Calgary, Alberta--(Newsfile Corp. - July 3, 2025) - Kovo+ Holdings Inc. (TSXV: KOVO) ("Kovo" or the "Company") is pleased to announce that it has entered into a definitive agreement with Avonlea Ventures #2 Inc. ("AVI"), Kovo's largest shareholder and secured creditor, whereby AVI has agreed to extend the terms of the 2nd Amended & Restated Senior Loan and Security Agreement (the "Senior Loan Agreement") and secured promissory grid note (the "Secured Prom Note") for a period of one (1) month, respectively (the "Extension Agreement").
Extension Agreement
Under the Extension Agreement, Kovo and AVI extended the maturity date of the Senior Loan Agreement and Secured Prom Note, respectively, upon which the indebtedness owing thereunder was to be repaid for a 1-month period, now maturing on July 31, 2025 ("Maturity Date"). The other terms, as set out in the Senior Loan Agreement and Secured Prom Note, remain unchanged.
Related Party Transactions
AVI is an Ontario corporation controlled by Mr. 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 Venture Exchange.
As AVI is a "related party" of the Company, entering into the Extension Agreement and matters relating thereto (the "Transactions") are considered to be "related party transactions" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") requiring 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(b), 5.5(g) and 5.7(1)(e) of MI 61-101, the Company relied 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: (i) Kovo was (and continues to be) in serious financial difficulty; (ii) the Transactions are each designed to improve the financial position of the Company; (iii) paragraph 5.5(f) (Bankruptcy, Insolvency, Court Order) of MI 61-101 was not applicable; and (iv) Kovo's board of directors (the "Board"), acting in good faith, and at least two-thirds of Kovo's independent directors, acting in good faith, determined that: (A) the Company was (and continues to be) in serious financial difficulty and the Transactions are each designed to improve the financial position of Kovo, and (B) the terms of the Transactions were reasonable in the circumstances.
The Transactions were unanimously approved by the Board members who were independent for the purposes thereof, being all directors other than Messrs. Michael Steele and Robert Galarza. Neither the Company nor, to the knowledge of the Company after reasonable inquiry, AVI, had knowledge of any material information concerning the Company or its securities that has not been generally disclosed. No special committee of the Board was established in connection with the Transactions, as the entire Board was engaged in respect thereof, and, other than Messrs. Steele and Galarza, who abstained from voting thereon, no materially contrary view or abstention was expressed or made by any director of the Company in relation thereto.
Neither the Company nor any director or senior officer of the Company has knowledge, after reasonable inquiry, of any prior valuation in respect of the Company that relates to the subject matter of or is otherwise relevant to the Transactions, which has been made in the 24 months prior to the date of this news release. The Company did not file a material change report more than 21 days before the expected closing as the details of the Transactions were not finalized until immediately prior to its issuance, and the Company wished to close the Transactions as soon as practicable for sound business reasons.
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 exploitative 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, (i) expectations regarding the characteristics, value drivers, and anticipated benefits of the Transactions; (ii) expectations regarding the Company's use of proceeds in connection with the Secured Prom Note; and (iii) expectations concerning the Company's business plans and operations. 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. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties, include, but are not limited to, the Company being unable to use the proceeds of the Secured Prom Note as described, legal or regulatory impediments regarding the Secured Prom Note, the Company defaulting on the Secured Prom Note or Senior Loan Agreement and leading to enforcement under the security, the proceeds being insufficient for the Company's purposes, the Company's inability to repay the Secured Prom Note and Senior Loan Agreement at the end of the terms thereof and the Company being unable to raise additional funds on terms acceptable to the Company or at all. 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 expressly qualified by this cautionary statement.
Contact Information
For further information, please contact:
investors@kovo.co
1-866-714-0308
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/257798
SOURCE: Kovo+ Holdings Inc.
