Debt Term Sheet Signed to Extend Private Placement Financing of New Acquisitions

Company Progressing Diligence Phase on 10th and 11th Acquisitions

Vancouver, British Columbia--(Newsfile Corp. - September 9, 2021) - Kovo HealthTech Corporation (TSXV: KOVO) ("Kovo" or the "Company") is heading into September with two prospective acquisitions underway, as the Company confirmed it has entered into a new non-binding letter of intent (the "Non-Binding LOI") to acquire its 11th Revenue Cycle Management (RCM) specialist firm (the "Seller").

Kovo Readies Over CAD$11 Million in Potential Funding

Kovo also announced it has confirmed financing terms (the "Investment Agreement") with a Canadian lender to provide senior secured debt financing of up to CAD$8.8 million on an as-needed basis subject to the Company satisfying certain equity funding requirements of the lender. The net proceeds, together with the anticipated proceeds of the CAD$2.5 million marketed placement agreement announced on September 2, 2021, create a potential pool to fund the Company's pipeline of acquisitions.

Kovo Acquisition Focus: Immediate, Accretive Growth

"As we enter diligence on our prospective 11th acquisition and move into the final stages of diligence on the 10th acquisition target announced on September 2nd, Kovo is focused on integrating targets to our platform to implement operational efficiencies which translate directly into additional, accretive growth," explains Kovo CEO Greg Noble.

Noble adds that, as disclosed previously, Kovo's acquisition strategy targets buying $1 of Annual Recurring Revenue ("ARR") for every $1 investment of debt or equity and explains how the Company proposes to use the debt and equity capital to materially increase its current, reported CAD$7.5 million in ARR (approximately USD$6 million).

"Kovo's current pipeline — with the non-binding LOI announced on September 2nd, the non-binding LOI announced today and additional prospective targets in advanced negotiations — represent opportunities to generate accretive ARR in line with our acquisition strategy post-closing of financings," says Noble, adding that the Company continues to focus on adding new customers and organic growth on its software and services business.

Kovo generated 43% year-over-year organic growth on its core RCM software and services business for the quarter ended June 30, 2021

Proposed Deal Enters Due Diligence

Under the terms of the Non-Binding LOI dated June 25, 2021, the Company has the option to, through a wholly-owned subsidiary, purchase substantially all of the assets of the seller, including associated trademarks, trade names, brand names goodwill, customer lists and customer contracts. The completion of the acquisition is subject to due diligence and the satisfaction of a number of closing conditions, including receipt of the approval of the TSX Venture Exchange (the "TSXV").

Provided that all closing conditions are satisfied, the acquisition is expected to close in the fourth quarter of 2021. Detailed terms and conditions will be disclosed in further press releases as the proposed transaction proceeds. The proposed transaction requires capital from the debt and equity financings discussed herein, and therefore there can be no assurance that the transaction will be completed on the terms contained herein or at all.

Investment Agreement

The non-binding Investment Agreement has been structured as a non-revolving senior secured multi-draw term facility to fund acquisitions. Under the terms of the Investment Agreement, up to CAD$8.8 Million, or approximately USD$7 million (the "Investment Amount"), up to CAD$1 million will be available to be drawn on closing, with each subsequent draw to be subject to the agreement of the Company and the lender. The Company's right to draw any amount in excess of CAD$4 million under the facility will be subject to the Company first raising equity financing in the amount of CAD$1.5 million. Subject to compliance with the policies of the TSXV, the Company will grant to the lender 40% warrant coverage on each tranche priced at market at the time of each such draw and will receive a six-month interest penalty for early termination. The repayment terms are interest only in the range of 15 to 16 per cent for the term of the loan with a balloon payment after 36 months from the first tranche being drawn, and are subject to financial covenants that are still to be determined. The non-binding term sheet dated August 16, 2021 is subject to due diligence by the lender at the borrower's expense, as well as satisfaction of other standard closing conditions, including any required third party approvals. There can be no assurance that the loan will be completed on the terms contained herein or at all.

About Kovo HealthTech Corporation

Kovo is a leader in healthcare technology and Revenue Cycle Management software and services. Kovo creates, acquires and grows businesses to better the healthcare experience within the patient encounter continuum. To learn more about Kovo and to keep up-to-date on Kovo news, visit www.kovo.co