FLUENT — Regulatory Filings 2023

Jan 4, 2023

Form 51-102F3

MATERIAL CHANGE REPORT

1. Name and Address of the Company

Cansortium Inc. (the “ Company ”) 82 NE 26th Street, Unit 110 Miami, FL 33137

2. Date of Material Change

December 21, 2022.

3. News Release

A news release regarding the material change was disseminated by the Company over Cision on December 22, 2022.

4. Summary of Material Change

Pursuant to a third amendment dated December 21, 2022 (the “ Third Amendment ”) to an existing agreement (as amended, the “ Smith Transaction Agreement ”) among the Company and certain of its affiliates and William Smith, a director and the Executive Chairman of the Company, and certain companies controlled by Mr. Smith (together with Mr. Smith, collectively, the “ Smith Group ”), the Company has restructured a short-term contingent liability by issuing 11,634,615 common shares of the Company (the “ Transaction Shares ”) to the Smith Group at a deemed price of US$0.12 per Transaction Share (the “ Transaction ”).

5. Full Description of Material Change

Pursuant to the Third Amendment to the Smith Transaction Agreement among the Company and certain of its affiliates and the Smith Group, the Company has completed the Transaction.

Prior to the Third Amendment, pursuant to the Smith Transaction Agreement, among other things, 18,615,385 common shares of the Company (“ Common Shares ”) (on an as converted basis with respect to applicable proportionate voting shares of the Company (the “ PVS ”) held by the Smith Group) were subject to a price “floor” (the “ Floor ”) of US$0.65 per Common Share until May 31, 2023 (the “ Floor Expiration Date ”). If on or prior to the Floor Expiration Date, the Smith Group elected to sell some or all of its shares subject to the Floor, and the proposed purchase price was less than US$0.65 per Common Share, then the Company could purchase all or any portion of the Common Shares proposed to be sold for US$0.65 per Common Share. Alternatively, the Company could elect to pay in cash the difference between US$0.65 per Common Share and the actual sale price per Common Share received by the Smith Group in such sale.

On December 19, 2022, Mr. Smith provided the Company with notice (the “ Notice ”) of the intent of the Smith Group to sell the Transaction Shares subject to the Floor. Pursuant to the Smith Transaction Agreement, the Smith Group was entitled to complete such sale five days following delivery of the Notice.

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Pursuant to the Third Amendment, the Floor price has been revised to US$0.40 per Common Share and the Floor Expiration Date has been extended to December 31, 2025. 30,250,000 Common Shares (including the Transaction Shares and on an as converted basis with respect to applicable PVS held by the Smith Group) are now subject to the Floor as revised by the Third Amendment. The Smith Group must not exercise its Floor rights prior to June 30, 2023.

The 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 ”). The Company relied on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the Transaction Shares did not exceed 25% of the Company’s market capitalization. The Company did not file a material change report more than 21 days before the closing of the Transaction as the Company wished to close the Transaction as soon as practicable following finalization of the Transaction terms, which the Company deems reasonable as it wished to reduce its liabilities as soon as possible.

The board of directors of the Company approved the Transaction at a meeting held on December 20, 2022. Mr. Smith, having a material interest in the Transaction, abstained from voting on the Transaction. No special committee was established to review the Transaction. John McKimm, an independent director of the Company, voted against the Transaction. Mr. McKimm’s stated principal reasons for voting against the Transaction were that the Company did not benefit by creating dilution to shareholders without a corresponding reduction of the floor share obligation and the six-month restriction on exercising the Floor rights was of limited value to the Company. Mr. McKimm believed that due to the time of year and statutory holidays, the formal notice provided by the Smith Group was not sufficient time to resolve the floor share obligation in a manner that was reasonable for all constituents and preferred to allow the Smith Group to attempt to sell the Common Shares subject to the Floor. Mr. McKimm proposed that the Company form a special committee and work with the Smith Group to pursue a process for the sale of the Common Shares subject to the Floor prior to the end of the Floor Expiration Date rather than extend the obligation.

The approving members of the board based its decision on the current price of the Common Shares and the risks to the Company in allowing the Common Shares subject to the Floor to be sold, principally the approximately US$9.9M cash liability that would have resulted from such sale and the Company’s current cash position. The board believed that removing the possibility of that sale in the short term by extending the time under which the Floor rights could be exercised and reducing the Floor price was in the best interest of the Company and its stakeholders.

Following the completion of the Transaction, the Smith Group holds 222,222 warrants (each warrant exercisable to purchase one Common Share), 250,000 options (each option exercisable to purchase one Common Share), 1,421,538 PVS (representing 54.5% of the outstanding PVS) and 49,397,118 Common Shares (representing 20.7% of the outstanding Common Shares). Pursuant to the terms of a letter agreement dated as of January 15, 2020 among Endeavour Holdings LLC, a company forming part of the Smith Group, and certain founding shareholders of the Company, the Smith Group also remains entitled to receive 178,183.1 PVS and 734,962 Common Shares (the “ Side Letter Entitlement ”). The Common Shares and PVS held by the Smith Group will represent approximately 24.0% of all voting rights attached to the issued and outstanding voting securities of the Issuer (or 25.1%, assuming the exercise of the warrants and the options and the receipt of the Side Letter Entitlement). For more information, refer to the early warning report of the Smith Group avaialble on the Company’s SEDAR profile at www.sedar.com.

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

Not applicable.

7. Omitted Information

No significant facts have been omitted from this report.

8. Executive Officer

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

Todd Buchman Chief Legal Officer Tel: 1.305.441.9085

9. Date of Report

January 3, 2023.