Mr. Nicholas Brigman reports

EDGE TOTAL INTELLIGENCE ANNOUNCES DEBT MODIFICATION, IMPAIRMENT OF INTANGIBLES AND GOODWILL, AND AUSTAL BUSINESS UPDATE

Edge Total Intelligence Inc. has restructured certain debt obligations, intangible assets and goodwill to be applied to the company's second quarter 2026 financial statements have been impaired, and the company has provided an update on project work with Austal Ltd. All amounts are in U.S. dollars unless otherwise indicated.

Debt modification

Subject to the approval of the TSX Venture Exchange, the company has extended and restructured its debt and warrant held by Salem Investment Partners IV Limited Partnership and three promissory notes held by related parties. The amendments defer approximately $2.9-million in debt payments that were due on Sept. 30, 2026, and Oct. 30, 2026, as set forth below.

Under the amended terms:

1. Salem debt: Edge Total made a payment today to Salem of $1-million that reduced the principal to $989,442. Final payment of the debt is deferred to the earlier of a listing of the company's shares on a U.S. stock exchange and Feb. 15, 2027.
2. Salem warrant: The warrant repurchase option has been increased to $450,000 (a $100,000 increase) for purchase on or before Feb. 15, 2027, and Salem as warrantholder has the option of settling the warrant in common shares at fair market value.
3. Related-party promissory notes: The maturity date on three related-party promissory notes in the approximate principal amount and accrued interest of $1.5-million as at Sept. 30, 2026, is deferred to the earlier of the U.S. listing and June 30, 2027. Additional modifications:
   1. Reaffirmed the current conversion option and conversion price per share at previously stated pricing;
   2. Indicated that the conversion share price is subject to proportional adjustment in the event of any recapitalization event; and
   3. Clarified the note will become convertible or payable, as applicable, on the earlier of the uplisting or June 30, 2027.

The Salem debt and warrant and the related-party notes have been reported in the company's financial statements since inception. The deferral is expected to improve cash flow and extend the company's working capital. The amendment to the Salem debt and warrant will be subject to exchange approval.

Multilateral Instrument 61-101 disclosure

ConnertonA (James Barrett), Steven H. Owings and John Palmer are related parties of the company, and, further to the bullet above, the amendment to their promissory notes through the extension of the maturity dates is a related-party transaction within the meaning of Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The note amendment is exempt from the formal valuation requirement and minority shareholder approval requirements of MI 61-101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value as the fair market value of the notes held by related parties does not exceed 25 per cent of the company's market capitalization.

The note amendment was approved by the board of directors, with James Barrett having declared his interest. The board's determination took into account that Salem, the company's primary secured lender and an arm's-length party, agreed to extend its note to Feb. 15, 2027, on the same terms. The related-party noteholders agreed to extend on substantially the same terms, which the board considered reasonable in light of Salem's agreement.

The company did not file a material change report more than 21 days before the effective date of the note amendment. The company considers the shorter period reasonable and necessary in the circumstances. The notes reached maturity on Sept. 30, 2026, and Oct. 30, 2026. Following contract changes, the company did not have sufficient cash on hand to repay the notes at maturity without materially impairing its operations and go-forward strategy. Final terms of the note amendment were not settled with Salem and the related parties until Sept. 30, 2026, and the note amendment was required to avoid a default under the notes.

The note amendment remains subject to the acceptance of the TSX Venture Exchange, if applicable.

Separately, the promissory note held by Jacques Jarman, the company's chief growth and federal operations officer, of approximately $85,000 will be extinguished on or before its Oct. 30, 2026, maturity date.

Impairment of intangible assets and goodwill

Following the changes in renewing contracts announced on Sept. 8, 2026, the company has discontinued its efforts to complete a valuation that meets international financial reporting standard and U.S. generally accepted accounting principle audit criteria. Audit-specific information relating to classified contracts cannot be made available to auditor due to confidentiality and access restrictions.

As a result, the company will record an impairment relating to the intangible assets and goodwill associated with the Austal technology acquisition reported on its balance sheet in its Q2 2026 IFRS financial statements. The impairment is a non-cash charge of approximately $2.3-million, reducing the carrying value to nil, and does not affect the company's cash position. The company intends to file amended and restated Q2 2026 financial statements and management's discussion and analysis by Friday, Oct. 9, 2026.

Austal update

The company's financial diligence also identified that certain project work for Austal Australasia previously reported in its April contract win announcements and planned for third quarter and fourth quarter 2026 is being delivered directly by Austal Australasia. The work represented approximately $950,000 (Australian) in project bookings and was not part of the contract renewal lapses announced Sept. 8, 2026. Nonetheless, the company and Austal continue to actively establish valuable and profitable business under the strategic partnership.

About Edge Total Intelligence Inc.

Edge Total provides operational intelligence software and solutions for defence, maritime, manufacturing, critical infrastructure and government organizations whose systems by design cannot be consolidated. Its edgeCore platform creates a unified, real-time operational picture and enables governed action across those systems, with approvals, controls and evidence preserved. Customer data remain in place and under the customer's control. Having attained technology readiness level 9, Edge Total solutions have been authorized to operate and deployed in classified environments. Edge Total is headquartered in Arlington, Va., with operations in the United States, Canada, Australia and Serbia.

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