Calgary, Alberta--(Newsfile Corp. - September 4, 2026) - Kovo+ Holdings Inc. (TSXV: KOVO) ("Kovo" or the "Company") announces that, further to its press releases of August 6, 2026 and August 13, 2026, the Company has entered into a forbearance agreement (the "Forbearance Agreement") with Avonlea Ventures #2 Inc. ("AVI"), Kovo's senior secured lender, pursuant to which AVI has agreed to forbear from exercising, subject to the terms and conditions of the Forbearance Agreement, its enforcement rights under the Company's existing loan arrangements for a period extending through April 1, 2027, subject to the satisfaction of certain conditions and milestones.

The Company also announces that it has called a special meeting of its shareholders (the "Special Meeting") to be held at 10:00 a.m. (Calgary time) on October 5, 2026 at Dentons Canada LLP, 1500, 850 - 2nd St. SW, Calgary, Alberta T2P 0R8 to consider and, if thought fit, approve a special resolution authorizing the transactions contemplated under the Forbearance Agreement (the "Proposed Transaction"). The record date for determining shareholders entitled to receive notice of and to vote at the Meeting is August 27, 2026.

Background of the Proposed Transaction

As previously announced in the Company's news release dated August 13, 2026, Kovo's board of directors (the "Board") established a special committee (the "Special Committee"), chaired by Peter Bak, Board Chair, to lead the Company's evaluation of strategic and financing alternatives in connection with the default notice and demand for repayment (the "Default Notice") received from AVI on August 5, 2026.

The Default Notice was delivered in respect of the Company's obligations under its 2nd Amended & Restated Senior Loan and Security Agreement dated August 29, 2024 (the "Loan Agreement") and the Secured Promissory Grid Note dated May 1, 2025 (the "Grid Note", together with the Loan Agreement, the "Loan Documents"), both as extended and amended pursuant to extension agreements dated May 1, 2025, June 30, 2025, July 31, 2025, August 29, 2025, and April 20, 2026. As at August 4, 2026, the aggregate indebtedness owing under the Loan Documents was approximately US$27,088,873, comprising principal of US$16,700,000, fees of US$5,996,749 and accrued interest of US$4,392,124 (collectively, the "Indebtedness").

Forbearance Agreement

On September 2, 2026, the Company and its subsidiaries (collectively, the "Borrower Entities") entered into the Forbearance Agreement with AVI. Pursuant to the Forbearance Agreement, AVI has agreed, subject to the occurrence of a Termination Event (as defined below), to forbear from exercising its enforcement rights in respect of the Indebtedness, including appointing a receiver, seizing or selling secured property, commencing legal proceedings, or filing insolvency petitions against the Borrower Entities, across three staged forbearance periods: (i) through October 6, 2026 at 4:00 p.m. (Calgary time); (ii) from October 7, 2026 through December 31, 2026; and (iii) from January 1, 2027 through April 1, 2027.

As consideration for the forbearance, the Company has agreed to pay a forbearance fee (the "Forbearance Fee") equal to 3.0% of the Indebtedness. The Forbearance Fee will not be earned by AVI unless a Termination Event occurs and, upon being earned, will be added to and secured as part of the Indebtedness.

The Forbearance Agreement provides for a 24-month payment holiday during which no required cash payments of principal, interest, fees or expenses are owing by the Borrower Entities. Interest will continue to accrue on the Indebtedness during the payment holiday period.

AVI has agreed to advance to the Company up to US$1.0 million (the "Default Advance"), of which US$150,000 has been advanced. The Default Advance is to be used solely for specified payables of the Borrower Entities and will be added to and secured as part of the Indebtedness. All obligations owed by Kovo to AVI, including the Default Advance, are and will continue to be secured by all present and after-acquired property of Kovo and the Borrower Entities, including pursuant to a general security agreement, a guaranty and security agreement, and a securities pledge agreement.

Under the Forbearance Agreement, the Borrower Entities have agreed to, among other things: (i) continue observing all covenants under the Loan Documents; (ii) not sell, transfer or otherwise dispose of any secured property without the prior written consent of AVI; (iii) not incur any additional debt or issue any equity without the prior written approval of AVI; (iv) develop an updated operating plan acceptable to AVI (the "Updated Operating Plan"); (v) negotiate in good faith the Development Agreement (as defined below) and the RCM ROFR (as defined below) with AVI; and (vi) not make any filing under insolvency legislation without the prior written consent of AVI.

The Forbearance Agreement establishes reorganization milestones across the three forbearance periods, including, among other things: (i) holding the Special Meeting by October 5, 2026; (ii) completing the sale of the RCM Assets and the disposition of AI Vector 2.0, Inc. ("AIV") by December 31, 2026; and (iii) entering into a restructuring facility with AVI (the "Restructuring Facility") providing for not less than 12% annual interest over a five-year term, by April 1, 2027.

AVI may terminate the Forbearance Agreement upon the occurrence of specified termination events (each, a "Termination Event"), including new defaults under the Loan Documents, breaches of the Forbearance Agreement, third-party enforcement actions, events placing collateral in jeopardy, material adverse changes affecting the Borrower Entities, failure to meet reorganization milestones, insolvency proceedings, or failure of shareholders to approve the Proposed Transaction at the Special Meeting. The Forbearance Agreement is also subject to automatic termination if the conditions for the applicable forbearance period are not satisfied by the end of that period.

The Proposed Transaction contemplated under the Forbearance Agreement also includes the following key elements:

1. Dispositions and ROFR: The Company intends to sell certain revenue cycle management assets (the "RCM Assets") and its subsidiary, AI Vector 2.0, Inc. ("AIV"), with the proceeds used to pay down the outstanding debt. AVI has been granted a right of first refusal (the "RCM ROFR") over the RCM Assets and the AIV business. Under the RCM ROFR, AVI has provided a backstop offer of US$13 million in debt reduction for the specified assets (the "AVI Backstop Offer");
2. Debt Restructuring: After completing the sale of the RCM Assets and AIV, the remaining debt will be restructured into a five-year loan at not less than 12% annual interest, with no payments required during the first two years; and
3. Development Agreement: The Company further expects to enter into a development agreement (the "Development Agreement") with AVI and under which Kovo is expected to be appointed as exclusive representative or reseller for specified HEAL products to revenue cycle management clients and which is expected to include product revenue-sharing arrangements, a development collaboration framework, management arrangements for certain HEAL entities and related conditions to effectiveness. Although the terms of the Development Agreement have been negotiated, there can be no assurance that the Development Agreement will be entered into on terms satisfactory to the Company or at all.

Related Party Transaction

The Proposed Transaction constitutes a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"), as AVI is a "related party" of the Company. AVI is also a "Non-Arm's Length Party" for the purposes of TSX Venture Exchange policies. In accordance with MI 61-101, Kovo is required, in the absence of exemptions, to obtain a formal valuation and minority shareholder approval, of the related party transactions.

The Company is relying on the exemption in section 5.5(b), because it is listed on the TSXV, and the financial hardship exemption in section 5.5(g), from the formal valuation requirement pursuant to MI 61-101.. Kovo intends to seek minority shareholder approval of the Proposed Transaction at the Special Meeting.

The Proposed Transaction remains subject to acceptance by the TSX Venture Exchange (the "TSXV") to the extent required.

Special Meeting of Shareholders

At the Special Meeting, shareholders will be asked to consider and, if thought fit, pass a special resolution (the "Proposed Transaction Resolution") approving the Proposed Transaction.

The Proposed Transaction Resolution must be approved by not less than two-thirds (66⅔%) of the votes cast by shareholders present in person or represented by proxy at the Special Meeting as the sale of RCM Assets and AIV represents a sale of all or substantially all of the assets of the Company. In addition, the Proposed Transaction Resolution must be approved by a majority of the votes cast by shareholders, excluding the votes of AVI, HEAL Access USA Inc. and other "interested parties", in accordance with the requirements of MI 61-101 and applicable TSXV policies.

Shareholders wishing to be represented by proxy at the Special Meeting must submit their completed form of proxy to Computershare Trust Company of Canada, the Company's transfer agent, by no later than 10:00 a.m. (Calgary time) on October 1, 2026.

Full particulars of the Special Meeting, the Proposed Transaction, and the Proposed Transaction Resolution are set out in the information circular of the Company dated September 3, 2026 (the "Information Circular"). Shareholders may obtain a copy of the Information Circular by contacting the Company at investors@kovo.com or 1-866-558-6777. The Information Circular will also be available on SEDAR+ at www.sedarplus.ca.

The Board unanimously recommends that shareholders vote FOR the Proposed Transaction Resolution.

About Kovo+ Holdings Inc.

Kovo is a versatile technology company leading the charge in AI 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 healthcare 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. To learn more about Kovo and to keep up to date on Kovo news, visit www.kovoplus.com.

Cautionary Note Regarding Forward-Looking Information

Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" within the meaning of applicable Canadian securities laws. Such forward-looking statements or information are provided to inform the Company's shareholders and potential investors about management's current expectations and plans relating to the future and include, but are not limited to, statements in respect of the Forbearance Agreement and the conditions and milestones to be satisfied thereunder; the staged forbearance periods and the ability of the Company to satisfy the conditions for each period; the payment of the Forbearance Fee and the accrual of interest during the payment holiday; the intended sale of the RCM Assets and AIV and the use of proceeds therefrom; the proposed restructuring of the remaining Indebtedness under the Restructuring Facility; the negotiation and entry into the Development Agreement and the expected terms thereof, including the appointment of Kovo as exclusive representative or reseller and anticipated revenue-sharing arrangements; the timing and holding of the Special Meeting and the approval of the Proposed Transaction Resolution; the receipt of minority shareholder approval and TSXV acceptance of the Proposed Transaction; and the Company's future business plans, including the integration of healthcare sector additions and expansion into new markets. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any such forward-looking information may be identified by words such as "anticipate", "proposed", "estimates", "would", "expects", "intends", "plans", "may", "will", and similar expressions. Forward-looking statements or information are based on a number of factors and assumptions that have been used to develop such statements and information, but which may prove to be incorrect. Although the Company believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company can give no assurance that such expectations will prove to be correct. The forward-looking information in this news release reflects the current expectations, assumptions and/or beliefs of the Company based on information currently available to the Company. Any forward-looking information speaks only as of the date on which it is made and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. This cautionary statement expressly qualifies all forward-looking information in this news release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/313156