Cansortium Restructures Short-Term Contingent Liability

Cansortium Inc. CNTMF TIUM , a vertically-integrated cannabis company operating under the Fluent brand, announced that, pursuant to a third amendment dated December 21, 2022 to an existing agreement among the company and certain of its affiliates and William Smith, a director and the executive chairman of the company, and certain companies controlled by Smith (together with Smith, collectively, the "Smith group"), it has restructured a short-term contingent liability by issuing 11.6 million common shares of the company to the Smith Group at a deemed price of $0.12 per common share.

Prior to the third amendment, pursuant to the Smith transaction agreement, among other things, 18.6 million common shares of the company were subject to a price "floor" of $0.65 per common share until May 31, 2023. On December 19, 2022, Smith provided the company with notice of the intent of the Smith group to sell all 18.6 million common shares subject to the floor. Pursuant to the Smith transaction agreement, the Smith group was entitled to complete such sale five days following delivery of the notice.

Pursuant to the third amendment, the floor price has been revised to $0.40 per common share and the floor expiration date has been extended to December 31, 2025. 30.3 million common shares are now subject to the floor as revised by the third amendment. The Smith group must not exercise its floor rights prior to June 30, 2023.

The issuance of the transaction shares to the Smith group constitutes a "related party transaction" as such term is defined in Multilateral Instrument 61-101 - Protection of minority securityholders in special transactions.

Early Warning Disclosure of the Smith Group

In addition to the acquisition of the transaction shares pursuant to the Smith transaction agreement, on November 2, 2022, Smith was granted and acquired, as compensation in his capacity as a director of the company, 322,581 common shares at a value of $0.155 per share or $50,000 in aggregate and on November 24, 2022, Endeavour Holdings LLC, a company forming part of the Smith group, acquired, 1.8 million common shares pursuant to a settlement agreement with a former founding shareholder of the company at a value of $0.16 per share or $285,092 in aggregate.

Following the completion of each of the Smith transactions, the Smith group will hold 222,222 warrants, 250,000 options, 1.4 million PVS and 49.4 million common shares. The common shares and PVS held by the Smith group will represent approximately 24.0% of all voting rights attached to the issued and outstanding voting securities of the issuer.

Pursuant to the terms of the Smith transaction agreement, Can Endeavour LLC, a company forming part of the Smith group, has a contractual right to nominate two members to the board of directors of Cansortium. Can Endeavour exercised such right to have Smith and Mark Eckenrode nominated to be re-elected as directors of the company at the shareholder meeting of the company held on July 21, 2022 and Smith and Eckenrode were in fact re-elected.

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