Mr. Evan Gappelberg reports

NEXTECH3D.AI AND ARWAY PROVIDE BUSINESS COMBINATION UPDATE

Nextech3D.AI Corp. and Arway Corp. have provided an update at the request of staff of the Ontario Securities Commission in connection with a continuous disclosure review, with regard to the previously announced transaction pursuant to which Nextech proposes to acquire all of the common shares of Arway that it does not already own. The transaction will allow Nextech to further consolidate its technology stack with Arway and Map Dynamics (Map D), creating a more unified company while streamlining operations.

Map D, Nextech's event management platform, supports hundreds of events annually with features such as interactive floor plans, exhibitor management, ticketing, badge printing, mobile apps and, soon, blockchain ticketing. By bringing Arway back under the Nextech umbrella, the company will eliminate duplicative overhead, streamline development resources and centralize operations under a single event technology suite.

As previously announced, the consolidation is expected to:

• Reduce costs by integrating teams and technologies, cutting redundant expenses, and creating a leaner operational structure;
• Accelerate product development by unifying AI (artificial intelligence), AR (augmented reality) and navigation tools directly within the Map D event suite;
• Enhance revenue growth by offering organizers, exhibitors and attendees a seamless end-to-end solution, resulting in higher adoption rates, stronger customer retention and expanded recurring SaaS (software-as-a-service) revenues.

Transaction update

Nextech and Arway are in the process of negotiating a definitive agreement governing the terms and conditions of the transaction. The transaction is expected to proceed by way of a three-cornered amalgamation, whereby Arway will amalgamate with a wholly owned subsidiary of Nextech and shareholders of Arway will receive common shares of Nextech in exchange for each Arway share held. Final terms, including the exchange ratio and deemed price, are currently under review and will be disclosed in due course.

Impairment charges

Following the original spinout of Arway by Nextech, the company engaged its auditor to conduct impairment testing in accordance with IAS 36 -- Impairment of Assets. During this review, the auditor concluded that it was not reasonably assured that the Arway assets would generate future cash flows sufficient to support their carrying value. As a result, an amortization and impairment charge of approximately $5-million was recognized. The primary drivers of this impairment were twofold:

1. Limited commercialization: Arway had not secured meaningful external contracts other than an intercompany agreement, significantly reducing its expected recoverable value under IAS 36.
2. Technology underperformance: The Arway technology, as a stand-alone solution, did not achieve the expected market adoption or performance outcomes.

A subsequent impairment was recognized in connection with the Map D acquisition, which was accounted for under the acquisition method in accordance with IFRS 3 -- Business Combinations. Under this method, acquired assets and liabilities are measured at fair value, which can result in the recognition of goodwill. Based on the audit findings, any goodwill recognized was determined to be fully impaired, resulting in an additional impairment charge of approximately $700,000.

Despite these challenges, management of the company firmly believes that the reacquisition of Arway remains in the best interests of shareholders. The key reasons include:

• Strategic integration with Map D: Although Arway technology alone did not achieve commercial success, integrating it into the Map D platform has proven to enhance the combined solution's value proposition. This integration supports broader customer adoption and strengthens Map D's market position.
• New synergies following recent acquisitions: The recent acquisition of Event Dex -- and additional acquisitions currently under consideration -- are expected to further amplify these synergies. Centralizing Arway's capabilities within a unified platform is anticipated to accelerate growth, improve customer retention and unlock cross-selling opportunities.
• Operational efficiencies: The reacquisition allows the issuer to eliminate duplicative overhead, streamline development resources and consolidate go-to-market efforts under a single event technology ecosystem.

Further details

Completion of the transaction remains subject to execution of a definitive agreement, receipt of Arway shareholder approval, Canadian Securities Exchange approval and customary closing conditions. A notice of meeting and circular with full details will be filed on SEDAR+ in due course. There can be no assurance that the transaction will be completed as proposed or at all.

Further details about the proposed transaction will be provided in a disclosure document to be prepared and filed in connection therewith. Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the transaction, any information released or received with respect to the foregoing matters may not be accurate or complete and should not be relied upon.

About Nextech3D.AI Corp.

For more details on the company's AI road map and related developments, visit the company's website.

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