Kovo+ holder to convert debt, subscribe to offering

Mr. Justin Anderson reports KOVO+ HOLDINGS INC. SECURES LEAD ORDER AND STRATEGIC FINANCING COMMITMENTS Kovo+ Holdings Inc. has secured lead order and strategic financing commitments. Further to the news releases dated May 22, 2024, July 24, 2024, Sept. 17, 2024, and Dec. 19, 2024, Avonlea Ventures #2 Inc., Kovo+'s largest shareholder and secured creditor, has: (i) elected to convert up to $7,230,789 ($5,239,702 (U.S.)) into common shares in the capital of the company; and (ii) committed a minimum amount of $9,182,697 ($6,654,128 (U.S.)) as the lead order for the company's previously announced non-brokered private placement of up to 827.82 million units for gross proceeds of up to approximately $41.4-million ($30-million (U.S.)), both subject to necessary approvals, including approval of the TSX Venture Exchange. Under the debt conversion, AVI has elected to convert the indebtedness into common shares subject to and in accordance with the conditions of Kovo+'s second amended and restated senior loan and security agreement, as amended and extended, and applicable regulatory and other TSX-V approvals, and is conditional upon the completion of the private placement. Pursuant to the terms of the senior loan agreement, indebtedness of the company may be converted into common shares at a fixed price of five cents per common share in respect of the outstanding principal amount and at the prevailing market price in respect of accrued but unpaid interest, in each case in accordance with TSX-V policies. Assuming completion of the debt conversion in its entirety, a total of 144,615,772 common shares are expected to be issued at a deemed price of five cents. AVI has also committed to invest, subject to applicable regulatory and other TSX-V requirements, an amount up to $9,182,697 ($6,654,128 (U.S.)) in connection with the offering, whereby Kovo+ will issue up to 183,653,943 units to AVI. Justin Anderson, the chief executive officer of Kovo+, stated: "We are deeply grateful for Michael Steele's continued confidence and support during this pivotal time for our company. His partnership in this strategic step strengthens our financial foundation and enables us to build on our continued momentum. With his backing, we are better positioned for sustained growth and long-term success." AVI is an Ontario corporation controlled by Michael Steele, a current director and controlling indirect shareholder of the company. Mr. Steele is also a director, officer and the sole indirect beneficial shareholder of AVI, which is also considered a non-arm's-length party pursuant to the policies of the TSX-V. The issuance of the units to any related party (as such term is defined under within the meaning of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions)), including the AVI investment and the matters relating thereto, will be related-party transactions within the meaning of MI 61-101 and require Kovo+, in the absence of exemptions, to obtain a formal valuation and minority shareholder approval of the related-party transactions. Pursuant to sections 5.5(a), 5.5(b), 5.5(g) and 5.7(1)(a) of MI 61-101, the company intends to rely on exemptions from the formal valuation and minority shareholder requirements, respectively, as, in addition to no securities of the company being listed or quoted on certain specified exchanges, neither: (i) the fair market value (as determined under MI 61-101) of the subject matter of; nor (ii) the fair market value of the consideration for, the transaction, insofar as it involves related parties, is expected to exceed 25 per cetn of the company's market capitalization (as determined under MI 61-101). The closing of the offering, the AVI investment and the debt conversion, respectively, remain subject to and contingent upon certain conditions, including, but not limited to, the receipt of all necessary approvals, including the final approval of the TSX-V and sufficient arm's-length investment under the offering for the company's continuing compliance, post-AVI investment and/or debt conversion, with the continuous listing requirements of the TSX-V. All securities issued pursuant to the offering (including the AVI investment) and debt conversion will be subject to a four-month-and-one-day statutory hold period from the date of issue in accordance with applicable Canadian securities laws. About Kovo+ Holdings Inc. Kovo+ is a versatile technology company leading the charge in artificial intelligence initiatives to drive impact and innovation across diverse industries. Kovo+ remains committed to its core business-model of strategic growth opportunities within mid-market medical billing firms, where exploitive business optimization synergies exist. Moving forward, Kovo+ will integrate accretive broader health care sector additions to its portfolio and opportunities beyond in multiple new markets. Dedicated to revolutionizing business process optimization through technological advancements and evolving AI applied methods, Kovo+ embodies a commitment to ensured and enduring profitability. We seek Safe Harbor.