Martello Technologies Group Inc. — Capital/Financing Update 2020

Jun 2, 2020

MARTELLO TECHNOLOGIES GROUP INC.

390 March Rd., Suite 110 Ottawa, Ontario K2K 0G7

MATERIAL CHANGE REPORT

June 2, 2020

Item 1. Name and Address of Company

The name of the reporting issuer is Martello Technologies Group Inc. (the “ Issuer " or “ Martello ”). Its head office is located at 390 March Rd., Suite 110 Ottawa, Ontario K2K 0G7.

Item 2. Date of Material Changes

The material change occurred on May 26, 2020.

Item 3. News Releases

The Issuer/PI Financial disseminated a News Release via Globe Newswire on May 26, 2020 and filed the News Release on SEDAR on May 26, 2020.

Item 4. Summary of Material Changes

The Issuer announced that it has closed its previously announced bought deal public offering (including the exercise in full of the underwriters’ over-allotment option), resulting in the issuance by Martello of 32,861,250 units (the "Units") at a price of $0.21 per Unit (the "Offering Price"), for aggregate gross proceeds of $6,900,863. (the "Offering")

The Offering was led by PI Financial Corp. and Eight Capital as co-lead underwriters on behalf of a syndicate of underwriters (collectively the "Underwriters").

Item 5. Full Description of Material Changes

The Units were issued pursuant to a short form prospectus dated May 20, 2020, filed with the securities regulatory authorities in each of the provinces of Ontario, British Columbia and Alberta (the "Prospectus"). A copy of the Prospectus is available under the Company's profile on SEDAR at www.sedar.com.

Each Unit consists of one common share of the Company and one common share purchase warrant (each, a “Warrant”). Each Warrant is exercisable into one common share at an exercise price of $0.30 per common share for a period of 36 months from the Closing Date. Commencing on May 26, 2021, if the daily volume weighted average trading price of the common shares of the Company on the TSX Venture Exchange (“TSXV”) for any 10 consecutive days equals or exceeds $0.50, the Company may, upon providing written notice to the holders of the Warrants, accelerate the expiry date of the Warrants to the date that is 30 days following the date of such written notice.

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The Underwriters received a cash commission equal to 7% of the gross proceeds realized from the Offering. The Company also granted the Underwriters 1,643,063 compensation options, exercisable to purchase Units (a “Compensation Option Unit”) at a price of $0.21 per Compensation Option Unit for a period of 24 months following the date hereof.

$4,000,000 of the net proceeds of the Offering will be used to pay a portion of the purchase price and transaction expenses in connection with the previously announced acquisition of GSX Participations SA, which closed into escrow, subject to the receipt of the net proceeds of the Offering and the payment of the balance of the purchase price thereof, on May 25, 2020. The remainder of the net proceeds of the Offering will be used for general corporate purposes and working capital.

Items 6 and 7. Reliance on Subsection 7.1(2) of National Instrument 51-102 and Omitted Information

The Issuer is not relying on sub-section 7.1(2) of National Instrument 51-102 or the equivalent provisions of the securities legislation in other jurisdictions governing the Issuer for the filing of this report nor is any information being omitted in reliance thereon.

Item 8. Executive Officers

For further information, please contact John Proctor, President and Chief Executive Officer of the Issuer, at 613-271-5989.

Item 9. Date of Report

Dated this 2nd day of June, 2020.