Mr. Donald Benson reports

AVILA ENERGY CORPORATION ANNOUNCES CORPORATE UPDATE

On May 13, 2026, Avila Energy Corp. announced that the company had entered into a memorandum of agreement with its secured creditor, wherein the secured creditor agreed and Avila through its designated nominee agreed to purchase by way of assignment the debenture issued on July 14, 2024. This agreement was entered into to assure investors, in anticipation of the completion of the rights offering, which was to expire on May 22, 2026.

Pursuant to the terms and conditions of the above-described agreement, the nominee prepared the appropriate documents required by that initial agreement and presented them for signature on May 21, 2026. The secured creditor gave no indication of it not being prepared to conclude the transaction and the rights offering was closed.

One week later, the secured creditor advised the company that it was unwilling to conclude the agreement. The company and its nominee immediately filed a statement of claim in the Alberta Court of King's Bench, seeking that the court enforce the principle of specific performance forcing the defendant to conclude the transaction.

The statement of claim is out for service and the nominee will move to swiftly enforce its rights.

In the alternative, the company is hopeful that a resolution to this matter can be obtained in short order and the statement of claim can be discontinued and the matter resolved.

We seek Safe Harbor.