FLUENT — Capital/Financing Update 2024

Dec 6, 2024

FORM 51-102F3
Material Change Report

Item 1 Name and Address of Company
Cansortium Inc. ("Cansortium")
5540 W. Executive Drive, Suite 100
Tampa, FL 33609

Item 2 Date of Material Change
November 26, 2024

Item 3 News Release
A news release relating to the material change described herein was disseminated on November 26, 2024 through the services of Globe Newswire.

Item 4 Summary of Material Change
On November 26, 2024, Cansortium announced that it closed a new senior secured credit agreement (the "Credit Agreement") of up to $96,500,000 with Chicago Atlantic Admin, LLC ("Chicago Atlantic"), as administrative agent for certain lenders.

Item 5 Full Description of Material Change

5.1 Full Description of Material Change
On November 26, 2024, Cansortium announced that it closed the Credit Agreement. The Credit Agreement bears a cash interest rate of 12.00% per annum and a paid-in-kind (PIK) interest of 1.00% per annum and is due to mature on November 26, 2028. The Credit Agreement refinances the existing $71,000,000 senior secured term loan that was set to mature on May 29, 2025, thereby eliminating the previously disclosed requirement that Cansortium prepay $10,000,000 upon the consummation of the business combination with RIV Capital Inc. (CSE: RIV) (OTC: CNPOF) ("RIV Capital"), a vertically integrated cannabis company operating the Etain brand in New York. All required regulatory approvals needed for the business combination with RIV Capital have been obtained and Cansortium expects the closing with RIV Capital to occur in early December 2024.

The Credit Agreement provides for an initial loan of $71,500,000 and access to two additional credit lines of $10,000,000 for future real estate acquisitions and construction projects, and $15,000,000 in the event that Cansortium were to acquire RIV Capital's Buffalo cultivation and processing facility following the completion of the business combination.

The Credit Agreement includes a single financial covenant requiring Cansortium to maintain a minimum unrestricted cash balance of $4,500,000, tested at the end of each fiscal quarter, and includes customary terms and conditions for a financing of this type, including repayment obligations upon the occurrence of certain events of default thereunder.

The foregoing description of the Credit Agreement is not complete and is qualified in its entirety by reference to the full text of the Credit Agreement, a copy of which will be filed on Cansortium's profile on SEDAR+ at www.sedarplus.ca.

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Chicago Atlantic Credit Advisers, LLC served as lead arranger for the Credit Agreement and Chicago Atlantic serves as administrative agent for the Credit Agreement.

Smith Transaction

Cansortium and certain of its affiliates and William Smith, a director and the Executive Chair of Consortium, and certain companies controlled by Mr. Smith (together with Mr. Smith, collectively, the "Smith Group"), have entered into an amended and restated termination agreement (the "Amended Smith Transaction Termination Agreement") to replace in its entirety the existing termination agreement dated May 30, 2024 (the "Smith Transaction Termination Agreement"), which provided for, among other things, the termination of that certain agreement among Consortium, certain of its affiliates and the Smith Group (the "Initial Smith Transaction Agreement"). Pursuant to the terms of the Amended Smith Transaction Termination Agreement, Consortium paid to the Smith Group a $500,000 cash fee and issued to the Smith Group a 15.00% secured subordinated convertible note in an initial aggregate principal amount of $6,500,000 due May 26, 2029 (the "Smith Convertible Note"). Interest on the Smith Convertible Note compounds quarterly and is payable in arrears on maturity or conversion. The Smith Convertible Note is subordinated in right of payment to prior payment in full of the Credit Agreement and the principal and accrued interest thereunder is convertible, at the discretion of the Smith Group, into common shares of Consortium (each, a "Cansortium Share") at a price of $0.21 per Consortium Share. For more information on the Smith Transaction Termination Agreement and the Initial Smith Transaction Agreement, see Consortium's news release dated May 30, 2024 filed under Consortium's profile on SEDAR+ at www.sedarplus.ca.

The transactions contemplated by the Amended Smith Transaction Termination Agreement (the "Smith Transaction") constitutes a "related party transaction" as such term is defined in Multilateral Instrument 61-101 - Protection of Minority Securityholders in Special Transactions ("MI 61-101"). Consortium has relied on the exemptions from obtaining a formal valuation and minority shareholder approval of the shareholders of Consortium with respect to the Smith Transaction in accordance with sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the aggregate fair market value of the cash consideration and the Smith Convertible Note issuable in connection with the Smith Transaction does not exceed 25.00% of Consortium's market capitalization as determined in accordance with the provisions of MI 61-101. In addition, the Smith Transaction was approved by the board of directors of Consortium, with Mr. Smith having disclosed his interest in the Smith Transaction and abstaining from voting thereon. Consortium did not file a material change report 21 days prior to the closing of the Smith Transaction as the details of the Smith Transaction had not been finalized at that time. The foregoing description of the Amended Smith Transaction Termination Agreement is not complete and is qualified in its entirety by reference to the full text of the Amended Smith Transaction Termination Agreement, a copy of which will be filed on Consortium's profile on SEDAR+ at www.sedarplus.ca.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102

Not Applicable.

Item 7 Omitted Information

No information has been omitted from this Material Change Report.

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Item 8 Executive Officer

The name and business number of an executive officer of Consortium who is knowledgeable about the material change and this report is:

Robert Beasley
Chief Executive Officer
Tel: 850-972-8077

Item 9 Date of Report

December 6, 2024

Forward-Looking Statement

This material change report contains “forward-looking information” within the meaning of applicable Canadian securities legislation. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates, and projections regarding future events.

Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable by Consortium as of the date of this material change report, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in the public documents of Consortium available on Consortium’s profile on SEDAR+ at www.sedarplus.ca. These factors are not intended to represent a complete list of the factors that could affect Consortium; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this material change report are made as of the date of this material change report, and Consortium expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.