Martello Technologies Group Inc. — Capital/Financing Update 2021

Mar 1, 2021

MARTELLO TECHNOLOGIES GROUP INC.

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

MATERIAL CHANGE REPORT

March 1, 2021

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 Change

The material change occurred on February 25, 2021.

Item 3. News Release

The Issuer disseminated a News Release via CISION on February 25, 2021, and filed the News Release on SEDAR on February 25, 2021.

Item 4. Summary of Material Changes

Martello announced that it has entered into an agreement with Paradigm Capital Inc. to act as sole bookrunner, 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 26,316,000 units (the “ Units ”) at an offering price of $0.19 per Unit (the “ Offering Price ”) for gross proceeds of approximately $5 million (the “ Offering ”). The net proceeds of the Offering will be used for working capital and general corporate purposes.

Item 5. Full Description of Material Changes

Martello announced that it has entered into an agreement with Paradigm Capital Inc. to act as sole bookrunner, on behalf of the Underwriters, pursuant to which the Underwriters will purchase, on a bought deal basis, an aggregate of 26,316,000 Units at an Offering Price of $0.19 per Unit for gross proceeds of approximately $5 million. The net proceeds of the Offering will be used for working capital and general corporate purposes.

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

The Issuer has granted the Underwriters the option to cover over-allotments (the “OverAllotment Option), which will allow the Underwriters to purchase 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, Common 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.

Terms of the Offering

Each Unit shall consist of one common share of the Issuer (a “ Common Share ”) and one-half of one common share purchase warrant (each whole warrant a “ Warrant ”). Each Warrant will entitle the holder thereof to purchase one common share of the Issuer (a “Warrant Share”) at a price of $0.30 for a period of two years following the closing of the Offering.

The Offering is expected to close on March 18, 2021, and is subject to certain customary conditions, including the approval of the TSX Venture Exchange and applicable securities regulatory authorities.

The Issuer has agreed to pay the Underwriters a cash commission equal to 7.0% of the gross proceeds of the Offering, including on exercise of the Over-Allotment Option, other than in respect of sales of a maximum of $1,000,000 of the Offering to certain directors and officers of the Issuer or their related entities (The “ President’s List ”) for which the Issuer shall pay a commission equal to 3.5%. The Issuer has also agreed to pay to the Underwriters compensation options (the “ Compensation Options ”) equal to 5.0% of the Units issued in the Offering, including on exercise of the Over-Allotment Option, other than any Units issued in connection with the President’s List. The Compensation Options shall be exercisable at the Offering Price for a period of 2 years from the closing of the Offering. The Underwriters will also receive Compensation Options equal to 2.5% of the number of Units issued to subscribers on the President’s List.

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 1st day of March 2021.