Kovo+ Announces Corporate Update

Executive Summary

• Kovo+ Holdings Inc. entered into a fourth extension agreement with its largest shareholder and secured creditor, Avonlea Ventures #2 Inc. (AVI), extending the maturity of its Senior Loan and Secured Promissory Note to December 31, 2025, and increasing the borrowing capacity from USD$1.25 million to USD$3.75 million.
• The Company’s subsidiary, Nexus AI Data, Inc., completed the acquisition of 100% of the assets of AI Vector, LLC, an AI-driven IT infrastructure management company, for an adjusted purchase price of approximately USD$2.993 million.
• The Company announced significant leadership changes, including the resignation of director Robert Galarza, the appointment of Dr. Wayne Young as a director and audit committee member, and the appointment of David Pinkowitz as interim CFO.

Key Details

• Financing Terms (Extension Agreement):

  • Counterparty: Avonlea Ventures #2 Inc. (AVI), a related party controlled by director Michael Steele.
  • Maturity Extension: The 2nd Amended & Restated Senior Loan and Security Agreement and Secured Promissory Note were extended by four (4) months, with a new maturity date of December 31, 2025.
  • Increased Borrowing Capacity: The principal amount available under the Secured Prom Note increased from USD$1,250,000 to USD$3,750,000.
  • Drawdown: Kovo drew down USD$300,000 from the Secured Prom Note, bringing the aggregate drawn amount to USD$1,250,000.
  • Fees: Kovo granted AVI a one-time loan fee of USD$250,000 and a monthly fee equal to 1.0% of the aggregate indebtedness, payable in cash at maturity.
  • Regulatory Exemptions: The transaction relied on exemptions from formal valuation and minority shareholder approval under MI 61-101 due to the Company being in serious financial difficulty and the terms being reasonable. The independent director, Dr. Peter Bak, unanimously approved the transaction.

• Asset Acquisition (AI Vector, LLC):

  • Target: AI Vector, LLC, a Utah business solutions company specializing in AI-driven IT infrastructure management, proprietary monitoring systems, network security, and support services.
  • Acquirer: Nexus AI Data, Inc., an indirect wholly-owned subsidiary of Kovo.
  • Purchase Price Structure:
    • Aggregate purchase price: ~USD$3.993 million.
    • Reduction: USD$1.0 million applied as partial satisfaction of a purchase price accommodation previously negotiated with AVI.
    • Adjusted Purchase Price: ~USD$2.993 million.
    • Payment Terms: USD$350,000 in cash (paid as a deposit prior to closing) and assumption of liabilities totaling ~USD$2.6 million.
  • AVI Transaction Context: This acquisition was completed under a limited waiver from AVI, which holds an exclusive right to purchase these assets. AVI agreed not to enforce its Exclusive Right provided the main AVI Transaction closes on or before October 31, 2025.

• Management and Board Changes:

  • Director Resignation: Mr. Robert Galarza resigned as a director.
  • Director Appointment: Dr. Wayne Young (BSc, DDS) was appointed as a director. He is a consultant specializing in dentistry and oral surgery, former team dentist for the Calgary Flames, and serves as Chief Clinical and Business Advisor at Young Innovations.
  • Committee Appointment: Dr. Young was appointed to the Audit Committee and is deemed "financially literate" under NI 52-110.
  • CFO Appointment: David Pinkowitz was named interim CFO, effective immediately, with over 20 years of experience in the financial services sector.

Notable Quotes

• Justin Anderson, Chief Executive Officer: "The integration of Ai Vector LLC's technology and talent will strengthen Kovo's existing portfolio and accelerate the development of new AI-powered solutions for clients seeking improved efficiency and productivity."
• Dr. Peter Bak, Chair of the Board: "We extend our sincere gratitude to Robert for his service and contributions during his time on our board. Robert has been a valued member of Kovo, and his vision, commitment and dedication have been instrumental to the Company."