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Acquisition of Securities of Cansortium, Inc.

Toronto, Ontario–(Newsfile Corp. – January 26, 2021) – William Smith announces that pursuant to the terms of a proposed agreement (the “Proposed Agreement“) among William M. Smith (“Smith“), certain companies controlled by Smith (the “Smith Companies” and, together with Smith, the “Smith Group“) and Cansortium, Inc. (“Cansortium“), the Smith Group has received 1,421,538 proportional voting shares of Cansortium (the “Acquired PV Shares“) and, assuming that the Proposed Agreement is completed, the Smith Group will be entitled to keep the Acquired PV Shares, receive an additional 4,988,520 common shares of Cansortium (the “Additional Acquired Shares“) and receive an Amended and Restated Promissory Note in the principal amount of $12,933,290.02 convertible into common shares of Cansortium at a conversion price of $0.60 per common share, subject to adjustment (the “Convertible Note“). The Acquired PV Shares were delivered to the Smith Group in December 2020.

Prior to receiving the Acquired PV Shares, the Smith Group held 13,412,622 common shares of Cansortium representing 6.75% of the outstanding common shares and no proportional voting shares, and 222,222 warrants to purchase additional common shares at an exercise price of $0.45 per share.

Upon completion of the Proposed Agreement and delivery to the Smith Group of the Additional Acquired Shares and Convertible Note, the Smith Group will hold 1,421,538 proportional voting shares, representing 66.81% of the outstanding proportional voting shares, and 18,401,142 common shares, representing 9.26% of the outstanding common shares. Each proportional voting share carries 10 votes per share and is also convertible into 10 common shares.

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Upon conversion of the Convertible Note, conversion of the Acquired PV Shares and exercise of the Warrants, the Smith Group would hold 54,394,227 common shares of Cansortium, representing 27.36% of the outstanding common shares.

All percentages above are based on the number of issued and outstanding common and proportional voting shares as disclosed in the Cansortium’s financial statements for the nine months ended September 30, 2020.

Pursuant to the terms of the Proposed Agreement, which have been negotiated by the parties to, amongst other things, assist Cansortium in the restructuring of debt owed by Cansortium to members of the Smith Group, no additional cash consideration will be paid by the Smith Companies as the principal amount of the Convertible Note represent debt and other obligations previously owed by Cansortium to members of the Smith Group and the Acquired PV Shares and the Additional Acquired Shares will be transferred to the Smith Group in partial consideration for the Smith Group entering into the Agreement.

The Agreement also provides that the 14,215,380 common shares of Cansortium that the Acquired PV Shares are convertible into plus an additional 4,400,005 common shares held or to be held by the Smith Group shall be subject to a price “Floor” of $0.65 per share guaranteed by Cansortium and its subsidiaries. The Floor shall expire at 5:00 P.M. on May 31, 2023. If during that time period, members of the Smith Group elect to sell some or all of its common shares subject to the Floor, and the purchase price is less than $0.65 per share, then Cansortium (or its designee) shall have the first right to purchase all or any portion of the contemplated Common Shares to be sold for $0.65 per common share. Alternatively, Cansortium may elect to pay in cash to the seller on the date of such sale the difference between $0.65 and the actual sale price per common share. The price Floor shall be cancelled if the closing price of the common shares is $4.13 per common shares or more for twenty (20) consecutive trading days while maintaining a trading volume of at least three (3) million common shares each trading day of such period.

The Smith Group acquired the securities for investment purposes and may, depending on market and other conditions, increase or decrease its beneficial ownership, control or direction over securities of Cansortium through market transactions, private agreements, treasury issuances, exercise of warrants, or otherwise.

The Smith Group’s address is 155 Middle Plantation Lane, Gulf Breeze, Florida 32561. A copy of the Early Warning Report will appear under the profile of Cansortium on the SEDAR website at www.sedar.com. Cansortium’s head office is located at 82 NE 26th Street, Unit 110, Miami, Florida, 33137.

For further information or to obtain a copy of the Early Warning Report, please contact William Smith at billsmedia@gmail.com.


To view the source version of this press release, please visit https://www.newsfilecorp.com/release/72856