Martello Technologies Group Inc. — Capital/Financing Update 2020

May 9, 2020

MARTELLO TECHNOLOGIES GROUP INC.

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

MATERIAL CHANGE REPORT

May 8, 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 6, 2020.

Item 3. News Releases

The Issuer/PI Financial disseminated a News Release via Globe Newswire on May 6, 2020 and filed the News Release on SEDAR on May 7, 2020.

Item 4. Summary of Material Changes

The issuer announced that that it has entered into an agreement with PI Financial Corp. and Eight Capital to act as co-lead underwriters, on behalf of a syndicate of underwriters (collectively the "Underwriters"), pursuant to which the Underwriters will purchase, on a bought deal basis, an aggregate of 23,810,000 units of Martello (the "Units") at a price of $0.21 per Unit (the "Offering Price") for aggregate gross proceeds of $5,000,100 (the "Offering"). The net proceeds of the Offering will be used to pay a portion of the purchase price in connection with the previously announced acquisition by the Company (the “Acquisition”) of all of the issued and outstanding securities of GSX Participations SA (“GSX”) pursuant to a share purchase agreement dated April 28, 2020.

Item 5. Full Description of Material Changes

Martello Technologies Group Inc. announced that it has entered into an agreement with PI Financial Corp. and Eight Capital to act as co-lead underwriters, on behalf of a syndicate of underwriters (collectively the " Underwriters "), pursuant to which the Underwriters will purchase, on a bought deal basis, an aggregate of 23,810,000 units of Martello (the " Units ") at a price of $0.21 per Unit (the " Offering Price ") for aggregate gross proceeds of $5,000,100 (the " Offering "). The net proceeds of the Offering will be used to pay a portion of the purchase price in connection with the previously announced acquisition by the Company (the “ Acquisition ”) of all of the issued and outstanding securities of GSX Participations SA (“ GSX ”) pursuant to a share purchase agreement dated April 28, 2020.

.

The Units will be offered by way of a short-form prospectus in Ontario, Alberta, and British Columbia, and such other additional jurisdictions in Canada as agreed to by the Company and the Underwriters.

The Company has also granted the underwriters an option to cover over-allotments (the “ OverAllotment Option ”), which will allow the underwriters to offer up to an additional 15% of the Offering, on the same terms as the Units. The Over-Allotment Option may be exercised in whole or in part at any time up to 30 days following the closing date of the Offering, for any number of Units, Unit Shares, Warrants, or any combination thereof at a price equal to the Offering Price for a Unit and a price to be agreed upon for the Warrant.

GSX Acquisition

The Company has entered into a share purchase agreement dated April 28, 2020 to acquire 100% of the shares of GSX, a provider of end-user experience monitoring for Microsoft Office 365 headquartered in Geneva, Switzerland with more than 400 enterprise customers globally. The consideration for the acquisition is 22,000,000 common shares and CDN$13,860,000 cash for an aggregate purchase price of $18,700,000, subject to adjustment (the " Purchase Price ").

Terms of the Offering

Each Unit shall consist of one common share of the Company (each, a “ Unit Share ”) and one transferable common share purchase warrant (each such warrant, a “ Warrant ”). Each Warrant shall be 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 (the “ Warrant Shares ” or together with the Unit Shares, “ Shares ”). Commencing on the date that is 12 months following the Closing Date, 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.

The Offering is expected to close on or about May 26, 2020, or such other date as agreed between the Company and the Underwriters, and is subject to certain conditions including, but not limited to, the closing in escrow of the Acquisition and the receipt of all necessary regulatory and other approvals including the approval of the TSXV.

The Company has agreed to pay a cash commission of 7.0% of the gross proceeds of the Offering and will issue to the Underwriters compensation options (the “ Compensation Options ”) equal to 5.0% of the aggregate number of Units sold under the Offering (the “ Underwriting Fee ”). The Compensation Options will be exercisable into common shares of the Company at a price per Compensation Options equal to the Offering Price for a period of 24 months from the closing of the Offering.

The news release on May 6, 2020 does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “ U.S. Securities Act ”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

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 8th day of May, 2020.