Nextech3D.AI, Arway negotiating a definitive agreement

Executive Summary

• Nextech3D.AI Corp. and Arway Corp. are proceeding with a business combination to reacquire Arway shares not already owned by Nextech, aiming to consolidate technology stacks and streamline operations under the Map D event management platform.
• The transaction is currently in the negotiation phase for a definitive agreement, expected to proceed via a three-cornered amalgamation where Arway shareholders will receive Nextech common shares; final exchange ratios and pricing are pending.
• Nextech recognized significant impairment charges totaling approximately $5.7 million ($5 million for Arway assets and $700,000 for Map D goodwill) due to Arway's limited commercialization and technology underperformance as a standalone entity.

Key Details

• Transaction Structure: The acquisition will occur via a three-cornered amalgamation where Arway amalgamates with a wholly owned subsidiary of Nextech. Arway shareholders will receive common shares of Nextech in exchange for their Arway shares.
• Strategic Rationale:
  • Integration of Arway’s AI, AR, and navigation tools into the Map D event suite.
  • Elimination of duplicative overhead and centralization of development resources.
  • Creation of a unified event technology suite to enhance revenue growth through higher adoption rates and recurring SaaS revenues.
  • Synergies with recent acquisitions (e.g., Event Dex) and potential future acquisitions.
• Impairment Charges:
  • Arway Impairment: Approximately $5 million recognized due to limited external contracts (only intercompany agreements) and failure to achieve expected market adoption/performance.
  • Map D Goodwill Impairment: Approximately $700,000 recognized, fully impairing goodwill from the Map D acquisition based on audit findings.
• Regulatory Status: The update was provided at the request of the Ontario Securities Commission staff regarding a continuous disclosure review.
• Closing Conditions: Completion is subject to:
  • Execution of a definitive agreement.
  • Arway shareholder approval.
  • Canadian Securities Exchange (CSE) approval.
  • Customary closing conditions.
• Next Steps: A notice of meeting and circular with full details will be filed on SEDAR+ in due course.

Notable Quotes

• "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... New synergies following recent acquisitions... Operational efficiencies."