LXRandCo, Inc. — Capital/Financing Update 2021

Jan 4, 2021

FORM 51-102F3

MATERIAL CHANGE REPORT

Item 1 Name and Address of Company

LXRandCo, Inc. (“ LXR ” or the “ Company ”) 7399 Saint-Laurent Blvd. Montréal, Québec H2R 1W7

Item 2 Date of Material Change

December 23, 2020

Item 3 News Release

On December 23, 2020, the Company issued a press release disclosing the material change, which was disseminated through the newswire services of Cision. A copy of the press release was filed on SEDAR.

Item 4 Summary of Material Change

LXR has closed its brokered private placement of Units (as defined below) initially announced on December 7, 2020. LXR raised gross proceeds of $7,500,000.00 through the issuance of 60,000,000 Units at a price of $0.125 per Unit.

Item 5 Full Description of Material Change

5.1 Full Description of Material Change

LXR closed a brokered private placement financing (the " Private Placement ") by issuing 60,000,000 units (each a " Unit ") at a price of $0.125 per Unit (the “ Unit Price ”) for gross aggregate proceeds of $7,500,000. Each Unit consists of one Class B share (a " Class B Share ") of LXR and a one-quarter of a Class B Share purchase warrant (each whole warrant a " Warrant ") exercisable into one Class B Share at a price of $0.175 per Warrant for a period of 24 months from the closing date. The Warrants are subject to an accelerated expiry if, following the date that is four months and one day after the date of issuance of the Units and prior to the expiry date of the Warrants, the daily volume weighted average trading price of the Class B Shares exceeds $0.35 for ten consecutive trading days.

Cormark Securities Inc., acted as lead agent in the Private Placement on behalf of a syndicate of agents (the “ Agents ”). In consideration of their services in connection with the Private Placement, the Company paid the Agents, a cash fee (the “ Agency Fee ”) of 6.0% of the gross proceeds realized by the Company in respect of the sale of the Units, excluding the gross proceeds received from the sale of the Units to Gibraltar & Company, Inc. (“ Gibraltar ”), as well as Luigi Fraquelli, Valerie Sorbie, Camillo di Prata, Eric Graveline and Javier San Juan (collectively, the “ Insider Participants ”). The Agency Fee paid on the gross proceeds from Gibraltar and the Insider Participants was 3.0%. In addition to the Agency Fee, the Company also issued to the Agents 2,414,400 broker warrants of the Company (the “ Broker Warrants ”), which will expire 24 months from the Closing Date, to purchase 2,414,400 additional Units at the Unit Price. The number of Units purchasable through the exercise of the Broker Warrants is equal to 6.0% of the number of Units sold in the Private Placement excluding the Units sold to Gibraltar and the Insider Participants.

Prior to the Private Placement, the Company had 32,783,155 issued and outstanding Class B Shares on a non-diluted basis. Pursuant to the Private Placement, the Company has issued up to 78,018,000 Class B Shares, comprised of 60,000,000 Class B Shares, plus 15,000,000 Warrants (exercisable into 15,000,000

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Class B Shares) and 2,414,400 Broker Warrants (exercisable into 2,414,400 Class B Shares and 603,600 Warrants which are further exercisable into 603,600 Class B Shares). This represents approximately 183% of the aggregate issued and outstanding Class B Shares on a non-diluted basis and approximately 238% of the aggregate issued and outstanding Class B Shares, assuming exercise of the Warrants and Broker Warrants, as of the date hereof. Following completion of the Private Placement, the Company has 92,783,155 issued and outstanding Class B Shares on a non-diluted basis

All securities issued under the Private Placement, including securities issuable on exercise thereof, are subject to a hold period expiring four months and one day from the date of issuance.

The following supplementary information is provided in accordance with Section 5.2 of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (" MI 61-101 "):

a) a description of the transaction and its material terms:

See Item 5.1 above.

b) the purpose and business reasons for the transaction:

The net proceeds of the Private Placement will be used to fund the execution of LXR’s transformation to a digital-first omni-channel model as announced on September 3, 2020. The proceeds of the Private Placement shall be used by the Company to accelerate the growth of its e-commerce initiatives, which include expansion of the e-commerce team and increased digital marketing spend, and for general working capital purposes.

c) the anticipated effect of the transaction on the issuer’s business and affairs:

See Item 5.1(b) above.

d) a description of:

i. the interest in the transaction of every interested party and of the related parties and associated entities of the interested parties:

Gibraltar acquired 8,000,000 Units.

Camillo di Prata, a director and the interim chief executive officer of the Company and an insider of Gibraltar, acquired 6,600,000 Units.

Valerie Sorbie, a director and the Chair of the Company and an insider of Gibraltar, acquired 2,160,000 Units.

Eric Graveline, a director of the Company, acquired 1,600,000 Units.

Javier San Juan, a director of the Company, purchased 1,200,000 Units.

Luigi Fraquelli, an insider of Gibraltar, purchased 200,000 Units.

ii. the anticipated effect of the transaction on the percentage of securities of the issuer, or of an affiliated entity of the issuer, beneficially owned or controlled by each person or company referred to in subparagraph (i) for which there would be a material change in that percentage

Upon closing of the Private Placement, and as a result of the issuance of Units to Gibraltar in connection therewith, Gibraltar (and its affiliates) beneficially owns, controls or directs, directly

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or indirectly, 18,838,786 Class B Shares and 2,000,000 Warrants, representing approximately 20.30% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 21.99% of the aggregate issued and outstanding Class B Shares on a partiallydiluted basis.

Upon closing of the Private Placement, and as result of the issuance of Units to Eric Graveline in connection therewith, Eric Graveline beneficially owns, controls or directs, directly or indirectly, 4,257,393 Class B Shares and 400,000 Warrants, representing approximately 4.59% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 5.00% of the aggregate issued and outstanding Class B Shares on a partially-diluted basis

Upon closing of the Private Placement, and as result of the issuance of Units to Camillo di Prata in connection therewith, Camillo di Prata beneficially owns, controls or directs, directly or indirectly, 7,053,143 Class B Shares and 1,650,000 Warrants of LXR, representing approximately 7.60% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 9.22% of the aggregate issued and outstanding Class B Shares on a partiallydiluted basis

Upon closing of the Private Placement, and as result of the issuance of Units to Valerie Sorbie in connection therewith, Valerie Sorbie beneficially owns, controls or directs, directly or indirectly, 2,613,143 Class B Shares and 540,000 Warrants, representing approximately 2.82% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 3.38% of the aggregate issued and outstanding Class B Shares on a partially-diluted basis.

Upon closing of the Private Placement, and as result of the issuance of Units to Javier San Juan in connection therewith, Javier San Juan beneficially owns, controls or directs, directly or indirectly, 1,200,000 Class B Shares and 300,000 Warrants, representing approximately 1.29% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 1.61% of the aggregate issued and outstanding Class B Shares on a partially-diluted basis

Upon closing of the Private Placement, and as result of the issuance of Units to Luigi Fraquelli in connection therewith, Luigi Fraquelli beneficially owns, controls or directs, directly or indirectly 200,000 Class B Shares and 50,000 Warrants, representing approximately 0.22% of the issued and outstanding Class B Shares on a non-diluted basis and approximately 0.27% of the aggregate issued and outstanding Class B Shares on a partially-diluted basis

e) unless this information will be included in another disclosure document for the transaction, a discussion of the review and approval process adopted by the board of directors and the special committee, if any, of the issuer for the transaction, including a discussion of any materially contrary view or abstention by a director and any material disagreement between the board and the special committee:

See Item 5.1(i) below. The Private Placement was considered and unanimously approved by the relevant board of directors of the Company. There was no contrary view or abstention by any director approving the Private Placement

f) A summary in accordance with section 6.5 of MI 61-101, of the formal valuation, if any, obtained for the transaction, unless the formal valuation is included in its entirety in the material change report or will be included in its entirety in another disclosure document for the transaction:

Not applicable.

g) disclosure, in accordance with section 6.8, of every prior valuation in respect of the issuer that relates to the subject matter of or is otherwise relevant to the transaction

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i. that has been made in the 24 months before the date of the material change report:

Not applicable.

ii. the existence of which is known, after reasonable enquiry to the issuer or to any director or officer of the issuer:

Not applicable.

h) the general nature and material terms of any agreement entered into by the issuer, or a related party of the issuer, with an interested party or a joint actor with an interested party, in connection with the transaction:

Not applicable.

i) disclosure of the formal valuation and minority approval exemptions, if any, on which the issuer is relying under sections 5.5 and 5.7 of MI 61-101 respectively, and the facts supporting reliance on the exemptions:

As Gibraltar and the Insider Participants are insiders of the Company, the Private Placement constituted a related party transaction under MI 61-101. The Company relied on the exemption from the formal valuation requirement in Section 5.5(g) of MI 61-101 and the exemption from the minority approval requirement in Section 5.7(1)(e) of MI 61-101 based on the board of directors of the Company, acting in good faith, having determined, and at least two-thirds of the Company’s independent directors, acting in good faith, having determined, that the Company, which throughout 2020 has faced significant challenges brought on by the coronavirus (COVID-19) pandemic, is in serious financial difficulty with limited alternatives, that the Private Placement was designed to improve the Company’s financial position, that the terms of the Private Placement were reasonable in the Company’s circumstances, that the immediacy of the Company’s need for financing through the Private Placement did not afford it sufficient time to hold a shareholders’ meeting and that the Private Placement was fair to, and in the best interests of, the shareholders of the Company.

The Company was unable to issue a material change report more than 21 days before closing the Private Placement as it was reasonable and necessary to do so in the circumstances as the Company wanted to complete the Private Placement as expeditiously as possible given the immediacy of the Company’s need for financing.

5.2 Disclosure for Restructuring Transactions

Not applicable.

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

Not applicable.

Item 7 Omitted Information

Not applicable.

Item 8 Executive Officer

For further information, please contact Nadine Eap, Chief Financial Officer of the Corporation, by telephone at (514) 564-9993. Ms. Eap is an executive officer who is knowledgeable about the details of the matters described herein.

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Item 9 Date of Report

January 4, 2020.

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