Power Group Projects Corp. — Regulatory Filings 2021

Jun 30, 2021

FORM 51-102F3 MATERIAL CHANGE REPORT

1. Name and Address of Company

Power Group Projects Corp. 393 University Avenue, Suite 1810 Toronto, Ontario M5G 1E6

2. Date of Material Change

June 21, 2021

3. News Release

A press release disclosing the material change was released on June 21, 2021, through the facilities of Newsfile Corp.

4. Summary of Material Change

On June 21, 2021, the Company closed a non-brokered private placement through the issuance of 19,999,998 units (“ Units ”) at a price of $0.06 per Unit for gross proceeds of $1,200,000 (the “ Offering ”).

5. Full Description of Material Change

Pursuant to the Offering, the Company issued 19,999,998 Units at a price of $0.06 per Unit for gross proceeds of $1,200,000. The proceeds of the Offering will be used for general working capital purposes.

Each Unit is comprised of one common share (“ Common Share ”) in the capital of the Company and one Common Share purchase warrant (“ Warrant ”). Each Warrant entitles the holder thereof to purchase one Common Share for a period of three (3) years from the closing date (the “ Closing Date ”) at a price of $0.12 per Common Share.

In connection with the Offering, the Company paid certain eligible finders (the “ Finders ”) aggregate cash commissions of $32,940 equal to 6% of the gross proceeds of the Offering and issued 549,000 broker warrants (each, a “ Broker Warrant ”) equal to 6% of the number of Units delivered by the Finders pursuant to the Offering. Each Broker Warrant entitles the holder thereof to acquire one Common Share at an exercise price of $0.12 per Common Share for a period of three (3) years from the Closing Date.

All securities issued in connection with the Offering are subject to a statutory hold period of four months plus a day from the date of issuance in accordance with applicable securities legislation.

The closing of the Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and other approvals, including the approval of the TSX Venture Exchange.

A portion of the Offering constituted a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“ MI 61-101 ”), as certain insiders of the Company acquired an aggregate of 10,264,286 Units under the Offering.

The following supplementary information is provided in accordance with Section 5.2 of MI 61101.

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

The Offering constituted a “related party transaction” as such term is defined by MI 61101 as Nathwani Capital Inc. (“ Nathwani ”), an insider of the Company, subscribed for an aggregate of 175,000 Units pursuant to the Offering.

(b) the purpose and business reasons for the transaction:

The proceeds from the Offering will be used by the Company for general working capital purposes.

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

The completion of the Offering will provide the Company with funds for working capital and for other general and administrative costs.

(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:

Nathwani Capital Inc. (“ Nathwani ”), an insider of the Company, subscribed for an aggregate of 175,000 Units of the Company.

• (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:

Pursuant to the Offering, Nathwani acquired 175,000 Units of the Company. Prior to the completion of the Offering, Nathwani did not hold, directly or indirectly, any Units of the Company. Upon completion of the Offering, Kelly now beneficially owns and controls, directly or indirectly, 175,000 Common Shares and 175,000 Warrants representing approximately 0.36% of the Company’s issued and outstanding Common Shares on a non-diluted basis and approximately 0.72% of the issued and outstanding Common Shares on a partially diluted basis, assuming the exercise of all of the Warrants held by Nathwani.

• (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:

A resolution of the board of directors was passed on June 17, 2021 approving the Offering. No special committee was established in connection with the Offering, and no materially contrary view or abstention was expressed or made by any director.

• (f) A summary in accordance with section 6.5 of MI 61-101, of the formal valuation, if

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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 MI 61-101, of every prior valuation in respect of the issuer that relates to the subject matter of or is otherwise relevant to the transaction:

  • (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:

Other than subscription agreements for the Units, the Company did not enter into any agreement with an interested party or a joint actor with an interested party in connection with the Offering. To the Company’s knowledge, no related party to the Company entered into any agreement with an interested party or a joint actor with an interested party, in connection with the Offering.

• (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:

The Company is relying 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 61101, as the fair market value of the participation in the Offering by insiders does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the Offering, which the Company deems reasonable in the circumstances in order to complete the Offering in an expeditious manner. The Offering was approved by all independent directors of the Company.

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

The report is not being filed on a confidential basis.

7. Omitted Information

No significant facts have been omitted from this Material Change Report.

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8. Executive Officer

For further information, contact Aleem Nathwani, Chief Executive Officer at (604) 290-7073

9. Date of Report

This report is dated at Toronto, this 30[th] of June, 2021.

Cautionary Statement Regarding Forward-Looking Information

This material change report contains certain “forward-looking information” within the meaning of applicable securities laws. Forward looking information is frequently characterized by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”, “may”, “will”, “would”, “potential”, “proposed” and other similar words, or statements that certain events or conditions “may” or “will” occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. For a description of the risks and uncertainties facing the Company and its business and affairs, readers should refer to the Company’s Management’s Discussion and Analysis. The Company undertakes no obligation to update forward-looking information if circumstances or management’s estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forwardlooking information.

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