Mr. Darren Bondar reports

NEXT PHASE VENTURES LTD. ANNOUNCES FCC SETTLEMENT FRAMEWORK, RELATED-PARTY FUNDING AND STRATEGIC TRANSACTION UPDATE

Next Phase Ventures Ltd.'s wholly owned subsidiary, Hempalta Processing Inc. (HPI), and Darren Bondar, the company's president and chief executive officer, have entered into a settlement agreement with Farm Credit Canada (FCC) effective July 16, 2026. The settlement agreement was countersigned by FCC on Sept. 14, 2026, and is now fully executed and binding on all parties.

The company is also announcing a related party shareholder loan transaction and providing an update concerning the financing initiatives described in its May 29, 2026, news release and its continuing review of strategic transaction opportunities.

FCC indebtedness reduced following equipment disposition

As at March 31, 2026, the company's financial statements reported outstanding indebtedness to FCC of $626,307. FCC subsequently completed the disposition of HPI's remaining secured processing equipment and applied the resulting net proceeds against the indebtedness.

Following completion of that process, the outstanding indebtedness owing by HPI to FCC, and guaranteed personally by Mr. Bondar, was reduced by $236,724.99 to $389,582.01 as at July 31, 2026. The processing equipment had previously been written off in HPI's financial statements.

The settlement agreement establishes a defined framework for resolving the remaining FCC indebtedness and provides greater certainty as the company pursues a strategic transaction.

FCC settlement framework

The settlement agreement is dated effective July 16, 2026. It was executed by HPI and Mr. Bondar and delivered to FCC, and became binding on all parties on Sept. 14, 2026, when countersigned by FCC. The settlement agreement provides for two alternative payment outcomes.

Base settlement schedule

HPI and/or Mr. Bondar may settle the FCC indebtedness for an aggregate payment of $265,000, consisting of:

• An initial payment of $100,000 on or before Sept. 30, 2026;
• Twelve equal quarterly payments of $13,750, totalling $165,000, over three years beginning Dec. 31, 2026.

Monetization event

If a monetization event relating to Mr. Bondar's interests in NPV occurs on or before Dec. 31, 2029, the amount payable to FCC generally becomes the FCC indebtedness as at the effective date of the settlement agreement, plus specified legal costs accruing after that date, less settlement payments previously made.

No interest accrues on the FCC indebtedness after the effective date of the settlement agreement for purposes of calculating the amount payable following a monetization event.

The settlement agreement defines a monetization event broadly and includes certain business combinations, financings, dispositions, repayments, conversions and market-price events involving NPV or Mr. Bondar's interests in NPV.

Upon payment of the applicable settlement amount and satisfaction of the terms of the settlement agreement, FCC is required to release its security over HPI and provide releases to HPI and Mr. Bondar. Until that time, the FCC indebtedness remains due and payable, and FCC retains its contractual enforcement rights in the event of a default under the settlement agreement.

Initial payment and related party funding

To fund the initial $100,000 payment, Mr. Bondar intends to advance $100,000 to the company as an additional shareholder loan, and expects to finance the additional advance on or about Sept. 24, 2026. The company will use the entire amount of the additional advance to make the initial payment directly to FCC on behalf of HPI. No portion of the additional advance will be used for general working capital or any other purpose.

Shareholders should note that the FCC indebtedness is guaranteed personally by Mr. Bondar. Accordingly, the company's payment of the initial $100,000 to FCC will reduce Mr. Bondar's personal exposure under that guarantee, and the funds used to make that payment will be advanced by Mr. Bondar to the company as indebtedness bearing interest at 12 per cent per annum and secured against the company's assets. The independent directors considered this conflict of interest in approving the transaction.

Consolidation of existing shareholder indebtedness

In connection with the additional advance, the company and Mr. Bondar have entered into a debt assumption, consolidation and extension agreement, and a consolidated secured promissory note, each dated Sept. 14, 2026, under which all indebtedness owing by the company to Mr. Bondar is consolidated into a single secured obligation. The consolidation includes:

• Prior promissory notes, shareholder loans and advances made by Mr. Bondar;
• Obligations arising in connection with the affairs of HPI;
• An employment severance obligation owing to Mr. Bondar in the amount of $138,000;
• Accrued and unpaid interest capitalized as at Sept. 14, 2026;
• The committed $100,000 additional advance.

Certain payment defaults had arisen under the company's prior loan arrangements with Mr. Bondar as a result of non-payment of interest. Mr. Bondar has waived those payment defaults as part of the transaction.

Subject to final certification by the company's chief financial officer, the opening consolidated principal amount owing to Mr. Bondar is $631,198.79, comprising $531,198.79 of existing indebtedness and the committed $100,000 additional advance. Interest will accrue on the additional advance only from the date it is actually financed. If the additional advance is not financed, the consolidated principal amount will be reduced by $100,000.

The consolidated shareholder loan will:

• Bear interest at 12 per cent per annum;
• Accrue interest without monthly cash payments, with accrued interest payable at maturity, upon earlier repayment or following an applicable acceleration event;
• Mature on June 30, 2027;
• Be secured by a general security agreement over the assets of the company, subject to any postponement or subordination arrangements agreed to in favour of FCC.

The consolidated secured promissory note contains events of default that include failure by the company to file its audited annual financial statements and related continuous disclosure documents for the financial year ending Sept. 30, 2026, within the period prescribed by applicable securities laws, the issuance of a cease trade order or a suspension of trading in the company's shares continuing for five business days, and a delisting of the company's shares from the TSX Venture Exchange. On an event of default, Mr. Bondar may accelerate all amounts owing. All amounts owing also become due on a change of control of the company or on completion of a reverse takeover, qualifying transaction, merger, arrangement, amalgamation, or sale of all or substantially all of the company's assets, unless otherwise agreed by Mr. Bondar in writing.

The shareholder loan will not automatically convert into securities of the company and contains no equity, voting or participating component. Any future conversion of the shareholder loan into securities would require a separate agreement, approval of the disinterested directors, and all applicable corporate, securities law and TSX Venture Exchange approvals.

Related party transaction matters

Mr. Bondar is a director and senior officer of the company and is therefore a related party of the company. The additional advance and the consolidation and extension of the existing shareholder loan constitute a related party transaction within the meaning of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions and Policy 5.9 of the TSX Venture Exchange.

Mr. Bondar disclosed his interest in the arrangements and abstained from the board's consideration and approval of the transaction. The transaction was approved by written resolution of the independent directors of the company, Anshu Khanna and Christopher Ostafie, who determined that the arrangements are in the best interests of the company and are on reasonable commercial terms that are not less advantageous to the company than would reasonably be available from an arm's-length lender in the circumstances.

The company is relying on the exemption from the formal valuation requirement in Section 5.5(b) of MI 61-101 (issuer not listed on a specified market) and the exemption from the minority approval requirement in Section 5.7(1)(f) of MI 61-101 (loan to an issuer on reasonable commercial terms that are not less advantageous to the issuer than if the loan were obtained from an arm's-length party, and that is not convertible into and has no equity or voting component). The arrangements remain subject to any required acceptance or approval of the TSX Venture Exchange.

The company did not file a material change report in respect of the transaction more than 21 days before the anticipated funding date of the additional advance. The company considers the shorter period reasonable and necessary in the circumstances in order to permit the initial payment to FCC to be made before the Sept. 30, 2026, deadline under the settlement agreement.

Update to previously announced financing initiatives

The proposed conversion of approximately $400,000 of secured indebtedness owing to Mr. Bondar into common shares of the company and the proposed non-brokered private placement for gross proceeds of up to $500,000, each announced on May 29, 2026, did not proceed and have been discontinued. No securities were issued and no financing proceeds were received under either proposed transaction.

Strategic transaction process

NPV continues to evaluate strategic alternatives, including a reverse takeover, recapitalization, merger, business combination or asset acquisition.

The reduction of the FCC indebtedness from $626,307 to $389,582.01, together with the defined settlement framework, provides greater certainty regarding a significant legacy obligation while the company advances its strategic transaction process.

NPV is actively seeking qualified counterparties and is prepared to engage with private companies, management teams, investment bankers and advisers regarding potential transaction structures. The company is seeking opportunities that can benefit from NPV's existing TSX Venture Exchange listing, public company infrastructure, governance platform and transaction experience.

The company has not entered into a letter of intent or definitive agreement for a strategic transaction at this time. There can be no assurance that the company's review will result in a transaction or as to the structure, timing or terms of any transaction.

Any proposed transaction would be subject to due diligence, definitive documentation, board approval, applicable shareholder approval, regulatory approval, including TSX Venture Exchange approval and other customary closing conditions.

Management commentary

Darren Bondar, president and chief executive officer of the company, stated: "The completed equipment disposition reduced the outstanding FCC indebtedness by approximately $237,000, and the settlement agreement now provides a defined framework for addressing the remaining legacy obligation. The initial $100,000 payment will be funded by me through an additional shareholder-loan advance to NPV, with every dollar directed to FCC. Together, these steps provide greater clarity regarding the company's balance sheet as we continue pursuing a value-accretive strategic transaction. Our focus is on preserving the value of NPV's public company platform and engaging with credible counterparties that may benefit from a TSX Venture Exchange listing, an established shareholder base and an experienced public-company team."

About Next Phase Ventures Ltd.

Next Phase Ventures is a TSX Venture Exchange-listed company headquartered in Calgary, Alta. The company is evaluating strategic alternatives, including a reverse takeover, recapitalization, merger, business combination or asset acquisition, and is seeking opportunities that can leverage its public-market platform, governance infrastructure and transaction experience. The company continues to manage the orderly wind-down of its legacy operating activities.

We seek Safe Harbor.