrealized gains and losses on ETP payables   (328,253,885)   (75,513,491)
Staking and lending income   5,808,001    571,813 
Management fees   1,731,882    215,677 
Research revenue   501,868    - 
Node revenue   4,675    5,821 
Realized (loss) on investments, net   -    (587)
Unrealized (loss) gain on investments, net   (1,839,032)   357,353 
Interest income   868    829 
Total revenues   (4,922,567)   (11,344,052)
Expenses          
Management and consulting fees   1,453,118    1,089,615 
Share based payments   1,617,515    941,286 
Travel and promotion   574,534    117,293 
Office and rent   595,564    628,628 
Accounting and legal   252,906    213,526 
Regulatory and transfer agent   92,015    67,407 
Depreciation - property, plant and equipment   3,236    3,236 
Depreciation - right of use assets   -    34,034 
Amortization - intangibles   517,225    509,575 
Finance costs   1,737,514    1,286,466 
Transaction costs   490,397    232,775 
Foreign exchange (gain) loss   823,144    10,461 
Impairment loss   4,962,021    - 
Total expenses   13,119,189    5,134,302 
Net (loss) for the period   (18,041,756)   (16,478,354)
Other comprehensive loss          
Foreign currency translation loss   (1,269,052)   33,889 
Net (loss) and comprehensive (loss) for the period  $(19,310,808)   $(16,444,465)

 

For the three months ended March 31, 2024, the Company recorded a net (loss) of $(18,041,756) ($(0.06) per basic share) on total revenues of $(4,922,567) compared to net income (loss) of $(16,478,354) ($(0.08) per basic share) on total revenues of $(11,344,052) for the three months ended March 31, 2023.

 

For the three months ended March 31, 2024, realized and net change in unrealized gains and loss on digital assets was $317,123,056 and realized and net change in unrealized gains and loss on ETP payables was $(328,253,885). Higher digital asset prices in 2024 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

15

 

 

The Company earned staking and lending income of $5,808,001 for the three months ended March 31, 2024 compared to $571,813 for the same periods in 2023. The Company actively stakes and lends its digital assets to earn additional revenue. The staking and lending income was significantly higher for the three months ended March 31, 2024 due to the increased digital asset prices as well as the Company staking and lending more digital assets compared to 2023.

 

The Company had management fee revenue of $1,731,882 for the three months ended March 31, 2024 compared to $215,677 for the same periods in 2023. In 2024, the Company’s had higher AUM and additional ETP products resulting higher management fees.

 

The Company had node revenue of $4,675 for the three months ended March 31, 2024 compared to $5,821 for the same period in 2023. During the three months ended March 31, 2024, the Company earned 340,039.11663 (March 31, 2023 – 178,442.922056) Shyft tokens for its services. The decreased revenue in 2024 is due to lower token price.

 

The Company had realized gain (loss) on investments of $nil for the three months ended March 31, 2024 compared to $(587) for the same periods in 2023. The Company had unrealized gain (loss) on investments of $(1,839,032) compared to $357,353 in the prior period. The unrealized loss for the three months ended March 31, 2024 primarily consisted of unrealized loss on SEBA.

 

Management and consulting fees were $1,453,118 during the three months ended March 31, 2024 compared to $1,089,615 during the same periods in 2023.

 

Share based payments were $1,617,515 during the three months ended March 31, 2024 compared to $941,286 in the same periods in 2023. The Company granted 125,000 options to a consultant of the Company during 2023 compared to the 1,200,000 options and 1,000,000 deferred share units to directors, officers and consultants of the Company during 2022. The higher share-based payments in 2024 is a result the vesting of options and DSU granted in 2023.

 

Travel and promotion was $574,534 during the three months ended March 31, 2024 compared to $117,293 during the same period in 2023. Corporate activities and business development increased in 2024 compared to 2023.

 

Office and rent was $595,564 during the three months ended March 31, 2024 compared to $628,628 during the same periods in 2023.

 

Accounting and legal was $252,906 during the three months ended March 31, 2024 and $213,526 during the same periods in 2023.

 

Total depreciation and amortization was $520,461 for the three months ended March 31, 2024 from $546,845 during the prior period in 2023. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of Reflexivity LLC, DeFi Capital and Valour.

 

Finance costs were $1,737,514 for the three months ended March 31, 2024 compared to $1,286,466 during the prior periods in 2023. The increase in financing costs relates to the interest expense on the digital asset provider loans and other loans of the Company. The interest rates on these loans were higher in 2024 compared to 2023.

 

Transaction costs were $490,397 for the three months ended March 31, 2024 compared to $232,775 in the prior period. The increase in transaction costs relates to the trading of digital assets as brokerage commission and ETP issuance costs.

 

Foreign loss was $823,144 for the three months ended March 31, 2024 compared to $10,461 in the prior period. The loss reflects the currency fluctuations primarily in Company’s digital asset and ETPs which are denominated in US dollars, Swedish Krona, Euro and Swiss Franc.

 

Impairment loss was $4,962,021 for the three months ended March 31, 2024 compared to $nil in the prior period. The Company impaired the costs related to the Solana IP acquisition in Q1 2024.

 

16

 

 

During the three months ended March 31, 2024, the Company used $57,050,633 in operations of which $353,147 was used by changes in working capital, $200,399,402 was used to purchase digital assets offset by $149,972,147 was provided from the disposal of digital assets. During the comparative three months ended March 31, 2023, the Company used $14,498,854 in operations of which $1,798,919 was provided by the changes in working capital, $90,978,084 was used to purchase digital assets offset by $77,173,457 was provided from the disposal of digital assets. The cash used from operations was higher in 2024 compared to 2023 due to a higher net loss in 2024 and the increased net purchase of digital assets in 2024 was $(50,427,255) compared in 2023 the net purchase of digital assets was $(13,804,627) reflecting increased activity in digital asset market.

 

During the three months ended March 31, 2024, $59,312,083 was provided by financing activities compared to $13,999,153 in the prior period. The Company received proceeds of $266,299,553 from ETP holders and $53,077 provided from warrant exercises offset by $207,040,547 used for payments to ETP holders. During the three months ended March 31, 2023, the Company received proceeds of $49,015,215 from ETP holders and proceeds of $4,319,901 from loans offset by $39,335,963 used for payments to ETP holders. The cash provide from financing was higher in 2024 compared to 2023 due to higher net ETP sales in 2024.

 

Liquidity and Capital Resources

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any negative impact to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has been able to roll over its loan payable with the digital asset providers on similar terms throughout the year. The Company has successfully raised approximately $1.5M from new investors in 2022 via private placements financings and in 2023 successfully raised $4.6M from new loans and $4.5M from private placement financings.

 

The Company loaned and staked more digital assets in Q1 2024 compared to Q1 2023 and as a result the Company earned more revenue via staking and lending. Higher AUM in the Company’s fee earning ETPs in Q1 2024 compared to the same period 2023 resulted in higher management fees. Overall, the Company’s total revenues improved in 2024 as a result of improving digital asset markets.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

DeFi relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

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Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As Of March 31, 2024, the loan principal of $53,522,500 (US$39,500,000) (December 31, 2023 - $53,242,700 (US$39,500,000)) was outstanding. The loans terms are 90 days and open term and have interest rates ranging from 9.5% and 18%. These extended loans are secured with 658 BTC and 9,946 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis. On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy or trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,679,315 and secured with 475 BTC.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of March 31, 2024, the loan principal of $4,065,000 (US$3,000,001) (December 31, 2023 - $3,967,801 (US$3,000,001)) was outstanding.

 

DeFi used cash of $57,164,106 in its operating activities during the three months ended March 31, 2024. Included in cash used in operations are $200,399,402 used in the purchase of digital assets, $353,147 used by changes of working capital and $149,972,147 generated from the disposal of digital assets. DeFi also provided $59,312,083 in financing activities. Included in cash provided in financing activities are $266,299,553 from proceeds from ETP holders, $53,077 from warrant exercises offset by $207,040,547 used for payments to ETP holders.

 

As at March 31, 2024, the Company’s sources of funds include the estimated fair value of its cash of $9,412,862, equity investments of $41,793,929 and digital assets of $875,418,425 offset by total liabilities of $975,069,685.

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

As at March 31, 2024 and December 31, 2023, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

 March 31, 2024 
   United States   British   Swiss   Euro 
Cash  $324,773   $20,291   $1,736,698   $5,618,349 
Receivables   153,143    -    -    1,677 
Private investments   4,115,032    -    37,678,898    - 
Prepaid expenses   2,033,569    -    -    - 
Digital assets   875,418,425    -    -    - 
Accounts payable and accrued liabilities   (1,115,106)   (75,692)   (78,831)   (21,948)
Loan payable   (57,587,500)   -    -    - 
ETP holders payable   (907,927,865)   -    -    - 
Net assets (liabilities)  $(84,585,529)  $(55,401)  $39,336,766   $5,598,078 

 

 December 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

  

18

 

 

As at March 31, 2024, United States Dollar was converted at a rate of $1.3550 (December 31, 2023 - $1.3226) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.7114 (December 31, 2023 - $1.6837) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4632 (December 31, 2023 - $1.4626) Canadian Dollars to 1.00 Euro. Swiss France was converted at a rate of $1.5020 (December 31, 2023 - $1.5758).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

●to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

●to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

●taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

●raising capital through equity financings; and

 

●realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the three months ended March 31, 2024.

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,299,500 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $969,400, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

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Summary of Quarterly Results

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun 
   2024   2023   2023   2023   2023   2022   2022   2022 
Revenue  $(4,922,567)  $8,548,779   $6,003,995   $7,147,292   $(11,344,052)  $(11,123,848)  $295,605   $(5,219,545)
Net(loss) income and comprehensive (loss) income  $(19,310,808)  $1,415,946   $(4,719,786)  $800,012   $(16,444,465)  $(254,464,521)  $(9,011,375)  $(18,870,125)
(Loss) income per Share - basic   (0.06)   -    (0.01)   -    (0.08)   (0.13)   (0.04)   (0.09)
(Loss) income per Share - diluted   (0.06)   -    (0.01)   -    (0.08)   (0.13)   (0.04)   (0.09)
Total Assets  $983,940,422   $591,960,107   $253,585,558   $259,787,932   $267,666,904   $194,003,779   $263,678,822   $241,666,497 
Total Long Term Liabilities  $0   $0   $0   $0   $0   $1,709,911   $1,681,358   $0 

 

Selected Annual Information

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-23   31-Dec-22   31-Dec-21 
(a) Net Revenue   10,356,014    (14,226,780)  $15,081,078 
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (18,948,293)   (69,135,318)  $(71,254,155)
(ii) Income (loss) per share – basic   (0.09)   (0.32)   (0.37)
(iii) Income (loss) per share – diluted   (0.09)   (0.32)   (0.37)
(c) Total Assets   591,960,108    194,003,779   $459,690,575 
(d) Total Liabilities   573,516,045    166,094,517   $367,909,179 

 

Off Balance Sheet Arrangements

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

During the three months ended March 31, 2024, the Company paid or accrued $300,006 (three months ended March 31, 2023 - $424,173) to directors and officers of the Company and $1,231,737 (three months ended March 31, 2023 - $134,971) to directors and officers of the Company in share-based compensation.

 

As March 31,2024, the Company had $15,000 (December 31, 2023 - $147,485) owing to its current key management, and $314,136 (December 31, 2023 - $314,136) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

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Related Party Transactions

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of March 31, 2024 and December 31, 2023.

 

Investment  Nature of relationship
to invesment		  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,190,764 
Aminna Bank AG *  Former Director (Olivier Roussy Newton) of investee   37,550,000 
Total investment - March 31, 2024     $39,740,764 

 

*Private companies

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - December 31, 2023     $41,533,380 

 

*Private companies

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at March 31, 2024.

 

During the three months ended March 31, 2024, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

●The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at March 31, 2024 the Company had a payable balance of $259,999 (December 31, 2023 - $226,000) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

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●The Company incurred $3,958 (March 31, 2023 - $23,339) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $69,825 (December 31, 2023 – $165,868) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

●Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($75,692) (December 31, 2023 - $74,466) expenses owed to Vik Pathak, a former director and officer of the Company.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

Financial Instruments and Other Instruments

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

The Company has determined the carrying values of its financial instruments as follows:

 

●The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.

 

●Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2023 and 2022.

 

●Digital assets classified as financial assets relate to USDC which is measured at fair value

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at March 31, 2024 and December 31, 2023.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market price)  

(Valuation technique -

observable market Inputs)

   (Valuation technique - non-observable market inputs)   Total 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    41,793,929    41,793,929 
Digital assets   -    691    -    691 
March 31, 2024  $     -   $691   $41,793,929   $41,794,619 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    –    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended March 31, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2024		   December 31,
2023		 
Balance, beginning of period  $673   $1,586 
Acquired (disposal)   18    (913)
Balance, end of period  $691   $673 

 

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Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended March 31, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2024		   December 31,
2023		 
Balance, beginning of period  $43,540,534   $30,015,445 
Purchases   -    128,898  
Unrealized gain/(loss) net   (1,746,605)   13,396,191 
Balance, end of period  $41,793,929   $43,540,534 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at March 31, 2024 and December 31, 2023.

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		 

Range of
significant unobservable

input(s)

3iQ Corp.  $1,246,700   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,190,763   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,568   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   37,550,000   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
March 31, 2024  $41,793,929          
               
3iQ Corp.  $1,216,890    Recent financing  Marketability of shares   0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   39,395,000   Market approach  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at March 31, 2024, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $124,670 (December 31, 2023 - $121,689) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at March 31, 2024, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $219,076 (December 31, 2023 - $213,828) change in the carrying amount.

 

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Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at March 31, 2024, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31, 2024, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at March 31, 2024, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,757 (December 31, 2023 - $66,137) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31, 2024, the valuation of SDK:Meta LLC was $nil (December 31, 2023 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31, 2024, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- $nil (December 31, 2022 - $nil) change in the carrying amount.

 

Amina Bank AG (formerly SEBA Bank AG) (“Amina”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at March 31, 2024, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,755,000 (December 31, 2022 +/- $3,939,500) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at March 31, 2024, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at March 31, 2024, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2023 - $nil) change in the carrying amount.

 

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Outstanding Share Data

 

Authorized unlimited common shares without par value – 290,240,736 are issued and outstanding as at May 15, 2024.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at May 15, 2024.

 

Stock options and convertible securities outstanding as at May 15, 2024 are as follows:

 

Stock Options:

23,530,000 with an exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and May 12, 2029.

 

Warrants:

45,691,502 with an exercise price ranging from $0.20 to $0.30 expiring between November 14, 2024 and November 6, 2028.

 

Deferred shares units:

8,537,005 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2023 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

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Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

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●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

27

 

 

Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack

 

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Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, DeFi relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

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DeFi Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

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Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

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Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

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Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at March 31, 2024, the Company’s investments through its Defi Venture business arm comprise of $43,622,786 represented approximately 4.4% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

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●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

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Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

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Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

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Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

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Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

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The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

39

 

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

Multilateral Instrument 52-109 Disclosure

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

40

 

 

Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $10,188,642 to $104,235,682; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,370,117 as at March 31, 2023, with an opening retained earnings impact at January 1, 2023 of $23,678,466. For more details, please refer to Note 24 of the condensed consolidated interim financial statements of the Company for three months ended March 31, 2024 and 2023. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the three months ended March 31, 2023. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis, will not be prevented or detected on a timely basis.

 

Remediation of Material Weaknesses in Internal Control over Financial Reporting

 

Management is committed to the planning and implementation of remediation efforts to address the material weaknesses, as well as to continuously enhance the Company’s internal controls. These remediation efforts to-date have included engaging and consulting with the external accounting and valuation advisors, considering authoritative and non-authoritative guidance available in the accounting literature.

 

The management team, including the Chief Executive Officer and Chief Financial Officer, have reaffirmed and re-emphasized the importance of internal control, control consciousness and a strong control environment.

 

Material Accounting Policies

 

The Company’s material accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2023 and 2022.

 

Critical Accounting Estimates and Assumptions

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

41

 

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

42

 

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 8 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

 

43

 

 

Exhibit 99.115

 

 

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

For the three and six months ended June 30, 2024 and 2023

(expressed in Canadian dollars)

 

1

 

 

DeFi Technologies Inc.

 

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (CPA Canada) for a review of interim financial statements by an entity’s auditor.

 

2

 

 

DeFi Technologies Inc.

 

Table of Contents

 

Condensed consolidated interim statements of financial position 4
Condensed consolidated interim statements of operations and comprehensive (loss) 5
Condensed consolidated interim statements of cash flows 6
Condensed consolidated interim statements of changes in equity 7
Notes to the condensed consolidated interim financial statements 8 - 43

 

3

 

 

DeFi Technologies Inc.

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   Note  June 30,
2024		   December 31,
2023		 
Assets     $   $ 
Current           
Cash and cash equivalents  3,18   19,529,425    6,727,482 
Amounts receivable  5,18   134,101    54,036 
Prepaid expenses  6   4,520,767    1,509,824 
Digital assets  7,18   273,685,379    188,342,579 
Digital assets loaned  7   130,074,548    270,362,684 
Digital assets staked  7   366,273,589    30,516,888 
Total current assets      794,217,809    497,513,493 
Private investments, at fair value through profit and loss  4,18,21   40,994,025    43,540,534 
Digital assets  7   789,302    643,487 
Equipment      2,349    7,679 
Intangible assets  8,9   2,963,613    3,542,888 
Goodwill  8,9   49,348,414    46,712,027 
Total assets      888,315,512    591,960,108 
Liabilities and shareholders’ equity             
Current liabilities             
Accounts payable and accrued liabilities  10,18,21   36,416,276    9,174,846 
Loans payable  11,18   17,793,100    56,210,709 
ETP holders payable  12,18   730,068,689    508,130,490 
Deferred revenue      220,987    - 
Total current liabilities      784,499,052    573,516,045 
Shareholders’ equity             
Common shares  16(b)(c)   181,688,832    170,687,476 
Preferred shares      4,321,350    4,321,350 
Share-based payments reserves  17   30,390,898    28,631,887 
Accumulated other comprehensive income      (2,811,136)   (1,652,547)
Non-controlling interest      (457)   (4,871)
Deficit      (109,773,027)   (183,539,232)
Total equity      103,816,460    18,444,063 
Total liabilities and equity      888,315,512    591,960,108 
Nature of operations and going concern  1          
Commitments and contingencies  22          

 

Approved on behalf of the Board of Directors:

 

“Olivier Roussy Newton”  “Stefan Hascoet”
Director Director

 

See accompanying notes to these condensed consolidated interim financial statements

 

4

 

 

DeFi Technologies Inc.

Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)

(Expressed in Canadian dollars)

 

 

      Three months ended
June 30,		   Six months ended
June 30		 
   Note  2024   2023   2024   2023 
      $   $   $   $ 
              (Restated - see Note 24) 
Revenues                   
Realized and net change in unrealized gains and (losses) on digital assets  13   (86,085,883)   (4,166,320)   231,037,173    58,852,213 
Realized and net change in unrealized gains and (losses) on ETP payables  14   209,094,995    18,984,061    (119,158,890)   (56,529,430)
Staking and lending income      8,263,022    764,662    14,071,024    1,336,475 
Management fees      2,145,432    244,016    3,877,314    459,693 
Research revenue      338,583    -    840,451    - 
Node revenue      35    (845)   4,709    4,976 
Realized (loss) on investments  4   634,271    (3,438)   634,271    (4,025)
Unrealized (loss) on investments  4   (659,386)   (42,491)   (2,498,418)   314,862 
Interest income      644    (572)   1,512    257 
Total revenues      133,731,713    15,779,073    128,809,146    4,435,022 
Expenses                       
Operating, general and administration  15,21   30,511,981    1,755,467    33,480,118    3,871,936 
Share based payments  17   3,433,990    501,594    5,051,505    1,442,880 
Depreciation - property, plant and equipment      2,092    3,236    5,328    6,472 
Depreciation - right of use assets      -    (34,034)   -    0 
Amortization - intangibles  9   508,154    509,575    1,025,379    1,019,150 
Finance costs      929,255    275,063    2,666,769    1,561,529 
Transaction costs      1,089,807    86,944    1,580,204    319,719 
Foreign exchange loss      6,318,062    4,743,568    7,141,206    4,754,029 
Impairment loss  9   -    -    4,962,021    - 
Total expenses      42,793,341    7,841,413    55,912,530    12,975,715 
Income (loss) before other item      90,938,372    7,937,660    72,896,616    (8,540,694)
Loss on settlement of debt      -    (198,482)   -    (198,482)
Net income (loss) for the period      90,938,372    7,739,178    72,896,616    (8,739,176)

Other comprehensive loss

Foreign currency translation gain (loss)

      110,463    1,692,615    (1,158,589)   1,726,504 
Net income (loss) and comprehensive income (loss) for the period      91,048,835    9,431,793    71,738,026    (7,012,672)
Net income (loss) attributed to:                       

Owners of the parent

      72,892,202    (8,739,176)   72,892,202    (8,739,176)
Non-controlling interests      4,414    -    4,414    - 
       72,896,616    (8,739,176)   72,896,616    (8,739,176)
Net income (loss) and comprehensive income (loss) attributed to:                       

Owners of the parent

      71,733,612    (7,012,672)   71,733,612    (7,012,672)
Non-controlling interests      4,414    -    4,414    - 
       71,738,026    (7,012,672)   71,738,026    (7,012,672)
(Loss) per share                       
Basic      0.34    0.04    0.26    (0.04)
Diluted      0.34    0.04    0.26    (0.04)
Weighted average number of shares outstanding:                       
Basic      269,753,932    220,295,703    284,134,127    219,656,652 
Diluted      269,753,932    220,295,703    284,134,127    219,656,652 

 

See accompanying notes to these condensed consolidated interim financial statements

 

5

 

 

DeFi Technologies Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

       Three months ended
March 31,		 
   Note   2024  
2023		 
      $   $ 
       (Restated - See Note 24) 
Cash (used in) provided by operations:        
Net (loss) for the period       $72,896,616   $(16,478,354)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:               
Share-based payments   17    5,051,505    941,285 
Impairment loss   9    4,962,021    - 
Interest income        -    (829)
Interest expense        -    3,590 
Depreciation - Property, plant & equipment        5,328    3,236 
Depreciation - right of use assets        -    34,034 
Amortization - Intangible asset   9    1,025,379    509,575 
Realized loss on investments, net        (634,271)   587 
Unrealized (gain) loss on investments, net        2,498,418    (357,353)
Realized and net change in unrealized (gains) and loss on digital assets   13    (231,037,173)   (63,018,533)
Realized and net change in unrealized (gains) and loss on ETP   14    119,158,890    75,513,491 
Staking and lending income        (14,071,024)   (571,813)
Management fees        (3,877,314)   (215,677)
Node revenue        (4,709)   (5,821)
Unrealized loss on foreign exchange        (753,775)   1,136,940 
         (44,780,109)   (2,505,642)
Adjustment for:               
Purchase of digital assets        (200,399,402)   (90,978,084)
Disposal of digital assets        149,972,147    77,173,457 
Disposal of investments        -    12,496 
Change in amounts receivable        (95,980)   (24,048)
Change in prepaid expenses and deposits        (637,607)   174,420 
Change in accounts payable and accrued liabilities        380,440    1,648,547 
Net cash (used in) operating activities        (95,560,511)   (14,498,854)
Investing activities               
Cash received from acquisition of subsidiary        198,681    - 
Net cash provided by investing activities        198,681    - 
Financing activities               
Proceeds from ETP holders        266,299,553    49,015,215 
Payments to ETP holders        (207,040,547)   (39,335,963)
Loan Payable        -    4,319,901 
Proceeds from exercise of warrants   16    53,077    - 
Net cash provided by financing activities        59,312,083    13,999,153 
Effect of exchange rate changes on cash and cash equivalents        173,361    (3,772)
Change in cash and cash equivalents        (35,876,386)   (503,473)
Cash, beginning of year        6,727,482    4,906,165 
Cash and cash equivalents, end of period       $(29,148,904)  $4,402,692 

 

See accompanying notes to these condensed consolidated interim financial statements

 

6

 

 

DeFi Technologies Inc.

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in Canadian dollars)

 

 

                   Share-based payments                     
                       Deferred               Accumulated             
   Number of       Number of           Shares           Share-based   other             
   Common   Common   Preferred   Preferred       Unit   Treasury       Payments   comprehensive   Non-controlling         
   Shares   Shares   Shares   Shares   Options   (DSU)   shares   Warrants   Reserve   income   interest   Deficit   Total 
Balance, December 31, 2023   276,658,208   $170,687,476    4,500,000   $4,321,350   $17,968,263   $8,040,660   $27,453   $2,595,513   $28,631,889    (1,652,548)   (4,871)   (183,539,232)   18,444,063 
Acquisition of Reflxivity   5,000,000    3,100,000    -    -    -    -    -    -    -    -    -    -    3,100,000 
Acquisition of Solana IP   7,297,090    4,962,021    -    -    -    -    -    -    -    -    -    -    4,962,021 
Warrants exercised   5,691,798    1,787,346    -    -    -    -    -    (407,932)   (407,932)   -    -    -    1,379,414 
Option exercised   1,380,000    712,024    -    -    (256,574)   -    -    -    (256,574)   -    -    -    455,451 
DSU exercised   2,107,281    1,753,984    -    -    -    (1,753,984)   -    -    (1,753,984)   -    -    -    - 
Option expiry   -    -    -    -    (874,002)   -    -    -    (874,002)   -    -    874,002    - 
NCIB   (680,000)   (1,314,018)   -    -    -    -    -    -    -    -    -    -    (1,314,018)
Share-based payments   -    -    -    -    3,034,858    2,016,642    -    -    5,051,501    -    -    -    5,051,501 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (1,158,589)   4,414    72,892,202    71,738,026 
Balance, June 30, 2024   297,454,377   $181,688,832    4,500,000   $4,321,350   $19,872,546   $8,303,318   $27,453   $2,187,581   $30,390,898   $(2,811,136)  $(457)  $(109,773,027)  $103,816,460 
                                                 -    -    (0)     
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   -    (167,477,256)   27,909,261 
Shares issued for debt settlement   7,939,268    873,319    -    -    -    -    -    -    -    -    -    -    873,319 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    -    423,261    - 
Options cancelled   -    -    -    -    (2,831,533)   -    -    -    (2,831,533)   -    -    2,831,533    - 
DSUs exercised   500,000    107,500    -    -    -    (107,500)   -    -    (107,500)   -    -    -    - 
Share-based payments   -    -    -    -    277,136    1,165,743    -    -    1,442,879    -    -    -    1,442,879 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    1,726,504    -    (8,739,176)   (7,012,672)
Balance, June 30, 2023   227,449,769   $167,132,220    4,500,000   $4,321,350   $17,762,915   $8,035,349   $27,453   $164,852   $25,990,569   $(1,269,714)  $-   $(172,961,638)  $23,212,787 

 

See accompanying notes to these condensed consolidated interim financial statements

 

7

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets, providing premium membership for research reports to investors and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These condensed consolidated interim financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at June 30, 2024, the Company has working capital of $9,718,757 (December 31, 2023 - working capital (deficiency) of $(76,002,552), including cash of $19.529,425 (December 31, 2023 - $6,727,482) and for the six months ended June 30, 2024 had a net income and comprehensive income of $71,738,026 (for the six months ended June 30, 2023 – net loss and comprehensive loss of $16,444,465). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These condensed consolidated interim financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global commodity and financial markets and supply chains. Russia’s invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result in additional sanctions or other international action and the escalation of war between Israel and Hamas in Gaza, any of which may have a destabilizing effect on commodity prices, supply chains, and global economies more broadly. Volatility in digital asset prices and supply chain disruptions may adversely affect the Corporation’s business, financial condition, financing options, and results of operations. The extent and duration of the current Russia-Ukraine conflict or the Israel and Hamas conflict in Gaza and related international action cannot be accurately predicted at this time and the effects of such conflict may magnify the impact of the other risks, including those relating to digital asset price volatility and global financial conditions. The situation is rapidly changing and unforeseeable impacts, including on shareholders of the Corporation, and third parties with which the Corporation relies on or transacts, may materialize and may have an adverse effect on the Corporation’s business, results of operation, and financial condition.

 

8

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information

 

(a)Statement of compliance

 

These condensed consolidated interim financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) applicable to the preparation of interim financial statements, including IAS 34 – Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the annual audited consolidated financial statements for the years ended December 31, 2023 and 2022, which was prepared in accordance with IFRS as issued by the IASB. These condensed consolidated interim financial statements of the Company were approved for issue by the Board of Directors on August 14, 2024.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These condensed consolidated interim financial statements comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Reflexivity LLC, Valour Inc., DeFi Europe AG, and Valour Digital Securities Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the condensed consolidated interim financial statements.

 

(c)Basis of preparation and functional currency

 

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non- monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Reflexivity LLC, Valour Inc., DeFi Europe AG, and Valour Digital Securities Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

9

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(c)Basis of preparation and functional currency (continued)

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Change in accounting policy

 

During the year ended December 31, 2023, the Company changed its accounting policy regarding the treatment for when the Company sells a portion of its digital asset holdings or when there’s redemptions of its ETP payables. The Company has adopted first in, first out (“FIFO”) to identify the units sold and determine the cost basis to use. As a result, for six months ended June 30, 2023, realized gains (loss) on digital assets increased (decreased) by $(11,399,582) and unrealized gains (loss) (decreased) increased by $11,399,582. As a result, for the six months ended June 30, 2023, realized gains (loss) on ETP payables increased (decreased) by $4,725,198 and unrealized gains (loss) (decreased) increased by $(4,725,198).

 

There were no changes to the condensed consolidated interim statements of financial position, condensed consolidated interim statements of operations and comprehensive (loss) or condensed consolidated interim statements of cash flow.

 

(e)Significant accounting judgements, estimates and assumptions

 

The preparation of these condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

10

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets were classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid- point price at 17:30 CET digital asset exchanges consistent with the final terms for each exchange traded product (“ETP”). The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company revalues its digital assets quarterly.

 

(ii)Accounting for ETP holder payables

 

Financial liabilities at fair value through profit or loss held includes ETP holders payable. Liabilities arising in connection with ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company elected not to designate this as a hedging instrument. The ETPS are actively traded on the Nordic Growth Market (“NGM”) and Germany Borse Frankfurt Zertifikate AG.

 

(iii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 4 and 18 for further details.

 

(iv)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 4 and 18 for further details.

 

11

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

(vi)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii) Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 9 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

12

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

(xi)Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

(xii)Accounting for digital assets held as collateral

 

The Company has provided digital assets as collateral for loans provided by digital asset liquidity provider. These digital assets held as collateral are included with digital assets and valued at fair value consistent with the Company’s accounting policy for its digital assets. See note 2(e)(i).

  

3.Cash and cash equivalents

 

   31-Mar-24   31-Dec-23 
Cash at banks  $842,827   $306,920 
Cash at brokers   7,080,002    6,417,725 
Cash at digital currency exchanges   1,490,032    2,837 
   $9,412,862   $6,727,482 

 

4.Investments, at fair value through profit and loss

 

At March 31, 2024, the Company’s investment portfolio consisted of nine private investments for a total estimated fair value of $41,793,929 (December 31, 2023 – nine private investments for a total estimated fair value of 43,540,534).

 

During the three months ended March 31, 2024, the Company had an unrealized (loss) of $(1,839,032) (March 31, 2023 – realized (loss) of $(587) and an unrealized gain of $357,353) on private and public investments.

 

13

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

4.Investments, at fair value through profit and loss (continued)

 

Private Investments

 

At March 31, 2024, the Company’s nine private investments had a total fair value of $41,793,929.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		  

%

of FV

 
3iQ Corp.     187,007 common shares  $261,605   $1,246,700    3.0%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,190,763    5.2%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,568    1.6%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG     3,906,250 non-voting shares   34,498,750    37,550,000    89.9%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $41,793,929    100.0%

 

(i) Investments in related party entities

 

At December 31, 2023, the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value  

%

of FV

 
3iQ Corp.     187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

5.Amounts receivable

 

   31-Mar-24   31-Dec-23 
Other receivables  $2,330,255   $54,036 

 

6.Prepaid expenses

 

   31-Mar-24   31-Dec-23 
Prepaid insurance  $6,102   $42,335 
Prepaid expenses   2,141,329    1,467,489 
   $2,147,431   $1,509,824 

 

14

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets

 

As at March 31, 2024, the Company’s digital assets consisted of the below digital currencies, with a fair value of $875,418,425 (December 31, 2023 - $489,865,638). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

  

March 31, 2024

  

December 31, 2023

 
   Quantity   $   Quantity   $ 
Binance Coin   1,513.1116    1,197,048    236.4452    97,710 
Bitcoin   2,381.8503    192,744,913    2,271.3329    108,983,280 
Ethereum   21,676.5143    104,937,646    21,537.4066    65,956,320 
EthereumPoW   0.2000    1.3550    0.2000    1 
Cardano   61,168,793.2691    54,197,047    54,210,783.1700    43,306,306 
Polkadot   2,027,300.6397    26,185,430    1,666,147.7880    18,371,365 
Solana   1,699,772.18    429,694,885    1,682,112.49    235,733,109 
Shyft   4,539,407.2792    58,143    4,539,407.2792    78,314 
Uniswap   318,909.1202    5,408,351    296,352.0602    2,932,687 
USDC        691         673 
USDT        24,858         111,856 
Litcoin   -    -    17.3931    1,719 
Doge   373,126.4335    111,280    220,474.3947    26,652 
Cosmos   11,245.3147    188,145    11,700.0000    171,497 
Avalanche   421,146.8852    31,249,900    248,151.6644    13,148,105 
Matic   18,786.3068    25,463    0.0003    - 
Ripple   5,229,376.9426    4,403,827    76,029.7317    62,737 
Enjin   56,055.3285    38,388    432,342.3671    223,237 
Tron   584,329.3077    95,263    118,490.5094    16,581 
Terra Luna   203,002.3956    -    202,302.5360    - 
ICP   911,662.5358    22,988,977    -    - 
AAVE   28.7781    4,924    -    - 
LINK   1,330.8496    34,389    -    - 
Current   77,589,845    873,589,568    63,728,357    489,222,151 
Blocto   264,559.703    9,464    264,559.703    10,503 
Boba Network   250,000.00    -    250,000.00    - 
Clover   450,000.00    46,426    450,000.00    19,831 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    1,495,483    2,500,000.00    503,669 
Saffron.finance   86.21    5,206    86.21    2,619 
Sovryn   15,458.95    42,189    15,458.95    12,863 
Wilder World   148,810.00    230,089    148,810.00    94,002 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    - 
Long-Term        1,828,857         643,487 
Total Digital Assets        875,418,425         489,865,638 

 

15

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

The continuity of digital assets for the three months ended March 31, 2024 and year ended December 31, 2023:

 

   March 31,
2024		   December 31,
2023		 
Opening balance  $489,865,638   $104,202,085 
Digital assets acquired   200,399,402    318,355,007 
Digital assets disposed   (149,972,147)   (244,656,544)
Realized gain (loss) on digital assets   69,689,782    (1,017,247)
Digital assets earned from staking, lending and fees   5,808,001    3,554,587 
Net change in unrealized gains and losses on digital assets   247,433,275    324,976,115 
Foreign exchange gain (loss)   12,194,474    (15,548,363)
   $875,418,425   $489,865,638 

 

Digital assets held by counterparty for the three months ended March 31, 2024 and year ended December 31, 2023 is the following:

 

   March 31,
2024		   December 31,
2023		 
Counterparty A  $400,829,962   $421,687,911 
Counterparty B   34,162,937    30,592,947 
Counterparty C   5,017,256    2,775,287 
Counterparty D   24,187,888    11,785,440 
Counterparty E   9,430,477    8,633,491 
Counterparty F   25,810,607    837,948 
Counterparty G   15,214,935    8,840,988 
Counterparty H   24,443,622    - 
Other   1,640,342    248,294 
Self custody   334,680,399    4,463,332 
Total  $875,418,425   $489,865,638 

 

As of March 31, 2024, digital assets held as collateral consisted of the following:

 

   Number of
coins
on loan		   Fair Value 
Bitcoin   816.4876   $41,880,406 
Ethereum   9,946.4729    48,148,787 
Total   10,762.9605   $90,029,194 

  

As at March 31, 2024, the 475 Bitcoin held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $9,050,472 (US$6,679,315), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

  

Number of
coins

on loan

   Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcoin held by Genesis as collateral against a loan has been written down to$8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

16

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

Digital Assets loaned

 

As of March 31, 2024, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of March 31, 2024, digital assets on loan consisted of the following:

 

  

Number of
coins

on loan

   Fair Value   Fair Value Share 
Digital assets on loan:            
Ethereum   8,500.0000    41,146,716    32%
Cardano   19,000,000.0000    16,834,655    13%
Polkadot   1,800,000.0000    23,249,524    18%
Uniswap   150,000.0000    2,543,836    2%
Avalanche   300,000.0000    22,261,810    17%
Bitcoin   250.0365    24,038,007    18%
Total   21,258,750.0365   $130,074,548    100%

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

  

Number of
coins

on loan

   Fair Value   Fair Value Share 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of March 31, 2024, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins
on loan		   Fair Value 
Digital assets on loan:           
Counterparty A  2.4% to 9.7%   21,258,500.0000    106,036,541 
Counterparty D  3.79%   250.0365    24,038,007 
Total      21,258,750.0365   $130,074,548 

 

17

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins
on loan		   Fair Value 
Digital on loan:           
Counterparty A  2.4% to 9.7%   11,578,285.0000    270,362,684 
Total      11,578,285.0000   $270,362,684 

 

As of March 31, 2024, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  March 31,
2024		 
Digital assets on loan:       
Counterparty A  Cayman Islands   82%
Counterparty D  United States   18%
Total      100%

 

As of December 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on loan:       
Counterparty A  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of March 31, 2024, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.12% to 8.88% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of March 31, 2024, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value Share 
Digital assets on staked:            
Cardano   38,201,004.7950    33,847,408    9%
Solana   1,315,000.0000    332,426,181    91%
Total   39,516,004.7950   $366,273,589    100%

 

18

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value Share 
Digital on staked:            
Cardano   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950   $30,516,888    100%

 

As of March 31, 2024, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of
coins staked		   Fair Value 
Digital on staked:            
Counterparty B   3.12%   38,201,004.7950    33,847,408 
Self custody   8.88%   1,315,000.0000    332,426,181 
Total        39,516,004.7950   $366,273,589 

  

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates   Number of
coins staked		   Fair Value 
Digital on staked:            
Counterparty B   3.15%   38,201,004.7950    30,516,888 
Total        38,201,004.7950   $30,516,888 

 

As of March 31, 2024, digital assets staked were concentrated with counterparties as follows:

 

   Geography  March 31,
2024		 
Digital on staked:       
Counterparty B  Switzerland   9%
Self custody  Switzerland   91%
Total      9%

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:       
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of March 31, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

19

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

8.Acquisition of Reflexivity

 

On February 6, 2024, the Company acquired 100% interest in Reflexivity LLC (“Reflexivity”) by issuing 5,000,000 common shares. Reflexivity is a private company incorporated in the United States that operates a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry.

 

Details of the consideration for acquisition, net assets acquired and goodwill are as follows:

 

Purchase price consider paid:    
Fair value of shares issued  $3,100,000 
Fair value of shares issued  $3,100,000 

 

Fair value of assets and liabilities assumed:    
Cash  $319,643 
Amounts receivable   18,131 
Prepaid expenses   21,448 
Client relationships   315,000 
Brand Name   66,000 
Technology   78,000 
Accounts payable   (1,383)
Deferred revenue   (353,226)
   $463,613 
Goodwill   2,636,387 
Total net assets aquired  $3,100,000 

 

The goodwill acquired as part of the Reflexivity acquisition is made up of assembled workforce and implied goodwill related to Reflexivity’s management and staff experiences and Reflexivity’s reputation in the industry. It will not be deductible for tax purposes.

 

20

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Intangibles and goodwill

 

Cost  Client relationships   Technology   Brand Name   Total 
Balance, December 31, 2023 and 2022  $-   $-   $42,789,968   $42,789,968 
Acquisition of Reflexivty LLC   315,000    78,000    66,000    459,000 
Acquisition of Solana IP   -    4,962,021    -    4,962,021 
Balance, March 31, 2024  $315,000   $5,040,021   $42,855,968   $48,210,989 

 

Accumulated Amortization         

Brand Name

   Total 
Balance, December 31, 2022  $-   $-   $(37,208,780)  $(37,208,780)
Amortization   -    -    (2,038,300)   (2,038,300)
Balance, December 31, 2023  $-   $-   $(39,247,080)  $(39,247,080)
Amortization   (5,250)   (1,300)   (510,675)   (517,225)
Impairment loss   -    (4,962,021)   -    (4,962,021)
Balance, March 31, 2024  $(5,250)  $(4,963,321)  $(39,757,755)  $(44,726,326)
                     
Balance, December 31, 2023  $-   $-   $3,542,888   $3,542,888 
Balance, March 31, 2024  $309,750   $76,700   $3,098,213   $3,484,663 

 

On February 9, 2024, the Company acquired intellectual property by issuing 7,297,090 common shares of the Company. The intellectual property acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by the Company. At the time of acquisition, the intangible assets were in an early stage of research and development, with significant uncertainties surrounding its future market demand, sales price and production costs, and as such, on February 9, 2024, the Company recognized an impairment loss of $4,962,021.

 

10.Accounts payable and accrued liabilities

 

   31-Mar-24   31-Dec-23 
Corporate payables  $4,585,876   $4,443,937 
Digital asset liquidity provider   4,614,314    4,402,557 
Related party payable (Note 21)   84,825    328,352 
   $9,285,015   $9,174,846 

 

21

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

11.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As of March 31, 2024, the loan principal of $53,522,500 (US$39,500,000) (December 31, 2023 - $52,242,700 (US$39,500,000)) was outstanding. The loans terms are 90 days and open term and have interest rates ranging from 9.5% and 18% The extended loans are secured with 658 BTC and 9,946 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis. On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,679,315 and secured with 475 BTC. See Note 7.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of March 31, 2024, the loan principal of $4,065,000 (US$3,000,001) (December 31, 2023 - $3,967,801 (US$3,000,001)) was outstanding.

 

12.ETP holders payable

 

The fair market value of the Company’s ETPs as at March 31, 2024 and December 31, 2023 were as follows:

 

   March 31,
2024		   December 31, 2023 
   $   $ 
Valour Bitcoin Zero EUR   25,105,276    13,325,026 
Valour Bitcoin Zero SEK   202,215,185    113,727,037 
Valour Ethereum Zero EUR   2,692,002    1,426,174 
Valour Ethereum Zero SEK   100,527,911    64,723,237 
Valour Polkadot EUR   199,547    217,017 
Valour Polkadot SEK   25,933,856    18,056,128 
Valour Cardano EUR   177,861    105,209 
Valour Cardano SEK   53,583,901    43,131,123 
Valour Uniswap EUR   249,592    132,960 
Valour Uniswap SEK   5,130,187    2,780,982 
Valour Binance EUR   96,997    1,560 
Valour Binance SEK   813,117    - 
Valour Solana EUR   8,940,736    4,215,658 
Valour Solana SEK   422,008,623    232,410,677 
Valour Cosmos EUR   174,667    159,572 
Valour Digital Asset Basket 10 EUR   419,815    301,427 
Valour Digital Asset Basket 10 SEK   5,676    42,770 
Valour Bitcoin Carbon Neutral EUR   21,267    5,288 
Valour Avalanche EUR   289,686    137,447 
Valour Avalanche SEK   30,798,678    13,034,136 
Valour Enjin EUR   35,814    197,061 
Valour Ripple SEK   4,112,765    - 
1Valour Bitcoin Physical Carbon Neutral   406,808    - 
1Valour Ethereum Physical Staking   196,903    - 
1Valour Internet Computer Physical Carbon Neutral   22,988,956    - 
1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip   802,039    - 
    907,927,865    508,130,490 

 

22

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

12.ETP holders payable (continued)

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

13.Realized and net change in unrealized gains and (losses) on digital assets

 

   31-Mar-24   31-Mar-23 
Realized gains / (loss) on digital assets  $69,689,782   $(9,607,996)
Unrealized gains / (loss) on digital assets   247,433,275    72,626,529 
   $317,123,056   $63,018,533 

 

14.Realized and net change in unrealized gains and (losses) on ETP payables

 

   31-Mar-24   31-Mar-23 
Realized gains / (loss) on ETPs  $(99,760,190)  $32,834,448 
Unrealized gains / (loss) on ETPs   (228,493,695)   (108,347,939)
   $(328,253,885)  $(75,513,491)

 

15.Expenses by nature

 

   Three months ended
March 31		 
   2024   2023 
Management and consulting fees  $1,453,118   $1,089,615 
Travel and promotion   574,534    117,293 
Office and rent   595,564    628,628 
Accounting and legal   252,906    213,526 
Regulatory and transfer agent   92,015    67,407 
   $2,968,137   $2,116,469 

 

16.Share Capital

 

a)As at March 31, 2024 and December 31, 2023, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non- retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

23

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share Capital (continued)

 

b)Issued and outstanding shares

 

   Number of
Common Shares		   Amount 
Balance, December 31, 2022   219,010,501   $166,151,401 
Private placement financings   11,812,500    1,117,145 
Shares issued for debt settlement   13,697,095    1,449,102 
Warrant allocation        (243,330)
Options exercised   575,000    181,585 
DSU exercised   757,500    317,150 
Issued on convertible debt   30,000,000    1,585,524 
Shares issued on acquisition of investment   805,612    128,898 
Balance, December 31, 2023   276,658,208   $170,687,476 
Acquisition of Refelxivty LLC (see Note 8)   5,000,000    3,100,000 
Acquisiton of Solana IP (see Note 9)   7,297,090    4,962,021 
DSU exercised   1,037,281    421,584 
Warrant exercised   176,924    71,432 
Balance, March 31, 2024   290,169,503   $179,242,513 

 

During the year ended December 31, 2023, the Company issued 13,697,095 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $172,093. Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

On October 24, 2023, the Company issued convertible debt in exchange for $3,000,000, the notes mature two years from issuance and accrue interest at 8% per annum. Upon conversion or at the maturity of the note the notes were convertible for an equal number of common shares and share purchase warrants, of the Company with an exercise price of $0.20. An officer of the Company subscribed for $361,250 convertible debt.

 

On November 6, 2023, the conversion option was exercised resulting in the issuance of 30,000,000 common shares of the Company and 30,000,000 warrants, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.20 for a period of 60 months following the closing date. At the issue date, the fair value of the warrants was estimated at $0.10 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 151.9%; risk-free interest rate of 3.87% and an expected life of 5 years. As a result of the conversion option, an officer of the Company received 3,612,500 common shares and 3,612,500 warrants for his convertible debenture.

 

On November 6, 2023, the Company issued 805,612 common shares of the Company in exchange for a $128,898 investment in Neuronomics AG. The shares were valued based on the closing price of the Company’s stock at the date of the exchange. An officer of the Company received 402,808 common shares in exchange for 362 shares of Neuromomics AG.

 

On November 22, 2023, the Company closed a non-brokered private placement financing and issued 11,812,500 units for gross proceeds of $1,890,000 at a price of $0.16 per unit, each unit consists of one common shares of the company and one warrant, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.23 for a period of 24 months following the closing date. An officer of the Company subscribed 3,125,000 units for $335,167. At the issue date, the fair value of the warrants was estimated at $0.16 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 139.6%; risk-free interest rate of 4.40% and an expected life of 2 years.

 

24

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options  DSU  Warrants    
   Number of
Options		   Weighted
average
exercise
prices		   Value of
options		   Number of
DSU		   Value of
DSU		   Number of
warrants		   Weighted
average
exercise
prices		   Value of
warrants		   Total Value 
December 31, 2022   17,777,500  $1.27    20,344,765    6,370,000   $6,977,106    16,740,486  $0.20   $588,113   $27,909,984 
Granted   8,900,000    0.10    875,928    4,359,286    2,044,291    41,812,500    0.21    2,430,661    5,350,880 
Exercised   (575,000)   0.15    (86,710)   (757,500)   (317,150)   -    -    -    (403,860)
Expired / cancelled   (2,697,500)   1.11    (3,138,269)   (327,500)   (663,587)   (12,684,560)   0.03    (423,261)   (4,225,117)
December 31, 2023   23,405,000  $0.99   $17,995,714    9,644,286   $8,040,660    45,868,426  $0.30   $2,595,513   $28,631,887 
Granted   125,000    0.69    1,460,825    -    156,689    -    -    -    1,617,515 
Exercised   -    -    -    (1,037,281)   (421,584)   (176,924)   0.30    (18,354)   (439,938)
March 31, 2024   23,530,000  $0.99   $19,456,539    8,607,005   $7,775,765    45,691,502  $0.20   $2,577,159   $29,809,464 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

On March 12, 2024, the Company granted 125,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.69 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $79,575 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

On July 13, 2023, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.115 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $105,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.47%; and an expected average life of 5 years.

 

On November 24, 2023, the Company granted 2,650,000 stock options to a consultant and directors of the Company to purchase common shares of the Company for the price of $0.29 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $731,400 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.7%; risk- free interest rate of 3.83%; and an expected average life of 5 years. Directors of the received 2,500,000 options.

 

On December 4, 2023, the Company granted 4,500,000 stock options to an officer of the Company to purchase common shares of the Company for the price of $0.45 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $2,162,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.9%; risk-free interest rate of 3.54%; and an expected average life of 5 years.

 

25

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

On December 11, 2023, the Company granted 750,000 stock options to a consult and directors of the Company to purchase common shares of the Company for the price of $0.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $308,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 153.1%; risk- free interest rate of 3.53%; and an expected average life of 5 years. Directors of the received 500,000 options.

 

The Company recorded $1,460,825 of share-based payments during the three months ended March 31, 2024 (three months ended March 31, 2023 - $189,449).

 

The following share-based payment arrangements were in existence at March 31, 2024:

 

Number
outstanding		     Number exercisable     Grant
date		     Expiry
date		     Exercise
price		     Fair value at grant date     Grant date share
price		     Expected volatility     Expected life
(yrs)		     Expected
dividend yield		     Risk-free interest
rate		  
510,000       510,000       16-Nov-20       16-Nov-25     $ 0.09       40,392     $ 0.09       138.70 %     5       0 %     0.46 %
250,000       250,000       24-Feb-21       24-Feb-26     $ 1.58       574,750     $ 2.55       147.00 %     5       0 %     0.73 %
1,000,000       1,000,000       22-Mar-21       22-Mar-26     $ 1.58       1,906,500     $ 2.12       145.70 %     5       0 %     0.99 %
2,170,000       2,170,000       09-Apr-21       09-Apr-26     $ 1.58       3,468,962     $ 1.78       145.20 %     5       0 %     0.95 %
2,900,000       2,900,000       18-May-21       18-May-26     $ 1.22       3,263,080     $ 1.25       145.60 %     5       0 %     0.95 %
1,000,000       1,000,000       18-May-21       18-May-26     $ 1.22       1,125,200     $ 1.25       145.60 %     5       0 %     0.95 %
1,950,000       1,950,000       25-May-21       25-May-26     $ 1.11       1,944,540     $ 1.11       145.50 %     5       0 %     0.86 %
1,150,000       1,150,000       13-Aug-21       13-Aug-26     $ 1.58       1,461,305     $ 1.43       143.70 %     5       0 %     0.84 %
250,000       250,000       21-Sep-21       21-Sep-26     $ 1.70       380,375     $ 1.70       144.00 %     5       0 %     0.85 %
250,000       250,000       13-Oct-21       13-Oct-26     $ 2.10       470,375     $ 2.10       144.00 %     5       0 %     1.27 %
500,000       500,000       09-Nov-21       09-Nov-26     $ 3.92       1,758,050     $ 3.92       144.30 %     5       0 %     1.37 %
250,000       250,000       31-Dec-21       31-Dec-26     $ 3.11       698,525     $ 3.11       145.00 %     5       0 %     1.25 %
500,000       500,000       09-May-22       09-May-27     $ 2.00       591,950     $ 1.34       146.00 %     5       0 %     2.76 %
500,000       500,000       20-May-22       20-May-27     $ 1.00       334,300     $ 0.75       146.80 %     5       0 %     2.70 %
400,000       400,000       21-Jul-22       21-Jul-27     $ 0.80       195,640     $ 0.50       147.50 %     5       0 %     3.00 %
500,000       500,000       17-Oct-22       17-Oct-27     $ 0.17       75,350     $ 0.17       149.50 %     5       0 %     3.60 %
425,000       425,000       19-Oct-22       19-Oct-27     $ 0.17       64,090     $ 0.17       149.40 %     5       0 %     3.71 %
1,000,000       500,000       13-Jul-23       13-Jul-28     $ 0.115       105,000     $ 0.12       149.10 %     5       0 %     3.71 %
2,650,000       662,500       24-Nov-23       24-Nov-28     $ 0.29       731,400     $ 0.29       151.70 %     5       0 %     3.83 %
4,500,000       1,125,000       04-Dec-23       04-Dec-28     $ 0.45       2,162,700     $ 0.45       151.90 %     5       0 %     3.54 %
750,000       187,500       11-Dec-23       11-Dec-28     $ 0.52       308,700     $ 0.52       153.10 %     5       0 %     3.53 %
125,000       -       12-Mar-24       12-Mar-29     $ 0.69       79,525     $ 0.69       154.30 %         5              0 %     3.47 %
23,530,000       15,005,000                               21,740,709                                          

 

The weighted average remaining contractual life of the options exercisable at March 31, 2024 was 3.22 years (December 31, 2023 – 3.46 years).

 

Warrants

 

As at March 31, 2024, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		   Grant
date		   Expiry
date		   Exercise
price		   Fair value at grant date   Grant date share
price		   Expected volatility   Expected life
(yrs)		   Expected
dividend yield		   Risk-free interest
rate		 
Warrants   3,360,509    14-Nov-22    14-Nov-24    $0.30    348,614   $0.17    152.7%         2          0%   3.87%
Warrants   187,493    14-Nov-22    14-Nov-24    $0.30    19,865   $0.17    152.7%   2    0%   3.87%
Warrants   331,000    29-Nov-22    29-Nov-24    $0.30    30,010   $0.18    141.7%   2    0%   3.95%
Warrants   30,000,000    06-Nov-23    06-Nov-28    $0.20    1,414,476   $0.17    151.9%   5    0%   3.87%
Warrants   11,812,500    22-Nov-23    22-Nov-25    $0.23    772,855   $0.33    139.6%   2    0%   4,40%
Warrant issue costs                       (8,661)                         
    45,691,502                   2,577,159                          

 

26

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Share-based payments reserves (continued)

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

On July 13, 2023, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On November 24, 2023, the Company granted 1,434,286 DSUs to consultants of the Company. These DSUs have a grant day fair value of $277,500 and vest immediately.

 

On November 24, 2023, the Company granted 925,000 DSUs to officers and consultants of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day. Officers of the Company received 400,000 DSUs.

 

The Company recorded $156,689 in share-based compensation during the three months ended March 31, 2024 (three months ended March 31, 2023 - $751,837).

 

18.Financial instruments

 

Financial assets and financial liabilities as at March 31, 2024 and December 31, 2023 are as follows:

 

   Asset / (liabilities) at amortized cost   Assets / (liabilities) at fair value through profit/(loss)   Total 
December 31, 2023            
Cash  $6,727,482   $-   $6,727,482 
Amounts receivable   54,036    -    54,036 
Private investments   -    43,540,534    43,540,534 
USDC   -    673    673 
Accounts payable and accrued liabilities   (9,174,846)   -    (9,174,846)
Loan payable   (56,210,709)   -    (56,210,709)
ETP holders payable   -    (508,130,490)   (508,130,490)
March 31, 2024               
Cash  $9,412,862   $-   $9,412,862 
Amounts receivable   2,330,255    -    2,330,255 
Private investments   -    41,793,929    41,793,929 
USDC   -    691    691 
Accounts payable and accrued liabilities   (9,285,015)   -    (9,285,015)
Loan payable   (57,587,500)   -    (57,587,500)
ETP holders payable   -    (907,927,865)   (907,927,865)

 

27

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada, the United States and Europe. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

Custodian Risks

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

28

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at March 31, 2024, the Company had current assets of $887,480,115 (December 31, 2023 - $497,513,493) to settle current liabilities of $975,069,685 (December 31, 2023 - $573,516,045).

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at March 31, 2024 and December 31, 2023:

 

   March 31, 2024 
   Total   Less than
1 year		   1-3 years 
Cash  $9,412,862   $9,412,862   $- 
Amounts receivable   2,330,255    2,330,255    - 
Prepaid expenses   2,147,431    2,147,431    - 
Digital assets   875,418,425    873,589,568    1,828,857 
Private investments   41,793,929    -    41,793,929 
Accounts payable and accrued liabilities   (9,285,015)   (9,285,015)   - 
Loans payable   (57,587,500)   (57,587,500)   - 
ETP holders payable   (907,927,865)   (907,927,865)   - 
Total assets / (liabilities) - March 31, 2024  $(43,697,478)  $(87,320,265)  $43,622,786 

 

   December 31, 2023 
   Total  

Less thn

1 year

   1-3 years 
Cash   6,727,482   $6,727,482   $- 
Amounts receivable   54,036    54,036    - 
Prepaid expenses   1,509,824    1,509,824    - 
Digital assets   489,865,638    489,222,151    643,487 
Private investments   43,540,534    -    43,540,534 
Accounts payable and accrued liabilities   (9,174,846)   (9,174,846)   - 
Loan payable   (56,210,709)   (56,210,709)   - 
ETP holders payable   (508,130,490)   (508,130,490)   - 
Total assets / (liabilities) - December 31, 2023  $(31,818,531)  $(76,002,552)  $44,184,021 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

29

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At March 31, 2024, two investments made up approximately 4.0% (December 31, 2023 – two investments of 7.0%) of the total assets of the Company.

 

For the three months ended March 31, 2024, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.01 per share.

 

For the year ended December 31, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.2 million, or $0.02 per share.

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at March 31, 2024, a 1% change in interest rates could result in $94,000 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro Swiss Franc and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at March 31, 2024 and December 31, 2023, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   March 31, 2024 
   United States   British   Swiss   Euro 
Cash  $324,773   $20,291   $1,736,698   $5,618,349 
Receivables   153,143    -    -    1,677 
Private investments   4,115,032    -    37,678,898    - 
Prepaid expenses   2,033,569    -    -    - 
Digital assets   875,418,425    -    -    - 
Accounts payable and accrued liabilities   (1,115,106)   (75,692)   (78,831)   (21,948)
Loan payable   (57,587,500)   -    -    - 
ETP holders payable   (907,927,865)   -    -    - 
Net assets (liabilities)  $(84,585,529)  $(55,401)  $39,336,766   $5,598,078 

 

30

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

(c)Currency risk (continued)

 

   December 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of March 31, 2024 would result in an estimated increase (decrease) in net income of approximately $3,963,300 (December 31, 2023 - $2,601,500).

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

31

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2023 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at March 31, 2024 and December 31, 2023.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market price)   (Valuation technique -observable market Inputs)   (Valuation technique - non-observable market inputs)   Total 
Publicly traded investments  $          -   $-   $-   $- 
Privately traded invesments   -    -    41,793,929    41,793,929 
Digital assets   -    691    -    691 
March 31, 2024  $-   $691   $41,793,929   $41,793,929 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 

 

32

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended March 31, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2024		   December 31,
2023		 
Balance, beginning of period  $673   $1,586 
Acquired (disposal)   18    (913)
Balance, end of period  $691   $673 

  

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended March 31, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  March 31,
2024		   December 31,
2023		 
Balance, beginning of period  $43,540,534   $30,015,445 
Purchases   -    128,898 
Unrealized gain/(loss) net   (1,746,605)   13,396,191 
Balance, end of period  $41,793,929   $43,540,534 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

33

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at March 31, 2024 and December 31, 2023.

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $1,246,700   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,190,763   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,568   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   37,550,000   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
March 31, 2024  $41,793,929  
                
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   39,395,000   Market approach  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534  

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at March 31, 2024, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $124,670 (December 31, 2023 - $121,689) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at March 31, 2024, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $219,076 (December 31, 2023 - $213,828) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at March 31, 2024, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31, 2024, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

34

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at March 31, 2024, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $67,757 (December 31, 2023 - $66,137) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at March 31, 2024, the valuation of SDK:Meta LLC was $nil (December 31, 2023 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at March 31, 2024, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

Amina Bank AG (formerly SEBA Bank AG) (“Amina”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at March 31, 2024, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,755,000 (December 31, 2023 +/- $3,939,500) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at March 31, 2024, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at March 31, 2024, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at March 31, 2024. As at March 31, 2024, a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2023 - $nil) change in the carrying amount.

 

35

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open-source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

(c)Digital currency risk factors: Political, regulatory risk and technology in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

36

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the three months ended March 31, 2024.

 

21.Related party disclosures

 

a)The condensed consolidated interim financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest 
DeFi Capital Inc.   100 
DeFi Holdings (Bermuda) Ltd.   100 
Electrum Streaming Inc.   100 
Reflexivity LLC   100 
Valour Inc.   100 
DeFi Europe AG   100 
Valour Management Limited   100 
Valour Digital Securities Limited   0 

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non- executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three months ended March 31, 2024 and 2023 were as follows:

 

   Three months ended
March 31,		 
   2024   2023 
Short-term benefits  $330,006   $424,173 
Shared-based payments   1,231,737    134,971 
   $1,561,743   $559,144 

 

37

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Related party disclosures (continued)

 

As at March 31, 2024, the Company had $15,000 (December 31, 2022 - $147,485) owing to its current key management, and $314,136 (December 31, 2022 - $314,136) owing to its former key management. Such amounts are unsecured, non- interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the three months ended March 31, 2024 and 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended
March 31,		 
   2024   2023 
2227929 Ontario Inc.  $30,000   $30,000 
   $30,000   $30,000 

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at March 31, 2024, the Company had a payable balance of $259,999 (December 31, 2023 - $226,000) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

As at March 31, 2024, the Company incurred $3,958 (March 31, 2023 - $23,338) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $69,825 (December 31, 2023 – $165,868) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($75,692) (December 31, 2023 -$74,466) expenses owed to Vik Pathak, a former director and officer of the Company.

 

See Note 17.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of March 31, 2024 and December 31, 2023.

 

Investment  Nature of relationship to invesment 

Estimated

Fair value

 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,190,764 
Aminna Bank AG *  Former Director (Olivier Roussy Newton) of investee   37,550,000 
Total investment - March 31, 2024     $39,740,764 

 

*Private companies

 

Investment  Nature of relationship to invesment 

Estimated

Fair value

 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - December 31, 2023     $41,533,380 

 

*Private companies

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at March 31, 2024.

 

38

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Related party disclosures (continued)

 

During the year ended December 31, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

During the year ended December 31, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

22.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,299,500 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $969,400, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

23.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in the Untied States, Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. The United States operates the Company’s research firm. Information about the Company’s assets by geographical location is detailed below.

 

March 31, 2024  Canada   United States   Bermuda   Cayman Islands   Total 
Cash   232,629    323,210    -    8,857,023    9,412,862 
Amounts receivable   -    130,536    -    2,199,719    2,330,255 
Prepaid expenses   104,426    23,840    9,436    2,009,729    2,147,431 
Digital Assets   1,495,483    -    391,517    873,531,425    875,418,425 
Property, plant and equipment   -    -    2,455    1,987    4,442 
Other non-current assets   93,410,117    -    -    1,216,890    94,627,007 
Total assets   95,242,655    477,586    403,408    887,816,772    983,940,422 

 

December 31, 2023 

 

Canada

  

 

Bermuda

  

Cayman Islands

  

 

Total

 
Cash   59,069    -    6,668,412    6,727,481 
Amounts receivable   6,878    -    47,159    54,037 
Public investments   -    -    -    - 
Prepaid expenses   77,521    -    1,432,303    1,509,824 
Digital Assets   503,669    218,131    489,143,837    489,865,637 
Property, plant and equipment   -    5,073    2,606    7,679 
Other non-current assets   92,578,559    -    1,216,890    93,795,449 
Total assets   93,225,696    223,204    498,511,207    591,960,107 

 

39

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the three months ended March 31, 2024  DeFi   Reflexivity   DeFi Bermuda   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   991,814    25,982    162,515    315,942,744    317,123,055 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    -    (328,253,885)   (328,253,885)
Staking and lending income   -    -    61    5,807,941    5,808,001 
Management fees   -    -    -    1,731,882    1,731,882 
Research revenue   -    501,868    -    -    501,868 
Node revenue   -    -    4,675    -    4,675 
Realized (loss) on investments, net   -    -    -    -    - 
Unrealized (loss) on investments, net   (1,776,414)   -    -    (62,618)   (1,839,032)
Interest income   868    -    -    -    868 
Total revenue   (783,732)   527,850    167,251    (4,833,936)   (4,922,567)
Expenses                         
Operating, general and administration   830,296    308,062    3,130    1,826,648    2,968,136 
Share based payments   1,617,515    -    -    -    1,617,515 
Depreciation - property, plant and equipment   -    -    2,617    619    3,236 
Amortization - intangibles   517,225    -    -    -    517,225 
Finance costs   13,345    -    -    1,724,169    1,737,514 
Transaction costs   -    -    -    490,397    490,397 
Foreign exchange (gain) loss   28,999    -    -    794,145    823,144 
Impairment loss   4,962,021    -    -    -    4,962,021 
Total expenses   7,969,401    308,062    5,747    4,835,978    13,119,188 
Income (loss) before other item   (8,753,133)   219,788    161,503    (9,669,914)   (18,041,756)
Other comprehensive loss                         
Foreign currency translation (loss) gain   -    1,054    5,220    (1,275,326)   (1,269,052)
Net (loss) income and comprehensive (loss) income for the period   (8,753,133)   220,842    166,723    (10,945,240)   (19,310,808)

 

For the three months ended March 31, 2023  DEFI   DeFi Bermuda   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    24,880    62,993,653    63,018,533 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (75,513,491)   (75,513,491)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    14    571,799    571,813 
Management fees   -    -    215,677    215,677 
Node revenue   -    5,821    -    5,821 
Realized (loss) on investments, net   -    -    (587)   (587)
Unrealized (loss) on investments, net   355,005    -    2,348    357,353 
Interest income   488    -    341    829 
Total revenue   355,493    30,715    (11,730,260)   (11,344,052)
Expenses                    

Operating, general and administration

   921,360    13,325    1,181,784    2,116,469 
Share based payments   941,286    -    -    941,286 
Depreciation - property, plant and equipment   -    2,617    619    3,236 
Depreciation - right of use assets   -    -    34,034    34,034 
Amortization - intangibles   509,575    -    -    509,575 
Finance costs        -    1,286,466    1,286,466 
Transaction costs   -    -    232,775    232,775 
Foreign exchange (gain) loss   7,116    -    3,345    10,461 
Total expenses   2,379,337    15,942    2,739,023    5,134,302 
(Loss) income before other item   (2,023,844)   14,772    (14,469,282)   (16,478,354)
Other comprehensive loss                    

Foreign currency translation (loss) gain

   -    (168)   34,057    33,889 

Net (loss) income and comprehensive (loss) income for the period

   (2,023,844)   14,604    (14,435,225)   (16,444,465)

 

40

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results

 

The Company has restated its March 31, 2023 condensed consolidated interim statement of financial position, condensed consolidated interim statement of operations and comprehensive loss and condensed consolidated interim statement of cash flow to correct material errors and omissions in its prior filing. The following tables present the impact of the restatement adjustments on the Company's previously issued condensed consolidated interim financial statements for the three months ended March 31, 2023

a.To impair the digital assets held at Genesis to its recoverable amount of $8,134,953 (US$6,144,205).

 

b.To revalue the fair value 3iQ investments to $1,246,816.

 

c.To revalue the fair value of SEBA Bank AG to $26,014,500.

 

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

   March 31,
2023
$
As previously reported		   Restatement   March 31, 2023
$
As Restated		 

Assets

            
Current            
Cash and cash equivalents
   4,402,692         4,402,692 
Amounts receivable   91,099         91,099 
Public investments, at fair value through profit and loss   3,518         3,518 
Prepaid expenses   389,979         389,979 
Digital assets   114,424,324    (10,188,642)   104,235,682 
Digital assets loaned   56,718,460         56,718,460 
Digital assets staked   19,567,096    (10,188,642)   19,567,096 
Total current assets   195,597,168       185,408,526 
Private investments, at fair value through profit and loss   43,859,941    (13,489,824)   30,370,117 
Digital assets   87,232         87,232 
Equipment   17,389         17,389 
Intangible assets   5,071,613         5,071,613 
Goodwill   46,712,027         46,712,027 
Total assets   291,345,370    (23,678,466)   267,666,904 
Liabilities and shareholders' equity               
Current liabilities               
Accounts payable and accrued liabilities
   7,263,149         7,263,149 
Loans payable   57,102,191         57,102,191 
ETP holders payable   190,895,482         190,895,482 
Total current liabilities   255,260,822    -    255,260,822 
Shareholders' equity               
Common shares
   166,258,901         166,258,901 
Preferred shares   4,321,350         4,321,350 
Share-based payments reserves   26,851,949         26,851,949 
Accumulated other comprehensive income   (2,962,329)        (2,962,329)
Deficit   (158,385,324)   (23,678,466)   (182,063,790)
Total equity   36,084,547    (23,678,466)   12,406,081 
Total liabilities and equity   291,345,369    (23,678,466)   267,666,903 

 

41

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

   Three months ended March 31, 
   2023       2023 
   $       $ 
   reported   Restatement   As Restated 
Revenues               
Realized and net change in unrealized gains and (losses) on digital assets   70,773,827    (7,755,294)   63,018,533 
Realized and net change in unrealized gains and (losses) on ETP payables   (75,513,491)        (75,513,491)
Staking and lending income   571,813         571,813 
Management fees   215,677         215,677 
Node revenue   5,821         5,821 
Realized (loss) on investments, net   (587)        (587)
Unrealized (loss) on investments, net   357,353         357,353 
Interest income   829         829 
Total revenues   (3,588,758)   (7,755,294)   (11,344,052)
Expenses               

Operating, general and administration

   2,116,469         2,116,469 
Share based payments   941,286         941,286 
Depreciation - property, plant and equipment   3,236         3,236 
Depreciation - right of use assets   34,034         34,034 
Amortization - intangibles   509,575         509,575 
Finance costs   1,286,466         1,286,466 
Transaction costs   232,775         232,775 
Foreign exchange gains (loss)   10,461         10,461 
Total expenses   5,134,302    -    5,134,302 
Net (loss) for the period   (8,723,060)   (7,755,294)   (16,478,354)
Other comprehensive loss               
Foreign currency translation loss   33,889    -    33,889 

Net (loss) and comprehensive income (loss) for the period

   (8,689,171)   (7,755,294)   (16,444,465)
    -           
(Loss) per share               
Basic   (0.04)        (0.08)
Diluted   (0.04)        (0.08)
                
Weighted average number of shares outstanding:               
Basic   219,010,501         219,010,501 
Diluted   219,010,501         219,010,501 

 

42

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements
For the three and six months ended June 30, 2024 and 2023
(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

 

   Three months ended March 31, 
   2023       2023 
   $       $ 
   As previously reported   Restatement   As Restated 
Cash (used in) provided by operations:            
Net (loss) for the year  $(8,723,060)  $(7,755,294)  $(16,478,354)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:               
Share-based payments   941,285         941,285 
Interest income   (829)        (829)
Interest expense   3,590         3,590 
Depreciation - Property, plant & equipment   3,236         3,236 
Depreciation - right of use assets   34,034         34,034 
Amortization - Intangible asset   509,575         509,575 
Realized loss on investments, net   587         587 
Unrealized (gain) loss on investments, net   (357,353)        (357,353)
Realized and net change in unrealized (gains) and loss on digital assets   (70,773,827)   7,755,294    (63,018,533)
Realized and net change in unrealized (gains) and loss on ETP   75,513,491         75,513,491 
Staking and lending income   (571,813)        (571,813)
Node revenue   (5,821)        (5,821)
Management fees   (215,677)        (215,677)
Unrealized loss on foreign exchange   1,136,940         1,136,940 
    (2,505,642)   -    (2,505,642)
Adjustment for:               
Purchase of digital assets   (90,978,084)        (90,978,084)
Disposal of digital assets   77,173,457         77,173,457 
Disposal of investments   12,496         12,496 
Change in amounts receivable   (24,048)        (24,048)
Change in prepaid expenses and deposits   174,420         174,420 
Change in accounts payable and accrued liabilities   1,648,547         1,648,547 
Net cash (used in) operating activities   (14,498,854)   -    (14,498,854)
Financing activities               
Proceeds from ETP holders   49,015,215         49,015,215 
Payments to ETP holders   (39,335,963)        (39,335,963)
Loan Payable   4,319,901         4,319,901 
Net cash provided by financing activities   13,999,153    -    13,999,153 
                

Effect of exchange rate changes on cash and cash equivalents

   (3,772)   -    (3,772)
Change in cash and cash equivalents   (503,473)   -    (503,473)
Cash, beginning of year   4,906,165    -    4,906,165 
Cash and cash equivalents, end of period  $4,402,692   $-   $4,402,692 

 

43

 

Exhibit 99.116

 

 

DeFi Technologies Subsidiary Valour Inc. Launches World’s First Yield Bearing Bitcoin (BTC) ETP in Collaboration with Core Foundation, Offering Investors Exposure to Bitcoin with a 5.65% Yield

 

●Launch of World’s First Yield-Bearing Bitcoin (BTC) ETP: Valour Inc. and Core Foundation collaborate to introduce the world’s first yield-bearing Bitcoin (BTC) ETP on the Nordic Growth Market (NGM) exchange with a 1.9% management fee, offering investors exposure to Bitcoin with a 5.65% yield.

 

●Powering Valour Bitcoin Staking (BTC) SEK ETP with Core Blockchain: The Core blockchain network, powered by Bitcoin, forms the foundation for Valour Bitcoin Staking (BTC) SEK ETP (ISIN: CH1213604536), providing Ethereum Virtual Machine (EVM) compatibility and the innovative Satoshi Plus consensus mechanism to enhance security and scalability.

 

●Simplified Investment with Valour Bitcoin Staking (BTC) SEK ETP: Valour Bitcoin Staking (BTC) SEK ETP streamlines Bitcoin investment by delegating Bitcoins to Core validators, the yield is attributed to the Net Asset Value (NAV) on a daily basis. This innovative product ensures custodial control and security while offering investors substantial yield without requiring them to sell or trade their Bitcoin holdings.

 

TORONTO, May 15, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched the world’s first yield-bearing Bitcoin (BTC) ETP in collaboration with the Core Foundation, an organization dedicated to the development of the Core blockchain network (“Core Chain”). This offering provides investors exposure to Bitcoin with a 5.65% yield on the Nordic Growth Market (NGM) exchange.

 

The Core blockchain network is a Bitcoin-powered layer-one blockchain for EVM-Compatible smart contracts. With 50% of Bitcoin mining hash power contributing to Core’s security in exchange for unlocking Bitcoin utility and rewards, Core Chain is the most Bitcoin-aligned EVM blockchain (BTCfi, Bitcoin staking, and more).

 

Trading of the Valour Bitcoin Staking (BTC) SEK ETP (ISIN: CH1213604536) commenced on May 10, 2024 with a 1.9% management fee, marking a historic moment as the world’s first-of-its-kind Yield Bearing Bitcoin ETP. This innovative offering allows investors to gain exposure to Bitcoin while receiving a remarkable 5.65% yield, all without the need to sell or trade Bitcoin directly.

 

 

 

Introducing the World’s First Yield Bearing Bitcoin (BTC) ETP (CNW Group/DeFi Technologies Inc.)

 

Valour Bitcoin Staking (BTC) SEK ETP simplifies investment in the world’s best-known digital asset, making it easier and more secure for investors to participate in Bitcoin’s potential upside. The yield is attributed to the Net Asset Value (NAV) on a daily basis, providing investors with yield without needing to sell or trade their Bitcoin holdings.

 

Valour Bitcoin Staking (BTC) SEK ETP generates yield by delegating Bitcoins to a validator on the Core Chain through non-custodial, native Bitcoin staking. Staked Bitcoins receive staking rewards in the form of CORE tokens, which are then reinvested into the product.

 

Core Chain, the underlying blockchain, is a Bitcoin-powered, decentralized, secure, and scalable layer 1 blockchain compatible with the Ethereum Virtual Machine (EVM). It is supported by Bitcoin’s Proof of Work (PoW) through a unique consensus mechanism known as ‘Satoshi Plus’. This mechanism enables Bitcoin miners to delegate their PoW (DPoW) to Core validators without impacting their future Bitcoin rewards, thereby unlocking the potential of Bitcoin-secured decentralized applications.

 

Despite engaging in Bitcoin staking, security remains uncompromised. Custodial control is maintained while yield is generated. Bitcoins are staked through a specific type of native Bitcoin transaction called a ‘stake transaction’, which includes a lockup period and Core Chain staking details such as the Core Validator and the Core reward address. During the lockup period, the Bitcoins cannot be transferred or slashed. Only the owner can transfer the Bitcoins once the lockup period expires.

 

 

 

 

“We are thrilled to introduce the world’s first Yield Bearing Bitcoin ETP, offering investors an unprecedented opportunity to gain exposure to Bitcoin while earning a substantial yield,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Valour Bitcoin Staking (BTC) ETP embodies our commitment to innovation in the digital asset space, providing investors with a seamless and secure way to participate in Bitcoin’s growth potential while offering a novel investment avenue for engaging with the world’s premier cryptocurrency”

 

“Core Foundation is excited to collaborate with Valour Inc. to launch the world’s first yield-bearing Bitcoin ETP. This groundbreaking product brings BTCfi to a wider audience, and sustainable yield to Bitcoin holders. Investors can now earn yield while maintaining exposure to Bitcoin. This is enabled by non-custodial Bitcoin staking which helps secure the Core blockchain. Core Foundation is proud to be the first and most reliable ecosystem to power these new offerings, underscoring Core Chain’s position as the most Bitcoin-aligned blockchain,” said Core contributor Brendon Sedo.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and cryptocurrency industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

About Core Chain

 

The Core blockchain network is a Bitcoin-powered layer-one blockchain for EVM-Compatible smart contracts. With 50% of Bitcoin mining hash powercontributing to Core’s security in exchange for unlocking Bitcoin utility and rewards, Core is the most Bitcoin-aligned EVM blockchain (BTCfi, Bitcoin staking, and more). This breakthrough has amassed a massive community of 2.2M Twitter followers and 250k Discord members which has translated into millions of Core adopters, over 15M unique addresses, and 230M transactions since its mainnet launch in January 2023.

 

2

 

 

Cautionary note regarding forward-looking information: This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to future development and listings of ETPs; staking of Bitcoin within the Core Chain; development and management of a validator node on the Core Chain; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour ETPs by exchanges and regulatory authorities; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

View original content to download multimedia:

 

https://www.prnewswire.com/news-releases/defi-technologies-subsidiary-valour-inc-launches-worlds-first-yield-bearing-bitcoin-btc-etp-in-collaboration-with-core-foundation-offering SOURCE DeFi Technologies Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/May2024/15/c0879.html

 

%SEDAR: 00007675E

 

For further information:

 

Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 07:30e 15-MAY-24

 

 

3

 

 

Exhibit 99.117

 

 

DeFi Technologies Announces Shareholder Call to Discuss Q1 2024 Financial Results

 

TORONTO – May 16, 2024 – DeFi Technologies Inc. (the “Company” or “DEFI”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, today announces it will conduct a shareholder call on Thursday, May 21, 2024 at 1:00 p.m. EST to discuss its financial performance for the three month period ending March 31, 2024.

 

IMPORTANT – To register for the webcast see below:

 

When: May 21, 2024

Time: 12:00 PM Eastern Time

Topic: DeFi Q1Financials

 

Register in advance for this webinar:

https://us06web.zoom.us/webinar/register/WN_WXqYSBQKRyiJBr_Nd9GjIA#/registration

 

After registering, you will receive a confirmation email containing information about joining the webinar.

 

Learn more about DeFi Technologies and Valour at defi.tech and valour.com.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

 

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; shareholder call of the Company future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

 

 

Exhibit 99.118

 

  

DeFi Technologies Engages Annemarie Tierney of Liquid Advisors, for Cross-listing to a US Securities Exchange

 

Toronto, Canada, May 23, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the engagement of Liquid Advisors, Inc. to facilitate the cross-listing of the common shares of the Company on a US securities exchange.

 

DeFi Technologies’ decision to engage Liquid Advisors, Inc. reflects its strategic commitment to driving growth and expanding its presence in the capital market. With a focus on enhancing investor visibility and access to capital markets, the company aims to leverage their expertise to facilitate its transition from the OTC to a major US stock exchange.

 

Annemarie Tierney, Founder and Principal of Liquid Advisors, brings a wealth of experience in U.S. securities laws, cross border listings, exchange listing standards, and corporate governance to the table. With years of experience, including at the SEC, the NYSE, Nasdaq, Skadden Arps (London and New York) and through providing strategic advice to Liquid Advisors’ diverse client base, Annemarie has a deep understanding of, digital asset legal and regulatory issues, SEC registration, and international securities transactional work, making her a valuable asset in DeFi Technologies’ uplisting process.

 

“We are encouraged to have Liquid Advisors, Inc. on board to support our uplisting efforts,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Their expertise and track record of success in navigating the complexities of the capital markets in the United States will be instrumental as we look to cross-list on a US-based major stock exchange. With their guidance, we are confident in our ability to seize the opportunity for expanded visibility, enhanced liquidity, and continued growth in the capital markets.”

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

  

  

 

About Liquid Advisors

 

Liquid Advisors is a strategic advisory firm offering private placement and secondary liquidity structuring and regulatory requirement services, including for digital or token-based securities. For more information please visit https://www.liquidadvisors.com/

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the cross-listing of the common shares of the Company on a US securities exchange; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

 

 

 

 

Exhibit 99.119

 

 

 

 

 

 

 

Exhibit 99.120

 

 

Notice of Availability of Proxy Materials for DeFi Technologies Inc.
Annual General and Special Meeting

 

Meeting Date and Time: June 25, 2024 at 10:00 a.m. (Toronto time)

 

Location: 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2 

 

 

 

Please be advised that the proxy materials for the above noted securityholder meeting are available for viewing and downloading online. This document provides an overview of these materials, but you are reminded to access and review the information circular and other proxy materials available online prior to voting. These materials are available at:

 

https://defi.tech/investor-relations

 

OR

 

www.sedarplus.ca

 

 

 

Obtaining Paper Copies of the Proxy Materials

 

Securityholders may request to receive paper copies of the proxy materials related to the above referenced meeting by mail at no cost. Requests for paper copies must be received by June 15, 2024 in order to receive the paper copy in advance of the meeting. Shareholders may request to receive a paper copy of the Materials for up to one year from the date the Materials were filed on www.sedarplus.ca.

 

For more information regarding notice-and-access or to obtain a paper copy of the Materials you may contact our transfer agent, Odyssey Trust Company, via www.odysseycontact.com or by phone at 1-888-290-1175 (toll-free within North America) or 1-587-885-0960 (direct from outside North America).

 

 

 

Notice of Meeting

 

The resolutions to be voted on at the meeting, described in detail in the Management Information Circular, are as follows:

 

1.Auditor Appointment: Appoint HDPCA Professional Corporation as auditors of DeFi Technologies Inc. (the “Corporation”) for the ensuing year and authorizing the directors of the Corporation to fix their renumeration;

 

2.Election of Directors: Consider and elect directors for the ensuing year;

 

3.Stock Option Plan. Consider and re-approve the Corporation’s rolling stock option plan; and

 

4.DSU Plan. Consider and re-approve the Corporation’s deferred share unit plan.

 

Voting

 

To vote your securities, please refer to the instructions on the enclosed Proxy or Voting Instruction Form. Your Proxy or Voting Instruction Form must be received by June 21, 2024 at 10:00 a.m. (Toronto time). 

 

Stratification

 

The Issuer is providing paper copies of its Management Information Circular only to those registered shareholders and beneficial shareholders that have previously requested to receive paper materials.

 

Annual Financial Statements

 

The Issuer is providing paper copies or emailing electronic copies of its annual financial statements to registered shareholders and beneficial shareholders that have opted to receive annual financial statements and have indicated a preference for either delivery method.

Exhibit 99.121

 

DeFi Technologies Inc. Announces Strategic Acquisition of Leading Solana Trading Systems IP

 

DEFI TECHNOLOGIES INC. 

NOTICE OF ANNUAL GENERAL AND SPECIAL MEETING OF
COMMON SHAREHOLDERS

 

You are invited to the 2024 annual general and special meeting (the “Meeting”) of common shareholders (the “Shareholders”) of DeFi Technologies Inc. (the “Corporation”).

 

When: Tuesday, June 25, 2024 at 10:00 a.m. (Toronto time)

 

Where:198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2

 

The purpose of the Meeting is as follows:

 

1.Financial Statements. Receive and consider the audited consolidated financial statements as at and for the fiscal year ended December 31, 2023;

 

2.Auditor Appointment. Appoint HDCPA Professional Corporation as auditor of the Corporation;

 

3.Elect Directors. Consider and elect the directors for the ensuing year;

 

4.Stock Option Plan. Consider and re-approve the Corporation’s rolling stock option plan (the “Stock Option Plan”);

 

5.DSU Plan. Consider and re-approve the Corporation’s deferred share unit plan (the “DSU Plan”); and

 

6.Other Business. Consider other business as may properly come before the Meeting or any postponement(s) or adjournment(s) thereof.

 

The details of all matters proposed to be put before the Shareholders at the Meeting are set forth in the management information circular (the “Circular”), under “Matters to be Considered”, accompanying this Notice of Meeting. At the Meeting, Shareholders will be asked to approve each of the foregoing items.

 

The board of directors of the Corporation unanimously recommends that the Shareholders vote FOR each of the appointment of HDCPA Professional Corporation as auditor of the Corporation, the election of the directors of the Corporation for the ensuing year, the approval of the Stock Option Plan and the approval of the DSU Plan.

 

Each common share of the Corporation (a “Common Share”) will entitle the holder thereof to one (1) vote at the Meeting.

 

The directors of the Corporation have fixed the close of business on May 10, 2024 as the record date, being the date for the determination of the registered Shareholders entitled to notice and to vote at the Meeting and any adjournments(s) or postponement(s) thereof.

 

2

 

 

Shareholders and/or their appointees may participate in the Meeting by way of conference call however votes cannot be cast on the conference call. Please register at https://us02web.zoom.us/meeting/register/tZwvdeuurjsvGNx_Pl9HWycW1FXxjoPQ5_4B to receive conference call details. Electronic copies of the Meeting materials may be obtained at https://defi.tech/investor-relations or under the Corporation’s profile on www.sedarplus.ca.

 

The Corporation has elected to use the notice-and-access rules (“Notice and Access”) under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations for distribution of the Circular, this Notice of Meeting, the form of proxy and the voting instruction form (collectively, the “Meeting Materials”) to holders of Common Shares. Notice and Access is a set of rules that allows issuers to post electronic versions of its proxy-related materials on SEDAR and on one additional website, rather than mailing paper copies to shareholders.

 

Shareholders may obtain paper copies of the Meeting Materials by contacting the Corporation’s transfer agent, Odyssey Trust Company (“Odyssey”), at 1-587-885-0960 and 1-888-290-1175 (toll-free) from outside of North America. A request for paper copies should be received by Odyssey by June 15, 2024 in order to allow sufficient time for the shareholder to receive the paper copy and return the proxy by its due date.

 

Proxies are being solicited by management of the Corporation. A form of proxy for the Meeting accompanies this notice (the “Proxy”). Shareholders who are entitled to vote at the Meeting may vote either in person or by Proxy. Shareholders who are unable to be present in person at the Meeting are requested to complete, execute and deliver the enclosed Proxy to the Corporation’s registrar and transfer agent, Odyssey Trust Company, #702-67 Yonge Street, Toronto ON M5E 1J8 by no later than 10:00 a.m. (Toronto time) on June 21, 2024, or if the Meeting is adjourned or postponed, by no later than 48 hours prior to the time of such reconvened meeting (excluding Saturdays, Sundays and holidays). The Chairman of the Meeting may waive or extend the time limit for the deposit of Proxies. Beneficial owners of Common Shares registered in the name of a broker, custodian, nominee or other intermediary should follow the instructions provided by their broker, custodian, nominee or other intermediary in order to vote their Common Shares.

 

Registered holders of the potash stream preferred shares of the Corporation are hereby provided with notice of, and are entitled to attend, the Meeting and be heard at such Meeting.

 

DATED at Toronto, Ontario as of the 14th day of May, 2024

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “Olivier Roussy Newton”
  Chief Executive Officer and Executive Chairman

 

3

 

 

DEFI TECHNOLOGIES INC.

 

MANAGEMENT INFORMATION CIRCULAR May 14, 2024

 

FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 25, 2024

 

INFORMATION REGARDING CONDUCT OF MEETING

 

Solicitation of Proxies

 

This management information circular (“Circular”) is furnished in connection with the solicitation by the management of Valour Inc. (the “Corporation” or “Valour”) of proxies to be used at the annual general and special meeting (the “Meeting”) of holders of common shares of the Corporation to be held at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2 on June 25, 2024 at 10:00 a.m. and at any postponement(s) or adjournment(s) thereof for the purposes set forth in the accompanying notice of meeting (“Notice of Meeting”). References in this Circular to the “Meeting” include references to any postponement(s) or adjournment(s) thereof. It is expected that the solicitation will be primarily by mail but proxies may also be solicited through other means by employees, consultants and agents of the Corporation. The cost of solicitation by management will be borne by the Corporation.

 

The Corporation is sending proxy-related materials to holders (the “Shareholders”) of common shares (the “Common Shares”) using the notice-and-access rules (“Notice and Access”) under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations. Notice and Access is a set of rules for reducing the volume of materials that must be physically mailed to Shareholders by posting the circular and additional materials online. Shareholders will still receive a hard copy of the Notice of Meeting and form of proxy or voting instruction form, as the case may be, and may choose to receive a hard copy of this Circular (collectively, the “Meeting Materials”). Details are included in the Notice of Meeting. The Meeting Materials are available online at https://defi.tech/investor-relations and under the Corporation’s profile on SEDAR at www.sedar.com. Shareholders are reminded to review the Meeting Materials before voting.

 

The board of directors of the Corporation (the “Board”) has by resolution fixed the close of business on May 10, 2024 as the record date for the meeting (the “Record Date”) being the date for the determination of the registered Shareholders entitled to notice of and to vote at the Meeting and any postponement(s) or adjournment(s) thereof. The Board has by resolution fixed 10:00 a.m. (Toronto time) on June 21, 2024, or 48 hours (excluding Saturdays, Sundays and holidays) before any postponement(s) or adjournment(s) of the Meeting, as the time by which proxies to be used or acted upon at the Meeting or any adjournment(s) thereof shall be deposited with the Corporation’s transfer agent, Odyssey Trust Company (“Odyssey”). The proxy cut-off time may be waived or extended by the Board or a person authorized by the Board in its sole discretion without notice.

 

The Corporation shall make a list of all persons who are registered holders of Common Shares on the Record Date and the number of Common Shares registered in the name of each person on that date. Each Shareholder is entitled to one (1) vote on each matter to be acted on at the Meeting for each Common Share registered in his or her name as it appears on the list.

 

These materials are being sent to both registered and non-registered owners of Common Shares. If you are a non-registered owner, and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with the applicable securities regulatory requirements from the Intermediary (as defined below) holding on your behalf. By choosing to send these materials to you directly, the Corporation (and not the Intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.

 

4

 

 

Unless otherwise stated, the information contained in this Circular is as of May 14, 2024. All dollar amount references in this Circular, unless otherwise indicated, are expressed in Canadian dollars.

 

Shareholders and/or their appointees may participate in the Meeting by way of conference call however votes cannot be cast on the conference call. Please register at https://us02web.zoom.us/meeting/register/tZwvdeuurjsvGNx_Pl9HWycW1FXxjoPQ5_4B to receive conference call details. Electronic copies of the Meeting materials may be obtained under the Corporation’s profile on www.sedarplus.ca.

 

Appointment and Revocation of Proxies

 

The persons named in the enclosed form of proxy are officers and/or directors of the Corporation. A Shareholder desiring to appoint some other person or entity to represent him at the Meeting may do so by inserting such person’s name in the blank space provided in that form of proxy or by completing another proper form of proxy and, in either case, depositing the completed proxy at the office of Odyssey, the transfer agent of the Corporation, as indicated on the enclosed envelope not later than the times set out above.

 

In addition to revocation in any other manner permitted by law, a Shareholder may revoke a proxy given pursuant to this solicitation by depositing an instrument in writing (including another proxy bearing a later date) executed by the Shareholder or by an attorney authorized in writing at 198 Davenport Road, Toronto, Ontario M5R 1J2 at any time up to and including the last business day preceding the day of the Meeting.

 

Voting of Proxies

 

Common Shares represented by properly executed proxies in favour of persons designated in the printed portion of the enclosed form of proxy will be voted for each of the matters to be voted on by Shareholders as described in this Circular or withheld from voting or voted against if so indicated on the form of proxy and in accordance with the instructions of the Shareholder on any ballot that may be called for and that, if the Shareholder specifies a choice with respect to any matter to be acted upon, the securities will be voted accordingly. In the absence of such election, the proxy will confer discretionary authority to be voted in favour of each matter for which no choice has been specified. The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting or other matters which may properly come before the Meeting. At the time of printing this Circular, management of the Corporation knows of no such amendments, variations or other matters to come before the Meeting. However, if any other matters that are not now known to management should properly come before the Meeting, the proxy will be voted on such matters in accordance with the best judgement of the named proxies.

 

Non-Registered Holders

 

Only registered Shareholders or the persons they appoint as their proxies are permitted to vote at the Meeting. However, in many cases, Common Shares beneficially owned by a holder who is not a registered Shareholder (a “Non-Registered Holder”) are registered either: (i) in the name of an intermediary with whom the Non-Registered Holder deals in respect of the Common Shares such as, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans (an “Intermediary”); or (ii) in the name of a clearing agency (such as The Canadian Depository for Securities Limited of which the Intermediary is a participant). In accordance with the requirements of National Instrument 54-101 of the Canadian Securities Administrators, the Corporation will distribute copies of the Notice of Meeting, forms of proxy and this Circular to the clearing agencies and Intermediaries for onward distribution to Non-Registered Holders.

 

Intermediaries are then required to forward the Meeting materials to Non-Registered Holders unless the Non-Registered Holder has waived the right to receive them. Non-Registered Holders will be given, in substitution for the proxy otherwise contained in proxy-related materials, a request for voting instructions (the “VIF”) which, when properly completed and signed by the Non-Registered Holder and returned to the Intermediary, will constitute voting instructions which the Intermediary must follow.

 

5

 

 

The purpose of this procedure is to permit Non-Registered Holders to direct the voting of the Common Shares they beneficially own. Should a Non-Registered Holder who receives the VIF wish to vote at a Meeting in person (or have another person attend and vote on behalf of the Non-Registered Holder), the Non-Registered Holder should so indicate in the place provided for that purpose in the VIF and a form of legal proxy will be sent to the Non-Registered Holder. In any event, Non-Registered Holders should carefully follow the instructions of their Intermediary set out in the VIF.

 

The Corporation intends to pay Intermediaries to forward the Meeting materials to objecting Non- Registered Holders.

 

Interest of Persons in Matters to be Acted Upon

 

No director or executive officer of the Corporation, nor any person who had held such a position since the beginning of the last completed financial year end of the Corporation, no nominee director nor any respective associates or affiliates of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise in any matter to be acted upon at the Meeting other than (a) the election of directors and as possible recipients of stock options (“Stock Options”) under the Corporation’s stock option plan (the “Stock Option Plan”) and/or deferred share units (“DSUs”) under the Corporation’s deferred share unit plan (the “DSU Plan”), (b) the approval of the Stock Option Plan and (c) the approval of the DSU Plan.

 

Voting Securities and Principal Holder Thereof

 

The authorized capital of the Corporation consists of an unlimited number of Common Shares and 20,000,000 non-voting potash stream preferred shares. As of the Record Date, the Corporation had 290,170,736 Common Shares issued and outstanding. Each Common Share will entitle the holder thereof to one (1) vote at the Meeting.

 

To the knowledge of the directors and officers of the Corporation, as at the Record Date, no person beneficially owns, directly or indirectly, or exercises control or direction over securities carrying more than 10% of the voting rights attached to the Common Shares.

 

DIRECTOR AND EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Named Executive Officers

 

For the financial year ended December 31, 2023, the objectives of the Corporation’s compensation strategy were to ensure that compensation for its Named Executive Officers (as defined herein) is sufficiently attractive to recruit, retain and motivate high performing individuals to assist the Corporation in achieving its goals. The Corporation also ensures that compensation is fair, balanced and linked to the performance of the Corporation and the individual Named Executive Officer.

 

Compensation for the Named Executive Officers is composed primarily of three components: base fees, performance bonuses and the granting of Stock Options and DSUs. Performance bonuses are awarded from time to time having regard to the performance of the Corporation and the individual Named Executive Officer. In establishing the levels of monthly base fees, the award of Stock Options, the award of DSUs and performance bonuses, the Corporation takes into consideration individual performance, responsibilities, length of service and previous grants of Stock Options and DSUs. Performance is discussed informally by the directors in light of achievement of the Corporation’s strategic objective of growth and the enhancement of Shareholder value through increases in the trading price of its Common Shares.

 

The Compensation, Nomination and Governance Committee (the “CNG Committee”) recommends the monthly base fees, performance bonus, Stock Options and DSUs to be granted to the Named Executive Officers to the Board for approval. The CNG Committee and the Board does not have a pre-determined compensation plan, but rather reviews informally the performance of the Named Executive Officers when determining compensation levels. Factors considered include: the long-term interests of the Corporation and its Shareholders, the financial and operating performance of the Corporation and each Named Executive Officers individual performance, contribution towards meeting corporate objectives, responsibilities and length of service; however, these factors were informally discussed and there are no formal pre-determined goals or formal measures, nor does the CNG Committee or the Board conduct any survey of competitors or have any defined benchmarks.

 

The CNG Committee and the Board believes that an informal process for determining compensation of Named Executive Officers is appropriate for a company of its size and that the compensation paid to each Named Executive Officer during the last fiscal year was commensurate with the Named Executive Officer’s position, experience and performance.

 

6

 

 

Directors

 

Compensation of directors of the Corporation is determined on a case-by-case basis with reference to the role that each director provides to the Corporation. Directors may receive cash bonuses and in addition, are entitled to participate in the Stock Option Plan and the DSU Plan, which is designed to give each option holder an interest in preserving and maximizing Shareholder value. Such grants are determined by an informal assessment of an individual’s current and expected future performance, level of responsibilities and the importance of his/her position and contribution to the Corporation.

 

The Corporation does not currently prescribe a set of formal objective measures to determine discretionary bonus entitlements. Rather, the Corporation uses informal goals natural to development companies such as strategic acquisitions, advancement of exploration and development, equity and debt financing and other transactions and developments that serve to increase the Corporation’s valuation. Such goals are not pre-set.

 

Officers who also act as directors of the Corporation do not receive any additional compensation for services rendered in their capacity as directors.

 

Risks Associated with Compensation

 

In light of the Corporation’s size and the balance between long-term objectives and short-term financial goals with respect to the Corporation’s executive compensation program, the CNG Committee and the Board does not deem it necessary to consider at this time the implications of the risks associated with its compensation policies and practices.

 

Financial Instruments

 

The Corporation does not currently have a policy that restricts directors or NEOs from purchasing financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity. However, to the knowledge of the Corporation as of the date hereof, no director or NEO of the Corporation has participated in the purchase of such financial instruments.

 

Performance Graph

 

The following graph compares the yearly percentage change in the cumulative total shareholder return for C$100 invested in Common Shares on the S&P/TSX Composite Index for the period of January 31, 2021 (the month on which the Common Shares were listed on the Cboe Canada (formerly NEO Exchange Inc. (“Cboe Canada”) to December 31, 2023, assuming the reinvestment of any dividends

 

 

The Common Shares were listed on the Cboe Canada in January 2021. Since listing on the Cboe Canada, the Corporation has expanded its management team to account for the growth of its business to sustain its operations in Europe and Canada as well as attracting new talent to develop its decentralized finance business. The value of the Common Shares have also corresponded to the fluctuations in the cryptocurrency market over the past few years.

 

7

 

 

NEO Summary Compensation Table

 

The following table summarizes the compensation paid during the three most recently completed financial years in respect of the individuals who were carrying out the role of the President & Chief Executive Officer (“CEO”) of the Corporation, Chief Financial Officer (“CFO”) or the Corporation, and the three most highly compensated executive officers of the Corporation (together with the CEO and CFO, the “Named Executive Officers” or “NEOs”). No other officer, employee or consultant of the Corporation received total compensation of $150,000 or greater.

 

Name and Principal
Position		  Year
Ended		   Salary
($)(1)		   Share
Awards
($)(2)		   Option
Awards
($)(3)		   Non-equity incentive
plan compensation
($)		   All other
compensation
($)(5)		   Total
compensation
($)		 
                   Annual
incentive
plans(4)		   Long-term
incentive
plans		         

Olivier Roussy Newton(6)

  2023   961,968   Nil   362,351   Nil   Nil   Nil   1,324,319 
Chief Executive Officer  2022   75,000   Nil   Nil   Nil   Nil   Nil   75,000 
and Executive Chairman  2021   N/A   N/A   N/A   N/A   N/A   N/A   N/A 
                                 

Russell Starr(6)

  2023   50,000   Nil   Nil   Nil   Nil   Nil   50,000 
Head of Capital Markets and Former  2022   300,000   Nil   1,745,821   300,000   Nil   Nil   2,345,821 
Chief Executive Officer and Executive Chairman  2021   150,000   1,511,270   548,693   Nil   Nil   Nil   2,209,963 
                                 
Ryan Ptolemy
  2023   120,000   102,861   Nil   Nil   Nil   Nil   222,861 
Chief Financial Officer  2022   120,000   567,998   Nil   50,000   Nil   Nil   737,998 
   2021   80,000   251,878   1,714,586   20,000   NIL   NIL   2,066,464 
                                 

Diana Biggs(8)

  2023   N/A   N/A   N/A   N/A   N/A   N/A   N/A 
Former Chief Strategy Officer  2022   224,219   171,285   231,615   Nil   Nil   Nil   627,119 
   2021   95,704   62,970   2,014,533   Nil   Nil   Nil   2,173,207 
                                 

Johan Wattenstrom(9)

  2023   N/A   N/A   N/A   N/A   N/A   N/A   N/A 
Former Chief Operating Officer  2022   234,318   101,520   Nil   Nil   Nil   Nil   335,838 
   2021   75,618   50,376   Nil   Nil   Nil   Nil   125,994 
                                 
Kenny Choi
  2023   120,000   102,861   Nil   Nil   Nil   Nil   222,861 
Corporate Secretary  2021   120,000   567,998   Nil   50,000   Nil   Nil   737,998 
   2020   74,000   251,878   1,339,870   20,000   NIL   NIL   1,685,748 

 

Notes:

 

1.Compensation has been paid as consulting fees under the independent contractor agreement with the Named Executive Officer as described under the heading “Executive Compensation – Termination of Employment, Change in Responsibilities and Employment Contracts” of this Circular.

 

2.Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.

 

3.The value ascribed to option grants represents non-cash consideration and has been estimated using the Black-Sholes Models as at the date of grant, as follows: expected dividend yield — April 9, 2021 - 0%; expected volatility — 145.2%; risk-free interest rate — 0.95%; and expected life — 5 years, May 18, 2021 - 0%; expected volatility — 145.6%; risk-free interest rate — 0.95%; and expected life — 5 years, August 13, 2021 - 0%; expected volatility — 143.7%; risk-free interest rate — 0.84%; and expected life — 5 years,. This is consistent with the accounting values used in the Corporation’s financial statements, November 23, 2023 – 0%; expected volatility - 151.7%; risk-free interest rate – 3.83% and expect life – 5 years, December 4, 2023 – 0%; expected volatility – 151.9%; risk-free interest rate – 3.54% and expected life – 5 years. The Corporation selected the Black-Scholes model given its prevalence of use in North America.

 

4.Compensation paid in the form of discretionary performance based bonuses.

 

5.Other benefits did not exceed the lesser of $50,000 and 10% of the total annual compensation for the Named Executive Officer.

 

6.Mr. Newton was appointed as Chief Executive Officer on October 6, 2022 and elected as Executive Chairman on June 20, 2023, replacing Mr. Starr in both roles. Mr. Newton is also compensated as a Director of Valour Inc., a wholly-owned subsidiary of the Corporation.

 

7.Ms. Biggs resigned as Chief Strategy Officer on July 5, 2022.

 

8.Mr. Wattenstrom resigned as Chief Operating Officer on October 6, 2022.

 

8

 

 

Incentive Plan Awards

 

The following table provides information regarding the incentive plan awards for each Named Executive Officer outstanding as of December 31, 2023.

 

Outstanding Share-Based Awards and Option-Based Awards

 

   Option-Based Awards  Share-Based Awards 
Name  Number of
securities
underlying
unexercised
options
(#)		  Option
exercise
price
($)		  Option
expiration
date		  Value of
unexercised
in-the-money
options
($) (1)(2)		   Number of shares
or units of shares
that have not vested
(#)		   Market or payout value
of share awards that
have not vested
($)(3)		   Market or payout
value of vested
share-based
awards not paid
out or distributed ($)		 

Olivier Roussy Newton(4)

Chief Executive Officer and Executive Chairman

  500,000
4,500,000		  500,000 options at $0.29
4,500,000 options at $0.45		  November 24, 2028
December 4, 2028		  1,130,000   Nil   Nil   Nl 

Russell Starr(4)

Head of Capital Markets and Former Chief Executive Officer and Executive Chairman

  650,000
1,000,000		  650,000 options at $1.58
1,000,000 options at $0.11		  August 13, 2026
July 13, 2028		  545,000   1,000,000   660,000   Nil 

Ryan Ptolemy

Chief Financial Officer

  100,000
300,000
1,300,000		  100,000 options at $0.09
300,000 options at $1.58
1,300,000 options at $1.22 		  November 16, 2025
April 9, 2026
May 18, 2026		  57,000   200,000   132,000   343,200 

Diana Biggs(5)

Former Chief Strategy Officer

  Nil  Nil  Nil  Nil   Nil   Nil   Nil 

Johan Wattenstrom(6) Former Chief Operating Officer

  Nil  Nil  Nil  Nil   Nil   Nil   79,200 

Kenny Choi

Corporate Secretary

  150,000
300,000
1,000,000		  150,000 options at $0.09
300,000 options at $1.58
1,000,000 options at $1.22		  November 16, 2025
April 9, 2026
May 18, 2026		  85,500   200,000   132,000   343,200 

 

Notes:

 

1.Based on the closing market price of $0.66 of the Common Shares on December 29, 2023 and subtracting the exercise price of the options.

 

2.These options have not been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of exercise.

 

3.Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.

 

4.Mr. Newton was appointed as Chief Executive Officer on October 6, 2022 and elected as Executive Chairman on June 20, 2023, replacing Mr. Starr in both roles.

 

5.Ms. Biggs resigned as Chief Strategy Officer on July 5, 2022.

 

6.Mr. Wattenstrom resigned as Chief Operating Officer on October 6, 2022.

 

9

 

 

Value on Pay-Out or Vesting of Incentive Plan Awards

 

Name  Option-based awards –
Value vested during
2023 fiscal year
($)		  Share-based awards –
Value vested during the
2023 fiscal year
($)		   Non-equity incentive plan
compensation – Value
earned during the
2023 fiscal year
($)
Olivier Roussy Newton  Nil  Nil   Nil
Ryan Ptolemy  Nil  165,000   Nil
Kenny Choi  Nil  165,000   Nil

 

None of the Named Executive Officers exercised any Stock Options or had his or her DSUs pay-out during the year ended December 31, 2023.

 

Employment, Consulting and Management Agreements

 

The following describes the respective consulting and employment agreements entered into by the Corporation and its NEOs as of the date hereof.

 

Name  Termination
Notice Period		  Monthly Fees   Severance on
Termination		  Severance on Change
of Control(1)
Olivier Roussy Newton
Chief Executive Officer and Executive Chairman		  30 days   US$25,000   12 months  36 months base fees plus aggregate cash bonuses paid in the 36 months prior to the Change of Control.
Ryan Ptolemy
Chief Financial Officer		  30 days  $10,000   6 months’ fees  24 months base fees plus aggregate cash bonuses paid in the 24 months prior to the Change of Control.
Kenny Choi
Corporate Secretary		  30 days  $10,000   6 months’ fees  24 months base fees plus aggregate cash bonuses paid in the 24 months prior to the Change of Control.

 

Notes:

 

(1)Severance upon a change of control becomes payable In the event of a Change of Control of the Corporation and within one year following the date of the Change of Control the Corporation or the officer elects to terminate the agreement.

 

For the purpose of the agreements set forth above, “Change of Control” shall be defined as (1) the acquisition, directly or indirectly, by any person (person being defined as an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Business Corporations Act (Ontario)) or group of persons acting jointly or in concert, as such terms are defined in the Securities Act, Ontario of: (A) shares or rights or options to acquire shares of the Corporation or securities which are convertible into shares of the Corporation or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) or more of the votes entitled to be cast at a meeting of the shareholders of the Corporation; (B) shares or rights or options to acquire shares, or their equivalent, of any material subsidiary of the Company or securities which are convertible into shares of the material subsidiary or any combination thereof such that after the completion of such acquisition such person would be entitled to exercise 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) or more of the votes entitled to be cast a meeting of the shareholders of the material subsidiary; or (C) more than 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) of the material assets of the Corporation, including the acquisition of more than 50% (or 25% in the case of Mr. Ptolemy’s consulting agreement) of the material assets of any material subsidiary of the Corporation; or (2) as a result of or in connection with: (A) a contested election of directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Corporation or any of its Affiliates and another corporation or other entity, the nominees named in the most recent management information circular of the Corporation for election to the Corporation’s board of directors do not constitute a majority of the Corporation’s board of directors.

 

10

 

 

Summary of Termination Payments

 

The estimated incremental payments, payables and benefits that might be paid to the Named Executive Officers pursuant to the above noted agreements in the event of termination without cause or after a Change of Control (assuming such termination or Change of Control is effective as of the Record Date) are detailed below:

 

Named Executive Officer  Termination not
for Cause ($)		  Value of Unvested Options ($) upon termination not for cause  Termination on a Change of Control ($)  Value of Unvested Options Vested ($) upon Change
in Control
Olivier Roussy Newton            
Salary and Quantified Benefits  US$300,000  Nil  US$900,000  Nil
Bonus  Nil  Nil  Nil  Nil
Total  US$300,000  Nil  US$900,000  Nil
Ryan Ptolemy            
Salary and Quantified Benefits  60,000  Nil  240,000  Nil
Bonus  Nil  Nil  20,000  Nil
Total  60,000  Nil  290,000  Nil
Kenny Choi            
Salary and Quantified Benefits  60,000  Nil  240,000  Nil
Bonus  Nil  Nil  50,000  Nil
Total  60,0000  Nil  290,00  Nil

 

Notes:

 

(1)Severance upon a change of control becomes payable in the event of a Change of Control of the Corporation and within one year following the date of the Change of Control the Corporation or the officer elects to terminate the agreement.

 

Other Arrangements

 

Other than as disclosed below or elsewhere in this Circular, none of the officers or directors of the Corporation have compensation arrangements pursuant to any other arrangement or in lieu of any standard compensation arrangement.

 

Indebtedness of Directors and Executive Officers

 

As at the date of this Circular and during the financial year ended December 31, 2023, no director or executive officer of the Corporation (and each of their associates and/or affiliates) was indebted, including under any securities purchase or other program, to (i) the Corporation or its subsidiaries, or (ii) any other entity which is, or was at any time during the financial year ended December 31, 2023, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Corporation or its subsidiaries.

 

11

 

 

Directors’ and Officers’ Insurance and Indemnification

 

The Corporation maintains insurance for the benefit of its directors and officers against liability in their respective capacities as directors and officers. The Corporation has purchased in respect of directors and officers an aggregate of US$2,500,000 in coverage. The approximate amount of premiums paid by the Corporation in 2023 in respect of such insurance was US$106,848.

 

Interest of Informed Persons in Material Transactions

 

No informed person (as such term is defined under applicable securities laws) of the Corporation or nominee (and each of their associates or affiliates) has had any direct or indirect material interest in any transaction involving the Corporation since January 1, 2023 or in any proposed transaction which has materially affected or would materially affect the Corporation or its subsidiaries other than as may be disclosed herein.

 

Director Compensation

 

Compensation of directors for the financial year ended December 31, 2023 was determined on a case-by- case basis with reference to the role that each director provided to the Corporation. Executive officers who also act as directors of the Corporation do not receive any additional compensation for services rendered in their capacity as directors. The following information details compensation paid in the recently completed financial year.

 

Director Summary Compensation Table

 

The following table provides information regarding the compensation awarded to each director during the year ended December 31, 2023, other than any NEOs who are also directors, whose compensation was included above.

 

Name  Fees
earned
($)		  Share
awards
($)		   Option
awards
($)		  

Non-equity
incentive plan
compensation

($)(1)

 

 

All other
compensation

($)(2)

  Total
($)		 
Krisztian Toth  Nil   11,053    29,035   Nil  Nil   40,088 
Mikael Tandetnik  Nil   Nil    45,021   Nil  Nil   55,405 
Stefan Hascoet  Nil   10,384    43,506   Nil  Nil   43,506 
Suzanne Ennis
  Nil   Nil    29,035   Nil  Nil   29,035 
Tito Gandhi(1)  Nil   11,053    Nil   Nil  Nil   11,053 
William C. Steers(2)  Nil   11,0513    Nil   Nil  Nil   11,053 
TOTALS  Nil   43,543    145,597   Nil  Nil   190,140 

 

Notes:

 

(1)Mr. Gandhi did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

(2)Mr. Steers did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

12

 

 

Incentive Plan Awards

 

The following table provides information regarding the incentive plan awards for each director outstanding as of December 31, 2023, other than any NEOs who are also directors, whose compensation was included above.

 

Outstanding Share-Based Awards and Option-Based Awards

 

   Option-Based Awards  Share-Based Awards
Name 

 

Number of
securities
underlying
unexercised options
(#)

  Option
exercise price
($)		  Option expiration
date		  Value of unexercised
in-the-money options
($)(1) (2)		  Number of shares
or units of shares
that have not vested
(#)		  Market or payout
value of share
awards that have not vested
($)(3)		  Market or payout
value of vested
share-based
awards not paid
out or distributed
Krisztian Toth  450,000
500,000		  1.11
0.29		  May 25, 2026
November 24, 2028		  185,000  Nil  Nil  46,200
Mikael Tandetnik  350,000
500,000
250,000		  1.58
0.29
0.52		  March 22, 2026
November 24, 2028
December 11, 2028		  220,000  Nil  Nil  Nil
Stefan Hascoet  350,000
500,000
250,000		  1.58
0.29
0.52		  March 22, 2026
November 24, 2028
December 11, 2028		  220,000  Nil  Nil  115,500
Suzanne Ennis  250,000
500,000		  1.70
0.29		  September 21, 2026
November 28, 2028		  185,000  Nil  Nil  95,700
Tito Gandhi(4)  Nil  Nil  Nil  Nil  Nil  Nil  Nil
William C. Steers(5)  Nil  Nil  Nil  Nil  Nil  Nil  Nil

 

Notes:

 

(1)Based on the closing market price of $0.66 of the Common Shares on December 29, 2023 and subtracting the exercise price of the options.

 

(2)These options have not been, and may never be, exercised and actual gains, if any, on exercise will depend on the value of the Common Shares on the date of exercise.

 

(3)Share-based awards comprise of DSUs. Value is based on the fair value of the award on the grant date.

 

(4)Mr. Gandhi did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

(5)Mr. Steers did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

Value on Pay-Out or Vesting of Incentive Plan Awards

 

Name  Option-based awards –
Value vested during
2023 fiscal year
($)		  Share-based awards –
Value vested during the
2023 fiscal year
($)		   Non-equity incentive plan compensation – Value
earned during the
2023 fiscal year
($)
Krisztian Toth  Nil  16,500   Nil
Mikael Tandetnik  Nil  Nil   Nil
Stefan Hascoet  Nil  57,750   Nil
Suzanne Ennis  Nil  41,250   Nil
Tito Gandhi(1)  Nil  16,500   Nil
William C. Steers(2)  Nil  16,500   Nil

 

Notes:

 

(1)Mr. Gandhi did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

(2)Mr. Steers did not stand for re-election at the 2023 annual meeting of shareholders of the Company.

 

No director exercised his or her Stock Options or were paid out his or her DSUs during the year ended December 31, 2023.

 

13

 

 

Stock Option Plan

 

The Corporation believes that granting stock options to officers, directors, consultants and employees encourages retention and more closely aligns the interests of such key personnel with the interests of shareholders while at the same time not drawing on the limited cash resources of the Corporation.

 

The Stock Option Plan is designed to advance the interests of the Corporation by encouraging employees, officers and consultants to have equity participation in the Corporation through the acquisition of Common Shares. The following is a summary of the terms of the proposed Stock Option Plan, which is qualified in its entirety by the provisions of the Stock Option Plan.

 

The Stock Option Plan is a “evergreen” stock option plan under Cboe Canada Exchange Listing Manual as under the Stock Option Plan the Corporation is authorized to grant Stock Options of up to 10% of its issued and outstanding Common Shares at the time of the Stock Option grant, from time to time, with no vesting provisions. As of the date hereof, there is an aggregate of 23,080,000 Stock Options outstanding under the Stock Option Plan, which represents approximately 7.9% of the outstanding Common Shares.

 

The terms and conditions of each Stock Option granted under the Stock Option Plan will be determined by the Board. Stock Options will be priced in the context of the market and in compliance with applicable securities laws and Cboe Canada Exchange guidelines. Consequently, the exercise price for any Stock Option shall not be lower than the market price of the underlying Common Shares at the time of grant. Vesting terms will be determined at the discretion of the Board. The Board shall also determine the term of Stock Options granted under the Stock Option Plan, provided that no Stock Option shall be outstanding for a period greater than five years. The Board shall also have complete discretion to set the terms of any vesting schedule of each Stock Option granted.

 

The Stock Option Plan provides for amendment procedures that specify the kind of amendments to the Stock Option Plan that will require Shareholder approval. The Board believes that except for certain material changes to the Stock Option Plan, it is important that the Board has the flexibility to make changes to the Stock Option Plan without Shareholder approval. Such amendments could include making appropriate adjustments to outstanding Stock Options in the event of certain corporate transactions, the addition of provisions requiring forfeiture of options in certain circumstances, specifying practices with respect to applicable tax withholdings and changes to enhance clarity or correct ambiguous provisions.

 

The Stock Option Plan does not provide for the transformation of Stock Options granted under the Stock Option Plan into stock appreciation right involving the issuance of securities from the treasury of the Corporation.

 

The Stock Option Plan provides that holders of Stock Options who are restricted from trading in securities of the Corporation during periodic black-out periods imposed by the Corporation shall be entitled to exercise a Stock Option that was set to expire during a black-out period imposed by the Corporation until the day that is five business days following the expiry of the black-out period.

 

Directors, officers, employees and certain consultants shall be eligible to receive Stock Options under the Stock Option Plan. Upon the termination of an optionholder’s engagement with the Corporation, the cancellation or early vesting of any Stock Option shall be in the discretion of the Board. In general, the Corporation expects that Stock Options will be cancelled 90 days following an optionholder’s termination from the Corporation. Stock Options granted under the Stock Option Plan shall not be assignable.

 

The Corporation will not provide financial assistance to any optionholder to facilitate the exercise of Stock Options under the Stock Option Plan.

 

Pursuant to Section 10.13 – Security Based Compensation of the Cboe Canada Exchange Listing Manual, the Corporation is required to obtain the approval of its Shareholders to any stock option plan that is a “evergreen” plan every three years at the Corporation’s annual meeting of Shareholders. The Stock Option Plan was last approved by Shareholders at the annual and special meeting of Shareholders held on September 13, 2021, and is therefore subject to approval at the Meeting.

 

The table below sets out the outstanding options under the Stock Option Plan as of the Record Date.

 

   Number of securities to be issued upon exercise of outstanding options, warrants and rights   Weighted-average exercise price of outstanding options, warrants and rights  

Number of securities remaining available under equity compensation plans (excluding securities

reflected in column (a))

 
Plan Category  (a)   (b)   (c) 
Equity compensation plans approved by security holders   23,080,000   $0.99    5,935,508 
Equity compensation plans not approved by
security holders		   N/A    N/A    N/A 
TOTAL   23,080,000   $0.99    5,935,508 

 

14

 

 

DSU Plan

 

The Corporation believes that granting DSUs to officers, directors, consultants and employees encourages retention and more closely aligns the interests of such key personnel with the interests of shareholders while at the same time not drawing on the limited cash resources of the Corporation.

 

The Board administers DSU Plan, designates from time to time those directors, officers, employees, and consultants of the Corporation to whom DSUs are to be granted and determines the number of shares covered by such DSUs. DSUs are granted by the Corporation pursuant to recommendations by the CNG Committee and approval of the Board.

 

A copy of the DSU Plan is attached to this Circular as Exhibit “C”. The following is a summary of the principal terms of the DSU Plan, which is qualified in its entirety by the provisions of the DSU Plan:

 

●Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Corporation;

 

●The Board fixes the vesting terms it deems appropriate when granting DSUs;

 

●The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant. As of the date hereof, there is an aggregate of 8,607,005 DSUs outstanding under the DSU Plan, which represents approximately 2.97% of the outstanding Common Shares.

 

●No DSUs shall be granted under the DSU Plan if such grant could result, at any time, in (i) the number of Common Shares issuable to insiders of the Corporation under all share compensation arrangements exceeding 10% of the issued and outstanding Common Shares, (ii) the issuance to insiders of the Corporation of a number of Common Shares exceeding 10% of the issued and outstanding Common Shares, (iii) the number of Common Shares reserved for issuance under all share compensation arrangements with any one participant, together with such participants permitted assigns, exceeding 5% of the issued and outstanding Common Shares and (iv) a grant of more than 2% of the issued and outstanding Common Shares to any one contractor in any one-year period;

 

●Under the DSU Plan, the DSUs are to be redeemed and paid out by the Corporation within 60 days of when a participant ceases to be a directors, officer, employee or consultant of the Corporation without further action or payment on the part of the holder of the DSU. For each DSU, the Corporation will deliver a payment of one Common Shares.

 

●DSUs granted under the DSU Plan may not be assigned or transferred except to certain permitted assigns; and

 

●Subject to any regulatory or Cboe Canada approval, the Board may from time to time amend or revise the terms and conditions of the DSU Plan.

 

15

 

 

Pursuant to Section 10.13 – Security Based Compensation of the Cboe Canada Listing Manual, the Corporation is required to obtain the approval of its Shareholders to any deferred share unit plan that is a “evergreen” plan every three years at the Corporation’s annual meeting of Shareholders. The DSU Plan was last approved by Shareholders at the annual and special meeting of Shareholders held on September 13, 2021, and is therefore subject to approval at the Meeting.

 

The table below sets out the outstanding DSUs under the DSU Plan as of the Record Date.

 

   Number of securities to be issued upon exercise of outstanding DSUs   Weighted-average exercise price of outstanding DSUs  

Number of securities remaining available under the DSU Plan (excluding securities

reflected in column (a))

 
Plan Category  (a)   (b)   (c) 
Equity compensation plans approved by security holders   8,607,005   $0.00    5,901,532 
Equity compensation plans not approved by security holders   N/A    N/A    N/A 
TOTAL   8,607,005    0.00    5,901,532 

 

Corporate Governance Policies

 

Management of the Corporation and the Board recognize the importance of corporate governance in effectively managing the Corporation, protecting employees and Shareholders, and enhancing Shareholder value.

 

The Board fulfills its mandate directly and through its Audit Committee and its Compensation, Nomination and Governance Committee (“CNG Committee”) and other ad hoc committees at regularly scheduled meetings or as required. The directors are kept informed regarding the Corporation’s operations at regular meetings and through reports and discussions with management on matters within their particular areas of expertise. Frequency of meetings may be increased and the nature of the agenda items may be changed depending upon the state of the Corporation’s affairs and in light of opportunities or risks that the Corporation faces.

 

The Corporation believes that its corporate governance practices are in compliance with applicable Canadian requirements. The Corporation is committed to monitoring governance developments to ensure its practices remain current and appropriate.

 

Board of Directors

 

Pursuant to National Instrument 58-101 – Corporate Governance, a director is independent if the director has no direct or indirect relationship with the issuer which could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of a member’s independent judgment. Certain directors are deemed to have a material relationship with the issuer by virtue of their position or relationship with the Corporation. The Board is currently comprised of five members, three of which are independent. Mr. Newton is non-independent as he is the Chief Executive Officer of the Corporation and Mr. Toth is non-independent as he is a partner of Fasken Martineau DuMoulin LLP, legal counsel to the Corporation. In assessing whether a director is independent for these purposes, the circumstances of each director have been examined in relation to a number of factors.

 

Other Public Corporation Directorships

 

To the best of the Corporation’s knowledge and based on publicly available information, as of the date hereof, the directors of the Corporation hold directorship positions with the following reporting issuers:

 

Director   Reporting Issuer
Olivier Roussy Newton   BTQ Technologies Gorp.
Krisztián Tóth  

Leviathan Gold Ltd.

Mikael Tandetnik   None
Stefan Hascoet   None
Suzanne Ennis   None

 

16

 

 

Board Mandate

 

The duties and responsibilities of the Board are to supervise the management of the business and affairs of the Corporation, and to act with a view towards the best interests of the Corporation. In discharging its mandate, the Board is responsible for the oversight and review of:

 

●the strategic planning process of the Corporation;

 

●identifying the principal risks of the Corporation’s business and ensuring the implementation of appropriate systems to manage these risks;

 

●succession planning, including appointing, training and monitoring senior management;

 

●a communications policy for the Corporation to facilitate communications with investors and other interested parties; and

 

●the integrity of the Corporation’s internal control and management information systems.

 

The Board discharges its responsibilities directly and through its committees, currently consisting of the Audit Committee and the Compensation, Nomination and Governance Committee.

 

Orientation and Continuing Education

 

Directors are expected to attend all meetings of the Board and are also expected to prepare thoroughly in advance of each meeting in order to actively participate in the deliberations and decisions.

 

The Board recognizes the importance of ongoing director education and the need for each director to take personal responsibility for this process. The Board notes that it has benefited from the experience and knowledge of individual members of the Board in respect of the evolving governance regime and principles. The Board ensures that all directors are apprised of changes in the Corporation’s operations and business. All Board members are provided with copies of periodic reports on the business and operations of the Corporation.

 

Nomination of Directors

 

The Board is largely responsible for identifying new candidates for nomination to the Board. The process by which candidates are identified is through recommendations presented to the Board, which establishes and discusses qualifications based on corporate law and regulatory requirements as well as education and experience related to the business of the Corporation.

 

17

 

 

Compensation

 

The CNG Committee is responsible for recommending to the Board the compensation of the directors and Chief Executive Officer of the Corporation. The process for determining executive compensation is relatively informal, in view of the size and stage of the Corporation and its operations. The Corporation does not maintain specific performance goals or use benchmarks in determining the compensation of executive officers. Upon the recommendation of the CNG Committee, the Board may at its discretion award either a cash bonus or stock options for high achievement or for accomplishments that the Board deems as worthy of recognition.

 

The CNG Committee reviews and discusses proposals received by the Chief Executive Officer of the Corporation regarding the compensation of management and the directors. Please refer to the section “Compensation and Corporate Governance Committee”.

 

Board Assessments

 

The Board and its individual directors are assessed on an informal basis continually as to their effectiveness and contribution. The Chair of the Board encourages discussion amongst the Board as to evaluation of the effectiveness of the Board as a whole and of each individual director. All directors are free to make suggestions for improvement of the practice of the Board at any time and are encouraged to do so.

 

Majority Voting Policy

 

The Corporation has adopted a Majority Voting Policy to provide a meaningful way for the Corporation’s shareholders to hold individual directors accountable and to require the Corporation to closely examine directors that do not have the support of a majority of Shareholders who vote at the Meeting. The policy provides that forms of proxy for the election of directors will permit a Shareholder to vote in favour of, or to withhold from voting, separately for each director nominee and that where a director nominee has more votes withheld than are voted in favour of him or her, the nominee will be considered not to have received the support of the shareholders, even though duly elected as a matter of corporate law. Pursuant to the policy, such a nominee will forthwith submit his or her resignation to the Board, such resignation to be effective on acceptance by the Board. The Board will then establish an advisory committee (the “Committee”) to which it shall refer the resignation for consideration within an 90 day period. In such circumstances, the Committee will make a recommendation to the Board as to the director’s suitability to serve as a director after reviewing, among other things, the results of the voting for the nominee and the Board will consider such recommendation. Any director subject to the Majority Voting Policy will not be a member of the Committee or participate in any Board level discussion where his or her resignation is being considered. Absent exceptional circumstances the Committee and the Board will accept the resignation of the nominee director. Once the Board has made a final decision regarding the resignation, the Company will publicly disclose the Board’s decision regarding the resignation, including the reasons for not accepting the resignation, if applicable. If the resignation is accepted, the Board may leave the vacancy unfilled or appoint a new director to fill the vacancy.

 

This policy does not apply where an election involves a proxy battle (i.e., where proxy material is circulated in support of one or more nominees who are not part of the director nominees supported by the management of the Corporation).

 

Audit Committee

 

The purposes of the Audit Committee are to assist the Board’s oversight of: the integrity of the Corporation’s financial statements; the Corporation’s compliance with legal and regulatory requirements; the qualifications and independence of the Corporation’s independent auditors; and the performance of the independent auditors and the Corporation’s internal audit function.

 

Please see Schedule “A” for the text of the Audit Committee Charter.

 

Composition of the Audit Committee

 

The Corporation’s Audit Committee is comprised of three directors, Stefan Hascoet (Chair), Mikael Tandetnik and Suzanne Ennis. Each member of the Audit Committee is considered to be financially literate and are considered independent, as such term is defined in NI 52-110.

 

18

 

 

Relevant Education and Experience

 

Please see page 20 for the biographies of each member of the Audit Committee.

 

Audit Committee Oversight

 

At no time since the commencement of the Corporation’s most recently completed financial year has there been a recommendation of the Audit Committee to nominate or compensate an external auditor which was not adopted by the Board.

 

Reliance on Certain Exemptions

 

At no time since the commencement of the Corporation’s most recently completed financial year has the Corporation relied on either (a) an exemption in section 2.4 of NI 52-110; or (b) an exemption from NI 52- 110, in whole or in part, granted under Part 8 (Exemptions) of NI 52-110.

 

Pre-Approval Policies and Procedures

 

The Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services.

 

External Auditor Service Fees

 

HDCPA Professional Corporation (“HDCPA”) are the current external auditors of the Corporation and were appointed on December 20, 2023. BF Borgers CPA were the former external auditors of the Corporation for the fiscal year ended December 31, 2022 and were appointed on February 3, 2023. The aggregate fees billed and estimated to be billed by the external auditors for the last two (2) fiscal years is set out in the table below. “Audit Fees” includes fees for audit services including the audit services completed for the Corporation’s subsidiaries. “Audit Related Fees” includes fees for assurance and related services by the Corporation’s external auditor that are reasonably related to the performance of the audit or review of the Corporation’s financial statements and not reported under Audit Fees including the review of interim filings and travel related expenses for the annual audit. “Tax Fees” includes fees for professional services rendered by the external auditor for tax compliance, tax advice, and tax planning. “All Other Fees” includes all fees billed by the external auditors for services not covered in the other three categories.

 

Year   Audit
Fees ($)		   Audit
Related Fees		   Tax
Fees ($)		   All
Other Fees		 
2023    385,375    37,500    15,000    437,875 
2022    297,177    Nil    Nil    Nil 

 

Compensation, Nomination and Governance Committee

 

The Compensation, Nomination and Governance Committee (the “CNG Committee”) is comprised of Mr. Krisztian Toth, Mr. Mikael Tandetnik and Mr. Stefan Hascoet. Mr. Tandetnik and Mr. Hascoet are independent directors and Mr. Toth is a non-independent director. Please see page 20 for the biographies of each member of the CNG Committee.

 

The CNG Committee’s responsibilities are twofold. First, with respect to compensation, the CNG Committee’s responsibility include (i) discharging the Board’s responsibilities relating to the compensation of the Corporation’s executive officers, (ii) administering the Corporation’s incentive compensation and equity-based plans, and (iii) assisting the Board with respect to management succession and development. In carrying out its duties with respect to compensation, the CNG Committee reviews and makes recommendations to the Board on an annual basis regarding (A) company-wide compensation programs and practices, (B) all aspects of the remuneration of the Corporation’s executive officers and directors, and (C) equity-based plans and any material amendments thereto (including increases in the number of securities available for grant as options or otherwise thereunder).

 

19

 

 

The primary function of the CNG Committee with respect to nomination and governance matters is to exercise the responsibilities and duties set forth below, including but not limited to: (i) advising the Board on corporate governance in general, (ii) identifying candidates to act as directors of the Corporation, (iii) recommending to the Board qualified candidates to nominate as a director of the Corporation for consideration by the shareholders of the Corporation at the next annual meeting of shareholders (iv) overseeing and assessing the functioning of the Board and the committees of the Board, and (v) developing and recommending to the Board, and overseeing the implementation and assessment of, effective corporate governance principles.

 

MATTERS TO BE CONSIDERED

 

Financial Statements

 

The financial statements for the fiscal year ended December 31, 2023 will be presented to Shareholders for review at the Meeting. No vote by the Shareholders is required with respect to this matter.

 

Election of Directors

 

The Board currently consists of five directors. The Corporation has nominated five persons (the “Nominees”) for election as a director at the Meeting. At the Meeting, Shareholders will be asked to elect each individual Nominee as a director. All directors so elected will hold office until the end of the next annual general meeting of shareholders of the Corporation or until their successors are elected or appointed, unless their office is vacated earlier in accordance with the by-laws of the Corporation or with the provisions of the Business Corporations Act (Ontario).

 

The following table provides the names of the Nominees and information concerning such Nominees. The persons in the enclosed form of proxy intend to vote for the election of the Nominees. Management does not contemplate that any of the Nominees will be unable to serve as a director.

 

Information in the table below regarding the number of Common Shares of the Corporation beneficially owned, directly or indirectly, or over which control or direction is exercised by the Nominees is based upon information furnished by the respective Nominee and is as at the Record Date.

 

Name and Municipality of Residence  Principal Occupation  Director Since  Number of Common Shares
Beneficially Owned or Over which Control is Exercised(1)		 
Krisztian Tóth(3)
Toronto, Ontario
Canada		  Partner at Fasken Martineau DuMoulin LLP  May 14, 2021   Nil 
Olivier Roussy Newton
Zug, Switzerland		  Chief Executive Officer of the Corporation  June 20, 2023   17,504,410 
Mikael Tandetnik(2) (3)
Geneva, Switzerland		  Founder of Ariane Group SA  June 20, 2023   440,455 
Stefan Hascoet(2) (3)
Geneva, Switzerland		  Managing Partner of Deep Knowledge Ventures Suisse  June 20, 2023   618,000 

Suzanne Ennis(2)
Toronto, Ontario Canada

  Head of Investor Relations of Hut 8  June 22, 2023   18,948 

 

Notes:

 

(1)The Corporation has relied exclusively on the respective Nominee for this information.

 

(2)Member of the Audit Committee

 

(3)Member of the Compensation, Nomination and Governance Committee.

 

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Biographical information for each of the nominated directors are set out below:

 

Mr. Roussy Newton is the Chief Executive Officer of the Corporation. He is a technology entrepreneur who has made significant contributions to the fields of FinTech, Quantum Computing and Capital Markets. Mr. Roussy Newton founded and served as president of HIVE Blockchain Technologies, which made history by becoming the first crypto mining company to go public in 2017, and has also been involved in a number of other highly successful ventures. Mr. Roussy Newton also serves as the Managing Director of BTQ AG, where he is responsible for overseeing the company’s operations on research focused on post quantum technologies.

 

Mr. Tóth, is an experienced M&A lawyer and partner at the law firm of Fasken Martineau DuMoulin LLP, which is a leading international business law and litigation firm with eight offices with more than 700 lawyers across Canada and in the UK and South Africa. Mr. Tóth began his career at Fasken in 2003, eventually becoming a partner of the firm in 2009. He has been recognized by IFLR1000 for his capital markets work. Mr. Tóth holds a bachelor of arts in Politics Sociology from Queen’s University and an LLB from Dalhousie University.

 

Mr. Tandetnik is a seasoned wealth manager and CEO with a strong background in finance. He embarked on his career as a Salesperson for equity and structured products at BNP Paribas, gaining valuable experience in the field. Subsequently, he transitioned to various brokerage firms, honing his expertise in investment management. After founding LS Advisor in Paris and driven by his passion for the cryptocurrency industry, Mr. Tandetnik established Ariane Group SA in Geneva, a wealth management companies specializing in catering to cryptocurrency clients and investments. He played a pivotal role in numerous fundraising initiatives for both listed and unlisted private crypto companies, demonstrating his deep involvement in the crypto space. Mr. Tandetnik’s academic qualifications include a Bachelor’s degree in Business from the Ecole Supérieure de Gestion et Finance (ESGF) in France and a Master’s degree from ESLSCA, where he specialized in Trading and Options.

 

Mr. Hascoet is a capital markets professional who spent 12 years in the City of London in the field of equity derivatives and cross-asset structured products working for three global investment banks, including at RBC Capital Markets, leading a team covering Swiss clients. After his initial training in the institutional finance world, Mr. Hascoet decided to focus on the dual fields of finance & blockchains through various entrepreneurial endeavors, focusing on making blockchain assets investible and building bridges with the established banking systems and capital markets frameworks. Mr. Hascoet is a Swiss resident, based in Geneva, Managing Partner of Deep Knowledge Ventures Suisse, a data-driven investment holding of commercial and non-profit organizations active in the fields of DeepTech, Fintech and Longevity. Mr. Hascoet is a graduate of the French Grande Ecole system, having studied at l’Ecole Ste Genevieve in Versailles and ESCP Business School in Paris.

 

Ms. Ennis is an acclaimed leader in emerging technology and innovation, known for her passion in ushering global investor awareness and capital into opportunities within Canada’s thriving technology, natural resources, and small cap sectors. With over 15 years of experience, she has raised over a billion dollars for Canadian structured product and small cap companies, propelling hidden Canadian gems into significant market cap opportunities. Ms. Ennis holds a bachelor of arts in political science from McMaster University and a certificate of specialization, corporate finance, ESG investing, venture capital and private equity from the Columbia Business School.

 

Unless authority to do so is withheld, the persons named in the accompanying proxy intend to vote for the election of each of the Nominees. If prior to the Meeting any of such Nominees is unable to or unwilling to serve, the persons named in the accompanying form of proxy will vote for another nominee or nominees in their discretion if additional nominations are made at the Meeting. Each Nominee elected will hold office until his successor is elected at the next annual meeting of the Corporation, or any postponement(s) or adjournment(s) thereof, or until his successor is elected or appointed.

 

No proposed director is to be elected under any arrangement or understanding between the proposed director and any other person or corporation, except the directors and executive officers of the Corporation acting solely in such capacity.

 

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The Board of Directors recommends that Shareholders vote in favour of electing each of the directors as set forth above. PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE ELECTION OF EACH DIRECTOR.

 

Cease Trade Orders or Bankruptcies

 

No director or executive officer of the Corporation is, or within ten years prior to the date hereof has been, a director, chief executive officer or chief financial officer of any company (including the Corporation) that,

 

(i) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

 

Except as provided below, no director or executive officer of the Corporation is or has been, within the ten years before the date of this Circular, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

 

Mr. Tóth was a director of Voyager Digital Ltd. (“Voyager”). On July 5, 2022, Voyager commenced a voluntary Chapter 11 process in the U.S. Bankruptcy Court of the Southern District of New York (the “Court”) with the liquidation plan approved by the Court on May 17, 2023 and recognition of this order was obtained in the Ontario Superior Court of Justice (Commercial List) pursuant to the Companies’ Creditors Arrangement Act on May 24, 2023. On October 5, 2022, the Canadian Securities Administrators issued a cease trade order in respect of the securities of Voyager

 

No director or executive officer has, within the ten years before the date of this Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director or executive officer.

 

No proposed director has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for a proposed director.

 

Appointment of Auditors

 

On December 20, 2023, the board of directors of the Corporation appointed HDCPA Professional Corporation (“HDCPA”) as auditors of the Corporation following the resignation of BF Borgers CPA PC as auditors of the Corporation. At the Meeting, Shareholders will be asked to re-appoint HDCPA as auditors of the Corporation until the close of the next annual meeting of and to authorize the directors to fix their remuneration.

 

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PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE APPOINTMENT OF HDCPA AS THE CORPORATION’S AUDITORS AND AUTHORIZING THE BOARD OF DIRECTORS TO FIX THEIR REMUNERATION, UNLESS THE SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT HIS OR HER COMMON SHARES ARE TO BE VOTED AGAINST SUCH A RESOLUTION.

 

Approval of Stock Option Plan

 

The Stock Option Plan is designed to advance the interests of the Corporation by encouraging employees, directors, officers and consultants to have equity participation in the Corporation through the acquisition of Common Shares. A copy of the Stock Option Plan is attached at schedule “B” hereto.

 

The Corporation is required to obtain the approval of its Shareholders to any stock option plan that is an “evergreen” plan every three years pursuant to the policies of the Cboe Canada. The Stock Option Plan was last approved by Shareholders at the annual and special meeting of Shareholders held on September 13, 2021. Accordingly, at the Meeting, Shareholders will be asked to approve the following ordinary resolution approving the Stock Option Plan:

 

“BE IT RESOLVED THAT:

 

1. the Stock Option Plan of the Corporation, as described in the management information circular of the Corporation dated May 14, 2024 is hereby approved and the Corporation be and is hereby authorized to reserve for issuance pursuant to the Stock Option Plan such number of stock options up to 10% of the total issued and outstanding Common Shares at the time of grant; and

 

2. any director or officer of the Corporation is hereby authorized to execute (whether under the corporate seal of the Corporation or otherwise) and deliver all such documents and to do all such other acts and things as such director or officer may determine to be necessary or advisable to give effect to the true intent of these resolutions.”

 

PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE STOCK OPTION PLAN UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT THE COMMON SHARES ARE TO BE VOTED AGAINST SUCH ORDINARY RESOLUTION.

 

Approval of DSU Plan

 

The purpose of the DSU Plan is strengthen the alignment of interests between directors, officer, employees and consultants and the shareholders of the Corporation. In addition, the DSU Plan has been adopted for the purpose of advancing the interests of the Corporation through the motivation, attraction and retention of participants in the DSU Plan, it being generally recognized that deferred share unit plans aid in attracting, retaining and encouraging commitment and performance due to the opportunity offered to such persons to receive compensation in line with the value of the Common Shares.

 

The Board administers DSU Plan, designates from time to time those directors, officers, employees, and consultants of the Corporation to whom DSUs are to be granted and determines the number of shares covered by such DSUs. DSUs are granted by the Corporation pursuant to recommendations by the CNG Committee and approval of the Board. A copy of the DSU Plan is attached to this Circular as Exhibit “C”.

 

The Corporation is required to obtain the approval of its Shareholders to any deferred share unit plan that is an “evergreen” plan every three years pursuant to the policies of the Cboe Canada. The DSU Plan was last approved by Shareholders at the annual and special meeting of Shareholders held on September 13, 2021. Accordingly, at the Meeting, Shareholders will be asked to approve the following ordinary resolution approving the DSU Plan:

 

23

 

 

“BE IT RESOLVED THAT:

 

1. the DSU Plan of the Corporation, as described in the management information circular of the Corporation dated May 14, 2024 is hereby approved and the Corporation be and is hereby authorized to reserve for issuance pursuant to the DSU Plan such number of DSUs up to 5% of the total issued and outstanding Common Shares at the time of grant; and

 

2. any director or officer of the Corporation is hereby authorized to execute (whether under the corporate seal of the Corporation or otherwise) and deliver all such documents and to do all such other acts and things as such director or officer may determine to be necessary or advisable to give effect to the true intent of these resolutions.”

 

PROXIES RECEIVED IN FAVOUR OF MANAGEMENT WILL BE VOTED FOR THE APPROVAL OF THE DSU PLAN UNLESS A SHAREHOLDER HAS SPECIFIED IN THE PROXY THAT THE COMMON SHARES ARE TO BE VOTED AGAINST SUCH ORDINARY RESOLUTION.

 

Additional Information

 

Additional information relating to the Corporation may be found under the profile of the Corporation on SEDAR at www.sedarplus.ca. Additional financial information is provided in the Corporation’s audited financial statements and related management’s discussion and analysis for the financial year ended December 31, 2023, which can be found at or under the profile of the Corporation on SEDAR. Shareholders may also request these documents by emailing kenny@defi.tech or by telephone at (416) 861-2262.

 

Board of Directors Approval

 

The contents of this Circular and the sending thereof to the Shareholders of the Corporation have been approved by the Board.

 

  BY ORDER OF THE BOARD OF DIRECTORS
   
  (signed) “Olivier Roussy Newton”
  Chief Executive Officer and Executive Chairman
  Toronto, Ontario May 14, 2024

 

24

 

 

SCHEDULE “A”

 

DEFI TECHNOLOGIES INC.

AUDIT COMMITTEE CHARTER

 

 

Mandate

 

The primary function of the audit committee (the “Committee”) is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting and the Company’s auditing, accounting and financial reporting processes. Consistent with this function, the Committee will encourage continuous improvement of, and should foster adherence to, the Company’s policies, procedures and practices at all levels. The Committee’s primary duties and responsibilities are to (i) serve as an independent and objective party to monitor the Company’s financial reporting and internal control system and review the Company’s financial statements; (ii) review and appraise the performance of the Company’s external auditors; and (iii) provide an open avenue of communication among the Company’s auditors, financial and senior management and the board of directors.

 

Composition

 

The Committee shall be comprised of three directors as determined by the board of directors, the majority of whom shall be free from any relationship that, in the opinion of the board of directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.

 

At least one member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of this Charter, the definition of “financially literate” is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company’s financial statements.

 

The members of the Committee shall be elected by the board of directors at its first meeting following the annual shareholders’ meeting. Unless a Chair is elected by the full board of directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.

 

Meetings

 

The Committee shall meet at least four times annually, or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditors in separate sessions.

 

Responsibilities and Duties

 

To fulfil its responsibilities and duties, the Committee shall:

 

Documents/Reports Review

 

(a)Review and update this Charter annually.

 

(b)Review the Company’s financial statements, management discussion and analysis (“MD&A”) and any annual and interim earnings, press releases before the Company publicly discloses this informimation and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion or review rendered by the external auditors.

 

25

 

 

External Auditors

 

(a)Review annually the performance of the external auditors who shall be ultimately accountable to the board of directors and the Committee as representatives of the shareholders of the Company.

 

(b)Obtain annually a formal written statement of the external auditors setting forth all relationships between the external auditors and the Company, consistent with Independence Standards Board Standard 1.

 

(c)Review and discuss with the external auditors any disclosed relationships or services that may impact the objectivity and independence of the external auditors.

 

(d)Take or recommend that the full board of directors take appropriate action to oversee the independence of the external auditors.

 

(e)Recommend to the board of directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

 

(f)At each meeting, consult with the external auditors, without the presence of management, about the quality of the Company’s accounting principles, internal controls and the completeness and accuracy of the Company’s financial statements.

 

(g)Review and approve the Company’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Company.

 

(h)Review with management and the external auditors the audit plan for the year- end financial statements and intended template for such statements.

 

(i)Review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company’s external auditors. The pre-approval requirement is waived with respect to the provision of non-audit services if:

 

(i)the aggregate amount of all such non-audit services provided to the Company constitutes not more than 5% of the total amount of revenues paid by the Company to its external auditors during the fiscal year in which the non-audit services are provided;

 

(ii)such services were not recognized by the Company at the time of the engagement to be non-audit services; and

 

(iii)such services are promptly brought to the attention of the Committee by the Company and approved prior to the completion of the audit by the Committee or by one or more members of the Committee who are members of the board of directors to whom authority to grant such approvals has been delegated by the Committee.

 

Provided the pre-approval of the non-audit services is presented to the Committee’s first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.

 

26

 

 

Financial Reporting Processes

 

(a)In consultation with the external auditors, review with management the integrity of the Company’s financial reporting process, both internal and external.

 

(b)Consider the external auditor’s judgments about the quality and appropriateness of the Company’s accounting principles as applied in its financial reporting.

 

(c)Consider and approve, if appropriate, changes to the Company’s auditing and accounting principles and practices as suggested by the external auditors and management.

 

(d)Review significant judgments made by management in the preparation of the financial statements and the view of the external auditors as to appropriateness of such judgments.

 

(e)Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

 

(f)Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

 

(g)Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

 

(h)Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

 

(a)Review certification process.

 

(b)Establish a procedure for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.

 

Other

 

Review any related party transactions.

 

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SCHEDULE “B”

 

DEFI TECHNOLOGIES INC. (the “Corporation”)
STOCK OPTION PLAN

 

1. STATEMENT OF PURPOSE

 

1.1 Principal Purposes – The principal purposes of the Plan are to provide the Corporation with the advantages of the incentive inherent in share ownership on the part of employees, officers, directors and consultants responsible for the continued success of the Corporation; to create in such individuals a proprietary interest in, and a greater concern for, the welfare and success of the Corporation; to encourage such individuals to remain with the Corporation; and to attract new employees, officers, directors and consultants to the Corporation.

 

1.2 Benefit to Shareholders – The Plan is expected to benefit shareholders by enabling the Corporation to attract and retain skilled and motivated personnel by offering such personnel an opportunity to share in any increase in value of the Shares resulting from their efforts.

 

2. INTERPRETATION

 

2.1 Defined Terms – For the purposes of this Plan, the following terms shall have the following meanings:

 

(a)“Act” means the Securities Act (Ontario), as amended from time to time;

 

(b)“Associate” shall have the meaning ascribed to such term in the Act;

 

(c)“Board” means the Board of Directors of the Corporation;

 

(d)“Cboe Canada” means Cboe Canada Exchange;

 

(e)“Change in Control” means:

 

(i)a takeover bid (as defined in the Act), which is successful in acquiring Shares,

 

(ii)the change of control of the Board resulting from the election by the members of the Corporation of less than a majority of the persons nominated for election by management of the Corporation,

 

(iii)the sale of all or substantially all the assets of the Corporation,

 

(iv)the sale, exchange or other disposition of a majority of the outstanding Shares in a single transaction or series of related transactions,

 

(v)the dissolution of the Corporation’s business or the liquidation of its assets,

 

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(vi)a merger, amalgamation or arrangement of the Corporation in a transaction or series of transactions in which the Corporation’s shareholders receive less than 51% of the outstanding shares of the new or continuing corporation, or

 

(vii)the acquisition, directly or indirectly, through one transaction or a series of transactions, by any Person, of an aggregate of more than 50% of the outstanding Shares;

 

(f)“Committee” means a committee of the Board appointed in accordance with this Plan, or if no such committee is appointed, the Board itself;

 

(g)“Corporation” means DeFi Technologies Inc. a company incorporated under the Business Corporations Act (Ontario);

 

(h)“Consultant” means an individual, other than an Employee, senior officer or director of the Corporation or a Subsidiary Corporation, or a Consultant Corporation, who;

 

(i)provides ongoing consulting, technical, management or other services to the Corporation or a Subsidiary Corporation, other than services provided in relation to a distribution of the Corporation’s securities,

 

(ii)provides the services under a written contract between the Corporation or a Subsidiary Corporation and the individual or Consultant Corporation,

 

(iii)in the reasonable opinion of the Corporation spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or a Subsidiary Corporation, and

 

(iv)has a relationship with the Corporation or a Subsidiary Corporation that enables the individual or Consultant Corporation to be knowledgeable about the business and affairs of the Corporation;

 

(i)“Consultant Corporation” means, for an individual Consultant, a company of which the individual is an employee or shareholder, or a partnership of which the individual is an employee or partner;

 

(j)“Date of Grant” means the date specified in the Option Agreement as the date on which the Option is effectively granted;

 

(k)“Disability” means any disability with respect to an Optionee which the Board, in its sole and unfettered discretion, considers likely to prevent permanently the Optionee from:

 

(i)being employed or engaged by the Corporation, a Subsidiary Corporation or another employer, in a position the same as or similar to that in which he was last employed or engaged by the Corporation or a Subsidiary Corporation; or

 

29

 

 

(ii)acting as a director or officer of the Corporation or a Subsidiary Corporation;

 

(l)“Disinterested Shareholder Approval” means an ordinary resolution approved by a majority of the votes cast by members of the Corporation at a shareholders’ meeting, excluding votes attaching to Shares beneficially owned by Insiders to whom Options may be granted and Associates of those persons;

 

(m)“Effective Date” means the effective date of this Plan, which is the later of the day of its approval by the shareholders of the Corporation and the day of its acceptance for filing by the Exchange if such acceptance for filing is required under the rules or policies of the Exchange;

 

(n)“Eligible Person” means:

 

(i)an Employee, senior officer or director of the Corporation or any Subsidiary Corporation,

 

(ii)a Consultant,

 

(iii)an individual providing Investor Relations Activities for the Corporation; and

 

(iv)a company, all of the voting securities of which are beneficially owned by one or more of the persons referred to in (i), (ii) or (iii) above;

 

(o)“Employee” means:

 

(i)an individual who is considered an employee under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source),

 

(ii)an individual who works full-time for the Corporation or a Subsidiary Corporation providing services normally provided by an employee and who is subject to the same control and direction by the Corporation or a Subsidiary Corporation over the details and methods of work as an employee of the Corporation or a Subsidiary Corporation, but for whom income tax deductions are not made at source, and

 

(iii)an individual who works for the Corporation or a Subsidiary Corporation, on a continuing and regular basis for a minimum amount of time per week, providing services normally provided by an employee and who is subject to the same control and direction by the Corporation or a Subsidiary Corporation over the details and methods of work as an employee of the Corporation or a Subsidiary Corporation, but for whom income tax deductions are not made at source;

 

(p)“Exchange” means the stock exchange or over the counter market on which the Shares are listed;

 

30

 

 

(q)“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;

 

(r)“Fair Market Value” means, where the Shares are listed for trading on an Exchange, the last closing price of the Shares before the Date of Grant on the Exchange which is the principal trading market for the Shares, as may be determined for such purpose by the Committee, provided that, so long as the Shares are listed only on the NEO, the “Fair Market Value” shall not be lower than the last closing price of the Shares before the Date of Grant;

 

(s)“Guardian” means the guardian, if any, appointed for an Optionee;

 

(t)“Insider” shall have the meaning ascribed to such term in the Act;

 

(u)“Investor Relations Activities” means any activities or oral or written communications, by or on behalf of the Corporation or a shareholder of the Corporation that promote or reasonably could be expected to promote the purchase or sale of securities of the Corporation, but does not include:

 

(i)the dissemination of information provided, or records prepared, in the ordinary course of business of the Corporation

 

(A)to promote the sale of products or services of the Corporation, or

 

(B)to raise public awareness of the Corporation,

 

that cannot reasonably be considered to promote the purchase or sale of securities of the Corporation,

 

(ii)activities or communications necessary to comply with the requirements of

 

(A)applicable securities laws,

 

(B)the rules and policies of the NEO, if the Shares are listed only on the NEO, or the by-laws, rules or other regulatory instruments of any other self-regulatory body or exchange having jurisdiction over the Corporation,

 

(iii)communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

 

(A)the communication is only through the newspaper, magazine or publication, and

 

(B)the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer, or

 

31

 

 

(iv)activities or communications that may be otherwise specified by the Cboe Canada, if the Shares are listed only on Cboe Canada;

 

(v)“Option” means an option to purchase unissued Shares granted pursuant to the terms of this Plan;

 

(w)“Option Agreement” means a written agreement between the Corporation and an Optionee specifying the terms of the Option being granted to the Optionee under the Plan;

 

(x)“Option Price” means the exercise price per Share specified in an Option Agreement, adjusted from time to time in accordance with the provisions of Sections 6.3 and 10;

 

(y)“Optionee” means an Eligible Person to whom an Option has been granted;

 

(z)“Person” means a natural person, company, government or political subdivision or agency of a government; and where two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of an issuer, such syndicate or group shall be deemed to be a Person;

 

"(aa)“Plan” means this Stock Option Plan of the Corporation;

 

(bb)“Qualified Successor” means a person who is entitled to ownership of an Option upon the death of an Optionee, pursuant to a will or the applicable laws of descent and distribution upon death;

 

(cc)“Shares” means the common shares in the capital of the Corporation as constituted on the Date of Grant, adjusted from time to time in accordance with the provisions of Section 10;

 

(dd)“Shareholder Approval” means an ordinary resolution approved by a majority of the votes cast by members of the Corporation at a shareholders’ meeting;

 

(ee)“Subsidiary Corporation” shall mean a company which is a subsidiary of the Corporation; and

 

(ff)“Term” means the period of time during which an Option may be exercised.

 

3. ADMINISTRATION

 

3.1 Board or Committee – The Plan shall be administered by the Board or by a Committee appointed in accordance with Section 3.2.

 

3.2 Appointment of Committee – The Board may at any time appoint a Committee, consisting of not less than three of its members, to administer the Plan on behalf of the Board in accordance with such terms and conditions as the Board may prescribe, consistent with this Plan. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. From time to time, the Board may increase the size of the Committee and appoint additional members, remove members (with or without cause) and appoint new members in their place, fill vacancies however caused, or remove all members of the Committee and thereafter directly administer the Plan. In the absence of the appointment of a Committee by the Board, the Board shall administer the Plan.

 

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3.3 Quorum and Voting – A majority of the members of the Committee shall constitute a quorum, and, subject to the limitations in this Section 3, all actions of the Committee shall require the affirmative vote of members who constitute a majority of such quorum. No member of the Committee who is a director to whom an Option may be granted may participate in the decision to grant such Option (but any such member may be counted in determining the existence of a quorum at any meeting of the Committee in which action is to be taken with respect to the granting of an Option to him).

 

3.4 Powers of Board and Committee – The Board shall from time to time authorize and approve the grant by the Corporation of Options under this Plan, and any Committee appointed under Section 3.2 shall have the authority to review the following matters in relation to the Plan and to make recommendations thereon to the Board;

 

(a)administration of the Plan in accordance with its terms,

 

(b)determination of all questions arising in connection with the administration, interpretation and application of the Plan, including all questions relating to the value of the Shares,

 

(c)correction of any defect, supply of any information or reconciliation of any inconsistency in the Plan in such manner and to such extent as shall be deemed necessary or advisable to carry out the purposes of the Plan,

 

(d)prescription, amendment and rescission of the rules and regulations relating to the administration of the Plan;

 

(e)determination of the duration and purpose of leaves of absence from employment which may be granted to Optionees without constituting a termination of employment for purposes of the Plan,

 

(f)with respect to the granting of Options:

 

(i)determination of the Employees, officers, directors or Consultants to whom Options will be granted, based on the eligibility criteria set out in this Plan,

 

(ii)determination of the terms and provisions of the Option Agreement which shall be entered into with each Optionee (which need not be identical with the terms of any other Option Agreement) and which shall not be inconsistent with the terms of this Plan,

 

(iii)amendment of the terms and provisions of an Option Agreement, provided the Board obtains:

 

(A)the consent of the Optionee, and

 

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(B)if required, the approval of any stock exchange on which the Shares are listed,

 

(iv)determination of when Options will be granted,

 

(v)determination of the number of Shares subject to each Option,

 

(vi)determination of the vesting schedule, if any, for the exercise of each Option, and

 

(g)other determinations necessary or advisable for administration of the Plan.

 

3.5 Obtain Approvals – The Board will seek to obtain any regulatory, Exchange or shareholder approvals which may be required pursuant to applicable securities laws or Exchange rules.

 

3.6 Administration by Committee – The Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan. In addition, the Committee’s administration of the Plan shall in all respects be consistent with the Exchange policies and rules.

 

4. ELIGIBILITY

 

4.1 Eligibility for Options – Options may be granted to any Eligible Person.

 

4.2 Insider Eligibility for Options – Notwithstanding Section 4.1, if the Shares are listed only on the NEO, grants of Options to Insiders shall be subject to the policies of the NEO.

 

4.3 No Violation of Securities Laws – No Option shall be granted to any Optionee unless the Committee has determined that the grant of such Option and the exercise thereof by the Optionee will not violate the securities law of the jurisdiction in which the Optionee resides.

 

5. SHARES SUBJECT TO THE PLAN

 

5.1 Number of Shares – The maximum number of Shares issuable from time to time under the Plan is that number of Shares as is equal to 10% of the number of issued Shares at the Date of Grant of an Option. The maximum number of Shares issuable under the Plan shall be adjusted, where necessary, to take account of the events referred to in Section 10.

 

5.2 Expiry of Option – If an Option expires or terminates for any reason without having been exercised in full, the unpurchased Shares subject thereto shall again be available for the purposes of the Plan.

 

5.3 Reservation of Shares – The Corporation will at all times reserve for issuance and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

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6. OPTION TERMS

 

6.1 Option Agreement – Each Option granted to an Optionee shall be confirmed by the execution and delivery of an Option Agreement and the Board shall specify the following terms in each such Option Agreement:

 

(a)the number of Shares subject to option pursuant to such Option, subject to the following limitations if the Shares are listed only on the NEO:

 

(i)the number of Shares reserved for issuance pursuant to Options to any one Optionee shall not exceed 5% of the issued Shares in any 12-month period,

 

(ii)the number of Shares reserved for issuance pursuant to Options to any one Consultant shall not exceed 2% of the issued Shares in any 12-month period, and

 

(iii)the aggregate number of Shares reserved for issuance pursuant to Options to Employees and those individuals conducting Investor Relations Activities shall not exceed 2% of the issued Shares in any 12-month period;

 

(b)the Date of Grant;

 

(c)the Term, provided that, if the Shares are listed only on the NEO, the length of the Term shall in no event be greater than five years following the Date of Grant for all Optionees;

 

(d)the Option Price, provided that the Option Price shall not be less than the Fair Market Value of the Shares on the Date of Grant;

 

(e)subject to Section 6.2 below, any vesting schedule upon which the exercise of an Option is contingent;

 

(f)if the Optionee is an Employee, Consultant or an individual providing Investor Relations Activities for the Corporation, a representation by the Corporation and the Optionee that the Optionee is a bona fide Employee, Consultant or an individual providing Investor Relations Activities for the Corporation, as the case may be, of the Corporation or a Subsidiary Corporation; and

 

(g)such other terms and conditions as the Board deems advisable and are consistent with the purposes of this Plan.

 

6.2 Vesting Schedule – The Board, as applicable, shall have complete discretion to set the terms of any vesting schedule of each Option granted, including, without limitation, discretion to:

 

(a)permit partial vesting in stated percentage amounts based on the Term of such Option; and

 

(b)permit full vesting after a stated period of time has passed from the Date of Grant.

 

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6.3 Amendments to Options – Amendments to the terms of previously granted Options are subject to regulatory approval, if required. If required by the Exchange, Disinterested Shareholder Approval shall be required for any reduction in the Option Price of a previously granted Option if the Optionee is an Insider of the Company at the time of the proposed reduction in the Option Price.

 

6.4 Uniformity – Except as expressly provided herein, nothing contained in this Plan shall require that the terms and conditions of Options granted under the Plan be uniform.

 

7. EXERCISE OF OPTION

 

7.1 Method of Exercise – Subject to any limitations or conditions imposed upon an Optionee pursuant to the Option Agreement or Section 6 hereof, an Optionee may exercise an Option by giving written notice thereof, specifying the number of Shares in respect of which the Option is exercised, to the Corporation at its principal place of business at any time after the Date of Grant until 4:00 p.m. (Toronto time) on the last day of the Term, such notice to be accompanied by full payment of the aggregate Option Price to the extent the Option is so exercised and an indication as to suitable arrangements made with the Corporation, in accordance with Section 15.7, for the receipt by the Corporation of an amount sufficient to satisfy any withholding tax requirements under applicable tax legislation in respect of the exercise of an Option (the “Withholding Obligations”). Such amounts shall be in lawful money (Canadian funds) by cash, cheque, bank draft or wire transfer. Payment by cheque made payable to the Corporation in the amount of the aggregate Option Price shall constitute payment of such Option Price unless the cheque is not honoured upon presentation, in which case the Option shall not have been validly exercised.

 

7.2 Issuance of Certificates – Not later than the third business day after exercise of an Option in accordance with Section 7.1, the Corporation shall issue and deliver to the Optionee a certificate or certificates evidencing the Shares with respect to which the Option has been exercised. Until the issuance of such certificate or certificates, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to such Shares, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the certificate is issued, except as provided by Section 10 hereof.

 

7.3 Compliance with U.S. Securities Laws – As a condition to the exercise of an Option, the Board may require the Optionee to represent and warrant in writing at the time of such exercise that the Shares are being purchased only for investment and without any then-present intention to sell or distribute such Shares. At the option of the Board, a stop-transfer order against such Shares may be placed on the stock books and records of the Corporation and a legend, indicating that the stock may not be pledged, sold or otherwise transferred unless an opinion of counsel is provided stating that such transfer is not in violation of any applicable law or regulation, may be stamped on the certificates representing such Shares in order to assure an exemption from registration. The Board may also require such other documentation as may from time to time be necessary to comply with United States’ federal and state securities laws. The Corporation has no obligation to undertake registration of Options or the Shares issuable upon the exercise of the Options.

 

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8. TRANSFERABILITY OF OPTIONS

 

8.1 Non-Transferable – Except as permitted by applicable securities laws and the policies of the Exchange, and as provided otherwise in this Section 8, Options are non-assignable and non-transferable.

 

8.2 Death of Optionee – Subject to Section 8.3, if the employment of an Optionee as an Employee of, or the services of a Consultant providing services to, the Corporation or any Subsidiary Corporation, or the employment of an Optionee as an individual providing Investor Relations Activities, or the position of the Optionee as a director or senior officer of the Corporation or any Subsidiary Corporation, terminates as a result of such Optionee’s death, any Options held by such Optionee shall pass to the Qualified Successor of the Optionee and shall be exercisable by such Qualified Successor until the earlier of a period of not more than one year following the date of such death and the expiry of the Term of the Option.

 

8.3 Disability of Optionee – If the employment of an Optionee as an Employee of, or the services of a Consultant providing services to, the Corporation or any Subsidiary Corporation, or the employment of an Optionee as an individual providing Investor Relations Activities for the Corporation, or the position of the Optionee as a director or senior officer of the Corporation or any Subsidiary Corporation, is terminated by reason of such Optionee’s Disability, any Options held by such Optionee that could have been exercised immediately prior to such termination of employment or service shall be exercisable by such Optionee, or by his Guardian, for a period of not more than one year following the date of such following the termination of employment or service of such Optionee. If such Optionee dies within that period of not more than one year, any Option held by such Optionee that could have been exercised immediately prior to his or her death shall pass to the Qualified Successor of such Optionee, and shall be exercisable by the Qualified Successor until the earlier of a period of not more than one year following the death of such Optionee and the expiry of the Term of the Option.

 

8.4 Vesting – Options held by a Qualified Successor or exercisable by a Guardian shall, during the period prior to their termination, continue to vest in accordance with any vesting schedule to which such Options are subject.

 

8.5 Deemed Non-Interruption of Employment – Employment shall be deemed to continue intact during any military or sick leave or other bona fide leave of absence if the period of such leave does not exceed 90 days or, if longer, for so long as the Optionee’s right to reemployment with the Corporation or any Subsidiary Corporation is guaranteed either by statute or by contract. If the period of such leave exceeds 90 days and the Optionee’s reemployment is not so guaranteed, then the Optionee’s employment shall be deemed to have terminated on the ninety-first day of such leave.

 

9. TERMINATION OF OPTIONS

 

9.1 Termination of Options – To the extent not earlier exercised or terminated in accordance with Section 8, an Option shall terminate at the earliest of the following dates:

 

(a)the termination date specified for such Option in the Option Agreement;

 

(b)where the Optionee’s position as an Employee, a Consultant, a director or a senior officer of the Corporation or any Subsidiary Corporation, or an individual providing Investor Relations Activities for the Corporation, is terminated for cause, the date of such termination for cause;

 

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(c)where the Optionee’s position as an Employee, a Consultant, a director or a senior officer of the Corporation or any Subsidiary Corporation or an individual providing Investor Relations Activities for the Corporation terminates for a reason other than the Optionee’s Disability or death or for cause, not more than 90 days after such date of termination or, if the Shares are listed only on the NEO, not more than 30 days after such person ceases to be employed to provide Investor Relations Activities; PROVIDED that if an Optionee’s position changes from one of the said categories to another category, such change shall not constitute termination or cessation for the purpose of this Subsection 9.1(c); and

 

(d)the date of any sale, transfer, assignment or hypothecation, or any attempted sale, transfer, assignment or hypothecation, of such Option in violation of Section 8.1.

 

9.2 Lapsed Options – If Options are surrendered, terminate or expire without being exercised in whole or in part, new Options may be granted covering the Shares not purchased under such lapsed Options. If an Option has been surrendered in connection with the regranting of a new Option to the same Optionee on different terms than the original Option granted to such Optionee, then, if required, the new Option is subject to approval of the Exchange.

 

9.3 Exclusion From Severance Allowance, Retirement Allowance or Termination Settlement – If the Optionee retires, resigns or is terminated from employment or engagement with the Corporation or any Subsidiary Corporation, the loss or limitation, if any, pursuant to the Option Agreement with respect to the right to purchase Option Shares which were not vested at that time or which, if vested, were cancelled, shall not give rise to any right to damages and shall not be included in the calculation of nor form any part of any severance allowance, retiring allowance or termination settlement of any kind whatsoever in respect of such Optionee.

 

10. ADJUSTMENTS TO OPTIONS

 

10.1 Alteration in Capital Structure – If there is any change in the Shares through or by means of a declaration of stock dividends of the Shares or consolidations, subdivisions or reclassifications of the Shares, or otherwise, the number of Shares available under the Plan, the Shares subject to any Option and the Option Price therefor shall be adjusted proportionately by the Board and, if required, approved by the Exchange, and such adjustment shall be effective and binding for all purposes of the Plan.

 

10.2 Effect of Amalgamation, Merger or Arrangement – If the Corporation amalgamates, merges or enters into a plan of arrangement with or into another corporation, any Shares receivable on the exercise of an Option shall be converted into the securities, property or cash which the Optionee would have received upon such amalgamation, merger or arrangement if the Optionee had exercised the Option immediately prior to the record date applicable to such amalgamation, merger or arrangement, and the exercise price shall be adjusted proportionately by the Board and such adjustment shall be binding for all purposes of the Plan.

 

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10.3 Acceleration on Change in Control – Upon a Change in Control, all Options shall become immediately exercisable, notwithstanding any contingent vesting provisions to which such Options may have otherwise been subject.

 

10.4 Acceleration of Date of Exercise – Subject to the approval of the Exchange, if required, the Board shall have the right to accelerate the date of vesting of any portion of any Option which remains unvested.

 

10.5 Determinations to be Binding – If any questions arise at any time with respect to the Option Price or exercise price or number of Option Shares or other property deliverable upon exercise of an Option following an event referred to in this Section 10, such questions shall be conclusively determined by the Board, whose decisions shall be final and binding.

 

10.6 Effect of a Take-Over – If a bona fide offer (the “Offer”) for Shares is made to an Optionee or to shareholders generally or to a class of shareholders which includes the Optionee, which Offer constitutes a take-over bid within the meaning of the Act, the Corporation shall, immediately upon receipt of notice of the Offer, notify each Optionee of full particulars of the Offer, whereupon any Option held by an Optionee may be exercised in whole or in part, notwithstanding any contingent vesting provisions to which such Options may have otherwise been subject, by the Optionee so as to permit the Optionee to tender the Shares received upon such exercise (the “Optioned Shares”) to the Offer. If:

 

(a)the Offer is not completed within the time specified therein; or

 

(b)all of the Optioned Shares tendered by the Optionee pursuant to the Offer are not taken up and paid for by the offeror pursuant thereto;

 

the Optioned Shares or, in the case of clause (b) above, the Optioned Shares that are not taken up and paid for, may be returned by the Optionee to the Corporation and reinstated as authorized but unissued Shares and with respect to such returned Optioned Shares, the Option shall be reinstated as if it had not been exercised. If any Optioned Shares are returned to the Corporation under this Section, the Corporation shall refund to the Optionee any Option Price paid for such Optioned Shares.

 

11. APPROVAL, TERMINATION AND AMENDMENT OF PLAN

 

11.1 Shareholder Approval – This Plan, if the Shares are listed only on Cboe Canada, is subject to Shareholder Approval every three years.

 

11.2 Power of Board to Terminate or Amend Plan – Subject to the approval of the Exchange, if required, the Board may terminate, suspend or discontinue the Plan at any time or amend or revise the terms of the Plan; provided, however, that, except as provided in Section 10, the Board may not do any of the following without obtaining, within 12 months either before or after the Board’s adoption of a resolution authorizing such action, approval by the Corporation’s shareholders at a meeting duly held in accordance with the applicable corporate laws:

 

(a)increase the maximum number of Shares which may be issued under the Plan;

 

(b)materially modify the requirements as to eligibility for participation in the Plan; or

 

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(c)materially increase the benefits accruing to participants under the Plan;

 

however, the Board may amend the terms of the Plan to comply with the requirements of any applicable regulatory authority, or as a result of changes in the policies of the Exchange relating to director, officer and employee stock options, without obtaining the approval of the Corporation’s shareholders.

 

11.3 No Grant During Suspension of Plan – No Option may be granted during any suspension, or after termination, of the Plan. Amendment, suspension or termination of the Plan shall not, without the consent of the Optionee, alter or impair any rights or obligations under any Option previously granted.

 

12. CONDITIONS PRECEDENT TO ISSUANCE OF SHARES

 

12.1 Compliance with Laws – Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such shares shall comply with all relevant provisions of law, including, without limitation, any applicable United States’ state securities laws, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations thereunder and the requirements of any Exchange or automated interdealer quotation system of a registered national securities association upon which such Shares may then be listed or quoted, and such issuance shall be further subject to the approval of counsel for the Corporation with respect to such compliance, including the availability of an exemption from registration for the issuance and sale of such Shares. The inability of the Corporation to obtain from any regulatory body the authority deemed by the Corporation to be necessary for the lawful issuance and sale of any Shares under this Plan, or the unavailability of an exemption from registration for the issuance and sale of any Shares under this Plan, shall relieve the Corporation of any liability with respect to the non-issuance or sale of such Shares other than with respect to a refund of any Option Price paid.

 

13. USE OF PROCEEDS

 

13.1 Use of Proceeds – Proceeds from the sale of Shares pursuant to the Options granted and exercised under the Plan shall constitute general funds of the Corporation and shall be used for general corporate purposes, or as the Board otherwise determines.

 

14. NOTICES

 

14.1 Notices – All notices, requests, demands and other communications required or permitted to be given under this Plan and the Options granted under this Plan shall be in writing and shall be either delivered personally to the party to whom notice is to be given, in which case notice shall be deemed to have been duly given on the date of such personal delivery; telecopied, in which case notice shall be deemed to have been duly given on the date the telecopy is sent; or mailed to the party to whom notice is to be given, by first class mail, registered or certified, return receipt requested, postage prepaid, and addressed to the party at his or its most recent known address, in which case such notice shall be deemed to have been duly given on the tenth postal delivery day following the date of such mailing.

 

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15. MISCELLANEOUS PROVISIONS

 

15.1 No Obligations to Exercise – Optionees shall be under no obligation to exercise Options granted under this Plan.

 

15.2 No Obligation to Retain Optionee – Nothing contained in this Plan shall obligate the Corporation or any Subsidiary Corporation to retain an Optionee as an Employee, officer, director or Consultant for any period, nor shall this Plan interfere in any way with the right of the Corporation or any Subsidiary Corporation to reduce such Optionee’s compensation.

 

15.3 Binding Agreement – The provisions of this Plan and of each Option Agreement with an Optionee shall be binding upon such Optionee and the Qualified Successor or Guardian of such Optionee.

 

15.4 Use of Terms – Where the context so requires, references herein to the singular shall include the plural, and vice versa, and references to a particular gender shall include either or both genders.

 

15.5 Headings – The headings used in this Plan are for convenience of reference only and shall not in any way affect or be used in interpreting any of the provisions of this Plan.

 

15.6 No Representation or Warranty – The Corporation makes no representation or warranty as to the future value of any Shares issued in accordance with the provisions of this Plan.

 

15.7 Income Taxes – Upon the exercise of an Option by an Optionee, the Corporation shall have the right to require the Optionee to remit to the Corporation an amount sufficient to satisfy any Withholding Obligations relating thereto under applicable tax legislation. Unless otherwise prohibited by the Board or by applicable law, satisfaction of the amount of the Withholding Obligations (the “Withholding Amount”) may be accomplished by any of the following methods or by a combination of such methods as determined by the Corporation in its sole discretion:

 

(a)the tendering by the Optionee of cash payment to the Corporation in an amount less than or equal to the Withholding Amount; or

 

(b)the withholding by the Corporation from the Shares otherwise due to the Optionee such number of Shares as it determines are required to be sold by the Corporation, as trustee, to satisfy the Withholding Amount (net of selling costs). By executing and delivering the Option Agreement, the Optionee shall be deemed to have consented to such sale and have granted to the Corporation an irrevocable power of attorney to effect the sale of such Shares and to have acknowledged and agreed that the Corporation does not accept responsibility for the price obtained on the sale of such Shares; or

 

(c)the withholding by the Corporation from any cash payment otherwise due by the Corporation to the Optionee, including salaries, directors fees, consulting fees and any other forms of remuneration, such amount of cash as is required to pay and satisfy the Withholding Amount;

 

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●provided, however, in all cases, that the sum of any cash so paid or withheld and the fair market value of any Shares so withheld is sufficient to satisfy the Withholding Amount.

 

●The provisions of the Option Agreement shall provide that the Optionee (or their beneficiaries) shall be responsible for all taxes with respect to any Options granted under the Option Plan and an acknowledgement that neither the Board nor the Corporation shall make any representations or warranties of any nature or kind whatsoever to any person regarding the tax treatment of Options or payments on account of the Withholding Amount made under the Option Plan and none of the Board, the Corporation, nor any of its employees or representatives shall have any liability to an Optionee (or its beneficiaries) with respect thereto.

 

15.8 Compliance with Applicable Law – If any provision of the Plan or any Option Agreement contravenes any law or any order, policy, by-law or regulation of any regulatory body or stock exchange or over the counter market having authority over the Corporation or the Plan, then such provision shall be deemed to be amended to the extent required to bring such provision into compliance therewith.

 

15.9 Conflict – In the event of any conflict between the provisions of this Plan and an Option Agreement, the provisions of this Plan shall govern.

 

15.10 Governing Law – This Plan and each Option Agreement issued pursuant to this Plan shall be governed by the laws of the Province of Ontario.

 

15.11 Time of Essence – Time is of the essence of this Plan and of each Option Agreement. No extension of time will be deemed to be, or to operate as, a waiver of the essentiality of time.

 

15.12 Entire Agreement – This Plan and the Option Agreement sets out the entire agreement between the Corporation and the Optionees relative to the subject matter hereof and supersedes all prior agreements, undertakings and understandings, whether oral or written.

 

16. EFFECTIVE DATE OF PLAN

 

16.1 Effective Date of Plan – This Plan shall be effective on the later of the day of its approval by the shareholders of the Corporation given by way of ordinary resolution and the day of its acceptance for filing by the Exchange.

 

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SCHEDULE “C”

 

DEFI TECHNOLOGIES INC. (the “Corporation”)
DSU PLAN

 

Article 1
DEFINITIONS AND INTERPRETATION

 

1.01For purposes of this Deferred Share Unit Plan, unless such word or term is otherwise defined herein or the context in which such word or term is used herein otherwise requires, the following words and terms with the initial letter or letters thereof capitalized shall have the following meanings:

 

(a)“Act” means the Business Corporations Act (Ontario) or its successor, as amended from time to time;

 

(b)“Board” means the board of directors of the Corporation;

 

(c)“Cboe Manual” means the corporate finance manual published by the Exchange, as amended from time to time, or if the Common Shares are no longer listed for trading on the Exchange, the policies of such other exchange or quotation system on which the Common Shares are listed or quoted for trading;

 

(d)“Change of Control” means the occurrence of any one or more of the following events:

 

(i)a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity, as a result of which the holders of Common Shares immediately prior to the completion of the transaction hold less than 25% of the outstanding shares of the successor corporation after completion of the transaction;

 

(ii)the sale, lease, exchange or other disposition, in a single transaction or a series of related transactions, of assets, rights or properties of the Corporation and/or any of its Subsidiaries which have an aggregate book value greater than 25% of the book value of the assets, rights and properties of the Corporation and its Subsidiaries on a consolidated basis to any other person or entity, other than a disposition to a wholly-owned Subsidiary of the Corporation in the course of a reorganization of the assets of the Corporation and its Subsidiaries;

 

(iii)a resolution is adopted to wind-up, dissolve or liquidate the Corporation;

 

(iv)any person, entity or group of persons or entities acting jointly or in concert (an “Acquiror”) acquires or acquires control (including, without limitation, the right to vote or direct the voting) of Voting Securities of the Corporation which, when added to the Voting Securities owned of record or beneficially by the Acquiror or which the Acquiror has the right to vote or in respect of which the Acquiror has the right to direct the voting, would entitle the Acquiror and/or associates and/or affiliates of the Acquiror (as such terms are defined in the Act) to cast or to direct the casting of 20% or more of the votes attached to all of the Corporation’s outstanding Voting Securities which may be cast to elect directors of the Corporation or the successor corporation (regardless of whether a meeting has been called to elect directors);

 

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(v)as a result of or in connection with: (A) a contested election of directors, or; (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Corporation or any of its affiliates and another corporation or other entity, the nominees named in the most recent management information circular of the Corporation for election to the Board (or replacements designated by such nominees) shall not constitute a majority of the Board; or

 

(vi)the Board adopts a resolution to the effect that a Change of Control as defined herein has occurred or is imminent.

 

(e)“Committee” means the Board or if the Board so determines in accordance with Section 2.03 of the Plan, the committee of the Directors authorized to administer the Plan, which may include any compensation committee of the Board;

 

(f)“Common Shares” means the common shares of the Corporation;

 

(g)“Consultant” means, with respect to a corporation, a person, other than an Employee, Executive Officer, or Director of such corporation or of a Related Entity of such corporation, that:

 

(i)is engaged to provide services to such corporation or a Related Entity of such corporation, other than services provided in relation to a distribution;

 

(ii)provides the services under a written contract with such corporation or a Related Entity of such corporation, and

 

(iii)spends or will spend a significant amount of time and attention on the affairs and business of such corporation or a Related Entity of such corporation;

 

and includes:

 

(iv)for an individual Consultant, a corporation of which the individual Consultant is an employee or shareholder, and a partnership of which the individual Consultant is an employee or partner, and

 

(v)for a Consultant that is not an individual, an Employee, Executive Officer, or Director of the Consultant, provided that the individual Employee, Executive Officer, or Director spends or will spend a significant amount of time and attention on the affairs and business of the issuing corporation or a Related Entity of such corporation;

 

(h)“Corporation” means DeFi Technologies Inc., a corporation existing under the Act;

 

(i)“Deferred Share Unit” or “DSU” means a unit credited by way of a bookkeeping entry in the books of the Corporation and administered pursuant to the Plan, representing the right to receive one Common Share;

 

(j)“Designated Affiliate” means an affiliate of the Corporation designated by the Committee for purposes of the Plan from time to time;

 

(k)“Director” means a member of the Board from time to time;

 

(l)“Disinterested Shareholder Approval” means approval by a majority of the votes cast by all the Corporation’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to shares of the Corporation beneficially owned by Insiders to whom DSUs may be granted under the Plan and their associates and affiliates;

 

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(m)“DSU Grant Letter” has the meaning ascribed in Section 3.04;

 

(n)“DSU Issue Date” means the date on which the Committee determines to grant Deferred Share Units to an Eligible Person;

 

(o)“DSU Payment” means

 

(i)if the DSU Issue Date of a DSU is prior to June 14, 2021, a cash payment by the Corporation to a Participant equal to the Market Value of a Common Share on the Separation Date multiplied by the number of DSUs held by the Participant on the Separation Date;

 

(ii)if the DSU Issue Date of a DSU is on or after June 14, 2021, the issuance of Common Shares by the Corporation to a Participant equal to the number of Deferred Share Units held by the Participant on the Separation Date;

 

(p)“DSU Trust” has the meaning ascribed thereto in Section 8.01;

 

(q)“Eligible Person” means a person who, at the relevant time:

 

(i)is a Director of the Corporation or of a Related Entity

 

(ii)is an Executive Officer of the Corporation or of a Related Entity

 

(iii)is an Employee of the of the Corporation or of a Related Entity; or

 

(iv)is a Consultant of the Corporation or of a Related Entity;

 

(r)“Employee” means, with respect to a corporation:

 

(i)an individual who is considered an employee of the corporation or a Related Entity of the corporation under the Income Tax Act;

 

(ii)an individual who works full-time for the corporation or a Related Entity of the corporation providing services normally provided by an employee and who is subject to the same control and direction by the corporation or the Related Entity of the corporation over the details and methods of work as an employee of the corporation or the Related Entity of the corporation, but for whom income tax deductions are not made at source, or

 

(iii)an individual who works for the corporation or a Related Entity of the corporation on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the corporation or the Related Entity of the corporation over the details and methods of work as an employee of the corporation or the Related Entity of the corporation, but for whom income tax deductions are not made at source.

 

(s)“Event of Termination” means the termination of the employment of a Participant as an employee or the cessation of a Participant as a Director, Executive Officer, Employee or Consultant, in any of the foregoing circumstances for any reason whatsoever, but provided that the Participant does not thereafter continue in the capacity of a Director, Executive Officer, Employee or Consultant. In the case of a termination of the employment of a Participant with the Corporation, the date of the Event of Termination shall be the date of the cessation of such Participant’s employment with the Corporation regardless of whether he or she is entitled to notice of termination or payment at law or under the terms of any employment contract and regardless of whether the termination of employment was lawful or unlawful. In the case of a cessation of a Participant as a Director or Executive Officer, the date of the Event of Termination shall be the date that such Participant ceases to serve in such capacity. In the case of a cessation of a Participant as a Consultant, the date of the Event of Termination shall be the date that the Corporation’s contractual arrangement for services with such Participant terminates.

 

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(t)“Exchange” means the Cboe Canada Exchange or, if the Common Shares are no longer listed for trading on the Cboe Canada Exchange, such other exchange or quotation system on which the Common Shares are listed or quoted for trading;

 

(u)“Executive Officer” means, in respect of a corporation, an individual who is:

 

(i)a chair, vice-chair or president;

 

(ii)a vice-president in charge of a principal business unit, division or function including sales, finance or production; or

 

(iii)performing a policy-making function in respect of the corporation;

 

(v)“Insider” has the meaning as set out in the Toronto Stock Exchange Company Manual;

 

(w)“Investor Relations Activities” has the meaning ascribed to such term in the Securities Act;

 

(x)“Market Value” means the weighted average trading price of the Common Shares on the Exchange for the five consecutive trading days immediately prior to the date as of which Market Value is determined. If the Common Shares are not trading on the Exchange, then the Market Value shall be determined based on the trading price on such stock exchange or over-the-counter market on which the Common Shares are listed and posted for trading. If the Common Shares are not listed and posted for trading on any stock exchange or over-the-counter market, then Market Value shall be the fair market value of such Common Shares as determined by the Committee in its sole discretion;

 

(y)“Participant” for the Plan means each Eligible Person to whom Deferred Share Units are issued;

 

(z)“Person” means any individual, firm, partnership, limited partnership, limited liability company or partnership, unlimited liability company, joint stock company, association, trust, trustee, executor, administrator, legal or personal representative, government, governmental body, entity or authority, group, body corporate, corporation, unincorporated organization or association, syndicate, joint venture or any other entity, whether or not having legal personality, and any of the foregoing in any derivative, representative or fiduciary capacity and pronouns have a similar meaning;

 

(aa)“Plan” means the deferred share unit plan described in Article 3 hereof;

 

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(bb)“Related Entity” means, for a corporation, a person that controls or is controlled by the corporation or that is controlled by the same person that controls the corporation;

 

(cc)“Required Regulatory Approval” means the approval of the Exchange and/or such other regulatory administrative or legal authorities as required for the issuance of Common Shares from treasury to satisfy the DSU Payment obligation of the Corporation under any DSUs;

 

(dd)“Required Shareholder Approval” means the approval, if any, by the shareholders of the Corporation, as required pursuant to applicable laws and Exchange rules and policies for the issuance of Common Shares from treasury to satisfy the DSU Payment obligations of the Corporation under any DSUs;

 

(ee)“Separation Date” means the date on which an Event of Termination occurs with respect to a Participant, or the date on which a Participant otherwise ceases to be an Eligible Person for any reason whatsoever, including the death of such Eligible Person;

 

(ff)“Security-Based Compensation Arrangement” shall include:

 

(i)stock option plans for the benefit of employees, Insiders, service providers, or any one of such groups;

 

(ii)stock purchase plans where the Corporation provides financial assistance or where the Corporation matches the whole or a portion of the securities being purchased;

 

(iii)stock appreciation rights involving issuances of securities from treasury;

 

(iv)any other compensation or incentive mechanism involving the issuance or potential issuances of securities of the Corporation;

 

(v)security purchases from treasury by an employee, Insider, or service provider which is financially assisted by the Corporation by any means whatsoever;

 

(vi)and for the avoidance of doubt, “Security-Based Compensation Arrangements” shall expressly exclude securities issued pursuant to employment inducements.

 

(gg)“Subsidiary” means a corporation which is a subsidiary of the Corporation as defined under the Act;

 

(hh)“Voting Securities” means Common Shares and/or any other securities (other than debt securities) of the Corporation or a successor entity that carry a voting right either under all circumstances or under some circumstances that have occurred and are continuing.

 

1.02Securities Definitions

 

In the Plan, the term “affiliate”, shall have the meaning given to such term in the Securities Act (Ontario).

 

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1.03Headings

 

The headings of all articles, sections and paragraphs in the Plan are inserted for convenience of reference only and shall not affect the construction or interpretation of the Plan.

 

1.04Context, Construction

 

Whenever the singular or masculine are used in the Plan, the same shall be construed as being the plural or feminine or neuter or vice versa where the context so requires.

 

1.05References to this Plan

 

The words “hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions mean or refer to the Plan as a whole and not to any particular article, section, paragraph or other part hereof.

 

1.06Canadian Funds

 

Unless otherwise specifically provided, all references to dollar amounts in the Plan are references to lawful money of Canada.

 

Article 2
PURPOSE AND ADMINISTRATION OF THE DEFERRED SHARE PLAN

 

2.01Purpose of the Plan

 

The purpose of the Plan is to strengthen the alignment of interests between Eligible Persons and the shareholders of the Corporation. In addition, the Plan has been adopted for the purpose of advancing the interests of the Corporation through the motivation, attraction and retention of Eligible Persons, it being generally recognized that deferred share unit plans aid in attracting, retaining and encouraging commitment and performance due to the opportunity offered to such Eligible Persons to receive compensation in line with the value of the Common Shares.

 

2.02Administration of the Plan

 

The Plan shall be administered by the Committee, and the Committee shall have full discretionary authority to administer the Plan including the authority to interpret and construe any provision of the Plan and to adopt, amend and rescind such rules and regulations for administering the Plan as the Committee may deem necessary in order to comply with the requirements of the Plan. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and conclusive and shall be final and binding on the Participants and the Corporation. No member of the Committee shall be personally liable for any action taken or determination or interpretation made in good faith in connection with the Plan, and all members of the Committee shall, in addition to their rights as Directors, be fully protected, indemnified and held harmless by the Corporation with respect to any such action taken or determination or interpretation made. The appropriate officers of the Corporation are hereby authorized and empowered to do all things and execute and deliver all instruments, undertakings and applications and writings as they, in their absolute discretion, consider necessary for the implementation of the Plan and of the rules and regulations established for administering the Plan. The Plan shall remain an unfunded obligation of the Corporation and the rights of Participants under the Plan shall be general unsecured obligations of the Corporation. All costs incurred in connection with the Plan shall be for the account of the Corporation.

 

2.03Delegation to the Committee

 

All of the powers exercisable hereunder by the Directors may, to the extent permitted by applicable law and as determined by resolution of the Directors, be exercised by a committee of the Directors comprised of not less than three Directors, including any compensation committee of the Board.

 

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2.04Record Keeping

 

The Corporation shall maintain a register in which shall be recorded:

 

(a)the name and address of each Participant in the Plan;

 

(b)the number of Deferred Share Units granted to each Participant under the Plan; and

 

(c)the date and price at which Deferred Share Units were granted.

 

Article 3
DEFERRED SHARE UNIT PLAN

 

3.01Establishment of Plan

 

The Plan is hereby established for Eligible Persons.

 

3.02Grants of DSUs

 

The Committee may grant DSUs under this Plan at such time and in such amounts as it may determine, which DSUs shall be subject to the terms and vesting conditions, if any, set out in the resolution of the Committee approving such grant.

 

3.03Redemption

 

Each vested Deferred Share Unit held by a Participant who ceases to be an Eligible Person shall be redeemed by the Corporation on the relevant Separation Date for a DSU Payment (less any applicable taxes and other source deductions required to be withheld by the Corporation) to be made to the Participant (or after the Participant’s death, a dependent, relative or legal representative of the Participant) on such date as the Corporation determines not later than 60 days after the Separation Date, without any further action on the part of the holder of the Deferred Share Unit in accordance with this Article 3. On settlement, the Corporation shall, for each such vested DSU, deliver to the Participant one Common Share. Any issuance of Common Shares under the Plan is subject to Required Regulatory Approval and Required Shareholder Approval. No amount will be paid to, or in respect of, a Participant under the Plan or pursuant to any other arrangement, and no additional Deferred Share Units will be granted to compensate for a downward fluctuation in the value of the Common Shares of the Corporation nor will any other form of benefit by conferred upon, or in respect of, a Participant for such purpose. Share certificates or other evidence of Common Shares issued pursuant to this section shall bear any legend as may be required by applicable securities laws or Exchange rules.

 

If a DSU is subject to vesting condition(s), the Participant holding such DSU shall not be entitled to the DSU Payment if the Participant ceases to be an eligible Participant, other than if the Participant ceases to be an eligible Participant in the event of, in connection with, or as a result of, a Change of Control, prior to the vesting condition(s) having been satisfied, and such DSU shall then be deemed cancelled. In the event of a Change of Control, each DSU shall automatically vest and be redeemable upon the occurrence of the Separation Date in accordance with the preceding paragraph.

 

3.04Deferred Share Unit Letter

 

Each grant of Deferred Share Units under the Plan shall be evidenced by a letter of the Corporation (a “DSU Grant Letter”). Such Deferred Share Units shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions, including without limitation vesting conditions, which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a DSU Grant Letter. The provisions of the various DSU Grant Letters entered into under the Plan need not be identical, and may vary from Participant to Participant or according to the date of grant.

 

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The delivery of certificates representing the Common Shares to be issued in settlement of DSUs, as applicable, will be contingent upon the fulfillment of any requirements set out in the DSU Grant Letter or applicable provisions of laws.

 

3.05Dividends

 

In the event that a dividend (other than stock dividend) is declared and paid by the Corporation on Common Shares, a Participant will be credited with additional Deferred Share Units. The number of such additional Deferred Share Units will be calculated by dividing the total amount of the dividends that would have been paid to the Participant if the Deferred Share Units in the Participant’s account on the dividend record date had been outstanding Common Shares (and the Participant held no other Common Shares), by the closing price of a Common Share on the Exchange on the date on which the dividends were paid on the Common Shares.

 

3.06Term of the Plan

 

The Plan, as set forth herein, shall be deemed to become effective as of the date first written above. The Plan shall remain in effect until it is terminated by the Board. Upon termination of the Plan, the Corporation shall redeem all remaining Deferred Share Units under Section 3.03 above, as at the applicable Separation Date for each of the remaining Participants.

 

Article 4
Common Shares Subject to the Plan and Participation Limits

 

4.01Common Shares Subject to the Plan.

 

Subject to adjustment under the provisions of Article 7, the aggregate number of Common Shares to be reserved and set aside for issue upon the exercise or redemption and settlement for all DSUs granted under this Plan is equal to 5% of the number of issued Common Shares at the date of grant of a DSU.

 

4.02Common Shares Available for Future Grants.

 

Any Common Shares subject to DSUs which for any reason expires without having been exercised or is forfeited or terminated shall again be available for future DSU grants under the Plan.

 

4.03Participation Limits.

 

The Plan, when combined with all of the Corporation’s other previously established Security Based Compensation Arrangements, including the limitation imposed on the maximum number of Common Shares which may be issued pursuant to the exercise or redemption and settlement of DSUs set out in Section 4.01 above, shall not result at any time in the grant of DSUs:

 

(a)to any one Person in any 12 month period which could, when exercised, result in the issuance of Common Shares exceeding 5% of the issued and outstanding Common Shares of the Corporation, calculated at the DSU Issue Date, unless the Corporation has obtained the requisite Disinterested Shareholder Approval to the grant;

 

(b)to any one Consultant in any 12 month period which could, when exercised, result in the issuance of Common Shares exceeding 2% of the issued and outstanding Common Shares of the Corporation, calculated at the DSU Issue Date;

 

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(c)in any 12 month period, to Persons employed or engaged by the Corporation to perform Investor Relations Activities which could, when exercised, result in the issuance of Common Shares exceeding, in aggregate, 2% of the issued and outstanding Common Shares of the Corporation, calculated at the DSU Issue Date;

 

(d)a number of Common Shares issuable to Insiders at any time exceeding 10% of the issued and outstanding Common Shares;

 

(e)to Insiders, within a 12 month period, of a number of Common Shares issued exceeding 10% of the issued shares of the Corporation;

 

(f)a number of Common Shares (i) issuable to all non-executive directors exceeding 1% of the issued and outstanding Common Shares, or (ii) issuable to any one non-executive director within a one-year period exceeding an DSU grant value of $150,000 per such non-executive director, based on a valuation method acceptable to the Board.

 

Any entitlement to acquire Common Shares granted pursuant to the Plan or other Securities Based Compensation Arrangement prior to the Participant becoming an Insider shall be excluded for the purposes of the limits set out in this Section 4.03.

 

4.04Fractional Shares.

 

No fractional Common Shares shall be issued upon the settlement of DSUs in Common Shares, and the Board may determine the manner in which fractional share value shall be treated.

 

Article 5
WITHHOLDING TAXES

 

5.01Withholding Taxes

 

The Corporation or any Designated Affiliate may take such steps as are considered necessary or appropriate for the withholding of any taxes or other amounts that the Corporation or any Designated Affiliate is required by any law or regulation of any governmental authority whatsoever to withhold in connection with any DSU or DSU Payment, including, without limiting the generality of the foregoing, the withholding of all or any portion of any DSU Payment or the withholding of the issue of Common Shares to be issued under the Plan (if applicable), until such time as the Participant has paid to, or made satisfactory arrangements for the payment to, the Corporation or any Designated Affiliate for any amount that the Corporation or Designated Affiliate is required by law to withhold with respect to such taxes or other amounts. Without limitation to the foregoing, the Committee may adopt administrative rules under the Plan, which provide for the sale, on behalf of the Participant, of Common Shares (or a portion thereof) in the market upon the issuance of such shares under the Plan, to satisfy the Corporation’s or Designated Affiliate’s withholding obligations under the Plan.

 

Article 6
GENERAL

 

6.01Amendments to the Plan

 

The Board may amend the Plan or DSU grants at any time without obtaining shareholder approval, provided, however, that no such amendment may materially and adversely affect any DSUs previously granted to a Participant without the consent of the Participant, except to the extent required by applicable law (including Exchange requirements). Any amendment under this Section shall be subject to all necessary regulatory approvals.

 

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6.02Amendments to the Plan Requiring Shareholder Approval

 

Notwithstanding Section 6.01, no amendments to the Plan or DSU grants to:

 

(a)extend the date on which a DSU will be forfeited or terminated in accordance with its terms;

 

(b)increase the maximum number of Common Shares reserved for issuance under the Plan;

 

(c)revise the participation limits set out in Section 4.03;

 

(d)revise Section 6.03 to permit DSUs granted under the Plan to be transferable or assignable other than for estate settlement purposes;

 

(e)any amendment required to be approved by shareholders under applicable law (including without limitation, pursuant to the NEO Company Manual); or

 

(f)revise the amending provisions set forth in Section 6.01 or 0;

 

shall be made without obtaining approval of the shareholders of the Corporation or Disinterested Shareholder Approval, as applicable, in accordance with the requirements of the Exchange.

 

6.03Non-Assignable

 

Except as otherwise may be expressly provided for under this Plan or pursuant to a will or by the laws of descent and distribution, no Deferred Share Unit and no other right or interest of a Participant is assignable or transferable, and any such assignment or transfer in violation of this Plan shall be null and void.

 

6.04Rights as a Shareholder and Director

 

No holder of any Deferred Share Units shall have any rights as a shareholder of the Corporation at any time. Nothing in the Plan shall confer on any Eligible Person the right to continue as a Director of the Corporation or as a director or any affiliate or interfere with the right to remove such director.

 

6.05No Contract of Employment

 

Nothing contained in the Plan shall confer or be deemed to confer upon any Participant the right to continue in the employment of, or to provide services to, the Corporation or its affiliates nor interfere or be deemed to interfere in any way with any right of the Corporation or its affiliates to discharge any Participant at any time for any reason whatsoever, with or without cause.

 

6.06Adjustment in Number of Payments Subject to the Plan

 

In the event there is any change in the Common Shares, whether by reason of a stock dividend, stock split, reverse stock split, consolidation, subdivision, reclassification or otherwise, an appropriate proportionate adjustment shall be made by the Committee with respect to the number of Deferred Share Units then outstanding under the Plan as the Committee, in its sole discretion, may determine to prevent dilution or enlargement of rights. If such adjustments, as determined by the Committee, shall be conclusive, final and binding for all purposes of the Plan.

 

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6.07No Representation or Warranty

 

The Corporation makes no representation or warranty as to the future value of any rights under the Deferred Share Units issued in accordance with the provisions of the Plan. No amount will be paid to, or in respect of, an Eligible Person under this Plan or pursuant to any other arrangement, and no additional Deferred Share Units will be granted to such Eligible Person to compensate for a downward fluctuation in the price of the Common Shares, nor will any other form of benefit be conferred upon, or in respect of, an Eligible Person for such purpose.

 

6.08Compliance with Applicable Law

 

If any provision of the Plan or any Deferred Share Unit contravenes any law or any order, policy, by-law or regulation of any regulatory body having jurisdiction, then such provision shall be deemed to be amended to the extent necessary to bring such provision into compliance therewith.

 

6.09Interpretation

 

This Plan shall be governed by and construed in accordance with the laws of the Province of Ontario.

 

6.10Unfunded Benefit

 

All DSU Payments to be made constitute unfunded obligations of the Corporation payable solely from its general assets and subject to the claims of its creditors. The Corporation has not established any trust or separate fund to provide for the payment of benefits hereunder.

 

Article 7
Adjustments

 

7.01The number and kind of Common Shares to which a DSU grant pertains shall be adjusted in the event of a reorganization, recapitalization, stock split or redivision, reduction, combination or consolidation, stock dividend, combination of shares, merger, consolidation, rights offering or any other change in the corporate structure or shares of the Corporation, in such manner, if any, and at such time, as the Board, in its sole discretion, may determine to be equitable in the circumstances. Failure of the Board to provide for an adjustment shall be conclusive evidence that the Board has determined that it is equitable to make no adjustment in the circumstances. If an adjustment results in a fractional share, the fraction shall be disregarded.

 

7.02If at any time the Corporation grants to its shareholders the right to subscribe for and purchase pro rata additional securities of any other corporation or entity, there shall be no adjustments made to the Common Shares or other securities subject to a DSU grant in consequence thereof and the DSU grant shall remain unaffected.

 

7.03The adjustments provided for in this Article 7 shall be cumulative.

 

7.04On the happening of each and every of the foregoing events, the applicable provisions of the Plan shall be deemed to be amended accordingly and the Board shall take all necessary action so as to make all necessary adjustments in the number and kind of securities subject to any outstanding DSU grants (and the Plan).

 

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Article 8
DSU Trust

 

8.01Establishment and Funding of DSU Trust

 

At the election of the Committee, the Corporation may settle a trust (the “DSU Trust”) for the purposes of the Plan.  The DSU Trust shall be funded from time to time by payments made to the DSU Trust by the Corporation for the purpose of enabling the DSU Trust to satisfy the Corporation’s obligations under this Plan that, at the election of the Committee, may include purchasing Common Shares in the open market or pursuant to private transactions with third parties (other than the Corporation) sufficient Common Shares to satisfy the Corporation’s obligation to make DSU Payments.  All assets acquired under the Plan as a result of Corporation contributions, income and other additions to the DSU Trust shall be held in trust by the trustee in accordance with the provisions of the trust agreement and this Plan and administered, distributed and otherwise governed by the provisions of this Plan and the trust agreement as amended from time to time.

 

Article 9
MISCELLANEOUS

 

9.01Governing Law

 

The Plan shall be construed in accordance with and be governed by the laws of Ontario and shall be deemed to have been made therein.

 

9.02Regulatory and Shareholder Approval

 

The Plan shall be subject to the approval of any relevant regulatory authority whose approval is required. Any DSU grants granted prior to such approval and acceptance shall be conditional upon such approval and acceptance being given and no such DSU grants may be exercised or shall vest unless such approval and acceptance is given.

 

The Plan shall be subject to the approval of the shareholders of the Corporation (or if required, Disinterested Shareholder Approval) to be sought at the Corporation’s next duly called annual general meeting.

 

9.03Effective Date of the Plan

 

The Plan is dated with effect as of the effective date, as amended on August 15, 2021.

 

 

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Exhibit 99.122

 

 

 

DeFi Technologies’ New Business Line, DeFi Alpha, a Specialized Arbitrage Trading Desk, Generates an Additional C$59.2 Million (US$43.4 Million) from Low-Risk Arbitrage Trades, Totaling Over C$113.8 Million (US$83.4 Million) Thus Far in Q2

 

●DeFi Alpha Trading Desk: DeFi Technologies previously introduced a specialized arbitrage trading desk, DeFi Alpha, which has successfully generated approximately C$113.8 million (US$83.4 million) thus far in Q2 from low-risk arbitrage trades, marking a robust start for this new venture.

 

●Expansion of Business Lines: The DeFi Alpha trading desk complements DeFi Technologies’ existing suite of business lines, including digital asset management, venture investments, research, and infrastructure support for DeFi, focusing on identifying low-risk arbitrage opportunities in the crypto market.

 

Toronto, Canada, June 3, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce announces its new business line DeFi Alpha, a specialized arbitrage trading desk, has generated an additional C$59.2 million (US$43.4 million) from low-risk arbitrage trades. In its first few months, DeFi Alpha has come off to a promising start, generating approximately C$113.8 million (US$83.4 million).

 

This initiative enhances DeFi Technologies’ suite of offerings, complementing its existing business lines of digital asset management, venture investments, research, and DeFi infrastructure support. DeFi Alpha’s sole focus is to identify low-risk arbitrage opportunities within the crypto ecosystem. Of the US$83.4 million generated, US$19.5 million was used to pay down debt, as detailed in the press release dated May 7, 2024.

 

Aligned with DeFi Technologies’ core mission, the DeFi Alpha trading desk complements current business lines, including:

 

Valour Asset Management: Offering exchange-traded products (“ETPs”) for simplified and secure access to digital assets.

 

DEFI Ventures: Backing early-stage ventures and high-potential projects in the DeFi space.

 

DEFI Infrastructure: Running nodes for DeFi protocols and supporting decentralized networks.

 

Reflexivity Research: a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights.

 

The DeFi Alpha trading desk is strategically designed to focus on identifying and capitalizing upon arbitrage opportunities within the dynamic digital assets market. Utilizing advanced algorithmic strategies and in-depth market analysis, the trading desk aims to generate alpha by exploiting inefficiencies and discrepancies in digital asset pricing. The primary focus is on arbitrage trading opportunities in both centralized and decentralized markets, ensuring minimal market or protocol exposure to mitigate downside revenue volatility.

 

 

 

 

 

 

The launch of the DeFi Alpha trading desk highlights DeFi Technologies’ dedication to innovation in the DeFi space. This new trading desk is a strategic step in expanding the company’s presence in the digital asset market, representing a move towards innovative solutions and accelerating the Company’s revenue model.

 

“We are thrilled with the instant success and sizable contribution of the DeFi Alpha trading desk to our revenue,” said Olivier Roussy Newton, CEO of DeFi Technologies. “In the last two months alone, we have already booked C$113.8 million (US$83.4 million) from our new DeFi Alpha business line. With our focus on identifying and capitalizing on mispriced opportunities within the dynamic cryptocurrency market, we are confident that the DeFi Alpha trading desk will continue to deliver low-risk opportunities, benefiting both our Company and our shareholders.”

 

Engagement Of Gold Standard Media LLC

 

The Company is also pleased to announce that it has entered into an agreement with Gold Standard Media, LLC and their affiliates (“GSM”), pursuant to which GSM will provide certain marketing services to the Company, effective May 13, 2024 (the “GSM Agreement”). The services provided by GSM will be to publish and distribute information regarding the Company through multiple platforms including digital marketing, email marketing, and influencer marketing. Pursuant to the GSM Agreement, GSM shall provide services to DeFi Technologies for a period of 12 months for US$500,000 and a grant of 1,500,000 deferred share units of the Company.

 

GSM is owned and operated by Kenneth Ameduri, Juliet Ameduri and Lior Gantz and is an arm’s length party to the Company and GSM and their affiliates own 1,500,000 common shares of the Company. None of the Company or its officers are involved, directly, with the creation of the materials distributed by GSM. The Company will provide GSM with publicly available source information for their disclosure and the Company will be involved in reviewing the materials for accuracy prior to their dissemination.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

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About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding to the DeFi Alpha trading desk; delivery of trading opportunities by DeFi Alpha; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

3

 

 

Exhibit 99.123

 

 

 

DeFi Technologies Subsidiary Valour Inc. Expands Collaboration with justTRADE; 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP Now Available for German Savings Plans

 

●DeFi Technologies’ subsidiary Valour Inc. has expanded its partnership with justTRADE, making the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP available for German savings plans.

 

●This collaboration, initiated in August 2022, strengthens Valour’s position as a key provider of cryptocurrency products and ETPs for justTRADE’s clientele, aligning with their mission to provide simple and secure access to digital assets.

 

●The launch of the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP, which follows a rule-based passive index methodology and leverages Bitcoin Suisse’s Global Crypto Taxonomy, marks a historic milestone for STOXX and expands the accessibility of cryptocurrency investments within mainstream portfolios.

 

Toronto, Canada, June 4, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has broadened its partnership with justTRADE, a leading German online brokerage platform. The recently launched 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP is now available for German savings plans through justTRADE.

 

The collaboration between justTRADE and Valour builds on a foundation of shared commitment to innovation and accessibility in financial services. Initiated in August 2022, this partnership has already positioned Valour as a key provider of cryptocurrency products and ETPs for justTRADE’s clientele in Germany. justTRADE, known for its user-friendly platform and comprehensive financial offerings, aligns perfectly with Valour’s mission to simplify and secure access to digital assets through trusted, regulated vehicles. This collaboration not only extends the range of products available to justTRADE customers but also reinforces Valour’s role as a leader in the digital asset sector.

 

This recent launch is notably historic, as STOXX, renowned for its benchmark indices, has for the first time ventured into the cryptocurrency space. The 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP represents a pioneering investment opportunity in top-tier digital assets, providing an ideal entry point for both satellite and mainstream investment strategies. This product follows the STOXX Digital Asset Blue Chip X Index, applying a rule-based passive index methodology. It leverages Bitcoin Suisse’s comprehensive Global Crypto Taxonomy for asset classification, ensuring a well-balanced and regularly adjusted investment portfolio.

 

 

 

 

 

The introduction of the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP via justTRADE marks a significant milestone in the integration of traditional financial index expertise with the dynamic world of digital assets. This strategic move is set to expand the accessibility of cryptocurrency investments within mainstream portfolios, reflecting a growing recognition of digital assets as a vital component of diversified investment strategies.

 

Marco A. Infuso, Chief Sales Officer of Valour, commented on the collaboration, stating, “We are proud to partner with justTRADE to bring the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP to German retail and institutional investors. This partnership marks a significant step forward in our mission to make high-quality digital asset products accessible to a wider audience. justTRADE’s choice of Valour over larger financial institutions underscores our deep expertise and innovative approach in the ETP space. Together, we are setting new standards for investment in digital assets.”

 

Michael B. Bußhaus, Co-Founder and Managing Director of justTRADE, stated, “We are thrilled to have Valour as a partner for our crypto ETPs and savings plans. Their broad range of products, low costs, and innovative underlyings are very popular with our customers, making investments in crypto assets easy and convenient.”

 

About justTRADE

justTRADE is a Frankfurt-based online broker that consistently offers traders the trading of securities and cryptos for €0 order commission (plus standard market spreads and max. 1€ external cost) and from a single securities account. More than 500,000 securities - shares, ETFs, ETCs, wikifolios, certificates, warrants and leveraged products - can now be traded via iOS and Android or via the desktop browser, both on-exchange via three exchanges (LS Exchange, Quotrix and Tradegate Exchange) and off-exchange via five trading partners (J.P. Morgan, Société Générale, UBS, Vontobel and L&S (wikifolios)). Around 1,500 ETFs, ETCs and ETPs from twelve providers complete the offering. With the ability to trade also 27 native cryptos from the same custody account as all securities, justTRADE offers its customers an unprecedented offering in Germany. In addition, a total of around 200 securities are also eligible for savings plans. https://www.justtrade.com/

 

About DeFi Technologies

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: MB9) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

2

 

 

 

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the trading of the 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP on justTRADE; development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of digital assets; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of digital assets sector; rules and regulations with respect to digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

3

 

 

 

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

4

 

 

Exhibit 99.124

 

 

DeFi Technologies Announces Launch of Normal Course Issuer Bid

 

Toronto, Canada, June 6, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (Cboe CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce its intention to commence a Normal Course Issuer Bid (“NCIB”) to buy back common shares of the Company (the “Common Shares”) through the facilities of CBOE Canada Inc. (the “Exchange”) and/or other Canadian alternative trading platforms. The actual number of Common Shares that may be purchased under the NCIB and the exact timing of such purchases will be determined by the Company.

 

The Company is undertaking the NCIB because its management believes that, currently, and from time to time, the market price of its Common Shares may not reflect the underlying value of the Company’s business and prospects. Management believes that, at such times, the purchase of Common Shares for cancellation would be in the best interests of the Company’s shareholders and an appropriate use of its cash on hand. The Company’s current cash balance is approximately C$69.9 million (US$51 million).

 

The NCIB has been approved by the Company’s board of directors and accepted by the Exchange and will be executed in accordance with the applicable rules and policies of the Exchange and any applicable Canadian securities laws. The NCIB shall commence on June 10, 2024 and run through June 9, 2025 or on such earlier date as the NCIB is complete.

 

Under the terms of the NCIB, the Company may, if considered advisable, purchase its Common Shares in open market transactions through the facilities of the Exchange and/or other Canadian alternative trading platforms not to exceed up to 10% of the public float for the Common Shares as of June 3, 2024 or 26,996,392 Common Shares, purchased in aggregate. The price that the Company will pay for the Common Shares shall be the prevailing market price at the time of purchase and all purchased Common Shares will be cancelled by the Company. In accordance with Exchange rules, daily purchases (other than pursuant to a block purchase exception) on the Exchange under the NCIB cannot exceed 25% of the average daily trading volume on the Exchange as measured from December 1, 2023 to May 31, 2024.

 

The Company has appointed Ventum Financial Corp. to coordinate and facilitate purchases under the NCIB.

 

 

 

 

About DeFi Technologies

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

2

 

 

 

Cautionary note regarding forward-looking information:

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding to the NCIB; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

3

 

 

Exhibit 99.125

 

   

 

DeFi Technologies Provides Monthly Corporate Update:

Announces Bitcoin Treasury Strategy

Subsidiary Valour Repays an Additional US$5 Million in Loans, AUM Reaches C$837 Million (US$607 Million), Reflecting 64.9% Annual Growth with Strong Net Inflows of C$6.9 Million (US$5.08 Million)

 

●Bitcoin Treasury and Purchase of 110 Bitcoins: DeFi Technologies has adopted Bitcoin as its primary treasury reserve asset, purchasing 110 Bitcoins to initiate this strategy, reflecting confidence in Bitcoin’s protection from monetary debasement and potential to expand the Company’s treasury.

 

●Valour AUM and Repayment of Loans: Valour reports AUM of C$837 million (US$607 million) as of May 31, 2024, a year-on-year increase of 64.9%. Valour has also successfully repaid an additional US$5 million in outstanding loans secured by ETH collateral, following a previous repayment of US$19.5 million.

 

●Launch of Innovative Products and New Ventures: Valour Inc. introduced several innovative ETPs, including the Valour Internet Computer (ICP) ETP, Valour Toncoin (TON) ETP, Valour Chainlink (LINK) ETP, and the world’s first yield-bearing Bitcoin (BTC) ETP. Furthermore, the DeFi Alpha trading desk generated approximately C$113.8 million (US$83.4 million) in Q2 from low-risk arbitrage trades.

 

Toronto, Canada, June 10, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that it has adopted Bitcoin as its primary treasury reserve asset and has purchased 110 Bitcoins to initiate this strategy.

 

Bitcoin is now a major asset class with a market value exceeding $1 trillion. DeFi Technologies believes it has unique characteristics as a scarce and finite asset, making it a reasonable hedge against inflation and a safe haven from monetary debasement. Furthermore, its digital and architectural resilience positions it as a preferable alternative to traditional assets. Given the significant value gap between Bitcoin and other traditional assets, DeFi Technologies believes Bitcoin has the potential to generate outsized returns as it gains increasing acceptance.

 

Valour AUM Update and Repayment of Loans

 

The Company also announces that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, “Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, reports assets under management (“AUM”) of C$837 million (US$607 million) as of May 31, 2024. This figure represents a significant year-on-year increase of 64.9%, driven by a strong net inflow of C$6.9 million (US$5.08 million) and the appreciation of asset prices compared to the previous month.

 

 

 

 

   

 

Valour has also successfully repaid an additional US$5 million in outstanding loans secured by 2044 ETH as collateral. This repayment, achieved without raising additional equity or debt, released approximately 2044 ETH back into Valour’s operational assets, enabling potential staking and additional revenue generation. This is in addition to the US$19.5 million in outstanding loans that DeFi Technologies announced Valour had successfully repaid on May 7, 2024.

 

The debt repayments of US $19.5 million, US$5 million and the purchase of 110 Bitcoin (US $7.9 million) as a treasury reserve asset were funded by revenue from the DeFi Alpha trading desk, the Company’s newest business line, which has generated approximately C$113.8 million (US$83.4 million) in Q2 thus far from low-risk arbitrage trades. As of the end of May 2024, DeFi Technologies maintains a strong cash balance of approximately C$69.9 million (US$51 million), underscoring its robust financial health and capacity for continued growth and strategic investments.

 

“We have adopted Bitcoin as our primary treasury reserve asset, reflecting our confidence in its role as a hedge against inflation and a safe haven from monetary debasement,” said Olivier Roussy Newton, CEO of DeFi Technologies. “As the best-performing asset over the past decade, Bitcoin offers significant short to long-term potential to expand the Company’s treasury. Our strong year-on-year AUM growth reflects sustained demand for our innovative ETP products and investor trust. Tremendous revenue growth and a strong cash position highlight the effectiveness of our strategic initiatives. The success of DeFi Alpha in scaling our revenue model and our groundbreaking products demonstrate our commitment to providing secure, diversified, and accessible digital asset investment options. Our successful loan repayments further showcase the resilience of our operational strategy. We are excited about our future prospects and look forward to advancing our position in the digital asset space.”

 

Recap of Recent Strategic Advancements

 

The Success of DeFi Alpha Trading Desk: The DeFi Alpha trading desk, the Company’s newest business line, has generated approximately C$113.8 million (US$83.4 million) in Q2 thus far from low-risk arbitrage trades. This new venture complements DeFi Technologies’ existing business lines, including Valour digital asset management, DeFi venture investments, Reflexivity Research, and DeFi infrastructure support.

 

Valour Repays $19.5 Million in Outstanding Loans: On May 7, 2024, DeFi Technologies announced that its subsidiary Valour Inc. successfully repaid US$19.5 million in outstanding loans secured by BTC and ETH collateral. This repayment, achieved without raising additional equity or debt, released approximately 100 BTC and 5,000 ETH back into Valour’s operational assets, enabling potential staking and additional revenue generation. This strategic financial manoeuvre eliminated monthly interest expenses of approximately US$226,000, or US$2,712,000 annually, demonstrating Valour’s financial health and capital management prowess.

 

2 

 

 

   

 

Launch of Normal Course Issuer Bid: On June 6, 2024, DeFi Technologies announced its intention to commence a Normal Course Issuer Bid (NCIB) to buy back up to 10% of its common shares through the facilities of CBOE Canada Inc. and other Canadian alternative trading platforms.

 

Launch of Innovative ETPs: Valour Inc. made significant strides with the introduction of multiple innovative Exchange Traded Products (“ETPs”) in May 2024:

 

●Groundbreaking ETPs: Valour unveiled the Valour Internet Computer (ICP) ETP, Valour Toncoin (TON) ETP, and Valour Chainlink (LINK) ETP. These products, launched on May 10, 2024, mark significant milestones in the Nordic investment landscape, providing simplified access to these cutting-edge digital assets with a 1.9% management fee.

●Yield-Bearing Bitcoin ETP: In collaboration with Core Foundation, Valour launched the world’s first yield-bearing Bitcoin (BTC) ETP on the Nordic Growth Market (NGM) exchange. The Valour Bitcoin Staking (BTC) SEK ETP offers a 5.65% yield, enhancing investor returns while maintaining custodial control and security. This product simplifies Bitcoin investment by delegating Bitcoins to Core validators, attributing yield to the Net Asset Value (NAV) daily.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

3 

 

 

   

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the characteristics of Bitcoin and the Company’s strategy to adopt Bitcoin as a treasury reserve; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

4

 

 

Exhibit 99.126

 

 

DeFi Technologies Announces Launch of Core Chain Validator Node to Participate in Network Consensus and Staking, Stakes 1,498 BTC

 

●Launch of Core Chain Validator Node: DeFi Technologies has deployed an independent validator node on the Core Chain as part of its DeFi Infrastructure business line.

 

●Strategic Collaboration: This initiative is part of the broader collaboration with Core Foundation, which began with the development of innovative Bitcoin ETPs, including Valour’s Yield Bearing BTC ETP and a novel Core ETP.

 

●Staking 1,498 BTC: DeFi Technologies, through its subsidiary Valour Inc., will stake 1,498 BTC, participating in non-custodial Bitcoin staking and earning rewards from Core’s consensus mechanism.

 

TORONTO, June 11, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance is pleased to announce that it has deployed a Core Chain validator node to act as an independent validator for the network. The launch of the node is part of the Company’s DeFi Infrastructure business line, contributing to the mission of decentralized finance. The Company will also stake 1,498 BTC on the Core Chain.

 

This initiative follows the strategic collaboration between DeFi Technologies and Core Foundation, announced earlier this year on May 15, 2024, aimed first at developing innovative Bitcoin Exchange Traded Products (“ETPs”). This partnership included the launch of groundbreaking products such as Valour’s Yield Bearing BTC ETP and an upcoming novel CORE ETP, leveraging Core Chain’s unique blockchain features to introduce yield opportunities through BTC staking.

 

Core Chain is a cutting-edge, Bitcoin-powered, EVM-compatible blockchain that integrates Bitcoin miners and BTC stakers into its security in exchange for rewards. Validators are a fundamental component of Core’s consensus mechanism, Satoshi Plus consensus, responsible for validating transactions and producing blocks on the Core network.

 

By processing transactions and participating in consensus, DeFi Technologies will support the growth and performance of the Core Chain network. In connection with running the node, DeFi Technologies can receive rewards from securing transactions on Core Chain security. Additionally, the Company is participating in staking 1,498 BTC, earning staking rewards through its wholly owned subsidiary, Valour Inc.

 

Due to the unique nature of Core Chain’s Satoshi Plus consensus, Bitcoin staking is non-custodial, allowing any Bitcoin holder to earn yield by staking their Bitcoin tokens without giving up custody.

 

“We are excited to take this significant step forward with the launch of our Core Chain validator node,” said Olivier Roussy Newton, CEO of DeFi Technologies. “This initiative not only enhances our commitment to the decentralized finance ecosystem but also strengthens our strategic partnership with Core Foundation. By staking 1,498 BTC and participating in network consensus, we are advancing our mission to bridge traditional finance with innovative blockchain technology, specifically leveraging Bitcoin’s potential. This approach offers our investors unique exposure to yield and growth within the digital asset space.”

 

About Core

 

Core is a Bitcoin-powered and EVM-compatible layer-one blockchain responsible for bringing Bitcoin finance to life with the first-ever non-custodial BTC staking protocol and the world’s first yield bearing BTC ETP with Valour. Core is the most Bitcoin-aligned EVM blockchain with ~50% of Bitcoin mining hash power contributing to the network’s security and over 2,800 BTC natively staked in exchange for unlocking Bitcoin utility and rewards. This breakthrough has amassed a massive community of 2.3M Twitter followers and 265k Discord members which has translated into millions of Core adopters - over 18M unique addresses and 256M transactions since its mainnet launch in January 2023.

 

 

 

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding to launch of a Core Chain validator note; staking of BTC within the Core Chain; the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

View original content to download multimedia:

 

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SOURCE DeFi Technologies Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/June2024/11/c0807.html

 

%SEDAR: 00007675E

 

For further information: Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 07:30e 11-JUN-24

 

 

 

 

 

Exhibit 99.127

 

 

 

DeFi Technologies Responds to Recent Promotional Activity Pursuant to OTC Markets’ Request

 

Toronto, Ontario – (June 12, 2024) – DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (Cboe CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), has received a request from the OTC Markets Group Inc. (“OTC Markets”) to issue a statement on recent promotional activity related to the Company’s common shares (the “Common Shares”) traded on the OTCQB market (operated by OTC Markets).

 

On June 3, 2024, the Company publicly announced that it had retained Gold Standard Media, LLC (“GSM”) to publish and distribute publicly disclosed information regarding the Company through multiple platforms including digital marketing, email marketing, and influencer marketing (the “June 3 PR”). On June 6, 2024 OTC Markets informed the Company that it became aware of such activities, including the distribution of a number of newsletter emails published by Future Money Trends (collectively, the “Newsletters”).

 

The Company was therefore aware of GSM’s activities respecting the Company and had in advance publicly disclosed such activities in the June 3 PR. GSM is a third-party marketing and advertising firm. The appointment of GSM, the nature of the relationship between the Company and GSM, the extent of the Company’s editorial control over the content of the materials, compensation paid to GSM, the holding of Common Shares by GSM and its affiliates, were publicly disclosed in the June 3 PR, which can be found under the Company’s profile on SEDAR+ (www.sedarplus.ca).

 

The Company provided GSM with publicly available sources of information for its marketing materials. The Company is involved in reviewing the materials for accuracy with respect to any factual statements included that are directly derived from publicly available information provided to GSM prior to their dissemination and not any of the conclusions, recommendations or other statements made regarding such information or the Company generally. The Company has reviewed the materials and it does not consider the factual statements made in the materials to be materially false or misleading. In all cases, disclaimers are present to make sure the viewers contact qualified and registered brokers, investment advisors and financial advisors for personal investment advice with respect to decisions relating to purchasing the Company’s securities. Furthermore, the materials disclose compensation paid to GSM along with shareholdings of the Company by GSM and its affiliates as at June 3, 2024.

 

 

 

 

 

 

In addition to the retention of GSM, the Company has also, since May 2023, the Company engaged IRLabs, which was disclosed in the Company’s OTCQB Certification dated May 21, 2024, and Media One AG.

 

The OTC identified an increase in trading activity in the Common Shares since June 3, 2024. The Company notes that there has been an increase in trading activity of the Common Shares prior to the period identified by the OTC. As a result, the Company has no opinion as to whether or not or the extent to which the promotional activity outlined herein affected trading activity because of the many factors that affect trading activity of the Common Shares generally, which may include, but are not limited to:

 

a)The increase in valuation of the digital assets market generally, and in particular, the digital assets under management of the Company ;
   
b)Various positive business developments with the Company, including the performance of the Company’s DeFi Alpha, launch of new exchange traded products, 2024 Q1 results of the Company and the adoption of Bitcoin as a treasury reserve asset;
   
c)The Company’s NCIB program; and
   
d)Third party coverage of the Company, including on CNBC and the digital asset space.

 

Upon inquiry of Company management, and as confirmed by individual insider filings made on www.sedi.ca, none of the Company’s officers, directors or greater than 10% shareholders, have:

 

(i) directly or indirectly been involved in the creation of, distribution of, or payment for promotional materials related to the Company or its common shares; or (ii) sold or purchased any of the Company’s securities in the past 90 days other than:

 

a)The acquisition of 250,000 Common Shares on June 5, 2024 by Stefan Hascoet, a director of the Company
   
b)The disposition of 31,748 Common Shares on June 7, 2024 by Suzanne Ennis, a director of the Company;
   
c)The acquisition of 250,000 Common Shares on June 7, 2024 by Mikael Tandetnik, a director of the Company; and
   
d)The acquisition of 443,400 Common Shares on June 11, 2024 by Olivier Roussy Newton, the Chief Executive Officer and director of the Company.

 

After an inquiry to the GSM and its affiliates, to management’s knowledge, GSM and its affiliates has not sold or purchased securities of the Company within the past 90 days other than the purchase of 1.5 million Common Shares as disclosed in the June 3 PR.

 

2

 

 

 

 

 

Other than historical, publicly-disclosed offerings of the Common Shares, the Company has not at any point issued shares or convertible instruments allowing conversion to equity securities at prices constituting a discount to the current market rate at the time of issuance.

 

The Company is committed to compliance with the OTC Markets policy on stock promotion and the OTCQB standards.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate,

 

as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

3

 

 

Exhibit 99.128

 

 

DeFi Technologies Subsidiary Valour Inc. Introduces World’s First and Only Yield Bearing Bitcoin (BTC) ETP in Collaboration with Core Foundation, to German Investors on Börse Frankfurt Offering Exposure to Bitcoin with a 5.65% Yield

 

●Launch of Yield-Bearing Bitcoin (BTC) ETP on Börse Frankfurt: Valour Inc. and Core Foundation collaborate to introduce the world’s first yield-bearing Bitcoin (“BTC”) ETP on the Börse Frankfurt Exchange, previously launched on the Nordic Growth Market (“NGM”) with a 1.9% management fee, offering German investors exposure to Bitcoin with a 5.65% yield.

 

●Powering Valour Bitcoin Staking (BTC) EUR ETP with Core Blockchain: The Core blockchain network, powered by Bitcoin, forms the foundation for Valour Bitcoin Staking (BTC) EUR ETP (ISIN: CH1213604544), providing Ethereum Virtual Machine (“EVM”) compatibility and the innovative Satoshi Plus consensus mechanism to enhance security and scalability.

 

●Simplified Investment with Valour Bitcoin Staking (BTC) EUR ETP: Valour Bitcoin Staking (BTC) EUR ETP streamlines Bitcoin investment by delegating Bitcoins to Core validators, the yield is attributed to the Net Asset Value (“NAV”) on a daily basis. This innovative product ensures custodial control and security while offering investors substantial yield without requiring them to sell or trade their Bitcoin holdings.

 

Toronto, Canada, June 18, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (“DeFi”), is pleased to announce that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has introduced the world’s first and only yield-bearing Bitcoin (“BTC”) ETP to German investors in collaboration with the Core Foundation, an organization dedicated to the development of the Core blockchain network (“Core Chain”). This offering provides German investors exposure to Bitcoin with a 5.65% annualized yield available on Börse Frankfurt exchange. Valour Bitcoin Staking (BTC) EUR ETP was previously introduced to the Nordic Growth Market (“NGM”) on May 10, 2024.

 

The Core blockchain network is a Bitcoin-powered layer-one blockchain for EVM-Compatible smart contracts. With 50% of Bitcoin mining hash power contributing to Core Chain’s security in exchange for unlocking Bitcoin utility and rewards, Core Chain is the most Bitcoin-aligned Ethereum Virtual Machine (“EVM”) blockchain (BTCfi, Bitcoin staking, and more).

 

Trading of the Valour Bitcoin Staking (BTC) EUR ETP (ISIN: CH1213604544) commenced on June 13, 2024, with a 1.9% management fee, following its previous debut in Sweden. This innovative ETP allows investors to gain exposure to Bitcoin while receiving a remarkable 5.65% annualized yield, all without the need to sell or trade Bitcoin directly.

 

 

 

 

 

 

Valour Bitcoin Staking (BTC) EUR ETP simplifies investment in the world’s best-known digital asset, making it easier and more secure for investors to participate in Bitcoin’s potential upside. The yield is attributed to the Net Asset Value (“NAV”) on a daily basis, providing investors with yield without needing to sell or trade their Bitcoin holdings.

 

Valour Bitcoin Staking (BTC) EUR ETP generates yield by delegating Bitcoins to a validator on the Core Chain through non-custodial, native Bitcoin staking. Staked Bitcoins receive staking rewards in the form of CORE tokens, which are then reinvested into the product. Core Chain, the underlying blockchain, is a Bitcoin-powered, decentralized, secure, and scalable layer 1 blockchain compatible with the Ethereum Virtual Machine (EVM). It is supported by Bitcoin’s Proof of Work (“PoW”) through a unique consensus mechanism known as ’Satoshi Plus’. This mechanism enables Bitcoin miners to delegate their PoW (“DPoW”) to Core validators without impacting their future Bitcoin rewards, thereby unlocking the potential of Bitcoin-secured decentralized applications.

 

Despite engaging in Bitcoin staking, security remains uncompromised. Custodial control is maintained while yield is generated. Bitcoins are staked through a specific type of native Bitcoin transaction called a ’stake transaction’, which includes a lockup period and Core Chain staking details such as the Core Validator and the Core reward address. During the lockup period, the Bitcoins cannot be transferred or slashed. Only the owner can transfer the Bitcoins once the lockup period expires.

 

“We are thrilled to introduce the world’s first and only yield-bearing Bitcoin ETP to German investors, offering an unprecedented opportunity to gain exposure to Bitcoin while earning a substantial yield,” said Olivier Roussy Newton, CEO of DeFi Technologies.

 

“Valour Bitcoin Staking (BTC) EUR ETP embodies our commitment to innovation in the digital asset space, providing investors with a seamless and secure way to participate in Bitcoin’s growth potential while offering a novel investment avenue for engaging with the world’s premier cryptocurrency.” added Marco A. Infuso, Chief Sales Officer of Valour Inc.

 

2

 

 

 

“Core Foundation is excited to collaborate with Valour Inc. to launch the world’s first yield-bearing Bitcoin ETP. This groundbreaking product brings BTCfi to a wider audience, and sustainable yield to Bitcoin holders. Investors can now earn yield while maintaining exposure to Bitcoin. This is enabled by non-custodial Bitcoin staking which helps secure the Core blockchain. Core Foundation is proud to be the first and most reliable ecosystem to power these new offerings, underscoring Core Chain’s position as the most Bitcoin-aligned blockchain,” said Core contributor Brendon Sedo.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

3

 

 

 

About Core Chain

 

The Core blockchain network is a Bitcoin-powered layer-one blockchain for EVM-Compatible smart contracts. With 50% of Bitcoin mining hash power contributing to Core’s security in exchange for unlocking Bitcoin utility and rewards, Core is the most Bitcoin-aligned EVM blockchain (BTCfi, Bitcoin staking, and more). This breakthrough has amassed a massive community of 2.2M Twitter followers and 250k Discord members which has translated into millions of Core adopters, over 15M unique addresses, and 230M transactions since its mainnet launch in January 2023.

 

Cautionary note regarding forward-looking information: This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to future development and listings of ETPs; staking of Bitcoin within the Core Chain; yield generated by the Valour Bitcoin Staking (BTC) ETP; growth potential of Bitcoin; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour ETPs by exchanges and regulatory authorities; growth and development of DeFi and cryptocurrency sector; rules and regulations with respect to DeFi and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

4

 

Exhibit 99.129

 

DeFi Technologies’ Subsidiary Valour Inc. and The Hashgraph Association (THA) Celebrate Successful Launch of the World’s First Valour Hedera (HBAR) ETP at the Börse Frankfurt (Zertifikate) Exchange Closing Bell Ceremony

 

●Closing Bell Ceremony: The celebration at Börse Frankfurt’s main trading floor, with participation from Valour Inc. and The Hashgraph Association, drew attention from key industry leaders and investors, marking the debut of the world’s first Valour Hedera (HBAR) ETP (Exchange Traded Product), under ISIN: CH1213604528.

 

●Expansion of Certificate ETPs and world’s first certificate bell-ringing: DeFi Technologies’ subsidiary, Valour Inc., announced a new product offering launching the Valour Hedera (HBAR) Exchange Traded Product (ETP) in collaboration with The Hashgraph Association (THA) – a Swiss-based organisation focused on empowering a digital future for all by leveraging Hedera’s eco-friendly distributed ledger technology (DLT) that is governed by the world’s leading organisations.

 

●Hedera’s Significance: Hedera is a leading decentralised and open-source public network, notable for its energy-efficient Proof-of-Stake (PoS) consensus mechanism. It is governed by a council of independent, global organisations consisting of Fortune 500 enterprises and prestigious universities, including major corporations such as Google, IBM, Boeing, Dell, Deutsche Telekom, Standard Bank, and LG Electronics. HBAR, the native currency of Hedera, is used for network utilisation fees and network security and ranks amongst the world’s top thirty cryptocurrencies globally with a market capitalisation of $3.1 Billion1.

 

TORONTO, June 19, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: MB9) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched the Valour Hedera (HBAR) ETP. In collaboration with The Hashgraph Association (THA), a Swiss-based organisation at the forefront of digital enablement and the empowerment of enterprise-grade solutions and decentralised applications on the Hedera network, this landmark event was celebrated with a Closing Bell Ceremony at the Frankfurt Stock Exchange’s main trading floor, on June 18. This bell ringing event commemorated the very first certificate exchange traded product Börse Frankfurt for a cryptocurrency.

 

The closing bell ceremony at Börse Frankfurt marked the debut of the Valour Hedera (HBAR) ETP, drawing the attention of key industry leaders and investors. This new product underscores Valour’s commitment to expanding its portfolio of ETPs and enhancing market accessibility for digital assets on traditional exchanges.

 

 

1 https://coinmarketcap.com

 

 

 

“As we launch the world’s first Hedera (HBAR) ETP, we’re not just offering an investment product; we’re providing a gateway for investors to easily access and leverage the robust capabilities of the Hedera network,” stated Elaine Buehler, Head of Product at Valour Europe AG. “This product simplifies the process, enabling investors to participate in the future of enterprise blockchain technology with unprecedented ease and security.”

 

The Valour Hedera (HBAR) ETP is a significant addition to Valour’s range of offerings, designed to provide institutional investors with secure and straightforward access to Hedera’s native cryptocurrency, Hedera HBAR. This launch is part of Valour’s broader strategy to increase the availability of digital asset products on traditional exchanges.

 

Hedera HBAR is the native, energy-efficient cryptocurrency of the public Hedera DLT network. Hedera HBARs are used to pay application transaction fees and protect the network from attack through proof-of-stake and its asynchronous byzantine fault tolerant (aBFT) hashgraph consensus algorithm. HBAR has a market capitalisation of approximately US$3.7 billion and ranks among the top 30 cryptocurrencies globally according to CoinMarketcap.

 

Hedera is a decentralised, open-source, proof-of-stake public ledger that utilises the leaderless, asynchronous Byzantine Fault Tolerance (aBFT) hashgraph consensus algorithm. It is governed by a collusion-resistant, decentralised council of leading enterprises, universities, and Web3 projects from around the world. Hedera is built differently from other blockchains. It has high throughput with fast finality; low, predictable fees; fair transaction ordering with consensus timestamps; and a robust codebase that ensures scalability and reliability at every layer of its network infrastructure. Hedera is governed responsibly by the world’s leading organisations to ensure the network is collusion-resistant.

 

“The Hashgraph Association is pleased to engage with Valour to launch this first ever Valour Hedera (HBAR) ETP out of Europe. This achievement is in line with our aim to bring institutional investors to Web3 and to enable them to invest in bankable digital assets as an innovative and alternative investment for portfolio diversification. Investors are able to enter the digital assets realm through this structured and regulatory compliant ETP offered by Valour. For the environmentally conscious and ESG investor, HBAR is also the world’s most energy-efficient utility token used for paying application transaction fees and protecting the Hedera distributed ledger technology (“DLT”) network.” says Stefan Deiss, Co-Founder & Board Director of The Hashgraph Association.

 

“The launch of Valour Hedera (HBAR) represents a double world premiere. For the first time, the crypto asset Hedera can be integrated into any traditional portfolio or bank account as easily and transparently as any other share or bond. Additionally, for the first time ever, the bell for a crypto ETP will be rung in the certificates area of the Frankfurt Stock Exchange. We are very grateful to The Hashgraph Association for selecting us for such a world premiere,” added Marco A. Infuso, Chief Sales Officer at Valour Europe AG.

 

###

 

2

 

 

About The Hashgraph Association

 

The Hashgraph Association is at the forefront of the digital enablement and empowerment of organisations through the broad adoption of Hedera-powered enterprise-grade solutions and decentralised applications, which includes supporting and funding of training, innovation, and venture building programs globally. As a non-profit organisation headquartered in Switzerland, The Hashgraph Association provides funding for innovation, research, and development that enables economic inclusion and a digital future for all, with a positive environmental, social, and governance (ESG) impact. For further information about The Hashgraph Association, visit www.hashgraph-association.com.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Hedera (ETP), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

3

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Valour Hedera (HBAR) ETP; Hedera HBAR; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

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 offered under the Offering 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.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

Disclaimer: The Hedera logo and Trademark are used to refer to the Hedera network and its native cryptocurrency, HBAR. Hedera is a registered trademark of Hedera Hashgraph, LLC, all rights reserved. Hedera nor any of the Hedera governing council members have participated in the creation of this regulated ETP in Europe.

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

4

 

Exhibit 99.130

 

 

 

DeFi Technologies Responds to Misleading Short and Distort Report

 

TORONTO, June 19, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance, was made aware of a “short and distort” type report published by CoinSnacks.com (the “Report”) in respect of the Company.

 

The Report lacks merit and contains numerous defamatory, selective, inaccurate, incomplete and misleading statements, speculation, and innuendo. Furthermore, the Company believes, for the reasons noted below, that the Report was possibly commissioned by short-sellers in a coordinated effort to depress the valuation of the common shares of the Company (the “Shares”) to cover short positions, a tactic that is common for short-sellers to deploy when a company is successful and the short-sellers find themselves on the wrong end of a short trade. Recently, the Securities Exchange Commission (the “SEC”) has shed light on this unscrupulous practice by short-sellers, as reflected in recent charges against short sellers known to employ such tactics (see https://www.sec.gov/enforce/ap-summary/ia-6622-s). The example provided is for illustrative purposes for the investing public to understand how these type of reports can be used for improper purposes and should not be construed as an accusation by the Company in the case of the Report against the fund recently charged by the SEC.

 

On June 10, 2024, the Company was approached unsolicited by a Canadian investment bank (the “Bank”) on a potential bought-deal offer of US$15 million (the “Offer”). The Company declined this Offer given its strong publicly disclosed treasury position:

 

●on May 7, 2024, when the Company announced that it had paid down US$19.5 million in debt;

 

●on May 15, 2024, when the Company announced its strong 2024 Q1 results, including positive operating revenues and operating net income, and that its DeFi Alpha trading unit had generated US$40 million;

 

●on June 3, 2024, when the Company announced that DeFi Alpha had generated a further US$43.4 Million, for a total of US$83.4 million; and

 

●on June 6, 2024, when the Company announced its normal course issuer bid as well as approximately US$51 million in cash in treasury along with 110 BTC.

 

The Company further found the Offer to be peculiar given that (a) the Bank had previously admitted in court filings in Canada it had a history of acting for short-sellers, (b) the Bank communicated to the Company that there was one hedge fund participating in the Offer which had never met the Company and (c) the Company has an extremely strong treasury, which the investing public and hedge fund was aware of. As a result, the Company contacted each of Canadian Investment Regulatory Organization (“CIRO”) on June 10, 2024 and June 13, 2024 and OTC Markets (“OTC”) on June 13, 2024 with respect to the Offer and the potential for market manipulation by short-sellers of the Shares, including the potential for a “short and distort” report being issued in order for the short-sellers to cover their short position which would result in losses to shareholders of the Company. The Company is amenable to work with and provide information to the relevant regulatory authorities. The company believes that short sellers who engage in unscrupulous activities should be prosecuted to defend fair and transparent financial markets for investors and market participants.

 

The Company believes that coordinated efforts of short-sellers and issuance of misleading reports on public companies constitute market manipulation as evidenced by the SEC’s recent orders. All shareholders of the Company are encouraged to review the Company’s public disclosure record on www.sedarplus.ca.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the development and listing of future ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of ETPs by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

View original content to download multimedia:

 

https://www.prnewswire.com/news-releases/defi-technologies-responds-to-misleading-short-and-distort-report-302176843.html

 

SOURCE DeFi Technologies Inc.

 

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/June2024/19/c2641.html

 

%SEDAR: 00007675E

 

For further information:

 

For further information, please contact: Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 08:54e 19-JUN-24

 

 

 

 

 

Exhibit 99.131

 

 

DeFi Technologies Subsidiary Reflexivity Research Partners with CoinMarketCap to Deliver Crypto Insights

 

●Partnership Announcement: DeFi Technologies Inc.’s subsidiary, Reflexivity Research, has partnered with CoinMarketCap, the world’s most trusted source of crypto data and insights, to provide users with in-depth fundamental research on various crypto assets.

 

●Enhanced User Access: CoinMarketCap users will gain access to Reflexivity Research’s high-quality, actionable research, including fundamental analysis, market structure updates, and technical breakdowns.

 

●Quarterly Live Discussions: Reflexivity Research will host quarterly live discussions with leading crypto protocol foundations on the CMC Community Live platform, furthering user education and engagement.

 

Toronto, Canada, June 24, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Reflexivity Research, a leading crypto research firm, has partnered with CoinMarketCap, the world’s largest crypto pricing and data aggregator, to educate users on various digital assets with in-depth fundamental research.

 

CoinMarketCap is the world’s most trusted price-tracking website for digital assets in the rapidly growing digital asset space. Its mission is to make digital assets discoverable and efficient globally by empowering retail users with unbiased, high-quality, and accurate information to help them draw informed conclusions.

 

Through this partnership, CoinMarketCap users will now have access to Reflexivity Research’s high-quality, actionable research on individual digital assets, including fundamental analysis, market structure updates, and technical breakdowns. Additionally, Reflexivity Research will begin hosting quarterly live discussions with various leading crypto protocol foundations on the CMC Community Live platform.

 

“We are thrilled to partner with CoinMarketCap to bring our deep dive research to a wider audience,” said Will Clemente, Co-Founder of Reflexivity Research. “This collaboration aligns perfectly with our mission to provide crypto-native research in an easily digestible format and empower users with the knowledge they need to make informed decisions.”

 

“This partnership with CoinMarketCap marks a significant milestone for DeFi Technologies and Reflexivity Research,” said Olivier Roussy Newton, CEO of DeFi Technologies. “By combining our expertise in fundamental crypto research with CoinMarketCap’s extensive reach, we aim to enhance the accessibility and understanding of digital assets for retail users globally.”

 

 

 

 

 

 

About CoinMarketCap:

 

Founded in 2013, CoinMarketCap is ‘Home Of Crypto’, the world’s most trusted source of crypto data, insights and community. Our mission is to accelerate the crypto revolution by organizing the world’s crypto intelligence and making it easily accessible to all.

 

About Reflexivity Research

 

Reflexivity Research is one of the fastest growing research firms in the disruptive world of digital assets and cryptocurrencies. A subsidiary of DeFi Technologies, Reflexivity Research y was founded by Will Clemente and Anthony Pompliano with the goal of providing crypto-native research in an easily digestible format. Since launch, Reflexivity Research has partnered with some of the largest crypto organizations in the world and counts readers across major hedge funds, public company C-Suites, and the most respected family offices. You can read the firm’s research at www.reflexivityresearch.com

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the partnership between CoinMarketCap and Reflexivity Research; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

 

 

Exhibit 99.132

 

DeFi Technologies’ Subsidiary Valour Inc. Debuts World’s First CORE ETP and Expands World’s First Hedera ETP to Spotlight Stock Market

 

●Launch of First ETPs on Spotlight Stock Market: DeFi Technologies’ subsidiary Valour Inc. introduces the world’s first CORE ETP and expands the world’s first Hedera (HBAR) ETP to the Spotlight Stock Market, marking the first ETP offerings on this exchange.

 

●Innovative and Diverse Investment Opportunities: The Valour CORE ETP offers exposure to the Core blockchain’s native token with its unique Satoshi Plus consensus mechanism, while the Valour Hedera ETP provides access to Hedera’s energy-efficient HBAR cryptocurrency, both enhancing Valour’s product portfolio.

 

●Strengthening Strategic Collaborations: The launch signifies a deepening collaboration with the Core Foundation and follows the successful introduction of the Valour Bitcoin Staking ETP, underscoring Valour’s commitment to providing cutting-edge digital asset investment products.

 

TORONTO, June 28, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a crypto native technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), proudly announces that its subsidiary Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, has launched two new ETPs: the Valour CORE (CORE) ETP and the Valour Hedera (HBAR) ETP, on the Spotlight Stock Market in Sweden. These launches mark the first ETP offerings for Spotlight, as well as a significant milestone in Valour’s mission to provide retail and institutional investors with secure and simple access to leading digital assets.

 

The Valour CORE (CORE) SEK (ISIN: CH1213604593) offers investors exposure to the native token of the Core blockchain, CORE. Core Chain’s Satoshi Plus consensus mechanism uniquely combines the decentralization and security of Bitcoin’s Delegated Proof of Work (“DPoW”) with the scalability and flexibility of Ethereum’s Delegated Proof of Stake (“DPoS”). This innovative approach ensures a robust and efficient blockchain infrastructure. The Valour CORE (CORE) SEK tracks the price of CORE, providing a seamless and straightforward investment opportunity. This expansion follows the successful launch of the Valour Bitcoin Staking ETP, underscoring Valour’s commitment to offering a broad range of cutting-edge digital asset investment products. Additionally, this launch signifies a deepening collaboration with the Core Foundation.

 

In addition to the Valour CORE ETP, Valour is also expanding its offering of the world’s first Valour Hedera (HBAR) ETP, initially introduced on Börse Frankfurt (Zertifikate). The Valour Hedera (HBAR) ETP (ISIN: CH1213604585) provides secure and straightforward access to Hedera’s native cryptocurrency, HBAR. Hedera is renowned for its energy-efficient public distributed ledger technology, which utilizes the leaderless, asynchronous Byzantine Fault Tolerance (“aBFT”) hashgraph consensus algorithm. With a market capitalization of approximately US$3.7 billion, HBAR ranks among the top 30 digital assets globally. This ETP aligns with Valour’s broader strategy to expand the availability of digital asset products on traditional exchanges.

 

 

 

“We are thrilled to launch the first ETP offerings on the Spotlight Stock Market with the Valour Core and Hedera ETPs,” said Olivier Roussy Newton, CEO of DeFi Technologies. “This move underscores our commitment to providing investors with innovative and accessible digital asset investment opportunities. The introduction of these ETPs to a new exchange not only broadens our reach but also reinforces our mission to bridge traditional finance with the rapidly evolving world of decentralized finance.”

 

The Spotlight Stock Market, founded in 1997, is committed to making the listing process easier, safer, and more visible for growth companies. By focusing on accessibility and visibility, Spotlight aims to become the premier marketplace in the Nordic region. The market supports innovative and high-growth companies, providing them with the visibility and security needed to attract investors. This ambition aligns perfectly with Valour’s goals of increasing the availability and simplicity of digital asset investments. The listing of Valour ETPs on the Spotlight Stock Market underscores the significance of this platform in supporting innovative financial products.

 

“We are excited to launch our new ETP segment with Valour at Spotlight. Valour has proven to be a leading and innovative provider of digital assets, which is why we are extremely happy and proud to welcome Valour to our exchange. The long-term strategy of Spotlight Stock Market is to extend our offer to investors and listed companies, both in terms of international trade and the range of products. Our recent exchange of trade systems, implementing the Nasdaq INET Nordic system, enables us to offer trade in different ETPs, which has been a request from several companies for an extended period,” said Spotlight Stock Market CEO Anders Kumlin.

 

“We’re pleased to introduce Valour Hedera (HBAR) and Valour CORE to the Nordics,” added Johanna Belitz, Head of Nordics. “Valour CORE (CORE) SEK stands out as the world’s first ETP featuring CORE as its underlying asset, marking a significant milestone in our offerings. This addition not only enhances our product portfolio but also reaffirms our commitment to providing innovative and diverse investment opportunities. Exciting times ahead!”

 

###

 

2

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/ 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Valour Hedera (HBAR) ETP; Hedera HBAR; Valour CORE ETP; listing of ETPs on the Spotlight Stock Market; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralised finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of ETPs by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

3

 

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

Disclaimer: The Hedera logo and Trademark are used to refer to the Hedera network and its native cryptocurrency, HBAR. Hedera is a registered trademark of Hedera Hashgraph, LLC, all rights reserved. Hedera nor any of the Hedera governing council members have participated in the creation of this regulated ETP in Europe.

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

 

4

 

 

Exhibit 99.133

 

DeFi Technologies Acquisition of Leading OTC Desk and Digital Asset Liquidity Provider Stillman Digital

 

●Stillman Digital Acquisition: DeFi Technologies signs LOI to acquire Stillman Digital Inc. and Stillman Digital Bermuda Ltd. (collectively doing business as Stillman Digital1), a leading OTC desk and digital asset liquidity provider with over US$15 billion in trade volume since 2021, with US$4 billion of that occurring in Q1 2024 alone. The company provides products and services in OTC on/off ramp tradeflow, electronic trade execution, OTC block trading, and market-making.

 

●Strategic Growth: This acquisition enhances DeFi Technologies’ trading capabilities, diversifies its client base, and stabilizes revenue streams by integrating Stillman’s expertise and market presence.

 

●Future Revenue Drivers: Stillman Digital Bermuda Ltd. plans on expanding new and future business segments, including Custody, Foreign Exchange, and Proprietary Trading, which are expected to drive future growth, supported by their strong market position and technological investments.

 

July 9, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the signing of a binding letter of intent (the “LOI”) to acquire Stillman Digital (“Stillman”), a leading OTC desk and liquidity provider offering limitless liquidity solutions and industry-leading trade execution, settlement, and technology services (the “Acquisition”).

 

Since its inception in 2021, Stillman Digital has achieved the following milestones:

 

●Facilitated over US$15 billion in trade volume, with US$4 billion of that occurring in Q1 2024 alone.
   
●Cemented itself as the leader in OTC on/off ramp tradeflow, boasting a market share that places it at the forefront of America’s OTC on/off ramp market.
   
●Achieved a 190% year-over-year compound annual growth rate (CAGR) for FY22/FY23.
   
●Demonstrated a robust revenue model, evidenced by a C$8.35M Q1 2024 run-rate revenue (US$6.1M).
   
●Established itself with three Blue Chip Regulatory Licenses and Registrations.

 

These accomplishments highlight Stillman Digital’s exceptional organic growth and market leadership.

 

 

1Not all products and services are available for each company and jurisdiction

 

 

 

 

Stillman Digital’s Core Products & Services

 

●Electronic Trade Execution: Stillman Digital generates over US$200 million in monthly volume with 24/7 streaming prices, providing deep liquidity across hundreds of pairings. Clients can execute trades via the Web Portal or API, with price feeds aggregated from over 30 global exchanges and trading firms. Trades are executed directly against Stillman Digital’s balance sheet. Revenue is generated through the spread between the client price and Stillman’s eventual hedge price, ensuring market-neutral revenue generation with minimal asset exposure. Additionally, complex order types (TWAP, VWAP) and price streams for the top 300 tokens are offered.

●OTC Block Trading: Stillman Digital processes an average trade size of $2 million+, offering a high-touch concierge service for large block trades. Trades are conducted via voice or chat, with manual trade confirmations handled by the back office. Acting as a global on/off ramp into the crypto markets, Stillman on-ramps US$40-80 million daily and processes over US$1 billion+ in monthly trade volumes.

●Market-Making: Stillman Digital provides liquidity expertise and robust market-making capabilities, currently handling US$400 million in monthly volume and experiencing rapid growth.

 

Newly Licensed & Future Revenue Drivers2

 

●Custody: Stillman Digital offers secure storage solutions with advanced encryption, multi-signature technology, and insurance. Utilizing state-of-the-art encryption and multi-signature technology, Stillman provides maximum security, offering both cold storage for long-term asset preservation and warm wallet solutions for convenient access. Stillman Digital provides 24/7 monitoring and support to safeguard clients’ assets and implement rigorous compliance and regulatory standards to maintain trust and transparency. Revenue is generated through custody fees based on the volume and value of assets under management.

 

●Foreign Exchange: Stillman Digital plans to facilitate competitive currency exchange with access to a wide range of fiat and digital asset pairs. Using advanced trading algorithms and liquidity providers, they ensure optimal execution. Clients benefit from real-time market insights and analysis to make informed trading decisions and have access to customizable trading interfaces via Web Portal or API. Revenue is generated through spreads on currency pairs and trading volume.

●Proprietary Trading: Future balance sheet maximization will be achieved via market-neutral proprietary trading activities across various digital asset markets. Sophisticated trading strategies and risk management techniques are utilized to generate consistent returns on capital. Cutting-edge technology and data analytics are leveraged to identify profitable trading opportunities. Strict compliance and regulatory controls are implemented to mitigate risks and ensure adherence to applicable laws. Revenue is generated through trading profits.

 

Stillman Digital’s technology investment and client diversification are expected to continue delivering profitable growth. Its established onshore and offshore regulatory credibility and extensive network of banking relationships create a competitive moat, laying the foundation for continued success. Custody, Foreign Exchange, and Proprietary Trading services are anticipated to drive future revenue and further expand Stillman’s market presence.

 

 

2These products are solely offered by Stillman Digital Bermuda Ltd.

 

2

 

 

Strategic Acquisition for Growth

 

The Acquisition aligns with DeFi Technologies’ strategic goals by bolstering its trading capacities and diversifying both its customer base and revenue streams. By integrating Stillman Digital into its operations, DeFi Technologies plans to internalize part of the trading flows from its portfolio companies and leverage Stillman’s expertise to enhance its trading capabilities within DeFi Alpha and its global operations. DeFi Technologies anticipates supporting Stillman Digital’s growth by providing it access to more opportunities in the digital asset space as part of the broader group of DeFi Technologies companies.

 

Moreover, the Acquisition will diversify DeFi Technologies’ client base and stabilize its revenue streams. While Valour primarily serves off-chain retail and high-net-worth clients, Stillman Digital focuses on on-chain institutional clients, providing a balanced client portfolio. Additionally, Stillman’s on/off-ramp business, which grew 178% during the 2022 market downturn, will help smooth out Valour’s more cyclical revenue tied to crypto price movements, mitigating downward volatility and ensuring stability during all market conditions.

 

Transaction Details

 

Pursuant to the LOI, DeFi Technologies will acquire all issued and outstanding securities of Stillman Digital in return for 2.5 million common shares of DeFi Technologies (the “Payment Shares”), with 1 million of the Payment Shares subject to a lock-up schedule and released quarterly over a period of a year. The parties intend to enter into a definitive agreement in respect of the Acquisition (the “Definitive Agreement”) by July 31, 2024.

 

Executive Comments

 

Jonathon Milks, CEO of Stillman Digital, commented, “Joining forces with DeFi Technologies marks an exciting new chapter for Stillman Digital. This partnership will enhance our ability to provide top-tier liquidity solutions and trading services, and together, we can further bridge the gap between traditional finance and decentralized finance. We look forward to tapping into the DeFi Technologies executive team’s expansive network in the web3 industry to fuel customer acquisition and profitable growth of the technological and regulatory infrastructure we have built at Stillman over the last four years.”

 

Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies, commented, “The Acquisition is a strategic step that not only expands our capabilities in the trading sector but also diversifies our client base and revenue streams. We are excited to integrate Stillman Digital’s expertise into our operations and enhance our comprehensive suite of services.”

 

About Stillman Digital

 

Stillman Digital is a leading OTC desk and liquidity provider that offers limitless liquidity solutions for businesses, focusing on industry-leading trade execution, settlement, and technology. For more information, please visit https://www.stillmandigital.com

 

3

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Hedera (ETP), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

4

 

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements regarding the closing of the Acquisition; the business and growth opportunities of Stillman Digital; synergies realized from the Transaction; issuance and release of Payment Shares; the regulatory environment with respect to the growth and adoption of decentralized finance and digital assets; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

5

 

 

Exhibit 99.134

 

   

 

DeFi Technologies Provides Monthly Corporate Update: Subsidiary Valour Reports Assets Under Management at C$698 Million (US$512 Million), Up 37% This Fiscal Year, Bolstered by Continued Month Over Month Net Inflows of C$6.5 Million (US$4.8 Million), Among Other Key Developments

 

●AUM & Continued Inflows: Valour reports AUM of C$698 million (US$512 million) as of June 30, 2024, marking a notable year to date increase of 37%. This growth is further bolstered by Valour’s continued month-over-month strong net inflows of C$6.5 million (US$4.8 million) during June, demonstrating robust investor confidence and continued demand for Valour's ETP products despite the recent downturn in digital asset markets.

 

●Strong Financial Position: Current cash balance is approximately C$67.1M (US$49.3M) and current loans payable stand at approximately C$17.7M (US$13M). The Company also purchased and holds 110 Bitcoin as part of its treasury strategy.

 

●Valour Bitcoin Staking (BTC) ETP: One of Valour’s newest ETPs, Valour Bitcoin Staking (BTC), led all ETPs in inflows with C$2.3 million (US$1.7 million) in net inflow. This ETP, the world's first and only Bitcoin ETP that generates yield for investors, showcases Valour's innovative approach by offering exposure to Bitcoin while providing a 5.65% yield—all without the need to sell or trade Bitcoin.

 

●Product Launches and Strategic Partnerships: Valour introduced the world's first CORE ETP, expanded the world's first Hedera (HBAR) ETP to the Spotlight Stock Market, celebrated the launch of the world's first Valour Hedera (HBAR) ETP at Börse Frankfurt and introduced the world's first yield-bearing Bitcoin (BTC) ETP on Börse Frankfurt. Furthermore, Reflexivity Research partnered with CoinMarketCap to provide in-depth crypto research. Additionally, DeFi Technologies deployed a validator node on the Core Chain, participating in non-custodial Bitcoin staking.

 

Toronto, Canada, July 10, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, "Valour"), a leading issuer of exchange traded products ("ETPs") reports C$698 million (US$512 million) as of June 30, 2024. This figure represents a significant year to date increase of 37%.

 

Despite a decrease in AUM from May due to a downturn in digital asset prices, Valour's strategic initiatives continue to drive substantial growth. Notably, the Company continues to see net inflows into its ETPs month over month, buoyed by a strong net inflow of C$6.5 million (US$4.8 million) in the month of June.

 

 

 

 

   

 

One of Valour’s newest ETPs, Valour Bitcoin Staking (BTC), led all ETPs in inflows with C$2.3 million (US$1.7 million) in net inflow. This ETP, the world's first and only Bitcoin ETP that generates yield for investors, showcases Valour's innovative approach by offering exposure to Bitcoin while providing a 5.65% yield—all without the need to sell or trade Bitcoin. This novel offering has created significant demand among investors.

 

The company maintains a strong financial position with a current cash balance of approximately C$67.1M (US$49.3M) and current loans payable of approximately C$17.7M (US$13M). Additionally, the company has purchased and holds 110 Bitcoin as part of its treasury strategy.

 

Below is a recap of the Company’s announcements from June 2024.

 

Debut of World's First CORE ETP and Expansion of World's First Hedera ETP: Valour introduced the world's first CORE ETP and expanded the world's first Hedera (HBAR) ETP to the Spotlight Stock Market, marking the first ETP offerings on this exchange. The Valour CORE ETP provides exposure to the Core blockchain's native token with its unique Satoshi Plus consensus mechanism, while the Valour Hedera ETP offers access to Hedera's energy-efficient HBAR cryptocurrency. These products enhance Valour's portfolio and signify a deepening collaboration with the Core Foundation, following the successful launch of the Valour Bitcoin Staking ETP. This underscores Valour's commitment to delivering cutting-edge digital asset investment products.

 

Reflexivity Research Partnership with CoinMarketCap: DeFi Technologies’ subsidiary, Reflexivity Research, partnered with CoinMarketCap, the world's most trusted source of crypto data and insights, to offer users in-depth fundamental research on various crypto assets. CoinMarketCap users will gain access to Reflexivity Research's high-quality, actionable research, including fundamental analysis, market structure updates, and technical breakdowns. Additionally, Reflexivity Research will host quarterly live discussions with leading crypto protocol foundations on the CMC Community Live platform, furthering user education and engagement.

 

Valour Hedera (HBAR) ETP Launch Celebration: The celebration at Börse Frankfurt's main trading floor, with participation from Valour and The Hashgraph Association, drew significant attention from key industry leaders and investors. This event marked the debut of the world's first Valour Hedera (HBAR) ETP. Valour launched this product in collaboration with The Hashgraph Association (THA), a Swiss-based organization focused on leveraging Hedera's eco-friendly distributed ledger technology. Hedera, governed by a council of independent global organizations, is notable for its energy-efficient Proof-of-Stake consensus mechanism. The Hedera network includes major corporations such as Google, IBM, Boeing, Dell, Deutsche Telekom, Standard Bank, and LG Electronics. HBAR, the native currency of Hedera, is used for network utilization fees and security, ranking among the world's top thirty cryptocurrencies with a market capitalization of $3.1 billion.

 

1

 

 

   

 

Launch of Yield-Bearing Bitcoin (BTC) ETP on Börse Frankfurt: Valour in collaboration with Core Foundation, introduced the world's first yield-bearing Bitcoin (BTC) ETP on the Börse Frankfurt Exchange. This product, previously launched on the Nordic Growth Market (NGM) with a 1.9% management fee, offers German investors exposure to Bitcoin with a 5.65% yield. The Core blockchain network, powered by Bitcoin, forms the foundation for Valour Bitcoin Staking (BTC) ETP, providing Ethereum Virtual Machine (EVM) compatibility and the innovative Satoshi Plus consensus mechanism to enhance security and scalability. This product streamlines Bitcoin investment by delegating Bitcoins to Core validators, with the yield attributed to the Net Asset Value (NAV) on a daily basis. It ensures custodial control and security while offering substantial yield without requiring investors to sell or trade their Bitcoin holdings.

 

Core Chain Validator Node Launch: DeFi Technologies deployed an independent validator node on the Core Chain as part of its DeFi Infrastructure business line. This initiative is part of a broader collaboration with Core Foundation, which began with the development of innovative Bitcoin ETPs, including Valour's Yield Bearing BTC ETP and a novel Core ETP. Through its subsidiary Valour, DeFi Technologies staked 1,498 BTC, participating in non-custodial Bitcoin staking and earning rewards from Core's consensus mechanism.

 

“We are thrilled with the continued inflows into our ETPs and the innovation showcased by our subsidiary, Valour,” said Olivier Roussy Newton, CEO of DeFi Technologies. “The impressive launches of our innovative ETPs underscore our commitment to providing investors with unique and valuable opportunities in the digital asset space. As we continue to expand our offerings and deepen our strategic collaborations, we remain dedicated to developing continued investor demand for our ETPs and scaling revenue-generating opportunities.”

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

2

 

 

   

 

About Reflexivity Research

 

Reflexivity Research is one of the fastest growing research firms in the disruptive world of digital assets and cryptocurrencies. A subsidiary of DeFi Technologies, Reflexivity Research y was founded by Will Clemente and Anthony Pompliano with the goal of providing crypto-native research in an easily digestible format. Since launch, Reflexivity Research has partnered with some of the largest crypto organizations in the world and counts readers across major hedge funds, public company C-Suites, and the most respected family offices. You can read the firm's research at www.reflexivityresearch.com

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; yields generated by ETPs; staking of BTC on the on the Core Chain; listing of future ETPs; collaboration with Core Foundation; the Company’s Bitcoin treasury strategy; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

 For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

3

 

Exhibit 99.135

 

DeFi Technologies Reports its Trading Desk, DeFi Alpha, has Generated an Additional C$19.3 Million (US$14.1 Million) in Arbitrage Trading

 

●Significant Return Generation: DeFi Alpha, DeFi Technologies’ specialized arbitrage trading desk, generated an additional C$19.3 million (US$14.1 million) in Q3 2024 through low-risk arbitrage trades, contributing to a total of C$133.1 million (US$97.5 million) in cash and digital asset equivalents in 2024.

 

●Enhanced Financial Position: The most recent gains from DeFi Alpha will be reflected in the Company’s Q3 2024 financial statements, further strengthening DeFi Technologies’ financial position and increasing its digital asset holdings.

 

TORONTO, July 16, 2024 -DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: RB9) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the continued successful performance of its specialized arbitrage trading desk, DeFi Alpha. Building on its earlier success, DeFi Alpha has generated significant additional returns, showcasing the effectiveness of the Company’s strategic trading operations.

 

DeFi Alpha has generated an additional approximately C$4.0 million (US$2.9 million) in USDT and C$15.3 million (US$11.2 million) in digital asset inventory through low-risk arbitrage trades in Q3 2024. This achievement has resulted in a notable increase in the Company’s USDT balance and digital asset holdings, totaling C$19.3 million (US$14.1 million). Combined with earlier gains, DeFi Alpha has generated over C$133.1 million (US$97.5 million) in cash and digital asset equivalents in 2024.

 

The Company’s financial statements for Q3 2024 will reflect these gains, further strengthening DeFi Technologies’ financial position.

 

Olivier Roussy Newton, CEO of DeFi Technologies, commented: “We are thrilled with the ongoing performance of DeFi Alpha and the substantial gains achieved through our arbitrage trading strategy. This success underscores our commitment to innovative and low-risk trading strategies that enhance our financial stability and drive value for our shareholders.”

 

DeFi Alpha is a specialized arbitrage trading desk that focuses on identifying and capitalizing on low-risk arbitrage opportunities within the cryptocurrency market. Utilizing advanced algorithmic strategies and in-depth market analysis, DeFi Alpha aims to generate alpha by exploiting inefficiencies and discrepancies in digital asset pricing. The trading desk’s primary focus is on arbitrage opportunities in both centralized and decentralized markets, ensuring minimal market or protocol exposure to mitigate downside revenue volatility.

 

 

 

About DeFi Technologies
DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

2

 

 

Cautionary note regarding forward-looking information:

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to DeFi Alpha’s performance, trading strategies and future trading opportunities; valuation of DeFi Alpha’s return; growth of AUM; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of DeFi Technologies, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of ETPs by exchanges; availability of trading opportunities for DeFi Alpha; change in valuation of digital assets held by the Company; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

3

 

 

Exhibit 99.136

 

DeFi Technologies’ Subsidiary Valour Inc. Announces Launch of World’s first Exchange Traded Product for the NEAR Protocol Token

●World’s First NEAR Protocol ETP Launched: Valour has launched the world’s first ETP for the NEAR Protocol token on the Spotlight Stock Market in Sweden, providing secure and diversified exposure to the NEAR ecosystem.

 

●Significant Market Impact: The NEAR Protocol supports decentralised applications in the DeFi and NFT sectors with high scalability, low transaction fees, and interoperability. With a market capitalization of approximately US$5.6 billion, NEAR ranks among the top 20 digital assets globally.

 

●Expansion of Product Offerings: Valour continues to drive innovation in digital assets, launching eleven ETPs in 2024, with plans to introduce more digital asset ETPs in the coming months to enhance accessibility and convenience for retail and institutional investors.

 

TORONTO, July 17, 2024 -DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (NEO: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc.(“Valour”), a leading issuer of exchange traded products (“ETPs”) that provides simplified access to digital assets, has launched an ETP for the NEAR Protocol token on the Spotlight Stock Market in Sweden.

 

The Valour Near (NEAR) ETP (ISIN: CH1213604577) provides retail and institutional investors with trusted, secure, and diversified exposure to the innovative and fast-growing NEAR ecosystem, enabling participation in a decentralised web platform that aims to redefine the future of digital finance.

 

One of the NEAR Protocol’s best use cases is in supporting decentralised applications, particularly in the DeFi and NFT sectors. Projects such as Burrow, decentralised money market protocol, and Mintbase, a platform for creating and selling NFTs, are built on NEAR. NEAR’s high scalability, low transaction fees, interoperability, and user-friendly features make it an ideal platform for these applications, enabling a wide range of financial services and digital asset management with enhanced performance and accessibility. With a market capitalisation of approximately US$5.6 billion, NEAR ranks among the top 20 digital assets globally.

 

“By launching the world’s first Valour NEAR ETP, we’re giving investors an extraordinary chance to dive into the revolutionary NEAR Protocol, known for its transformative impact on DeFi and NFTs. This ETP offers a secure and straightforward way to invest in a leading digital asset, seamlessly bringing the future of decentralised finance into their portfolios,” says Elaine Buehler, Head of Product at Valour.

 

 

 

 

This is Valour’s third ETP listed on the Spotlight Stock Market in Sweden in recent weeks, following the launches of Core (CORE) and Hedera (HBAR) ETPs. The Spotlight Stock Market is part of Spotlight Group AB, founded in 1997 and is headquartered in Malmo, Sweden. Ithas recently developed its ETP segment, with Valour contributing to this effort through its unique offerings.

 

Valour continues to lead the way in driving innovation in digital assets and expanding its product portfolio to meet the evolving needs of investors in the Nordics. With the addition of the Valour NEAR ETP, Valour has launched eleven ETPs in 2024. The Company plans to introduce a wide range of digital asset investment products in the coming months to further increase accessibility and convenience for retail and institutional investors.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Near (NEAR), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Valour Near (NEAR) ETP and the NEar Ptotocol; development and listing of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of ETPs by exchanges; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

 

 

 

Exhibit 99.137

 

DeFi Technologies Expands BTC Treasury Holdings and Diversifies into Solana, CORE and CORE DAO Staking

 

●Expanded Bitcoin Holdings: The Company has increased its BTC holdings by purchasing an additional 94.34 BTC, bringing the total to 204.34 BTC, reaffirming its confidence in BTC as a primary treasury reserve digital asset.

 

●Addition of Solana (SOL) to Treasury: The Company has diversified its treasury by acquiring 12,775 SOL tokens, recognizing SOL’s high-performance blockchain, low transaction fees, and strong market activity, with a trading volume of US$393.71 billion and a liquidity TVL of US$865.97 million.

 

●Addition of CORE (CORE) to Treasury and CORE DAO Staking: The Company has purchased 1,484,148 CORE tokens and plans to participate in CORE's staking facility, which enhances yield opportunities and contributes to network security, further diversifying the Company's income streams and strengthening its position in the DeFi ecosystem.

 

TORONTO, July 18, 2024 -DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce the expansion of its digital asset treasury strategy. The Company has purchased an additional 94.34 BTC, bringing its total BTC holdings to 204.34 BTC. Additionally, the Company has acquired 12,775 SOL tokens and 1,484,148 CORE tokens, with plans to actively participate in CORE DAO's staking facility.

 

Expanded Bitcoin Holdings

 

Following the Company’s initial acquisition of 110 BTC in June 2024, the Company has continued to bolster its confidence in BTC as a primary treasury reserve asset. The additional purchase of 94.34 BTC, for a total of 204.34 BTC reaffirms the Company’s commitment to this leading digital asset, recognizing its unique characteristics as a scarce and finite asset, and its potential as a hedge against inflation and a safeguard against monetary debasement.

 

Addition of Solana (SOL) to Treasury

 

In a strategic move to diversify the Company’s treasury, the Company has acquired 12,775 SOL tokens. SOL stands out with its high-performance, permissionless blockchain, capable of processing up to 65,000 transactions per second, thanks to its unique Proof of History and Proof of Stake combination. This scalability and efficiency surpass many of its peers.

 

 

 

 

SOL’s low transaction fees and rapid processing times lower barriers for developers, fostering a strong user base and impressive fee generation. The platform's trading volume has reached US$393.71 billion, indicating robust market activity and user engagement. The liquidity Total Value Locked (“TVL”) stands at US$865.97 million, reflecting substantial assets held in liquidity pools, which support trading activities. Since its inception, SOL’s decentralized finance landscape has attracted 24,591,311 traders and executed 1,847,335,349 swaps, highlighting its high transactional activity and efficiency.

 

Overall, SOL’s technical strengths, significant market activity, and ongoing enhancements position it as a promising investment, offering a scalable and efficient platform for a wide range of decentralized applications.

 

Addition of CORE To Treasury and Participation in CORE DAO's Staking

 

The Company is also pleased to announce that it has purchased 1,484,148 CORE tokens and intends to participate in CORE's staking facility. CORE’s innovative staking solution enables holders to stake BTC non-custodially enhancing yield opportunities and contributing to network security and stability. The Company’s participation in this staking facility not only diversifies its income streams but also strengthens its collaborative relationship with CORE Foundation and involvement in the broader DeFi ecosystem. CORE is proving to be a leading BTC scaling chain with over 55% of BTC hash rate participation,US$138.5M in TVL, and 5,000+ BTC staked (~US$320M).

 

"We are thrilled to announce these significant advancements in our digital asset treasury strategy," said Olivier Roussy Newton, CEO of DeFi Technologies. "Our increased BTC holdings, strategic investment in SOL, CORE and participation in CORE's staking facility reflect our commitment to leveraging the most promising opportunities in the decentralized finance landscape. These actions not only diversify our balance sheet but also align with our mission to bridge traditional capital markets with the innovative world of DeFi."

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

2

 

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Near (NEAR), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Company’s digital asset treasury strategy; participation in CORE’s staking facility;; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited staking returns on the CORE staking facility; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief  Executive Officer

ir@defi.tech
(323) 537-7681

 

 

3

 

Exhibit 99.138

 

 

DeFi Technologies and Zero Computing Announce Strategic Partnership over Integrating Validator, Trading and ZK Infrastructure

 

●Strategic Partnership: DeFi Technologies partners with Zero Computing to build critical infrastructure, enhancing DeFi Alpha, the Company’s arbitrage trading desk. This partnership aims to improve arbitrage discovery and execution capabilities while advancing zero-knowledge enabled Maximal Extractable Value (MEV) strategies.

 

●Pomp Podcast: CEO of Zero Computing, Christopher Tam, will be featured on the Pomp Podcast next week to explain the value of zero-knowledge and how it complements DeFi Technologies' infrastructure business line.

 

●Enhanced Trading Infrastructure: Leveraging Zero Computing's advanced zero-knowledge proof capabilities will optimize DeFi Alpha’s algorithmic strategies, improve transaction privacy, and increase operational efficiency.

 

●Multi-Chain Expansion: Zero Computing will introduce verifiable computation to the Solana blockchain, marking a significant milestone in expanding zero-knowledge proofs across diverse blockchain ecosystems, reshaping the landscape of decentralized finance.

 

Toronto, Canada, July 30, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (“DeFi”), is pleased to announce a strategic partnership (the “Partnership”) with Zero Computing, a pioneer in verifiable computation on Ethereum and Solana. This partnership aims to build critical infrastructure to enhance the arbitrage discovery and execution capabilities of DeFi Technologies' specialized trading desk, DeFi Alpha, and advance capabilities for capturing zero-knowledge enabled Maximal Extractable Value (“MEV”).

 

Key Highlights of the Partnership:

 

●Multi-Chain ZK Proving Platform: Zero Computing has developed an interoperable, chain-agnostic platform for generating zero-knowledge proofs. This platform is positioned to handle proofs on both Ethereum and Solana, with plans to expand to additional chains.

 

●Unlocking Trading Strategies: The Partnership will focus on developing novel trading strategies to bolster DeFi Alpha trading desk operations for zero-knowledge enabled MEV.

 

○MEV (Maximal Extractable Value) refers to the maximum value that can be extracted from block production in a blockchain network. This can include transaction fees and arbitrage opportunities available to block producers. Zero-knowledge proofs are a novel form of block production and represent a new paradigm of MEV.

 

●Vertical Integration: The Partnership aims to vertically integrate the supply chain, making Zero Computing an essential part of novel trading strategies by focusing on the role of generating zero-knowledge proofs.

 

●Innovative Financial Products: DeFi Technologies plans to leverage Zero Computing's technology to develop innovative financial products, including zero-knowledge index Exchange Traded Products (“ETPs”).

 

 

 

 

 

Integrating Zero Computing Innovations

 

Zero Computing is pioneering a novel method for extracting MEV using zero-knowledge proofs. This cutting-edge approach offers multiple benefits, including:

 

●Enabling zero-dollar transaction fees through MEV redistribution

 

●More efficient utilization of blockspace

 

●A sustainable economic model for generating zero-knowledge proofs

 

As the final entity interacting with a block before finalization, Zero Computing plays a crucial role in the zero-knowledge supply chain, making it an essential component in advanced trading strategies.

 

Expanding Horizons: Bringing Verifiable Computation to Solana

 

In a significant move, Zero Computing is now leading efforts to introduce verifiable computation to the Solana blockchain designed to enable off-chain execution of complex computations with on-chain verification. This initiative marks a major milestone in the expansion of zero-knowledge proofs across diverse blockchain ecosystems. By integrating these innovative technologies, Zero Computing, in collaboration with DeFi Technologies, is poised to reshape the landscape of decentralized finance.

 

Enhancing DeFi Technologies' Trading Infrastructure:

 

DeFi Alpha has already demonstrated success in generating substantial returns from low-risk arbitrage opportunities within the cryptocurrency market. Since inception in 2024, DeFi Alpha has generated C$133.1 million (US$97.5 million) in cash and digital asset equivalents. By leveraging Zero Computing's cutting-edge computational technology, DeFi Alpha will further optimize its algorithmic strategies and market analysis processes. This Partnership is expected to enhance the speed and accuracy of identifying arbitrage opportunities, enabling DeFi Alpha to capitalize on market inefficiencies more effectively.

 

Integrating Zero Computing’s technology will significantly enhance DeFi Alpha’s trading infrastructure. Incorporating advanced zero-knowledge proof capabilities will streamline trading processes, improve transaction privacy, and increase operational efficiency, bolstering the security and robustness of DeFi Alpha’s trading platform and enabling the development of more sophisticated trading strategies.

 

Additionally, CEO of Zero Computing, Christopher Tam, will be featured on the Pomp Podcast next week to explain the value of zero-knowledge and how it complements DeFi Technologies' infrastructure business line.

 

"Our partnership with Zero Computing marks a significant milestone in enhancing our trading capabilities and infrastructure,” said Olivier Roussy Newton, CEO of DeFi Technologies. “By integrating their cutting-edge zero-knowledge proof technology, we are not only improving the efficiency and privacy of our transactions but also paving the way for innovative trading strategies.”

 

1 

 

 

 

"We are excited to collaborate with DeFi Technologies to bring our advanced verifiable computation solutions to their trading platform,” said Christopher Tam, CEO of Zero Computing. “Our zero-knowledge proof technology will enable DeFi Alpha to optimize arbitrage opportunities with greater speed and accuracy. The Partnership highlights our shared vision of pushing the boundaries of zero-knowledge technology and driving the future of decentralized finance."

 

About Zero Computing

Zero Computing is revolutionizing the generation of zero-knowledge proofs by providing specialized cloud infrastructure tailored to the specific needs of proof requests. Our platform orchestrates vast compute resources to deliver fast, efficient, and cost-effective proof generation. Key achievements include reducing proving times and significantly lowering costs for equivalent performance. For more information please visit https://zerocomputing.xyz/

 

About DeFi Technologies

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour's existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Near (NEAR), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

2 

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Partnership; Zero Computing and the ZK Proving Platform and the ability of DeFi Alpha to identify trading opportunities; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited to, the efficacy of the ZK Proving platform; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

  

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

3

 

 

Exhibit 99.139 

 

   

 

DeFi Technologies Appoints Andrew Forson to Board of Directors

 

Toronto, Canada, July 31, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (“DeFi”), is delighted to announce the appointment of Andrew Forson to its board of directors (the “Board”).

 

Andrew Forson is an experienced financial and risk engineer, software architect, and trust and estate practitioner. Currently, he serves as the Head of Ventures and Investments for the Hashgraph Group, the commercialization and enablement arm of Hedera, where he has been instrumental in driving strategic investments and fostering innovation in the digital asset sector.

 

Mr. Forson brings a wealth of experience from his extensive background in developing structured financial products and his deep understanding of the digital asset landscape. His expertise will be invaluable as DeFi Technologies continues to expand its suite of innovative financial products and services.

 

“We are thrilled to welcome Andrew to our Board,” said Olivier Roussy Newton, CEO of DeFi Technologies. “His vast experience in financial engineering and his forward-thinking approach to digital assets will be a tremendous asset to our Company as we continue to lead the way in the digital assets space.”

 

Andrew Forson holds an MBA from the prestigious Edinburgh Business School. His addition to the Board aligns with DeFi Technologies’ commitment to strengthening its leadership team and enhancing its strategic capabilities in the rapidly evolving digital finance industry.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

 

 

 

   

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Near (NEAR), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the appointment of Mr. Forson; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited to, growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

 

Exhibit 99.140

 

DeFi Technologies’ Subsidiary Valour Inc. Announces Landmark MOU with Nairobi Securities Exchange and SovFi to Develop and Launch Valour ETPs in Africa

 

●Strategic MOU Announcement: DeFi Technologies’ subsidiary, Valour Inc., has signed a Memorandum of Understanding (MOU) with the Nairobi Securities Exchange (NSE) and SovFi Inc. to facilitate the creation, issuance, and trading of digital asset exchange-traded products (ETPs) in the African market, leveraging Valour’s expertise in digital assets and SovFi’s financial solutions.

 

●Objectives and Outcomes: The collaboration aims to enhance market infrastructure, attract a broader investor base, and increase trading volumes by deploying Valour’s ETPs on the NSE. This partnership will strengthen the NSE’s position as a leading financial hub in Africa and expand Valour’s market reach in Africa, contributing to increased liquidity and investment opportunities.

 

●Kenya’s Digital Asset Landscape: Kenya, a technological innovation hub with a robust mobile money ecosystem and 85% smartphone penetration, is the largest cryptocurrency market in East Africa and ranks among the top five on the continent. The country is witnessing growing digital asset adoption for practical applications, highlighting its potential to transform the financial landscape.

 

TORONTO, August 6, 2024 -DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA DEFI) (GR: RB9) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc. (“Valour”), a leading issuer of exchange traded products (“ETPs”) that provide simplified access to digital assets, is pleased to announce the signing of a Memorandum of Understanding (“MOU”) with the Nairobi Securities Exchange (“NSE”) and SovFi Inc. (“SovFi”) to facilitate the creation, issuance, and trading of digital asset exchange-traded products (“ETPs”) in the African market.

 

The NSE, the premier African securities exchange, provides a world-class trading facility for both local and international investors. This collaboration with Valour and SovFi is set to bolster NSE’s position as a leading financial hub in Africa, offering innovative investment opportunities to a diverse range of investors and contributing significantly to the growth of Kenya’s economy.

 

SovFi aims to provide market liquidity and capital-raising solutions for large sovereign capital market operators. SovFi’s financial instrument development, regulation, and deployment leverage both traditional and token-based finance to deliver low-cost, highly liquid exchange-tradable products.

 

1

 

Key Objectives of the MOU

 

The key objectives of the MOU include facilitating the creation, issuance, and trading of digital asset ETPs on the NSE by leveraging Valour’s extensive expertise in digital assets and ETPs. The MOU aims to deploy financial products developed by Valour and SovFi, develop market infrastructure and enhance market access to global capital through tokenized finance primitives and real-world assets.

 

Expected Outcomes

 

The expected outcomes of this MOU are significant. For the NSE, the collaboration will enhance product offerings, attract a broader investor base, and benefit from increased trading volumes and market activity, thereby further solidifying its role in the growth of Kenya’s economy and as leading African securities exchange.

 

Frank Mwiti, CEO of the Nairobi Securities Exchange declared: “We are thrilled to embark on this groundbreaking partnership. This collaboration aligns perfectly with our vision to position the NSE as a leading financial hub in Africa. The passporting of Valour’s ETPs to the NSE will significantly enhance our product offerings. By facilitating the creation, issuance, and trading of digital asset ETPs we are opening new avenues for both local and international investors. This move will not only diversify our market but also contribute to the growth of Kenya’s economy. We look forward to leveraging Valour’s expertise in digital assets and SovFi’s innovative financial solutions to bring cutting-edge investment opportunities to our market”.

 

Through the MOU, Valour plans to expand its ETP product offerings and market reach in Africa, contributing to increased liquidity and investment opportunities.

 

Olivier Roussy Newton, Chief Executive Officer of Defi Technologies added: “This MOU marks a significant milestone in Valour’s mission to expand access to digital asset investment products globally. By leveraging our expertise in issuing innovative ETPs and facilitating the passporting of our financial instruments to the NSE, we aim to provide investors with secure and regulated exposure to the dynamic world of digital assets. Our collaboration with the NSE and SovFi will enable us to expand our product offerings and market reach in Africa, while contributing our technical knowledge and experience in digital asset-based financial products to develop market infrastructure.”

 

SovFi will leverage enhanced distribution channels and market penetration opportunities, promoting the adoption of blockchain technology in African financial markets.

 

Johan Wattenström, Director of SovFi commented: “This collaboration between SovFi, the NSE, and Valour represents a significant step towards expanding access to innovative financial products. SovFi’s expertise in tokenization and blockchain technology will play a crucial role in this collaboration. Along with the NSE’s established market presence and Valour’s ETP expertise, this MOU has the potential to accelerate the adoption of financial products, fostering growth and innovation across the African continent and beyond.”

 

2

 

Collaborative Efforts

 

The NSE will facilitate the creation, issuance, and trading of digital asset ETPs and onboard Valour as an issuer. Valour will expand its product offerings, utilize ETPs from Valour and affiliate companies, and provide expertise in issuing and managing digital asset-based financial products. Initially, this may include, but is not limited to, ETPs related to Bitcoin (BTC), Ethereum (ETH), Solana (SOL) and Hedera (HBAR). SovFi will leverage distribution channels, provide expertise in financial instruments, and support the integration of blockchain technology in the African financial markets.

 

Digital Asset Adoption in Kenya

 

Kenya, often hailed as a hub of technological innovation in Africa and aptly nicknamed the “Silicon Savannah,” is one of the continent’s largest digital asset markets. The country has carved a unique niche in Africa’s burgeoning Web3 landscape, driven by a tech-savvy population, a vibrant mobile money ecosystem, and a growing entrepreneurial spirit. With an 85% smartphone penetration rate, Kenya plays a crucial role in the Web3 evolution. It ranks as the largest cryptocurrency market in East Africa and is among the top five on the continent. According to a report by CoinGecko, Kenya was ranked 15th globally in terms of interest in cryptocurrencies in 2023. In Kenya, cryptocurrencies are increasingly used for practical applications like remittances, e-commerce payments, and digital content creation, not just as investment or speculative assets. These advancements highlight the growing adoption of digital assets and their potential to transform Kenya’s financial landscape.

 

About Nairobi Securities Exchange

 

The NSE is the premier African securities exchange located in Kenya, offering a world-class trading facility for both local and international investors. It plays a pivotal role in the African financial markets by facilitating access to capital, enhancing liquidity, and creating investment opportunities. For more information please visit https://www.nse.co.ke/

 

About SovFi Inc.

 

SovFi aims to provide market liquidity and capital-raising solutions for large sovereign capital market operators. SovFi’s financial instrument development, regulation, and deployment leverage both traditional and token-based finance to deliver low-cost, highly liquid exchange-tradable products. For more information please visit https://www.sov.fi/

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

3

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to objectives and outcomes of the MOU; listing of ETPs on the NSE; development of ETPs; future demand for ETP’s; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

4

 

 

Exhibit 99.141

 

 

DeFi Technologies Provides Monthly Corporate Update: Subsidiary Valour Reports Assets Under Management at C$837 Million (US$609 Million), Up 64% This Fiscal Year, Bolstered by Continued Month Over Month Net Inflows of C$9.3 Million (US$6.75 Million), Among Other Key Developments

 

●AUM & Continued Inflows: Valour reports AUM of C$837 million (US$609 million) as of July 31, 2024, marking a notable year to date increase of 64%. This growth is further bolstered by Valour’s continued month-over-month strong net inflows of C$9.3 million (US$6.75 million) during July, demonstrating robust investor confidence and continued demand for Valour’s ETP products.

 

●Strong Financial Position: Current cash and USDT balance is approximately C$56.2M (US$40.9M) and current loans payable stand at approximately C$17.9M (US$13M). The Company also purchased and holds 204.34 BTC and diversified its treasury by acquiring 12,775 SOL tokens and 1,484,148 CORE tokens, totaling C$20.7M (US$15.1M) as of August 7, 2024.

 

●Product Launches and Strategic Partnerships: Last month, DeFi Technologies appointed Andrew Forson to its board of directors, strengthening leadership with digital asset expertise. A strategic partnership with Zero Computing was established to enhance DeFi Alpha’s trading capabilities using zero-knowledge proofs. Furthermore, Valour launched the world’s first NEAR Protocol ETP on the Spotlight Stock Market, expanding its innovative ETP offerings. Additionally, DeFi Technologies signed an LOI to acquire Stillman Digital, a leading OTC desk and digital asset liquidity provider, to enhance trading capabilities and diversify revenue streams.

 

Toronto, Canada, August 8, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: RB9) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, “Valour”), a leading issuer of exchange traded products (“ETPs”) reports an increase of assets under management (“AUM”) to C$837 million (US$609 million) as of July 31, 2024. This figure represents a significant year to date increase of 64%.

 

Valour’s strategic initiatives continue to drive substantial growth, notably marked by a strong net inflow of C$9.3 million (US$6.75 million) in July.

 

Top 5 Assets by Net Inflows: Valour’s investment products continue to attract substantial inflows, with the following assets leading:

 

●Valour Solana SEK: C$3.1M (US$2.3M)

 

●Valour XRP SEK: C$1.4M (US$1.07M)

 

●Valour BTC Zero SEK: C$1.2M (US$938,363)

 

 

 

 

●Valour Avalanche AVAX SEK: C$1.1M (US$802,314)

 

●Valour NEAR SEK: C$724,627 (US$527,322)

 

These products highlight the diverse range of digital assets that continue to draw investor interest and contribute significantly to the overall growth of Valour’s AUM.

 

The Company maintains a strong financial position with a current cash balance of approximately C$56.2M (US$40.9M) and current loans payable of approximately C$17.9M (US$13M). Additionally, the Company also purchased and holds 204.34 BTC and diversified its treasury by acquiring 12,775 SOL tokens and 1,484,148 CORE tokens, totaling C$20.7M (US$15.1M) as of August 7, 2024.

 

Q2 2024 Financial Statements

 

The Company plans to file its Q2 2024 financial statements on August 14, 2024.

 

Below is a recap of the Company’s announcements from July 2024.

 

Board Appointment - Andrew Forson

 

Andrew Forson, with a background in financial and risk engineering and currently the Head of Ventures and Investments for the Hashgraph Group, was appointed to the board of directors of DeFi Technologies. His expertise is expected to significantly enhance the Company’s strategic capabilities in the digital asset sector.

 

Strategic Partnership with Zero Computing

 

DeFi Technologies formed a strategic partnership with Zero Computing to enhance its arbitrage trading desk, DeFi Alpha. This partnership focuses on leveraging zero-knowledge proof technologies to improve trading strategies and expand multi-chain functionalities, specifically introducing verifiable computation to the Solana blockchain.

 

Expansion of BTC Treasury and Diversification

 

DeFi Technologies expanded its Bitcoin holdings by purchasing an additional 94.34 BTC and diversified its treasury by acquiring 12,775 SOL tokens and 1,484,148 CORE tokens. This diversification includes participating in CORE DAO staking, enhancing the company’s yield opportunities and network security.

 

Launch of NEAR Protocol ETP by Valour Inc.

 

Valour launched the world’s first ETP for the NEAR Protocol token. This ETP provides secure and diversified exposure to the NEAR ecosystem, which is significant in the DeFi and NFT sectors and ranks among the top 20 digital assets globally.

 

Arbitrage Trading Gains by DeFi Alpha

 

DeFi Alpha, the arbitrage trading desk of DeFi Technologies, generated an additional C$19.3 million (US$14.1 million) through arbitrage trades in Q3 2024, contributing to a total of C$133.1 million (US$97.5 million) in cash and digital asset equivalents in 2024. This achievement contributes to a significant enhancement of the Company’s financial position.

 

2

 

 

 

Acquisition of Stillman Digital

 

DeFi Technologies signed a letter of intent to acquire Stillman Digital, a leading OTC desk and digital asset liquidity provider. This acquisition aims to enhance the Company’s trading capabilities, diversify its client base, and expand its revenue streams through new business segments such as custody, foreign exchange, and proprietary trading.

 

“We are immensely pleased with the performance of Valour’s ETP products, as evidenced by the significant AUM growth and robust inflows this fiscal year,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Reflecting on recent months, the launch of the world’s first ETP for the NEAR Protocol, the strategic partnership with Zero Computing, and the expansion of our digital asset treasury strategy exemplifies our commitment to innovation and market leadership. These initiatives not only underline our dedication to offering pioneering investment solutions but also ensure we meet the evolving needs of our investors. Looking ahead, our focus remains on driving value and expanding our offerings to sustain growth and reinforce our position as a leader in the digital assets space.”

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Near (NEAR), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK), Core (CORE), Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Hedera (HBAR), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

3

 

 

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; acquisition of Stillman Digital; the Company’s digital asset treasury strategy; filing of the Company’s Q2 2024 financial statements; listing of future ETPs; collaboration with Core Foundation; the Company’s Bitcoin treasury strategy; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

4

 

 

Exhibit 99.142

 

 

 

DeFi Technologies Announces Shareholder Call to Discuss Q2 2024 Financial Results

 

TORONTO – August 13, 2024 – DeFi Technologies Inc. (the “Company” or “DEFI”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance,today announces it will conduct a shareholder call on Thursday, August 15, 2024 at 12:00 p.m. EST to discuss its financial performance for the three month and six month period ending June 30, 2024.

 

IMPORTANT – To register for the webcast see below:

 

When: August 15, 2024

Time: 12:00 PM Eastern Time

Topic: DeFi Q2 Financials

 

Register in advance for this webinar:

 

https://zoom.us/webinar/register/WN_wIjGZxhOQ0C6_PYPzUD9XA#/registration

 

After registering, you will receive a confirmation email containing information about joining the webinar.

 

Learn more about DeFi Technologies at defi.tech

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/  

 

 

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial; results of the Company; the shareholder call development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton

Chief Executive Officer

ir@defi.tech

(323) 537-7681

 

 

 

 

 

Exhibit 99.143

 

 

 

DeFi Technologies Inc. Announces Q2 2024 Financial Results: Achieving Its Strongest Financial Quarter to Date, Record Revenues of C$133.2 million (US$98.0 million) and $128.2 million (US$94.4 million) for the three and six months ended June 30, 2024, Net Income of C$90.4 million (US$66.5 million) and $72.3 million (US$53.2 million) for the three and six months ended June 30, 2024, and Notable Strategic Developments

 

●Record Operating Revenues and Net Income: DeFi Technologies recorded its strongest quarter ever, achieving Total Revenues of C$133.2 million (approximately US$98.0 million) and C$128.2 million (approximately US$94.4 million) for the three and six months and Net Income of C$90.4 million (approximately US$66.5 million) and C$72.3 million (approximately US$53.2 million) for three and six months ended June 30, 2024.

 

●Strategic Advancements and Product Launches: The quarter featured the launch of multiple Exchange Traded Products (“ETPs”) by subsidiary Valour Inc, and Valour Digital Securities Limited (together, “Valour”) significantly enhancing the company’s product offerings and market position.

 

●Substantial Growth in Assets Under Management (AUM): AUM grew by 43.7% since December 31, 2023 to approximately C$730.1 million (US$533.4 million) as of June 30, 2024, driven by favorable market conditions, new product launches, and strategic corporate actions that enhanced trading volumes and overall financial performance. Since June 30, 2024, AUM has further increased to C$837 million (US$610 million) as of July 31, 2024.

 

●2024 Outlook: Looking ahead, DeFi Technologies projects its annualized revenues for fiscal 2024 to reach approximately C$179 million (US$131 million) for 2024, supported by ongoing AUM growth, upcoming ETP launches, and the integration of new acquisitions, which are poised to capitalize on the favorable conditions in the digital asset sector. Furthermore, we continue to evaluate additional Defi Alpha trading opportunities which, if executed, will drive revenues and net income higher.

 

TORONTO, Aug. 14, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DEFI”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company and the first and only publicly traded company that bridges the gap between traditional capital markets, Web3 and decentralised finance, announces its financial performance for the three and six months ended June 30, 2024 (all amounts in Canadian dollars, unless otherwise stated).

 

Key Highlights of Q2 2024:

 

●The Company reported a cash balance as of June 30, 2024 of C$19.5 million (US$14.2 million) compared to C$6.7 million (US$4.2 million) on December 31, 2024. The Company also held $54.5 million in USDT and 110 BTC totaling $9.2M (US$6.7M) as part of its treasury position at the end of June 2024. As of August 14, 2024, the Company’s digital asset treasury position has increased to include 204.23 BTC, 12,775 SOL, and 1,484,148 CORE, totaling $15.5 million (US$21.2 million).

 

 

 

 

●The Company’s venture portfolio investments were valued at C$41.0 million ($US30.5 million) as of June 30, 2024.

 

●AUM grew 43.7% from C$508.1 million ($US370.8 million) as of December 31, 2023 to approximately C$730.1 million (US$532.2) as of June 30, 2024.

 

●Total Revenues were C$133.2 million (US$98 million) for Q2 2024, a significant improvement from the total revenues of C$7.4 million (US$5.4 million) for the same period in 2023.

 

●Valour announced the launches of a Short Spot Bitcoin ETP, Valour Internet Computer (ICP) ETP, Valour Toncoin (TON) ETP, Valour Chainlink (LINK) ETP, the world’s first CORE ETP, expanded the world’s first Hedera ETP to Spotlight Stock Market and launched the world’s first yield bearing Bitcoin (BTC) ETP in collaboration with Core Foundation, offering investors exposure to Bitcoin with a 5.65% yield.

 

●DeFi Alpha, a specialized arbitrage trading desk, generated over $111.5 Million (US$82 Million) in Q2 2024.

 

●Valour paid down C$40.4 million (US$29.5 million) in outstanding loans, thereby increasing digital asset collateral for revenue generation.

 

●Valour launched trading desk in UAE to expand ETP listings and presence in the Middle East.

 

●DeFi Technologies launched a normal course issuer bid.

 

●DeFi Technologies announced the launch of a Core chain validator node to participate in network consensus and staking, stakes 1,498 BTC.

 

●Reflexivity Research partnered with CoinMarketCap to deliver crypto insights.

 

Comment from the CEO:

 

“Q2 2024 represents a transformative period for DeFi Technologies, setting new benchmarks for financial performance and strategic growth. Our record revenues of $133.2 million (US$98 million) and net income of $90.4 million (US$66.5 million) for the quarter reflect the strength of our business model and the success of our recent strategic initiatives,” said Olivier Roussy Newton, CEO of DeFi Technologies. “For the quarter, we not only delivered exceptional financial results but also significantly advanced our market position through key product launches, partnerships, and the expansion of our digital asset ETP offerings.

 

A pivotal highlight of this quarter was the launch of DeFi Alpha, our specialized arbitrage trading desk, which generated over $111.5 million (US$82 million) in Q2 2024. This new venture has rapidly become a significant revenue driver, showcasing our commitment to innovation and adaptability in the dynamic digital asset landscape.

 

Additionally, we strategically paid down US$29.5 million in outstanding loans, strengthening our balance sheet and increasing our digital asset collateral for revenue generation. Our digital asset treasury strategy remains robust, with holdings of 204.34 BTC, 12,775 SOL tokens, and 1,484,148 CORE tokens, enabling us to participate in the appreciation of digital assets while supporting our staking and yield-generating activities.

 

The 43.7% growth in AUM to $730.1 million as of June 30, 2024, and further growth to $837 million by July 31, 2024, underscores our ability to adapt and thrive in the rapidly evolving financial technology landscape. As we continue to innovate and lead in the regulated digital asset space, these achievements reinforce our commitment to delivering long-term value to our shareholders.

 

The net income of $90.4 million (US$66.5 million) for the quarter and $72.3 million (US$53.2 million) for the six months ended June 30, 2024, reflects our financial strength. The drop from $90.4 million in net income for Q2 to $72.3 million for the six months is primarily as a result of the downward adjustment in the value of BTC collateral to the carrying value of the outstanding loan payable held by Genesis Global Capital LLC (“Genesis”) due to filing for bankruptcy. We have received an initial distribution of 95 BTC in August from the estate of Genesis and anticipate further distributions as the liquidation process runs its course.

 

2

 

 

“Moving forward, we remain focused to capitalize on the growing opportunities within the digital asset sector, ensuring that DeFi Technologies remains at the forefront of financial innovation and continues to leverage our digital asset treasury and initiatives like DeFi Alpha to maximize returns and support the broader ecosystem,” added Mr. Roussy Newton.

 

ETPs/Valour:

 

Valour’s ETP business reported AUM of $730.1 million as of June 30, 2024, a 43.7% increase from December 31, 2023 AUM of $508 million. As of July 31, 2024, Valour’s AUM stood at $837 million.

 

Liquidity:

 

The Company ended Q2 2024 with a cash balance of $19.5 million, compared to $6.7 million at the close of 2023. The Company also held $54.5 million in USDT. Additionally, the venture portfolio investments stood firm at $41.0 million.

 

Financial Performance:

 

For the three and six months ending June 30, 2024:

 

●Revenues were $133.2 million and $128.2 million for three and six months ended June 30, 2024, compared to $7.4 million and $(4.0) million for the same periods in 2023. Defi Alpha trading desk revenue, increased staking and lending, management fees and new revenue from its recently acquired Reflexivity LLC helped improve revenues in Q2 2024.

 

●Net Income was $90.4 million and $72.3 million for three and six months ended June 30, 2024 compared to $(0.7) million and $ 17.1) million for the same periods in 2023.

 

Outlook for 2024:

 

The outlook that follows supersedes all prior financial outlook statements made by the Company, constitutes forward-looking information within the meaning of applicable securities laws, and is based on a number of assumptions and subject to a number of risks. Actual results could vary materially as a result of numerous factors, including certain risk factors, many of which are beyond the Company’s control. Please see “Cautionary note regarding forward-looking information” and “Financial Outlook Assumptions” below for more information.

 

The Company has experienced significant revenue growth since Q1 2024. Valour’s ETPs have witnessed a nearly 700% increase in AUM from the market lows in late 2022, alongside growth in trading volumes. Valour’s AUM stood at approximately $730.1 million (US$533.4 million) as of June 30, 2024 and $837 million (US$609 million) as of July 31, 2024.

 

The Company’s staking and lending income, changes in gains and losses on digital assets and ETP payables, as well as management fees, are closely correlated with capital inflow for Valour’s ETPs and the price of digital assets underlying Valour’s ETPs, which has continued to grow since the end of 2023. Furthermore, revenue from arbitrage and liquidity provision is highly linked to overall market activity and turnover in Valour’s listed ETPs. The Company also formed DeFi Alpha in Q2 2024, which generated approximately $111.5 million (US$82 million) in Q2 2024, Given the foregoing factors, the Company’s annualized revenue is forecasted to be approximately $179 million (US$131 million) for 20241. Further growth in AUM may lead to proportional increases in revenue.

 

For Q3 2024, it is anticipated that new ETP launches, improved ETP mix and continuous inflow of funds into Valour’s ETPs, further trading opportunities identified and executed by DeFi Alpha and accretive acquisitions of the Company, will continue to add to revenues of the Company. The Company maintains its plans to launch approximately 15 ETP products in 2024 and an additional 30 in 2025 as the Company continues to take advantage of positive macro fundamentals for the digital asset ecosystem in general.

 

 

1The Company provided an Operating Revenue guidance of $119 million (US$87.45 million) in Q1 2024. Operating Revenue is a non-IFRS financial measure that excludes the one-time effect of the adjustment in the value the BTC collateral held by Genesis Global Capital LLC (“Genesis”). As the Genesis liquidation is a one-time effect and given the passage of time and progress of the Genesis liquidation, the Company has elected to use revenue as defined under IFRS for its financial outlook beginning Q2 2024.

 

3

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

For more information on Valour, to subscribe, or to receive updates and financial information, visit valour.com.

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. For more information please visit https://www.reflexivityresearch.com/

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the financial results of the Company; revenue outlook of the Company; revenue generation by DeFi Alpha; future collaborations and partnerships; development of ETPs; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

4

 

 

Financial Outlook Assumptions

 

The financial outlook on revenue of the Company is based on a number of assumptions, including assumptions related to inflation, changes in interest rates, volatility of the digital asset market, current and projected market prices of digital assets, in particular the digital assets underlying the Company’s ETPs, the Company’s ability to realize staking and lending income from digital assets held by the Company, the ability of DeFi Alpha to generate yield on the Company’s excess liquidity and identify and execute accretive trading opportunities, the return realized by the Company on staking and lending income, the return on management fees earned by the Company, ongoing subscriptions of Reflexivity Research, consumer interest in the Valour’s ETPs, foreign exchange rates and other macroeconomic conditions, the regulatory environment with respect to ETPs and digital assets in the jurisdictions that the Company operates in, introduction of future ETPs, “black swan events” in the digital asset industry, competitors that offer competing ETP products and market acceptance of the Company’s ETP offerings. The Company’s financial outlook, including the various underlying assumptions, constitutes forward-looking information and should be read in conjunction with the cautionary statement on forward-looking information above. Many factors may cause the Company’s actual results, level of activity, performance or achievements to differ materially from those expressed or implied by such forward-looking information, including the risks and uncertainties related to: macroeconomic factors affecting the digital asset industry, including inflation, changes in interest rates, investor confidence in digital assets; volatility of the digital assets and fluctuation in market value of digital assets; exchange rate fluctuations; any pandemic such as the COVID-19 pandemic or the mpox virus; fraud, misconduct or gross negligence by individuals within the digital asset industry; a negative regulatory environment with respect to digital assets; the Russian invasion of Ukraine and reactions thereto; the Israel-Hamas war and reactions thereto; the Company’s inability to attract purchasers of its ETPs; decrease in AUM as a result of investor selling the Company’s ETPs or a fall in the value of the underlying digital assets; Valour’s inability to launch attractive ETPs; the Valour’s inability to increase ETP sales; the Company’s inability to implement our growth strategy; the Company’s reliance on a small number of custodian and market participants to operate its ETP programs; the Company’s ability to prevent and manage information security breaches or other cyber-security threats; the Company’s ability to compete against competitors; strategic relations with third parties; changes to technologies on which ETPs are purchased and sold is reliant; Valour’s ability to distribute ETPs in jurisdictions it is not currently operating in; the Company’s ability to obtain, maintain and protect our intellectual property; The Company’s ability to execute on its acquisition strategy; the Company’s liquidity and capital resources; pending and threatened litigation and regulatory compliance; changes in tax laws and their application; the Companys ability to expand our sales, marketing and support capability and capacity; and maintaining our customer service levels and reputation. The purpose of the forward-looking information is to provide the reader with a description of management’s expectations regarding our financial performance and may not be appropriate for other purposes.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

SOURCE DeFi Technologies Inc.

 

View original content to download multimedia:

http://www.newswire.ca/en/releases/archive/August2024/14/c1539.html

 

%SEDAR: 00007675E

 

For further information: For further information, please contact: Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 17:26e 14-AUG-24

 

 

5

 

 

Exhibit 99.144

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Ryan Ptolemy, Chief Financial Officer of DeFi Technologies Inc. certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended June 30, 2024.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

 

 

5.2  ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing for the interim period ended March 31, 2024;

 

(a)  a description of the material weakness;

 

(b)   the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)   the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3 Limitation on scope of design: N/A

 

6.  Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: August 14, 2024  
   
(signed) “Ryan Ptolemy”  
Ryan Ptolemy  
Chief Financial Officer  

 

 

 

 

 

Exhibit 99.145

 

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

 

I, Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies Inc., certify the following:

 

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of DeFi Technologies Inc. (the “issuer”) for the interim period ended June 30, 2024.

 

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

 

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

 

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

 

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (COSO Framework) published by the Committee of Sponsoring organizations of the Treadway Commission (COSO).

 

 

 

 

5.2  ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing for the interim period ended March 31, 2024;

 

(a)  a description of the material weakness;

 

(b)   the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)   the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3 Limitation on scope of design: N/A

 

6.  Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2024 and ended on June 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

Date: August 14, 2024  
   
(signed) “Olivier Roussy Newton”  
Olivier Roussy Newton  
Chief Executive Officer  

 

 

 

 

 

Exhibit 99.146

 

 

 

 

 

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

 

 

 

 

 

Six months ended June 30, 2024

 

 

 

 

 

 

 

 

 

 

Background

 

This Management’s Discussion and Analysis (“MD&A”) has been prepared based on information available to DeFi Technologies Inc. (“we”, “our”, “us”, “DeFi” or the “Company”) containing information through August 14, 2024, unless otherwise noted. The MD&A provides a detailed analysis of the Company’s operations and compares its financial results for the three and six months ended June 30, 2024 and 2023. The financial statements and related notes of DeFi have been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”). Please refer to the notes of the December 31, 2023 annual audited consolidated financial statements for disclosure of the Company’s significant accounting policies. The Company’s presentation currency is the Canadian dollar. Unless otherwise noted, all references to currency in this MD&A refer to Canadian dollars.

 

Additional information, including our press releases, have been filed electronically through the System for Electronic Document Analysis and Retrieval (“SEDAR”) and is available online under the Company’s SEDAR profile at www.sedar.com.

 

Cautionary Statement Regarding Forward Looking Information

 

Except for statements of historical fact relating to DeFi certain information contained herein constitutes forward-looking information under Canadian securities legislation.  The use of any of the words “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “goal”, “predict”, “potential”, “should”, “believe”, “intend” or the negative of these terms and similar expressions are intended to identify forward-looking information and statements. The information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information and statements. Such statements reflect the Company’s current views with respect to certain events, and are subject to certain risks, uncertainties and assumptions. Many factors could cause the Company’s actual results, performance, or achievements to vary from those described in this MD&A. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this MD&A as intended, planned, anticipated, believed, estimated, or expected. With respect to the forward-looking statements contained herein, although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements, because no assurance can be given that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the Company’s lack of operating history as an investment company; the volatility of the market price of the common shares of the Company; risks relating to the trading price of the common shares of the Company relative to net asset value; risks relating to available investment opportunities and competition for investments; the volatility of the share prices of investments in public companies; the dependence on management, directors and the investment committee; risks relating to additional funding requirements; potential conflicts of interest and potential transaction and legal risks, conflict of interests and litigation risks, as more particularly described under the heading “Risk Factors” in this MD&A and in the Company’s Annual Information Form (“AIF”) filed with Canadian securities regulators. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.

 

2

 

 

Restatement of Previously Issued Condensed Interim Consolidated Financial Statements

 

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $10,822,637 to $106,572,333; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,236,513 as at June 30, 2023, with an retained earnings impact at June 30, 2023 of $24,312,461. For more details, please refer to Note 24 of the condensed consolidated interim financial statements of the Company for three and six months ended June 30, 2024 and 2023. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the three and six months ended June 30, 2023. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis will not be prevented or detected on a timely basis.

 

Overview of the Company

 

 

The Company is a publicly listed issuer on the CBOE Canada trading under the symbol “DEFI”. The Company is a crypto-native technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance. The Company’s mission is to expand investor access to industry-leading decentralized technologies which it believes lie at the heart of the future of finance. On behalf of its shareholders and investors, it identifies opportunities and areas of innovation, and builds and invests in new technologies and ventures in order to provide trusted, diversified exposure across the decentralized finance ecosystem. The Company does so through five distinct business lines: Valour Asset Management, DeFi Alpha, DeFi Ventures, DeFi Infrastructure and Reflexivity LLC.

 

The Company’s condensed consolidated interim financial statements have been prepared in accordance with IFRS applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and liquidate its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying condensed consolidated interim financial statements.

 

Investment Pillars

 

 

DeFi generates revenue through five core pillars:

 

Valour Asset Management

 

The Company, through its 100% ownership of Valour Inc., is developing Exchange Traded Products (“ETPs”) that synthetically track the value of a single DeFi protocol or a basket of protocols. ETPs simplify the ability for retail and institutional investors to gain exposure to DeFi protocols or basket of protocols as it removes the need to manage a wallet, two-factor authentication, various logins, and other intricacies that are linked to managing a decentralized finance protocol portfolio.

 

3

 

 

DeFi Alpha

 

Defi Alpha, a specialized arbitrage trading desk with the sole focus is to identify low-risk arbitrage opportunities within the crypto ecosystem. The Defi Alpha trading desk is strategically designed to focus on identifying and capitalizing upon arbitrage opportunities within the dynamic digital assets market. Utilizing advanced algorithmic strategies and in-depth market analysis, the trading desk aims to generate alpha by exploiting inefficiencies and discrepancies in digital asset pricing. The primary focus is on arbitrage trading opportunities in both centralized and decentralized markets, ensuring minimal market or protocol exposure to mitigate downside revenue volatility.

 

DeFi Ventures

 

The Company, whether by itself or through its subsidiaries, invests in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets.

 

DeFi Infrastructure

 

The Company’s DeFi Infrastructure line of business offer governance services and products within the DeFi ecosystem. The Company uses its expertise in DeFi to offer node management of decentralized protocols to support governance, security and transaction validation for their networks.

 

Reflexivity LLC

 

The Company’s Reflexivity LLC line of business specializes in producing cutting-edge research reports for the cryptocurrency industry. Reflexivity has also focused on creating a large third-party distribution channel for its research, which has been accomplished by partnering with platforms such as TradingView, eToro and others.

 

Highlights For The Six Months Ended June 30, 2024 And Subsequent Events:

 

 

§On February 7, 2024, the Company has completed its acquisition of Reflexivity Research LLC, a premier private research firm that specializes in producing research reports for the cryptocurrency industry. Reflexivity, co-founded by Anthony Pompliano and Will Clemente, offers crypto-native research designed for traditional finance investors. Reflexivity’s research is distributed via their homepage, a premium membership portal, and an email list of over 55,000 investors which generates a positive cash flow for Reflexivity.

 

§On February 9, 2024, the Company completed the acquisition of intellectual property (IP) from prominent Solana developer Stefan Jorgensen. The IP acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by both Defi Technologies and Valour Inc.

 

§On February 20, 2024, the Company  launched its physical-backed staking exchange-traded product (ETP) for the Internet Computer Protocol (ICP) token. The Valour Internet Computer Protocol ETP (ISIN: GB00BS2BDN04) provides retail and institutional investors with trusted, secure and diversified exposure to the innovative and fast-growing Internet Computer ecosystem. The Internet Computer adds autonomous serverless cloud functionality to the public Internet -- making it possible to build almost any system or service entirely on a decentralized network. Developers and enterprises no longer have to rely on legacy information technology systems that are susceptible to hacks and downtime. The Internet Computer is a tamper-proof and unstoppable network, a new paradigm of computing power.

 

4

 

 

§On March 18, 2024, the Company’s subsidiary Valour Inc. partnered with Bitcoin Suisse AG and Stoxx in launching the innovative 1Valour Stoxx Bitcoin Suisse Digital Asset Blue Chip ETP. This pioneering product marks a significant step forward in the digital asset market, providing a diversified investment approach to the top blue-chip digital assets in a simple and secure manner.

 

§On April 8, 2024, the Company opened a new trading desk in the United Arab Emirates (UAE). As part of this strategic initiative, the Company aims to expand its assets under management (AUM) by launching 15 new ETP products in 2024, in addition to the 17 already listed in Europe, followed by another 30 in 2025.

 

§On April 17, 2024, the Company entered into a collaboration with the Core Foundation to develop innovative ETPs (exchange-traded products) that leverage Core Chain’s unique blockchain capabilities, introducing a first-of-its-kind yield-bearing BTC ETP and a novel Core ETP. The yield-bearing BTC ETP will offer yield directly from Core Chain’s block rewards. This groundbreaking initiative marks a first in the market, as the previously passive BTC asset becomes productive and yield-bearing without moving off the bitcoin network.

 

§On April 18, 2024, the Company launched the first short spot bitcoin (BTC) ETP.

 

§On May 7, 2024, the Company’s subsidiary, Valour Inc. successfully repaid US$19.5 million in outstanding loans. As of April 30, 2024, and due to favourable business conditions, Valour has fully repaid balances of US$6 million and US$13.5 million, which were secured by Bitcoin (BTC) and Ethereum (ETH) collateral, respectively. No further equity or debt was raised to repay the loan. The loans, which were structured with open-term tenures allowing for flexible repayment, were fully repaid on April 30, 2024. This strategic financial management will result in substantial savings for the Company.

 

§On May 13, 2024, the Company’s subsidiary Valour Inc. launched three new ETPs. Among these offerings are the Valour Internet Computer (ICP) ETP and the Valour Toncoin (TON) ETP, the first of their kind in the Nordics. These are accompanied by the Valour Chainlink (LINK) ETP, providing simplified access to cutting-edge digital assets. Trading of all three ETPs commenced on May 10, 2024, with a 1.9 percent management fee.

 

§On June 4, 2024, the Company’s subsidiary, Valour Inc., announced it has broadened its partnership with justTrade, a leading German on-line brokerage platform. The recently launched 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETP is now available for German savings plans through justTRADE.

 

§On June 10, 2024, the Company announced it has adopted Bitcoin as its primary treasury reserve asset and has purchased 110 Bitcoin to initiate this strategy.

 

§On June 11, 2024, the Company announced it has deployed a Core Chain validator node to act as an independent validator for the network. The launch of the node is part of the Company’s Defi Infrastructure business line, contributing to the mission of decentralized finance. The Company will also stake 1,498 Bitcoin on the Core Chain.

 

§On June 19, 2024, the Company’s subsidiary, Valour Inc., launched the Valour Hedera (HBAR) ETP (exchange-traded product). The Valour Hedera (HBAR) ETP (ISIN: CH1213604585) provides secure and straightforward access to Hedera’s native cryptocurrency, HBAR. Hedera is renowned for its energy-efficient public distributed ledger technology, which utilizes the leaderless, asynchronous Byzantine Fault Tolerance (“aBFT”) hashgraph consensus algorithm.

 

5

 

 

§On June 28, 2024, the Company’s subsidiary Valour Inc. launched two new ETPs, the Valour CORE (CORE) ETP and the Valour Hedera (HBAR) ETP, on the Spotlight Stock Market in Sweden. The Valour CORE (CORE) SEK (ISIN: CH1213604593) offers investors exposure to the native token of the Core blockchain, CORE. Core Chain’s Satoshi Plus consensus mechanism uniquely combines the decentralization and security of Bitcoin’s Delegated Proof of Work (“DPoW”) with the scalability and flexibility of Ethereum’s Delegated Proof of Stake (“DPoS”).

 

§On July 9, 2024, the Company signed a binding letter of intent to acquire Stillman Digital Inc., a leading OTC desk and liquidity provider offering limitless liquidity solutions and industry-leading trade execution, settlement and technology services.

 

§On July 17, 2024, the Company’s subsidiary, Valour Inc., launched an ETP (exchange-traded product) for the Near Protocol token on the Spotlight Stock Market in Sweden. The Valour Near (NEAR) ETP (ISIN: CH1213604577) provides retail and institutional investors with trusted, secure and diversified exposure to the innovative and fast-growing Near ecosystem, enabling participation in a decentralized Web platform that aims to redefine the future of digital finance.

 

§On July 18, 2024, the Company expanded its digital asset treasury strategy purchasing an additional 94.34 Bitcoin, bringing its total Bitcoin holdings to 204.34 Bitcoin. Additionally, the Company has acquired 12,775 Solana tokens and 1,484,148 Core tokens, with plans to actively participate in Core DAO’s staking facility.

 

§On July 30, 2024, the Company formed a strategic partnership with Zero Computing, a pioneer in verifiable computation on Ethereum and Solana. This partnership aims to build critical infrastructure to enhance the arbitrage discovery and execution capabilities of Defi Technologies’ specialized trading desk, DeFi Alpha, and advance capabilities for capturing zero-knowledge enabled maximal extractable value (MEV).

 

§On July 31, 2024, the Company appointed Andrew Forson to its board of directors. Andrew Forson is an experienced financial and risk engineer, software architect, and trust and estate practitioner. Currently, he serves as the head of ventures and investments for the Hashgraph Group, the commercialization and enablement arm of Hedera, where he has been instrumental in driving strategic investments and fostering innovation in the digital asset sector.

 

§On August 6, 2024, the Company’s subsidiary, Valour Inc., signed a memorandum of understanding (MOU) with the Nairobi Securities Exchange (NSE) and SovFi Inc. to facilitate the creation, issuance and trading of digital asset exchange-traded products in the African market.

 

6

 

 

Digital Assets

 

 

As at June 30, 2024, the Company’s digital assets consisted of the below digital currencies, with a fair value of $770,257,971 (December 31, 2023 - $489,865,638). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each ETP. The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.The Company’s holdings of digital assets consist of the following:

 

   June 30, 2024   December 31, 2023 
   Quantity   $   Quantity   $ 
Binance Coin   1,833.1116    1,435,764    236.4452    97,710 
Bitcoin   2,544.2313    181,934,285    2,271.3329    108,983,280 
Ethereum   21,425.6087    100,059,573    21,537.4066    65,956,320 
EthereumPoW   -    -    0.2000    1 
Cardano   62,374,745.9926    33,354,333    54,210,783.1700    43,306,306 
Polkadot   2,174,109.2288    18,811,801    1,666,147.7880    18,371,365 
Solana   1,737,320.62    337,682,809    1,682,112.49    235,733,109 
Shyft   4,879,446.3958    49,806    4,539,407.2792    78,314 
Uniswap   326,938.2981    4,179,467    296,352.0602    2,932,687 
USDC        698         673 
USDT        54,473,100         111,856 
Litecoin   -    -    17.3931    1,719 
Doge   404,126.4335    69,086    220,474.3947    26,652 
Cosmos   21,278.72    202,569.12    11,700.0000    171,497 
Avalanche   481,576.7021    18,607,286    248,151.6644    13,148,105 
Matic   19,504.9463    14,598    0.0003    - 
Ripple   7,323,969.3011    4,771,762    76,029.7317    62,737 
Enjin   66,737.8886    17,556    432,342.3671    223,237 
Tron   128,246.2765    21,064    118,490.5094    16,581 
Terra Luna   203,702.1876    -    202,302.5360    - 
Shiba Inu   2,351,900,000.0000    54,724    -    - 
ICP   1,020,042.1003    11,140,987    -    - 
Core   431,105.7669    791,440           
AAVE   1.5265    201    -    - 
LINK   16,691.6367    327,361    -    - 
TON   135,790.0000    1,404,661    -    - 
HARB   594,000.0000    63,740    -    - 
Current   2,434,265,137    769,468,669    63,728,357    489,222,151 
Blocto   266,780.171    2,873    264,559.703    10,503 
Boba Network   250,000.00    -    250,000.00    – 
Clover   480,000.00    20,764    450,000.00    19,831 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    666,446    2,500,000.00    503,669 
Saffron.finance   86.21    2,612    86.21    2,619 
Sovryn   15,458.95    13,292    15,458.95    12,863 
Wilder World   148,810.00    83,316    148,810.00    94,002 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    - 
Long-Term        789,302         643,487 
Total Digital Assets        770,257,971         489,865,638 

 

7

 

 

The continuity of digital assets for the six months ended June 30, 2024 and year ended December 31, 2023:

 

   June 30,
2024		   December 31,
2023		 
Opening balance  $489,865,638   $104,202,085 
Digital assets acquired   583,851,244    318,355,007 
Digital assets disposed   (568,751,078)   (244,656,544)
Realized gain (loss) on digital assets   289,239,113    (1,017,247)
Digital assets earned from staking, lending and fees   14,071,024    3,554,587 
Net change in unrealized gains and losses on digital assets   (58,766,787)   324,976,115 
Foreign exchange gain (loss)   20,748,817    (15,548,363)
   $770,257,971   $489,865,638 

 

Digital assets held by counterpart for the six months ended June 30, 2024 and year ended December 31, 2023:

 

   June 30,
2024		   December 31,
2023		 
Counterparty A  $130,941,393   $421,687,911 
Counterparty B   20,520,801    30,592,947 
Counterparty C   2,558,611    2,775,287 
Counterparty D   59,706    11,785,440 
Counterparty E   9,203,964    8,633,491 
Counterparty F   13,464,318    837,948 
Counterparty G   13,202,820    8,840,988 
Counterparty H   11,978,801    - 
Counterparty I   213,940,499    - 
Counterparty J   95,483,620    - 
Other   3,083,236    248,294 
Self custody   255,820,202    4,463,332 
Total  $770,257,971   $489,865,638 

 

As of June 30, 2024, digital assets held as collateral consisted of the following:

 

   Number of
coins on loan		   Fair Value 
Bitcoin   633.2614   $22,406,784 
Ethereum   1,845.0000    8,616,789 
Total   2,478.2614   $31,023,573 

 

As at June 30, 2024, the 475 Bitcoin held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $9,203,964 (US$6,724,603), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

   Number of
coins on loan		   Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcoin held by Genesis as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

8

 

 

Digital Assets loaned

 

As of June 30, 2024, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.3% to 9.2% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of June 30, 2024, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value
Share		 
Digital assets on loan:            
Ethereum   8,500.0000    39,697,946    50%
Cardano   19,000,000.0000    10,160,271    13%
Polkadot   1,800,000.0000    15,574,766    20%
Uniswap   150,000.0000    1,917,549    2%
Avalanche   300,000.0000    11,591,726    15%
Total   21,258,500.0000   $78,942,257    100%

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

   Number of
coins on loan		   Fair Value   Fair Value
Share		 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of June 30, 2024, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins on loan		   Fair Value 
Digital assets on loan:           
Counterparty A  2.3% to 9.2%   21,258,500.0000    78,942,257 
Total      21,258,500.0000   $78,942,257 

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins on loan		   Fair Value 
Digital on loan:           
Counterparty A  2.4% to 9.7%   11,578,285.0000    270,362,684 
Total      11,578,285.0000   $270,362,684 

 

As of June 30, 2024, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  June 30,
2024		 
Digital assets on loan:       
Counterparty A  Cayman Islands   100%
Total      100%

 

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As of December 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on loan:       
Counterparty A  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of June 30, 2024, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 2.99% to 9.48% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has staked select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of June 30, 2024, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital assets on staked:            
Cardano   38,202,110.3050    20,428,620    6%
Bitcoin   1,610.0324    5,589,577    2%
Solana   1,640,090.8681    318,782,965    92%
Total   39,843,811.2055   $344,801,161    100%

 

As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:            
Cardano   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950   $30,516,888    100%

 

As of June 30, 2024, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest
rates		  Number of
coins staked		   Fair Value   Fair Value
Share		 
Digital on staked:               
Counterparty B  2.99%   38,201,004.7950    20,428,029    6%
Counterparty I  8.00%   1,100,692.0000    213,940,499    62%
Counterparty J  8.00%   491,249.0000    95,483,620    28%
Self custody  7.57 to 9.48%   50,865.4105    14,949,014    4%
Total      39,843,811.2055   $344,801,161    100%

 

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As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest
rates		   Number of
coins staked		   Fair Value 
Digital on staked:            
Counterparty B   3.15%   38,201,004.7950    30,516,888 
Total        38,201,004.7950   $30,516,888 

 

As of June 30, 2024, digital assets staked were concentrated with counterparties as follows:

 

   Geography  June 30,
2024		 
Digital on staked:       
Counterparty B  Switzerland   6%
Counterparty I  United States   62%
Counterparty J  United States   28%
Self custody  Switzerland   4%
Total      100%

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:       
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Third Party Custodians

 

 

As of June 30, 2024, the Company used the following third-party custodians (each, a “Custodian”) in the ordinary course of business of its DeFi Ventures business line as well as for digital asset underlying Valour ETPs:

 

Custodian   Location
Bitcoin Suisse AG   Switzerland
Anchorage Digital   United States
B2C2 Overseas LTD   Cayman Islands
Copper   Switzerland

 

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Each of the Custodians have not appointed a sub-custodian to hold crypto assets owned by the Company. The Custodians hold and safeguard the digital assets deposited by the Company and its subsidiaries. The Custodians also offer lending and staking services. The Custodians are not Canadian financial institutions. None of the Custodians are related parties of the Company.

 

Each Custodian maintains general commercial insurance on its own behalf, but the Corporation and other clients of such Custodians are not named insured under such policies. The Company is not aware of any security breaches or similar incidents at the Custodians. The Company believes that any event of insolvency or bankruptcy of a Custodian would be treated in accordance with the insolvency or bankruptcy laws of the applicable jurisdiction of such Custodian.

 

As of June 30, 2024, the breakdown of digital assets deposited with each Custodian as a percentage of total digital assets custodied by the Company and its subsidiaries is as follows:

 

Custodian  Location  % of digital assets custodied by market value (1)   Regulatory Body
Bitcoin Suisse AG  Switzerland   2.7%  Financial Services Standards Association (VQF). Zug. Switzerland
Anchorage Digital  United States   0.0%  Office of Comptroller of Currency
B2C2 Overseas LTD  Cayman Islands   17.0%  Cayman Islands Monetary Authority (CIMA)
Copper      1.6%  Financial Services Standards Association (VQF). Zug. Switzerland

 

Note 1: As at June 30, 2024; Residual digital assets served as collateral for loans with Equities First (approx. 1.7%;, regulated by FCA UK), Laser Digital (approx.. 1.7%, regulated by Dubai Virtual Assets Regulatory Authority) and Genesis Global Capital LLC (1.2%; subject to bankruptcy proceeding/filing as of 19 January 2023).

 

Valour diligences and reviews counterparty risk in accordance with the following principles:

 

●Valour shall strive to spread counterparty risk between several counterparties, where relevant and practical.

 

●In relevant situations and as far as possible, counterparty (and settlement) risk shall be mitigated by conducting transactions in well-established settlement systems based on the principles of delivery versus payment or payment versus payment.

 

●The below methodology is to be applied when proposing and selecting counterparties and when granting limits on counterparty risk score.

 

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  ●The counterparties are reviewed in regular intervals and re-evaluated.
    
  ●In case of significant events such as negative news or credit events, Valour can decide to close the business relationship with a counterparty irrespective of the review cycle.
    
  ●Valour manages a counterparty scorecard and captures, assesses and monitors the below information.

 

1.Contact information

 

The name, the website and contact person at the exchange/counterparty, as well as the responsible onboarding owner on Valour side.

 

2.Current status

 

The current status of the relationship, the connection type, as well as the services, products and currency pairs used on the respective exchange/counterparty have to be documented and kept up to date

 

3.Country of registration and regulation

 

The country in which the exchange/counterparty is registered must be documented. In addition all countries in which the exchange/counterparty holds a regulatory licence have to be assessed and documented by stating the licence number (if applicable).

 

4.Country risk

 

The country of registration as well as the country/-ies of regulation are evaluated by using the country risk matrix. The country risk matrix considers the FATF (and equivalent) country evaluation, the Transparency.org Corruption Perception Index (CPI) as well as the VQF SRO country risk recommendations.

 

5.Adverse media search

 

An adverse media search is being conducted. For example, information about an exchange having been hacked in the past or any news about a negative reputation, regulatory breaches etc. are documented.

 

6.Public exchange scores

 

Publicly available information and risk scores from data sources such as Coinmarketcap and Coingecko are being collected and documented.

 

7.Information security certification

 

The exchange/counterparty information security certification status is assessed. Information about the possession of certifications such as AICPA SOC 1, SOC 2 Type I and SOC 2 Type II as well as ISO 27001 are documented.

 

8.Insurance coverage

 

Information about insurance protection and regulatory status in terms of investor protection are assessed and documented.

 

9.Proof of reserves

 

It is being checked if the exchange/counterparty has made the public wallet addresses of its cold and hot storage publicly available or if any other cryptographic means of verification of the reserves held in custody are either publicly available or have been audited.

 

10.Risk evaluation

 

The risk score is evaluated on a scale of 1 to 5, with 1 being the lowest risk and 5 being the highest risk. Based on the information collected in the scorecard, with a focus on regulatory licences, a risk score is calculated and documented for each exchange or counterparty. By carefully evaluating the risk score, we can ensure that we are making responsible business decisions and protecting our customers and stakeholders.

 

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11.Business justification and restrictions

 

In cases where an exchange or counterparty presents increased risks, a business justification must be provided. We must carefully consider the potential exposure and take appropriate measures to limit it through restrictions, thresholds, or other means. Any decision to establish a business relationship with an exchange or counterparty with increased risks must be approved by the board.

 

12.Recurring review schedule

 

The review date and review frequency of all exchanges/counterparties are documented and tracked in the scorecard. A review once a year is set as the default standard, however, an ad-hoc review has to be considered in case of any event that may result in any of the assessment criteria being changed.

 

13.Account closure

 

If the exchange or counterparty has been identified with an increased risk, such as a risk score of 4 or 5, Valour will determine if it is necessary to close the business relationship. This decision is based on the potential exposure and the potential impact on the business and stakeholders.

 

If it is determined that the business relationship should be terminated, a plan for closing the relationship is developed in a controlled and orderly manner. This may include transferring outstanding transactions, closing accounts, and ensuring that all necessary documents and records are properly transferred or retained. The decision to close the business relationship is communicated to the exchange or counterparty and a timeline for the closure is provided. Once the business relationship has been successfully terminated, the counterparty scorecard is updated in order to reflect the closure.

 

By following this process, we can ensure that we are taking a responsible and proactive approach to closing business relationships with risky counterparties. This can help protect our customers and stakeholders and maintain the integrity of our business operations.

 

Self-Custody of Digital Assets

 

 

At June 30, 2024, the Company’s had self-custody of digital assets totaling $255,820,202 (December 31, 2023 - $4,463,332).

 

The Company maintains controls around the meta mask and other hot and cold wallets includes only senior management having access to the accounts, passwords, seed phases, etc. All copies of passwords and seed phases are secured with senior management. Duplicate copies of the passwords and seeds phases are held by two members of the senior management in different locations.

 

Staking and Lending Policy

 

 

As part of Valour’s policy to hedge 100% of the market risk, Valour purchases and sells the digital assets which its ETPs track. Valour may lend or stake such digital assets on its balance sheet to generate revenue in accordance with the policies in the Base Prospectus and VDSL Base Prospectus. Lending or staking transactions are only conducted with institutional-grade counterparties and only up to a certain percentage for risk management purposes in accordance with Valour’s lending and staking policy (the “Lending and Staking Policy”), which is reviewed and approved by the board of Valour.

 

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When deciding whether to lend or stake a particular asset, the Lending and Staking Policy provides that the decision will initially be made based on the risk profile of the potential counterparties, then the highest yield available, then prioritizing staking over lending.

 

As of the date of this MD&A, the Lending and Staking Policy provides the following limits for lending and staking of digital assets:

 

Digital Asset   Lending and staking limits
Bitcoin, Ethereum, Solana, Avalanche  

Up to 75% of unrestricted tokens may be lent on open terms to eligible counterparties, 50% of tokens may be lent on terms up to six months.

 

100% of tokens may be staked

All other Digital Assets  

Up to 75% of unrestricted tokens may be lent on open terms to eligible counterparties, 50% of tokens may be lent on terms up to six months.

 

If total AUM is greater than US$5 million, up to 95% may be staked, else 75% may be staked

 

The Company’s lending arrangements policy is as follows:

 

(a) which party has legal title

 

The lender authorizes the counterparty e.g., Anchorage to draw down lent assets. Typically, the counterparty / borrower is then permitted to use Client’s Designated Assets for any lawful purpose.

 

(b) the status of the assets in the event of insolvency of the borrower

 

The lender shall have full recourse to Counterparty for any obligations hereunder in equity and at law. Upon any event of default, the lender shall be entitled to seek all remedies available at law or in equity for the full amount or any unpaid principal of any advance, accrued but unpaid fees or other amounts or property payable hereunder against Lender in addition to enforcing its security interest.

 

(c) contractual limitation on use and transfer of lent items by borrower

 

Typically, the Counterparty is then permitted to use client’s designated assets for any lawful purpose.

 

(d) borrower’s ability to initiate transactions with the borrowed assets, including but not limited to: sell, lend, pledge, and/or hypothecate

 

Typically, the Counterparty is then permitted to use Client’s Designated Assets for any lawful purpose, including selling, lending, pledging and/or hypothecating. Certain lending agreements require Counterparties to grant a security interest to the Company on any assets that are further lent out.

 

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(e) borrowers’ rights regarding “co-mingling”

 

There is no specific language in the lending agreement but given the Counterparties can use for any lawful purpose, the Company’s believes that comingling can occur.

 

(f) callability terms and conditions (including “notice period”, if any).

 

Termination. Client may terminate any Advance of its Designated Assets upon three (3) business days’ prior notice (the date of such termination, the “Termination Date”), from time to time at its sole discretion through an Electronic Notice.

 

Investments, At Fair Value, Through Profit and Loss, As At June 30, 2024

 

 

At June 30, 2024, the Company’s investment portfolio consisted of nine private investments for a total estimated fair value of $40,994,025 (December 31, 2023 – nine private investments for a total estimated fair value of $43,540,534).

 

Private Investments

 

At June 30, 2024, the Company’s nine private investments had a total fair value of $40,994,025.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   %
of FV		 
3iQ Corp.     61,712 common shares  $86,319   $415,569    1.0%
Amina Bank AG     3,906,250 non-voting shares   34,498,750    38,067,500    92.9%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    1,697,640    4.1%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    684,418    1.7%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,109,383   $40,994,025    100.0%

 

(i)Investments in related party entities

 

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At December 31, 2023, the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   % of FV 
3iQ Corp.     187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

(i)Investments in related party entities

 

3iQ Corp (“3iQ”)

 

On September 31, 2020, the Company acquired 187,007 shares of 3iQ through its acquisition of DeFi. 3iQ is a leading bitcoin and digital asset fund manager. During the six months ended June 30, 2024, the Company sold 125,295 shares. As at June 30, 2024, 3iQ was valued at $415,569. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of 3iQ would result in an estimated increase in loss to DeFi of $41,557.

 

Amina Bank AG (“Amina”)

 

During Q1, 2022, the Company acquired 3,906,250 non-voting shares for $34,498,750. Amina is a pioneer in the financial industry and is the only global smart bank providing a fully universal suite of regulated banking services in the emerging digital economy. As at June 30, 2024, Amina was valued at $38,067,500 which was based on a market approach. The investment represented 4.3% of the total assets of the Company. A 10% decline in the fair market value of Amina would result in an estimated increase in loss to DeFi of $3,806,750.

 

Brazil Potash Corp. (“BPC’)

 

On September 11, 2020, the Company acquired 404,200 common shares of BPC through the sale of its royalty interest. BPC is a Canadian private company which engaged in the extraction and processing of potash ore, an essential input for agriculture in Brazil.  As at June 30, 2024, BPC was valued at $1,697,640 which was based on BPC weighted average of comparable public market stock prices of $4.20 per share. The investment represented 0.2% of the total assets of the Company. A 10% decline in the fair market value of BPC would result in an estimated increase in loss to DeFi of $169,764.

 

Earnity Inc. (“Earnity”)

 

On December 3, 2021, the Company acquired 85,142 series A preferred shares of Earnity. Earnity is a group of dedicated fintech veterans who believe managing cryptocurrency should be a lot easier. As at June 30, 2024, Earnity was valued at $nil which was based on Earnity’s ceasing operations. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of Earnity would result in an estimated increase in loss to DeFi of $0.

 

Luxor Technology Corporation (“LTC”)

 

During the year ended December 31, 2021, the Company subscribed US$162,500 ($203,874) in LTC for the rights to certain preferred shares of LTC. During Q3, 2021, these rights were converted into 25,204 series A preferred shares and 76,429 of series A-1 preferred shares. LTC is building infrastructure to support the next generation of digital assets. As at June 30, 2024, LTC was valued at $684,418 which was based on LTC December 2021 financing prices. The investment represented 0.1% of the total assets of the Company. A 10% decline in the fair market value of LTC would result in an estimated increase in loss to DeFi of $68,442.

 

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SDK: meta, LLC (“SDK”)

 

During Q2, 2021, the Company signed a share exchange agreement with SDK and traded 3 million shares of the Company with 1 million membership units of SDK at a fair value of $3,42,000. SDK is a privately held Web3 blockchain technology company driving mass adoption of user-centric platforms and mobile consumption of decentralized finance and related offerings. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30, 2024, SDK was valued at $nil. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of SDK would result in an estimated increase in loss to DeFi of $0.

 

Skolem Technologies Ltd. (“STL”)

 

During Q4, 2021, these rights were converted into 16,354 series A preferred shares. STL is an Institutional DeFi trade execution platform. As at June 30, 2024, STL was valued at $nil which was based on STL ceasing operations. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of STL would result in an estimated increase in loss to DeFi of $0.

 

VolMEX Labs Corporation (“VLC”)

 

During Q1, 2021, the Company invested US$30,000 ($37,809) in VLC for the rights to certain preferred shares of VLC. VLC is a protocol for volatility indices and non-custodial trading build on Ethereum. As at June 30, 2024, VLC was valued at $0. The investment represented 0.0% of the total assets of the Company. A 10% decline in the fair market value of VLC would result in an estimated increase in loss to DeFi of $0.

 

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Financial Results

 

 

The following is a discussion of the results of operations of the Company for the three and six months ended June 30, 2024, and 2023. They should be read in conjunction with the Company’s condensed consolidated interim financial statements for the three and six months ended June 30, 2024 and 2023 and related notes.

 

Three and six months ended June 30, 2024 and 2023:

 

   Three months ended
June 30,		   Six months ended
June 30		 
   2024   2023   2024   2023 
Revenues                
Realized and net change in unrealized gains and (losses) on digital assets  $(86,650,729)  $(12,555,609)  $230,472,326   $50,462,924 
Realized and net change in unrealized gains and (losses) on ETP payables   209,094,995    18,984,061    (119,158,890)   (56,529,430)
Staking and lending income   8,263,022    764,662    14,071,024    1,336,475 
Management fees   2,145,432    244,016    3,877,314    459,693 
Research revenue   338,583    -    840,451    - 
Node revenue   35    (845)   4,709    4,976 
Realized gain (loss) on investments   634,271    (3,438)   634,271    (4,025)
Unrealized (loss) on investments   (659,386)   (42,491)   (2,498,418)   314,862 
Interest income   644    (572)   1,512    257 
Total revenues   133,166,866    7,389,784    128,244,299    (3,954,267)
Expenses                    
Operating, general and administration   30,511,981    1,755,467    33,480,118    3,871,936 
Share based payments   3,433,990    501,594    5,051,505    1,442,880 
Depreciation - property, plant and equipment   2,092    3,236    5,328    6,472 
Depreciation - right of use assets   -    (34,034)   -    - 
Amortization - intangibles   514,154    509,575    1,031,379    1,019,150 
Finance costs   929,255    275,063    2,666,769    1,561,529 
Transaction costs   1,089,807    86,944    1,580,204    319,719 
Foreign exchange loss   6,318,062    4,743,568    7,141,206    4,754,029 
Impairment loss   -    -    4,962,021    - 
Total expenses   42,799,341    7,841,413    55,918,530    12,975,715 
Income (loss) before other item   90,367,526    (451,629)   72,325,769    (16,929,983)
Loss on settlement of debt   -    (198,482)   -    (198,482)
Net income (loss) for the period   90,367,526    (650,111)   72,325,769    (17,128,465)
Other comprehensive income (loss)                    
Foreign currency translation gain (loss)   110,463    1,692,615    (1,158,589)   1,726,504 
Net income (loss) and comprehensive income (loss) for the period  $90,477,988   $1,042,504   $71,167,180   $(15,401,961)

 

For the three and six months ended June 30, 2024, the Company recorded a net income of $90,367,526 and $72,325,769 on total revenues of $133,166,866 and $128,244,299 compared to net income (loss) of $(650,111) and $(17,128,465) on total revenues of $7,389,784 and $(3,954,267) for the three and six months ended June 30, 2023.

 

For the three and six months ended June 30, 2024, realized and net change in unrealized gains and loss on digital assets was $(86,650,729) and $230,472,326 and realized and net change in unrealized gains and loss on ETP payables was $209,094,995 and $(119,158,890). DeFi Alpha trading returns and higher digital asset prices in 2024 resulted in gains on our digital assets that were offset by losses on ETP payables due to the increased share price of the ETPs.

 

The Company earned staking and lending income of $8,263,022 and $14,071,024 for the three and six months ended June 30, 2024 compared to $764,662 and $1,336,475 for the same periods in 2023. The Company actively stakes and lends its digital assets to earn additional revenue. The staking and lending income was significantly higher for the three and six months ended June 30, 2024 due to the increased digital asset prices as well as the Company staking and lending more digital assets compared to 2023.

 

The Company had management fee revenue of $2,145,432 and $3,877,314 for the three and six months ended June 30, 2024 compared to $244,016 and $459,693 for the same periods in 2023. In 2024, the Company’s had higher AUM and additional ETP products resulting in higher management fees.

 

19

 

 

The Company had node revenue of $35 and $4,709 for the three and six months ended June 30, 2024 compared to $(845) and $4,976 for the same period in 2023. During the six months ended June 30, 2024, the Company earned 340,039.11663 (June 30, 2023 – 345,905.024993) Shyft tokens for its services.

 

The Company had realized gain (loss) on investments of $634,271 for the three and six months ended June 30, 2024 compared to $(3,438) and $(4,025) for the same periods in 2023. The Company had unrealized gain (loss) on investments of $(659,386) and $(2,498,418) compared to $(42,491) and $314,862 in the prior period. The unrealized loss for the six months ended June 30, 2024 primarily consisted of unrealized losses on Amina and Brazil Potash.

 

Management and consulting fees were $28,831,959 and $30,285,078 during the three and six months ended June 30, 2024 compared to $1,195,609 and $2,285,224 during the same periods in 2023. Management and consulting fees increased due to accrued DeFi Alpha trading bonuses in Q2 2024.

 

Share based payments were $3,433,990 and $5,051,505 during the three six months ended June 30, 2024 compared to $501,594 and $1,442,880 in the same periods in 2023. The Company granted 4,825,000 options and 2,700,000 DSUs to consultants of the Company during 2024 compared to the 1,000,000 DSUs to directors, officers and consultants of the Company during 2023.

 

Travel and promotion was $1,029,962 and $1,604,496 during the three and six months ended June 30, 2024 compared to $122,323 and $239,615 during the same period in 2023. Corporate activities and business development increased in 2024 compared to 2023.

 

Office and rent was $(134,658) and $460,906 during the three and six months ended June 30, 2024 compared to $224,026 and $852,654 during the same periods in 2023.

 

Accounting and legal was $754,137 and $1,007,043 during the three and six months ended June 30, 2024 compared to $157,068 and $370,594 during the same periods in 2023. The 2024 increase is due to higher audit and legal fees in 2024.

 

Total depreciation and amortization was $516,246 and $1,036,707 for the three and six months ended June 30, 2024 compared to $478,777 and $1,025,622 during the prior periods in 2023. This relates to the equipment, right of use assets and intangible assets acquired as part of the acquisitions of Reflexivity LLC, DeFi Capital and Valour.

 

Finance costs were $929,255 and $2,666,769 for the three and six months ended June 30, 2024 compared to $275,063 and $1,561,529 during the prior periods in 2023. The increase in financing costs relates to the interest expense on the digital asset provider loans and other loans of the Company. The interest rates on these loans were higher in 2024 compared to 2023.

 

Transaction costs were $1,089,807 and $1,580,204 for the three and six months ended June 30, 2024 compared to $86,944 and $319,719 in the prior period. The increase in transaction costs relates to the trading of digital assets as brokerage commission and ETP issuance costs as well as transaction costs related to DeFi Alpha trading activity.

 

Foreign loss was $6,318,062 and $7,141,206 for the three and six months ended June 30, 2024 compared to $4,753,568 and $4,754,029 in the prior period. The loss reflects the currency fluctuations primarily in Company’s digital asset and ETPs which are denominated in US dollars, Swedish Krona, Euro and Swiss Franc.

 

Impairment loss was $4,962,021 for the six months ended June 30, 2024 compared to $nil in the prior period. The Company impaired the costs related to the Solana IP acquisition in Q1 2024.

 

20

 

 

During the six months ended June 30, 2024, the Company used $36,021,512 in operations of which $24,458,065 was provided by changes in working capital, $583,851,244 was used to purchase digital assets offset by $568,751,078 was provided from the disposal of digital assets. During the comparative six months ended June 30, 2023, the Company used $14,801,499 in operations of which $1,168,623 was used by the changes in working capital, $40,495,137 was used to purchase digital assets offset by $34,356,040 was provided from the disposal of digital assets. The cash used from operations was higher in 2024 compared to 2023 due to higher adjustments to net income in 2024 compared to 2023 and higher net purchase of digital assets in 2024 of $(15,100,166) compared in 2023 the net purchase of digital assets was $(6,139,097) reflecting increased activity in digital asset market.

 

During the six months ended June 30, 2024, $48,330,450 was provided by financing activities compared to $13,680,402 in the prior period. The Company received proceeds of $406,189,410 from ETP holders, proceeds of $752,230 from sale of investments, proceeds of $455,450 from option exercises and $1,379,414 provided from warrant exercises offset by $318,755,385 used for payments to ETP holders and $40,376,650 from loan repayments. During the six months ended June 30, 2023, the Company received proceeds of $56,747,554 from ETP holders and proceeds of $4,319,901 from loans offset by $47,387,053 used for payments to ETP holders. The cash provided from financing was higher in 2024 compared to 2023 due to higher net ETP sales in 2024 offset by loan repayment.

 

Liquidity and Capital Resources

 

 

In management’s view, given the nature of the Company’s operations, the most relevant financial information relates primarily to current liquidity, solvency and planned expenditures. The Company’s financial success will be dependent upon the execution and development of its new investment strategy and business operations. Such execution and development may take years to complete and the amount of resulting income, if any, is difficult to determine.

 

To date, the Company has not had any negative impacts to the Company’s digital assets holdings with the bankruptcies of Celsius, Voyager and Blockfi, with the exception for a small exposure to FTX as it held some of its own digital assets on the exchange. The Company has pay down loans from cash flow generated and rolled over its outstanding loans payable with the digital asset providers on similar terms throughout the year.

 

The Company loaned and staked more digital assets in 2024 compared to 2023 and as a result the Company earned more revenue via staking and lending. Higher AUM in the Company’s fee earning ETPs in H1 2024 compared to the same period 2023 resulted in higher management fees. Overall, the Company’s total revenues improved in 2024 as a result of improving digital asset markets and from profitable trades from DeFi Alpha.

 

The Company plans on funding its current working capital deficiency through a number of ways such as raising funds via private placement financings and debt financings, looking to monetizing its private investments, launching new products to increase the Company’s revenues and reducing costs.

 

DeFi relies upon various sources of funds for its ongoing operating activities. These resources include proceeds from dispositions of investments, interest and dividend income from investments and private placement financing.

 

21

 

 

Loans Payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. During the six months ended June 30, 2024, the Company repaid loans of US$29,500,000. As of June 30, 2024, the loan principal of $13,687,000 (US$10,000,000) (December 31, 2023 - $52,242,700 (US$39,500,000)) was outstanding. The loans terms are 90 days have interest rates ranging from 7.25% and 10.5% The extended loans are secured with 475 BTC and 1845 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis. On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy or trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,724,603 and secured with 475 BTC.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of June 30, 2024, the loan principal of $4,106,100 (US$3,000,001) (December 31, 2023 - $3,967,801 (US$3,000,001)) was outstanding.

 

DeFi used cash of $36,021,512 in its operating activities during the six months ended June 30, 2024. Included in cash used in operations are $583,851,244 used in the purchase of digital assets, $24,458,065 provided by changes of working capital and $568,751,078 generated from the disposal of digital assets. DeFi also provided $48,330,450 in financing activities. Included in cash provided in financing activities are $406,189,410 from ETP holders, proceeds of $752,230 from sale of investments, proceeds of $455,440 from option exercises and $1,379,414 provided from warrant exercises offset by $318,755,385 used for payments to ETP holders and $40,376,650 from loan repayments.

 

As at June 30 2024, the Company’s sources of funds include the estimated fair value of its cash of $19,529,425, equity investments of $40,994,025 and digital assets of $770,257,971 offset by total liabilities of $784,499,053.

 

Currency Risk

 

Currency risk is the risk to the Company’s earnings that arises from fluctuations of foreign exchange rates and the degree of volatility of these rates.

 

22

 

 

As at June 30, 2024 and December 31, 2023, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   June 30, 2024 
   United States   British   Swiss   Euro   SEK 
Cash  $(4,638,863)  $8,058   $3,634,977   $1,909,325   $2,486,173 
Receivables   98,443    -    24,022    -    - 
Private investments   2,510,956    -    38,067,500    -    - 
Prepaid expenses   1,800    -    166,897    -    - 
Digital assets   770,257,971    -    -    -    - 
Accounts payable and accrued liabilities   (1,059,415)   (153,037)   (411,456)   21,989    - 
Loan payable   (17,793,100)   -    -    -    - 
ETP holders payable   (730,068,689)   -    -    -    - 
Net assets (liabilities)  $19,309,103   $(144,979)  $41,481,940   $1,887,336   $2,486,173 

 

   December 31, 2023 
   United States   British   Swiss   European 
   Dollars   Pound   Franc   Euro 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

As at June 30, 2024, United States Dollar was converted at a rate of $1.3687 (December 31, 2023 - $1.3226) Canadian Dollars to $1.00 US Dollar. British Pounds was converted at a rate of $1.7301 (December 31, 2023 - $1.6837) Canadian Dollars to 1.00 British Pound. Euro was converted at a rate of $1.4659 (December 31, 2023 - $1.4626) Canadian Dollars to 1.00 Euro. Swiss Franc was converted at a rate of $1.5227 (December 31, 2023 - $1.5758).

 

Capital Management

 

The Company considers its capital to consist of share capital, equity reserve and deficit. The Company’s objectives when managing capital are:

 

§to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;
  
§to give shareholders sustained growth in value by increasing shareholders’ equity; while
  
§taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

§raising capital through equity financings; and
  
§realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders’ equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the six months ended June 30, 2024.

23

 

 

Commitments

 

Management Contract Commitments

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,312,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these consolidated financial statements. Minimum commitments remaining under these contracts were approximately $974,000, all due within one year.

 

Legal Commitments

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

Summary of Quarterly Results

 

 

The following is a summary of the Company’s financial results for the eight most recently completed quarters:

 

   30-Jun   31-Mar   31-Dec   30-Sep   30-Jun   31-Mar   31-Dec   30-Sep 
   2024   2024   2023   2023   2023   2023   2022   2022 
   $33,166,866   $(4,922,567)  $8,548,779   $6,003,995   $7,147,292   $(11,344,052)  $(11,123,848)  $295,605 
Net (loss) income and comprehensive (loss) income  $90,477,988   $(19,310,808)  $1,415,946   $(4,719,786)  $800,012   $(16,444,465)  $(254,464,521)  $(9,011,375)
(Loss) income per Share - basic   0.31    (0.06)   -    (0.01)   -    (0.08)   (0.13)   (0.04)
(Loss) income per Share - diluted   0.27    (0.06)   -    (0.01)   -    (0.08)   (0.13)   (0.04)
Total Assets  $887,744,666   $983,940,422   $591,960,107   $253,585,558   $259,787,932   $267,666,904   $194,003,779   $263,678,822 
Total Long Term Liabilities  $0   $0   $0   $0   $0   $0   $1,709,911   $1,681,358 

 

24

 

 

Selected Annual Information

 

 

The highlights of financial data for the Company for the three most recently completed financial years are as follows:

 

   31-Dec-23   31-Dec-22   31-Dec-21 
(a) Net Revenue   10,356,014    (14,226,780)  $15,081,078 
(b) Net Income (Loss) and Comprehensive Income (Loss)               
(i) Total income (loss)   (18,948,293)   (69,135,318)  $(71,254,155)
(ii) Income (loss) per share – basic   (0.09)   (0.32)   (0.37)
(iii) Income (loss) per share – diluted   (0.09)   (0.32)   (0.37)
(c) Total Assets   591,960,108    194,003,779   $459,690,575 
(d) Total Liabilities   573,516,045    166,094,517   $367,909,179 

 

Off Balance Sheet Arrangements

 

 

There are no off-balance sheet arrangements to which the Company is committed.

 

Compensation of Directors and Officers

 

 

During the six months ended June 30, 2024, the Company paid or accrued $660,012 (six months ended June 30, 2023 - $523,568) to directors and officers of the Company and $1,905,741 (six months ended June 30, 2023 - $197,331) to directors and officers of the Company in share-based compensation.

 

As June 30,2024, the Company had $83,435 (December 31, 2023 - $147,485) owing to its current key management, and $314,136 (December 31, 2023 - $314,136) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

More detailed information regarding the compensation of officers and directors of the Company is disclosed in the management information circular and such information is incorporated by reference herein. The management information circular is available under profile of the Company on SEDAR at www.sedar.com

 

25

 

 

Related Party Transactions

 

 

The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of June 30, 2024 and December 31, 2023.

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $1,697,640 
Aminna Bank AG *  Former Director (Olivier Roussy Newton) of investee   38,067,500 
Total investment - June 30, 2024     $39,765,140 

 

Investment  Nature of relationship to investment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - December 31, 2023     $41,533,380 

 

*Private companies

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at June 30, 2024.

 

During the six months ended June 30, 2024, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

●The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at June 30, 2024 the Company had a payable balance of $293,800 (December 31, 2023 - $226,000) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

●The Company incurred $14,917 (June 30, 2023 - $92,447) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $10,959 (December 31, 2023 – $165,868) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

●Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($76,519) (December 31, 2023 - $74,466) expenses owed to Vik Pathak, a former director and officer of the Company.

 

All of the above noted transactions have been in the normal course of operations and are recorded at their exchange amounts, which is the consideration agreed upon by the related parties.

 

Financial Instruments and Other Instruments

 

 

Fair value

 

IFRS requires that the Company disclose information about the fair value of its financial assets and liabilities. Fair value estimates are made at the statements of financial position date, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates.

 

26

 

 

The Company has determined the carrying values of its financial instruments as follows:

 

§The carrying values of cash, amounts receivable, accounts payable and accrual liabilities approximate their fair values due to the short-term nature of these instruments.
   
§Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 of the Company’s audited consolidated financial statements for the years ended December 31, 2023 and 2022.
   
§Digital assets classified as financial assets relate to USDC which is measured at fair value

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at June 30, 2024 and December 31, 2023.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market 
price)		   (Valuation
technique
-observable
market Inputs)		   (Valuation  
technique -
non-observable
 market inputs)		   Total 
Publicly traded investments  $      -   $-   $-   $- 
Privately traded investments   -    -    40,994,025    40,994,025 
Digital assets   -    698    -    698 
June 30, 2024  $-   $698   $40,994,025   $40,994,723 
Publicly traded investments  $-   $-   $-   $- 
Privately traded investments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the period ended June 30, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

   June 30,   December 31, 
Investments, fair value for the period ended  2024   2023 
Balance, beginning of period  $673   $1,586 
Acquired (disposal)   25    (913)
Balance, end of period  $698   $673 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the period ended June 30, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  June 30,
2024		   December 31,
2023		 
Balance, beginning of period  $43,540,534   $30,015,445 
Purchases   -    128,898 
Unrealized gain/(loss) net   (2,546,509)   13,396,191 
Balance, end of period  $40,994,025   $43,540,534 

 

27

 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at June 30, 2024 and December 31, 2023.

 

             Range of
          Significant  significant
       Valuation  unobservable  unobservable
Description   Fair value   technique  input(s)  input(s)
3iQ Corp.  $415,569   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   1,697,640   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   684,418   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   38,067,500   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
June 30, 2024  $40,994,025          
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   39,395,000   Market approach  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          

 

28

 

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at June 30, 2024, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $41,557 (December 31, 2023 - $121,689) change in the carrying amount.

 

Amina Bank AG (“Amina”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at June 30, 2024, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of Amina will result in a corresponding +/- $3,806,750 (December 31, 2023 +/- $3,939,500) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at June 30, 2024, the valuation of BPC was based on BPC weighted average of comparable public market stock prices of $4.20 per share, which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $169,764 (December 31, 2023 - $213,828) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity. As at June 30, 2024, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2024, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at June 30, 2024, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $68,442 (December 31, 2023 - $66,137) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30, 2024, the valuation of SDK:Meta LLC was $nil (December 31, 2023 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2024, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

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Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at June 30, 2024, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at June 30, 2024, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2023 - $nil) change in the carrying amount.

 

Outstanding Share Data

 

 

Authorized unlimited common shares without par value – 298,030,368 are issued and outstanding as at August 14, 2024.

 

Authorized 20,000,000 preferred shares, at 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible – 4,500,000 are issued and outstanding as at August 14, 2024.

 

Stock options and convertible securities outstanding as at August 14, 2024 are as follows:

 

Stock Options:

29,742,187 with an exercise price ranging from $0.09 to $3.92 expiring between November 16, 2025 and July 29, 2029.

 

Warrants:

39,771,769 with an exercise price ranging from $0.20 to $0.30 expiring between November 14, 2024 and November 6, 2028.

 

Deferred shares units:

13,676,012 with vesting terms ranging from six months to two years.

 

Risks and Uncertainties

 

 

The Company is exposed to a number of risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. The following outlines certain risk factors specific to the Company. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward–looking information relating to the Company. Please also refer to the Company’s AIF for the year ended December 31, 2023 filed on SEDAR for a full description of the Company’s risks in addition to those highlighted below.

 

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Risks Relating to the Business and Industry of the Company

 

Staking and Lending of Cryptocurrencies, DeFi Protocol Tokens or other Digital Assets

 

The Company may stake or lend crypto assets to third parties, including affiliates. On termination of the staking arrangement or loan, the counterparty is required to return the crypto assets to the Company; any gains or loss in the market price during the period would inure to the Company. In the event of the bankruptcy of the counterparty, the Company could experience delays in recovering its crypto assets. In addition, to the extent that the value of the crypto assets increases during the term of the loan, the value of the crypto assets may exceed the value of collateral provided to the Company, exposing the Company to credit risks with respect to the counterparty and potentially exposing the Company to a loss of the difference between the value of the crypto assets and the value of the collateral. If a counterparty defaults under its obligations with respect to a loan of crypto assets, including by failing to deliver additional collateral when required or by failing to return the crypto assets upon the termination of the loan, the Company may expend significant resources and incur significant expenses in connection with efforts to enforce the staking or loan agreement, which may ultimately be unsuccessful.

 

Furthermore, the Company and its affiliates may also pledge and grant security over its crypto assets to secure loans. In the event that the Company or its affiliates defaults under its obligations with respect to the loan, including failure to repay the principal amount of the loan or accrued interest, lenders may realize upon its security and take possession to such pledged crypto assets.

 

The crypto assets that are staked, loaned or pledged to third parties by the Company include crypto assets held by Valour for the purposes of hedging its ETPs. The Company is exposed to a potentially significant liquidity risk if, for example, the aggregate sale of ETPs exceed the quantum of uncommitted cryptocurrency available to the Company to satisfy such sale requests. A similar risk applies with respect to individual reserves of each type of cryptocurrency should the sale of ETPs, and correspondingly, the underlying cryptocurrency, exceed the Company’s available reserves.

 

Custody Risk

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

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Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Momentum Pricing Risk

 

Momentum pricing typically is associated with growth stocks and other assets whose valuation, as determined by the investing public, accounts for anticipated future appreciation in value. Cryptocurrency and DeFi protocol token market prices are determined primarily using data from various exchanges, over-the-counter markets, and derivative platforms. Momentum pricing may have resulted, and may continue to result, in speculation regarding future appreciation in the value of cryptocurrencies and DeFi Protocol tokens inflating and making their market prices more volatile. As a result, they may be more likely to fluctuate in value due to changing investor confidence in future appreciation (or depreciation) in their market prices, which could adversely affect the value of the Company’s cryptocurrency and DeFi protocol token inventory and thereby affect the Company’s shareholders.

 

The profitability of our operations will be significantly affected by changes in prices of cryptocurrencies, DeFi protocol tokens and other digital assets. Cryptocurrencies, DeFi protocol tokens and other digital assets prices are highly volatile, can fluctuate substantially and are affected by numerous factors beyond our control, including use of such cryptocurrencies, DeFi protocol tokens and other digital assets in the DeFi industry, demand, inflation and expectations with respect to the rate of inflation, global or regional political or economic events. If cryptocurrencies, DeFi protocol tokens and other digital assets prices should decline and remain at low market levels for a sustained period, we could determine that it is not economically feasible to continue activities.

 

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including, but not limited to:

 

●changes in liquidity, market-making volume, and trading activities;

 

●investment and trading activities of highly active retail and institutional users, speculators, miners, and investors;

 

●decreased user and investor confidence in crypto assets and crypto platforms;

 

●negative publicity or events and unpredictable social media coverage or “trending” of crypto assets;

 

●the ability for crypto assets to meet user and investor demands;

 

●the functionality and utility of crypto assets and their associated ecosystems and networks;

 

●consumer preferences and perceived value of crypto assets and crypto asset markets;

 

●regulatory or legislative changes and updates affecting the cryptoeconomy;

 

●the characterization of crypto assets under the laws of various jurisdictions around the world;

 

●the maintenance, troubleshooting, and development of the blockchain networks;

 

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●the ability for crypto networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently;

 

●interruptions in service from or failures of major crypto platforms;

 

●availability of an active derivatives market for various crypto assets;

 

●availability of banking and payment services to support crypto-related projects;

 

●level of interest rates and inflation;

 

●national and international economic and political conditions;

 

●global cryptocurrency supply;

 

●changes in the software, software requirements or hardware requirements underlying a blockchain network;

 

●competition for and among various cryptocurrencies; and

 

●actual or perceived manipulation of the markets for cryptocurrencies.

 

Cryptocurrencies, DeFi Protocol Tokens and Digital Assets Volatility Risk

 

As Valour’s ETPs track the market price of cryptocurrencies and DeFi protocol tokens, the value of the Common Shares relates partially to the value of such cryptocurrencies and DeFi protocol tokens, and fluctuations in the price of cryptocurrencies, DeFi protocol tokens and other digital assets could materially and adversely affect an investment in the Common Shares. Several factors may affect the price of cryptocurrencies, DeFi protocol tokens and other digital assets, including: the total number of cryptocurrencies, DeFi protocol tokens and other digital assets in existence; global cryptocurrency, DeFi protocol tokens and other digital assets demand; global cryptocurrencies, DeFi protocol tokens and other digital assets supply; investors’ expectations with respect to the rate of inflation of fiat currencies; investors’ expectations with respect to the rate of deflation of cryptocurrencies, DeFi protocol tokens and other digital assets; interest rates; currency exchange rates, including the rates at which cryptocurrencies, DeFi protocol tokens and other digital assets may be exchanged for fiat currencies; fiat currency withdrawal and deposit policies of cryptocurrency exchanges and liquidity of such cryptocurrency exchanges; interruptions in service from or failures of major cryptocurrency exchanges; Cyber theft of cryptocurrencies, DeFi protocol tokens and other digital assets from online wallet providers, or news of such theft from such providers or from individuals’ wallets; investment and trading activities of large investors; monetary policies of governments, trade restrictions, currency devaluations and revaluations; regulatory measures, if any, that restrict the use of cryptocurrencies, DeFi protocol tokens and other digital assets as a form of payment or the purchase of cryptocurrencies, DeFi protocol tokens and other digital assets; the availability and popularity of businesses that provide cryptocurrencies, DeFi protocol tokens and other digital assets and blockchain-related services; the maintenance and development of the open-source software protocol of various cryptocurrency or DeFi protocol networks; increased competition from other forms of cryptocurrency or payments services; global or regional political, economic or financial events and situations; expectations among cryptocurrencies, DeFi protocol tokens and other digital assets economy participants that the value of cryptocurrencies, DeFi protocol tokens and other digital assets will soon change; and fees associated with processing a cryptocurrency, DeFi protocol token or other digital asset transaction.

 

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Cryptocurrencies, DeFi protocol tokens and other digital assets have historically experienced significant intraday and long-term price volatility. If cryptocurrency, DeFi protocol token and other digital asset markets continue to be subject to sharp fluctuations, shareholders may experience losses if they need to sell their Common Shares at a time when the price of cryptocurrencies, DeFi protocol tokens and other digital assets is lower than it was when they purchased their Common Shares. In addition, investors should be aware that there is no assurance that cryptocurrencies, DeFi protocol tokens and other digital assets will maintain their long-term value in terms of future purchasing power or that the acceptance of cryptocurrencies, DeFi protocol tokens and other digital assets payments by mainstream retail merchants and commercial businesses will continue to grow.

 

Cybersecurity Threats, Security Breaches and Hacks

 

As with any other computer code, flaws in cryptocurrency and DeFi protocol source code have been exposed by certain malicious actors. Several errors and defects have been found and corrected, including those that disabled some functionality for users and exposed users’ information. Discovery of flaws in or exploitations of the source code that allow malicious actors to take or create cryptocurrencies and / or DeFi protocol tokens can occur.

 

Security breaches, computer malware and computer hacking attacks have been a prevalent concern in the Bitcoin and other cryptocurrency exchange market since the launch of the Bitcoin Network. Any security breach caused by hacking, which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses, could harm the Company’s business operations or result in loss of the Company’s assets. Any breach of the Company’s infrastructure could result in damage to the Company’s reputation and reduce demand for the Common Shares, resulting in a reduction in the price of the Common Shares. Furthermore, the Company believes that if its assets grow, it may become a more appealing target for security threats, such as hackers and malware.

 

Any security procedures implemented cannot guarantee the prevention of any loss due to a security breach, software defect or act of God that may be borne by the Company. The security procedures and operational infrastructure of the Company may be breached due to the actions of outside parties, error or malfeasance of an employee of the Company or otherwise, and, as a result, an unauthorized party may obtain access to the Company’s cryptocurrency account, private keys, data or cryptocurrencies. Additionally, outside parties may attempt to fraudulently induce employees of the Company to disclose sensitive information in order to gain access to the Company’s infrastructure. As the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, or may be designed to remain dormant until a predetermined event, and often are not recognized until launched against a target, the Company may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of one of the Company’s accounts occurs, the market perception of the effectiveness of the Company could be harmed.

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

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Cryptocurrency Exchanges and other Trading Venues are Relatively New

 

The Company and its affiliates manages its holdings of cryptocurrency, DeFi protocol tokens and other digital assets through cryptocurrency exchanges. In particular, DeFi relies on cryptocurrency exchanges to be able to buy and sell the digital assets which its ETPs track. To the extent that cryptocurrency exchanges or other trading venues are involved in fraud or experience security failures or other operational issues, this could result in a reduction in cryptocurrency prices. Cryptocurrency market prices depend, directly or indirectly, on the prices set on exchanges and other trading venues, which are new and, in most cases, largely unregulated as compared to established, regulated exchanges for securities, derivatives and other currencies. For example, in the past, a number of cryptocurrency exchanges have been closed due to fraud, business failure or security breaches. In many of these instances, the customers of these exchanges were not compensated or made whole for the partial or complete losses of their account balances in such exchanges. While smaller exchanges are less likely to have the infrastructure and capitalization that provide larger exchanges with additional stability, larger exchanges may be more likely to be appealing targets for hackers and “malware” (i.e., software used or programmed by attackers to disrupt computer operation, gather sensitive information, or gain access to private computer systems) and may be more likely to be targets of regulatory enforcement action.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company.

 

Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation. On August 24, 2017 and June 11, 2018, the Canadian Securities Administrators published CSA Staff Notice 46-307 – Cryptocurrency Offerings and CSA Staff Notice 46- 308 – Securities Law Implications for Offerings of Tokens, respectively, each providing guidance on whether token offerings are subject to Canadian securities laws.

 

While the Company does not have operations in the United States, the Company reviews development of the cryptocurrency regulatory environment in the United States on an ongoing basis due to the proximity of United States to Canada. In comparison to traditional securities or commodities markets, U.S. law and regulation remains thinly developed with respect to financial services provided to the cryptocurrency and crypto asset markets. Although recent years have seen some guidance emerge with respect to the question of whether a crypto asset constitutes a security for certain purposes under U.S. law, there remains little or no clear legal authority or established practice with respect to the application to crypto assets of concepts like staking and lending of cryptocurrency, fungibility, settlement, trade execution and reporting, collateralization rehypothecation, custody, repo, margin, restricted securities, short sales, bankruptcy and insolvency and many others. Some or all of these concepts may be needed for crypto-related marketplaces to continue to grow, mature and attract institutional participants; there can be no assurances that rules and practices for such concepts will develop in the United States in a manner that is timely, clear, favorable to the Company or compatible with other jurisdictions’ regimes in which the Company operates. Furthermore, to the extent the Company offers any of these financial services, emerging regulation or enforcement activity may have a material impact on the Company’s ability to continue providing such service thereby affecting the Company’s revenues and profitability as well as its reputation and resources.

 

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Governments may in the future take regulatory actions that prohibit or severely restrict the right to acquire, own, hold, sell, use or trade cryptocurrencies or to exchange cryptocurrencies for fiat currency. By extension, similar actions by other governments may result in the restriction of the acquisition, ownership, holding, selling, use or trading in the common shares of the Company’s common shares. Such a restriction could result in the Company liquidating its cryptocurrency investments at unfavorable prices and may adversely affect the Company’s shareholders.

 

DeFi Venture Portfolio Exposure

 

Given the nature of the Company’s DeFi Venture activities, the results of operations and financial condition of the Company are dependent upon the market value of the securities, tokens and cryptocurrencies that comprise DeFi Venture’s portfolio assets. Market value can be reflective of the actual or anticipated operating results of companies or projects in the portfolio and/or the general market conditions that affect the technology, crypto and DeFi sectors. Various factors affecting these sectors could have a negative impact on the Company’s portfolio of investments and thereby have an adverse effect on its business. Additionally, the Company’s investments are mostly in early stage ventures that may never mature or generate adequate returns or may require a number of years to do so. Junior companies may never achieve commercial success. This may create an irregular pattern in the Company’s investment gains and revenues (if any) and an investment in the Company’s securities may only be suitable for investors who are prepared to hold their investment for a long period of time. Macro factors such as commodity prices, the growth and decline of disruptive technologies, including DeFi technologies, and global political and economic conditions could have an adverse effect on the mining, technological and Defi sectors, thereby negatively affecting the Company’s portfolio of investments. Company and project-specific risks, such as the risks associated with emerging companies and project in the technology, crypto and DeFi sectors generally, could have an adverse effect on one or more of the investments in the portfolio at any point in time. Company, project and industry-specific risks that materially adversely affect the Company’s investment portfolio may have a materially adverse impact on operating results.

 

Banks May Cut off Banking Services to Businesses that Provide Cryptocurrency-related Services

 

A number of companies that provide cryptocurrency-related services have been unable to find banks that are willing to provide them with bank accounts and banking services. Similarly, a number of such companies have had their existing bank accounts closed by their banks. Banks may refuse to provide bank accounts and other banking services to cryptocurrency related companies or companies that accept cryptocurrencies for a number of reasons, such as perceived compliance risks or costs. The difficulty that many businesses that provide cryptocurrency-related services have and may continue to have in finding banks willing to provide them with bank accounts and other banking services may be currently decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies or could decrease its usefulness and harm its public perception in the future. Similarly, the usefulness of cryptocurrencies as a payment system and the public perception of cryptocurrencies could be damaged if banks were to close the accounts of many or of a few key businesses providing cryptocurrency-related services. This could decrease the market prices of cryptocurrencies and adversely affect the value of the Company’s cryptocurrency inventory.

 

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Impact of Geopolitical Events

 

Crises may motivate large-scale purchases of cryptocurrencies which could increase the price of cryptocurrencies rapidly. This may increase the likelihood of a subsequent price decrease as crisis-driven purchasing behavior wanes, adversely affecting the value of the Company’s cryptocurrency holdings. The possibility of large-scale purchases of cryptocurrencies in times of crisis may have a short-term positive impact on the prices of same. Future geopolitical crises may erode investors’ confidence in the stability of cryptocurrencies and may impair their price performance which would, in turn, adversely affect the Company’s cryptocurrency holdings.

 

As an alternative to fiat currencies that are backed by central governments, cryptocurrencies are subject to supply and demand forces based upon the desirability of an alternative, decentralized means of buying and selling goods and services, and it is unclear how such supply and demand will be impacted by geopolitical events. Nevertheless, political or economic crises may motivate large-scale acquisitions or sales of cryptocurrencies either globally or locally. Large-scale sales of cryptocurrencies would result in a reduction in their market prices and adversely affect the Company’s operations and profitability.

 

Further Development and Acceptance of Cryptocurrency and DeFi Networks

 

The further development and acceptance of cryptocurrency and other cryptographic and algorithmic protocols governing the issuance of transactions in cryptocurrencies and DeFi Protocols, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The growth of this industry in general, and the use of cryptocurrencies in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance of such networks may adversely affect the value of the corresponding cryptocurrencies and DeFi Protocol tokens, and thus may adversely affect the Company’s operations. The factors affecting the further development of the industry, include, but are not limited to the following:

 

●continued worldwide growth in the adoption and use of cryptocurrencies and DeFi;

 

●governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar cryptocurrency and DeFi systems;

 

●changes in consumer demographics and public tastes and preferences;

 

●the maintenance and development of the open-source software protocol of relevant networks;

 

●the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;

 

●general economic conditions and the regulatory environment relating to digital assets and decentralized finance; and

 

●negative consumer sentiment and perception of cryptocurrencies.

 

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Currently, there is relatively small use of cryptocurrencies in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect the Company’s operations, investment strategies, and profitability.

 

As relatively new products and technologies, cryptocurrencies have not been widely adopted, for example as a means of payment for goods and services, by major retail and commercial outlets. Conversely, a significant portion of cryptocurrency demand is generated by speculators and investors seeking to profit from the short-term or long-term holding of cryptocurrencies. The relative lack of acceptance of cryptocurrencies in the retail and commercial marketplace limits the ability of end-users to use them to pay for goods and services or other direct use cases that may arise. A lack of expansion by cryptocurrencies into retail and commercial markets, or a contraction of such use, may result in increased volatility or a reduction in their market prices, either of which could adversely impact the Company’s operations, investment strategies, and profitability. Further, if fees increase for recording transactions in the applicable Blockchain, demand for cryptocurrencies may be reduced and prevent the expansion of the network to retail merchants and commercial businesses, resulting in a reduction in the price of cryptocurrencies.

 

There are material risks and uncertainties associated with custodians of digital assets

 

We multiple custodians (or third-party “wallet providers”) to hold digital assets for our DeFi Ventures business line as well as for digital assets underlying Valour ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. We could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. We may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the our execution of hedging ETPs, the value of our assets and the value of any investment in our common shares.

 

Risk of Loss, Theft or Destruction of Cryptocurrencies

 

There is a risk that some or all of the Company’s cryptocurrencies could be lost, stolen or destroyed. If the Company’s cryptocurrencies are lost, stolen or destroyed under circumstances rendering a party liable to the Company, the responsible party may not have the financial resources sufficient to satisfy the Company’s claim.

 

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Irrevocability of Transactions

 

Bitcoin and most other cryptocurrency and DeFi protocol token transactions are irrevocable and stolen or incorrectly transferred cryptocurrencies or DeFi protocol tokens may be irretrievable. Such transactions are not reversible without the consent and active participation of the recipient of the transaction. Once a transaction has been verified and recorded in a block that is added to the Blockchain, an incorrect transfer of cryptocurrencies or a theft of cryptocurrencies generally will not be reversible and the Company may not be capable of seeking compensation for any such transfer or theft. To the extent that the Company is unable to seek a corrective transaction with the third party or is incapable of identifying the third party that has received the Company’s cryptocurrencies through error or theft, the Company will be unable to revert or otherwise recover incorrectly transferred cryptocurrencies. The Company will also be unable to convert or recover cryptocurrencies transferred to uncontrolled accounts.

 

Potential Failure to Maintain the Cryptocurrency Networks

 

Many cryptocurrency networks, including the Bitcoin Network, operates based on an open-source protocol maintained by the core developers of such networks and other contributors. As such protocols are not sold and their uses do not generate revenues for its development team, the core developers are generally not compensated for maintaining and updating such network protocols. Consequently, there is a lack of financial incentive for developers to maintain or develop such networks and the core developers may lack the resources to adequately address emerging issues with such network protocol. Although the many networks, including the Bitcoin Network, is currently supported by the core developers, there can be no guarantee that such support will continue or be sufficient in the future. To the extent that material issues arise with the such network protocol and the core developers and opensource contributors are unable to address the issues adequately or in a timely manner, such networks and an investment in the Common Shares may be adversely affected.

 

Potential Manipulation of Blockchain

 

If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains control of more than 50% of the processing power dedicated to mining on the Bitcoin Network, it may be able to alter or manipulate the Blockchain on which the Bitcoin Network and most Bitcoin transactions rely by constructing fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could control, exclude or modify the ordering of transactions, though it could not generate new Bitcoins or transactions using such control. The malicious actor could “double-spend” its own Bitcoins (i.e., spend the same Bitcoins in more than one transaction) and prevent the confirmation of other users’ transactions for so long as it maintained control. To the extent that such malicious actor or botnet did not yield its control of the processing power on the Bitcoin Network or the Bitcoin community did not reject the fraudulent blocks as malicious, reversing any changes made to the Blockchain may not be possible. To the extent that the Bitcoin ecosystem, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase.

 

Miners May Cease Operations

 

If the award of Bitcoins or other cryptocurrencies for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners in relevant networks, miners may cease expending processing power to solve blocks and confirmations of transactions on the Bitcoin Blockchain or other networks could be slowed. A reduction in the processing power expended by miners on the applicable blockchain network could increase the likelihood of a malicious actor or botnet obtaining control.

 

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Risks Related to Insurance

 

The Company intends to insure its operations in accordance with technology industry practice. However, given the novelty of cryptocurrency mining and associated businesses, such insurance may not be available, may be uneconomical for the Company, or the nature or level may be insufficient to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the Company.

 

Concentration of Investments

 

Other than as described herein, there are no restrictions on the proportion of the Company’s funds and no limit on the amount of funds that may be allocated to any particular investment. The Company may participate in a limited number of investments and, as a consequence, its financial results may be substantially adversely affected by the unfavorable performance of a single investment. Completion of one or more investments may result in a highly concentrated investment in a particular company, commodity or geographic area resulting in the performance of the Company depending significantly on the performance of such company, commodity or geographic area. As at June 30, 2024, the Company’s investments through its Defi Venture business arm comprise of $41,783,327 represented approximately 4.7% of the Company’s total assets.

 

We operate in a highly competitive industry and we compete against unregulated or less regulated companies and companies with greater financial and other resources, and our business, operating results, and financial condition may be adversely affected if we are unable to respond to our competitors effectively.

 

The cryptoeconomy is highly innovative, rapidly evolving, and characterized by healthy competition, experimentation, frequent introductions of new products and services, and subject to uncertain and evolving industry and regulatory requirements. We expect competition to further intensify in the future as existing and new competitors introduce new products or enhance existing products. Our DeFi ETPs and DeFi Governance business line compete against several companies and expect that we will face even more competition in the future. These competitors could have various competitive advantages over us, including but not limited to:

 

●greater name recognition, longer operating histories, and larger market shares;

 

●larger sales and marketing budgets and organizations;

 

●more established marketing, banking, and compliance relationships;

 

●greater resources to make acquisitions;

 

●lower labor, compliance, risk mitigation, and research and development costs;

 

●operations in certain jurisdictions with lower compliance costs and greater flexibility to explore new product offerings; and

 

●substantially greater financial, technical, and other resources.

 

If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, operating results, and financial condition could be adversely affected.

 

40

 

 

Harm to our brand and reputation could adversely affect our business.

 

Our reputation and brand may be adversely affected by complaints and negative publicity about us, even if factually incorrect or based on isolated incidents. Damage to our brand and reputation may be caused by:

 

●cybersecurity attacks, privacy or data security breaches, or other security incidents;

 

●complaints or negative publicity about us, our ETPs, our management team, our other employees or contractors or third-party service providers;

 

●actual or alleged illegal, negligent, reckless, fraudulent or otherwise inappropriate behavior by our management team, our other employees or contractors or third-party service providers;

 

●unfavorable media coverage;

 

●litigation involving, or regulatory actions or investigations into our business;

 

●a failure to comply with legal, tax and regulatory requirements;

 

●any perceived or actual weakness in our financial strength or liquidity;

 

●any regulatory action that results in changes to or prohibits certain lines of our business;

 

●a failure to operate our business in a way that is consistent with our values and mission;

 

●a sustained downturn in general economic conditions; and

 

●any of the foregoing with respect to our competitors, to the extent the resulting negative perception affects the public’s perception of us or our industry as a whole.

 

Private Issuers and Illiquid Securities

 

Through its DeFi Ventures business line, the Company invests in securities and / or digital assets of private issuers or projects. These may be subject to trading restrictions, including hold periods, and there may not be any market for such securities or digital assets. These limitations may impair the Company’s ability to react quickly to market conditions or negotiate the most favourable terms for exiting such investments. Investments in private issuers or projects are subject to a relatively high degree of risk. There can be no assurance that a public market will develop for any of the Company’s private investments, or that the Company will otherwise be able to realize a return on such investments.

 

The value attributed to securities and / or digital assets of private issuers or projects will be the cost thereof, subject to adjustment in limited circumstances, and therefore may not reflect the amount for which they can actually be sold. Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a ready market had existed for the investments.

 

The Company may also invest in illiquid securities of public issuers. A considerable period of time may elapse between the time a decision is made to sell such securities and the time the Company is able to do so, and the value of such securities could decline during such period. Illiquid investments are subject to various risks, particularly the risk that the Company will be unable to realize its investment objectives by sale or other disposition at attractive prices or otherwise be unable to complete any exit strategy. In some cases, the Company may be prohibited by contract or by law from selling such securities for a period of time or otherwise be restricted from disposing of such securities. Furthermore, the types of investments made may require a substantial length of time to liquidate.

 

41

 

 

The Company may also make direct investments in publicly traded securities that have low trading volumes. Accordingly, it may be difficult to make trades in these securities without adversely affecting the price of such securities.

 

Cash Flow, Revenue and Liquidity

 

The Company’s revenue and cash flow is generated primarily from financing activities, proceeds from the disposition of investments, management fees of ETPs and staking and lending activities of cryptocurrencies and DeFi protocol tokens. The availability of these sources of income and the amounts generated from these sources depend upon various factors, many of which are outside of the Company’s direct control. The Company’s liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in the market conditions generally or to matters specific to us, if the value of our investments decline, resulting in losses upon disposition, if there is low demand for our ETPs, resulting in lack of management fees received, and if rates provided by counterparties for staking and lending decrease.

 

Dependence on Management Personnel

 

The Company is dependent upon the efforts, skill and business contacts of key members of management, the Board and the Advisory Board, for among other things, the information and deal flow they generate during the normal course of their activities and the synergies that exist amongst their various fields of expertise and knowledge. Accordingly, the Company’s success may depend upon the continued service of these individuals who are not obligated to remain consultants to the Company. The loss of the services of any of these individuals could have a material adverse effect on the Company’s revenues, net income and cash flows and could harm its ability to maintain or grow existing assets and raise additional funds in the future.

 

Sensitivity to Macro-Economic Conditions

 

Due to the Company’s focus on decentralized finance industry, the success of the Company’s investments is interconnected to the growth of disruptive technologies. The Company may be adversely affected by the falling share prices of the securities of investee companies, cryptocurrencies, DeFi Protocol tokens and other crypto assets, as the trading price for the Common Shares may reflect the estimated aggregate value of the Company’s portfolio of investments and assets under management. The factors affecting current macro-economic conditions are beyond the control of the Company.

 

Available Opportunities and Competition for Investments

 

The success of the Company’s DeFi Ventures line of business will depend upon: (i) the availability of appropriate investment opportunities; (ii) the Company’s ability to identify, select, acquire, grow and exit those investments; and (iii) the Company’s ability to generate funds for future investments. The Company can expect to encounter competition from other entities having similar investment objectives, including institutional investors and strategic investors. These groups may compete for the same investments as the Company, may be better capitalized, have more personnel, have a longer operating history and have different return targets. As a result, the Company may not be able to compete successfully for investments. In addition, competition for investments may lead to the price of such investments increasing which may further limit the Company’s ability to generate desired returns. There can be no assurance that there will be a sufficient number of suitable investment opportunities available to invest in or that such investments can be made within a reasonable period of time. There can be no assurance that the Company will be able to identify suitable investment opportunities, acquire them at a reasonable cost or achieve an appropriate rate of return. Identifying attractive opportunities is difficult, highly competitive and involves a high degree of uncertainty. Potential returns from investments will be diminished to the extent that the Company is unable to find and make a sufficient number of attractive investments.

 

42

 

 

Share Prices of Investments

 

Investments in securities of public companies are subject to volatility in the share prices of the companies. There can be no assurance that an active trading market for any of the subject shares is sustainable. The trading prices of the subject shares could be subject to wide fluctuations in response to various factors beyond the Company’s control, including quarterly variations in the subject companies’ results of operations, changes in earnings, results of exploration and development activities, estimates by analysts, conditions in the mining, technological and cryptocurrency industries and general market or economic conditions. In recent years equity markets have experienced extreme price and volume fluctuations. These fluctuations have had a substantial effect on market prices, often unrelated to the operating performance of the specific companies. Such market fluctuations could adversely affect the market price of the Company’s investments.

 

Additional Financing Requirements

 

The Company anticipates ongoing requirements for funds to support its growth and may seek to obtain additional funds for these purposes through public or private equity, or debt financing. There are no assurances that additional funding will be available on acceptable terms, at an acceptable level or at all. Any additional equity financing may cause shareholders to experience dilution, and any debt financing would result in interest expense and possible restrictions on the Company’s operations or ability to incur additional debt. Any limitations on the Company’s ability to access the capital markets for additional funds could have a material adverse effect on its ability to grow its investment portfolio.

 

No Guaranteed Return

 

There is no guarantee that an investment in the Company’s securities will earn any positive return in the short term or long term. The task of identifying investment opportunities, monitoring such investments and realizing a significant return is difficult. Many organizations operated by persons of competence and integrity have been unable to make, manage and realize a return on such investments. In addition, past performance provides no assurance of future success.

 

Management of the Company’s Growth

 

Significant growth in the business, as a result of acquisitions or otherwise, could place a strain on the Company’s managerial, operational and financial resources and information systems. Future operating results will depend on the ability of senior management to manage rapidly changing business conditions, and to implement and improve the Company’s technical, administrative and financial controls and reporting systems. No assurance can be given that the Company will succeed in these efforts. The failure to effectively manage and improve these systems could increase costs, which could have a materially adverse effect on the Company’s operating results and overall performance.

 

43

 

 

Due Diligence

 

The due diligence process undertaken by the Company in connection with investment opportunities may not reveal all facts that may be relevant in connection with the investments. Before making investments, the Company conducts due diligence that it deems reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, the Company may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors, accountants and investment banks may be involved in the due diligence process in varying degrees depending on the type of investment. Nevertheless, when conducting due diligence and making an assessment regarding an investment, the Company relies on resources available including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process that is carried out with respect to investment opportunities may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment being successful.

 

Exchange Rate Fluctuations

 

A significant portion of the Company’s cryptocurrency, DeFi protocol tokens and digital asset holdings could be invested in United States dollar denominated investments or other foreign currencies. Changes in the value of the foreign currencies in which the Company’s investments are denominated could have a negative impact on the ultimate return on its investments and overall financial performance.

 

Non-controlling Interests

 

The Company’s investments include debt instruments and equity securities of companies that it does not control. Such instruments and securities may be acquired through trading activities or through purchases of securities directly from the issuer. These investments are subject to the risk that the company in which the investment is made may make business, financial or management decisions with which the Company does not agree or that the majority stakeholders or the management of the investee company may take risks or otherwise act in a manner that does not serve the Company’s interests. If any of the foregoing was to occur, the value of the Company’s investments could decrease and its financial condition, results of operations and cash flow could suffer as a result.

 

Changes in Legislation and Regulatory Risk

 

There can be no assurance that laws applicable to the Company or the businesses in which the Company invests, including securities legislation, will not be changed in a manner which adversely affects the Company. If such laws change, such changes could have a negative effect upon the value of the Company and upon investment opportunities available to the Company.

 

Risks Relating to the Financial Condition of the Company

 

Limited Operating History as a DeFi Company

 

The Company announced its focus in the DeFi industry on January 19, 2021. The Company’s limited operating history and the lack of meaningful historical financial data makes it difficult to fully evaluate the Company’s prospects. To the extent that the Company is able to execute its business plan, its business will be subject to all of the problems that typically affect a business with a limited operating history, such as unanticipated expenses, capital shortfalls, delays in program development and possible cost overruns. Investment in the securities of the Company is highly speculative given the nature of the Company’s business.

 

44

 

 

The Company’s success will depend on many factors, including some which may be beyond its control or which cannot be accounted for at this time, such as the market’s acceptance of the products of its investee companies, the emergence of potential competitors, and changes in economic conditions. For the reasons discussed in this section and elsewhere in this AIF, it is possible that the Company may not generate revenues or profits in the foreseeable future or at all.

 

No History of Operating Revenue and Cash Flow

 

The Company is dependent on financings and future cash flows to meet its obligations. The future performance of the business and the ability of the Company’s subsidiaries to provide the Company with payments may be constrained by factors such as, among others: success of the Company’s corporate strategy, economic downturns; technological and regulatory changes; the cash flows generated by operations, investment activities and financing activities; and the level of taxation, particularly corporate profits and withholding taxes. If the Company is unable to generate sufficient cash from operations, the Company may be required to incur indebtedness, raise funds in a public or private equity or debt offering, or sell some or all of its assets. There can be no assurance that any such financing will be available on satisfactory terms or that it will be sufficient.

 

The Company may be subject to limitations on the repatriation of earnings in each of the countries where the Company, including its investee companies, do business. In particular, there may be significant withholding taxes applicable to the repatriation of funds from foreign countries to Canada. There can be no assurance that changes in regulations, including tax treaties, in and among the relevant countries where the Company or its investee companies do business will not take place, and if such changes occur, they may adversely impact the Company’s ability to receive sufficient cash payments from its subsidiaries.

 

Insufficient Cash Flow and Funds in Reserve

 

The Company’s cash flow and funds in reserve may not be sufficient to fund its ongoing activities at all times and from time to time and it may require additional financing in order to carry out its activities. In addition, the Company may incur major unanticipated liabilities or expenses. Although the Company has been successful in the past in financing its activities, there can be no assurance that the Company will be able to obtain additional financing on commercially acceptable terms. The ability of the Company to arrange such financing in the future will depend in part upon the prevailing capital market conditions as well as the business performance of Company. There is risk that if the economy and banking industry experienced unexpected and/or prolonged deterioration, the Company’s access to additional financing may be affected. This may be further complicated by the limited market liquidity for shares of smaller companies such as the Company, restricting access to some institutional investors. Due to uncertainty in the capital markets, the Company may from time to time have restricted access to capital and increased borrowing costs. To the extent that external sources of capital become limited, unavailable, or available on onerous terms, the Company’s ability to make capital investments and maintain existing assets may be impaired, and its assets, liabilities, business, financial condition, results of operations and prospects may be affected materially and adversely as a result.

 

45

 

 

The Company, along with all other companies, may face reduced cash flow and restricted access to capital if the global economic situation deteriorates. A prolonged period of adverse market conditions may impede the Company’s ability to grow and complete additional acquisitions, if desired. In addition, a prolonged period of adverse market conditions may impede the Company’s ability to service any of its loans or arrange alternative financing when the existing loans become due. In each case, the Company’s business, financial condition, results of operations and prospects would be adversely affected.

 

Conflicts of Interest may Arise

 

Certain current or future directors and officers of the Company and its subsidiaries may be shareholders, directors and officers of other companies that may operate in the same sectors as the Company. Such associations may give rise to conflicts of interest from time to time. The directors and officers of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interest that they may have in any project or opportunity of the Company. If a conflict of interest arises at a meeting of the Board, any director in such conflict is required under the applicable corporate laws to disclose his or her interest and to abstain from voting on such matter.

 

Risks Relating to the Common Shares

 

Market Price of Common Shares may Experience Volatility

 

The market price of the Common Shares has been volatile in the past and may continue to be volatile. The market price is, and could be, subject to wide fluctuations due to a number of factors, including actual or anticipated fluctuations in the Company’s results of operations, changes in estimates of its future results of operations by management or securities analysts, market rumours, investments or divestments by the Company or its competitors and general industry changes.

 

Many of the factors that could affect the market price of the Common Shares are outside of the Company’s control. Broad market fluctuations, as well as economic conditions generally, may adversely affect the market price of the Common Shares. The stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of the Common Shares.

 

Shareholders’ Interest in the Company may be Diluted in the Future

 

If the Company raises additional funding by issuing additional equity securities, or securities convertible into equity, such financing may substantially dilute the interests of shareholders.

 

The Company has Never Paid Dividends and may not do so in the Foreseeable Future

 

The Company has never paid cash dividends on its Common Shares. Currently, the Company intends to retain its future earnings, if any, to fund the development and growth of its business, and does not anticipate paying any cash dividends on its Common Shares in the near future. As a result, shareholders will have to rely on capital appreciation, if any, to earn a return on investment in any Common Shares in the foreseeable future.

 

46

 

 

Multilateral Instrument 52-109 Disclosure

 

 

Evaluation of disclosure controls and procedures

 

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in annual filings, interim filings or other reports filed or submitted under provincial and territorial securities legislation, and that such information is accumulated and communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosures.

 

We have evaluated the effectiveness of our disclosure controls and procedures and have concluded, based on our evaluation that they are sufficiently effective to provide reasonable assurance that material information relating to the Company is made known to management and disclosed in accordance with applicable securities regulations.

 

Internal controls over financial reporting

 

The CEO and CFO, together with other members of Management, have designed internal controls over financial reporting based on the Internal Control–Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO - 1992). These controls are intended to provide reasonable assurance regarding the reliability of financial reporting and the preparation of annual audited financial statements in accordance with IFRS.

 

The Company reassessed the application of IFRS on the accounting for the valuation of the Company’s holdings in 3iQ and Seba Bank AG as well as the valuation of Valour’s Genesis loan and collateral. As a result of the restatement: (i) digital assets was reduced by $10,822,637 to $106,572,333; and (ii) private investments, at fair value through profit and loss was reduced by $13,489,824 to $30,236,513 as at June 30, 2023, with an retained earnings impact at June 30, 2023 of $24,312,461. For more details, please refer to Note 24 of the condensed consolidated interim financial statements of the Company for three and six months ended June 30, 2024 and 2023. The change in accounting is considered the correction of an error for accounting purposes and, as such, required a restatement of the financial statements for the three and six months ended June 30, 2023. Due to the accounting error, the Company’s management has concluded that there was a material weakness in its internal controls over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements and Management’s Discussion and Analysis, will not be prevented or detected on a timely basis.

 

Remediation of Material Weaknesses in Internal Control over Financial Reporting

 

Management is committed to the planning and implementation of remediation efforts to address the material weaknesses, as well as to continuously enhance the Company’s internal controls. These remediation efforts to-date have included engaging and consulting with the external accounting and valuation advisors, considering authoritative and non-authoritative guidance available in the accounting literature.

 

The management team, including the Chief Executive Officer and Chief Financial Officer, have reaffirmed and re-emphasized the importance of internal control, control consciousness and a strong control environment.

 

47

 

 

Material Accounting Policies

 

 

The Company’s material accounting policies can be found in Note 2 of its annual audited financial statements for the years ended December 31, 2023 and 2022.

 

Critical Accounting Estimates and Assumptions

 

 

The preparation of the Company’s Consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the Consolidated financial statements are as follows:

 

Accounting for digital assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com.

 

Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments.

 

Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values.

 

Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

48

 

 

Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

Contingencies

 

Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 8 for the discussion regarding impairment of the Company’s non-financial assets.

 

Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

Assessment of transaction as an asset purchase or business combination

 

Significant acquisitions require judgements and estimates to be made at the date of acquisition in relation to determining the relative fair value of the allocation of the purchase consideration over the fair value of the assets. The information necessary to measure the fair values as at the acquisition date of assets acquired requires management to make certain judgements and estimates about future performance of these assets.

 

Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

49

 

Exhibit 99.147

 

 

 

 

 

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

 

 

 

For the three and six months ended June 30, 2024 and 2023

 

(expressed in Canadian dollars)

 

1

 

 

DeFi Technologies Inc.

 

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the condensed consolidated interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

 

The Company’s independent auditor has not performed a review of these condensed consolidated interim financial statements in accordance with standards established by the Chartered Professional Accountants of Canada (CPA Canada) for a review of interim financial statements by an entity’s auditor.

 

2

 

 

DeFi Technologies Inc.

 

Table of Contents

 

Condensed consolidated interim statements of financial position 4
Condensed consolidated interim statements of operations and comprehensive income (loss) 5
Condensed consolidated interim statements of cash flows 6
Condensed consolidated interim statements of changes in equity 7
Notes to the condensed consolidated interim financial statements 8-44

 

3

 

 

DeFi Technologies Inc.

 

Condensed Consolidated Interim Statements of Financial Position

(Expressed in Canadian dollars)

 

   Note   June 30,
2024		   December 31,
2023		 
Assets      $   $ 
Current            
Cash and cash equivalents   3,18    19,529,425    6,727,482 
Amounts receivable   5,18    134,101    54,036 
Prepaid expenses   6    4,520,767    1,509,824 
Digital assets   7,18    345,725,251    188,342,579 
Digital assets loaned   7    78,942,257    270,362,684 
Digital assets staked   7    344,801,161    30,516,888 
Total current assets        793,652,962    497,513,493 
                
Private investments, at fair value through profit and loss   4,18,21    40,994,025    43,540,534 
Digital assets   7    789,302    643,487 
Equipment        2,349    7,679 
Intangible assets   8,9    2,957,613    3,542,888 
Goodwill   8,9    49,348,414    46,712,027 
Total assets        887,744,666    591,960,108 
Liabilities and shareholders’ equity               
Current liabilities               
Accounts payable and accrued liabilities   10,18,21    36,416,277    9,174,846 
Loans payable   11,18    17,793,100    56,210,709 
ETP holders payable   12,18    730,068,689    508,130,490 
Deferred revenue        220,987    - 
Total current liabilities        784,499,053    573,516,045 
Shareholders’ equity               
Common shares   16(b)   181,688,832    170,687,476 
Preferred shares        4,321,350    4,321,350 
Share-based payments reserves   17    30,390,898    28,631,887 
Accumulated other comprehensive income        (2,811,136)   (1,652,547)
Non-controlling interest        (457)   (4,871)
Deficit        (110,343,873)   (183,539,232)
Total equity        103,245,613    18,444,063 
Total liabilities and equity        887,744,666    591,960,108 
Nature of operations and going concern   1           
Commitments and contingencies   22           

 

Approved on behalf of the Board of Directors:

 

“Olivier Roussy Newton”   “Stefan Hascoet”
Director   Director

 

See accompanying notes to these condensed consolidated interim financial statements

 

4

 

 

DeFi Technologies Inc.

 

Condensed Consolidated Interim Statements of Operations and Comprehensive Income (Loss)

(Expressed in Canadian dollars)

 

      Three months ended June 30,   Six months ended June 30 
   Note  2024   2023   2024   2023 
      $   $   $   $ 
      (Restated - see Note 24)   (Restated - see Note 24) 
Revenues                   
Realized and net change in unrealized gains and (losses) on digital assets  13   (86,650,729)   (12,555,609)   230,472,326    50,462,924 
Realized and net change in unrealized gains and (losses) on ETP payables  14   209,094,995    18,984,061    (119,158,890)   (56,529,430)
Staking and lending income      8,263,022    764,662    14,071,024    1,336,475 
Management fees      2,145,432    244,016    3,877,314    459,693 
Research revenue      338,583    -    840,451    - 
Node revenue      35    (845)   4,709    4,976 
Realized gain (loss) on investments  4   634,271    (3,438)   634,271    (4,025)
Unrealized (loss) on investments  4   (659,386)   (42,491)   (2,498,418)   314,862 
Interest income      644    (572)   1,512    257 
Total revenues      133,166,866    7,389,784    128,244,299    (3,954,267)
Expenses  15,21   30,511,981    1,755,467    33,480,118    3,871,936 
Operating, general and administration                       
Share based payments  17   3,433,990    501,594    5,051,505    1,442,880 
Depreciation - property, plant and equipment      2,092    3,236    5,328    6,472 
Depreciation - right of use assets      -    (34,034)   -    - 
Amortization - intangibles  9   514,154    509,575    1,031,379    1,019,150 
Finance costs      929,255    275,063    2,666,769    1,561,529 
Transaction costs      1,089,807    86,944    1,580,204    319,719 
Foreign exchange loss      6,318,062    4,743,568    7,141,206    4,754,029 
Impairment loss  9   -    -    4,962,021    - 
Total expenses      42,799,341    7,841,413    55,918,530    12,975,715 
                        
Income (loss) before other item      90,367,526    (451,629)   72,325,769    (16,929,983)
Loss on settlement of debt      -    (198,482)   -    (198,482)
Net income (loss) for the period      90,367,526    (650,111)   72,325,769    (17,128,465)
Other comprehensive income (loss) Foreign currency translation gain (loss)      110,463    1,692,615    (1,158,589)   1,726,504 
Net income (loss) and comprehensive income (loss) for the period      90,477,988    1,042,504    71,167,180    (15,401,961)
                      
Net income (loss) attributed to:                       
Owners of the parent      90,404,006    (650,111)   72,321,355    (17,128,465)
Non-controlling interests      (36,480)   -    4,414    - 
       90,367,526    (650,111)   72,325,769    (17,128,465)
Net income (loss) and comprehensive income (loss) attributed to:                       
Owners of the parent      90,514,468    1,042,504    71,162,766    (15,401,961)
Non-controlling interests      (36,480)   -    4,414    - 
       90,477,988    1,042,504    71,167,180    (15,401,961)
Income (loss) per share                       
Basic      0.31    (0.00)   0.25    (0.08)
Diluted      0.27    (0.00)   0.22    (0.08)
                        
Weighted average number of shares outstanding:                       
Basic      291,902,102    220,295,703    288,018,114    219,656,652 
Diluted      332,820,561    220,295,703    325,349,322    219,656,652 

 

 

See accompanying notes to these condensed consolidated interim financial statements

 

5

 

 

DeFi Technologies Inc.

 

Condensed Consolidated Interim Statements of Cash Flows

(Expressed in Canadian dollars)

 

   Note  2024   Six months
ended
June 30,
2023		 
      $   $ 
          (Restated - See Note 24) 
Cash (used in) provided by operations:           
Net Income (loss) for the period     $72,325,769   $(17,128,465)
Adjustments to reconcile net (loss) income to cash (used in)             
operating activities:             
Share-based payments  17   5,051,505    1,442,880 
Loss on debt for shares      -    198,482 
Impairment loss  9   4,962,021    - 
Interest expense      -    1,561,529 
Interest income      -    (32,273)
Depreciation - Property, plant & equipment      5,328    6,472 
Depreciation - right of use assets      -    - 
Amortization - Intangible asset  9   1,031,379    1,019,150 
Realized loss on investments, net      (634,271)   4,025 
Unrealized (gain) loss on investments, net      2,498,418    (314,862)
Realized and net change in unrealized (gains) and loss on digital assets  13   (230,472,326)   (50,462,924)
Realized and net change in unrealized (gains) and loss on ETP  14   119,158,890    56,529,430 
Staking and lending income      (14,071,024)   (1,336,475)
Management fees      (3,877,314)   (459,693)
Node revenue      (4,709)   (4,976)
Unrealized loss on foreign exchange      (1,353,077)   1,471,425 
       (45,379,411)   (7,506,275)
Adjustment for:             
Purchase of digital assets      (583,851,244)   (40,495,137)
Disposal of digital assets      568,751,078    34,356,040 
Disposal of investments      -    12,496 
Change in amounts receivable      5,216    (125,932)
Change in prepaid expenses and deposits      (3,010,943)   (1,227,869)
Change in accounts payable and accrued liabilities      27,463,792    185,178 
Net cash (used in) operating activities      (36,021,512)   (14,801,499)
Investing activities             
Cash received from acquisition of subsidiary      319,643    - 
Net cash provided by investing activities      319,643    - 
Financing activities             
Proceeds from ETP holders      406,189,410    56,747,554 
Payments to ETP holders      (318,755,385)   (47,387,053)
Loan Payable      -    4,319,901 
Loan repaid  11   (40,376,650)   - 
Proceeds from investments      752,230    - 
Proceds from option exercises  17   455,450    - 
Proceeds from exercise of warrants  17   1,379,414    - 
NCIB  16   (1,314,018)   - 
Net cash provided by financing activities      48,330,450    13,680,402 
              
Effect of exchange rate changes on cash and cash equivalents      173,361    (104,240)
Change in cash and cash equivalents      12,801,943    (1,225,337)
Cash, beginning of year      6,727,482    4,906,165 
Cash and cash equivalents, end of period     $19,529,425   $3,680,828 

 

See accompanying notes to these condensed consolidated interim financial statements

 

6

 

 

DeFi Technologies Inc.

 

Condensed Consolidated Interim Statements of Changes in Equity

(Expressed in Canadian dollars)

 

                   Share-based payments                     
   Number of
Common
Shares		   Common
Shares		   Number of
Preferred
Shares		   Preferred
Shares		   Options   Deferred
Shares Unit
(DSU)		   Treasury
shares		   Warrants   Share-based
Payments
Reserve		   Accumulated
other
comprehensive
income		   Non-controlling
interest		   Deficit   Total 
Balance, December 31, 2023   276,658,208   $170,687,476    4,500,000   $4,321,350   $17,968,263   $8,040,660   $27,453   $2,595,513   $28,631,889    (1,652,548)      (4,871)   (183,539,232)   18,444,063 
Acquisition of Reflxivity   5,000,000    3,100,000    -    -    -    -    -    -    -    -    -    -    3,100,000 
Acquisition of Solana IP   7,297,090    4,962,021    -    -    -    -    -    -    -    -    -    -    4,962,021 
Warrants exercised   5,691,798    1,787,346    -    -    -    -    -    (407,932)   (407,932)   -    -    -    1,379,414 
Option exercised   1,380,000    712,024    -    -    (256,574)   -    -    -    (256,574)   -    -    -    455,451 
DSU exercised   2,107,281    1,753,984    -    -    -    (1,753,984)   -    -    (1,753,984)   -    -    -    - 
Option expiry   -    -    -    -    (874,002)   -    -    -    (874,002)   -    -    874,002    - 
NCIB   (680,000)   (1,314,018)   -    -    -    -    -    -    -    -    -    -    (1,314,018)
Share-based payments   -    -    -    -    3,034,858    2,016,642    -    -    5,051,501    -    -    -    5,051,501 
Net inome (loss) and comprehensive income (loss) for the period   -    -    -    -    -    -    -    -    -    (1,158,589)   4,414    72,321,355    71,167,180 
Balance, June 30, 2024   297,454,377   $181,688,832    4,500,000   $4,321,350   $19,872,546   $8,303,318   $27,453   $2,187,581   $30,390,898   $(2,811,136)  $(457)  $(110,343,874)  $103,245,613 
                                                                  
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   -    (167,477,256)   27,909,261 
Shares issued for debt settlement   7,939,268    873,320    -    -    -    -    -    -    -    -    -    -    873,320 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    -    423,261    - 
Options cancelled   -    -    -    -    (2,831,533)   -    -    -    (2,831,533)   -    -    2,831,533    - 
DSUs exercised   500,000    107,500    -    -    -    (107,500)   -    -    (107,500)   -    -    -    - 
Share-based payments   -    -    -    -    277,139    1,165,743    -    -    1,442,882    -    -    -    1,442,882 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    1,726,504    -    (17,128,465)   (15,401,961)
Balance, June 30, 2023   227,449,769   $167,132,221    4,500,000   $4,321,350   $17,762,918   $8,035,349   $27,453   $164,852   $25,990,572   $(1,269,714)  $-   $(181,350,927)  $14,823,502 

 

See accompanying notes to these condensed consolidated interim financial statements

 

7

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets, providing premium membership for research reports to investors and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These condensed consolidated interim financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at June 30, 2024, the Company has working capital of $9,153,909 (December 31, 2023 - working capital (deficiency) of $(76,002,552)), including cash of $19,529,425 (December 31, 2023 - $6,727,482) and for the six months ended June 30, 2024 had a net income and comprehensive income of $71,167,180 (for the six months ended June 30, 2023 – net loss and comprehensive loss of $15,401,961). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These condensed consolidated interim financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global commodity and financial markets and supply chains. Russia’s invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result in additional sanctions or other international action and the escalation of war between Israel and Hamas in Gaza, any of which may have a destabilizing effect on commodity prices, supply chains, and global economies more broadly. Volatility in digital asset prices and supply chain disruptions may adversely affect the Corporation’s business, financial condition, financing options, and results of operations. The extent and duration of the current Russia-Ukraine conflict or the Israel and Hamas conflict in Gaza and related international action cannot be accurately predicted at this time and the effects of such conflict may magnify the impact of the other risks, including those relating to digital asset price volatility and global financial conditions. The situation is rapidly changing and unforeseeable impacts, including on shareholders of the Corporation, and third parties with which the Corporation relies on or transacts, may materialize and may have an adverse effect on the Corporation’s business, results of operation, and financial condition.

 

8

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

2.Material accounting policy information

 

(a)Statement of compliance

 

These condensed consolidated interim financial statements of the Company were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB) applicable to the preparation of interim financial statements, including IAS 34 – Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the annual audited consolidated financial statements for the years ended December 31, 2023 and 2022, which was prepared in accordance with IFRS as issued by the IASB. These condensed consolidated interim financial statements of the Company were approved for issue by the Board of Directors on August 14, 2024.

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The condensed consolidated interim financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These condensed consolidated interim financial statements comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Reflexivity LLC, Valour Inc., DeFi Europe AG, and Valour Digital Securities Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the condensed consolidated interim financial statements.

 

(c)Basis of preparation and functional currency

 

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these condensed consolidated interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non- monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Reflexivity LLC, Valour Inc., DeFi Europe AG, and Valour Digital Securities Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

● assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

● income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

● all resulting exchange differences are recognized in other comprehensive loss.

 

9

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

2.Material accounting policy information (continued)

 

(c)Basis of preparation and functional currency (continued)

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

(d)Change in accounting policy

 

During the year ended December 31, 2023, the Company changed its accounting policy regarding the treatment for when the Company sells a portion of its digital asset holdings or when there’s redemptions of its ETP payables. The Company has adopted first in, first out (“FIFO”) to identify the units sold and determine the cost basis to use. As a result, for six months ended June 30, 2023, realized gains (loss) on digital assets increased (decreased) by $(11,399,582) and unrealized gains (loss) (decreased) increased by $11,399,582. As a result, for the six months ended June 30, 2023, realized gains (loss) on ETP payables increased (decreased) by $4,725,198 and unrealized gains (loss) (decreased) increased by $(4,725,198).

 

There were no changes to the condensed consolidated interim statements of financial position, condensed consolidated interim statements of operations and comprehensive (loss) or condensed consolidated interim statements of cash flow.

 

(e)Significant accounting judgements, estimates and assumptions

 

The preparation of these condensed consolidated interim financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated interim financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the condensed consolidated interim financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

10

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets were classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid- point price at 17:30 CET digital asset exchanges consistent with the final terms for each exchange traded product (“ETP”). The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Coinbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company revalues its digital assets quarterly.

 

(ii)Accounting for ETP holder payables

 

Financial liabilities at fair value through profit or loss held includes ETP holders payable. Liabilities arising in connection with ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company elected not to designate this as a hedging instrument. The ETPS are actively traded on the Nordic Growth Market (“NGM”) and Germany Borse Frankfurt Zertifikate AG.

 

(iii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 4 and 18 for further details.

 

(iv)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 4 and 18 for further details.

 

11

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(v)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

(vi)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

(viii)Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 9 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

12

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(xi)Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

(xii)Accounting for digital assets held as collateral

 

The Company has provided digital assets as collateral for loans provided by digital asset liquidity provider. These digital assets held as collateral are included with digital assets and valued at fair value consistent with the Company’s accounting policy for its digital assets. See note 2(e)(i).

 

3.Cash and cash equivalents

 

   30-Jun-24   31-Dec-23 
Cash at banks  $2,144,257   $306,920 
Cash at brokers   14,941,680    6,417,725 
Cash at digital currency exchanges   2,443,488    2,837 
   $19,529,425   $6,727,482 

 

4.Investments, at fair value through profit and loss

 

At June 30, 2024, the Company’s investment portfolio consisted of nine private investments for a total estimated fair value of $40,994,025 (December 31, 2023 – nine private investments for a total estimated fair value of 43,540,534).

 

During the three and six months ended June 30, 2024, the Company had a realized gain of $634,271 and $634,271 and an unrealized (loss) of $(659,386) and $(2,498,418) (June 30, 2023 – realized (loss) of ($3,438) and $(4,025) and an unrealized (loss) / gain of $(42,491) and $314,862) on private and public investments.

 

Private Investments

 

At June 30, 2024, the Company’s nine private investments had a total fair value of $40,994,025.

 

Private Issuer  Note  Security description  Cost   Estimated
Fair Value		   %
of FV		 
3iQ Corp.     61,712 common shares  $86,319   $415,569    1.0%
Amina Bank AG     3,906,250 non-voting shares   34,498,750    38,067,500    92.9%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    1,697,640    4.1%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    684,418    1.7%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,109,383   $40,994,025    100.0%

 

(i)Investments in related party entities

 

13

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

4.Investments, at fair value through profit and loss (continued)

 

At December 31, 2023, the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   %of FV 
3iQ Corp.     187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

5.Amounts receivable

 

   30-Jun-24   31-Dec-23 
Other receivables  $134,101   $54,036 

 

6.Prepaid expenses

 

   30-Jun-24   31-Dec-23 
         
Prepaid insurance  $98,247   $42,335 
Prepaid expenses   4,422,520    1,467,489 
   $4,520,767   $1,509,824 

 

14

 

 

DeFi Technologies Inc.

 

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

7.Digital Assets

 

As at June 30, 2024, the Company’s digital assets consisted of the below digital currencies, with a fair value of $770,257,971 (December 31, 2023 - $489,865,638). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Volmex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   June 30, 2024   December 31, 2023 
   Quantity   $   Quantity   $ 
Binance Coin   1,833.1116    1,435,764    236.4452    97,710 
Bitcoin   2,544.2313    181,934,285    2,271.3329    108,983,280 
Ethereum   21,425.6087    100,059,573    21,537.4066    65,956,320 
EthereumPoW   -    -    0.2000    1 
Cardano   62,374,745.9926    33,354,333    54,210,783.1700    43,306,306 
Polkadot   2,174,109.2288    18,811,801    1,666,147.7880    18,371,365 
Solana   1,737,320.62    337,682,809    1,682,112.49    235,733,109 
Shyft   4,879,446.3958    49,806    4,539,407.2792    78,314 
Uniswap   326,938.2981    4,179,467    296,352.0602    2,932,687 
USDC        698         673 
USDT        54,473,100         111,856 
Litecoin   -    -    17.3931    1,719 
Doge   404,126.4335    69,086    220,474.3947    26,652 
Cosmos   21,278.72    202,569.12    11,700.0000    171,497 
Avalanche   481,576.7021    18,607,286    248,151.6644    13,148,105 
Matic   19,504.9463    14,598    0.0003    - 
Ripple   7,323,969.3011    4,771,762    76,029.7317    62,737 
Enjin   66,737.8886    17,556    432,342.3671    223,237 
Tron   128,246.2765    21,064    118,490.5094    16,581 
Terra Luna   203,702.1876    -    202,302.5360    - 
Shiba Inu   2,351,900,000.0000    54,724    -    - 
ICP   1,020,042.1003    11,140,987    -    - 
Core   431,105.7669    791,440           
AAVE   1.5265    201    -    - 
LINK   16,691.6367    327,361    -    - 
TON   135,790.0000    1,404,661    -    - 
HARB   594,000.0000    63,740    -    - 
Current   2,434,265,137    769,468,669    63,728,357    489,222,151 
Blocto   266,780.171    2,873    264,559.703    10,503 
Boba Network   250,000.00    -    250,000.00    - 
Clover   480,000.00    20,764    450,000.00    19,831 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    666,446    2,500,000.00    503,669 
Saffron.finance   86.21    2,612    86.21    2,619 
Sovryn   15,458.95    13,292    15,458.95    12,863 
Wilder World   148,810.00    83,316    148,810.00    94,002 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    - 
Long-Term        789,302         643,487 
Total Digital Assets        770,257,971         489,865,638 

 

15

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

7.Digital Assets (continued)

 

The continuity of digital assets for the six months ended June 30, 2024 and year ended December 31, 2023:

 

   June 30,
2024		   December 31,
2023		 
Opening balance  $489,865,638   $104,202,085 
Digital assets acquired   583,851,244    318,355,007 
Digital assets disposed   (568,751,078)   (244,656,544)
Realized gain (loss) on digital assets   289,239,113    (1,017,247)
Digital assets earned from staking, lending and fees   14,071,024    3,554,587 
Net change in unrealized gains and losses on digital assets   (58,766,787)   324,976,115 
Foreign exchange gain (loss)   20,748,817    (15,548,363)
   $770,257,971   $489,865,638 

 

Digital assets held by counterparty for the six months ended June 30, 2024 and year ended December 31, 2023 is the following:

 

   June 30,
2024		   December 31,
2023		 
Counterparty A  $130,941,393   $421,687,911 
Counterparty B   20,520,801    30,592,947 
Counterparty C   2,558,611    2,775,287 
Counterparty D   59,706    11,785,440 
Counterparty E   9,203,964    8,633,491 
Counterparty F   13,464,318    837,948 
Counterparty G   13,202,820    8,840,988 
Counterparty H   11,978,801    - 
Counterparty I   213,940,499    - 
Counterparty J   95,483,620    - 
Other   3,083,236    248,294 
Self custody   255,820,202    4,463,332 
Total  $770,257,971   $489,865,638 

 

As of June 30, 2024, digital assets held as collateral consisted of the following:

 

   Number of coins
on loan		   Fair Value 
Bitcoin   633.2614   $22,406,784 
Ethereum   1,845.0000    8,616,789 
Total   2,478.2614   $31,023,573 

 

As at June 30, 2024, the 475 Bitcoin held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $9,203,964 (US$6,724,603), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

  

Number of coins
on loan

   Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcoin held by Genesis as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

16

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

7.Digital Assets (continued)

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital Assets loaned

 

As of June 30, 2024, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.3% to 9.2% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of June 30, 2024, digital assets on loan consisted of the following:

 

  

Number of coins

on loan

   Fair Value   Fair Value Share 
Digital assets on loan:            
Ethereum   8,500.0000    39,697,946    50%
Cardano   19,000,000.0000    10,160,271    13%
Polkadot   1,800,000.0000    15,574,766    20%
Uniswap   150,000.0000    1,917,549    2%
Avalanche   300,000.0000    11,591,726    15%
Total   21,258,500.0000   $78,942,257    100%

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

  

Number of coins

on loan

   Fair Value   Fair Value Share 
Digital on loan:            
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000    270,362,684    100%

 

As of June 30, 2024, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates  Number of coins
on loan		   Fair Value 
Digital assets on loan:           
Counterparty A  2.3% to 9.2%   21,258,500.0000    78,942,257 
Total      21,258,500.0000   $78,942,257 

 

17

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

7. Digital Assets (continued)

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

   Interest rates 

Number of coins

on loan

   Fair Value 
Digital on loan:           
Counterparty A  2.4% to 9.7%   11,578,285.0000    270,362,684 
Total      11,578,285.0000   $270,362,684 

 

As of June 30, 2024, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  June 30,
2024		 
Digital assets on loan:       

Counterparty A

  Cayman Islands   100%
Total      100%

 

As of December 31, 2023, digital assets on loan were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on loan:       

Counterparty A

  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of June 30, 2024, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 2.99% to 9.48% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of June 30, 2024, digital assets staked consisted of the following:

 

  

Number of coins

staked

   Fair Value   Fair Value
Share		 
Digital assets on staked:            
Cardano   38,202,110.3050    20,428,620    6%
Bitcoin   1,610.0324    5,589,577    2%
Solana   1,640,090.8681    318,782,965    92%
Total   39,843,811.2055   $344,801,161    100%

 

18

 

 

7.Digital Assets (continued)

 

As of December 31, 2023, digital assets staked consisted of the following:

 

  

Number of coins

staked

   Fair Value   Fair Value
Share		 
Digital on staked:            

Cardano

   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950    30,516,888    100%

 

As of June 30, 2024, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates  

Number of coins

staked

   Fair Value  

Fair Value

Share

 
Digital on staked:                
Counterparty B   2.99%    38,201,004.7950    20,428,029    6%
Counterparty I   8.00%    1,100,692.0000    213,940,499    62%
Counterparty J   8.00%    491,249.0000    95,483,620    28%
Self custody   7.57 to 9.48%    50,865.4105    14,949,014    4%
Total        39,843,811.2055   $344,801,161    100%

 

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

   Interest rates  

Number of coins

staked

   Fair Value 
Digital on staked:            
Counterparty A   3.15%    38,201,004.7950    30,516,888 
Total        38,201,004.7950   $30,516,888 

 

As of June 30, 2024, digital assets staked were concentrated with counterparties as follows:

 

   Geography  June 30, 2024 
Digital on staked:       
Counterparty B  Switzerland   6%
Counterparty I  United States   62%
Counterparty J  United States   28%
Self custody  Switzerland   4%
Total      100%

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:       
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company's due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of June 30, 2024 and December 31, 2023, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

19

 

 

8.Acquisition of Reflexivity

 

On February 6, 2024, the Company acquired 100% interest in Reflexivity LLC (“Reflexivity”) by issuing 5,000,000 common shares. Reflexivity is a private company incorporated in the United States that operates a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry.

 

Details of the consideration for acquisition, net assets acquired and goodwill are as follows:

 

Purchase price consider paid:    
Fair value of shares issued  $3,100,000 
Fair value of shares issued  $3,100,000 
Fair value of assets and liabilities assumed:    
Cash  $319,643 
Amounts receivable   18,131 
Prepaid expenses   21,448 
Client relationships   315,000 
Brand Name   66,000 
Technology   78,000 
Accounts payable   (1,383)
Deferred revenue   (353,226)
   $463,613 
Goodwill   2,636,387 
Total net assets aquired  $3,100,000 

 

The goodwill acquired as part of the Reflexivity acquisition is made up of assembled workforce and implied goodwill related to Reflexivity’s management and staff experiences and Reflexivity’s reputation in the industry. It will not be deductible for tax purposes.

 

20

 

 

9.Intangibles and goodwill

 

Cost  Client
relationships		   Technology   Brand Name   Total 
Balance, December 31, 2023 and 2022  $      -   $     -   $42,789,968   $42,789,968 
Acquisition of Reflexivty LLC   315,000    78,000    66,000    459,000 
Acquisition of Solana IP   -    4,962,021    -    4,962,021 
Balance, June 30, 2024  $315,000   $5,040,021   $42,855,968   $48,210,989 
                     
Accumulated Amortization             Brand Name    Total 
Balance, December 31, 2022  $-   $-   $(37,208,780)  $(37,208,780)
Amortization   -    -    (2,038,300)   (2,038,300)
Balance, December 31, 2023  $-   $-   $(39,247,080)  $(39,247,080)
Amortization   (13,125)   (6,500)   (1,024,650)   (1,044,275)
Impairment loss   -    (4,962,021)   -    (4,962,021)
Balance, June 30, 2024  $(13,125)  $(4,968,521)  $(40,271,730)  $(45,253,376)
                     
Balance, December 31, 2023  $-   $-   $3,542,888   $3,542,888 
Balance, June 30, 2024  $301,875   $71,500   $2,584,238   $2,957,613 

 

On February 9, 2024, the Company acquired intellectual property by issuing 7,297,090 common shares of the Company. The intellectual property acquired encompasses a suite of sophisticated features, including advanced liquidity provisioning, innovative trading strategies and technologies, along with the distribution, management and analytics of decentralized financial data. These elements are tailored to support the Solana-focused trading desk operated by the Company. At the time of acquisition, the intangible assets were in an early stage of research and development, with significant uncertainties surrounding its future market demand, sales price and production costs, and as such, on February 9, 2024, the Company recognized an impairment loss of $4,962,021.

 

10.Accounts payable and accrued liabilities

 

   30-Jun-24   31-Dec-23 
Corporate payables  $31,560,993   $4,443,937 
Digital asset liquidity provider   4,760,890    4,402,557 
Related party payable (Note 21)   94,394    328,352 
   $36,416,277   $9,174,846 

 

11.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among three different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. During the six months ended June 30, 2024, the Company repaid loans of US$29,500,000. As of June 30, 2024, the loan principal of $13,687,000 (US$10,000,000) (December 31, 2023 - $52,242,700 (US$39,500,000)) was outstanding. The loans terms are 90 days have interest rates ranging from 7.25% and 10.5% The extended loans are secured with 475 BTC and 1845 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis. On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,724,603 and secured with 475 BTC. See Note 7.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of June 30, 2024, the loan principal of $4,106,100 (US$3,000,001) (December 31, 2023 - $3,967,801 (US$3,000,001)) was outstanding.

 

21

 

 

12.ETP holders payable

 

The fair market value of the Company’s ETPs as at June 30, 2024 and December 31, 2023 were as follows:

 

  

June 30,
2024

$

  

December 31,
2023

$

 
Valour Bitcoin Zero EUR   21,638,739    13,325,026 
Valour Bitcoin Zero SEK   177,425,985    113,727,037 
Valour Ethereum Zero EUR   2,428,454    1,426,174 
Valour Ethereum Zero SEK   95,530,104    64,723,237 
Valour Polkadot EUR   139,967    217,017 
Valour Polkadot SEK   18,547,831    18,056,128 
Valour Cardano EUR   107,328    105,209 
Valour Cardano SEK   32,884,793    43,131,123 
Valour Uniswap EUR   190,107    132,960 
Valour Uniswap SEK   3,973,205    2,780,982 
Valour Binance EUR   43,888    1,560 
Valour Binance SEK   1,128,578    - 
Valour Solana EUR   7,160,499    4,215,658 
Valour Solana SEK   327,713,756    232,410,677 
Valour Cosmos EUR   188,318    159,572 
Valour Digital Asset Basket 10 EUR   594,865    301,427 
Valour Digital Asset Basket 10 SEK   4,446    42,770 
Valour Bitcoin Carbon Neutral EUR   18,382    5,288 
Valour Avalanche EUR   358,273    137,447 
Valour Avalanche SEK   18,227,456    13,034,136 
Valour Enjin EUR   17,436    197,061 
Valour Ripple SEK   4,517,635    - 
Valour Toncoin SEK   1,406,069    - 
Valour Chainlink SEK   293,597    - 
Valour ICP SEK   938,521    - 
Valour Bitcoin Staking SEK   2,442,085    - 
Valour Hedera EUR   65,192    - 
Valour Hedera SEK   11,729    - 
Valour CORE SEK   14,290    - 
Valour BTC Staking EUR   5,694    - 
Valour Short BTC SEK   75,332    - 
1Valour Bitcoin Physical Carbon Neutral   357,156    - 
1Valour Ethereum Physical Staking   458,647    - 
1Valour Internet Computer Physical Carbon Neutral   10,177,818    - 
1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip   982,511    - 
    730,068,689    508,130,490 

 

22

 

 

12.ETP holders payable (continued)

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

13.Realized and net change in unrealized gains and (losses) on digital assets

 

   Three months ended June,   Six months ended June, 
   2024   2023   2024   2023 
Realized gains / (loss) on digital assets  $219,549,331   $(16,138,894)  $289,239,113   $(25,746,890)
Unrealized gains / (loss) on digital assets   (306,200,061)   3,583,285    (58,766,787)   76,209,814 
   $(86,650,730)  $(12,555,609)  $230,472,326   $50,462,924 

 

14.Realized and net change in unrealized gains and (losses) on ETP payables

  

   Three months ended June,   Six months ended June, 
   2024   2023   2024   2023 
Realized gains / (loss) on ETPs  $(34,477,869)  $(5,588,510)  $(134,238,059)  $27,245,938)
Unrealized gains / (loss) on ETPs   243,572,864    24,572,571    15,079,169    (83,775,368)
   $209,094,995   $18,984,061   $(119,158,890)  $(56,529,430)

 

15.Expenses by nature

 

   Three months ended
June 30,		   Six months ended
June 30		 
   2024   2023   2024   2023 
Management and consulting fees  $28,831,959   $1,195,609   $30,285,078   $2,285,224 
Travel and promotion   1,029,962    122,323    1,604,496    239,616 
Office and rent   (134,658)   224,026    460,906    852,654 
Accounting and legal   754,137    157,068    1,007,043    370,594 
Regulatory and transfer agent   30,580    56,441    122,595    123,848 
   $30,511,981   $1,755,467   $33,480,118   $3,871,936 

 

16.Share Capital

 

a)As at June 30, 2024 and December 31, 2023, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non- retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

23

 

 

16.Share Capital (continued)

 

b)Issued and outstanding shares

 

   Number of
Common Shares		   Amount 
Balance, December 31, 2022   219,010,501   $166,151,401 
Private placement financings   11,812,500    1,117,145 
Shares issued for debt settlement   13,697,095    1,449,102 
Warrant allocation        (243,330)
Options exercised   575,000    181,585 
DSU exercised   757,500    317,150 
Issued on convertible debt   30,000,000    1,585,524 
Shares issued on acquisition of investment   805,612    128,898 
Balance, December 31, 2023   276,658,208   $170,687,476 
Acquisition of Refelxivty LLC (see Note 8)   5,000,000    3,100,000 
Acquisiton of Solana IP (see Note 9)   7,297,090    4,962,021 
DSU exercised   2,107,281    1,753,984 
Options exercised   1,380,000    712,024 
Warrant exercised   5,691,798    1,787,347 
NCIB   (680,000)   (1,314,019)
Balance, June 30, 2024   297,454,377   $181,688,832 

 

During the year ended December 31, 2023, the Company issued 13,697,095 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $172,093. Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

On October 24, 2023, the Company issued convertible debt in exchange for $3,000,000, the notes mature two years from issuance and accrue interest at 8% per annum. Upon conversion or at the maturity of the note the notes were convertible for an equal number of common shares and share purchase warrants, of the Company with an exercise price of $0.20. An officer of the Company subscribed for $361,250 convertible debt.

 

On November 6, 2023, the conversion option was exercised resulting in the issuance of 30,000,000 common shares of the Company and 30,000,000 warrants, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.20 for a period of 60 months following the closing date. At the issue date, the fair value of the warrants was estimated at $0.10 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 151.9%; risk-free interest rate of 3.87% and an expected life of 5 years. As a result of the conversion option, an officer of the Company received 3,612,500 common shares and 3,612,500 warrants for his convertible debenture.

 

On November 6, 2023, the Company issued 805,612 common shares of the Company in exchange for a $128,898 investment in Neuronomics AG. The shares were valued based on the closing price of the Company’s stock at the date of the exchange. An officer of the Company received 402,808 common shares in exchange for 362 shares of Neuromomics AG.

 

On November 22, 2023, the Company closed a non-brokered private placement financing and issued 11,812,500 units for gross proceeds of $1,890,000 at a price of $0.16 per unit, each unit consists of one common shares of the company and one warrant, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.23 for a period of 24 months following the closing date. An officer of the Company subscribed 3,125,000 units for $335,167. At the issue date, the fair value of the warrants was estimated at $0.16 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 139.6%; risk-free interest rate of 4.40% and an expected life of 2 years.

 

24

 

 

16.Share Capital (continued)

 

b)Issued and outstanding shares

 

On June 11, 2024, under the terms of the NCIB, the Company may, if considered advisable, purchase its common shares in open market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms, not to exceed up to 10 per cent of the public float for the common shares as of June 3, 2024, or 26,996,392 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange, as measured from Dec. 1, 2023, to May 31, 2024. The NCIB shall commence on June 10, 2024, and run through June 9, 2025, or on such earlier date as the NCIB is complete.

 

During the six months ended June 30, 2024, the Company purchased and cancelled 680,000 shares at an average price of $1.93 (December 31, 2023 – purchased and cancelled no shares).

 

17.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
   Number of
Options		   Weighted
average
exercise
prices		   Value of
options		   Number of
DSU		   Value of
DSU		   Number of
warrants		   Weighted
average
exercise
prices		   Value of
warrants		   TotalValue 
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   8,900,000    0.10    875,928    4,359,286    2,044,291    41,812,500    0.21    2,430,661    5,350,880 
Exercised   (575,000)   0.15    (86,710)   (757,500)   (317,150)   -    -    -    (403,860)
Expired / cancelled   (2,697,500)   1.11    (3,138,269)   (327,500)   (663,587)   (12,684,560)   0.03    (423,261)   (4,225,117)
December 31, 2023   23,405,000   $0.84   $17,995,714    9,644,286   $8,040,660    45,868,426   $0.30   $2,595,513   $28,631,887 
Granted   4,825,000    0.63    3,034,858    2,700,000    2,016,642    -    -    -    5,051,501 
Exercised   (1,380,000)   0.19    (256,572)   (2,107,281)   (1,753,984)   (5,089,425)   0.08    (407,932)   (2,418,488)
Expired / cancelled   (450,000)   1.94    (874,002)   (1,000,000)   -    -    -         (874,002)
June 30, 2024   26,400,000   $0.84   $19,899,998    9,237,005   $8,303,318    40,779,002   $0.21   $2,187,581   $30,390,898 

  

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

On March 12, 2024, the Company granted 125,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.69 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $79,575 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

On April 23, 2024, the Company granted 250,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.77 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $163,325 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.79%; and an expected average life of 5 years.

 

25

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

17.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

On May 1, 2024, the Company granted 250,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.77 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $172,950 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.63%; and an expected average life of 5 years.

 

On May 21, 2024, the Company granted 200,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.03 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $190,380 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.79%; and an expected average life of 5 years.

 

On June 4, 2024, the Company granted 4,000,000 stock options to consultants of Company to purchase common shares of the Company for the price of $1.26 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $4,658,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.5%; risk-free interest rate of 4.08%; and an expected average life of 5 years.

 

On July 13, 2023, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.115 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $105,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 154.3%; risk-free interest rate of 3.47%; and an expected average life of 5 years.

 

On November 24, 2023, the Company granted 2,650,000 stock options to a consultant and directors of the Company to purchase common shares of the Company for the price of $0.29 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $731,400 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.7%; risk- free interest rate of 3.83%; and an expected average life of 5 years. Directors of the received 2,500,000 options.

 

On December 4, 2023, the Company granted 4,500,000 stock options to an officer of the Company to purchase common shares of the Company for the price of $0.45 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $2,162,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.9%; risk-free interest rate of 3.54%; and an expected average life of 5 years.

 

On December 11, 2023, the Company granted 750,000 stock options to a consult and directors of the Company to purchase common shares of the Company for the price of $0.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $192,525 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 69.6%; risk-free interest rate of 3.53%; and an expected average life of 5 years. Directors of the received 500,000 options.

 

On December 11, 2023, the Company granted 750,000 stock options to a consult and directors of the Company to purchase common shares of the Company for the price of $0.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $308,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 153.1%; risk- free interest rate of 3.53%; and an expected average life of 5 years. Directors of the received 500,000 options.

 

26

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

17.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

The Company recorded $3,034,862 of share-based payments during the six months ended June 30, 2024 (six months ended June 30, 2023 - $277,136).

 

The following share-based payment arrangements were in existence at June 30, 2024:

 

Number outstanding   Number exercisable   Grant date  Expiry date  Exercise price   Fair value at grant date   Grant date share price   Expected volatility   Expected life (yrs)  Expected dividend yield   Risk-free interest rate 
 480,000    480,000   16-Nov-20  16-Nov-25  $0.09    38,016   $0.09    138.70%  5   0%   0.46%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26  $1.58    1,906,500   $2.12    145.70%  5   0%   0.99%
 2,070,000    2,070,000   09-Apr-21  09-Apr-26  $1.58    3,309,102   $1.78    145.20%  5   0%   0.95%
 2,800,000    2,800,000   18-May-21  18-May-26  $1.22    3,150,560   $1.25    145.60%  5   0%   0.95%
 1,000,000    1,000,000   18-May-21  18-May-26  $1.22    1,125,200   $1.25    145.60%  5   0%   0.95%
 1,950,000    1,950,000   25-May-21  25-May-26  $1.11    1,944,540   $1.11    145.50%  5   0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26  $1.58    1,461,305   $1.43    143.70%  5   0%   0.84%
 250,000    250,000   21-Sep-21  21-Sep-26  $1.70    380,375   $1.70    144.00%  5   0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26  $2.10    470,375   $2.10    144.00%  5   0%   1.27%
 500,000    500,000   09-Nov-21  09-Nov-26  $3.92    1,758,050   $3.92    144.30%  5   0%   1.37%
 250,000    250,000   31-Dec-21  31-Dec-26  $3.11    698,525   $3.11    145.00%  5   0%   1.25%
 500,000    500,000   09-May-22  09-May-27  $2.00    591,950   $1.34    146.00%  5   0%   2.76%
 500,000    500,000   20-May-22  20-May-27  $1.00    334,300   $0.75    146.80%  5   0%   2.70%
 400,000    400,000   21-Jul-22  21-Jul-27  $0.80    195,640   $0.50    147.50%  5   0%   3.00%
 500,000    500,000   17-Oct-22  17-Oct-27  $0.17    75,350   $0.17    149.50%  5   0%   3.60%
 225,000    225,000   19-Oct-22  19-Oct-27  $0.17    33,930   $0.17    149.40%  5   0%   3.71%
 1,000,000    500,000   13-Jul-23  13-Jul-28  $0.115    105,000   $0.12    149.10%  5   0%   3.71%
 1,875,000    937,500   24-Nov-23  24-Nov-28  $0.29    517,500   $0.29    151.70%  5   0%   3.83%
 4,500,000    3,375,000   04-Dec-23  04-Dec-28  $0.45    2,162,700   $0.45    151.90%  5   0%   3.54%
 375,000    -   11-Dec-23  11-Dec-28  $0.52    154,350   $0.52    153.10%  5   0%   3.53%
 125,000    31,250   12-Mar-24  12-Mar-29  $0.69    79,575   $0.69    154.30%  5   0%   3.47%
 250,000    -   23-Apr-24  23-Apr-29  $0.77    163,325   $0.77    154.30%  5   0%   3.79%
 250,000    -   01-May-24  01-May-29  $0.77    172,950   $0.77    154.30%  5   0%   3.63%
 200,000    -   21-May-24  21-May-29  $1.03    190,380   $1.03    154.30%  5   0%   3.79%
 4,000,000    -   04-Jun-24  04-Jun-29  $1.26    4,658,000   $1.26    154.50%  5   0%   4.08%
 26,400,000    18,668,750               25,677,498                                

 

The weighted average remaining contractual life of the options exercisable at June 30, 2024 was 2.4 years (December 31, 2023 – 3.46 years).

 

27

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

17.Share-based payments reserves (continued)

 

Warrants

 

As at June 30, 2024, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding &
exercisable		   Grant
date		  Expiry
date		  Exercise
price		   Fair value at
grant date		   Grant date
share price		   Expected
volatility		   Expected
life 
(yrs)		  Expected
dividend
yield		   Risk-free
interest
rate		 
Warrants   3,360,509   14-Nov-22  14-Nov-24  $0.30    286,125   $0.17    152.7%  2   0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24  $0.30    19,865   $0.17    152.7%  2   0%   3.87%
Warrants   106,000   29-Nov-22  29-Nov-24  $0.30    9,610   $0.18    141.7%  2   0%   3.95%
Warrants   30,000,000   06-Nov-23  06-Nov-28  $0.20    1,414,476   $0.17    151.9%  5   0%   3.87%
Warrants   7,125,000   22-Nov-23  22-Nov-25  $  0.23    466,167   $0.33    139.6%  2   0%   4.40%
Warrant issue costs                   (8,661)                       
    40,779,002               2,187,581                            

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On May 21, 2024, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,185,000 and vest immediately.

 

On May 21, 2024, the Company granted 1,500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,777,500 and vest in six months from the grant day.

 

On May 21, 2024, the Company granted 200,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $237,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

On July 13, 2023, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On November 24, 2023, the Company granted 1,434,286 DSUs to consultants of the Company. These DSUs have a grant day fair value of $277,500 and vest immediately.

 

On November 24, 2023, the Company granted 925,000 DSUs to officers and consultants of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day. Officers of the Company received 400,000 DSUs.

 

The Company recorded $2,016,642 in share-based compensation during the six months ended June 30, 2024 (six months ended June 30, 2023 - $1,165,743).

 

28

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments

 

Financial assets and financial liabilities as at June 30, 2024 and December 31, 2023 are as follows:

 

   Asset / (liabilities) at amortized cost  

Assets /(liabilities) at fair

value through profit/(loss)

   Total 
December 31, 2023            
Cash  $6,727,482   $-   $6,727,482 
Amounts receivable   54,036    -    54,036 
Private investments   -    43,540,534    43,540,534 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (9,174,846)   -    (9,174,846)
Loan payable   (56,210,709)   -    (56,210,709)
ETP holders payable   -    (508,130,490)   (508,130,490)
June 30, 2024               
Cash  $19,529,425   $-   $19,529,425 
Amounts receivable   134,101    -    134,101 
Private investments   -    40,994,025    40,994,025 
USDC   -    698    698 
Accounts payable and accrued liabilities   (36,416,276)   -    (36,416,276)
Loan payable   (17,793,100)   -    (17,793,100)
ETP holders payable   -    (730,068,689)   (730,068,689)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada, the United States and Europe. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

29

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

Custodian Risks

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its DeFi Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at June 30, 2024, the Company had current assets of $793,652,962 (December 31, 2023 - $497,513,493) to settle current liabilities of $784,499,053 (December 31, 2023 -

$573,516,045).

 

30

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at June 30, 2024 and December 31, 2023:

 

   June 30, 2024 
   Total   Less than 1 year   1-3 years 
Cash  $19,529,425   $19,529,425   $- 
Amounts receivable   134,101    134,101    - 
Prepaid expenses   4,520,767    4,520,767    - 
Digital assets   770,257,971    769,468,669    789,302 
Private investments   40,994,025    -    40,994,025 
Accounts payable and accrued liabilities   (36,416,276)   (36,416,276)   - 
Loans payable   (17,793,100)   (17,793,100)   - 
ETP holders payable   (730,068,689)   (730,068,689)   - 
Total assets / (liabilities) - June 30, 2024  $51,158,224   $9,374,897   $41,783,327 

 

   December 31, 2023 
   Total   Less than 1 year   1-3 years 
Cash   6,727,482   $6,727,482   $- 
Amounts receivable   54,036    54,036    - 
Prepaid expenses   1,509,824    1,509,824    - 
Digital assets   489,865,638    489,222,151    643,487 
Private investments   43,540,534    -    43,540,534 
Accounts payable and accrued liabilities   (9,174,846)   (9,174,846)   - 
Loan payable   (56,210,709)   (56,210,709)   - 
ETP holders payable   (508,130,490)   (508,130,490)   - 
Total assets / (liabilities) - December 31, 2023  $(31,818,531)  $(76,002,552)  $44,184,021 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At June 30, 2024, two investments made up approximately 4.5% (December 31, 2023 – two investments of 7.0%) of the total assets of the Company.

 

For the six months ended June 30, 2024, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.0 million, or $0.01 per share.

 

For the year ended December 31, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.2 million, or $0.02 per share.

 

31

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

Market risk (continued)

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at June 30, 2024, a 1% change in interest rates could result in approximately $195,000 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro, Swiss Franc, Swedish Krona and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at June 30, 2024 and December 31, 2023, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

   June 30, 2024 
   United States   British   Swiss   Euro   SEK 
Cash  $(4,638,863)  $8,058   $3,634,977   $1,909,325   $2,486,173 
Receivables   98,443    -    24,022    -    - 
Private investments   2,510,956    -    38,067,500    -    - 
Prepaid expenses   1,800    -    166,897    -    - 
Digital assets   770,257,971    -    -    -    - 
Accounts payable and accrued liabilities   (1,059,415)   (153,037)   (411,456)   21,989    - 
Loan payable   (17,793,100)   -    -    -    - 
ETP holders payable   (730,068,689)   -    -    -    - 
Net assets (liabilities)  $19,309,103   $(144,979)  $41,481,940   $1,887,336   $2,486,173 

 

   December 31, 2023 
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of June 30, 2024 would result in an estimated increase (decrease) in net income of approximately $ 6,502,000 (December 31, 2023 - $2,601,500).

 

32

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2023 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company's financial instruments, measured at fair value in the statements of financial position as at June 30, 2024 and December 31, 2023.

 

Investments, fair value  Level 1
(Quoted Market price)		  

Level 2

(Valuation
technique -observable
market Inputs)

   Level 3
(Valuation
technique -
non-observable
market inputs)		   Total 
Publicly traded investments  $          -   $               -   $-   $- 
Privately traded invesments   -    -    40,994,025    40,994,025 
Digital assets   -    698    -    698 
June 30, 2024  $-   $698   $40,994,025   $40,994,723 
Publicly traded investments  $-   $-   $-   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 

 

33

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended June 30, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

   June 30,   December 31, 
Investments, fair value for the period ended  2024   2023 
Balance, beginning of period  $         673   $1,586 
Acquired (disposal)   25    (913)
Balance, end of period  $698   $673 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended June 30, 2024 and December 31, 2023. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  June 30,
2024		   December 31,
2023		 
Balance, beginning of period  $43,540,534   $30,015,445 
Purchases   -    128,898 
Unrealized gain/(loss) net   (2,546,509)   13,396,191 
Balance, end of period  $40,994,025   $43,540,534 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at June 30, 2024 and December 31, 2023.

 

34

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

   

             Range of
          Significant  significant
       Valuation  unobservable  unobservable
Description  Fair vaue   technique  input(s)  input(s)
3iQ Corp.  $415,569   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   1,697,640   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   684,418   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   38,067,500   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
June 30, 2024  $40,994,025          
               
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   39,395,000   Market approach  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          

 

3iQ Corp. (“3iQ”)

 

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at June 30, 2024, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $41,557 (December 31, 2023 - $121,689) change in the carrying amount.

 

Amina Bank AG (formerly SEBA Bank AG) (“Amina”)

 

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at June 30, 2024, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of Amina will result in a corresponding +/- $3,806,750 (December 31, 2023 +/- $3,939,500) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

 

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at June 30, 2024, the valuation of BPC was based on BPC weighted average of comparable public market stock prices of $4.20 per share, which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $169,764 (December 31, 2023 - $213,828) change in the carrying amount.

 

35

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements

For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

18.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Earnity Inc. (“Earnity”)

 

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity. As at June 30, 2024, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2024, a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

Luxor Technology Corporation (“LTC”)

 

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at June 30, 2024, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $68,442 (December 31, 2023 - $66,137) change in the carrying amount.

 

SDK:Meta LLC

 

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at June 30, 2024, the valuation of SDK:Meta LLC was $nil (December 31, 2023 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at June 30, 2024, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

 

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at June 30, 2024, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2023 - $nil) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

 

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at June 30, 2024, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at June 30, 2024. As at June 30, 2024, a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2023 - $nil) change in the carrying amount.

 

36

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open-source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.
-Paper wallets are simply paper printouts of private and public addresses.
-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.
-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.
-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

(c)Digital currency risk factors: Political, regulatory risk and technology in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

37

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;
b)to give shareholders sustained growth in value by increasing shareholders’ equity; while
c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and
b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the six months ended June 30, 2024.

 

21.Related party disclosures

 

a)The condensed consolidated interim financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   % equity interest 
DeFi Capital Inc.   100 
DeFi Holdings (Bermuda) Ltd.   100 
Electrum Streaming Inc.   100 
Reflexivity LLC   100 
Valour Inc.   100 
DeFi Europe AG   100 
Valour Digital Securities Limited   0 

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non- executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the three and six months ended June 30, 2024 and 2023 were as follows:

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2024   2023   2024   2023 
Short-term benefits  $330,006   $239,975   $660,012   $532,568 
Shared-based payments   674,004    72,360    1,905,741    197,331 
   $1,004,010   $312,335   $2,565,753   $729,899 

 

38

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Related party disclosures (continued)

 

As at June 30, 2024, the Company had $83,435 (December 31, 2023 - $147,485) owing to its current key management, and $314,136 (December 31, 2023 - $314,136) owing to its former key management. Such amounts are unsecured, non- interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the three and six months ended June 30, 2024 and 2023, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2024   2023   2024   2023 
2227929 Ontario Inc.  $30,000   $30,000   $60,000   $60,000 
   $30,000   $30,000   $60,000   $60,000 

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at June 30, 2024, the Company had a payable balance of $293,800 (December 31, 2023 - $226,000) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

As at June 30, 2024, the Company incurred $14,917 (June 30, 2023 - $92,447) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $10,959 (December 31, 2023 – $165,868) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($76,519) (December 31, 2023 - $74,466) expenses owed to Vik Pathak, a former director and officer of the Company. See Note 17.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of June 30, 2024 and December 31, 2023.

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $1,697,640 
Aminna Bank AG *  Former Director (Olivier Roussy Newton) of investee   38,067,500 
Total investment - June 30, 2024     $39,765,140 

 

Investment  Nature of relationship to invesment  Estimated Fair value 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton) of investee   39,395,000 
Total investment - December 31, 2023     $41,533,380 

 

*Private companies

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at June 30, 2024.

 

39

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

21.Related party disclosures (continued)

 

During the year ended December 31, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

During the year ended December 31, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

22.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,312,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $974,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

23.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in the Untied States, Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. The United States operates the Company’s research firm. Information about the Company’s assets by geographical location is detailed below.

 

June 30, 2024  Canada   United States   Bermuda   Cayman Islands   Total 
Cash   601,490    271,935    -    18,656,000    19,529,425 
Amounts receivable   -    98,443    -    35,658    134,101 
Prepaid expenses   1,899,937    2,464    6,354    2,612,012    4,520,767 
Digital Assets   666,446    -    172,663    769,418,862    770,257,971 
Property, plant and equipment   -    -    982    1,367    2,349 
Other non-current assets   92,083,163    -    -    1,216,890    93,300,053 
Total assets   95,251,036    372,842    179,999    791,940,789    887,744,666 

 

December 31, 2023  Canada   Bermuda   Cayman Islands   Total 
Cash   59,069    -    6,668,412    6,727,481 
Amounts receivable   6,878    -    47,159    54,037 
Public investments   -    -    -    - 
Prepaid expenses   77,521    -    1,432,303    1,509,824 
Digital Assets   503,669    218,131    489,143,837    489,865,637 
Property, plant and equipment   -    5,073    2,606    7,679 
Other non-current assets   92,578,559    -    1,216,890    93,795,449 
Total assets   93,225,696    223,204    498,511,207    591,960,107 

 

40

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the six months ended June 30, 2024  DeFi   Reflexivity   DeFi
Bermuda		   Defi Alpha   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   162,777    10,381    (57,451)   111,475,008    118,881,611    230,472,326 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    -    -    (119,158,890)   (119,158,890)
Staking and lending income   -    -    61    -    14,070,962    14,071,024 
Management fees   -    -    -    -    3,877,314    3,877,314 
Research revenue   -    840,451    -    -    -    840,451 
Node revenue   -    -    4,709    -    -    4,709 
Realized (loss) on investments, net   -    -    -    -    634,271    634,271 
Unrealized (loss) on investments, net   (1,745,187)   -    -    -    (753,231)   (2,498,418)
Interest income   1,512    -    -    -    -    1,512 
Total revenue   (1,580,898)   850,832    (52,681)   111,475,008    17,552,038    128,244,299 
Expenses                              
Operating, general and administration   2,132,333    612,461    6,307    27,172,254    3,556,763    33,480,118 
Share based payments   5,051,505    -    -    -    -    5,051,505 
Depreciation - property, plant and equipment   -    -    4,091    -    1,237    5,328 
Amortization - intangibles   1,031,379    -    -    -    -    1,031,379 
Finance costs   10,684    -    -    -    2,656,085    2,666,769 
Transaction costs   13,220    -    -    841,294    725,690    1,580,204 
Foreign exchange (gain) loss   40,952    -    -    -    7,100,254    7,141,206 
Impairment loss   4,962,021    -    -    -    -    4,962,021 
Total expenses   13,242,094    612,461    10,398    28,013,548    14,040,030    55,918,530 
Income (loss) before other item   (14,822,992)   238,371    (63,078)   83,461,460    3,512,008    72,325,769 
Other comprehensive income (loss)                              
Foreign currency translation (loss) gain   -    1,832    5,984    -    (1,166,405)   (1,158,589)
Net (loss) income and comprehensive (loss) income for the period   (14,822,992)   240,203    (57,094)   83,461,460    2,345,603    71,167,180 

 

For the six months ended June 30, 2023  DeFi   DeFi
Bermuda		   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (5,029)   50,467,953    50,462,924 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (56,529,430)   (56,529,430)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    122    1,336,353    1,336,475 
Management fees   -    -    459,693    459,693 
Node revenue   -    4,976    -    4,976 
Realized (loss) on investments, net   -    -    (4,025)   (4,025)
Unrealized (loss) on investments, net   221,401    -    93,461    314,862 
Interest income   570    -    (313)   257 
Total revenue   221,971    69    (4,176,307)   (3,954,267)
Expenses                    
Operating, general and administration   1,677,555    16,346    2,178,035    3,871,936 
Share based payments   1,442,880    -    -    1,442,880 
Depreciation - property, plant and equipment   -    5,235    1,237    6,472 
Depreciation - right of use assets   -    -    -    - 
Amortization - intangibles   1,019,150    -    -    1,019,150 
Finance costs        -    1,561,529    1,561,529 
Transaction costs   -    -    319,719    319,719 
Foreign exchange (gain) loss   (44,754)   -    4,798,783    4,754,029 
Total expenses   4,094,831    21,581    8,859,303    12,975,715 
Income (loss) before other item   (3,872,860)   (21,512)   (13,035,611)   (16,929,983)
Loss on settlement of debt   (198,482)             (198,482)
(Loss) before other item   (4,071,342)   (21,512)   (13,035,611)   (17,128,465)
Other comprehensive loss                    
Foreign currency translation (loss) gain   -    (2,378)   1,728,882    1,726,504 
Net (loss) and comprehensive (loss) for the period   (4,071,342)   (23,890)   (11,306,729)   (15,401,961)

 

41

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results

 

The Company has restated its June 30, 2023 condensed consolidated interim statement of financial position, condensed consolidated interim statement of operations and comprehensive loss and condensed consolidated interim statement of cash flow to correct material errors and omissions in its prior filing. The following tables present the impact of the restatement adjustments on the Company’s previously issued condensed consolidated interim financial statements for the three and six months ended June 30, 2023:

 

a.To impair the digital assets held at Genesis to its recoverable amount of $8,325,658 (US$6,288,411).
b.To revalue the fair value 3iQ investments to $1,246,816.
c.To revalue the fair value of SEBA Bank AG to $26,014,500.

 

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   June 30,
2023
$
As previously reported		   Restatement   June 30,
2023
$
As Restated		 
Assets            
Current            
Cash and cash equivalents   3,680,828         3,680,828 
Amounts receivable    193,034         193,034 
Public investments, at fair value through profit and loss   -         - 
Prepaid expenses   1,792,612         1,792,612 
Digital assets   117,394,970    (10,822,637)   106,572,333 
Digital assets loaned   39,756,515         39,756,515 
Digital assets staked   26,243,271         26,243,271 
Total current assets   189,061,230    (10,822,637)   178,238,594 
Private investments, at fair value through profit and loss   43,726,337    (13,489,824)   30,236,513 
Digital assets   71,949         71,949 
Equipment   14,151         14,151 
Intangible assets   4,562,038         4,562,038 
Goodwill   46,712,027         46,712,027 
Total assets   284,147,732    (24,312,461)   259,835,271 
Liabilities and shareholders’ equity               
Current liabilities               
Accounts payable and accrued liabilities   6,007,556         6,007,556 
Loans payable   55,845,153         55,845,153 
ETP holders payable   183,159,061         183,159,061 
Total current liabilities   245,011,769    -    245,011,769 
Shareholders’ equity               
Common shares   167,132,221         167,132,221 
Preferred shares   4,321,350         4,321,350 
Share-based payments reserves   25,990,572         25,990,572 
Accumulated other comprehensive income   (1,269,714)        (1,269,714)
Deficit   (157,038,466)   (24,312,461)   (181,350,927)
Total equity   39,135,963    (24,312,461)   14,823,503 
Total liabilities and equity   284,147,732    (24,312,461)   259,835,272 

 

42

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)

 

 

   Three months ended June 30,   Six months ended June 30, 
   2023
$
As previously reported		   Restatement   2023
$
As Restated		   2023
$
As previously reported		   Restatement   2023
$
As Restated		 
Revenues                        
Realized and net change in unrealized gains and (losses) on digital assets   (11,921,614)   (633,995)   (12,555,609)   58,852,213    (8,389,289)   50,462,924 
Realized and net change in unrealized gains and (losses) on ETP payables   18,984,061         18,984,061    (56,529,430)        (56,529,430)
Staking and lending income   764,662         764,662    1,336,475         1,336,475 
Management fees   244,016         244,016    459,693         459,693 
Node revenue   -845         (845)   4,976         4,976 
Realized (loss) on investments, net   (3,438)        (3,438)   (4,025)        (4,025)
Unrealized (loss) on investments, net   (42,491)        (42,491)   314,862         314,862 
Interest income   (572)        (572)   257         257 
Total revenues   8,023,780    (633,995)   7,389,784    4,435,022    (8,389,289)   (3,954,267)
Expenses                              
Operating, general and administration   1,755,467         1,755,467    3,871,936         3,871,936 
Share based payments   501,594         501,594    1,442,880         1,442,880 
Depreciation - property, plant and equipment   3,236         3,236    6,472         6,472 
Depreciation - right of use assets   -34,034         (34,034)   -         - 
Amortization - intangibles   509,575         509,575    1,019,150         1,019,150 
Finance costs   275,063         275,063    1,561,529         1,561,529 
Transaction costs   86,944         86,944    319,719         319,719 
Foreign exchange gains (loss)   4,743,568         4,743,568    4,754,029         4,754,029 
Total expenses   7,841,413    -    7,841,413    12,975,715    -    12,975,715 
Income (loss) before other item   182,367    (633,995)   (451,629)   (8,540,694)   (8,389,289)   (16,929,983)
Loss on settlement of debt   (198,482)        (198,482)   (198,482)        (198,482)
Net income (loss) for the period   (16,115)   (633,995)   (650,111)   (8,739,176)   (8,389,289)   (17,128,465)
Other comprehensive loss                              
Foreign currency translation loss   1,692,615    -    1,692,615    1,726,504    -    1,726,504 
Net income (loss) and comprehensive income (loss) for the period   1,676,500    (633,995)   1,042,504    (7,012,672)   (8,389,289)   (15,401,961)
                               
(Loss) per share                              
Basic   (0.00)        (0.00)   (0.04)        (0.08)
Diluted   (0.00)        (0.00)   (0.04)        (0.08)
                               
Weighted average number of shares outstanding:                              
Basic   220,295,703         220,295,703    219,656,652         219,656,652 
Diluted   220,295,703         220,295,703    219,656,652         219,656,652 

 

43

 

 

DeFi Technologies Inc.

Notes to the condensed consolidated interim financial statements For the three and six months ended June 30, 2024 and 2023

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Cash Flows (Expressed in Canadian dollars)

 

 

   Six months ended June 30, 
   2023
$
As previously reported		   Restatement   2023
$
As
Restated		 
Cash (used in) provided by operations:            
Net (loss) for the year  $(8,739,176)  $(8,389,289)  $(17,128,465)
Adjustments to reconcile net (loss) income to cash (used in)               
operating activities:               
Share-based payments   1,442,880         1,442,880 
Loss on debt for shares   198,482         198,482 
Interest expense   1,561,529         1,561,529 
Interest paid   (32,273)        (32,273)
Depreciation - Property, plant & equipment   6,472         6,472 
Depreciation - right of use assets   -         - 
Amortization - Intangible asset   1,019,150         1,019,150 
Realized loss on investments, net   4,025         4,025 
Unrealized (gain) loss on investments, net   (314,862)        (314,862)
Realized and net change in unrealized (gains) and loss on digital assets   (58,852,213)   8,389,289    (50,462,924)
Realized and net change in unrealized (gains) and loss on ETP   56,529,430         56,529,430 
Staking and lending income   (1,336,475)        (1,336,475)
Node revenue   (4,976)        (4,976)
Management fees   (459,693)        (459,693)
Unrealized loss on foreign exchange   1,471,425         1,471,425 
    (7,506,275)   -    (7,506,275)
Adjustment for:               
Purchase of digital assets   (40,495,137)        (40,495,137)
Disposal of digital assets   34,356,040         34,356,040 
Disposal of investments   12,496         12,496 
Change in amounts receivable   (125,932)        (125,932)
Change in prepaid expenses and deposits   (1,227,869)        (1,227,869)
Change in accounts payable and accrued liabilities   185,178         185,178 
Net cash (used in) operating activities   (14,801,499)   -    (14,801,499)
Financing activities               
Proceeds from ETP holders   56,747,554         56,747,554 
Payments to ETP holders   (47,387,053)        (47,387,053)
Loan Payable   4,319,901         4,319,901 
Net cash provided by financing activities   13,680,402    -    13,680,402 
                
Effect of exchange rate changes on cash and cash equivalents   (104,240)   -    (104,240)
Change in cash and cash equivalents   (1,225,337)   -    (1,225,337)
Cash, beginning of year   4,906,165    -    4,906,165 
Cash and cash equivalents, end of period  $3,680,828   $-   $3,680,828 

 

 

44

 

 

Exhibit 99.148

 

DeFi Technologies and Professional Capital Management Partners to Enter U.S. ETF Market

 

  ● Partnership Announcement: DeFi Technologies Inc. and Professional Capital Management (led by Anthony Pompliano) have partnered to capitalize on opportunities in the fast-growing U.S. exchange-traded fund (ETF) market.

 

  ● Leveraging Expertise for Market Innovation: This partnership combines DeFi Technologies’ expertise in digital asset ETPs, through its subsidiary Valour Inc., with Professional Capital Management’s success in building profitable companies and utilizing media reach.

 

  ● Strategic Market Positioning: The partnership aims to deliver innovative ETF solutions that cater to the evolving needs of U.S. investors while leveraging DeFi Technologies’ and Anthony Pompliano’s unique brand and market positioning to establish a strong presence in the North American ETF market.

 

TORONTO – September 5, 2024 - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that it has partnered with Professional Capital Management, a disruptive investment firm focused on serving self-directed investors with unique capital allocation opportunities. This strategic partnership will focus on identifying and capitalizing on market entry opportunities within the rapidly expanding exchange-traded fund (“ETF”) space in the United States.

 

Over the last two decades, the growth of ETFs has emerged as one of the most disruptive trends within the asset management industry. As of early 2024, the total assets under management (“AUM”) for U.S.-listed ETFs have surpassed US $7.5 trillion, growing at an impressive compound annual growth rate (“CAGR”) of approximately 15% since 2010. This growth, nearly three times faster than that of traditional mutual funds, has been fueled by the increasing popularity of ETFs among both institutional and individual investors.

 

Bridging Expertise to Drive Innovation

 

Professional Capital Management, founded by entrepreneur and investor Anthony Pompliano, is an investment firm that builds businesses to provide unique investment opportunities to self-directed investors. Over the past two years, the firm has co-founded and operated nine profitable companies across various industries, demonstrating a unique ability to solve real-world problems while achieving attractive capital growth. In addition to building businesses, Anthony Pompliano has invested in nearly 200 companies and oversees one of the largest independent financial media platforms in the world, further solidifying his influence in the industry.

 

“ETFs represent a transformative opportunity to redefine how investors access and manage their portfolios,” said Anthony Pompliano. “By partnering with DeFi Technologies, we are combining our strengths to introduce innovative ETF products that cater to the growing demand for active and alternative investment strategies. This joint venture is about pushing the boundaries of what is possible in the ETF space and delivering value to a broader range of investors.”

 

DeFi Technologies brings significant experience to this joint venture through its wholly owned subsidiary, Valour Inc., which has successfully issued a range of exchange-traded products (“ETPs”) across European markets. Valour’s expertise in creating innovative, fully hedged, and physically backed digital asset ETPs uniquely positions DeFi Technologies within the ETF space. Valour’s product suite—including pioneering offerings like the Bitcoin Zero and Ethereum Zero products, which are fully hedged and fee-free—demonstrates a deep understanding of both traditional and digital asset management. This experience in developing cutting-edge ETPs, including the world’s first and only yield-generating Bitcoin ETP, ensures that DeFi Technologies and Professional Capital Management are well-equipped to create differentiated ETF products that meet the evolving needs of investors in the U.S. market.

 

 

 

 

By leveraging Valour’s experience in navigating complex regulatory environments and delivering secure, efficient access to digital assets, DeFi Technologies is poised to accelerate its entry into the U.S. ETF market. This joint venture represents a strategic step forward in expanding DeFi Technologies’ footprint in the rapidly growing ETF sector, utilizing its established ETP expertise to offer innovative investment solutions across both digital and traditional asset classes.

 

“We are thrilled to join forces with Professional Capital Management, a firm that shares our vision for innovation and growth,” said Olivier Roussy Newton, CEO of DeFi Technologies. “This joint venture combines the best of both worlds: our deep expertise in digital assets and ETPs and their exceptional ability to scale profitable ventures and find unique investment opportunities. Together, we are well-positioned to lead the next wave of ETF innovation in the U.S. market, encompassing both digital assets and beyond.”

 

About Professional Capital Management

 

Professional Capital Management is a modern investment firm dedicated to serving self-directed investors with unique investment opportunities. With a focus on innovation, Professional Capital Management has successfully co-founded and scaled numerous profitable companies across diverse industries. Led by a team of seasoned entrepreneurs and investors, including founder Anthony Pompliano, the firm is committed to transforming ideas into real-world solutions. For more information please visit https://www.professionalcapital.com/

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Follow DeFi Technologies on Linkedin and Twitter, or visit defi.tech for more information.

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets like Bitcoin in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free.

 

2

 

 

For more information about Valour, to subscribe, or to receive updates, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the objectives and potential business opportunities of the partnership between DeFi Technologies and Professional Capital Management; expected synergies from the partnership; and the growth and adoption of ETFs, decentralized finance, and digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of any ETFs or ETPs developed by the Company and Professional Capital Management; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

 

3

 

 

Exhibit 99.149

 

 

DeFi Technologies Refiles 2023 Annual Financial Statements

 

Toronto, Ontario – (September 6, 2024) – DeFi Technologies Inc. (the "Company" or "DeFi Technologies") (Cboe CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance, announces that it has refiled its 2023 annual consolidated financial statements (the “Refiled 2023 FS”) to include an amended auditor’s report delivered by HDCPA Professional Corporation (the “Auditors”). The date of the 2023 FS remains unchanged and the Refiled 2023 FS have not been restated in any respect.

 

In connection with a continuous disclosure review by the Ontario Securities Commission, the Company determined to refile the Auditors’ report on the Company’s previously filed 2023 annual consolidated financial statements (the “Original 2023 FS”) to correctly identify the period over which the Auditors are providing assurance. The Refiled 2023 FS include an amended Auditors report which (a) identifies that the Auditors did not audit or express an opinion on the Company’s 2022 financial statements, (b) corrects a typographical error in the “Other Matters” section to refer to “December 31, 2023”, and (c) adds certain note references under “Description of the Key Audit Matter”.

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionizing the way individuals and institutions interact with the evolving financial ecosystem. Join DeFi Technologies’ digital community on Linkedin and Twitter, and for more details, visit https://defi.tech/ 

 

Cautionary note regarding forward-looking information:

 

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to statements relating to the Refiled 2023 FS; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but are not limited to the acceptance of ETPs by exchanges; growth and development of the decentralised finance and digital asset sector; rules and regulations with respect to decentralised finance and digital assets; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

# # #

 

For further information, please contact:

 

Olivier Roussy Newton
Chief Executive Officer
ir@defi.tech
(323) 537-7681

 

Exhibit 99.150

 

NOTICE TO READER

 

The Company has re-filed its 2023 annual consolidated financial statements (the “Refiled 2023 FS”) to include an amended auditor’s report delivered by HDCPA Professional Corporation (the “Auditors”). The date of the 2023 FS remains unchanged and the Refiled 2023 FS have not been restated in any respect.

 

The Auditors’ report on the Company’s previously filed 2023 annual consolidated financial statements (the “Original 2023 FS”) was amended to correctly identify the period over which the Auditors are providing assurance. The Refiled 2023 FS include an amended Auditors report which (a) identifies that the Auditors did not audit or express an opinion on the Company’s 2022 financial statements, (b) corrects a typographical error in the “Other Matters” section to refer to “December 31, 2023”, and (c) adds certain note references under “Description of the Key Audit Matter”.

 

These revised financial statements replace and supersede the original financial statements previously filed on SEDAR on April 1, 2024.

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REVISED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

 

 

For the years ended December 31, 2023 and 2022

(expressed in Canadian dollars)

 

 

 

 

 

 

 

 

 

 

2

 

 

 

206-5250 Solar Drive, Mississauga, ON, L4W 0G4

Phone: (647) 793-8100 | Fax: (905) 497-1190

Web: www.hdcpa.ca

 

Independent Auditors’ Report - Revised

 

 

To the Shareholders of DeFi Technologies Inc. (formerly Valour Inc.)

 

Opinion

 

We have audited the consolidated financial statements of DeFi Technologies Inc. and its subsidiaries (the “Group” or the “Company”), which comprise the consolidated statements of financial position as at December 31, 2023, and the consolidated statements of loss and comprehensive loss, changes in shareholders’ equity and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policy information.

 

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2023, and its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board.

 

Basis for Opinion

 

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our opinion.

 

Material Uncertainty Related to Going Concern

 

We draw attention to Note 1 to the consolidated financial statements which describes the material uncertainty that may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

Emphasis of Matter – Restatement of Consolidated Financial Statements

 

We draw attention to Note 24 to the consolidated financial statements which describes i) that the consolidated financial statements that originally reported on March 31, 2023 have been amended, and ii) the matter that gives rise to the amendment of the consolidated financial statements. Our opinion is not modified in respect of this matter.

 

Other Matter – Comparative Information

 

The consolidated financial statements of DeFi Technologies Inc. for the year ended December 31, 2022, excluding the adjustments that were applied to restate certain comparative information, were audited by another auditor who expressed an unmodified audit opinion on those statements on March 31, 2023.

 

3

 

 

As part of our audit of the consolidated financial statements for the year ended December 31, 2023, we also audited the adjustments that were applied to restate certain comparative information presented as at December 31, 2022. In our opinion, such adjustments are appropriate and have been properly applied. Other than with respect to the adjustments that were applied to restate certain comparative information, we were not engaged to audit, review or apply any procedures to the consolidated financial statements as at and for the year ended December 31, 2022. Accordingly, we do not express an opinion or any other form of assurance on those consolidated financial statements taken as a whole.

 

Key Audit Matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2023. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

In addition to the matter described in the Material Uncertainty Related to Going Concern, we have determined the matters described below to be the key audit matters to be communicated in our auditor’s report.

 

1. Digital Assets held at a Counterparty

 

Description of the key audit matter

 

One of the Counterparties is a custodian/exchange that had custody of digital assets amounting to $421,687,911 (2022 – $59,579,414). Through testing of relevant internal controls performed by the auditor’s expert at this Counterparty, significant deficiencies were identified. Please refer to Note 7 and 17 to the consolidated financial statements for further detail.

 

Why the matter is a key audit matter

 

Since sufficient appropriate audit evidence could not be obtained with respect to the operating effectiveness of relevant internal controls, we were unable to place reliance on systems that produce statements and other information relating to the Company’s digital assets held at this counterparty that support the existence and rights & ownership assertion.

 

How our audit addressed the key audit matter

 

We performed additional audit procedures in order to assess the existence and rights & ownership to the digital assets held by this Counterparty as at December 31, 2022 and December 31, 2023, and digital asset transactions for the years then ended. Specifically, our work included, but was not limited to, the following procedures:

 

●Performing walkthroughs and testing the Company’s key controls related to reconciliation of and hedging position analysis of Exchange Traded Products (ETP’s) and Digital Assets;

 

●Obtaining detail of all transaction history from an Application Programming Interface (“API”), re-performing a roll-forward of digital asset balances held with this Counterparty from January 1, 2022 to December 31, 2023 and agreeing to the Company’s roll-forward;

 

●Testing the completeness and accuracy of reports produced from the API;

 

●Agreeing balances as of December 31, 2022 and December 31, 2023 from the roll-forward to the Counterparty confirmation and financial statements of the Company.

 

●Observing the withdrawal of all digital assets by the Company from the Counterparty subsequent to year-end, excluding digital assets held as collateral and minimum requirement for active trading; and

 

●Re-performing the roll-back of digital asset balances held with this Counterparty from the withdrawal date to December 31, 2023 and agreeing it to the Company’s roll-back.

 

4

 

 

2. Digital Assets – Recoverability of Coins held at Genesis Global Capital LLC (“Genesis”)

 

Description of the key audit matter

 

One of the Company’s loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and held 475 Bitcoin as collateral for the loans with a fair value as of December 31, 2023 of $26,513,019 (2022 - $10,609,787). The loans payable as at December 31, 2023 amounted to $8,690,623 (2022- $8,176,439). Please refer to Note 7, 10 and 17 to the consolidated financial statements for further detail.

 

Why the matter is a key audit matter

 

The assessment of the recoverability of the digital assets held as collateral requires management to apply judgement and estimates in assessing whether any of the digital assets will be recovered as a result of the claim from the bankruptcy proceedings.

 

How our audit addressed the key audit matter

 

To address the recoverability of digital assets held as collateral with Genesis, we performed the following procedures:

 

●Reviewing supporting documents for the loan as well as the collateral held with Genesis;

 

●Obtaining an understanding of the Company’s claim through review of legal documents as part of the bankruptcy proceedings;

 

●Sending legal confirmations to determine the current status of the bankruptcy proceedings;

 

●Assessing the client’s write-down of the digital assets to the recoverable amount for completeness and accuracy; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

3. Goodwill – Impairment

 

Description of the key audit matter:

 

The carrying value of Goodwill amounted to $46,712,027 as at December 31, 2023 (2022 - $46,712,027). Under IAS 36, Goodwill shall be assessed for impairment annually. The Company performed an assessment of Goodwill for impairment and concluded that it was not impaired for the year-ended December 31, 2022 and December 31, 2023. Please refer to Note 8 to the consolidated financial statements for further detail.

 

Why the matter is a key audit matter:

 

The assessment of the carrying value requires management to apply judgement and estimates in assessing whether any impairment has arisen at year end, and in quantifying any such impairment. The principal risks relate to the assessment of management’s cash flow forecast and the methodology used to value the Goodwill.

 

5

 

 

How our audit addressed the key audit matter:

 

We evaluated management’s assessment of the carrying value of Goodwill performed with reference to the criteria of IAS 36 and the Company’s accounting policy. Specifically, our work included, but was not limited to, the following procedures:

 

●Evaluating whether the expert engaged by management to value Goodwill has the appropriate expertise;

 

●Evaluating the work of the expert engaged by management to value Goodwill including the valuation techniques and assumptions used in the valuation;

 

●For forecasts prepared by management and used by the valuation expert, performed an analysis to assess the reasonability of key assumptions in the forecast;

 

●We confirmed that the forecasts used as basis for the valuation were appropriately approved by management and the board of directors; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

4. Private Investments – Valuation

 

Description of the key audit matter:

 

The carrying value of Private Investments amounted to $43,540,534 as at December 31, 2023 (2022 - $30,015,445). The Company accounts for these investments at fair value through profit and loss. Please refer to Note 4, 17 and 20 to the consolidated financial statements for further detail.

 

Why the matter is a key audit matter:

 

The assessment of the fair value requires management to apply judgement and estimates in assessing the fair value of the investment. The principal risks relate to the assessment of management’s methodology used to value the investment as well as assessing the fair value of the investment.

 

How our audit addressed the key audit matter:

 

We evaluated management’s assessment of the fair value of investments with reference to the Company’s accounting policy. Specifically, our work included, but was not limited to, the following procedures:

 

●Evaluating the fair value of the investments against subsequent sales of the investments after year-end, where applicable;

 

●Engaging an expert to value private investments with the appropriate expertise;

 

●Evaluating the work of the auditor’s expert to value investments including the valuation technique and assumptions used;

 

●Comparing the valuation from the expert to the valuation prepared by management; and

 

●Reviewing the adequacy of the disclosures in the consolidated financial statements.

 

Other Information

 

Management is responsible for the other information. The other information comprises:

 

●The information included in the Management’s Discussion and Analysis of Financial Conditions and Results of Operations for the year ended December 31, 2023.

 

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

 

6

 

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

 

We obtained the Management’s Discussion and Analysis of Financial Conditions and Results of Operations for the year ended December 31, 2023 prior to the date of this auditor’s report. If, based on the work we have performed on this other information, we conclude that there is a material misstatement of this other information, we are required to report that fact in this auditor’s report. We have nothing to report in this regard.

 

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

 

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

 

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

●Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

●Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

 

●Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

●Conclude on the appropriateness of management’s use of the going concern basis of accounting and, base on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

 

7

 

 

●Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

●Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2023, and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

The engagement partner on the audit resulting in this independent auditor’s report is Harpreet Dhawan.

 

  HDCPA Professional Corporation
Mississauga, ON Chartered Professional Accountants
April 1, 2024 Authorized to practice public accounting by CPA Ontario

 

8

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

 

Table of Contents

 

Consolidated statements of financial position 10
Consolidated statements of operations and comprehensive (loss) 11
Consolidated statements of cash flows 12
Consolidated statements of changes in equity 13
Notes to the consolidated financial statements 14-61

 

9

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)
Consolidated Statements of Financial Position
(Expressed in Canadian dollars)

 

 

       December 31,  

December 31,

 
   Note   2023   2022 
       $   $ 
       (Restated - See Note 24) 
Assets            
Current            
Cash and cash equivalents   3,17    6,727,482    4,906,165 
Amounts receivable   5,17    54,036    67,102 
Public investments, at fair value through profit and loss   4,17    -    17,227 
Prepaid expenses   6    1,509,824    564,742 
Digital assets   7,17    188,342,579    104,148,728 
Digital assets loaned   7    270,362,684    - 
Digital assets staked   7    30,516,888    - 
Total current assets        497,513,493    109,703,964 
                
Private investments, at fair value through profit and loss   4,17,20    43,540,534    30,015,445 
Digital assets   7    643,487    53,358 
Equipment        7,679    20,623 
Right of use assets        -    1,917,174 
Intangible assets   8    3,542,888    5,581,188 
Goodwill   8    46,712,027    46,712,027 
Total assets        591,960,108    194,003,779 
Liabilities and shareholders’ equity               
Current liabilities               
Accounts payable and accrued liabilities   9,17,20    9,174,846    5,822,379 
Loans payable   10,17    56,210,709    52,821,600 
ETP holders payable   11,17    508,130,490    105,740,627 
Total current liabilities        573,516,045    164,384,606 
Non-current liabilities               
Lease liabilities        -    1,709,911 
Total liabilities        573,516,045    166,094,517 
Shareholders’ equity               
Common shares   15(b)(c)   170,687,476    166,151,401 
Preferred shares        4,321,350    4,321,350 
Share-based payments reserves   16    28,631,887    27,909,984 
Accumulated other comprehensive income        (1,652,547)   (2,996,218)
Non-controlling interest        (4,871)   - 
Deficit        (183,539,232)   (167,477,256)
Total equity        18,444,063    27,909,262 
Total liabilities and equity        591,960,108    194,003,779 
Nature of operations and going concern   1           
Commitments and contingencies   21           
Subsequent event   25           

 

Approved on behalf of the Board of Directors:    
     
“Olivier Roussy Newton”   “Stefan Hascoet”
Director   Director

 

See accompanying notes to these consolidated financial statements

 

10

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Operations and Comprehensive (Loss)

(Expressed in Canadian dollars)

 

 

       Years ended December 31, 
   Note   2023   2022 
       $   $ 
       (Restated - see Note 24) 
Revenues            
Realized and net change in unrealized gains and (losses) on digital assets   12    323,958,866    (325,044,954)
Realized and net change in unrealized gains and (losses) on ETP payables   13    (332,100,866)   320,382,227 
Realized and unrealized (loss) on derivative assets        -    (434,073)
Staking and lending income        3,539,352    4,519,001 
Management fees        1,461,594    1,436,455 
Node revenue        15,235    347,758 
Realized (loss) on investments, net   4    (4,150)   (12,077)
Unrealized (loss) on investments, net   4    13,484,504    (15,476,381)
Interest income        1,480    55,264 
Total revenues        10,356,014    (14,226,780)
                
Expenses               
Operating, general and administration   14,20    9,975,267    14,748,059 
Share based payments   16    2,920,219    15,889,455 
Depreciation - property, plant and equipment        12,945    18,342 
Depreciation - right of use assets        -    69,322 
Amortization - intangibles   8    2,038,300    2,277,443 
Finance costs        4,161,136    4,014,038 
Transaction costs        1,029,442    1,113,941 
Foreign exchange loss (gains)        10,338,575    (324,699)
Impairment loss        -    13,865,355 
Total expenses        30,475,884    51,671,256 
Income (loss) before other item        (20,119,870)   (65,898,036)
(Loss) on settlement of debt        (172,093)   - 
Net (loss) for the period        (20,291,963)   (65,898,036)
Other comprehensive loss               
Foreign currency translation gain (loss)        1,343,670    (3,237,282)
Net (loss) and comprehensive income (loss) for the period        (18,948,293)   (69,135,318)
                
Net (loss) attributed to:               
Owners of the parent        (20,287,092)   (65,898,036)
Non-controlling interests        (4,871)   - 
         (20,291,963)   (65,898,036)
                
Net (loss) and comprehensive (loss) attributed to:               
Owners of the parent        (18,943,422)   (69,135,318)
Non-controlling interests        (4,871)   - 
         (18,948,293)   (69,135,318)
                
(Loss) per share               
Basic        (0.09)   (0.32)
Diluted        (0.09)   (0.32)
                
                
Weighted average number of shares outstanding:               
Basic        231,599,905    209,054,713 
Diluted        231,599,905    209,054,713 

 

See accompanying notes to these consolidated financial statements

 

11

 

 

DeFi Technologies Inc.

(Formerly Valour Inc.)

Consolidated Statements of Cash Flows

(Expressed in Canadian dollars)

 

 

       Years ended December 31, 
   Note   2023   2022 
       $   $ 
       (Restated - See Note 24) 
Cash (used in) provided by operations:               
Net (loss) for the year       $(20,291,963)  $(65,898,036)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:               
Share-based payments   16    2,920,219    15,889,455 
Impairment loss        -    13,865,356 
Loss on debt for shares        172,093    - 
Interest income        -    (55,264)
Interest expense   10    4,161,136    4,014,038 
Interest paid        (3,517,580)   - 
Depreciation - Property, plant & equipment        12,945    18,342 
Depreciation - right of use assets        -    69,322 
Amortization - Intangible asset   8    2,038,300    2,277,443 
Realized loss on investments, net        4,150    12,077 
Unrealized (gain) loss on investments, net        (13,484,504)   15,476,381 
Realized and net change in unrealized (gains) and loss on digital assets   12    (323,958,866)   325,044,954 
Realized and net change in unrealized (gains) and loss on ETP   13    332,100,866    (320,382,227)
Realized and unrealized loss on derivative assets   13    -    434,072 
Staking and lending income        (3,539,352)   (4,519,001)
Node revenue        (15,235)   (347,758)
Management fees        (1,461,594)   (1,436,455)
ETP paid in digital assets        1,320,155    - 
Unrealized loss on foreign exchange        440,341    (4,071,748)
         (23,098,889)   (19,609,049)
Adjustment for:               
Purchase of digital assets        (318,355,007)   (231,392,840)
Disposal of digital assets        244,656,544    191,092,048 
Purchase of investments        -    (34,649,658)
Disposal of investments        13,180    28,248 
Change in amounts receivable        13,065    (34,537)
Change in prepaid expenses and deposits        (945,069)   693,287 
Change in accounts payable and accrued liabilities        5,197,664    3,792,777 
Net cash (used in) operating activities        (92,518,511)   (90,079,724)
Investing activities               
Additions to right of use assets        -    (1,411,062)
Lease payment        -    (1,258,033)
Net cash (used in) investing activities        -    (2,669,095)
Financing activities               
Proceeds from ETP holders        308,595,496    242,378,583 
Payments to ETP holders        (223,232,891)   (196,516,517)
Loan Payable        4,629,099    53,117,760 
Proceeds from private placements        4,528,750    1,554,348 
Share issuance costs        -    (14,490)
Proceeds from exercise of warrants   16    -    647,284 
Proceeds from exercise of options   16    94,875    45,000 
Shares repurchased pursuant to NCIB        -    (13,154,570)
Net cash provided by financing activities        94,615,330    88,057,398 
                
Effect of exchange rate changes on cash and cash equivalents        (275,502)   436,552 
Change in cash and cash equivalents        1,821,317    (4,254,869)
Cash, beginning of year        4,906,165    9,161,034 
Cash and cash equivalents, end of year       $6,727,482   $4,906,165 

 

See accompanying notes to these consolidated financial statements

 

12

 

 

DeFi Technologies Inc.
(Formerly Valour Inc.)
Consolidated Statements of Changes in Equity
(Expressed in Canadian dollars)

 

 

                   Share-based payments                      
   Number of Common
Shares		   Common Shares   Number of
Preferred Shares		   Preferred Shares   Options   Deferred Shares
Unit
(DSU)		   Treasury
shares		   Warrants   Share-based
Payments Reserve		   Accumulated
other
comprehensive
income		   Non-controlling
interest		   Deficit   Total 
                                                     
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984    (2,996,218)   -    (167,477,256)   27,909,261 
Warant allocation   -    (243,330)   -    -    -    -    -    243,330    243,330    -    -    -    - 
Private Placement   11,812,500    1,117,145    -    -    -    -    -    772,855    772,855    -    -    -    1,890,000 
Shares issued for debt settlement   13,697,095    1,449,103    -    -    -    -    -    -    -    -    -    -    1,449,103 
Shares issued on convertible debt   30,000,000    1,585,524    -    -    -    -    -    1,414,476    1,414,476    -    -    -    3,000,000 
Shares issued on purchase of investment   805,612    128,898    -    -    -    -    -    -    -    -    -    -    128,898 
Option exercised   575,000    94,875    -    -    -    -    -    -    -    -    -    -    94,875 
Value of options exercised   -    86,710    -    -    (86,710)   -    -    -    (86,710)   -    -    -    - 
Warrants expired   -    -    -    -    -    -    -    (423,261)   (423,261)   -    -    423,261    - 
Options cancelled   -    -    -    -    (3,138,267)   -    -    -    (3,138,267)   -    -    3,138,267    - 
DSU exercised   757,500    317,150    -    -    -    (317,150)   -    -    (317,150)   -    -    -    - 
DSU cancelled   -    -    -    -    -    (663,587)   -    -    (663,587)   -    -    663,587    - 
Share-based payments   -    -    -    -    875,928    2,044,291    -    -    2,920,219    -    -    -    2,920,219 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    1,343,670    (4,871)   (20,287,092)   (18,948,293)
Balance, December 31, 2023   276,658,208   $170,687,476    4,500,000   $4,321,350   $17,968,263   $8,040,660   $27,453   $2,595,513   $28,631,889   $(1,652,548)  $(4,871)  $(183,539,232)  $18,444,063 
                                                                  
Balance, December 31, 2021   211,102,552   $163,265,466    4,500,000   $4,321,350   $18,232,675   $7,051,948   $27,453   $585,986    25,898,062   $241,064   $-   $(101,944,546)  $91,781,396 
Private Placement   7,736,865   $1,367,932    -    -    -    -    -    171,926    171,926    -    -    -    1,539,858 
Shares issued for debt settlement   138,767    296,160    -    -    -    -    -    -    -    -    -    -    296,160 
NCIB   (8,560,100)   (6,743,038)   -    -    -    -    -    -    -    -    -    (6,411,536)   (13,154,574)
Warrants exercised   3,714,917    647,285    -    -    -    -    -    (136,447)   (136,447)   -    -    -    647,285 
Value of warrants exercised   -    136,447    -    -    -    -    -    -    -    -    -    -    - 
Warrants expired   -    -    -    -    -    -    -    (33,352)   (33,352)   -    -    33,352    - 
Option exercised   500,000    45,000    -    -    -    -    -    -    -    -    -    -    45,000 
Value of options exercised   -    39,600    -    -    (39,600)   -    -    -    (39,600)   -    -    -    - 
Options cancelled             -    -    (5,150,380)   -    -    -    (5,150,380)   -    -    5,150,380    - 
DSU exercised   4,377,500    3,561,550    -    -    -    (3,561,550)   -    -    (3,561,550)   -    -    -    - 
Value of DSU exercised   -    3,535,000    -    -    -    (3,535,000)   -    -    (3,535,000)   -    -    -    - 
DSU cancelled   -    -    -    -    -    (1,593,130)   -    -    (1,593,130)   -    -    1,593,130    - 
Share-based payments   -    -    -    -    7,274,617    8,614,838    -    -    15,889,455    -    -    -    15,889,455 
Net (loss) and comprehensive (loss) for the period   -    -    -    -    -    -    -    -    -    (3,237,282)   -    (65,898,036)   (69,135,318)
Balance, December 31, 2022   219,010,501   $166,151,401    4,500,000   $4,321,350   $20,317,312   $6,977,106   $27,453   $588,113   $27,909,984   $(2,996,218)  $-   $(167,477,256)  $27,909,262 

 

See accompanying notes to these consolidated financial statements

 

13

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

1.Nature of operations and going concern

 

DeFi Technologies Inc. (formerly Valour Inc.) (the “Company” or “DeFi”), is a publicly listed company incorporated in the Province of British Columbia and continued under the laws of the Province of Ontario. On January 21, 2021, the Company up listed its shares to NEO Exchange (“NEO”) under the symbol of “DEFI”. DeFi is a Canadian technology company bridging the gap between traditional capital markets and decentralized finance. The Company generates revenues through the issuance of exchange traded products that synthetically track the value of a single DeFi protocol, investments in various companies and leading protocols across the decentralized finance ecosystem to build a diversified portfolio of decentralized finance assets and offering node management of decentralized protocols to support governance, security and transaction validation. The Company’s head office is located at 198 Davenport Road, Toronto, Ontario, Canada, M5R 1J2.

 

These consolidated financial statements were prepared on a going concern basis of presentation, which contemplates the realization of assets and settlement of liabilities as they become due in the normal course of operations for the next fiscal year. As at December 31, 2023, 2023, the Company has working capital (deficiency) of $(76,002,552) (December 31, 2022 - $(54,680,642), including cash of $6,727,482 (December 31, 2022 - $4,906,165) and for the year ended December 31, 2023 had a net loss and comprehensive loss of $18,948,293 (for the year ended December 31, 2022 – $69,135,318). The Company’s current source of operating cash flow is dependent on the success of its business model and operations and there can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. The Company’s status as a going concern is contingent upon raising the necessary funds through the selling of investments, digital assets and issuance of equity or debt. Management believes its working capital will be sufficient to support activities for the next twelve months and expects to raise additional funds when required and available. There can be no assurance that funds will be available to the Company with acceptable terms or at all. These matters constitute material uncertainties that cast significant doubt about the ability of the Company to continue as a going concern.

 

These consolidated financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported revenues and expenses and the balance sheet classifications that would be necessary if the going concern assumption were not appropriate. These adjustments could be material.

 

International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes, and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in global commodity and financial markets and supply chains. Russia’s invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result in additional sanctions or other international action and the escalation of war between Israel and Hamas in Gaza, any of which may have a destabilizing effect on commodity prices, supply chains, and global economies more broadly. Volatility in digital asset prices and supply chain disruptions may adversely affect the Corporation’s business, financial condition, financing options, and results of operations. The extent and duration of the current Russia-Ukraine conflict or the Israel and Hamas conflict in Gaza and related international action cannot be accurately predicted at this time and the effects of such conflict may magnify the impact of the other risks, including those relating to digital asset price volatility and global financial conditions. The situation is rapidly changing and unforeseeable impacts, including on shareholders of the Corporation, and third parties with which the Corporation relies on or transacts, may materialize and may have an adverse effect on the Corporation’s business, results of operation, and financial condition.

 

2.Material accounting policy information

 

(a)Statement of compliance

 

These consolidated financial statements of the Company were prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS”) The policies as set out below were consistently applied to all the periods presented unless otherwise noted. These consolidated financial statements of the Company were approved for issue by the Board of Directors on April 1, 2024.

 

14

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(b)Basis of consolidation

 

Subsidiaries consist of entities over which the Company is exposed to, or has rights to, variable returns as well as the ability to affect these returns through the power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date control is transferred to the Company and are deconsolidated from the date control ceases. The consolidated financial statements include all the assets, liabilities, revenues, expenses and cash flows of the Company and its subsidiary after eliminating inter-entity balances and transactions.

 

These consolidated financial statements of fiscal 2023 comprise the financial statements of the Company and its wholly owned subsidiaries Electrum Streaming Inc. (“ESI”), DeFi Capital Inc. (“DeFi Capital”), DeFi Holdings (Bermuda) Ltd. (“DeFi Bermuda”), Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited. All material intercompany transactions and balances between the Company and its subsidiary have been eliminated on consolidation.

 

Intercompany balances and any unrealized gains and losses or income and expenses arising from intercompany transactions are eliminated in preparing the consolidated financial statements.

 

(c)Basis of preparation and functional currency

 

These consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments and investments that have been measured at fair value. In addition, these consolidated financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

Foreign currency transactions are recorded at the exchange rate as at the date of the transaction. At each statement of financial position date, monetary assets and liabilities in foreign currencies other than the functional currency are translated using the year end foreign exchange rate. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities in foreign currencies other than the functional currency are translated using the historical rate. All gains and losses on translation of these foreign currency transactions and balances are included in the profit and loss. The functional currency for DeFi, DeFi Capital, and ESI is the Canadian dollar, and the functional currency for DeFi Bermuda, Valour Inc., DeFi Europe AG, Crypto 21 AB, Valour Management Limited and Valour Digital Securities Limited is US Dollars.

 

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

 

●assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet,

 

●income and expenses for each statement of loss and comprehensive loss are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and

 

●all resulting exchange differences are recognized in other comprehensive loss.

 

On consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings are recognized in other comprehensive loss. When a foreign operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.

 

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

 

15

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(d)Change in accounting policy

 

During the year ended December 31, 2023, the Company changed its accounting policy regarding the treatment for when the Company sells a portion of its digital asset holdings or when there’s redemptions of its ETP payables. The Company has adopted first in, first out (“FIFO”) to identify the units sold and determine the cost basis to use. As a result, for the year ended December 31, 2023 and 2022, realized gains (loss) on digital assets increase (decreased) by $54,543,334 and $(8,151,116), respectively and unrealized gains (loss) (decreased) increased by $(54,543,334) and $8,151,116, respectively. As a result, for the year ended December 31, 2023 and 2022, realized gains (loss) on ETP payables (decreased) increase by $(44,112,584) and $66,031,477, respectively and unrealized gains (loss) (decreased) increased by $(44,112,584 and $(66,031,477), respectively.

 

There were no changes to the consolidated statements of financial position, consolidated statements of operations and comprehensive (loss) or consolidated statements of cash flow.

 

(e)Significant accounting judgements, estimates and assumptions

 

The preparation of these consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual outcomes can differ from these estimates. The impacts of such estimates are pervasive throughout the consolidated financial statements and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised, and the revision affects both current and future periods.

 

Information about critical judgments and estimates in applying accounting policies that have the most significant effect on the amounts recognized in the condensed consolidated interim financial statements are as follows:

 

(i)Accounting for digital assets

 

Among its digital asset holdings, only USDC was classified by the Company as a financial asset. The rest of its digital assets were classified following the IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss. Digital currencies consist of cryptocurrency denominated assets (see Note 7) and are included in current and long-term assets. Digital currencies are carried at their fair value determined by the spot rate less costs to sell. The cost to sell digital assets is nominal. The digital currency market is still a new market and is highly volatile; historical prices are not necessarily indicative of future value; a significant change in the market prices for digital currencies would have a significant impact on the Company’s earnings and financial position. Fair value is determined by taking the mid-point price at 17:30 CET digital asset exchanges consistent with the final terms for each exchange traded product (“ETP”). The primary digital asset exchanges used to value digital assets are Kraken, Bitfinex, Binance, Coinbase and Bitstamp. Where digital assets held do not have pricing on these exchanges, other exchanges would be used. On all material coins, Kraken, Bitfinex, Counbase and Bitstamp were used. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company revalues its digital assets quarterly.

 

16

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(ii)Accounting for ETP holder payables

 

Financial liabilities at fair value through profit or loss held includes ETP holders payable. Liabilities arising in connection with ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company elected not to designate this as a hedging instrument. The ETPS are actively traded on the Nordic Growth Market (“NGM”) and Germany Borse Frankfurt Zertifikate AG.

 

(iii)Fair value of financial derivatives

 

Investments in options and warrants which are not traded on a recognized securities exchange do not have a readily available market value. Valuation technique such as Black Scholes model is used to value these instruments. Refer to Notes 4 and 17 for further details.

 

(iv)Fair value of investment in securities not quoted in an active market or private company investments

 

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques. The inputs to these models are derived from observable market data where possible, but where observable market data are not available, judgment is required to establish fair values. Refer to Notes 4 and 17 for further details.

 

(v)Share-based payments

 

The Company uses the Black-Scholes option pricing model to fair value options in order to calculate share-based compensation expense. The Black-Scholes model involves six key inputs to determine the fair value of an option: risk-free interest rate, exercise price, market price of the Company’s shares at date of issue, expected dividend yield, expected life, and expected volatility. Certain of the inputs are estimates which involve considerable judgment and are, or could be, affected by significant factors that are out of the Company’s control. The Company is also required to estimate the future forfeiture rate of options based on historical information in its calculation of share-based compensation expense.

 

(vi)Business combinations and goodwill

 

Judgment is used in determining whether an acquisition is a business combination or an asset acquisition. In a business combination, all identifiable assets and liabilities acquired are recorded at their fair values. In determining the allocation of the purchase price in a business combination, including any acquisition related contingent consideration, estimates including market based and appraisal values are used. The contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Goodwill is assessed for impairment annually.

 

(vii)Estimated useful lives and impairment considerations

 

Amortization of intangible assets is dependent upon estimates of useful lives, which are determined through the exercise of judgment. The assessment of impairment of these assets is dependent upon estimates of recoverable amounts that consider factors such as economic and market conditions and the useful lives of assets.

 

17

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(e)Significant accounting judgements, estimates and assumptions (continued)

 

(viii)Impairment of non-financial assets

 

The Company’s non-financial assets include prepaid expenses, digital assets excluding USDC, equipment and right of use assets, intangibles and goodwill. Impairment of these non-financial assets exists when the carrying value of an asset exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. These calculations are based on available data, other observable inputs and projections of cash flows, all of which are subject to estimates and assumptions. See Note 7 for the discussion regarding impairment of the Company’s non-financial assets.

 

(ix)Functional currency

 

The functional currency of the Company has been assessed by management based on consideration of the currency and economic factors that mainly influence the Company’s digital currencies, production and operating costs, financing and related transactions. Specifically, the Company considers the currencies in which digital currencies are most commonly denominated and the currencies in which expenses are settled, by each entity, as well as the currency in which each entity receives or raises financing. Changes to these factors may have an impact on the judgment applied in the determination of the Company’s functional currency.

 

(x)Assessment of transaction as an asset purchase or business combination

 

Assessment of a transaction as an asset purchase or a business combination requires judgements to be made at the date of acquisition in relation to determining whether the acquiree meets the definition of a business. The three elements of a business include inputs, processes and outputs. When the acquiree does not have outputs, it may still meet the definition of a business if its processes are substantive which includes assessment of whether the process is critical and whether the inputs acquired include both an organized workforce and inputs that the organized workforce could convert into outputs.

 

(xi)Control

 

Significant judgment is involved in the determination whether the Company controls under IFRS 10. The Company is deemed to control an investee when it demonstrates: power over the investee, exposure, or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect the amount of the investor’s returns. There is judgement required to determine whether these criterions are met. The Company determined it controlled Valour Digital Securities Limited through its role as arranger.

 

(xii)Accounting for digital assets held as collateral

 

The Company has provided digital assets as collateral for loans provider by digital asset liquidity provider. These digital assets held as collateral are included with digital assets and valued at fair value consistent with the Company’s accounting policy for its digital assets. See note 2(e)(i) and note 2(t).

 

(f)Financial instruments

 

Financial assets and financial liabilities are recognized on the Company’s statement of financial position when the Company has become a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. The Company’s financial instruments consist of cash, amounts receivable, public investments, private investments, derivative asset, accounts payable and accrued liabilities and ETP holders payable.

 

18

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments

 

Purchases and sales of investments where the Company cannot exert control or significant influence are recognized on a trade date basis. Public and private investments at fair value through profit or loss are initially recognized at fair value, with changes in fair value reported in profit (loss). At each financial reporting period, the Company’s management estimates the fair value of its investments based on the criteria below and reflects such valuations in the financial statements.

 

Transaction costs are expensed as incurred in the statements of loss. The determination of fair value requires judgment and is based on market information where available and appropriate. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such changes in valuations in the statements of loss. The Company is also required to present its investments (and other financial assets and liabilities reported at fair value) into three hierarchy levels (Level 1, 2, or 3) based on the transparency of inputs used in measuring the fair value, and to provide additional disclosure in connection therewith (see Note 17, “Financial instruments”). The three levels are defined as follows:

 

Level 1 – investment with quoted market price;

Level 2 – investment which valuation technique is based on observable market inputs; and

Level 3 – investment which valuation technique is based on non-observable market inputs.

 

Publicly traded investments:

 

1. Securities, including shares, options, and warrants which are traded on a recognized securities exchange and for which no sales restrictions apply are recorded at fair values based on quoted closing prices at the statement of financial position date or the closing price on the last day the security traded if there were no trades at the statement of financial position date. The Company utilizes the quoted closing prices. These are included in Level 1 as disclosed in Note 17.

 

2. Securities which are traded on a recognized securities exchange but which are escrowed or otherwise restricted as to sale or transfer are recorded at amounts discounted from market value. Shares that are received as part of a private placement that are subject to a standard four-month hold period are not discounted due the short term of the hold period. In determining the discount for such investments, the Company considers the nature and length of the restriction, business risk of the investee corporation, relative trading volume and price volatility and any other factors that may be relevant to the ongoing and realizable value of the investments. These are included in Level 2 in Note 17.

 

3. Warrants or options of publicly traded securities which do not have a quoted price are carried at an estimated fair value calculated using the Black-Scholes option pricing model if sufficient and reliable observable market inputs are available. These are included in Level 2 as disclosed in Note 17.

 

4. Securities which are traded on a recognized securities exchange but which do not have an active market are recorded at the most recent transaction price. These are included in Level 3 in Note 17.

 

The amounts at which the Company’s publicly traded investments could be disposed of may differ from carrying values based on market quotes, due to market price changes and the fair value was determined at a specific time, the value at which significant ownership positions are sold is often different than the quoted market price due to a variety of factors such as premiums paid for large blocks or discounts due to illiquidity. Such differences could be material.

 

19

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments (continued)

 

Privately held investments:

 

1. Securities in privately held companies (other than options and warrants) are initially recorded at cost, being the fair value at the time of acquisition. At the end of each financial reporting period, the Company’s management estimates the fair value of investments based on the criteria below and reflects such valuations in the financial statements. These are included in Level 3 as disclosed in Note 17. Options and warrants of private companies are carried at fair value using valuation technique.

 

With respect to valuation, the financial information of private companies in which the Company has investments may not always be available, or such information may be limited and/or unreliable. Use of the valuation approach described below may involve uncertainties and determinations based on the Company’s judgment and any value estimated from these may not be realized or realizable. In addition to the events described below, which may affect a specific investment, the Company will take into account general market conditions when valuing the privately held investments in its portfolio. In the absence of occurrence of any of these events or any significant change in general market conditions indicates generally that the fair value of the investment has not materially changed.

 

2. An upward adjustment is considered appropriate and supported by pervasive and objective evidence such as significant subsequent equity financing by an unrelated investor at a transaction price higher than the Company’s carrying value; or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a positive impact on the investee company’s prospects and therefore its fair value. In these circumstances, the adjustment to the fair value of the investment will be based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which, for example, reduce the corporate tax burden, or to an extent that, it was not previously allowed, or reduce or eliminate the need for approvals;

 

●receipt by the investee company of approvals, which allow the investee company to proceed with its project(s);

 

●release by the investee company of positive operational results, which either proves or expands their investee’s prospects; and

 

●important positive management changes by the investee company that the Company’s management believes will have a very positive impact on the investee company’s ability to achieve its objectives and build value for shareholders.

 

3. Downward adjustments to carrying values are made when there is evidence of a decline in value as indicated by the assessment of the financial condition of the investment based on third party financing, operational results, forecasts, and other developments since acquisition, or if there have been significant corporate, political or operating events affecting the investee company that, in management’s opinion, have a negative impact on the investee company’s prospects and therefore its fair value. The amount of the change to the fair value of the investment is based on management’s judgment and any value estimated may not be realized or realizable. Such events include, without limitation:

 

●political changes in a country in which the investee company operates which increases the tax burden on companies;

 

●denial of the investee company’s application for approvals which prohibit the investee company from proceeding with its projects;

 

●the investee company releases negative operating results;

 

●changes to the management of the investee company take place which the Company believes will have a negative impact on the investee company’s ability to achieve its objectives and build value for shareholders;

 

●the investee company is placed into receivership or bankruptcy; and

 

●based on financial information received from the investee company, it is apparent to the Company that the investee company is unlikely to be able to continue as a going concern.

 

20

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(i)Investments (continued)

 

Privately held investments (continued):

 

The resulting values may differ from values that would be realized had a ready market existed. The amounts at which the Company’s privately held investments could be disposed of may differ from the carrying value assigned. Such differences could be material.

 

(ii)Financial assets other than investments at fair value and liabilities

 

Financial assets

 

Initial recognition and measurement

Non-derivative financial assets within the scope of IFRS 9 are classified and measured as “financial assets at fair value”, as either fair value through profit or loss (“FVPL”) or fair value through other comprehensive income (“FVOCI”), and “financial assets at amortized costs”, as appropriate. The Company determines the classification of financial assets at the time of initial recognition based on the Company’s business model and the contractual terms of the cash flows.

 

All financial assets are recognized initially at fair value plus, in the case of financial assets not at FVPL, directly attributable transaction costs on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

 

Financial assets with embedded derivatives are considered in their entirety when determining their classification at FVPL or at amortized cost. Other accounts receivable held for collection of contractual cash flows are measured at amortized cost.

 

Subsequent measurement – financial assets at amortized cost

After initial recognition, financial assets measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the Effective Interest Rate (“EIR”) method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Subsequent measurement – financial assets at FVPL

Financial assets measured at FVPL include financial assets management intends to sell in the short term and any derivative financial instrument that is not designated as a hedging instrument in a hedge relationship. Financial assets measured at FVPL are carried at fair value in the statements of financial position with changes in fair value recognized in other income or expense in the statements of earnings (loss). The Company’s investments are classified as financial assets at FVPL.

 

Subsequent measurement – financial assets at FVOCI

Financial assets measured at FVOCI are non-derivative financial assets that are not held for trading and the Company has made an irrevocable election at the time of initial recognition to measure the assets at FVOCI. The Company does not measure any financial assets at FVOCI.

 

After initial measurement, investments measured at FVOCI are subsequently measured at fair value with unrealized gains or losses recognized in other comprehensive income or loss in the statements of comprehensive income (loss). When the investment is sold, the cumulative gain or loss remains in accumulated other comprehensive income or loss and is not reclassified to profit or loss.

 

Dividends from such investments are recognized in other income in the statements of earnings (loss) when the right to receive payments is established.

 

Derecognition

A financial asset is derecognized when the contractual rights to the cash flows from the asset expire, or the Company no longer retains substantially all the risks and rewards of ownership.

 

21

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(f)Financial instruments (continued)

 

(ii)Financial assets other than investments at fair value and liabilities (continued)

 

Financial assets (continued)

 

Impairment of financial assets

The Company has elected to apply the simplified approach to impairment as permitted by IFRS 9, which requires the expected lifetime loss to be recognized at the time of initial recognition of the receivable. To measure estimated credit losses, accounts receivable have been grouped based on shared credit risk characteristics, including the number of days past due. An impairment loss is reversed in subsequent periods if the amount of the expected loss decreases and the decrease can be objectively related to an event occurring after the initial impairment was recognized.

 

(iii)Financial assets other than investments at fair value and liabilities

 

Financial liabilities

 

Initial recognition and measurement

Financial liabilities are measured at amortized cost, unless they are required to be measured at FVPL as is the case for held for trading or derivative instruments, or the Company has opted to measure the financial liability at FVPL. ETP holders payable are designated as financial liability at fair value through profit or loss on initial recognition. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s financial liabilities also include accounts payable and liabilities and loans payable, which are measured at amortized cost. All financial liabilities are recognized initially at fair value and in the case of long-term debt, net of directly attributable transaction costs.

 

Subsequent measurement – financial liabilities at amortized cost

After initial recognition, financial liabilities measured at amortized cost are subsequently measured at the end of each reporting period at amortized cost using the EIR method. Amortized cost is calculated by taking into account any discount or premium on acquisition and any fees or costs that are an integral part of the EIR.

 

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires with any associated gain or loss recognized in other income or expense in the statements of earnings (loss).

 

(g)Cash

 

Cash is comprised of cash on hand and deposits that generally mature within 90 days from the date of acquisition. Deposits are held in Canadian chartered banks or in a financial institution controlled by a Canadian chartered bank.

 

(h)Revenue recognition

 

Revenue is recognized at an amount that reflects the consideration to which the Company is expected to be entitled in exchange for transferring services to a customer. For each contract with a customer, the Company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct service to be delivered; and recognizes revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the services promised. Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the Company. However, when an uncertainty arises about the collectability of an amount already included in revenue, the uncollectible amount, or the amount in respect of which recovery has ceased to be probable, is recognized as an expense, rather than as an adjustment of the amount of revenue originally recognized.

 

22

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(h)Revenue recognition (continued)

 

Management fees

 

The Company recognizes revenue from management fees earned on various ETP products. The management fee percentage is outlined in each ETP prospectus. The management fee is calculated daily based on the daily ETP net asset value and is recognized daily when the management fee is calculated. The management fee is deducted from the net asset value of the ETPs. The management fees are valued in the underlying ETPs base currency and converted into USD daily.

 

Other revenues

 

The Company earns revenue from aggregating small individual trades during the day to facilitate hedging and optimize liquidity and hedging them periodically. These are computed as net fiat receivables and are measured based on the average daily USD rates at the end of each day.

 

Public and private investments

 

Realized gains and losses on the disposal of investments and unrealized gains and losses in the value of investments are reflected in the statement of loss on a trade date basis. Upon disposal of an investment, previously recognized unrealized gains or losses are reversed, so as to recognize the full realized gain or loss in the period of disposition. All transaction costs are expensed as incurred.

 

(i)Lending, staking and node revenue

 

Lending and Staking

 

The Company earns a yield based on digital assets that are lent or staked with various reputable digital asset exchanges. The Company transfers digital asset to either staking account within the exchange platform and into staking custody accounts. The Company transfers the digital assets to those staking accounts and the counterparty delivers staking and lending rewards in return. The digital assets rewards are based on the rewards offered at the time the Company enters into staking or lending arrangements. The transaction price is an interest rate offered for the digital asset deposit. Over the period that the digital assets are staked or lent, the digital assets rewards are deposited into the Company’s custody accounts. The rewards are based on the amount of digital assets staked or lent and the rate offered by the custodian at that time.

 

Staking and lending rewards are recognized as revenue as they are earned over the period the digital assets are staked or loaned. Staking allows the Company to earn income through a process that is used to verify cryptocurrency transactions. It involves committing holdings to support a blockchain network and confirming transactions. Cryptocurrencies that allow staking use a “consensus mechanism” called Proof of Stake, which is the way they ensure that all transactions are verified and secured without a bank or payment processor in the middle.

 

(j)Node revenue

 

Node Revenue

 

Node revenue is earned as transactions are validated on a blockchain. When transactions are validated on the blockchain, the Company receives rewards from that blockchain. The transaction price are the rewards earned by the Company as transactions are validated by the Company’s node. The Company receives rewards for these services provided to the blockchain. The blockchain token rewards are only earned when the Company validates transactions that take place on the blockchain. When a transaction is validated by the Company’s node, rewards are deposited to the Company’s account. As the tokens are earned, revenue is calculated by summing up the tokens earned each day and multiplying the value of reward tokens for that day.

 

23

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(k)Leases

 

At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Company, as a lessee, recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove any improvements made to branches or office premises. The right-of-use asset is subsequently amortized using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

 

The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in net income if the carrying amount of the right-of-use asset has been reduced to zero. The Company presents right-of-use assets and lease liabilities in the Consolidated Statement of Financial Position. The Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 

(l)Operating segments

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the management team including the Chief Executive Officer and Chief Operating Officer.

 

The Company’s material operating segments are located in Canada, Bermuda and Cayman Islands (See Note 21 for details).

 

(m)Income (loss) per share

 

Basic income (loss) per share is calculated by dividing the net income (loss) by the weighted-average number of the Company’s common shares outstanding during the period. Diluted income (loss) per share is calculated by dividing the applicable net income (loss) by the sum of the weighted-average number of common shares outstanding if dilutive common shares had been issued during the period. The calculation of diluted income (loss) per share assumes that outstanding stock options and warrants with an average exercise price below market price of the underlying shares are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market price for the period. Diluted income per share for the year ended December 31, 2023 and 2022 all stock options and warrants were anti-dilutive and excluded from the calculation of dilutive loss per share.

 

24

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(n)Comprehensive income (loss)

 

Total comprehensive income (loss) comprises all components of profit or loss and other comprehensive income (loss). Other comprehensive income (loss) includes gains and losses from translating the financial statements of an entity’s whose functional currency differs from the presentation currency.

 

(o)Income taxes

 

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss.

 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

 

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

 

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

(p)Share-based payments

 

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Fair value is measured at grant date and each tranche is recognized on a graded-vesting basis over the period in which options vest. At the end of each reporting period, the Company revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity reserve.

 

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service. For options that expire unexercised, the recorded value is transferred to deficit.

 

(q)Investment in Associate

 

Associates are entities over which the Company has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments over which the Company has the ability to significantly influence are initially recorded at cost. When the initial recognition of the investment in the associate occurs as a result of a loss of control of a former subsidiary, the fair value of the retained interest in the former subsidiary on the date of the loss of control is deemed to be the cost on initial recognition. Investment income (loss) is calculated using the equity method. The Company’s share of the associate’s profit or loss is recognized in the consolidated statements of operations and its share of movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Company’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

25

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(q)Investment in Associate (continued)

 

The Company determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Company calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount in the consolidated statements of operations. Profits and losses resulting from upstream and downstream transactions between the Company and its associate are recognised in the Company’s financial statements only to the extent of unrelated investors’ interests in the associate. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Company. Dilution gains and losses arising in investments in associates are recognized in the consolidated statements of operations. The investment account of the investor reflects: i) the cost of the investment in the investee; ii) the investment income or loss (including the investor’s proportionate share of discontinued operations) relating

to the investee subsequent to the date when the use of the equity method first became appropriate; and iii) the investor’s proportion of dividends paid by the investee subsequent to the date when the use of the equity method first became appropriate

 

(r)Digital Assets

 

The IFRS Interpretations Committee (the “Committee”) published its agenda decision on Holdings of Cryptocurrencies in June 2019. The Committee concluded that IAS 2 – Inventories applies to cryptocurrencies when they are held for sale in the ordinary course of business, otherwise an entity should apply IAS 38 - Intangible Assets to holdings of cryptocurrencies. The Company has assessed that it acts in a capacity as a commodity broker trader as defined in IAS 2 - Inventories, in characterizing certain of its holdings as inventory, or more specifically, digital assets. If assets held by commodity broker-traders are principally acquired for the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin, such assets are accounted for as inventory, and changes in fair value less costs to sell are recognized in profit or loss.

 

Digital assets consist of cryptocurrency denominated assets (see Note 7) and are included in current assets. Digital assets are measured using unadjusted quoted prices taken from active markets, where available. Fair value measurement for digital assets with available active market prices has been classified as Level 1 in the fair value hierarchy. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. The Company revalues its digital assets quarterly.

 

Disclosure

 

The Company applies the disclosure requirements in the IFRS Standard applicable to its holding of cryptocurrencies. Accordingly, the Company applies the disclosure requirements in IAS 2 – Inventories for holdings of cryptocurrencies. If an entity measures its holding in cryptocurrencies at fair value, IFRS 13 Fair Value Measurement specifies applicable disclosure requirements. In applying IAS 1 Presentation of Financial Statements, the Company discloses judgements that its management has made regarding its accounting for holdings of cryptocurrencies if those are part of the judgements that had a significant effect on the amounts recognized in the consolidated financial statements.

 

The Company has evaluated the impact of the Agenda Paper and has determined that cryptocurrencies with an active market should be classified as digital assets and measured at fair value through other profit or loss.

 

Increases and decreases in the fair value of digital assets are recognized through profit or loss. Digital assets are derecognized when the Company has transferred substantially all the risks and rewards of ownership on disposal.

 

26

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(s)Digital Asset Loaned

 

Initial recognition and measurement

 

The Company enters into loan agreements with various digital asset exchanges to earn yield based on the digital assets that are lent. At the time the Company enters into the loan agreement, the digital asset is derecognized from digital assets as the borrower obtains the rights to direct the use of the digital asset and the Company recognizes this as digital assets loaned, measured at the fair value of the loaned digital asset.

 

Subsequent measurement

 

During the term of the digital asset loan, the digital asset loaned is measured at the fair value based on the fair market value of loaned digital assets with any gains / (losses) resulting from remeasuring the digital asset loaned to the realized and net change in unrealized gains and losses on digital assets.

 

Derecognition

 

At the end of the digital asset loan, the digital asset loaned is derecognized and re-recorded as digital assets at the carrying amount of the digital asset loaned.

 

(t)Intangible assets

 

Intangible assets consist of brand names. The Company has estimated the brand name will contribute cash flows for 10 years.

 

Intangible assets are carried at cost less accumulated amortization and impairment losses.

 

Impairment

 

Impairments are recorded when the recoverable amounts of assets are less than their carrying amounts. The recoverable amount is the higher of an asset’s fair value less costs to dispose or its value in use. Impairment losses are evaluated for potential reversals of impairment when events or changes in circumstances warrant such consideration.

 

The carrying values of all intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

 

(u)Goodwill

 

Goodwill arising on a business acquisition is recognized as an asset at the date that control is acquired (the “acquisition date”). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest (if any) in the entity over the fair value of the identifiable net assets.

 

Goodwill is not amortized but is reviewed for impairment at least annually or sooner if indicators of impairment exist. Goodwill is tested for impairment at the group level representing the lowest level at which management monitors it, the operating segment level. Any impairment loss is recognized immediately in profit or loss and is not subsequently reversed.

 

No impairment losses have been recognized in the consolidated statements of loss related to goodwill.

 

For the year ended December 31, 2023 and 2022, the Company did not experience any triggering events or additional information that the goodwill’s recoverable amount was significantly different than its carrying amount.

 

27

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

2.Material accounting policy information (continued)

 

(v)Share capital

 

Financial instruments issued by the Company are classified as share capital only to the extent that they do not meet the definition of a financial liability. The Company’s common shares are classified as equity instruments. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Repurchases by the Company of its own common shares under a Normal Course Issuer Bid (“NCIB”) are accounted for in accordance with IAS 32, Financial Instruments: Presentation. Upon reacquiring common shares under a NCIB, the Company deducts from equity the purchase price of these common shares and any costs to acquire such common shares. Any such common shares held by the Company are considered treasury shares until they are cancelled.

 

(w)Provisions

 

Provisions are recognized when (a), the Company has a present obligation (legal or constructive) as a result of a past event, and (b), it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

 

As at December 31, 2023, the Company recorded a legal provision of $nil (December 31, 2022, $2,000,000).

 

(x)New and future accounting change

 

Certain pronouncements were issued by the IASB or the IFRIC that are mandatory for accounting periods on or after January 1, 2024 or later periods. Many are not applicable or do not have a significant impact to the Company and have been excluded. The following amendments were adopted by the Company on January 1, 2023. The adoption of these amendments had no significant impact on the Company’s financial statements.

 

IAS 16, Property, Plant and Equipment - The IASB issued an amendment to IAS 16, Property, Plant and Equipment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an asset for its intended use. Instead, sales proceeds and its related costs must be recognized in profit or loss. The amendment will require companies to distinguish between costs associated with producing and selling items before the item of property, plant and equipment is available for use and costs associated with making the item of property, plant and equipment available for its intended use.

 

IFRS 9 – Financial Instruments - The IASB has issued an amendment to IFRS 9 Financial Instruments clarifying which fees to include in the test in assessing whether to derecognize a financial liability. Only those fees paid or received between the borrower and the lender, including fees paid or received by either the entity or the lender on the other’s behalf are included.

 

3.Cash and cash equivalents

 

   31-Dec-23   31-Dec-22 
Cash at banks  $306,920   $1,339,665 
Cash at brokers   6,417,725    3,425,834 
Cash at digital currency exchanges   2,837    140,665 
   $6,727,482   $4,906,165 

 

28

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

4.Investments, at fair value through profit and loss

 

At December 31, 2023, the Company’s investment portfolio consisted of zero publicly traded investment and nine private investments for a total estimated fair value of $43,540,534 (December 31, 2022 – one publicly traded investment and eight private investments at a total estimated fair value of $30,032,672).

 

During the year ended December 31, 2023, the Company had a realized (loss) of $(4,150) and an unrealized gains of $13,484,504 (December 31, 2022 – realized (loss) of ($12,077)) and an unrealized losses of ($15,476,381) on private and public investments.

 

Public Investments

 

At December 31, 2023, the Company had no public investments.

 

At December 31, 2022, the Company’s one public investment had a total fair value of $17,227.

 

Public Issuer  Note  Security description  Cost   Estimated Fair Value   %
of FV		 
Smart Valor AG     19,000 SDR   150,908    17,227    100.0%
Total public investments        $150,908   $17,227    100.0%

 

Private Investments

 

At December 31, 2023 the Company’s nine private investments had a total fair value of $43,540,534.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   %
of FV		 
3iQ Corp.     187,007 common shares  $261,605   $1,216,890    2.8%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,138,380    4.9%
Earnity Inc.     85,142 preferred shares   130,946    -    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    661,366    1.5%
Neuronomics AG     724 common shares   128,898    128,898    0.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
Amina Bank AG (formerly SEBA Bank AG)  (i)  3,906,250 non-voting shares   34,498,750    39,395,000    90.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    -    0.0%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    -    0.0%
Total private investments        $41,284,669   $43,540,534    100.0%

 

At December 31, 2022, the Company’s eight private investments had a total fair value of $30,015,445.

 

Private Issuer  Note  Security description  Cost   Estimated Fair Value   %
of FV		 
3iQ Corp.     187,007 common shares  $1,122,042   $1,246,149    4.2%
Brazil Potash Corp.  (i)  404,200 common shares   1,998,668    2,189,794    7.3%
Earnity Inc.     85,142 preferred shares   130,946    14,991    0.0%
Luxor Technology Corporation     201,633 preferred shares   630,505    677,268    2.3%
SDK:meta, LLC     1,000,000 units   3,420,000    -    0.0%
SEBA Bank AG  (i)  3,906,250 non-voting shares   34,498,750    25,657,000    85.5%
Skolem Technologies Ltd.     16,354 preferred shares   177,488    189,611    0.6%
VolMEX Labs Corporation     Rights to certain preferred shares and warrants   37,809    40,632    0.1%
Total private investments        $42,016,208   $30,015,445    100.0%

 

5.Amounts receivable

 

   30-Jun-23   31-Dec-22 
Other receivable  $54,036   $67,102 

 

29

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

6.Prepaid expenses

 

   30-Jun-23   31-Dec-22 
Prepaid insurance  $42,335   $61,065 
Prepaid expenses   1,467,489    503,677 
   $1,509,824   $564,742 

 

7.Digital Assets

 

As at December 31, 2023, the Company’s digital assets consisted of the below digital currencies, with a fair value of $489,865,638 (December 31, 2022 - $104,202,085). Digital currencies are recorded at their fair value on the date they are acquired and are revalued to their current market value at each reporting date. Fair value is determined by taking the mid-point price at 17:30 CET from Kraken, Bitfinex, Binance, Coinbase and other exchanges consistent with the final terms for each ETP. Fair value for Mobilecoin, Shyft, Blocto, Maps, Oxygen, Boba Network, Saffron.finance, Clover, Sovryn, Wilder World, Pyth and Vomex is determined by taking the last closing price for the day (UTC time) from www.coinmarketcap.com. The Company’s holdings of digital assets consist of the following:

 

   December 31, 2023   December 31, 2022 
   Quantity   $   Quantity   $ 
Binance Coin   236.4452    97,710    11.1000    3,678 
Bitcoin   2,271.3329    108,983,280    2,126.5130    45,065,282 
Ethereum   21,537.4066    65,956,320    21,141.7368    34,333,700 
EthereumPoW   0.2000    1    -    - 
Cardano   54,210,783.1700    43,306,306    36,438,339.0800    12,004,332 
Polkadot   1,666,147.7880    18,371,365    931,646.4544    5,407,239 
Solana   1,682,112.49    235,733,109    428,280.68    5,537,534 
Shyft   4,539,407.2792    78,314    3,507,575.4684    37,530 
Uniswap   296,352.0602    2,932,687    148,734.0602    1,021,542 
USDC        673         1,586 
USDT        111,856         14,134 
Litcoin   17.3931    1,719    -    - 
Doge   220,474.3947    26,652    10,000.0000    914 
Cosmos   11,700.0000    171,497    201.0000    2,531 
Avalanche   248,151.6644    13,148,105    48,995.3900    712,745 
Matic   0.0003    -    890.0000    906 
Shiba Inu   -    -    90,000,000.0000    975 
Ripple   76,029.7317    62,737    2,000.0000    919 
Enjin   432,342.3671    223,237    10,009.9900    3,180 
Tron   118,490.5094    16,581    -    - 
Terra Luna   202,302.5360    -    199,195.3600    - 
Current   63,728,357    489,222,151         104,148,728 
Blocto   264,559.703    10,503    251,424.913    6,737 
Boba Network   250,000.00    -    250,000.00    - 
Clover   430,000.00    19,831    310,000.00    13,216 
Maps   285,713.000    -    285,713.000    - 
Mobilecoin   2,855.5045    -    2,855.5045    - 
Oxygen   400,000.000    -    400,000.000    - 
Pyth   2,500,000.00    503,669    2,500,000.00    - 
Saffron.finance   86.21    2,619    86.21    2,345 
Sovryn   15,458.95    12,863    15,458.95    2,342 
Wilder World   148,810.00    94,002    148,810.00    28,660 
Volmex Labs   2,925,878.0000    -    2,925,878.0000    58 
Long-Term        643,487         53,358 
Total Digital Assets        489,865,638         104,202,085 

 

30

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

The continuity of digital assets for the years ended December 31, 2023 and 2022:

 

   December 31,
2023		   December 31,
2022		 
Opening balance  $104,202,085   $370,053,740 
Digital assets acquired   318,355,007    231,392,840 
Digital assets disposed   (244,656,544)   (191,092,048)
Realized (loss) on digital assets   (1,017,247)   (55,746,548)
Digital assets earned from staking, lending and fees   3,554,587    5,955,456 
Net change in unrealized gains and losses on digital assets   324,976,115    (270,021,882)
Foregin exchange (loss) gain   (15,548,363)   13,660,527 
   $489,865,638   $104,202,085 

 

In the normal course of business, the Company enters into open-ended lending arrangements with certain financial institutions, whereby the Company loans certain fiat and digital assets in exchange for interest income. The Company can demand the repayment of the loans and accrued interest at any time. The digital assets on loan are included in digital assets balances above.

 

Digital assets held by counterparty for the years ended December 31, 2023 and 2022 is the following:

 

   December 31,
2023		   December 31,
2022		 
   Fair Value   Fair Value 
Counterparty A   421,687,911    59,579,414 
Counterparty B   30,592,947    11,926,180 
Counterparty C   2,775,287    348,441 
Counterparty D   11,785,440    23,212,486 
Counterparty E   8,633,491    8,176,439 
Counterparty F   837,948    - 
Counterparty G   8,840,988    - 
Other   248,294    19,508 
Self custody   4,463,332    939,618 
Total  $489,865,638   $104,202,085 

 

As of December 31, 2023, digital assets held as collateral consisted of the following:

 

   Number of coins
on loan		   Fair Value 
Bitcoin   1,158.2614    46,860,266 
Ethereum   9,263.7800    28,369,770 
Total   10,422.0414   $75,230,036 

 

As at December 31, 2023, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,690,623 (US$6,570,862), the fair value of the loan and interest held with Genesis.

 

As of December 31, 2022, digital assets held as collateral consisted of the following:

 

   Number of coins
on loan		   Fair Value 
Bitcoin   1,763.8300    28,787,772 
Ethereum   18,051.9700    29,315,988 
Total   19,815.8000   $58,103,760 

 

31

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As at December 31, 2022, the 475 Bitcon held by Genesis Global Capital LLC (“Genesis”) as collateral against a loan has been written down to $8,176,439 (US$6,036,945), the fair value of the loan and interest held with Genesis.

 

Digital Assets loaned

 

As of December 31, 2023, the Company has on loan select digital assets to borrowers at annual rates ranging from approximately 2.4% to 9.7% and accrue interest on a monthly basis. The digital assets on loan are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets loaned with certain financial institutions.

 

As of December 31, 2023, digital assets on loan consisted of the following:

 

   Number of
coins
on loan		   Fair Value   Fair Value Share 
Digital on loan:               
Ethereum   7,000.0000    21,437,084    8%
Cardano   8,500,000.0000    6,790,228    3%
Polkdot   1,373,835.0000    15,148,250    6%
Solana   1,572,441.0000    220,363,625    82%
Avalanche   125,009.0000    6,623,496    2%
Total   11,578,285.0000   $270,362,684    100%

 

As of December 31, 2023, the digital assets on loan by significant borrowing counterparty is as follow:

 

 

   Interest rates  Number of
coins
on loan		   Fair Value   Fair Value Share 
Digital on loan:                  
Counterparty A   2.4% to 9.7%   11,578,285.0000    270,362,684    100%
Total      11,578,285.0000   $270,362,684    100%

 

   Geography  December 31,
2023		 
Digital on loan:        
Counterparty A  Cayman Islands   100%
Total      100%

 

The Company’s digital assets on loan are exposed to credit risk. The Company limits its credit risk by placing its digital assets on loan with high credit quality financial institutions that have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the borrower, review of the internal control practices and procedures of the borrower, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets on loan. While the Company intends to only transact with counterparties that it believes to be creditworthy, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

Digital Assets Staked

 

As of December 31, 2023, the Company has skated select digital assets to borrowers at annual rates ranging from approximately 3.15% and accrue rewards as they are earned. The digital assets staked are measured at fair value through profit and loss.

 

As of December 31, 2022, the Company had no digital assets skated with certain financial institutions.

 

32

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

7.Digital Assets (continued)

 

As of December 31, 2023, digital assets staked consisted of the following:

 

   Number of
coins
staked		   Fair Value   Fair Value Share 
Digital on staked:               
Cardano   38,201,004.7950    30,516,888    100%
Total   38,201,004.7950   $30,516,888    100%

 

As of December 31, 2023, the digital assets staked by significant borrowing counterparty is as follow:

 

 

   Interest rates   Number of
coins
staked		   Fair Value   Fair Value Share 
Digital on staked:                
Counterparty B   3.15%   38,201,004.7950    30,516,888    100%
Total        38,201,004.7950   $30,516,888    100%

 

As of December 31, 2023, digital assets staked were concentrated with counterparties as follows:

 

   Geography  December 31,
2023		 
Digital on staked:        
Counterparty B  Switzerland   100%
Total      100%

 

The Company’s digital assets staked are exposed to market risk, liquidity risk, lockup duration risk, loss or theft of assets and return duration risk. The Company limits these risks by placing its digital assets staked with open term durations without lockups as a standard for all staking arrangements. The Company also places allocation limits by counterparty and only deals with high credit quality financial institutions that are believed to have sufficient capital to meet their obligations as they come due and on which the Company has performed internal due diligence procedures. The Company’s due diligence procedures may include, but are not limited to, review of the financial position of the counterparty, review of the internal control practices and procedures of the counterparty, review of market information, and monitoring the Company’s risk exposure thresholds. As of December 31, 2023 and December 31, 2022, the Company does not expect a material loss on any of its digital assets staked. While the Company intends to only transact with counterparties that it believes to meets the Company staking policy criteria, there can be no assurance that a counterparty will not default and that the Company will not sustain a material loss on a transaction as a result.

 

33

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

8.Intangibles and goodwill

 

Cost  Brand Name   Total 
Balance, December 31, 2022 and 2021 and Decemebr 31, 2023  $42,789,968   $42,789,968 

 

Accumulated Amortization  Brand Name   Total 
Balance, December 31, 2021  $(21,065,981)  $(21,065,981)
Amortization   (2,277,443)   (2,277,443)
Impairment loss   (13,865,356)   (13,865,356)
Balance, December 31, 2022  $(37,208,780)  $(37,208,780)
Amortization   (2,038,300)   (2,038,300)
Balance, December 31, 2023  $(39,247,080)  $(39,247,080)
           
Balance, December 31, 2022  $5,581,188   $5,581,188 
Balance, Decemeber 31, 2023  $3,542,888   $3,542,888 

 

Impairment test of brand name

 

During the year ended December 31, 2023, as the result of the excess of consideration paid over the fair value of the brand name acquired from Defi Capital and Valour Inc., the Company carried out a review of the recoverable amount of that brand name, which is used in its governance business line in Canada and ETP business line on Cayman Islands. The review led to the recognition of an impairment loss of $nil (December 31, 2022 - $13,865,356), which has been recognized in profit or loss.

 

Impairment test of goodwill

 

Goodwill acquired through business combination of $46,712,027 (2022 - $46,712,027) has been allocated to the ETP CGU.

 

The Company tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The review led to the recognition of an impairment loss of $Nil (December 31, 2022 - $Nil). The recoverable amount of the Company’s CGU has been assessed by reference to the value in use (“VIU”).

 

Sensitivity

 

The Company has conducted an analysis of the sensitivity of the impairment test to changes in the key assumptions used to determine the recoverable amount of the ETP CGU to which goodwill is allocated.

 

The recoverable amount of the ETP CGU would equal its carrying amount if the key assumptions were to change as follows:

 

   31-Dec-23  31-Dec-22
Growth in reward rates  From 9.00% to 3.25%  From 11.50% to 1.5%
Growth in assets under management  From 49.00% to 9.0%  From 97.00% to 56.0%
Pre-tax discount rate  From 23.6% to 31.6%  From 23.7% to 31.7%

 

The directors and management have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the ETP CGU to exceed its recoverable amount.

 

34

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

9.Accounts payable and accrued liabilities

 

   31-Dec-23   31-Dec-22 
Corporate payables  $4,443,937   $5,505,689 
Digital asset liquidity provider   4,402,557    - 
Related party payable (Note 20)   328,352    316,690 
   $9,174,846   $5,822,379 

 

10.Loans payable

 

On January 14, 2022 and January 17, 2022, the Company entered into various loans with a digital asset liquidity provider totaling $46,235,200 (US$37,000,000). On April 4, 2022, the Company entered into a loan with a second digital asset provider for US$5,500,000. In April 2022, the Company partially repaid of one of the loans of US$3,500,000, while the remainder of these loans have since been renewed and continue to be outstanding. The Company has spread the loans among two different digital asset liquidity providers to reduce single entity concentration and be able to obtain more competitive rates. As Of December 31, 2023, the loan principal of $52,242,700 (US$39,500,000) (December 31, 2022 - $52,821,600 (US$39,000,000)) was outstanding. The loans terms are open term and have interest rates ranging from 10.2% and 14.05% The extended loans are secured with 1,000 BTC and 9,264 ETH.

 

One of Company’s digital asset liquidity provider loans payable is held with Genesis Global Capital LLC (“Genesis”). On January 20, 2023, Genesis declared bankruptcy and currently is not allowing withdrawals and not extending new loans. On March 15, 2023, the Court ruled that the Genesis debtors may not sell, buy, trade in crypto assets without prior consent by the creditors. The Court also allowed for the payment of some service providers required for upholding the operations but nothing beyond that. The Company’s loan with Genesis is an open term loan. The Genesis loan and interest payable is US$6,570,863 and secured with 475 BTC. See Note 7.

 

On February 3, 2023, the Company entered into a loan agreement with Ridgeside Capital Inc. for an unsecured loan of $260,000 The principal and interest is due on or before August 2, 2023. On July 11, 2023, the Company repayment the loan and outstanding interest of $270,129 by issuing 2,595,521 common shares. A former director of the Company, is also a director of Ridgeside Capital Inc.

 

On March 23, 2023, the Company entered into a loan agreement with an institutional investment firm that specializes in long-term asset backed financing for secured loan of $4,101,300 (US$3,000,001). The loan is secured by 158.2614 BTC. The Company paid a 1% origination fee to the lender. The Principal is due eighteen months from the closing date. Interest payments of US$24,375 are due quarterly with the first payment due on June 23, 2023. As of December 31, 2023, the loan principal of $3,967,801 (US$3,000,001) was outstanding.

 

35

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

11.ETP holders payable

 

The fair market value of the Company’s ETPs as at December 30, 2023 and December 31, 2022 were as follows:

 

   December 31, 2023   December 31, 2022 
   $   $ 
BTC Zero EUR   13,325,026    3,063,222 
BTC Zero SEK   113,727,037    44,379,551 
ETH Zero EUR   1,426,174    120,319 
ETH Zero SEK   64,723,237    33,841,456 
Polkadot EUR   217,017    56 
Polkadot SEK   18,056,128    5,312,625 
Cardano EUR   105,209    1,308 
Cardano SEK   43,131,123    11,833,732 
UNI EUR   132,960    86,714 
UNI SEK   2,780,982    891,459 
BNB ETP - EUR   1,560    - 
Solana EUR   4,215,658    12,010 
Solana SEK   232,410,677    5,494,963 
Cosmos EUR   159,572    185 
Valour Digital Asset Basket 10 EUR   301,427    790 
Valour Digital Asset Basket 10 SEK   42,770    - 
Valour BTC Carbon Neutral EUR   5,288    1,107 
Avalanche EUR   137,447    697,454 
Avalanche SEK   13,034,136    872 
Enjin EUR   197,061    2,804 
    508,130,490    105,740,627 

 

The Company’s ETP certificates are unsecured and trade on the Nordic Growth Market “(NGM”) and / or Germany Borse Frankfurt Zertifikate AG. ETPs issued by the Company referencing the performance of digital assets are measured at fair value through profit or loss. Their fair value is a function of the unadjusted quoted price of the digital asset underlying the ETP, less any accumulated management fees. The fair value basis is consistent with the measurement of the underlying digital assets which are measured at fair value. The Company’s policy is always to hedge 100% of the market risk by holding the underlying digital asset. Hedging is done continuously and in direct correspondence to the issuance of certificates to investors.

 

36

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

12.Realized and net change in unrealized gains and (losses) on digital assets

 

   31-Dec-23   31-Dec-22 
Realized gains / (loss) on digital assets  $(1,017,247)  $(55,746,548)
Unrealized gains / (loss) on digital assets   324,976,113    (269,298,406)
   $323,958,865   $(325,044,954)

 

13.Realized and net change in unrealized gains and (losses) on ETP payables

 

   31-Dec-23   31-Dec-22 
Realized gains / (loss) on ETPs  $15,580,180   $235,271,241 
Unrealized gains / (loss) on ETPs   (347,681,046)   85,110,986 
   $(332,100,866)  $320,382,227 

 

14.Expenses by nature

 

   Years ended December 31, 
   2023   2022 
Management and consulting fees  $5,569,354   $7,218,330 
Travel and promotion   718,366    2,331,176 
Office and rent   1,467,975    1,051,511 
Accounting and legal   2,000,363    4,103,581 
Regulatory and transfer agent   219,210    42,983 
Current income tax recovery   -    478 
   $9,975,267   $14,748,059 

 

15.Share Capital

 

a)As at December 31, 2023 and December 31, 2022, the Company is authorized to issue:

 

I.Unlimited number of common shares with no par value;

 

II.20,000,000 preferred shares, 9% cumulative dividends, non-voting, non-participating, non-redeemable, non-retractable, and non-convertible by the holder. The preferred shares are redeemable by the Company in certain circumstances.

 

37

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share Capital (continued)

 

b)Issued and outstanding shares

 

   Number of Common Shares   Amount 
Balance, December 31, 2021   211,102,552   $163,265,466 
Private placement financings   7,736,865    1,384,009 
Share issuance costs allocated to shares        (14,490)
Share issuance costs allocated to warrants        (1,587)
Shares issued for debt settlement   138,767    296,160 
Warrants exercised   3,714,917    647,284 
Grant date fair value on warrants exercised        136,447 
Options exercised   500,000    45,000 
Grant date fair value on options exercised   -    39,600 
DSU exercised   4,377,500    3,561,550 
Grant date fair value on DSU excercised        3,535,000 
NCIB   (8,560,100)   (6,743,037)
Balance, December 31, 2022   219,010,501   $166,151,401 
Private placement financings   11,812,500    1,117,145 
Shares issued for debt settlement   13,697,095    1,449,102 
Warrant allocation        (243,330)
Options exercised   575,000    181,585 
Grant date fair value on options exercised          
DSU exercised   757,500    317,150 
Issued on convertible debt   30,000,000    1,585,524 
Shares issued on acquisition of investment   805,612    128,898 
Balance, December 31, 2023   276,658,208   $170,687,476 

 

During the year ended December 31, 2023, the Company issued 13,697,095 common shares at an issue price of $0.11 per share to settle existing debt with consultants and management resulting in a loss on settlement of debt in the amount of $172,093. Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

On October 24, 2023, the Company issued convertible debt in exchange for $3,000,000, the notes mature two years from issuance and accrue interest at 8% per annum. Upon conversion or at the maturity of the note the notes were convertible for an equal number of common shares and share purchase warrants, of the Company with an exercise price of $0.20. An officer of the Company subscribed for $361,250 convertible debt.

 

On November 6, 2023, the conversion option was exercised resulting in the issuance of 30,000,000 common shares of the Company and 30,000,000 warrants, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.20 for a period of 60 months following the closing date. At the issue date, the fair value of the warrants was estimated at $0.10 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 151.9%; risk-free interest rate of 3.87% and an expected life of 5 years. As a result of the conversion option, an officer of the Company received 3,612,500 common shares and 3,612,500 warrants for his convertible debenture.

 

On November 6, 2023, the Company issued 805,612 common shares of the Company in exchange for an $128,898 investment in Neuronomics AG, the shares were valued based on the closing price of the Company’s stock at the date of the exchange. An officer of the Company received 402,808 common shares in exchange for 362 shares of Neuromomics AG.

 

38

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

15.Share Capital (continued)

 

b)Issued and outstanding shares (continued)

 

On November 22, 2023, the Company closed a non-brokered private placement financing and issued 11,812,500 units for gross proceeds of $1,890,000 at a price of $0.16 per unit, each unit consists of one common shares of the company and one warrant, each warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.23 for a period of 24 months following the closing date. An officer of the Company subscribed 3,125,000 units for $335,167. At the issue date, the fair value of the warrants was estimated at $0.16 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 139.6%; risk-free interest rate of 4.40% and an expected life of 2 years.

 

On November 14, 2022, the Company closed a non-brokered private placement financing and issued 7,736,865 unit for gross proceeds of $1,414,973 at a price of $0.20 per common unit, each unit consist of one common share of the Company and one-half warrant, each whole warrant entitles the holder to acquire one additional common share of the Company at an exercise price of $0.30 for a period of 24 months following the closing date. The transaction closed in 2 tranches with 3,724,926 warrants issued on November 14, 2022. At the issue date, the fair value of the warrants was estimated at $0.17 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 152.7%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The second tranche closed on November 19, 2022 with 331,000 warrants issued. At the issue date fair value of warrants was estimated at $13,183 using the Black Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility based on the Company’s historical volatility of 141.7%; risk-free interest rate of 3.87% and an expected life of 2 years.

 

The Company also paid share and warrant issue costs of $14,490. Of the total subscriptions, 2,500,000 units were acquired by a former officer of the Company. Company paid $14,950 in finders fees and other share issue costs. A former officer of the Company subscribed 2,500,000 units for $500,000.

 

Subscriptions for 2,500,000 Common Shares under the Offering constitute “related party transactions” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions (“MI 61-101”). For these transactions, the Company has relied on the exemption from the formal valuation requirement contained in Section 5.5(a) of MI 61-101 and has relied on the exemption from the minority shareholder requirements contained in Section 5.7(1)(a) of MI 61-101.

 

c)Normal Course Issuer Bid (“NCIB”)

 

On April 9, 2022, the Company extended its NCIB to buy back common shares of the Company through the facilities of Neo Exchange Inc. and/or other Canadian alternative trading platform. The NCIB was originally launched on April 13, 2021 and was set to expire on April 8, 2022. Under the terms of the NCIB, the company may, if considered advisable, purchase its common shares in open-market transactions through the facilities of the exchange and/or other Canadian alternative trading platforms not to exceed up to 10 per cent of the public float for the common shares as of April 8, 2022, or 20,359,513 common shares, purchased in aggregate. The price that the company will pay for the common shares shall be the prevailing market price at the time of purchase and all purchased common shares will be cancelled by the company. In accordance with exchange rules, daily purchases (other than pursuant to a block purchase exception) on the exchange under the NCIB cannot exceed 25 per cent of the average daily trading volume on the exchange as measured from November 8, 2021, to April 8, 2022. The NCIB will be extended until April 7, 2023, or to such earlier date as the NCIB is complete.

 

During the year ended December 31, 2023, the Company purchased and cancelled no shares (December 31, 2022 – purchased and cancelled 8,560,100 shares at an average price of $1.54).

 

39

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves

 

Stock options, DSUs and Warrants

 

   Options   DSU   Warrants     
   Number of
Options		   Weighted average
exercise
prices		   Value of
options		   Number of
DSU		   Value of
DSU		   Number of
warrants		   Weighted average
exercise
prices		   Value of
warrants		   Total Value 
December 31, 2021   20,308,100   $1.27   $18,260,128   $8,625,000   $7,051,948    19,432,810   $      0.20   $585,986   $25,898,062 
Granted   5,300,000    1.02    7,274,617    6,500,000    8,614,838    4,055,926    0.04    171,926    16,061,381 
Exercised   (500,000)   0.09    (39,600)   (4,377,500)   (7,096,550)   (3,714,917)   0.17    (136,447)   (7,272,597)
Expired / cancelled   (7,330,600)   0.50    (5,150,380)   (4,377,500)   (1,593,130)   (3,033,333)   0.01    (33,352)   (6,776,862)
December 31, 2022   17,777,500   $1.27    20,344,765    6,370,000   $6,977,106    16,740,486   $0.20   $588,113   $27,909,984 
Granted   8,900,000    0.10    875,928    4,359,286    2,044,291    41,812,500    0.21    2,430,661    5,350,880 
Exercised   (575,000)   0.15    (86,710)   (757,500)   (317,150)   -    -    -    (403,860)
Expired / cancelled   (2,697,500)   1.11    (3,138,269)   (327,500)   (663,587)   (12,684,560)   0.03    (423,261)   (4,225,117)
December 31, 2023   23,405,000   $0.99   $17,995,714    9,644,286   $8,040,660    45,868,426   $0.30   $2,595,513   $28,631,887 

 

Stock option plan

 

The Company has an ownership-based compensation scheme for executives and employees. In accordance with the terms of the plan, as approved by shareholders at a previous annual general meeting, officers, directors and consultants of the Company may be granted options to purchase common shares with the exercise prices determined at the time of grant. The Company has adopted a Floating Stock Option Plan (the “Plan”), whereby the number of common shares reserved for issuance under the Plan is equivalent of up to 10% of the issued and outstanding shares of the Company from time to time.

 

Each employee share option converts into one common share of the Company on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.

 

On July 13, 2023, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.115 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $105,000 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.1%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

On November 24, 2023, the Company granted 2,650,000 stock options to a consultant and directors of the Company to purchase common shares of the Company for the price of $0.29 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $731,400 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.7%; risk-free interest rate of 3.83%; and an expected average life of 5 years. Directors of the received 2,500,000 options.

 

On December 4, 2023, the Company granted 4,500,000 stock options to an officer of the Company to purchase common shares of the Company for the price of $0.45 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $2,162,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 151.9%; risk-free interest rate of 3.54%; and an expected average life of 5 years.

 

On December 11, 2023, the Company granted 750,000 stock options to a consult and directors of the Company to purchase common shares of the Company for the price of $0.52 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $308,700 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 153.1%; risk-free interest rate of 3.53%; and an expected average life of 5 years. Directors of the received 500,000 options.

 

40

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

On January 26, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.98 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $687,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.2.%; risk-free interest rate of 1.67%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On March 31, 2022, the Company granted 700,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1.43 for a period of five years from the date of grant. The options shall vest in four equal instalments every three months such that all options shall fully vests on the date that is 12 months from the date of grant. These options have an estimated grant date fair value of $903,840 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 145.8.%; risk-free interest rate of 2.39%; and an expected average life of 5 years. These options were forfeited and cancelled on December 31, 2022.

 

On May 5, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $2 for a period of five years from the date of grant. The options shall vest 50% at the grant date and 50% six months from the date of grant. These options have an estimated grant date fair value of $591,950 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

On May 5, 2022, the Company granted 1,200,000 stock options to an officer of Company to purchase common shares of the Company for the price of $1.11 for a period of five years from the date of grant. The options shall vest immediately. These options have an estimated grant date fair value of $1,468,560 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146%; risk-free interest rate of 2.76%; and an expected average life of 5 years.

 

On May 20, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $1 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $334,300 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 146.8%; risk-free interest rate of 2.70%; and an expected average life of 5 years. On July 21, 2022, the Company granted 400,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.80 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $195,640 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 147.5%; risk-free interest rate of 3.00%; and an expected average life of 5 years.

 

On October 17, 2022, the Company granted 500,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $73,350 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.5%; risk-free interest rate of 3.60%; and an expected average life of 5 years.

 

On October 19, 2022, the Company granted 1,000,000 stock options to a consultant of Company to purchase common shares of the Company for the price of $0.165 for a period of five years from the date of grant. The options shall vest in four equal installments every three months. These options have an estimated grant date fair value of $150,800 using the Black-Scholes option pricing model with the following assumptions: expected dividend yield of 0%; expected volatility of 149.4%; risk-free interest rate of 3.71%; and an expected average life of 5 years.

 

The Company recorded $875,928 of share-based payments during the year ended December 31, 2023 (2022 - $7,274,616).

 

41

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Stock option plan (continued)

 

The following share-based payment arrangements were in existence at December 31, 2023:

 

Number outstanding   Number exercisable   Grant
date		  Expiry
date		  Exercise price   Fair value at grant date   Grant date share price   Expected volatility   Expected life (yrs)   Expected dividend yield   Risk-free interest rate 
 510,000    510,000   16-Nov-20  16-Nov-25  $0.09    40,392   $0.09    138.70%   5    0%   0.46%
 250,000    250,000   24-Feb-21  24-Feb-26  $1.58    574,750   $2.55    147.00%   5    0%   0.73%
 1,000,000    1,000,000   22-Mar-21  22-Mar-26  $1.58    1,906,500   $2.12    145.70%   5    0%   0.99%
 2,170,000    2,170,000   9-Apr-21  9-Apr-26  $1.58    3,468,962   $1.78    145.20%   5    0%   0.95%
 2,900,000    2,900,000   18-May-21  18-May-26  $1.22    3,263,080   $1.25    145.60%   5    0%   0.95%
 1,000,000    1,000,000   18-May-21  18-May-26  $1.22    1,125,200   $1.25    145.60%   5    0%   0.95%
 1,950,000    1,950,000   25-May-21  25-May-26  $1.11    1,944,540   $1.11    145.50%   5    0%   0.86%
 1,150,000    1,150,000   13-Aug-21  13-Aug-26  $1.58    1,461,305   $1.43    143.70%   5    0%   0.84%
 250,000    250,000   21-Sep-21  21-Sep-26  $1.70    380,375   $1.70    144.00%   5    0%   0.85%
 250,000    250,000   13-Oct-21  13-Oct-26  $2.10    470,375   $2.10    144.00%   5    0%   1.27%
 500,000    500,000   9-Nov-21  9-Nov-26  $3.92    1,758,050   $3.92    144.30%   5    0%   1.37%
 250,000    250,000   31-Dec-21  31-Dec-26  $3.11    698,525   $3.11    145.00%   5    0%   1.25%
 500,000    500,000   9-May-22  9-May-27  $2.00    591,950   $1.34    146.00%   5    0%   2.76%
 500,000    500,000   20-May-22  20-May-27  $1.00    334,300   $0.75    146.80%   5    0%   2.70%
 400,000    400,000   21-Jul-22  21-Jul-27  $0.80    195,640   $0.50    147.50%   5    0%   3.00%
 500,000    500,000   17-Oct-22  17-Oct-27  $0.17    75,350   $0.17    149.50%   5    0%   3.60%
 425,000    425,000   19-Oct-22  19-Oct-27  $0.17    64,090   $0.17    149.40%   5    0%   3.71%
 1,000,000    250,000   13-Jul-23  13-Jul-28  $0.115    105,000   $0.12    149.10%   5    0%   3.71%
 2,650,000    -   24-Nov-23  24-Nov-28  $0.29    731,400   $0.29    151.70%   5    0%   3.83%
 4,500,000    -   4-Dec-23  4-Dec-28  $0.45    2,162,700   $0.45    151.90%   5    0%   3.54%
 750,000    -   11-Dec-23  11-Dec-28  $0.52    308,700   $0.52    153.10%       5          0%   3.53%
 23,405,000    14,755,000               21,661,184                          

 

The weighted average remaining contractual life of the options exercisable at December 31, 2023 was 3.46 years (December 31, 2022 – 3.5 years).

 

Warrants

 

As at December 31, 2023, the Company had share purchase warrants outstanding as follows:

 

   Number
outstanding & exercisable		   Grant
date		  Expiry
date		  Exercise price   Fair value at grant date   Grant date share price   Expected volatility   Expected life (yrs)   Expected dividend yield   Risk-free interest rate 
Warrants   3,537,433   14-Nov-22  14-Nov-24  $0.30    366,968   $0.17    152.7%   2            0%   3.87%
Warrants   187,493   14-Nov-22  14-Nov-24  $0.30    19,865   $0.17    152.7%   2    0%   3.87%
Warrants   331,000   29-Nov-22  29-Nov-24  $0.30    30,010   $0.18    141.7%   2    0%   3.95%
Warrants   30,000,000   6-Nov-23  6-Nov-28  $0.20    1,414,476   $0.17    151.9%   5    0%   3.87%
Warrants   11,812,500   22-Nov-23  22-Nov-25  $0.23    772,855   $0.33    139.6%   2    0%   4,40%
Warrant issue costs                   (8,661)                         
    45,868,426               2,595,512                          

 

Deferred Share Units Plan (DSUs)

 

On August 15, 2021, the Company adopted the DSUs plan. Eligible participants of the DSU Plan include any director, officer, employee or consultant of the Company. The Board fixes the vesting terms it deems appropriate when granting DSUs. The number of DSUs that may be granted under the DSU Plan may not exceed 5% of the total issued and outstanding Common Shares at the time of grant.

 

On February 1, 2023 the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

42

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

16.Share-based payments reserves (continued)

 

Deferred Share Units Plan (DSUs) (continued)

 

On February 1, 2023, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $107,500 and vest immediately.

 

On July 13, 2023, the Company granted 1,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On November 24, 2023, the Company granted 1,434,286 DSUs to consultants of the Company. These DSUs have a grant day fair value of $277,500 and vest immediately.

 

On November 24, 2023, the Company granted 925,000 DSUs to officers and consultants of the Company. These DSUs have a grant day fair value of $145,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day. Officers of the Company received 400,000 DSUs.

 

On January 26, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $990,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On March 31, 2022, the Company granted 600,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $858,000 and vest in four equal installments every six months, with the first instalment vesting on the date that is six months from the grant day.

 

On May 3, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $555,000 and vest immediately.

 

On July 21, 2022, the Company granted 2,400,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $1,200,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

On October 6, 2022, the Company granted 2,000,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $460,000 and vest in four equal instalments every three months, with the first instalment vesting on the date that is three-months from the grant date.

 

On October 19, 2022, the Company granted 500,000 DSUs to a consultant of the Company. These DSUs have a grant day fair value of $75,000 and vest in four equal instalments every six months, with the first instalment vesting on the date that is six-months from the grant date.

 

The Company recorded $2,044,291 in share-based compensation during the year ended December 31, 2023 (2022 - $8,614,838).

 

43

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments

 

Financial assets and financial liabilities as at December 31, 2023 and December 31, 2022 are as follows:

 

   Asset / (liabilities)
at amortized cost		   Assets /
(liabilities) at fair value through profit/(loss)		   Total 
December 31, 2022            
Cash  $4,906,165   $-   $4,906,165 
Amounts receivable   67,102    -    67,102 
Public investments   -    17,227    17,227 
Private investments   -    43,505,269    43,505,269 
USDC   -    1,586    1,586 
Accounts payable and accrued liabilities   (5,822,379)   -    (5,822,379)
Loan payable   (52,821,600)   -    (52,821,600)
ETP holders payable   -    (105,740,627)   (105,740,627)
December 31, 2023               
Cash  $6,727,482   $-   $6,727,482 
Amounts receivable   54,036    -    54,036 
Public investments   -    -    - 
Private investments   -    43,540,534    43,540,534 
USDC   -    (1,000)   (1,000)
Accounts payable and accrued liabilities   (9,174,846)   -    (9,174,846)
Loan payable   (56,210,709)   -    (56,210,709)
ETP holders payable   -    (508,130,490)   (508,130,490)

 

The Company’s financial instruments are exposed to several risks, including market, liquidity, credit and currency risks. There have been no significant changes in the risks, objectives, policies and procedures from the previous year. A discussion of the Company’s use of financial instruments and their associated risks is provided below:

 

Credit risk

 

Credit risk arises from the non-performance by counterparties of contractual financial obligations. The Company’s primary counterparty related to its cash carries an investment grade rating as assessed by external rating agencies. The Company maintains all or substantially all of its cash with a major financial institution domiciled in Canada. Deposits held with this institution may exceed the amount of insurance provided on such deposits.

 

Regulatory Risks

 

As cryptocurrencies have grown in both popularity and market size, governments around the world have reacted differently to cryptocurrencies with certain governments deeming them illegal while others have allowed their use and trade. Ongoing and future regulatory actions may alter, perhaps to a materially adverse extent, the ability of the Company to continue to operate. The effect of any future regulatory change on the DeFi ecosystem or any cryptocurrency, project or protocol that the Company may hold is impossible to predict, but such change could be substantial and adverse to the space as a whole, as well as potentially to the Company. Governments may, in the future, restrict or prohibit the acquisition, use or redemption of cryptocurrencies. Ownership of, holding or trading in cryptocurrencies may then be considered illegal and subject to sanction. Governments may also take regulatory action that may increase the cost and/or subject cryptocurrency mining companies to additional regulation.

 

44

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

Custodian Risks

 

The Company uses multiple custodians (or third-party “wallet providers”) to hold digital assets for its Valour Ventures business line as well as for digital assets underlying Valour Cayman ETPs. Such custodians may or may not be subject to regulation by U.S. state or federal or non-U.S. governmental agencies or other regulatory or self-regulatory organizations. The Company could have a high concentration of its digital assets in one location or with one custodian, which may be prone to losses arising out of hacking, loss of passwords, compromised access credentials, malware or cyberattacks. Custodians may not indemnify us against any losses of digital assets. Digital assets held by certain custodians may be transferred into “cold storage” or “deep storage,” in which case there could be a delay in retrieving such digital assets. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect our trading execution, the value of our and the value of any investment in our common shares. Furthermore, there is, and is likely to continue to be, uncertainty as to how U.S. and non-U.S. laws will be applied with respect to custody of cryptocurrencies and other digital assets held on behalf of clients. For example, U.S.- regulated investment advisers may be required to keep client “funds and securities” with a “qualified custodian”; there remain numerous questions about how to interpret and apply this rule, and how to identify a “qualified custodian” of, digital assets, which are obviously kept in a different way from the traditional securities with respect to which such rules were written. The uncertainty and potential difficulties associated with this question and related questions could materially and adversely affect our ability to continuously develop and launch our business lines. The Company may also incur costs related to the third-party custody and storage of its digital assets. Any security breach, incurred cost or loss of digital assets associated with the use of a custodian could materially and adversely affect the execution of hedging ETPs, the value of the Company’s assets and the value of any investment in the Common Shares.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if the Company’s access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or related to matters specific to the Company, or if the value of the Company’s investments declines, resulting in losses upon disposition. In addition, some of the investments the Company holds are lightly traded public corporations or not publicly traded and may not be easily liquidated. The Company generates cash flow from proceeds from the disposition of its investments and digital assets. There can be no assurances that sufficient funding, including adequate financing, will be available to cover the general and administrative expenses necessary for the maintenance of a public company. All of the Company’s assets, liabilities and obligations are due within one to three years.

 

The Company manages liquidity risk by maintaining adequate cash balances and liquid investments and digital assets. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial and non-financial assets and liabilities. As at December 31, 2023, the Company had current assets of $497,513,493 (December 31, 2022 - $109,703,964) to settle current liabilities of $573,516,046 (December 31, 2022 - $164,384,606).

 

45

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

The following table shows the Company’s source of liquidity by assets / (liabilities) as at December 31, 2023 and December 31, 2022

 

Liquidity risk (continued)

 

December 31, 2022
   Total   Less than
1 year		   1-3
years		 
Cash  $4,906,165   $4,906,165   $- 
Amounts receivable   67,102    67,102    - 
Public investments   17,227    17,227    - 
Prepaid expenses   564,742    564,742    - 
Digital assets   104,202,086    104,148,728    53,358 
Private investments   30,015,445    -    30,015,445 
Accounts payable and accrued liabilities   (5,822,379)   (5,822,379)   - 
Loan payable   (52,821,600)   (52,821,600)   - 
ETP holders payable   (105,740,627)   (105,740,627)   - 
Lease liabilities   (1,709,911)   -    (1,709,911)
Total assets / (liabilities) - December 31, 2022  $(26,321,750)  $(54,680,642)  $28,358,892 

 

December 31, 2023
    Total    Less than
1 year		    1-3
years		 
Cash  $6,727,482   $6,727,482   $- 
Amounts receivable   54,036    54,036    - 
Prepaid expenses   1,509,824    1,509,824    - 
Digital assets   489,865,637    489,222,151    643,487 
Private investments   43,540,534    -    43,540,534 
Accounts payable and accrued liabilities   (9,174,846)   (9,174,846)   - 
Loans payable   (56,210,709)   (56,210,709)   - 
ETP holders payable   (508,130,490)   (508,130,490)   - 
Total assets / (liabilities) - December 31, 2023  $(31,818,532)   (76,002,552)   44,184,021 

 

Digital assets included in the table above are non-financial assets except USDC. For the purposes of liquidity risk analysis, these non-financial assets were included as they are mainly utilized to pay off any redemptions related to ETP holders payable, a financial liability. The lent and staked digital assets fall under the “less than 1 year” bucket.

 

Market risk

 

Market risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will significantly fluctuate because of changes in market prices.

 

(a)Price and concentration risk

 

The Company is exposed to market risk in trading its investments and unfavourable market conditions could result in dispositions of investments at less than favorable prices. In addition, most of the Company’s investments are in the technology and resource sector. At December 31, 2023, two investments made up approximately 7.0% (December 31, 2022 – two investment of 13.9%) of the total assets of the Company.

 

For the year ended December 31, 2023, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $4.2 million, or $0.02 per share.

 

For the year ended December 31, 2022, a 10% decrease (increase) in the closing price of this these two positions would result in an estimated increase (decrease) in net loss of $2.7 million, or $0.02 per share.

 

46

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

Market risk (continued)

 

(b)Interest rate risk

 

The Company’s cash is subject to interest rate cash flow risk as it carries variable rates of interest. The Company’s interest rate risk management policy is to purchase highly liquid investments with a term to maturity of one year or less on the date of purchase. Based on cash balances on hand at December 31, 2023, a 1% change in interest rates could result in $6,700 change in net loss.

 

(c)Currency risk

 

Currency risk is the risk that the fair value of, or future cash flows from, the Company’s financial instruments will fluctuate because of changes in foreign exchange rates. The Company’s operations are exposed to foreign exchange fluctuations, which could have a significant adverse effect on its results of operations from time to time. The Company’s foreign currency risk arises primarily with respect to United States dollar, Euro Swiss Franc and British Pound. Fluctuations in the exchange rates between this currency and the Canadian dollar could have a material effect on the Company’s business, financial condition and results of operations. The Company does not engage in any hedging activity to mitigate this risk. The Company reduces its currency risk by maintaining minimal cash balances held in foreign currency.

 

As at December 31, 2023 and December 31, 2022, the Company had the following financial and non-financial assets and liabilities, (amounts posted in Canadian dollars) denominated in foreign currencies:

 

December 31, 2023
    United States
Dollars		    British
Pound		    Swiss
Franc		    European
Euro		 
Cash  $6,668,518   $-   $-   $- 
Receivables   47,159    -    -    - 
Private investments   4,016,636    -    39,395,000    - 
Prepaid investment   1,509,824    -    -    - 
Digital assets   489,865,637    -    -    - 
Accounts payable and accrued liabilities   (3,080,229)   (74,466)   (101,828)   (21,939)
Loan payable   (56,210,709)               
ETP holders payable   (508,130,490)   -    -    - 
Net assets (liabilities)  $(65,313,654)  $(74,466)  $39,293,172   $(21,939)

 

December 31, 2022
   United States
Dollars		   British
Pound		   Swiss
Franc		   European
Euro		 
Cash  $4,742,001   $-   $-   $- 
Receivables   67,103    -    -    - 
Private investments   4,358,445    -    25,657,000    - 
Prepaid investment   551,379    -    -    136,189 
Digital assets   104,202,086    -    -    - 
Accounts payable and accrued liabilities   (2,649,621)   (72,189)   (23,685)   (21,687)
Loan payable   (52,821,600)               
ETP holders payable   (105,740,627)   -    -    - 
Net assets (liabilities)  $(47,290,835)  $(72,189)  $25,633,315   $114,502 

 

A 10% increase (decrease) in the value of the Canadian dollar against all foreign currencies in which the Company held financial instruments as of December 31, 2023 would result in an estimated increase (decrease) in net income of approximately $2,601,500 (December 31, 2022 - $2,159,200).

 

47

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(d)Digital currency risk factors: Perception, Evolution, Validation and Valuation

 

A digital currency does not represent an intrinsic value or a form of credit. Its value is a function of the perspective of the participants within the marketplace for that digital currency. The price of the digital currency fluctuates as a result of supply and demand pressures that accumulate in the market for it.

 

Having a finite supply (in the case of many but not all digital currencies), the more people who want to own that digital currency, the more the market price increases and vice-versa.

 

The most common means of determining the value of a digital currency is through one or more cryptocurrency exchanges where that digital currency is traded. Such exchanges publicly disclose the “times and sales” of the various listed pairs. As the marketplace for digital currencies evolves, the process for assessing value will become increasingly sophisticated.

 

(e)Fair value of financial instruments

 

The Company has determined the carrying values of its financial instruments as follows:

 

i.The carrying values of cash, amounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these instruments.

 

ii.Public and private investments are carried at amounts in accordance with the Company’s accounting policies as set out in Note 2 in the Company’s December 31, 2023 financial statements.

 

iii.Digital assets classified as financial assets relate to USDC which is measured at fair value.

 

The following table illustrates the classification and hierarchy of the Company’s financial instruments, measured at fair value in the statements of financial position as at December 31, 2023 and December 31, 2022.

 

   Level 1   Level 2   Level 3     
Investments, fair value  (Quoted Market
price)		   (Valuation
technique -observable market Inputs)		   (Valuation
technique -
non-observable market inputs)		   Total 
Publicly traded investments  $-   $-   $      -   $- 
Privately traded invesments   -    -    43,540,534    43,540,534 
Digital assets   -    673    -    673 
December 31, 2023  $-   $673   $43,540,534   $43,541,207 
Publicly traded investments  $17,227   $-   $-   $17,227 
Privately traded invesments   -    -    30,015,445    30,015,445 
Digital assets   -    1,586    -    1,586 
December 31, 2022  $17,227   $1,586   $30,015,445   $30,034,258 

 

48

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Level 2 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 2 during the periods ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss

 

Investments, fair value for the period ended  December 31,
2023		   December 31,
2022		 
Balance, beginning of period  $1,586   $4,063 
Disposal   (913)   (2,477)
Balance, end of period  $673   $1,586 

 

Level 3 Hierarchy

 

The following table presents the changes in fair value measurements of financial instruments classified as Level 3 during the periods ended December 31, 2023 and December 31, 2022. These financial instruments are measured at fair value utilizing non-observable market inputs. The net realized losses and net unrealized gains are recognized in the statements of loss.

 

Investments, fair value for the period ended  December  31,
2023		   December 31,
2022		 
Balance, beginning of period  $30,015,445   $10,257,760 
Purchases   128,898    34,498,750 
Unrealized gain/(loss) net   13,396,191    (14,741,065)
Balance, end of period  $43,540,534   $30,015,445 

 

Within Level 3, the Company includes private company investments that are not quoted on an exchange. The key assumptions used in the valuation of these instruments include (but are not limited to) the value at which a recent financing was done by the investee, company-specific information, trends in general market conditions and the share performance of comparable publicly-traded companies.

 

As valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuate within short periods of time and are based on estimates, determination of fair value may differ materially from the values that would have resulted if a ready market existed for the investments. Given the size of the private investment portfolio, such changes may have a significant impact on the Company’s financial condition or operating results.

 

The following table presents the fair value, categorized by key valuation techniques and the unobservable inputs used within Level 3 as at December 31, 2023 and December 31, 2022.

 

49

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Description  Fair vaue   Valuation
technique		  Significant
unobservable
input(s)		  Range of
significant
unobservable
input(s)
3iQ Corp.  $1,216,890   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,138,380   Recent financing  Marketability of shares  0% discount
Earnity   -   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   661,366   Recent financing  Marketability of shares  0% discount
Neuronomics AG   128,898   Recent financing  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Amina Bank   39,395,000   Market approach  Marketability of shares  0% discount
Skolem Technologies Ltd.   -   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   -   Recent financing  Marketability of shares  0% discount
December 31, 2023  $43,540,534          

 

3iQ Corp.  $1,246,149   Recent financing  Marketability of shares  0% discount
Brazil Potash Corp.   2,189,794   Recent financing  Marketability of shares  0% discount
Earnity   14,991   Recent financing  Marketability of shares  0% discount
Luxor Technology Corporation   677,268   Recent financing  Marketability of shares  0% discount
SEBA Bank AG   25,657,000   Market approach  Marketability of shares  0% discount
SDK:meta, LLC   -   Recent financing  Marketability of shares  0% discount
Skolem Technologies Ltd.   189,611   Recent financing  Marketability of shares  0% discount
VolMEX Labs Corporation   40,632   Recent financing  Marketability of shares  0% discount
December 31, 2022  $30,015,445          

 

3iQ Corp. (“3iQ”)

On March 31, 2020, the Company acquired 187,007 common shares of 3iQ as part of the Company’s acquisition of Valour. As at December 31, 2023, the valuation of 3iQ was based on the recent transaction which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of 3iQ will result in a corresponding +/- $121,689 (December 31, 2022 - $124,615) change in the carrying amount.

 

Brazil Potash Corp. (“BPC”)

On September 11, 2020, the Company received 404,200 common shares of BPC as consideration of selling the Company’s Royalties to a non-arms length party of the Company. As at December 31, 2023, the valuation of BPC was based on the August 2022 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of BPC will result in a corresponding +/- $213,828 (December 31, 2022 - $218,979) change in the carrying amount.

 

Earnity Inc. (“Earnity”)

On April 13, 2021, the Company subscribed US$40,000 ($50,076) to acquire certain rights to certain future equity of Earnity (see Note 3). As at December 31, 2023, the valuation of Earnity was determined to be nil based on Earnity ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31, 2023 a +/- 10% change in the fair value of Earnity will result in a corresponding +/- $nil (December 31, 2022 - $1,499) change in the carrying amount.

 

50

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

17.Financial instruments (continued)

 

(e)Fair value of financial instruments (continued)

 

Luxor Technology Corporation (“LTC”)

On December 29, 2020, the Company subscribed US$100,000 ($128,060) to acquire certain rights to the preferred shares of LTC. The transaction was closed on February 15, 2021. On May 11, 2021, the Company subscribed additional rights of US$62,500 ($75,787). As at December 31, 2023, the valuation of LTC was based on the December 2021 financing which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023. a +/- 10% change in the fair value of LTC will result in a corresponding +/- $66,137 (December 31, 2022 - $67,727) change in the carrying amount.

 

SDK:Meta LLC

On June 3, 2021, the Company entered into a share exchange agreement with SDK exchanging 1,000,000 membership units of SDK with 3,000,000 shares of the Company valuing the investment at $3,420,000. During 2022, the Company impaired its investment in SDK:Meta LLC as they were unsuccessful in raising additional funds to continue to advance the company. As at December 31, 2023, the valuation of SDK:Meta LLC was $nil (December 31, 2022 - $nil). Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly. As at December 31, 2023, a +/- 10% change in the fair value of SDK:Meta LLC will result in a corresponding +/- 0 (December 31, 2022 - $0) change in the carrying amount.

 

Amina Bank AG (formerly SEBA Bank AG) (“Amina”)

On January 14, 2022, the Company invested $34,498,750 to acquire 3,906,250 non-votes shares of Amina. As at December 31, 2023, the valuation of Amina was based on a market approach which is indicative of being the fair market value. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of SEBA will result in a corresponding +/- $3,939,500 (December 31, 2022 +/- $2,565,700) change in the carrying amount.

 

Skolem Technologies Ltd. (“STL”)

On December 29, 2020, the Company invested US$20,000 ($25,612) to acquire certain rights to the preferred shares of STL. On October 29, 2021, the Company rights were converted into 16,354 series A preferred shares. As at December 31, 2023, the valuation of STL was determined to be nil based on STL ceasing operations. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023, a +/- 10% change in the fair value of STL will result in a corresponding +/- $nil (December 31, 2022 - $18,961) change in the carrying amount.

 

VolMEX Labs Corporation (“VLC”)

On February 23, 2021, the Company invested US$30,000 ($37,809) to acquire certain rights to the preferred shares of VLC. As at December 31, 2023, the valuation of VLC was nil. Management has determined that there are no reasonably possible alternative assumptions that would change the fair value significantly as at December 31, 2023. As at December 31, 2023. a +/- 10% change in the fair value of VLC will result in a corresponding +/- nil (December 31, 2022 - $4,063) change in the carrying amount.

 

51

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

18.Digital asset risk

 

(a)Digital currency risk factors: Risks due to the technical design of cryptocurrencies

 

The source code of many digital currencies, such as Bitcoin, is public and may be downloaded and viewed by anyone. As with all code, there may be a bug in the respective code which is yet to be found and repaired and can ultimately jeopardize the integrity and security of one or more of these networks.

 

Should miners for reasons yet unknown cease to register completed transactions within blocks which have been detached from the block chain, the confidence in the protocol and network will be reduced, which will reduce the value of the digital currency associated with that protocol, and the ETP payable balances that are valued with reference to the respective digital asset.

 

Protocols for most digital assets or cryptocurrencies are public open source software, they could be particularly vulnerable to hacker attacks, which could be damaging for the digital currency market and may be the cause for investors to choose other currencies or assets to invest in.

 

(b)Digital currency risk factors: Ownership, Wallets

 

Rather than the actual cryptocurrency (which are “stored” on the blockchain), a cryptocurrency wallet stores the information necessary to transact the cryptocurrency. Those digital credentials are needed so one can access and spend the underlying digital assets. Some use public-key cryptography in which two cryptographic keys, one public and one private, are generated and stored in a wallet. There are several types of wallets:

 

-Hardware wallets are USB-like hardware devices with a small screen built specifically for handling private keys and public keys/addresses.

 

-Paper wallets are simply paper printouts of private and public addresses.

 

-Desktop wallets are installable software programs/apps downloaded from the internet that hold your private and public keys/addresses.

 

-Mobile wallets are wallets installed on a mobile device and are thus always available and connected to the internet.

 

-Web wallets are hot wallets that are always connected to the internet that can be stored in a browser or can be “hosted” by third party providers such as an exchange.

 

(c)Digital currency risk factors: Political, regulatory risk and technology in the market of digital currencies

 

The legal status of digital currencies, inter alia Bitcoin varies between different countries. The lack of consensus concerning the regulation of digital currencies and how such currencies shall be handled tax wise causes insecurity regarding their legal status. As all digital currencies remain largely unregulated assets, there is a risk that politics and future regulations may negatively impact the market of digital currencies and companies operating in such market. It is impossible to estimate how politics and future regulations may affect the market. However, future regulations and changes in the legal status of the digital currencies is a political risk which may affect the price development of the tracked digital currencies.

 

The perception (and the extent to which it is held) that there is significant usage of the digital assets in connection with criminal or other illicit purposes, could materially influence the development and regulation of digital assets (potentially by curtailing the same).

 

As technological change occurs, the security threats to the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets will likely adapt and previously unknown threats may emerge. The Company’s ability to adopt technology in response to changing security needs or trends may pose a challenge to the safekeeping of the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets. To the extent that the Company is unable to identify and mitigate or stop new security threats, the Company’s cryptocurrencies, DeFi protocol tokens and other digital assets may be subject to theft, loss, destruction or other attack.

 

52

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

19.Capital management

 

The Company considers its capital to consist of share capital, share based payments reserves and deficit. The Company’s objectives when managing capital are:

 

a)to allow the Company to respond to changes in economic and/or marketplace conditions by maintaining the Company’s ability to purchase new investments;

 

b)to give shareholders sustained growth in value by increasing shareholders’ equity; while

 

c)taking a conservative approach towards financial leverage and management of financial risks.

 

The Company’s management reviews its capital structure on an on-going basis and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying investments. The Company’s current capital is composed of its shareholders’ equity and, to-date, has adjusted or maintained its level of capital by:

 

a)raising capital through equity financings; and

 

b)realizing proceeds from the disposition of its investments

 

The Company is not subject to any capital requirements imposed by a lending institution or regulatory body, other than the NEO Exchange which requires one of the following to be met: (i) shareholders equity of at least $2.5 million, (ii) net income from continuing operations of at least $375,000, (iii) market value of listed securities of at least $25 million, or (iv) assets and revenues of at least $25 million. There were no changes to the Company’s capital management during the year ended December 31, 2023.

 

20.Related party disclosures

 

a)The consolidated financial statements include the financial statements of the Company and its subsidiaries and its respective ownership listed below:

 

   Country of incorporation  % equity interest
DeFi Capital Inc.  Canada  100
DeFi Holdings (Bermuda) Ltd.  Bermuda  100
Electrum Streaming Inc.  Canada  100
Valour Inc. (Cayman)  Cayman Islands  100
DeFi Europe AG  Cayman Islands  100
Crypto 21 AB  Sweden  100
Valour Management Limited  UK  100
Valour Digital Securities Limited     0

 

b)Compensation of key management personnel of the Company

 

In accordance with IAS 24, key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including any directors (executive and non-executive) of the Company. The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The remuneration of directors and other members of key management personnel during the years ended December 31, 2023 and 2022 were as follows:

 

   Three months ended September 30,   Years Ended December 31, 
   2023   2022   2023   2022 
Short-term benefits  $862,208   $435,545   $862,208   $1,673,537 
Shared-based payments   574,361    2,701,002    574,361    3,944,408 
   $1,436,569   $3,136,547   $1,436,569   $5,617,945 

 

53

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Related party disclosures (continued)

 

As at December 31, 2023, the Company had $147,485 (December 31, 2022 - $296,084) owing to its current key management, and $314,136 (December 31, 2022 - $356,340) owing to its former key management. Such amounts are unsecured, non-interest bearing, with no fixed terms of payment or “due on demand”.

 

c)During the years ended December 30, 2023 and 2022, the Company entered into the following transactions in the ordinary course of business with related parties that are not subsidiaries of the Company.

 

   Three months ended September 30,   Years Ended December 31, 
   2023   2022   2023   2022 
2227929 Ontario Inc.  $30,000   $30,000   $120,000   $120,000 
   $30,000   $30,000   $120,000   $120,000 

 

**Excl. HST & incl. bonus

 

The Company shares office space with other companies who may have common officers and directors. The costs associated with the use of this space, including the provision of office equipment and supplies, are administered by 2227929 Ontario Inc. to whom the Company pays a fee. As at December 31, 2023 the Company had a payable balance of $226,000 (December 31, 2022 - $90,400) with 2227929 Ontario Inc. to cover shared expenses. The amounts outstanding are unsecured with no fixed terms of repayment. Fred Leigh, a former director and former officer of the Company, is also a director of 2227929 Ontario Inc.

 

The Company incurred $173,917 (2022 - $41,086) in legal fees to a firm in which a director of the Company is a partner. Included in accounts payable and accrued liabilities were legal expenses of $165,868 (December 31, 2022 – $34,759) incurred in the ordinary course of business at a law firm where a director of the company is a Partner.

 

Included in accounts payable and accrued liabilities were expenses of GBP 44,228 ($74,466) (December 31, 2022 - $72,189) expenses owed to Vik Pathak, a former director and officer of the Company.

 

On August 10, 2023, the Company entered into a share purchase agreement to sell its subsidiary Crypto 21 AB for 50,000 SEK. One of the purchasers is an officer of the Company.

 

See note 16.

 

d)The Company’s directors and officers may have investments in and hold management and/or director and officer positions in some of the investments that the Company holds. The following is a list of total investments and the nature of the relationship of the Company’s directors or officers with the investment as of December 31, 2023 and December 31, 2022.

 

Investment  Nature of relationship to invesment  Estimated
Fair value		 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,138,380 
Aminna Bank AG (formerlt SEBA Bank AG)*  Former Director (Olivier Roussy Newton)  of investee   39,395,000 
Total investment -  December 31, 2023     $41,533,380 

 

*Private companies

 

Investment  Nature of relationship to invesment  Estimated
Fair value		   % of FV 
Brazil Potash Corp.*  Officer (Ryan Ptolemy) of Investee  $2,189,794    7.9%
SEBA Bank AG  Director (Olivier Roussy Newton)  of investee   25,657,000      
Total investment - December 31, 2022     $27,846,794    100.0%

 

*Private companies

 

The Company has a diversified base of investors. To the Company’s knowledge, no one holds more than 10% of the Company’s shares on a basic share and partially diluted share basis as at December 31, 2023,

 

54

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

20.Related party disclosures (continued)

 

During the year ended December 31, 2023, Officers of the Company received 4,377,139 common shares to settle $413,868 of outstanding payables.

 

During the year ended December 31, 2023, the Company also issued 2,724,941 common shares of the Company to former key management at an issue price of $0.11 per share to settle existing debt of $231,620 resulting in a loss on settlement of debt in the amount of $68,124.

 

Valour Inc. holds 4,000,000 common shares of the Company.

 

21.Commitments and contingencies

 

The Company is party to certain management contracts. These contracts require that additional payments of up to approximately $2,070,000 be made upon the occurrence of certain events such as a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed consolidated interim financial statements. Minimum commitments remaining under these contracts were approximately $900,000, all due within one year.

 

The Company is, from time to time, involved in various claims and legal proceedings. The Company cannot reasonably predict the likelihood or outcome of these activities. The Company does not believe that adverse decisions in any ending or threatened proceedings related to any matter, or any amount which may be required to be paid by reasons thereof, will have a material effect on the financial condition or future results of operations.

 

22.Operating segments

 

Geographical information

 

The Company operates in Canada where its head office is located and in Bermuda and Cayman Islands where its operating business are located. Cayman Islands operates the Company’s ETPs business line which involves issuing ETPs, hedging against the underlying digital asset, lending and staking of digital assets and management fees earned on the ETPs. Bermuda operates the Company’s Venture portfolio and node business lines. Information about the Company’s assets by geographical location is detailed below.

 

December 31, 2023  Canada   Bermuda   Cayman
Islands		   Total 
Cash   59,069    -    6,668,412    6,727,481 
Amounts receivable   6,878    -    47,159    54,037 
Public investments   -    -    -    - 
Prepaid expenses   77,521    -    1,432,303    1,509,824 
Digital Assets   503,669    218,131    489,143,837    489,865,637 
Property, plant and equipment   -    5,073    2,606    7,679 
Other non-current assets   92,578,559    -    1,216,890    93,795,449 
Total assets   93,225,696    223,204    498,511,207    591,960,107 

 

December 31, 2022  Canada   Bermuda   Cayman
Islands		   Total 
Cash   261,992    -    4,644,173    4,906,165 
Amounts receivable   4,155    -    62,947    67,102 
Public investments   -    -    17,228    17,228 
Prepaid expenses   136,189    2,784    425,769    564,742 
Digital Assets   -    144,246    104,057,840    104,202,086 
Property, plant and equipment   -    15,543    5,080    20,623 
Other non-current assets   81,021,879    40,632    3,163,323    84,225,834 
Total assets   81,424,215    203,205    112,376,360    194,003,780 

 

55

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

22.Operating segments (continued)

 

Information about the Company’s revenues and expenses by subsidiary are detailed below:

 

For the year ended December 31, 2023  DeFi   DeFi
Bermuda		   Valour Inc.   Total 
Realized and net change in unrealized gains and (losses) on digital assets   503,669    122,096    323,333,102    323,958,867 
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    (332,100,866)   (332,100,866)
Realized (loss) of derivative asset   -    -    -    - 
Staking and lending income   -    164    3,539,188    3,539,352 
Management fees   -    -    1,461,594    1,461,594 
Node revenue   -    15,235    -    15,235 
Realized (loss) on investments, net   -    -    (4,150)   (4,150)
Unrealized (loss) on investments, net   13,466,082    (40,872)   59,294    13,484,504 
Interest income   1,480    -    -    1,480 
Total revenue   13,971,231    96,622    (3,711,838)   10,356,015 
Expenses                    
Operating, general and administration   3,476,710    33,863    6,464,694    9,975,267 
Share based payments   2,920,219    -    -    2,920,219 
Depreciation - property, plant and equipment   -    10,470    2,475    12,945 
Amortization - intangibles   2,038,300    -    -    2,038,300 
Finance costs   8,789    -    4,152,347    4,161,136 
Transaction costs   -    -    1,029,442    1,029,442 
Foreign exchange (gain) loss   (34,696)   -    10,373,271    10,338,575 
Income (loss) before other item   5,561,909    52,289    (25,734,067)   (20,119,869)
Loss on settlement of debt   (172,093)             (172,093)
Income (loss) before other item   5,389,816    52,289    (25,734,067)   (20,291,962)
Other comprehensive loss                    
Foreign currency translation (loss) gain   -    (4,611)   1,348,281    1,343,670 
Net (loss) income and comprehensive (loss) income for the period   5,389,816    47,678    (24,385,786)   (18,948,292)

 

For the year ended December 31, 2022  Valour Inc.
(Canada)		   DeFi
Bermuda		   Valour Inc.
(Cayman)		   Total 
Realized and net change in unrealized gains and (losses) on digital assets   -    (3,135,165)   (321,909,789)   (325,044,954)
Realized and net change in unrealized gains and (losses) on ETP payables   -    -    320,382,227    320,382,227 
Realized (loss) of derivative asset   -    (434,072)   -    (434,072)
Staking and lending income   -    5,329    4,513,672    4,519,001 
Management fees   -    -    1,436,455    1,436,455 
Node revenue   -    347,758    -    347,758 
Realized (loss) on investments, net   (12,077)   -    -    (12,077)
Unrealized (loss) on investments, net   (12,227,493)   -    (3,248,888)   (15,476,381)
Interest income   2,641    -    52,623    55,264 
Total revenue   (12,236,929)   (3,216,150)   1,226,300    (14,226,779)
Expenses                    
Operating, general and administration   9,282,891    43,889    5,421,279    14,748,059 
Share based payments   15,889,455    -    -    15,889,455 
Depreciation - property, plant and equipment   -    15,867    2,475    18,342 
Depreciation - right of use assets   -    -    69,322    69,322 
Amortization - intangibles   2,277,443    -    -    2,277,443 
Finance costs        -    4,014,038    4,014,038 
Transaction costs   140,886    -    973,055    1,113,941 
Foreign exchange (gain) loss   139,109    -    (463,808)   (324,699)
Impairment loss   13,865,356    -    -    13,865,356 
Total expenses   41,595,140    59,756    10,016,360    51,671,256 
(Loss) income before other item   (53,832,069)   (3,275,906)   (8,790,061)   (65,898,036)
Other comprehensive loss                    
Foreign currency translation (loss) gain   (1,779)   115,366    (3,350,869)   (3,237,282)
Net (loss) income and comprehensive (loss) income for the period   (53,833,848)   (3,160,540)   (12,140,930)   (69,135,318)

 

56

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

23.Income Taxes

 

a)  Provision for Income Taxes

 

Major items causing the Company’s income tax rate to differ from the Canadian federal and provincial statutory rate of 26.5% (2022 – 26.5%) were as follows:

 

  

2023

$

  

2022

$

 
(Loss) before income taxes   (20,291,962)   (65,898,036)
Expected income tax recovery based on statutory rate   (5,377,000)   (17,463,000)
Adjustment to expected income tax recovery:          
Change in foreign exchange rates   -    (86,000)
Permanent difference from difference in tax rates   2,130,873    2,175,641 
Provision to return adjustment   (284,000)   (1,979,092)
Share based compensation   728,000    4,211,000 
Other   (90,000)   (9,000)
Change in unrecorded deferred tax asset   2,892,127    13,150,092 
Deferred income tax provision (recovery)   -    - 

 

b) Deferred income tax

 

Deferred income tax assets have not been recognized in respect of the following deductible temporary differences in Canada:

 

    2023
$		    2022
$		 
Non-capital loss carry-forwards   49,321,000    43,751,000 
Undepreciated capital costs (UCC)   33,000    33,000 
Reserves   360,000      
Share issuance costs   207,000    208,000 
Exploration and evaluation assets   7,002,000    7,002,000 
Investments   40,985,000    41,045,000 
Capital losses carried forward   23,348,000    22,687,000 
Total   121,256,000    114,726,000 

 

The deferred tax impact for Valour Inc. and DeFi Bermuda are nil as the corporate income tax rate is 0% in these two countries.

 

The Company has approximately $49,321,000 of non-capital loss carry-forwards in Canada which may be used to reduce the taxable income of future years. These losses expire from 2026 to 2043.

 

57

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results

 

The Company has restated its December 31, 2022 consolidated statement of financial position, consolidated statement of operations and comprehensive loss and consolidated statement of cash flow to correct material errors and omissions in its prior filing. The following tables present the impact of the restatement adjustments on the Company’s previously issued consolidated financial statements for the year ended December 31, 2022:

 

a.To impair the digital assets held at Genesis to its recoverable amount of $8,176,439 (US$6,036,945).

 

b.To revalue the fair value 3iQ investments to $1,246,149.

 

c.To revalue the fair value of SEBA Bank AG to $25,657,000.

 

Consolidated Statements of Financial Position

(Expressed in Canadian dollars)

 

 

   December 31,
2022
$
As previously reported		   Restatement   December 31,
2022
$
As
Restated		 
Assets            
Current            
Cash and cash equivalents   4,906,165         4,906,165 
Amounts receivable   67,102         67,102 
Public investments, at fair value through profit and loss   17,227         17,227 
Prepaid expenses   564,742         564,742 
Digital assets    106,582,076    (2,433,348)   104,148,728 
Digital assets loaned   -         - 
Digital assets staked   -         - 
Total current assets   112,137,312    2,433,348    109,703,964 
Private investments, at fair value through profit and loss   43,505,269    (13,489,824)   30,015,445 
Digital assets   53,358         53,358 
Equipment   20,623         20,623 
Right of use assets   1,917,174         1,917,174 
Intangible assets   5,581,188         5,581,188 
Goodwill   46,712,027         46,712,027 
Total assets   209,926,951    15,923,172    194,003,779 
Liabilities and shareholders’ equity               
Current liabilities               
Accounts payable and accrued liabilities   5,822,379         5,822,379 
Loans payable   52,821,600         52,821,600 
ETP holders payable   105,740,627         105,740,627 
Total current liabilities   164,384,606    -    164,384,606 
Non-current liabilities               
Lease liabilities   1,709,911         1,709,911 
Total liabilities   166,094,517    -    166,094,517 
Shareholders’ equity               
Common shares   166,151,401         166,151,401 
Preferred shares   4,321,350         4,321,350 
Share-based payments reserves   27,909,984         27,909,984 
Accumulated other comprehensive income   (2,996,218)        (2,996,218)
Non-controlling interest   -        -
Deficit   (151,554,084)   (15,923,172)   (167,477,256)
Total equity   43,832,434-    15,923,172    27,909,262 
Total liabilities and equity   209,926,951-    15,923,172    194,003,779 

 

58

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Operations and Comprehensive (Loss)            
(Expressed in Canadian dollars) 
   Years ended December 31, 
   2022        
   $       2022 
   As
previously
reported		   Restatement   $
As
Restated		 
             
Revenues            
Realized and net change in unrealized gains and (losses) on digital assets   (322,611,606)   (2,433,348)   (325,044,954)
Realized and net change in unrealized gains and (losses) on ETP payables   320,382,227         320,382,227 
Realized and unrealized (loss) on derivative assets   (434,073)        (434,073)
Staking and lending income   4,519,001         4,519,001 
Management fees   1,436,455         1,436,455 
Node revenue   347,758         347,758 
Realized (loss) on investments, net   (12,077)        (12,077)
Unrealized (loss) on investments, net   (1,986,557)   (13,489,824)   (15,476,381)
Interest income   55,264         55,264 
Total revenues   1,696,392    (15,923,172)   (14,226,780)
                
Expenses               
Operating, general and administration   14,748,059         14,748,059 
Share based payments   15,889,455         15,889,455 
Depreciation - property, plant and equipment   18,342         18,342 
Depreciation - right of use assets   69,322         69,322 
Amortization - intangibles   2,277,443         2,277,443 
Finance costs   4,014,038         4,014,038 
Transaction costs   1,113,941         1,113,941 
Foreign exchange gains (loss)   (324,699)        (324,699)
Impairment loss   13,865,355         13,865,355 
Total expenses   51,671,256    -    51,671,256 
Income (loss) before other item   (49,974,864)   (15,923,172)   (65,898,036)
Loss on settlement of debt   -    -    - 
Net (loss) for the period   (49,974,864)   (15,923,172)   (65,898,036)
Other comprehensive loss               
Foreign currency translation loss   (3,237,282)   -    (3,237,282)
Net (loss) and comprehensive income (loss) for the period   (53,212,146)   (15,923,172)   (69,135,318)
                
Net (loss) attributed to:               
Owners of the parent   (49,974,864)        (65,898,036)
Non-controlling interests   -         - 
    (49,974,864)        (65,898,036)
                
Net (loss) and comprehensive (loss) attributed to:               
Owners of the parent   (53,212,146)        (69,135,318)
Non-controlling interests   -         - 
    (53,212,146)        (69,135,318)
                
(Loss) per share               
Basic   (0.24)        (0.32)
Diluted   (0.24)        (0.32)
                
Weighted average number of shares outstanding:               
Basic   209,054,713         209,054,713 
Diluted   209,054,713         209,054,713 

 

59

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

24.Restatement of financial results (continued)

 

Consolidated Statements of Cash Flows            
(Expressed in Canadian dollars) 
   Years ended December 31, 
   2022       2022 
   $       $ 
   As previously
reported		   Restatement   As
Restated		 
Cash (used in) provided by operations:            
Net (loss) for the year  $(49,974,864)  $(15,923,172)  $(65,898,036)
Adjustments to reconcile net (loss) income to cash (used in) operating activities:               
Share-based payments   15,889,455         15,889,455 
Impairment loss   13,865,356         13,865,356 
Loss on debt for shares   -         - 
Interest income   (55,264)        (55,264)
Interest expense   -         - 
Interest paid   -         - 
Depreciation - Property, plant & equipment   18,342         18,342 
Depreciation - right of use assets   69,322         69,322 
Amortization - Intangible asset   2,277,443         2,277,443 
Realized loss on investments, net   12,077         12,077 
Unrealized (gain) loss on investments, net   1,986,557    13,489,824    15,476,381 
Realized and net change in unrealized (gains) and loss on digital assets   322,611,606    2,433,348    325,044,954 
Realized and net change in unrealized (gains) and loss on ETP   (320,382,227)        (320,382,227)
Realized and unrealized loss on derivative assets   434,072         434,072 
Staking and lending income   (4,519,001)        (4,519,001)
Node revenue   (347,758)        (347,758)
Management fees   (1,436,455)        (1,436,455)
ETP paid in digital assets   -         - 
Unrealized loss on foreign exchange   3,735,067         3,735,067 
    (15,816,272)   0    (15,816,272)
Adjustment for:               
Purchase of digital assets   (231,392,840)        (231,392,840)
Disposal of digital assets   191,092,048         191,092,048 
Purchase of investments   (34,649,658)        (34,649,658)
Disposal of investments   28,248         28,248 
Change in amounts receivable   (34,537)        (34,537)
Change in prepaid expenses and deposits   693,287         693,287 
Change in accounts payable and accrued liabilities   -         - 
Net cash (used in) operating activities   (90,079,724)   0    (90,079,724)
Investing activities               
Additions to right of use assets   (1,411,062)        (1,411,062)
Lease payment   (1,258,033)        (1,258,033)
Net cash (used in) investing activities   (2,669,095)   -    (2,669,095)
Financing activities               
Proceeds from ETP holders   242,378,583         242,378,583 
Payments to ETP holders   (196,516,517)        (196,516,517)
Loan Payable   53,117,760         53,117,760 
Proceeds from private placements   1,554,348         1,554,348 
Share issuance costs   (14,490)        (14,490)
Proceeds from exercise of warrants   647,284         647,284 
Proceeds from exercise of options   45,000         45,000 
Shares repurchased pursuant to NCIB   (13,154,570)        (13,154,570)
Net cash provided by financing activities   88,057,398    -    88,057,398 
Effect of exchange rate changes on cash and cash equivalents   436,552    -    436,552 
Change in cash and cash equivalents   (4,254,869)   -    (4,254,869)
Cash, beginning of year   9,161,034    -    9,161,034 
Cash and cash equivalents, end of year  $4,906,165   $-   $4,906,165 

 

60

 

 

DeFi Technologies Inc. (Formerly Valour Inc.)

Notes to the consolidated financial statements

For the years December 31, 2023 and 2022

(Expressed in Canadian dollars unless otherwise noted)

 

 

25.Subsequent event

 

On February 7, 2024, the Company completed its acquisition of Reflexivity Research LLC, a premier private research firm that specializes in producing cutting-edge research reports for the cryptocurrency industry acquiring all the issued and outstanding shares of Reflexivity Research LLC for five million common shares of the Company.

 

On February 9, 2024, the Company completed its the acquisition of intellectual property (IP) from prominent Solana developer Stefan Jorgensen. This acquisition marks a significant milestone in Defi Technologies’ expansion strategy, focusing on enhancing its offerings in the Solana ecosystem by issuing a total of 7,297,090 common shares of the company at a deemed price of 55 cents per payment share to Mr. Jorgensen in exchange for all of the IP. The payment shares are subject to a lock-up and will be released in five tranches over a period of two years and be subject to the continued involvement of Mr. Jorgensen with Defi Technologies and its subsidiaries. No finders’ fees were paid in connection with the acquisition.

 

Subsequent to December 31, 2023, the Company agreed to sell some of its shares in 3iQ.

 

 

61

 

Exhibit 99.151

 

FORM 52-109F1R
CERTIFICATION OF REFILED ANNUAL FILINGS

 

This certificate is being filed on the same date that DeFi Technologies Inc. (the “issuer”) has refiled its annual financial statements.

 

I, Ryan Ptolemy, the Chief Financial Officer of DeFi Technologies Inc., certify the following:
 

1.Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of the issuer for the financial year ended December 31, 2023.

 

2.Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3.Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO). 

 

 

 

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a) a description of the material weakness;

 

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c) the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3N/A

 

6.The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7.The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: September 6, 2024

 

(Signed) “Ryan Ptolemy”  
Ryan Ptolemy  
Chief Financial Officer  

 

 

 

 

Exhibit 99.152

 

FORM 52-109F1R
CERTIFICATION OF REFILED ANNUAL FILINGS

 

This certificate is being filed on the same date that DeFi Technologies Inc. (the “issuer”) has refiled its annual financial statements.

 

I, Olivier Roussy Newton, Chief Executive Officer of DeFi Technologies Inc., certify the following:

 

1.Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the “annual filings”) of the issuer for the financial year ended December 31, 2023.

 

2.Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings.

 

3.Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual filings.

 

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

 

5.Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the financial year end

 

a.designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 

i.material information relating to the issuer is made known to us by others, particularly during the period in which the annual filings are being prepared; and

 

ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 

b.designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

 

5.1The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is Internal Control - Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

 

 

 

5.2ICFR – material weakness relating to design: The issuer has disclosed in its annual MD&A for each material weakness relating to design existing at the financial year end

 

(a)a description of the material weakness;

 

(b)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(c)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

5.3N/A

 

6.The issuer’s other certifying officer(s) and I have

 

a.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s DC&P at the financial year end and the issuer has disclosed in its annual MD&A our conclusions about the effectiveness of DC&P at the financial year end based on that evaluation; and

 

b.evaluated, or caused to be evaluated under our supervision, the effectiveness of the issuer’s ICFR at the financial year end and the issuer has disclosed in its annual MD&A

 

i.our conclusions about the effectiveness of ICFR at the financial year end based on that evaluation; and

 

ii.for each material weakness relating to operation existing at the financial year end

 

(A)a description of the material weakness;

 

(B)the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

 

(C)the issuer’s current plans, if any, or any actions already undertaken, for remediating the material weakness.

 

7.The issuer has disclosed in its annual MD&A any change in the issuer’s ICFR that occurred during the period beginning October 1, 2023 and ended on December 31, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

 

8.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of ICFR, to the issuer’s auditors, and the board of directors or the audit committee of the board of directors any fraud that involves management or other employees who have a significant role in the issuer’s ICFR.

 

Date: September 6, 2024

 

Signed) “Olivier Roussy Newton”  
Olivier Roussy Newton  
Chief Executive Officer  

 

 

 

 

Exhibit 99.153

 

 

DeFi Technologies Provides Monthly Corporate Update: Subsidiary Valour Reports Assets Under Management at C$661 Million (US$487 Million), Up 30% This Fiscal Year, and Records Highest Monthly Net Inflows of 2024 at C$14.1 Million (US$10.4 Million) in August

 

  ●AUM & Record Inflows: Valour reports assets under management (AUM) of C$661 million (US$487 million) as of August 31, 2024. Despite a decline in AUM due to asset prices, August marked the highest net inflows of 2024, with a significant net inflow of C$14.1 million (US$10.4 million). This growth reflects strong investor confidence and sustained demand for Valour’s range of ETP products.

 

  ●Strong Financial Position: August 31, 2024 Cash and USDT balance is approximately C$26.2M (US$19.4M) and current loans payable stand at approximately C$17.5M (US$13M). The Company also purchased and holds 204.3 BTC, and diversified its treasury holdings with 21.3 ETH, 246,683 ADA, 64,616 DOT, 5,345 SOL, 490 UNI, 433,322 AVAX and 2,515,203 CORE tokens, totaling approximately C$33.9M (US$25.1M) as of August 31, 2024.

 

TORONTO, Sept. 10, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: RB9) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce that its subsidiary, Valour Inc., and Valour Digital Securities Limited (together, “Valour”), a leading issuer of exchange traded products (“ETPs”) reports assets under management (“AUM”) of C$661 million (US$487 million) as of August 30, 2024. This figure represents a significant year-to-date increase of 30%.

 

Despite a downtrend in digital asset prices, Valour achieved its highest monthly net inflows of 2024, recording C$14.1 million (US$10.4 million) in August. This milestone highlights strong investor confidence and the growing demand for Valour’s product suite.

 

Key Products Driving Inflows:

 

The products contributing to this exceptional performance include:

 

  ●Valour Solana SEK: C$6.03M (US$4.4M)
    
  ●Valour BTC Zero SEK: C$3.6M (US$2.7M)
    
  ●Valour ETH Zero SEK: C$920.1K (US$677.6K)
    
  ●Valour Cardano SEK: C$661.2K (US$486.8K)
    
  ●Valour NEAR SEK: C$586.9K (US$432.2K)

 

These inflows underscore Valour’s leadership in providing access to diverse digital assets via innovative ETP products.

 

The Company maintains a strong financial position with cash balance of approximately C$26.2M (US$19.4M) and loans payable of approximately C$17.5M (US$13M) as at August 31, 2024. Additionally, the Company holds 204.3 BTC and has diversified its treasury holdings with 21.3 ETH, 246,683 ADA, 64,616 DOT, 5,345 SOL, 490 UNI, 433,322 AVAX and 2,515,203 CORE tokens, totaling approximately C$33.9M (US$25.1M) as of August 31, 2024.

 

Recent Strategic Developments from August include:

 

Landmark MOU with Nairobi Securities Exchange and SovFi to Develop and Launch Valour ETPs in Africa

 

Valour signed a Memorandum of Understanding (“MOU”) with the Nairobi Securities Exchange (“NSE”) and SovFi Inc. to facilitate the creation, issuance, and trading of digital asset ETPs in the African market. This partnership leverages Valour’s expertise in digital assets and SovFi’s financial solutions to enhance market infrastructure and attract a broader investor base. The collaboration aims to increase trading volumes on the NSE, strengthening its position as a leading financial hub in Africa, while expanding Valour’s market reach in the region. Kenya, with its growing digital asset market and innovative mobile money ecosystem, is primed to benefit from this transformative initiative.

 

“We are pleased with the continued performance of Valour’s ETP products, as demonstrated by the record-breaking inflows for 2024 and steady AUM growth this fiscal year,” said Olivier Roussy Newton, CEO of DeFi Technologies. “Despite market headwinds and a decline in asset prices, August’s highest net inflows of 2024 highlight strong investor confidence in our products and the growing demand for innovative digital asset solutions. Our strategic partnerships, such as the recent MOU with the Nairobi Securities Exchange, further reinforce our commitment to product innovation and market expansion. Looking ahead, we remain focused on delivering value to our investors while continuing to lead the market with cutting-edge digital asset products.”

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Follow DeFi Technologies on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

 

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information about Valour, to subscribe, or to receive updates, visit valour.com.

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the growth of AUM; the MOU with NSE and SovFi; investor interest and confidence in digital assets; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by the Company and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward-looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of decentralised finance and cryptocurrency sector; rules and regulations with respect to decentralised finance and cryptocurrency; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

THE CBOE CANADA EXCHANGE DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

 

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SOURCE DeFi Technologies Inc.

 

   View original content to download multimedia: http://www.newswire.ca/en/releases/archive/September2024/10/c9728.html

 

%SEDAR: 00007675E

 

For further information: For further information, please contact: Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 07:30e 10-SEP-24

 

 

 

Exhibit 99.154

 

 

DeFi Technologies Subsidiary Reflexivity Research Announces Inaugural Crypto Investor Day in New York City

 

  ●DeFi Technologies’ subsidiary Reflexivity Research announces its inaugural Crypto Investor Day, set for October 25th, 2024, in New York City.

 

  ●The event is expected to bring together nearly 1,000 industry leaders and top minds from both crypto and traditional finance, including speakers from VanEck, Nelson Mullins, Tether, Ripple Labs, Fidelity Digital Assets, White & Case, Sei, Lekker Capital, and more.

 

  ●Crypto Investor Day will be moderated by Anthony Pompliano and is supported by prominent sponsors, including Coinbase, Ledger, Grayscale, Near, 3iQ, Ripple, Blockware, B2C2, Copper, Nelson Mullins, Liquid Mercury, and more.

 

TORONTO, Sept. 13, 2024 /CNW/ - DeFi Technologies Inc. (the “Company” or “DeFi Technologies”) (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF), a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralised finance (“DeFi”), is pleased to announce its subsidiary, Reflexivity Research LLC (“Reflexivity Research”), a leading crypto research firm, has announced its inaugural Crypto Investor Day, set to take place in New York City on October 25th, 2024.

 

Reflexivity Research’s Crypto Investor Day is expected to attract up to 1,000 industry leaders, investors, and entrepreneurs to midtown Manhattan this fall. The event will feature a full day of fireside chats with prominent figures from both the crypto and traditional finance sectors. The event will be moderated by Anthony Pompliano, Co-Founder of Reflexivity Research, who is known for his extensive work both building and investing at the intersection of finance, technology, entrepreneurship, and economics.

 

The event will feature an impressive lineup of speakers, including Jan van Eck (CEO of VanEck), Paolo Ardoino (CEO at Tether), Chris Kuiper (Director of Research at Fidelity Digital Assets), Ladan Stewart (Partner at White & Case), Quinn Thompson (Founder and CIO of Lekker Capital), Richard B. Levin (Chair - FinTech and Regulation Practice at Nelson Mullins), Brad Garlinghouse (CEO of Ripple Labs), Austin Federa (Head of Strategy at Solana), Jay Jog (Co-founder at Sei Labs), and several more. Tickets and a full list of speakers can be found at: https://lu.ma/cryptoinvestorday24

 

The event is supported by a host of esteemed sponsors and partners, including Coinbase, Ledger, Grayscale, Blockware, Near, 3iQ, Ripple, B2C2, Copper, Nelson Mullins, Liquid Mercury, Token Relations, and more.

 

“We’re thrilled to launch Crypto Investor Day, an event that will highlight the convergence of traditional finance and the digital asset space,” said Anthony Pompliano, Co-Founder of Reflexivity Research. “Our mission is to bridge the knowledge gap between these two worlds, maximizing our insights-per-minute KPI through some of the top minds in the industry.”

 

Olivier Roussy Newton, CEO of DeFi Technologies, added, “This event represents a great milestone for Reflexivity Research, as it builds off its successful Bitcoin Investor Day event earlier this year and continues to complement the growth seen in its research business. We’re excited to create a platform where leaders from both traditional and digital finance can collaborate and share ideas.”

 

For tickets and more information, please visit https://lu.ma/cryptoinvestorday24

 

About Reflexivity Research

 

Reflexivity Research LLC is a leading research firm specializing in the creation of high-quality, in-depth research reports for the bitcoin and digital asset industry, empowering investors with valuable insights. Reflexivity is a wholly owned subsidiary of DeFi Technologies Inc. For more information please visit https://www.reflexivityresearch.com/

 

 

 

About DeFi Technologies

 

DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF) is a financial technology company that pioneers the convergence of traditional capital markets with the world of decentralized finance (DeFi). With a dedicated focus on industry-leading Web3 technologies, DeFi Technologies aims to provide widespread investor access to the future of finance. Backed by an esteemed team of experts with extensive experience in financial markets and digital assets, we are committed to revolutionising the way individuals and institutions interact with the evolving financial ecosystem. Follow DeFi Technologies on Linkedin and Twitter, and for more details, visit https://defi.tech/

 

About Valour

 

Valour Inc. and Valour Digital Securities Limited (together, “Valour”) issues exchange traded products (“ETPs”) that enable retail and institutional investors to access digital assets in a simple and secure way via their traditional bank account. Valour is part of the asset management business line of DeFi Technologies Inc. (CBOE CA: DEFI) (GR: R9B) (OTC: DEFTF).

 

In addition to their novel physical backed digital asset platform, which includes 1Valour Bitcoin Physical Carbon Neutral ETP, 1Valour Ethereum Physical Staking, and 1Valour Internet Computer Physical Staking, Valour offers fully hedged digital asset ETPs with low to zero management fees, with product listings across European exchanges, banks and broker platforms. Valour’s existing product range includes Valour Uniswap (UNI), Cardano (ADA), Polkadot (DOT), Solana (SOL), Avalanche (AVAX), Cosmos (ATOM), Binance (BNB), Ripple (XRP), Toncoin (TON), Internet Computer (ICP), Chainlink (LINK) Enjin (ENJ), Valour Bitcoin Staking (BTC), Bitcoin Carbon Neutral (BTCN), Valour Digital Asset Basket 10 (VDAB10) and 1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip ETPs with low management fees. Valour’s flagship products are Bitcoin Zero and Ethereum Zero, the first fully hedged, passive investment products with Bitcoin (BTC) and Ethereum (ETH) as underlyings which are completely fee free. For more information about Valour, to subscribe, or to receive updates, visit valour.com

 

Cautionary note regarding forward-looking information:

 

This press release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to the Crypto Investor Day held by Reflexivity Research; the regulatory environment with respect to the growth and adoption of decentralized finance; the pursuit by DeFi Technologies and its subsidiaries of business opportunities; and the merits or potential returns of any such opportunities. Forward- looking information is 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, as the case may be, to be materially different from those expressed or implied by such forward-looking information. Such risks, uncertainties and other factors include, but is not limited the acceptance of Valour exchange traded products by exchanges; growth and development of DeFi and digital asset sector; rules and regulations with respect to DeFi and digital asset; general business, economic, competitive, political and social uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

 

    View original content to download multimedia:

https://www.prnewswire.com/news-releases/defi-technologies-subsidiary-reflexivity-research-announces-inaugural-crypto-investor-day-in-new-york-city-302247424

 

SOURCE DeFi Technologies Inc.

 

   View original content to download multimedia: http://www.newswire.ca/en/releases/archive/September2024/13/c4971.html

 

%SEDAR: 00007675E

 

For further information: For further information, please contact: Olivier Roussy Newton, Chief Executive Officer, ir@defi.tech, (323) 537-7681

 

CO: DeFi Technologies Inc.

 

CNW 07:30e 13-SEP-24

 

 

 

Exhibit 99.155

 

 

September 16, 2024

 

DeFi Technologies Inc. (formerly Valour Inc.)

65 Queen St W, 9th Floor,

Toronto, ON,

M5H 2M5

 

Re: Auditor Consent for 40-F Filing

 

Dear Mr. Olivier Roussy-Newton, Chairman of the BOD and Mr. Ryan Ptolemy, CFO:

 

We consent to the use of our report to the shareholders of DeFi Technologies Inc. dated April 1, 2024 on the financial statements of DeFi Technologies Inc., which comprise the consolidated statements of financial position as at December 31, 2023, and the consolidated statements of loss and comprehensive loss, consolidated statements of cash flows and consolidated statements of changes in shareholders equity (deficiency) for the year then ended, and notes to the financial statements, including material accounting policy information, in the Form 40-F to be filed by DeFi Technologies Inc, with Securities and Exchange Commission on EDGAR on or about September 16, 2024.

 

Yours truly,

 

Signed  “Harpreet Dhawan”  
  Harpreet Dhawan CPA, CA  
  HDCPA Professional Corporation  
  Chartered Professional Accountants  
  Licensed Public Accountants  

 

 

   
www.hdcpa.ca | 647-793-8100  
5250 Solar Drive, Suite 206, Mississauga, ON, L4W 0G4  
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