AVANTE LOGIXX INC. SECOND LARGEST SHAREHOLDER CONTINUES TO ASK FOR GOVERNANCE IMPROVEMENTS, TRANSPARENCY AND SALE

• CHALLENGES FAIRFAX, AVANTE'S 19.99% SHAREHOLDER, TO DEMAND SAME
• ASKS WHY FAIRFAX BLOCKED MARCH 2022 SALE VALUED AT $1.75/SHARE
• 1.1M OPTIONS GRANTED APRIL 2022 AT $0.88 MUST BE RE-PRICED TO $1.75
• $600,000 FEE PAID TO KINGSDALE ON BEHALF OF FAIRFAX AND CEO MOUNOUCHOS MUST BE REIMBURSED
• COSTS FROM BLOCKING SALE ESTIMATED AT $4.1M OR $0.15/SHARE
• EXCESS CASH OF $11M ($0.42/SHARE) SHOULD BE DISTRIBUTED
• AVANTE SHOULD BE SOLD

TORONTO, April 25, 2023 /CNW/ - George Christopoulos today announced the acquisition of additional Avante Logixx Inc. ("Avante") (TSXV: XX) shares and now controls 3,347,400, representing 12.64% of Avante's shares. Fairfax (TSX: FFH) controls 5,297,434 shares or 19.99%.

Mr. Christopoulos also reiterates the disclosures made in the Early Warning Report and Press Release dated March 29, 2023 filed on SEDAR.

Mr. Christopoulos continues to challenge both Avante's board and Fairfax on:

1. Sale valued at $1.75/share blocked by Mounouchos and Fairfax in March 2022
   
   Subsequently, a new four-person board was formed and Mounouchos was appointed CEO/Chairman. Avante's shares have since traded as low as $0.65.
   
   
2. 1,100,000 options issued in April 2022 priced as low as $0.88 must be repriced at $1.75
   
   Less than 30 days after blocking the sale valued at $1.75 share, the board issued 1,100,000 options (including 800,000 to Mounouchos at an average exercise price of $1.02). These options must be repriced at $1.75. Also, the board subsequently issued an additional 250,000 options, priced at $0.80.
   
   If 100,000 options are issued to each of the three newest directors, option dilution from March 2022 would total 1,650,000, or 6.3%.
   
   
3. Avante's payment of $600,000 obligation of Mounouchos and Fairfax must be reimbursed
   
   Avante was not a party to the Mounouchos/ Fairfax agreement with Kingsdale for "proxy- advisory services provided to two large shareholders". Avante's decision to pay the $600,000 (plus HST) obligation of two of its shareholders (Mounouchos and Fairfax) was entirely gratuitous, with no benefit for Avante's other shareholders. Mounouchos and Fairfax should repay $600,000 immediately.
   
   
4. Costs from blocked sale estimated at $4.1m or about $.15/share
   
   This includes the option grants, $600,000 proxy advisory fee, $750,000 break fee, estimated legal and accounting costs, and CEO severance.
   
   If Fairfax blocked the sale at $1.75/share because it believed intrinsic value was materially higher – say, $2.00/share, then these costs imply Fairfax's estimate of intrinsic value was at least $2.15/share. However, investment banker and legal costs will be incurred to complete an eventual sale, perhaps implying that Fairfax's estimate of intrinsic value was even higher, at say $2.35.

Other significant governance concerns include:

• CEO and Chairman roles must be separated immediately
  
  
• Change in control and severance terms for CEO Mounouchos should be limited

Avante should not enter into any agreement with Mounouchos that provides a change in control payment or more than statutory severance. 

Mounouchos was paid severance of approximately $600,000 in 2016, following which he remained a director until 2017. Mounouchos returned as an incorporated contractor in early 2018 and for the four fiscal years ending March 31, 2022 was paid an average of $238,000 per year.

• Avante must adequately disclose its business strategy including:
• whether it plans to expand to Florida and/or other jurisdictions
• its intentions concerning diversification into cybersecurity.

Mounouchos has met at least three shareholders and openly discussed Florida acquisitions, and possible significant investments in a new area, cybersecurity. Director Verner confirmed that Avante had considered investing in Plurilock Security Inc.

Such investments would represent great risk given Avante's poor long-term track record of creating shareholder value, and lack of experience with Florida and cybersecurity. Such discussions may also have constituted selective disclosure and could be a reason why Avante's share price continued to experience downward pressure, even well after March 2022, when its sale at $1.75/share was blocked.

• Board of Directors improperly appointed and does not represent minority shareholders

Since March 30, 2022, Avante has added seven directors outside the normal channel of a shareholder meeting, while failing to allow any board representation for minority shareholders. The recent re-appointment of Bruce Bronfman to the board, without proper consideration of other candidates, is disappointing. Bronfman served as a director from 2006 to 2018, during which time little shareholder value was created. Furthermore, he appears to have been recommended solely by CEO Mounouchos. 

At least one new independent board member should be appointed, on suggestions by minority shareholders.

• Board's independence is questionable

A four-person board of questionable independence was responsible for the 1.1M options granted on April 28, 2022 and the $600,000 payment to Kingsdale:

• Leland Verner was previously a director from 2007 to 2019, and during that time received additional consulting fees of up to $100k annually.
• Wes Hall's Kingsdale was waiting to receive its $600,000 fee for "proxy-advisory services provided to two large shareholders" (i.e., Mounouchos and Fairfax), which was paid by Avante on June 3, 2022.
• There was no previous disclosure by Mounouchos and Fairfax that they:
• expected to incur proxy related fees of $600,000
• would require Avante to pay the $600,000 to Kingsdale.
  
• Robert Klopot apparently made a $200,000 loan to Mounouchos, which was repaid in December 2022 by Mounouchos' transfer of 200,000 Avante shares.
• Fairfax nominee, Wade Burton, was added to the board July 18, 2022, after the $600,000 payment to Kingsdale.
  
  
• CFO Rotz resigned June 3, 2022, the same day $600,000 paid to Kingsdale

The timing implies the $600,000 payment was the reason for the CFO's resignation. Avante waited until June 10^th to announce the CFO had "provided notice of his retirement".

• Re-appointment of founder Mounouchos as CEO and Chairman despite Avante's poor performance since 2008
  
  
• Greater transparency required on compensation and related party transactions:

•  
• Mounouchos' current compensation not yet disclosed and Avante appears to be remunerating its CEO through a corporation
  
  
• Inappropriateness of providing Avante's directors with up to $5,000 of services and doing so without full disclosure
  
  Unlike cash, the value and delivery of services can be difficult to measure, monitor and control. Avante's "Related Parties Transactions" notes to the financial statements have not disclosed the value of services provided to its directors and officers. Similarly, the value of services provided to significant shareholders has not been disclosed.

• Settlement of employment contract dispute with former CEO Campbell not disclosed
  
   Avante apparently settled its employment contract dispute with former CEO Campbell in January 2023, but has not disclosed the effect of such settlement on its cash balance. Shareholders may not know if there has been a resulting material change to Avante's cash balance until the end of July 2023, when fiscal 2023 financial results are expected.
  
  Campbell may have been seeking both severance as well as compensation for the denied opportunity to realize $1.75 of value for his shares as well as his share-based compensation.

• $11m of excess cash ($0.42/share) should be returned to shareholders

Given Avante's history of poor investments and destruction of shareholder value, excess cash should be returned to shareholders, instead of making high risk acquisitions, in unfamiliar territories and businesses. 

Fairfax must demand Avante adopt best practices in corporate governance, requiring:

• appropriate management
• separation of CEO and Chair roles
• clear disclosure of business strategy
• board representation for minority shareholders
• a policy of returning excess cash to shareholders where the track record for deploying capital within the business and previous diversifications has been poor.

In addition, Fairfax owes an explanation to other Avante shareholders why it:

• blocked the sale of Avante valued at $1.75/share, which then resulted in approximately $4.1m or $0.15/share of costs,
• acquiesced in the issuance of at least 1,350,000 stock options priced as low as $0.80, and
• had Avante pay the $600,000 obligation of Fairfax and Mounouchos.

Based on Avante's financial results and share price performance since becoming public, Avante does not have appropriate management and has been poorly governed. Often, the only means of achieving Good Governance, and adequate returns for shareholders, is to sell an underperforming company to new owners through a controlled auction. 

This press release includes the personal views and opinions of George Christopoulos. It does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate and securities laws.

Avante's head office address is 1959 Leslie Street, Toronto, Ontario, M3B 2M3. A copy of this press release may be obtained on Avante's SEDAR profile at www.sedar.com.

SOURCE George Christopoulos

George Christopoulos, Telephone: [phone]