CANNAROYALTY CORP. CSE FORM 2A LISTING STATEMENT in connection with the listing of CannaRoyalty Corp., the entity formed upon the reverse take-over of

Transcription

1 CANNAROYALTY CORP. CSE FORM 2A LISTING STATEMENT in connection with the listing of CannaRoyalty Corp., the entity formed upon the reverse take-over of Bonanza Blue Corp. by Cannabis Royalties & Holdings Corp. December 5, 2016

2 SUMMARY OF THE LISTING STATEMENT The following is a summary of the principal features of this Issuer and should be read together with the more detailed information and financial data and statements contained elsewhere in this Listing Statement. Principal Business of CannaRoyalty and its subsidiaries CannaRoyalty Corp. ( CannaRoyalty ) is a fully integrated, active participant in the legal cannabis sector, with a focus on building a platform of assets in three key verticals: research, brands, and devices. CannaRoyalty contributes capital, strategy, managerial support, and industry expertise to its Business Units to maximize the return potential of its diversified platform of assets. CannaRoyalty s objective is to be a multinational, value-added, endto-end solution provider in the legal cannabis industry. CannaRoyalty focuses on building its platform of assets via royalty, equity, license, and debt agreements with licensed operations in legal cannabis jurisdictions. CannaRoyalty has focused on creating a sustainable business in the key U.S. states of California, Washington, Arizona, and Oregon by integrating its Business Units to create synergies and a true end-to-end solution geared to the needs of patients and other consumers. CannaRoyalty has enhanced the growth of its Business Units by expanding its reach to end-users and partners. Although each Business Unit is primarily responsible for developing its business, CannaRoyalty provides functional expertise, oversight, and a framework of disciplined planning to the operations of the Business Units when needed. For more information on the Principal Business of CannaRoyalty and its subsidiaries see Section 4 - Narrative Description of the Business. Use of Available Funds Use of Available Funds $ Current Projects and Acquisition Pipeline Product Launches Working Capital NET: 1,625, ,000 2,177,251 4,452,251 For more information on use of available funds see Section 4 - Narrative Description of the Business. Risk Factors An investment in CannaRoyalty involves risks, uncertainties, and other factors, many of which are beyond the control of CannaRoyalty, which include, but are not limited to: regulatory risks; changes in laws, regulations, and/or guidelines; unfavourable publicity or consumer perception; CannaRoyalty s limited operating history; competition; banking issues related to the cannabis industry; CannaRoyalty s additional financing requirements; currency fluctuations; risks associated with acquisitions; research and market development; operation permits and authorizations; liability and enforcement complaints; product liability; reliance on key inputs; resale of shares; price volatility of publicly traded securities; dependence and reliance upon existing management, research and development personnel, as well as growing extraction personnel; management of growth; dividends; intellectual property; insurance coverage; costs of maintaining a public listing; litigation; operational risks; difficulty

3 implementing business strategy; conflicts of interest; and available talent pool. For more information on risk factors see Section 20 Risk Factors. Financial Information As the Issuer was formed as a result of the RTO, it does not have historical financial statements presented on a consolidated basis. Refer to section 8 Consolidated Capitalization for a summary of the Issuer s pro forma financial information. For more information on the financial information for each of CannaRoyalty, CRHC and Bonanza refer to section 25 Financial Statements. Restricted Securities The securities of certain principals (as such term is defined in NP ) of CannaRoyalty are subject to an escrow agreement in accordance with NP For more information on these escrowed securities see section 11 Escrowed Securities.

4 TABLE OF CONTENTS 1. ABOUT THIS LISTING STATEMENT CORPORATE STRUCTURE GENERAL DEVELOPMENT OF THE BUSINESS NARRATIVE DESCRIPTION OF THE BUSINESS SELECTED CONSOLIDATED FINANCIAL INFORMATION MANAGEMENT S DISCUSSION AND ANALYSIS MARKET FOR SECURITIES CONSOLIDATED CAPITALIZATION OPTIONS TO PURCHASE SECURITIES DESCRIPTION OF THE SECURITIES ESCROWED SECURITIES PRINCIPAL SHAREHOLDERS DIRECTORS AND OFFICERS CAPITALIZATION EXECUTIVE COMPENSATION INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS RISK FACTORS PROMOTERS LEGAL PROCEEDINGS AND REGULATORY ACTIONS INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS AUDITORS, TRANSFER AGENTS AND REGISTRARS MATERIAL CONTRACTS INTEREST OF EXPERTS OTHER MATERIAL FACTS FINANCIAL STATEMENTS GLOSSARY...57 A-1 SCHEDULE "A" INFORMATION CONCERNING BONANZA BLUE CORP....B-1 SCHEDULE "B" INFORMATION CONCERNING CANNABIS ROYALTIES & HOLDINGS CORP. B-1 SCHEDULE "C" INFORMATION CONCERNING THE RTO...C-1 SCHEDULE "D" PRO FORMA FINANCIAL STATEMENTS OF CANNAROYALTY...D-1 SCHEDULE "E" BONANZA S MD&A FOR THE YEAR ENDED DECEMBER 31, E-1 SCHEDULE "F" BONANZA S MD&A FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, F-1 SCHEDULE "G" CRHC S MD&A FOR THE YEAR ENDED MARCH 31, G-1 SCHEDULE "H" CRHC S MD&A FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 H- 1

5 SCHEDULE "I" BONANZA S MANAGEMENT INFORMATION CIRCULAR DATED SEPTEMBER 30, I-1 SCHEDULE "J" STATEMENT OF EXECUTIVE COMPENSATION...J-1 SCHEDULE "K" BONANZA S AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015 AND K-1 SCHEDULE "L" BONANZA S INTERIM FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, L-1 SCHEDULE "M" CRHC S AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016 AND THE PERIOD FROM OCTOBER 3, 2014 (DATE OF INCORPORATION) TO MARCH 31, M-1 SCHEDULE "N" CRHC S INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, N-1 SCHEDULE "O" AMALGAMATION AGREEMENT...O-1

6 1. ABOUT THIS LISTING STATEMENT 1.1 General Unless otherwise indicated: (i) (ii) (iii) (iv) (v) (vi) (vii) all capitalized terms not otherwise defined in this listing statement (the Listing Statement ) have the meanings ascribed thereto in 26 GLOSSARY ; Bonanza refers to Bonanza Blue Corp. and its subsidiaries prior to the RTO, on a consolidated basis (for information on Bonanza immediately prior to the RTO see Schedule A ); CRHC refers to Cannabis Royalties & Holdings Corp. and its subsidiaries prior to the RTO, on a consolidated basis (for information on CRHC immediately prior to the RTO see Schedule B ); Issuer refers to CannaRoyalty Corp. (i.e., Bonanza and its subsidiaries following the RTO, on a consolidated basis), and, in the case of references to matters undertaken by a predecessor in interest to the Issuer or its subsidiaries, includes each such predecessor in interest, unless the context otherwise requires; except where otherwise indicated, all references to dollar amounts and $ are to Canadian currency; any statements in this Listing Statement made by or on behalf of management are made in such persons capacities as officers of the Issuer, CRHC or Bonanza, as applicable, and not in their personal capacities; and all information in this Listing Statement is stated as at November 24, 2016, unless otherwise indicated. 1.2 Cautionary Statement Regarding Forward-Looking Statements The information provided in this Listing Statement, including schedules and information incorporated by reference, may contain forward-looking statements about Bonanza, CRHC or the Issuer. In addition, the Issuer may make or approve certain statements in future filings with Canadian securities regulatory authorities, in press releases, or in oral or written presentations by representatives of the Issuer that are not statements of historical fact and may also constitute forward-looking statements. All statements, other than statements of historical fact, made by the Issuer that address activities, events or developments that the Issuer expects or anticipates will or may occur in the future are forward-looking statements, including, but not limited to, statements preceded by, followed by or that include words such as may, will, would, could, should, believes, estimates, projects, potential, expects, plans, intends, anticipates, targeted, continues, forecasts, designed, goal, or the negative of those words or other similar or comparable words. Forward-looking statements may relate to future financial conditions, results of operations, plans, objectives, performance or business developments. These statements speak only as at the date they are made and are based on information currently available and on the then current expectations of the Issuer and/or CRHC and assumptions concerning future events, which are subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from that which was expressed or implied by such forward-looking statements, including, but not limited to, risks and uncertainties related to:! the available funds of the Issuer and the anticipated use of such funds;! the availability of financing opportunities, legal and regulatory risks inherent in the cannabis industry, risks associated with economic conditions, dependence on management and currency risk; and - 1 -

7 ! other risks described in this Listing Statement and described from time to time in documents filed by the Issuer with Canadian securities regulatory authorities. Consequently, all forward-looking statements made in this Listing Statement and other documents of the Issuer are qualified by such cautionary statements and there can be no assurance that the anticipated results or developments will actually be realized or, even if realized, that they will have the expected consequences to or effects on the Issuer. The cautionary statements contained or referred to in this section should be considered in connection with any subsequent written or oral forward-looking statements that the Issuer and/or persons acting on its behalf may issue. CannaRoyalty undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required under securities legislation. See 17 RISK FACTORS. 1.3 Market and Industry Data This Listing Statement includes market and industry data relevant to the Issuer and CRHC s business that has been obtained from third party sources, including industry publications. CannaRoyalty and CRHC believe that its industry data is accurate and that its estimates and assumptions are reasonable, but there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, neither Bonanza, the Issuer nor CRHC have independently verified any of the data from third party sources referred to in this Listing Statement or ascertained the underlying economic assumptions relied upon by such sources. 1.4 Information Regarding Bonanza The information regarding Bonanza that has been included in this Listing Statement is based upon public filings made by Bonanza, together with inquiries made of management of Bonanza, and accordingly, there can be no assurance that such information is accurate or complete. See 17 RISK FACTORS. 1.5 Information Regarding Business Units The information regarding the Issuer s Business Units that has been included in this Listing Statement is based upon information available to the Issuer and inquiries made of management of the Business Units, and accordingly, there can be no assurance that such information is accurate or complete. See 17 RISK FACTORS

8 2. CORPORATE STRUCTURE 2.1 Corporate Name and Head and Registered Office CannaRoyalty is a reporting issuer listed for trading on the CSE in the Province of Ontario. CannaRoyalty was incorporated as McGarry Minerals Ltd. on August 19, In connection with a corporate reorganization, the Issuer changed its name to Bonanza Blue Corp. on August 16, 2000 and changed its name to CannaRoyalty Corp. on December 5, 2016, prior to the completion of the RTO. CannaRoyalty s head office and registered office is located at 343 Preston Street, 11th Floor Ottawa, Ontario K1S 1N Jurisdiction of Incorporation CannaRoyalty was incorporated under the OBCA. 2.3 Diagram of Intercorporate Relationships The diagram on the following page presents the corporate subsidiaries and certain business interests of the Issuer

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10 2.4 Non-Corporate Issuers or Issuers Outside of Canada This section is not applicable to the Issuer. 2.5 Summary of the RTO and Related Transactions For a summary of the RTO and related transactions refer to Schedule C. 3.1 General Development 3. GENERAL DEVELOPMENT OF THE BUSINESS Bonanza was initially formed in order to acquire an interest in and to explore mineral prospects. In 1989, Bonanza abandoned its mineral prospects and changed its name to Whittier Capital Inc. and later to Whittier Industries Inc. In 1991, it acquired Best Sports Distribution Ltd., which was engaged in the development and distribution of sporting equipment, and changed its name to TriplePlay Sports Group Inc. During 1994, operations of Bonanza ceased due to lack of funds and other factors. On August 16, 2000, Bonanza s name was changed to Bonanza Blue Corp., in connection with a corporate reorganization effected to settle indebtedness with creditors. Bonanza had no active business operations leading up to completion of the RTO. Bonanza entered into the Definitive Agreement with CRHC on June 30, 2016, which outlines the general terms and conditions of the RTO, pursuant to which Bonanza was to acquire all of the issued and outstanding securities of CRHC in exchange for securities of Bonanza. For further information regarding the RTO, please see Schedule C. CRHC was incorporated on October 3, 2014, with the aim of providing integrated, end-to-end solutions encompassing research, brands, and devices covering the key segments of the legal cannabis market. CRHC contributes strategic capital and functional expertise to maximize the return potential of its diversified platform of assets. In addition to its head office in Vancouver, CRHC has a satellite office in Ottawa, Ontario and a registered address in County of Kent, Delaware., care of a registered agent. CRHC s trademark/trade dress is branded under the CRHC name. On March 11, 2016, Cannroy Delaware Inc., a wholly owned subsidiary of CRHC, was incorporated in Delaware. On April 29, 2016, CRHC established a share unit plan to provide directors, officers, consultants, or employees involved in the management of CRHC the opportunity to acquire share units of CRHC in order to allow them to participate in the long-term success of the business. See 9.2(a) Options to Purchase Securities Share Unit Plan - CRHC. On May 3, 2016, Cannroy Distribution LLC, a wholly owned subsidiary of Cannroy Delaware Inc. was incorporated in Delaware. (i) Acquisitions and Development of the Business CRHC has built a platform of assets via royalty agreements, equity interests, convertible and nonconvertible debt and licensing agreements with various businesses in Canada and the United States, primarily in the start-up phase, as set forth below. On March 6, 2015, CRHC acquired 1,500 Class A units, an 8.2% equity interest, in Alternative Medical Enterprises, LLC ( Alternative Medical Enterprises ) for $1,850,070. Alternative Medical Enterprises owns 100% of NuTrae LLC, a company developing drug delivery systems and products such as a transdermal patch, a meter-dosing inhaler and aerosolizer, and creams, lotions, and balms. Alternative Medical Enterprises also has an interest in a licensed cultivation operation in Arizona, and an interest in a company with real estate and agriculture assets focused on the cannabis sector in Colorado. On August 19, 2015, CRHC entered into a loan agreement with Santa Barbara Patients Collective and Healing Center ( Santa Barbara ) for $131,170 (US$100,000) to assist Santa Barbara in opening a - 5 -

11 collective and healing center in Santa Barbara, California. Interest is calculated at 20% per annum. The principal and accrued interest was due on August 19, The loan is unsecured. As the amount is now past due and no payments have been received, CRHC has provided an allowance of $65,585 (US$50,000) against the principal balance. CRHC has engaged legal counsel to assist in pursuing collection of the entire amount of the loan and all accrued interest. The bad debt expense is included in general and administrative expenses. Furthermore, CRHC has written off all accrued interest on this loan and reduced interest income accordingly. On November 16, 2015, a letter of intent was executed by CRHC, Vida Cannabis Corp. ( Vida ), and Resolve Digital Health Inc. ( Resolve ) to enter into a definitive agreement where CRHC would invest $750,000 cash in Resolve, in return for an 11% equity interest in Resolve which is accounted for at cost. On April 1, 2016, CRHC purchased Vida s rights and obligations to acquire 50,531 common shares of Resolve, and these shares were fully paid on July 4, The total consideration paid to Vida of $2,825,000 also included a royalty interest in NuTrae LLC (see below). After the completion of this transaction on July 4, 2016, CRHC held a 35% equity interest in Resolve as well as an option to have a CRHC representative on the Resolve board of directors. As a result, CRHC has significant influence over Resolve and as an associate the investment is accounted for under the equity method. Though CRHC has not yet exercised its right to have a representative appointed to Resolve s board, it plans to do so imminently. On February 3, 2016, CRHC entered into a loan agreement with Eureka Management Services Inc. ( Eureka ), a company that manages Magnolia Wellness, a medical cannabis dispensary in Oakland, California. The loan is to assist Eureka in expanding its operations in Oakland to add a licensed kitchen to produce edibles, distillates, concentrates and confectionary products. The loan was made in exchange for a convertible promissory note receivable with a face value of US$200,000. At signing, CRHC advanced US$100,000 of the US$200,000; the other half of the loan was advanced on April 6, During August 2016, CRHC advanced a further US$200,000 to Eureka as part of a second convertible promissory note. The conditions of the first and second convertible promissory notes are the same. The term is five years. Commencing on the third anniversary (February 2019 and August 2019, respectively), CRHC has the option to convert the principal and accrued interest into a 5% equity interest in Eureka for each loan for an aggregate stake of up to 10% in Eureka. If the conversion options are not exercised, commencing on the third anniversary date, principal shall be paid monthly in arrears on the last day of each month in equal monthly instalments. If the conversion options are not exercised, the accrued interest shall be paid monthly in arrears on the last day of each month in equal monthly instalments. Principal and accrued interest can be repaid in advance without penalty. As at September 30, 2016, the note receivable totalled $430,333, which includes $14,575 of interest accrued and receivable. As of March 31, 2016, CRHC entered into a royalty agreement with Cascadia Holdings LLC ( Cascadia ), a subsidiary of AltoTerra Capital Partners Ltd. ( AltoTerra ), in which CRHC paid $891,772 and provided the use of property and equipment in consideration for a 30% royalty stream on Cascadia s gross revenues. In April 2016, CRHC paid the remaining US$65,000 to Cascadia, raising the total investment to $973,738 (US$751,666). Cascadia is incorporated in the state of Washington and is in the business of leasing turnkey built-out solutions to companies that produce and process cannabis products pursuant to a license issued by the Washington State Liquor and Cannabis Board. The royalty investment is secured by Cascadia s lease at this property. On April 1, 2016, CRHC and CannaCraft Inc. ( CannaCraft ) entered into license agreements for the purpose of facilitating the distribution of vaporizer devices in Canada and the State of Washington. CRHC advanced funds of $327,925 (US$250,000) to CannaCraft on May 16, This advance has been partially offset by the purchase of equipment and product from CannaCraft, valued at $224,541. The balance of the advance at September 30, 2016 is $103,384 (US$78,817). This advance is not part of the joint venture agreement or license agreements between the two companies. On April 1, 2016, CRHC entered into an Exclusive License Agreement with Wagner Dimas Inc. ( Wagner Dimas ), a Nevada Corporation which has an innovative process for creating machine rolled - 6 -

12 products whereby CRHC acquired an exclusive license to manufacture, have manufactured, use, offer to sell, sell, import and/or distribute licensed property belonging to Wagner Dimas. On May 25, 2016 CRHC acquired a 20% equity interest in Wagner Dimas, with an outstanding obligation to make additional payments. The Company committed to purchase 2,000,000 shares of Wagner Dimas for US$625,000 of which $491,888 (US$375,000) remained unpaid at September 30, The last portion of the investment was made on November 21, 2016 and is now paid in full. Wagner Dimas brands and sells some of its products under the name Lucy s Pre-Rolls. Pursuant to a binding letter agreement dated April 1, 2016 between CRHC and Vida, CRHC purchased from Vida the following interests: (i) 3.5 % royalty on the net revenue of NuTrae LLC for a period of 10 years, commencing January 1, 2016; (ii) Vida s rights and obligations to acquire 50,531 common shares of Resolve Digital Health Inc.; and (iii) 20% interest in Bay Area Extraction Processing. In addition, at such time as CRHC increases the number of directors on its Board of Directors or completes a reversetakeover transaction with a reporting issuer in connection with a going-public transaction, Vida will have the right to nominate one individual to serve as a member of the Board of Directors of CRHC or the RTO acquirer, as applicable, until the next meeting of the resulting company s shareholders. In consideration for these interests, CRHC issued 3,500,000 of its common shares to Vida, valued at $2,625,000 ($0.75 per share) on July 4, 2016, and will make cash payments totalling $200,000 during the period June 30, 2016 to December 31, The total consideration for this purchase was $2,825,000. On April 7, 2016 CRHC acquired a 10% equity interest in Bodhi Research & Development Inc. ( Bodhi ) for $250,000, and an option to earn up to an additional 10% equity interest in connection with the provision of future services. The investment of $250,000 was paid in two instalments. The first instalment of $100,000 was advanced on April 7, On September 29, 2016, CRHC paid the remaining instalment of $150,000. On May 3, 2016, CRHC incorporated Cannroy Distribution LLC, a wholly owned subsidiary of Cannroy Delaware Inc. On May 5, 2016, CRHC acquired a 6% equity interest (350,000 common shares) in Eureka for US$100,000. Additionally, CRHC also provided US$400,000 of loans to Eureka, convertible into an additional 10% equity interest in Eureka. On May 15, 2016, CRHC advanced a total of US$118,000 to Natural Ventures PR, LLC ( Natural Ventures ), a corporation organized under the laws of Puerto Rico. A promissory note was taken back with interest charged at 5% per annum. As at September 30, 2016, the note receivable totalled $156,782 which includes $2,001 of interest accrued and receivable. CRHC expects to close a transaction involving a royalty by year end. On May 20, 2016, CRHC entered into a letter of intent with Progressive Marketing Partners LLC ( Stokes ), a Limited Liability Company in California that produces low dose, cannabis infused edibles. CRHC will purchase a license from Stokes to manufacture and sell Stokes products in Arizona, Oregon, Washington, and when federal legislation permits, in Canada. An upfront license fee of US$125,000 is required for a term of five years from the first commercial sale of any product from this agreement in any of the licensed territories. An advance of US$50,000 was made as an up-front fee, but will be refunded in full with annual interest of 2.5% if a definitive agreement is not finalized by December 31, The royalties will be 13% of gross sales, paid on a quarterly basis. On June 13, 2016, pursuant to the letter of intent signed between CRHC, Vida, and Resolve dated November 16, 2015, and the binding letter agreement between CRHC and Vida dated April 1, 2016, CRHC subscribed for 73,027 shares in Resolve as part of its original investment of $750,000 and the purchase of Vida s right to common shares, increasing CRHC s holding in Resolve to 35%. On June 26, 2016, CRHC acquired the interest to a royalty stream purchase agreement with NuTrae LLC ( NuTrae ), as part of the Vida transaction for an allocated purchase price of $1,130,000, providing for a 3.5% royalty on the net revenues of NuTrae for a period of 10 years, commencing January 1,

13 On June 30, 2016, CRHC acquired a 1.5% royalty interest on gross revenue of Three Leaf Holdings Corporation ( Three Leaf ) for a two-year period, plus a 2% fee on gross value of all of Three Leaf s referrals for one year, in exchange for its $100,000 investment. This investment was made in accordance with a private placement on March 17, 2016, in which Three Leaf subscribed to 666,666 common shares in CRHC for $500,000, CRHC agreed to make an investment in Three Leaf of $100,000. On June 30, 2016, CRHC entered into the Definitive Agreement with Bonanza. See the heading Definitive Agreement in Schedule C for further details. On June 30, 2016, as memorialized in a term sheet, CRHC committed to subscribe for a 70% equity interest in Achelois LLC ( Achelois ), a company in the State of California that develops and manufactures cannabis infused skin lotions with fibroblast technology for healing and pain relief. Consideration for the shares in Achelois is comprised of funding commitments, and the provision of services. As part of the funding commitments, CRHC will provide funding to Achelois on an as needed basis to allow Achelois to become commercially operational. As of November 17, 2016, CRHC has provided US$50,300 in funding to Achelois. CRHC management believes that this equity transaction will be completed. However, if an agreement fails to be reached there is a possibility that some of this funding will not be fully recovered. During July 2016, CRHC advanced $393,510 (US$300,000) to BAS Research in two separate tranches of US$150,000. BAS Research is a fully licensed and compliant lab and manufacturing and processing facility located in Berkeley, CA. Two secured, convertible promissory notes were received in exchange. The loans mature in January, 2018 after an eighteen-month term. The notes accrue interest at an annual rate of 7% and can only be prepaid at the option of CRHC. Upon maturity or at any time after the maturity date, in lieu of demanding payment, CRHC may at its option and sole discretion, elect to convert all or part of the outstanding principal amount plus any accrued and unpaid interest into a number of shares of BAS Research common stock or shares of the authorized class of series of preferred stock most recently issued by BAS Research. If CRHC elects to convert the notes receivable into common or preferred shares, the potential stake would not result in CRHC having significant influence over BAS Research. On July 22, 2016, CRHC entered into a joint venture with CannaCraft, a company in California that supplies equipment and cannabis-based medicines. The joint venture is conducted under the name Mobile Medicine, whose purpose is to manufacture and lease mobile gelatin encapsulation machines. CannaCraft will contribute one third of the funds required, and will be responsible for the design and manufacturing of the machines. CannaCraft will also manage and operate the machines. CRHC will contribute two thirds of the funding required for a 50% equity interest, of which $192,540 (US$150,000) has been advanced at September 30, At September 30, 2016, the Mobile Medicine joint venture is not commercially operational and has not conducted any activities. Effective August 12, 2016, CRHC entered into a binding term sheet with the following related entities, Dreamcatcher Labs Inc., a corporation incorporated under the laws of the State of Nevada ("Dreamcatcher"), Rock Vapor Technologies Inc., a corporation incorporated under the laws of the State of Delaware ("Rock Vapor"), and GreenRock Botanicals, Inc. ("GreenRock"), to: (i) acquire all of the issued and outstanding shares of Dreamcatcher, a non-profit mutual benefit corporation incorporated under the laws of the State of California; (ii) acquire certain assets of Rock Vapor; and (iii) acquire a controlling governing membership interest in GreenRock. During August and September 2016, CRHC advanced a total of $118,444 (US$90,298) to Dreamcatcher for working capital. The loan is non-interest bearing, unsecured, with no specific terms of repayment. On September 9, 2016 CRHC entered into a term sheet to subscribe for a 50% equity stake in Rich Extracts LLC ( Rich Extracts ), a corporation engaged in the business of using a variety of proprietary extraction processes to produce premium cannabis concentrate and cannabis distillate products in the State of Oregon. Consideration for the shares in Rich Extracts is comprised of funding commitments, the provision of services, a transfer of equipment, inventory, and other tangible assets owned by CRHC into Rich Extracts, and a payment of US$200,000, which represents 50% of the estimated value of the - 8 -

14 equipment, inventory, and other tangible assets that the other joint venture is personally transferring into Rich Extracts. In relation to these funding commitments, CRHC has provided funding and advances of US$1,409,360 to Rich Extracts as of November 23, If the term sheet is contractually agreed upon, CRHC and Rich Extracts will have a joint arrangement with joint control and accordingly a portion of these advances will be recorded as an investment in a joint venture. CRHC has provided services to Rich Extracts relating to research and development of products, marketing and promotion, distribution management, strategic business development, executive management, back office administration, and where permitted, manufacturing, to assist Rich Extracts in becoming commercially operational. As of November 17, 2016, CRHC has paid US$100,000 to the other joint venturer of Rich Extracts as partial payment for the value of equipment, inventory, and other tangible assets that he has personally transferred into Rich Extracts. In addition, there will be an assignment of intellectual property, a consulting agreement with the CEO of Rich Extracts for a minimum one year period, with a monthly consulting fee of US$10,000. On October 24, 2016, CRHC entered into a definitive share purchase agreement (the DC SPA ) with Dreamcatcher and GreenRock to purchase all of the issued and outstanding shares of Dreamcatcher and the controlling governing membership interest in GreenRock. Pursuant to the DC SPA, the Dreamcatcher shareholders and GreenRock governing member were issued 2,625,000 common shares in the capital of CRHC, representing an implied value of $5,250, (based on a valuation of $2.00 per common share). In addition, up to 2,000,000 common shares in the capital of CRHC (the Earn-Out Shares ) may be issued to the Dreamcatcher shareholders upon the satisfaction of certain performance-based conditions precedent, namely, the ability of Dreamcatcher to obtain new customers, increase sales revenue and launch new products to market (the Earn-Out Release Conditions ). The Dreamcatcher shareholders have the option to decline the Earn-Out Shares should the Earn-Out Release Conditions be satisfied. The Earn-Out Shares shall be issued in two equal tranches on a pro rata basis amongst the Dreamcatcher shareholders with all fractional shares being rounded down. Also on October 24, 2016, CRHC entered into a definitive asset purchase agreement with Rock Vapor for the purchase of certain assets of Rock Vapor for 375,000 common shares in the capital of CRHC representing an implied value of $750, (based on a valuation of $2.00 per common share). A previous director and officer of each of Dreamcatcher, Rock Vapor, and GreenRock, entered into an employment agreement with Dreamcatcher to act as Chief Executive Officer of Dreamcatcher and the sole governing member of GreenRock. As at September 30, 2016 CRHC has advanced US$90,298 to Dreamcatcher for working capital. On October 19, 2016, CRHC entered into a license and royalty agreement with Aphria Inc. ( Aphria ) whereby CRHC agreed to license to Aphria to sell or produce, in Canada, the products that CRHC owns the rights to through its various investments. A 5% royalty on gross revenue from the sale of the products will be paid on a quarterly basis in exchange for the license. Effective November 1st, 2016, CRHC acquired all of the issued and outstanding shares in Electric Medialand Inc. ( Electric Medialand ). The purchase price of Electric Medialand was $200,000 cash and 750,000 common shares of CRHC valued at $2.00 per share. The $200,000 cash portion of the purchase price will be paid in three equal installments on the closing date of this transaction, six months from closing, and the balance, twelve months from closing. As a result of the transaction, the founder and owner of Electric Medialand will be joining CRHC as Chief Marketing Officer. Electric Medialand adds expertise in sales and marketing to support CRHC s brands and help grow their sales.. On November 7, 2016 CRHC entered into a binding letter of intent with Zenabis Limited Partnership ( Zenabis ), a biopharmaceutical company with a focus on medical marijuana research and development. The letter of intent includes a share purchase, a share exchange and other commercial arrangements. If certain conditions are not met or waived or if the transaction is not completed by December 31, 2016, CRHC shall make a penalty payment of $366,950 to Zenabis, which it may satisfy via the issuance shares. CRHC has internally developed the brand Freya Intimacy Oil

15 (ii) Selected Financings On April 24, 2015, CRHC issued 1,750,000 CRHC Shares in connection with a non-brokered financing at a price of $0.50 per share for aggregate proceeds of $875,000. On September 30, 2015, CRHC issued 2,070,000 CRHC Shares in connection with a non-brokered financing at a price of $0.50 per share for aggregate proceeds of $1,035, Insiders purchased an aggregate of 200,000 CRHC Shares for aggregate gross proceeds of $100,000 to CRHC. On October 29, 2015, CRHC issued 200,000 CRHC Shares in connection with a non-brokered financing at a price of $0.50 per share for aggregate proceeds of $100,000. On March 17, 2016, CRHC issued 3,333,333 CRHC Shares in connection with a non-brokered financing at a price of $0.75 per share for aggregate proceeds of approximately $2,500,000. On June 7, 2016, CRHC issued 3,000,000 units in connection with a non-brokered financing at a price of $1.00 per unit for aggregate proceeds of $3,000,000. Each unit is comprised of one common share of CRHC and one half of one share purchase warrant. Each whole share purchase warrant is exercisable for one common share of CRHC at a price of $1.50 and will expire on December 7, As part of this financing, Aphria Inc. ( Aphria ), a publicly traded, licensed medical marijuana producer in Ontario, subscribed for 1,500,000 units. Aphria has been given pre-emptive rights to maintain their percentage ownership of CRHC by buying a proportionate number of shares of any future issue of common shares and securities convertible into common shares of CRHC. On June 17, 2016, CRHC entered into a loan agreement with a shareholder for $450,730 (US$350,000) with maturity on October 31, 2016, bearing interest at 14.29% for the term of the loan. The loan is secured by an 8.2% equity interest in Alternative Medical Enterprises, 3.5% royalty interest in Nutrae, 35% equity interest in Resolve, and CO2 supercritical extractors. An amount of US$200,000 has been paid by November 23, On July 15, 2016, CRHC issued 665,000 Units in connection with a non-brokered financing at a price of $0.75 per Unit for aggregate proceeds of $498,750. On July 28, 2016, CRHC issued 1,072,735 Units in connection with a non-brokered financing at a price of $0.75 per Unit for aggregate proceeds of $804,551. Each unit is comprised of one common share of CRHC and one half of one share purchase warrant. Each whole share purchase warrant is exercisable for one common share of CRHC at a price of $1.50 and will expire on January 29, On August 18, 2016, CRHC issued 220,000 CRHC Shares in satisfaction of amounts owing under an outstanding loan agreement dated February 19, 2016 at a conversion price of $0.75 per CRHC Share for aggregate proceeds of $165,000. On August 24, 2016, CRHC issued 750,000 common shares and generated gross proceeds of $1,125,000 as Aphria exercised its 750,000 common share purchase warrants for $1.50 per warrant. On September 28, 2016, CRHC issued 250,000 CRHC Shares in connection with a non-brokered financing at a price of $2.00 per share for aggregate proceeds of $500,000. On October 4, 2016, in connection with the RTO, CRHC completed a brokered offering of 2,502,000 subscription receipts at a price of C$2.00 per Subscription Receipt for total gross proceeds of $5,004,000 (the CRHC SR Financing ) through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc (collectively with the Co-Lead Agents, the Agents ). Proceeds from this subscription receipt offering (less 50% of the fees and expenses payable to the Agents) have been placed in escrow until the Escrow Release Conditions are satisfied. The subscription receipts will be automatically converted into CRHC Shares upon satisfaction of the Escrow Release Conditions

16 On October 19, 2016, CRHC issued and sold a secured convertible debenture to Aphria for $1,500,000. The debenture matures on October 19, 2019 and is secured by the assets of CRHC, and bears interest at 5% per annum payable annually. It is convertible by Aphria, in whole or in part, into common shares of CRHC at a conversion rate of $2 per share at any time prior to maturity. CRHC also has the option to redeem the principal and accrued interest at any time prior to maturity. On or about November 30, 2016 Bonanza is expected to complete a non-brokered private placement of 120,000 Bonanza Shares for gross proceeds of $90,000 to satisfy one of the conditions to the RTO. 3.2 Trends, Commitments, Events or Uncertainties See 4.2 Market Information, Trends, Commitments, Events and Uncertainties. 4. NARRATIVE DESCRIPTION OF THE BUSINESS 4.1 Narrative Description of the Business Prior to the RTO, Bonanza had no active business operations aside from seeking business opportunities. Upon effecting the RTO, the below description of CRHC became the Issuer s business. (i) Organization CRHC is a fully integrated, active participant in the legal cannabis sector, with a focus on building a platform of assets in 3 key verticals: research, brands, and devices. CRHC contributes strategic expertise and functional knowledge to maximize the return potential of its diversified platform of assets. At March 31, 2016 and March 31, 2015, CRHC had no full-time employees. CRHC has established service contracts for key executive, management, functional expertise and other support personnel. (ii) Business Objectives CRHC s long-term objective is to build one of the cannabis industry s first multinational, value-added, end-to-end solution providers encompassing research, brands and devices covering the key segments of the legal cannabis market. CRHC focuses on building its platform of assets via royalty agreements and minority equity stakes in licensed operations in legal cannabis jurisdictions. Further, CRHC seeks to actively assist and drive the commercialization of its assets (referred to as Business Units ) by contributing strategic capital and functional expertise to maximize the return potential of its diversified platform of assets. CRHC s short-term objective is to create a sustainable business in the key U.S. states of California, Washington, Arizona, and Oregon by integrating its Business Units to create synergies and a true end-toend solution geared to the needs of patients and consumers. In that regard, CRHC s business plan is targeted at the growth of its Business Units and expanding their reach to end-users and partners. CRHC will contribute by providing, among other things, capital, strategy, brand development, investing expertise, accounting, and administrative support. Although each Business Unit is primarily responsible for developing its business, CRHC is available to provide functional expertise, oversight, and a framework of disciplined planning to the operations of the Business Units when needed. CRHC has positioned itself for longer-term commercial expansion by expending its resources on finding and closing on promising brands and innovative companies, projects, assets and overall business frameworks in the legal cannabis sector in key jurisdictions. See 4.1 Narrative Description of the Business (v) Assets and Holdings: Devices, (vi) Assets: Brands and (vii) Assets: Research. CRHC plans to expand its reach by building new joint partnerships with both vertical market partners and end-user product companies. See 4.1 Narrative Description of the Business (iv) Strategic Partnerships. To achieve its long-term objectives, CRHC will continue making specific and deliberate investments, including acquisitions, to:

17 ! increase the diversity and quality of CRHC s product offerings across different market segments; and! increase the strength and segmentation of the CRHC s multiple brands. In addition, management believes that a significant opportunity exists today and will develop further in the future, to leverage CRHC s expertise, financial strength and business model in legal marijuana markets around the world. CRHC intends on pursuing opportunities in a number of jurisdictions where cannabis is legally allowed presently, or where the government is actively moving towards such a legal framework. Subject to regulatory requirements and approval, strategic business opportunities pursued by CRHC could include:! providing advisory services to third-parties that are interested in establishing licensed cannabis cultivation, processing and sales operations;! entering into strategic relationships that create value by sharing their expertise and industry knowledge;! providing capital in the form of debt, royalties, or equity to new business units; and! entering into licensing agreements to generate revenue, create strategic partnerships, or other business purposes. CRHC began generating nominal revenues from its Business Units in August 2016, and is projected to increase its revenue over the next 12 months from an increasing number of royalty agreements and business units coming on-line, from an increase in the amount of royalties and revenues generated by those business units and due to the recent developments on the legalization of marijuana in key U.S. jurisdictions. Although CRHC continues to expect to make investments into cannabis assets structured as royalties or other investments, the changes the company expects to the business over this period will largely be a result of changing legislation as well as the company s ability to access capital in order to execute an increasing number of new opportunities. Refer to 3 General Development of the Business 3.1 General Development (i) Acquisitions and Development of the Business section above for details on the new license agreements and business units coming on line. (iii) Total Funds Total Funds Available CRHC has historically relied upon equity financings to satisfy its capital requirements and may require further equity capital to finance its development, expansion and acquisition activities moving forward. The pro forma working capital position of the Issuer as at September 30, 2016, giving effect to the RTO, as if it had been completed on that date, was $4,452,251. This amount reflects the combined working capital of CRHC and Bonanza as at September 30, 2016, as well as the RTO and related transactions discussed in further detail in the consolidated pro forma balance sheet of the Issuer, which is attached hereto as Schedule D. These transactions include:! the CRHC SR Financing, the proceeds of which are held in escrow pending satisfaction of the Escrow Release Conditions; and! the Bonanza Financing. Purpose of Funds

18 CannaRoyalty intends to spend its available funds on current projects, pipeline projects, product launches, and general corporate purposes. The estimated use of funds following completion of the RTO is set forth below. Use of Available Funds $ Current Projects and Acquisition Pipeline Product Launches Working Capital NET: 1,625, ,000 2,177,251 4,452,251 Notwithstanding the foregoing, there may be circumstances where, for sound business reasons, a reallocation of funds may be necessary for the Issuer to achieve its objectives. CannaRoyalty may require additional funds in order to fulfill all of its expenditure requirements to meet its business objectives and may either issue additional securities or incur debt. There can be no assurance that additional funding required by the Issuer will be available, if required. However, it is anticipated that the available funds will be sufficient to satisfy the Issuer's objectives over the next 12 months. Aphria (iv) Strategic Partnerships Aphria Inc. ( Aphria ) is a Canadian company listed on the TSX Venture Exchange and a strategic partner for CRHC. Aphria is located in Leamington, Ontario and is a Health Canada approved licensed producer of high quality 100% greenhouse grown medical cannabis products. Aphria produces and sells its products (currently dried bud and oil) through 2 primary channels; retail and wholesale. Retail sales are exclusively direct to consumer, a model that is mandated by Health Canada under the ACMPR ( Access to Cannabis for Medical Purposes Regulations ). Through this model, customers place orders online or by telephone and the product is shipped directly to their address. Aphria s wholesale business involves selling bulk product to other licensed producers. Aphria is also committed to supporting cannabis R&D through various means including strategic partnerships and the development of in house capabilities. In short, Aphria is committed to providing pharma-grade medical cannabis and superior patient care, while balancing patient economics and returns to shareholders. On May 13, 2016 Aphria acquired a 7.2% equity interest in CRHC for $1.5 million and executed a related agreement with CRHC granting Aphria a pre-emptive right to participate in future financings to maintain its ownership percentage and a right of first refusal with respect to financings completed with any licensed producer. On August 24, 2016 Aphria exercised its 750,000 warrants, priced at $1.50 each, to acquire an additional 750,000 common shares of CRHC, in advance of the RTO. This increased Aphria s total ownership interest in CRHC to 8.3%, prior to the RTO. CRHC and Aphria intend to provide each other with expertise and industry knowledge with respect to intellectual property, delivery systems, extraction, and processing technologies. On September 16, 2016 Aphria announced that it signed a supply agreement with Bodhi, a Business Unit of CRHC, to supply its Rideau Gold cannabis oil for a medical study being conducted by Bodhi on the impact of medical cannabis (primarily CBD) in the management of concussion and post-concussive syndrome. The Supply Agreement is expected to last two years, during which time, Bodhi s study is slated to include over 1,000 patients. The Bodhi group has been advised by several world class experts including Professor Emeritus Lester Grinspoon from Harvard Medical School. On September 28, 2016, 250,000 CRHC Shares were issued to Aphria pursuant to a non-brokered financing at a price of $2.00 per CRHC Share for aggregate proceeds of $500,

19 On October 19, 2016, CRHC entered into a license and royalty agreement with Aphria whereby it will grant a license to Aphria to sell or produce, in Canada, the products that CRHC owns through its various investments. A 5% royalty on gross revenue from the sale of the products will be paid on a quarterly basis in exchange for the license. Also on October 19, 2016, CRHC issued and sold a secured convertible debenture to Aphria for $1,500,000. The debenture matures on October 19, 2019, is secured by the assets of CRHC, and bears interest at 5% per annum payable annually. It is convertible by Aphria, in whole or in part, into common shares of CRHC at a conversion rate of $2 per share at any time prior to maturity. CRHC also has the option to redeem the principal and accrued interest at any time prior to maturity. Alternative Medical Enterprise Alternative Medical Enterprises, LLC is a Florida-based company bringing pharmaceutical industry precision to the development, production and dispensing of medical cannabis. Alternative Medical Enterprises s mission is to produce safe, reliable and effective cannabis-based therapies, grounded in scientific clinical and genetic research to ensure pharmaceutical level quality and consistency. Inspired by a first-hand connection with patient and caretaker communities and driven by the opportunity to make a difference, Alternative Medical Enterprises is committed to delivering better alternative medicines to help patients and their families achieve wellness. Alternative Medical Enterprises and its subsidiaries are working to build the core elements of a significant national presence in the US cannabis market. Alternative Medical Enterprises s operations in Arizona currently produce medical grade cannabis to serve approximately 1,500 patients a month. Its yield is soon expected to increase with the completion of the expansion of its state-of-the-art growing and manufacturing facility and in-house laboratory. On the product side, Alternative Medical Enterprises affiliate MüV recently launched a line of Distillate Vape Pens along with a topical line that includes industrial hemp-derived (CBD-only) sports gel, body butter and hydrating lotion. Zenabis CRHC has entered into a letter of intent with Zenabis where, among other things, the parties have expressed their intention to complete a share purchase, a share exchange and other commercial arrangements. Zenabis is a biopharmaceutical company focused on research, development and long-term growth in medical cannabis production. Zenabis was created by International Herbs (BC) Ltd. ( IHL ), a Canadian herb grower and importer, and is operated by International Herbs Medical Marijuana Ltd. In New Brunswick, Zenabis is establishing a state-of-the-art, licensed facility for the production and distribution of pharmaceutical-grade medical marijuana. The facility, under construction in Atholville, received $4 million in financial assistance from the provincial government in August, Zenabis is currently at the Pre- License Inspection stage under the Access to Cannabis for Medical Purposes Regulations (ACMPR). Once the $14 million construction phase is complete in 2017, the facility is expected to be the largest indoor medical marijuana facility in Canada, at 396,000 square feet, located on a twenty acre site. With strong credentials in start-ups, the pharmaceutical industry as well as in distribution and horticulture, Zenabis aims to deliver high-quality products at a competitive price to improve health. Founded on strategic partnerships, the Zenabis team brings experience in research and development, pharmaceuticals, complex cultivation techniques, sustainable practices and design, marketing, distribution and facility management

20 (v) Assets: Devices Asset Name, Class and Acquisition Date Description of Investment Description of Asset Resolve Digital Health (Breeze) IP Devices Q CRHC has a 35% equity interest in Resolve as well as an option to have a CRHC representative on the Resolve board of directors. An integrated digital health platform for symptom relief. Resolve s Breeze product is a patent-pending dosage control smart inhaler. The Breeze product has been created with proprietary tracking and analytics software. Modular, pre-measured, hygienically packed individual dose of very high pharmaceutical grade cannabis with no need to handle or measure product. The firm s so-called Smart Pods are measured for users specific symptoms, custom formulated by cannabis experts, are geared to specific ailments, including relief, anti-inflammatory, control, sleep, calm, energy and appetite. Each pod has disposable filter tips, which are flavoured or plain, are environmentally friendly, and have magnetic closures. The Breeze product has also been created with a cooling system to ensure that vapour is at a cool temperature. The Resolve Digital Dosing & Tracking System keeps track of doses, dose effectiveness, symptoms, medicine, reporting, lifestyle, retail, supply chain management, and support. Dreamcatcher Labs Inc. IP Devices Q On October 24, 2016, CRHC entered into a definitive share purchase agreement (the DC SPA ) with Dreamcatcher and GreenRock to purchase all of the issued and outstanding shares of Dreamcatcher and the controlling governing membership interest in GreenRock. Pursuant to the DC SPA, the Dreamcatcher shareholders and GreenRock governing member were issued 2,625,000 common shares in the capital of CRHC, representing an implied value of $5,250, (based on a valuation of $2.00 per common share). In addition, up to 2,000,000 common shares in the capital of CRHC (the Earn-Out Shares ) may be issued to the Dreamcatcher shareholders upon the satisfaction of certain performance-based conditions precedent, namely, the ability of Dreamcatcher to obtain new customers, increase sales revenue and launch new products to market (the Earn-Out Release Conditions ). The Dreamcatcher shareholders have the option to decline the Earn-Out Shares should the Earn-Out Release Conditions be satisfied. The Earn-Out Shares shall be issued in two equal tranches on a pro rata basis amongst the Dreamcatcher shareholders with all fractional shares being rounded Rock Vapor supplies e-cigarettes and vaporizers for the tobacco market while Dreamcatcher is an industrial filling and packaging system. The firm has designed and manufactures a proprietary cartridge for the cannabis sector. The unique cartridge provides an array of strains that can be delivered through its cool and sleek cartridge and is safe and secure. The product ensures that users have an ability to access a vast array of extracts and oil and can enjoy different types of strains and experiences. Legal*

21 Asset Name, Class and Acquisition Date Description of Investment Description of Asset down. Also on October 24, 2016, CRHC entered into a definitive asset purchase agreement with Rock Vapor for the purchase of certain assets of Rock Vapor for 375,000 common shares in the capital of CRHC representing an implied value of $750, (based on a valuation of $2.00 per common share). A previous director and officer of each of Dreamcatcher, Rock Vapor, and GreenRock, entered into an employment agreement with Dreamcatcher to act as Chief Executive Officer of Dreamcatcher and the sole governing member of GreenRock. As at September 30, 2016 CRHC has advanced US$90,298 to Dreamcatcher for working capital. (vi) Assets: Brands Asset Name, Class and Acquisition Date Description of Investment Description of Asset Lucy s Pre-Rolls IP Brands Q Wagner Dimas Inc. ( Wager Dimas ), a Nevada Corporation, brands and sells some of its products under the name Lucy s Pre- Rolls. On April 1, 2016, CRHC entered into an Exclusive License Agreement with Wagner Dimas, which has an innovative process for creating machine rolled products, whereby CRHC acquired an exclusive license to manufacture, have manufactured, use, offer to sell, sell, import and/or distribute licensed property belonging to Wagner Dimas. On May 25, 2016 CRHC acquired a 20% equity interest in Wagner Dimas by purchasing 2,000,000 shares for US$625,000. Lucy s Pre-Rolls are produced through an innovative process that creates all-natural uniform and perfectly packaged joints made only from the finest 100% cannabis flowers. Lucy s Pre-Rolls have been independently lab-tested for safety. Wagner Dimas has also entered into co-packing agreements and developed other branded products. GreenRock Botanical IP Brands Q Please see the above description under (v) Assets: Devices Dreamcatcher Labs. The GreenRock Botanical brand is currently held by Dreamcatcher Labs. A unique marijuana cartridge and battery unit have made GreenRock Botanical s E-Vaporizer an industry favourite. These E-Vaporizers are manufactured and produced by Dreamcatcher. This product is easy-touse, requires no charging of batteries, no changing of cartridges, causes no smoke or smell and creates no fuss

22 Asset Name, Class and Acquisition Date TRU Extracts IP Brands Not yet completed Stokes Confections IP Brands Q Description of Investment Description of Asset This product is being distributed in California. White label agreements are also in place in California and Arizona. GreenRock Botanical s E-Vaporizer has experienced an average 23.1% monthly growth in transactions from June 2015 through to May TRU Extracts is a brand developed for Rich Extracts LLC ( Rich Extracts ) and owned by CRHC. TRU Extracts is a wholly owned brand of CRHC, which produces all concentrates. See below description under (viii) Assets: Supporting Assets Rich Extracts LLC. On May 20, 2016, CRHC entered into a letter of intent with Progressive Marketing Partners LLC ( Stokes ), a Limited Liability Company in California that produces low dose, cannabis infused edibles. Award-winning low dose THC infused edibles. This firm s products include tablets and truffles. The company is a Limited Liability Company in California CRHC will purchase a license from Stokes to manufacture and sell Stokes products in Arizona, Oregon, Washington, and when federal legislation permits, in Canada. An upfront license fee of US$125,000 is required for a term of five years from the first commercial sale of any product from this agreement in any of the licensed territories. An advance of US$50,000 was made as an upfront fee, but will be refunded in full with annual interest of 2.5% if a definitive agreement is not finalized by December 31, The royalties will be 13% of gross sales, paid on a quarterly basis

23 Asset Name, Class and Acquisition Date DermaLeaf Skin Care IP Brands Q Freya Intimacy Oil IP Brands Developed Internally Best Buds IP Brands Developed internally Soul Sugar Kitchen IP Brands Description of Investment Description of Asset CRHC and Achelois have developed DermaLeaf Skin Care, a brand that may be used to market products owned by Achelois. On June 30, 2016, as memorialized in a term sheet, CRHC committed to subscribe for a 70% equity interest in Achelois, a company in the State of California that develops and manufactures cannabis infused skin lotions with fibroblast technology for healing and pain relief. Consideration for the shares in Achelois is comprised of funding commitments, and the provision of services. As part of the funding commitments, CRHC will provide funding to Achelois on an as needed basis to allow Achelois to become commercially operational. As of September 30, 2016, CRHC has provided US$56,088 (US$42,760) in funding to Achelois. Achelois is a company in the State of California that develops and manufactures cannabis infused skin lotions with fibroblast technology for healing and pain relief. DermaLeaf targets deep skin repair, burns, scar repair, wrinkle reduction and tattoo enhancement. CRHC developed its own wholly owned brand, Freya Intimacy Oil. All natural sensual enhancement oil designed for women. Freya Intimacy Oil uses the complex powers of cannabis to promote relaxation and increase blood flow to create a potent therapeutic aphrodisiac. Best Buds is a wholly owned brand of CRHC which has used an exclusive consultancy agreement to create animal health formulations. Trademark applications have been filed in connection with the Best Buds brand. Cannabis infused, all natural dog treats. These treats combat tooth decay, bad breath, promote general intestinal health, reduce inflammation, increase joint mobility, increase energy, and reduce anxiety. Soul Sugar Kitchen is a brand of CRHC pursuant to trademark applications filed with the United States Patent and Trademark Office. Soul Sugar Kitchen has used an exclusive consultancy.soul Sugar Kitchen, a Cannabis Cup winning edibles and confections producer, markets gourmet quality cannabis edibles, carefully developed and manufactured by a multiple-award winning cannabis

24 Asset Name, Class and Acquisition Date Description of Investment Description of Asset Developed internally agreement relating to the development of edible cannabis products. chef. Initial product categories include homemade peanut butter cups, hand-formed chocolate truffles, and premium snack mixes in a variety of flavours. (vii) Assets: Research Asset Name, Class and Acquisition Date Description of Investment Description of Asset Bodhi Research IP Research Q CRHC acquired a 10% equity interest in Bodhi for $250,000. CRHC has an option to earn up to an additional 10% equity interest in connection with the provision of services which are currently being provided. Bodhi Research is an Ontario corporation that is conducting research trials for exploring the use of cannabis in the treatment of concussions and post concussive syndrome. The collaboration is with some of the world s foremost experts in concussions and pain management, including Dr. Neilank Jha (Neurosurgeon and Founder of Konkussion the largest network of concussion clinics in North America). (viii) Assets: Supporting Assets Asset Name, Class and Acquisition Date Description of Investment Description of Asset BAS Research California Q In July, 2016 CRHC advanced US$300,000 to BAS Research in return for two secured convertible loans. Both convertible secured loans were signed in conjunction with convertible promissory note purchase agreements, pursuant to which Cannroy Delaware has an option to convert the loan into equity. BAS is a fully licensed and compliant lab and manufacturing and processing facility located in Berkeley, CA. which carries out research and genetics work. It consists of PhDs and chemists who have undertaken R&D work regarding advanced tissue culture and genetics. The research work and studies are to determine ailment-specific strains as well as extraction and post-processing. The firm can tailor products to clients specific needs. In addition to its investment, CRHC has secured a supplier relationship

25 Asset Name, Class and Acquisition Date Eureka Management Services California Q1/Q Three Leaf Logistics California Q Description of Investment Description of Asset that includes buying processed cannabis oil at preferred rates, and tailoring the product for its specific requirements. In February, 2016, CRHC entered into a loan agreement with Eureka Management Services Inc. ( Eureka ), a company that manages Magnolia Wellness, a medical cannabis dispensary in Oakland, California. The loan is to assist Eureka in expanding its operations in Oakland to add a licensed kitchen to produce edibles, distillates, concentrates and confections. The loan was made in exchange for a convertible promissory note receivable with a face value of US$200,000. During August 2016, CRHC advanced a further $200,000 USD to Eureka as part of a second convertible promissory note. The conditions of the first and second convertible promissory notes are the same. The terms are for five years. Commencing on the third anniversary (February 2019 and August 2019, respectively), CRHC has the option to convert the principal and accrued interest into a 5% equity interest in Eureka for each loan for an aggregate stake of up to 10% in Eureka. Eureka Management Services operates the Magnolia Wellness Dispensary in Oakland, CA and has a fully integrated license relating to cultivation, extraction and a dispensary. Magnolia has 27,000 registered patients and has a revenue forecast of $7 million for Expansion plans include a fully licensed kitchen facility for the production of edibles, concentrates and confections. In addition to the investment, CRHC has secured a preferred supplier agreement that includes shelf space for brand testing and access to the kitchen facility. On May 5, 2016, CRHC acquired a 6% equity interest (350,000 common shares) in Eureka for US$100,000. CRHC and Eureka Management Services entered into a Memorandum of Understanding in connection with the planned expansion of the Eureka Management Services facilities and future operations. CRHC acquired a 1.5% royalty interest on gross revenue of Three Leaf for a two-year period, plus a 2% fee on gross value of all Three Leaf s referrals for one year, in exchange for its $100,000 investment and referral of business for a term of 24 months. Three Leaf Holdings Corporation is a logistics and fulfillment company focused exclusively on the cannabis sector. This firm ensures the highest levels of security clearance and boasts proprietary tracking and fulfillment capabilities. Three Leaf also invested $500,000 in CRHC in connection with a Three Leaf is a sister company of JP Logistics, which is a global logistics company with operations in North America, Europe and Asia,

26 Asset Name, Class and Acquisition Date CannaCraft Inc. California Q Description of Investment Description of Asset subscription for shares in CRHC. and whose clients include Amazon, Costco and the Home Shopping Network. Licensing Agreements On April 1, 2016, CRHC and CannaCraft Inc. ( CannaCraft ) entered into license agreements for the purpose of facilitating the distribution of vaporizer devices in Canada and the State of Washington under the brands of both Absolute Xtracts ( ABX ) and Care by Design ( CBD ). Joint Venture On July 22, 2016, CRHC entered into a joint venture with CannaCraft, a company in California that supplies equipment and cannabis-based medicines. The joint venture is conducted under the name Mobile Medicine, whose purpose is to manufacture and lease mobile gelatin encapsulation machines. CannaCraft will contribute one third of the funds required, and will be responsible for the design and manufacturing of the machines. CannaCraft will also manage and operate the machines. CRHC will contribute two thirds of the funding required for a 50% equity interest, of which $192,540 (US$150,000) has been advanced at September 30, At September 30, 2016, the Mobile Medicine joint venture is not commercially operational and has not conducted any activities. Both CRHC and Cannacraft will pay expenses in the same ratio in which they contribute funds. CBD provides cannabis soft gels that are ideal for long-acting relief and precise dosing, they are available in 8 and 24 unitpackages. CBD also offers sublingual sprays that offer fast relief and precise dosing; they are available in 5ml and 15ml bottles. CRHC and CBD have license agreements in WA and Canada. ABX has unique disposable vape cartridges containing oil from a cleanly extracted proprietary supercritical CO2 method. ABX also has a precise dosing and long-acting relief product i.e., the ABX Soft Gels. This product includes organic coconut oil to improve absorption. Available in 10mg, 25mg and 50mg doses of THC. CRHC and ABX have license agreements in WA and Canada relating to vaporizers, vape cartridges & soft gel type products. The asset relating to the joint venture is a mobile, industrial filling machine, with plans to commence operations in Q in California out of licensed facilities throughout the State. Planning is underway to add operations in Washington and Oregon in Q

27 Asset Name, Class and Acquisition Date AltoTerra Capital Partners Ltd. Washington Q Rich Extracts LLC Oregon Q Description of Investment Description of Asset As of March 31, 2016, CRHC entered into a royalty agreement with Cascadia Holdings LLC ( Cascadia ), a subsidiary of AltoTerra Capital Partners Ltd. ( AltoTerra ), in which CRHC paid $891,772 and provided the use of property and equipment in consideration for a 30% royalty stream on Cascadia s gross revenues. In April 2016, CRHC paid the remaining US$65,000 to Cascadia, raising the total investment to $973,738 (US$751,666). Cascadia, a subsidiary of AltoTerra, is incorporated in the state of Washington and is a real estate holdings entity focused on owning and leasing facilities that offer full turnkey, equipped-to-rent solutions to tenants that have a valid license to cultivate and/or extract cannabis in the state of Washington. Specifically, Cascadia provides facility design, assistance with licensing, consulting, and distribution in exchange for a gross rent that is priced at a premium due to the value-add and turnkey nature of its offering to its tenant-clients. The two main real estate holdings include the American Nutraceutical building (9,000 sq. ft.), which it owns, and the Aroma Essential Oil Extractions building (18,000 sq ft.), which it leases and which is currently undergoing an expansion to a total of over 40,000 sq. ft of rentable facility space. On September 9, 2016 CRHC entered into a term sheet to subscribe for a 50% equity stake in Rich Extracts LLC ( Rich Extracts ), a corporation engaged in the business of using a variety of proprietary extraction processes to produce premium cannabis concentrate and cannabis distillate products in the State of Oregon. Consideration for the shares in Rich Extracts is comprised of funding commitments, the provision of services, a transfer of equipment, inventory, and other tangible assets owned by CRHC into Rich Extracts, and a payment of US$200,000, which represents 50% of the estimated value of the equipment, inventory, and other tangible assets that the other joint venture is personally transferring into Rich Extracts. TRU Extracts produces a Clear Oil product line, including concentrates, distillates and shatter. This firm currently distributes its products in Oregon and is considering expansion into California. The corporation uses a variety of proprietary extraction processes to produce premium cannabis concentrate and cannabis distillate products. In relation to these funding commitments, CRHC has provided funding and advances of US$1,409,360 to Rich Extracts as of November 23, If the term sheet is contractually agreed upon, CRHC and Rich Extracts will have a joint arrangement with joint control and accordingly a portion of these advances will be recorded as an investment in a joint venture. CRHC will provide services to Rich Extracts relating to research and development of products, marketing and promotion, distribution management, strategic business development, executive management, back office administration, and where permitted,

28 Asset Name, Class and Acquisition Date Alternative Medical Enterprises Colorado, AZ Q NuTrae LLC Colorado, AZ Q Description of Investment Description of Asset manufacturing, to assist Rich Extracts in becoming commercially operational. On March 6, 2015, CRHC acquired 1,500 Class A units, an 8.2% equity interest, in Alternative Medical Enterprises for $1,850,070. This firm is founded by Principals of MedImmune (which was acquired by Astra Zeneca in 2007 for over $15 billion). The firm has three wholly owned subsidiaries as well as a 50% interest in Vida Pets LLC. The three subsidiaries include: i) NuTrae LLC (refer below) ii) Alternative Medical Enterprises North America LLC - In Arizona, this entity has a 75% interest in 34,000 square feet of licensed cultivation, expandable to 66,000 square feet, extraction processing operation. In Colorado, the entity has a 10% interest in a company with real estate and agriculture assets focused on the cannabis sector iii) Alternative Medical Enterprises LLC this entity has a planned Florida cultivation, dispensary, laboratory, extract facility, as well as a 50% ownership interest in Vida Pets LLC. Vida Pets is at the very early stages of designing a clinical trial on a colony of aged beagles to determine the effectiveness of pure CBD derived from hemp on joint mobility and anxiety in animals. Alternative Medical Enterprises owns 100% of NuTrae. On June 26, 2016, CRHC acquired the interest to a royalty stream purchase agreement with NuTrae, providing for a 3.5% royalty on the net revenues of NuTrae for a period of 10 years, commencing January 1, This royalty stream was acquired pursuant to the April 1st binding letter agreement between CRHC and Vida as described above in (v) Assets: Devices under Resolve Digital Health (Breeze). NuTrae LLC is a company developing drug delivery systems and products. This firm has a fairly broad product platform that includes a host of projects and assets, which include: Transdermal patch (USF) Oral dissolvable film (F6 Pharma) Creams, lotions, balms (Essential naturals) Intimacy oil Meter-dosing inhaler and aerosolizer Disposable and rechargeable vape pens Wax and Shatter

29 4.2 Market Information, Trends, Commitments, Events and Uncertainties Usage of Cannabis Marijuana is a preparation of the leaves and flowering tops of cannabis sativa, the hemp plant, which contains a number of pharmacologically active principles (cannabinoids). Hashish, also derived from the hemp plant, is obtained from the clear resin secreted by the flowering tops of the plant and is four to eight times as potent as marijuana. Both drugs are used for their euphoric properties and are considerably more potent when smoked and inhaled than when simply eaten. Hash is made from the cannabis plant has been around for centuries, and there are plenty of processes in which hash can be made. The main goal of the extraction process is to isolate the trichome heads, which house the essential oils of cannabis, from the stalks and plant matter that carry little-to-no medicinal value. Medical cannabis refers to the use of cannabis and its constituent cannabinoids, such as tetrahydrocannabinol (THC) and cannabidiol (CBD), as medical therapy to treat disease or alleviate symptoms. The cannabis plant has a history of medicinal use dating back thousands of years across many cultures. Smoking cannabis is the most traditional form of ingestion and consists of smoking the dried flowers or leaves of the cannabis plant. Hash and kief are also ingested this way. Cannabis can be smoked through a pipe, rolled into a joint (or cigarette), or smoked using a water pipe (bong). Vaporizing involves using a vaporizer, which is a device that is able to extract the therapeutic ingredients in the cannabis plant material, called cannabinoids, at a much lower temperature than required for burning. This allows user to inhale the active ingredients as a vapor instead of smoke, and spares them the irritating and harmful effects of smoking. Many medical marijuana patients find that vaporizing offers an improved medical effectiveness, compared to smoking. Topical cannabis encompasses herbal medicines that are applied directly to the skin or muscles. They include lotions, salves, balms, sprays, oils, and creams. Some patients report they are effective for skin conditions like psoriasis, joint diseases like rheumatoid arthritis, migraines, restless leg syndrome, some spasms, and everyday muscle stress and soreness. However, unlike smoking, vaporizing or eating the medical cannabis, topical products are generally non-psychoactive. Shift in Extraction Processes The push towards regulating both medical and recreational cannabis markets has sparked demand for a shift from raw cannabis to extracted cannabis concentrates for a variety of reasons. The extraction process kills bacteria, mold, and fungi present in the vegetable material it is extracted from, which can make it a safer medical use product. The main compounds being extracted are cannabinoids and terpenes, which provide the aroma, flavour and effect of the final product. The extraction process removes the glands (trichomes) from the vegetable matter of the leaf, leaving a concentrated wad, goo, hash or powder of pure active medicinal compound, which offers a larger dose of medicinal ingredient for patients who require it. Given that concentrates ideally have no plant matter left, the extraction process also produces flavours that are cleaner and more pleasant, for both medical and recreational users. Increased demand for cannabis extracts has grown alongside higher demand for the compound CBD. CBD is a non-psychoactive ingredient in cannabis that has shown great potential for medical treatment of a variety of health conditions, including epilepsy. Due to the fact that CBD is non-psychoactive, CBD extracts attract a large market of patients who are averse to using medical marijuana because of its psychoactive properties, but want to take advantage of its therapeutic properties. Further, even for those who are not averse to the psychoactive effects, an excessive amount of cannabis consumption is required to obtain a significant CBD dose. As research continues to provide insights into the medical efficacy of CBD, the popularity of CBD extracts continues to grow. Concentrated CBD extractions allow patients to consume a medically 24

30 adequate dose of CBD, with less unwanted side effects. This will significantly aid in the objective of improving medical research and utility for patients who require the use of CBD in treating various health issues. Cannabis concentrates have consequently dominated total sales in many legal markets, for both medical and recreational use. Cannabis concentrates are used to make edibles, topical ointments, capsules and other packaged products that require a more professional extraction. Concentrates are also sold for direct consumption in small containers, which can be nearly odourless when sealed. Concentrates purchased for direct consumption are named for the different consistencies created by the extraction. These waxes, oils, budders, and shatters are formulated for use in vaporizers, which range in size from large at-home units to small pen-sized devices that are used discreetly. Vaporizers work similar to an electronic cigarette by heating the material to a temperature hot enough to convert it into an inhalable vapour, which has minimal odour and dissipates immediately in the air, unlike smoke. Increasing popularity and innovation of concentrates has created an increased demand for safe, professional, and effective extraction of cannabis concentrates. Hydrocarbon Solvent Extraction The medicinal compounds in cannabis flowers are hydrophobic. Accordingly, one of the most efficient extraction methods is using hydrocarbon solvents such as butane, propane, and hexane to separate the trichomes from the leaf. Hydrocarbon extracts are most commonly produced using butane and are referred to as butane hash oil (BHO). The basic process to produce BHO is to strip the glands from the leaves, followed by evaporating the solvent from the glands. This finished product is often further refined into other applications. Hydrocarbon solvent extraction is commonly used in food and cosmetic production. Products created using this method include decaffeinated coffee, fragrances, essential oils, and food extracts such as vanilla. Pharmaceutical grade hydrocarbon solvents have low toxicity, and the FDA allows a residual solvent level of 5000 parts per million (PPM) on industrial goods produced using this method. Cannabis products created in legal market can contain between zero and 300 ppm of residual solvent. The main danger of extraction involves the solvent itself. Hydrocarbon solvents are volatile compounds that are heavier than air and although they cannot be seen, they can pool on the floor of a space that is not properly ventilated. In such a setting, even a small spark could cause, and has caused, dangerous explosions. Accordingly, an effort towards clean, safe, organized, and consistent extraction methods is essential. Lack of regulation poses a significant risk, because despite the safety risks of extraction, the business opportunity is lucrative and the barriers to market entry are low. In addition to production risks, unregulated extractors have used products and processes not intended for consumable use goods, providing additional risks for the end-user. Industry stakeholders and professional legal extractors insist that extraction should be regulated to minimize lack of safety procedures, other risks, and general stigma associated with non-legal extraction. Extraction regulation could also reduce some of the financial challenges associated with extraction businesses. Specifically, lack of regulation requires these businesses to run on a cash-only basis, presenting a challenge with keeping the business solvent and adaptable. Professional extractors use expensive machinery, lab testing, and safety measures. For example, proper extraction requires the use of expensive closed-loop systems, to ensure that the hydrocarbon solvent is not allowed to enter open air. Regulation could help achieve cost consistencies and efficiencies, while also avoiding the challenges associated with operating on a cash-only basis. Proper regulation aimed at creating a more resourceful market in the recreational space may help foster innovation and promote public safety, while also decreasing the supply and demand for non-regulated cannabis. In California, the United State s largest cannabis market, extraction is currently unregulated. In December 2015, a state appellate court ruled cannabis extracts are covered under the state s vague medical marijuana law, Prop 215, which was passed by voters in However, in the absence of formal

31 regulation in the production of legal extracts, industry stakeholders are working to create standards and regulations for production. For example, California Extraction Research and Science Association (CERSA), will certify products that meet CERSA standards to create a safer and more transparent marketplace for business owners and patients. 1 If medical and adult use legalization continues to foster the development, research, and innovation of legal cannabis products and brands, the supply and demand of cannabis extracts is expected to grow. Today s legal concentrate producers must maintain a delicate balance to meet demand safely, within regulation, and operating entirely with cash. Legality and regulation will continue to be a state-by-state patchwork until the issue is taken up nationally. Trends United States In the United States, twenty-eight states and Washington D.C. have legalized medical marijuana, while eight states and Washington, D.C. have legalized recreational marijuana. Although cannabis currently remains a Schedule I drug under federal law, the U.S. Department of Justice issued a memorandum (the Cole Memorandum ) on August 29, 2013 to the U.S. Attorneys offices (federal prosecutors) directing that individuals and businesses that rigorously comply with state regulatory provisions in states that have strictly-regulated legalized medical or recreational cannabis programs should not be a prosecutorial priority for violations of federal law. This federal policy was reinforced by passage of a 2015 federal budget bill (passed in 2014) that prohibits the use of federal funds to interfere in the implementation of state medical marijuana laws. This bill targets Department of Justice funding, which encompasses the Drug Enforcement Agency. This bill shows the development of bi-partisan support in the U.S. Congress for legalizing the use of cannabis. It is anticipated that the federal government will eventually repeal the federal prohibition on cannabis and thereby leave the states to decide for themselves whether to permit regulated cannabis cultivation and sale, just as states are free today to decide policies governing the distribution of alcohol or tobacco. Under U.S. federal law it may potentially be a violation of federal money laundering statutes for financial institutions to take any proceeds from marijuana sales or any other Schedule I substance. Canadian banks are also hesitant to deal with cannabis companies, due to the uncertain legal and regulatory framework of the industry. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses. Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering or conspiracy. Despite these laws, the U.S. Treasury Department issued a memorandum in February of 2014 outlining the pathways for financial institutions to bank marijuana businesses in compliance with federal law. Under these guidelines, financial institutions must submit a suspicious activity report ( SAR ) as required by federal money laundering laws. These marijuana related SARs are divided into three categories: marijuana limited, marijuana priority, and marijuana terminated, based on the financial institution s belief that the marijuana business follows state law, is operating out of compliance with state law, or where the banking relationship has been terminated. In the U.S., a bill has been tabled in Congress to grant banks and other financial institutions immunity from federal criminal prosecution for servicing marijuanarelated businesses if the underlying marijuana business follows state law. This bill has not been passed and there can be no assurance with that it will be passed in its current form or at all. In both Canada and the United States, transactions involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Legislative changes to help reduce these challenges would eliminate these challenges for companies in the cannabis space, and would improve the efficiency of both significant and minor financial transactions. Political and regulatory risks also exist due to the recent election of Donald Trump to the U.S. presidency, and his nomination of Sen. Jeff Sessions to the post of Attorney General. Mr. Trump s positions

32 regarding marijuana are difficult to discern; however, Sen. Sessions has been a consistent opponent of marijuana legalization efforts throughout his political career. It remains unclear what stance the Department of Justice under the new administration might take toward legalization efforts in U.S. states, but federal enforcement of the Controlled Substances Act and other applicable laws is possible. Despite the legal, regulatory, and political obstacles the marijuana industry currently faces, the industry has continued to grow. State-Level Overview The following is an analysis of market and regulatory conditions for the marijuana industry in U.S. states in which CRHC has a substantial operating presence. State Type of Regulated Cannabis Program Population (2015) Number of Patients (as of) Number of Total Cannabis Licenses (as of) Arizona medical 6,758,300 99,895 (May 2016) 99 (January 2016) California medical and future adult-use 38,714,725 no data no data Colorado medical and adultuse 5,442, ,914 (October 2016) 2892 (November 2016) Florida low-thc medical and future medical 19,789,625 no data 6 (November 2016) Puerto Rico medical 3,474,182 no data no data Oregon medical and adultuse 4,013,800 68,201 (October 2016) 796 (November 2016) Washington medical and adultuse 7,061,410 no data 1682 (November 2016)

33 Arizona Summary Arizona has a medical marijuana program and voted on, but failed to pass, an adult-use marijuana ballot measure on November 8 th, In 2010, Arizona voters approved the Arizona Medical Marijuana Act (Proposition 203). The law created a regulated system for a limited number of non-profit medical marijuana dispensaries and permits, but does not require, these dispensary businesses to be vertically integrated. Dispensaries may cultivate medical marijuana and produce manufactured marijuana products without obtaining a new license if they receive the required inspections and registrations. On April 11, 2012, the Arizona Department of Health Services ( ADHS ), which oversees the medical marijuana program, announced revised rules and set the application dates for medical marijuana dispensaries. On November 15, 2012, the first dispensary certificate was awarded and by the end of 2012 a small number medical marijuana dispensaries started to open. The Arizona Department of Health Services has issued 99 dispensary registration certificates as of January 16th, Arizona limits the total number of non-profit medical marijuana dispensary registration certificates to no more than one for every Community Health Analysis Area ( CHAA ), with a maximum of 126 total dispensary registrations. The application for a dispensary registration certificate is not competitive; however, if more than one application is received per CHAA, applications will be evaluated based on specific criteria. Applications are accepted on a limited basis based on geographic need and CHAAs without a current dispensary. Residency is not required to own or operate a medical marijuana dispensary in Arizona. The medical marijuana law includes a wide range of qualifying conditions that include chronic pain and nausea, resulting in greater patient access and a larger potential market. In 2015, Arizona medical marijuana businesses sold 38,411 pounds of medical marijuana to patients in the state. California Summary California has an existing medical marijuana law and voted to approve the Adult Use of Marijuana Act ( AUMA ) to tax and regulate for all adults 21 years of age and older on November 8, California was the first state to pass medical marijuana in 1996, allowing for a not-for-profit patient/caregiver system, 2 but there was no state licensing authority to oversee businesses that emerged. In September of 2 A patient/caregiver system refers to the type of non-commercial medical marijuana laws that were passed from 1996 to These laws permitted qualified patients to cultivate their own medical marijuana or designate a caregiver to cultivate on their behalf

34 2015, the California legislature passed three bills collectively known as the Medical Cannabis Regulation and Safety Act ( MCRSA ). 3 The MCRSA establishes a licensing and regulatory framework for medical marijuana businesses in California. The system has multiple license types for dispensaries, infused products manufacturers, cultivation facilities, testing laboratories, transportation companies, and distributors. Edible infused product manufacturers will require either volatile solvent or nonvolatile solvent manufacturing licenses depending on their specific extraction methodology. Multiple agencies will oversee different aspects of the program and businesses will require a state license and local approval to operate. California will begin licensing medical marijuana businesses at the state level under MCRSA in Until that time, political movement and medical marijuana business licensing will predominately occur at the local level. There are no residency requirements for the current not-for-profit system under the MCRSA. However, the adult-use law, AUMA, requires the persons controlling licensed businesses to be residents of California before January 1, Existing medical marijuana collectives acting in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018 may continue their operations until licensed under MCRSA. An applicant under the MCRSA must obtain local approval and a state license. The state license approval process is not competitive, and localities are accepting licenses based on timelines within their individual ordinances. Localities may prohibit medical marijuana business or limit the number of licenses offered in their jurisdiction. The Department of Food and Agriculture, Bureau of Marijuana Regulation, and Department of Public Health are still developing statewide rules for the Medical Marijuana Regulation and Safety Act. Since AUMA was successfully passed by voter initiative, it appears probable that several bills in the 2017 California legislative session will be introduced to conform the MCRSA and AUMA regulatory structures. At the same time, cities and counties across the state will begin adopting local licensing and regulations around both medical and adult-use cannabis. Colorado Summary Colorado has both medical and adult-use marijuana programs. Voters initially passed a medical marijuana patient/caregiver initiative in Colorado then became the first state in the country to pass for-profit cannabis business legislation through the statehouse in Voters subsequently passed adult-use marijuana legalization in 2012, and the first adult-use marijuana businesses opened on January 1, The successful and competitive nature of Colorado s medical marijuana market, and eventual adult-use marketplace, can be traced back to the relatively expansive set of qualifying medical conditions and an open application process without a limit on the number of statewide business licenses. Local jurisdictions may limit or prohibit medical and adult-use marijuana businesses within their jurisdiction. Vertical integration between cultivation and dispensing is required for medical marijuana but not for adult-use marijuana businesses. Colorado has a non-competitive rolling application process at the statelevel with no limit on the number of statewide licenses, although local governments may limit or ban adult-use or medical marijuana businesses. In 2015, Colorado s licensed marijuana businesses are estimated to have sold just under $1 billion in medical and adult-use marijuana and marijuana products. During the summer of 2016, Colorado changed its ownership and investment requirements to permit individuals without Colorado residency to hold an equity stake in a marijuana businesses starting in Florida Summary Florida currently has a limited low-thc medical marijuana program, which was signed into law on June 16, 2014, and passed on November 8, 2016, by voter initiative with over 71% of the electorate voting in favor, a medical marijuana law that will expand both the range of conditions and types of medical marijuana and medical marijuana products available to patients. Florida s existing limited medical marijuana law included only cancer, medical conditions that result in chronic seizures or severe muscle spasms, or a terminal condition that causes significant functional impairment with a diagnosis of less than one year of life. In addition, the limited medical law only permitted low-thc marijuana be sold in non- 3 The original law was subsequently changed so that the word cannabis replaced marijuana in all aspects of the law. As such, MMRSA became MCRSA

35 smokable forms. 4 Under the existing law Low-THC cannabis means a cannabis plant with dried flowers containing 0.8% or less of tetrahydrocannabinol ( THC ) and more than 10% of cannabidiol (CBD). Florida ended its competitive application process on July 8, 2015 and currently has six low-thc cannabis dispensing organizations throughout the state. The limited number of qualifying conditions, available types of medical cannabis, and number of dispensing locations has resulted in a relatively small number of patients registering with the existing low-thc cannabis program. Florida s new and more expansive medical marijuana program will increase the number of qualifying conditions to include: epilepsy, glaucoma, positive status for human immunodeficiency virus ( HIV ), acquired immune deficiency syndrome ( AIDS ), posttraumatic stress disorder ( PTSD ), amyotrophic lateral sclerosis ( ALS ), Crohn's disease, Parkinson's disease, multiple sclerosis, and other debilitating medical conditions of the same kind or class as or comparable to those enumerated, and for which a physician believes that the medical use of marijuana would likely outweigh the potential health risks for a patient. In addition, medical cannabis will no longer be restricted to just those forms with less than 0.8% THC. At this time, it is unclear whether or not symptoms such as chronic pain and severe nausea will be included as qualifying conditions or whether additional dispensary licenses will be issued. Regulations for the new program must be finalized within six months of June Puerto Rico Summary In May of 2015 the Governor Alejandro Garcia Padilla of Puerto Rico signed an executive order legalizing medical cannabis. The Puerto Rico Health Department was tasked with developing regulations for the production, manufacturing, and sales of medical cannabis and medical cannabis products. In January of 2016, the Puerto Rico Health Department published their initial set of regulations governing the medical program. Puerto Rico permits the use of medical cannabis pills, creams, patches, tinctures, and whole plant cannabis for vaporization only. Smoking medical cannabis is prohibited in Puerto Rico. The program has a wide range of qualifying conditions including chronic pain, severe nausea, and migraines as well as cancer, HIV, AIDs, Crohn s disease and other conditions often included in state medical marijuana programs. Puerto Rico has strict residency requirements for medical cannabis business ownership that stipulate the business entity must be held at least 51% by Puerto Rican residents. The medical marijuana program does not require cultivation and dispensing operations to be vertically integrated, but also does not prohibit a single entity from holding a cultivation, manufacturing, and dispensing license. Oregon Summary Oregon has both medical and adult-use marijuana programs. Oregon voters passed a limited noncommercial patient/caregiver medical marijuana law in 1998, and, in 2013, the legislature passed House Bill 3460 to create a regulatory structure for existing unlicensed medical marijuana businesses. However, the original regulations created by the Oregon Health Authority ( OHA ) after the passage of House Bill 3460 were minimal and only regulated storefront dispensaries, leaving cultivators and infused-product manufacturers within the unregulated patient/caregiver system. On June 30, 2015, Gov. Kate Brown signed House Bill 3400 into law, which improved on the existing regulatory structure for medical marijuana businesses and created a licensing process for cultivators and processors. Vertical integration is permissible, but not required. The law does not impose a limit on the number of licenses and applications are currently accepted on a rolling basis. Local prohibitions, zoning laws, and setback requirements between medical marijuana dispensaries and other sensitive uses has limited the available space for new medical establishments. Laws passed during the 2016 legislative session removed the Oregon residency requirement for medical marijuana business ownership that existed within House Bill Currently, 379 medical dispensaries are registered in Oregon, and the qualifying conditions list to receive medical marijuana treatment is robust and includes conditions such as severe pain and severe nausea. 4 Florida passed HB 307 in March of 2016 which permits medical cannabis with higher levels of THC to be provided to patients with terminal illnesses only

36 In November of 2014, Oregon voters passed Measure 91, "Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act," creating a regulatory system for individuals 21 years of age and older to purchase marijuana for personal use from licensed retail marijuana stores. The Oregon Liquor Control Commission ( OLCC ) licenses and regulates adult-use marijuana businesses and is currently accepting applications. In addition, the OHA released regulations authorizing medical marijuana dispensaries to sell small amounts of marijuana, concentrates and edibles to all adults 21 years of age and older until December 31, Medical marijuana dispensaries selling products to adult-use consumers are required to collect a tax of 25% on all adult-use marijuana products sold at a medical dispensary. As of November 2016, 338 of the state s 379 medical marijuana dispensaries have registered to sell marijuana to adult-use consumers. Washington Summary Washington State has both medical and adult-use marijuana programs. Washington State passed a medical marijuana patient/caregiver law by popular vote in 1998 but was unable to regulate medical marijuana businesses that developed in the late 2000 s. When Initiative 502 legalized marijuana for adults 21 years of age and older in 2012, it licensed adult-use marijuana businesses within the Washington State Liquor and Cannabis Board (WSLCB) and left the unregulated medical marijuana establishments in a precarious situation. Governor Jay Inslee signed, Senate Bill 5052 in 2015, which allows existing adultuse retail marijuana stores to apply for a medical marijuana endorsement and sell medical marijuana tax free to registered qualifying patients and their designated caregivers. To accommodate for patient demand and the elimination of unregulated medical marijuana storefronts, Washington re-opened its application process for new adult-use marijuana retail stores. Priority is given to those who were operating or employed by a marijuana collective before January 1, 2013 in compliance with all other state and local restrictions. Unlike many other states, Washington prohibits vertical integration between retailers and cultivators. There are four primary business types: producers that cultivate marijuana, processors that create infused products, retailers that sell marijuana to consumers, and testing labs that test cannabis for contaminants. Only producers and processors may be vertically integrated. In the past year, rules passed by the WSLCB removed the six-month residency requirement for applicants and investors in Washington s marijuana establishments. As of November 9, 2016, Washington state has issued 453 retail marijuana licenses. The state is currently not accepting new applications for growers, producers or processors. Canada On August 24, 2016, the Access to Cannabis for Medical Purposes ( ACMPR ) was introduced to allow for reasonable access to cannabis for medical purposes for Canadians who have been authorized to use cannabis by their health care practitioner. The ACMPR will replace the Marijuana for Medical Purposes Regulations ( MMPR ), introduced in June 2013, reflecting the federal government s evolving view on medical marijuana policy. MMPR and The Marihuana Medical Access Regulations ( MMAR ) are both legislative schemes that were important early steps in the Canadian government s legislative path towards legalizing and regulating medical marijuana. Despite MMAR being repealed on March 31, 2014, and MMPR ceasing to be in effect on August 24, 2016; the marijuana medical research and patient treatment industries have grown rapidly. The introduction of ACMPR further regulates the production and distribution of medical cannabis, demonstrating Health Canada s commitment to improving the regulatory landscape surrounding medical marijuana use, in addition to ensuring that production occurs under secure and regulated commercial production facilities. Under the ACMPR, Canadians who have been authorized by their health care practitioner will continue to have the option of purchasing safe, quality-controlled cannabis from one of the 34 producers licensed by Health Canada. Canadians will also be able to produce a limited amount of cannabis for their own medical purposes, or designate someone to produce it for them

37 On April 20, 2016, the Canadian Government announced its intention to introduce, by the spring of calendar 2017, legislation to legalize the recreational use of cannabis in Canada. This position is promising given that legalization at a federal level will open the door to investment, innovation, and more opportunities. It will also relax restrictive tax policies and allow banks to deal with the marijuana industry more similarly to other industries. Health Canada estimates that close to 70,000 patients in Canada used doctor prescribed medical marijuana in 2015, establishing a market worth in excess of $100 million. By 2024, Health Canada estimates that the number of patients using medical marijuana will grow to 450,000, creating a market worth an estimated $1.3 billion. Assessing the Markets/Business CRHC s Business Units operate is in a large, fragmented marketplace. There are certain large cannabis growers as well as a large segment of small and local cannabis product firms who provide a variety of different products offerings. In the U.S. public markets, the majority of the cannabis-related businesses are traded on the OTC. Nasdaq-listed firms include GW Pharmaceuticals (GWPH), Insys Therapeutics (INSY), Cara Therapeutics (CARA) and Zynerba Pharmaceuticals (ZYNE). Of the 20+ Canadian marijuana listed firms, most are focused on growing cannabis products. Competitive Conditions and Environment With specialized expertise in each of its three-segment areas, CRHC is well positioned to participate in the rapid evolution of the cannabis industry through its growing platform of assets in the newest therapies, devices, research, and highest quality branded products that help patients and other consumers. CRHC is also heavily diversified in its various industry assets, providing it with the adaptability required to thrive in this dynamic and fast-changing industry. Within the short period of legal adult use, these increasing cannabis sales and further steps toward industry regulation and legalization have prompted a push toward increasingly bigger waves of investment and innovation in the cannabis industry. There is also a strong opportunity for products, brands, research, and related services that will complement the cannabis market. CRHC seeks to leverage its operational expertise, industry knowledge, and diverse assets to capitalize on the so-called greenrush in a regulated marijuana industry. CRHC intends to grow its existing Business Units by providing assistance, expertise, and guidance, while continuing to seek out and close on innovative industry investment opportunities. Medical marijuana opportunities are becoming increasingly available as new jurisdictions move towards establishing new or improved medical marijuana systems. As Canada has developed an enviable regulatory model, companies acting within that framework have expertise, knowledge and potentially product to share with the global community. Despite the fast growing market for legalized cannabis in both Canada and the U.S., there remains a significant lack of traditional sources of bank lending or venture and private equity capital, as well as an absence of traditional management expertise and advisory services. This is primarily because of the regulatory and legal challenges that cannabis continues to pose in both Canada and the United States. In addition to the problems posed by scarcity of capital, many holders of cannabis licenses lack traditional business experience and skills and desire value-added capital that can add to the skill and experience of their management team. CRHC is looking to fill this market gap by providing both capital and operational expertise to help grow its Business Units and other market opportunities. At the core of CRHC s competitive advantage are its capital markets, brand development and project selection skills, as well as functional expertise and knowledge in the key areas of genetics, cultivation, extraction and post-processing

38 4.3 Outstanding Asset-based Securities This information is not applicable to the Issuer. 4.4 Mineral Projects This information is not applicable to the Issuer. 4.5 Oil and Gas Operations This information is not applicable to the Issuer. 5.1 Annual Information 5. SELECTED CONSOLIDATED FINANCIAL INFORMATION As the Issuer was formed as a result of the RTO, it does not have historical financial statements presented on a consolidated basis. The following table provides a brief summary of pro-forma financial information of the Issuer as at September 30, See also, 25 FINANCIAL STATEMENTS for pro-forma financial statements of the Issuer. Selected data from pro forma statement of operations and comprehensive income for the 12 month period ending December 31, Bonanza CRHC Pro-Forma Revenue Nil Nil Nil Income (loss) from continuing operations $(44,290) $(1,130,114) $(1,174,404) Net comprehensive income (loss) (44,290) (1,317,483) (5,273,969) Net comprehensive loss per share (basic and diluted) (0.01) (0.15) (0.41) Cash dividends declared per share Nil Nil Nil Selected data from pro forma statement of operations and comprehensive income for the 9 month period ending September 30, Revenue Nil $140,125 $140,125 Income (loss) from continuing operations (40,663) (4,440,752) (4,573,118) Net comprehensive income (loss) (40,663) (4,753,865) (4,886,231) Net comprehensive loss per share (basic and diluted) (0.01) (0.27) (0.23) Cash dividends declared per share Nil Nil Nil Selected data from pro forma statement of financial position at September 30,

39 Total assets $5,790 $12,748,207 $6,157 Total long term liabilities Nil Nil Nil 5.2 Dividends CannaRoyalty does not intend, and is not required, to pay any dividends on the Issuer Shares. Any decision to pay dividends will be made on the basis of the Issuer s earnings, financial requirements and other conditions existing at the time. CannaRoyalty s ability to pay dividends may be affected by U.S. state and federal regulations. See 17. RISK FACTORS. 5.3 Foreign GAAP The financial statements included in this Listing Statements have been, and the future financial statements of the Issuer shall be, prepared in accordance with IFRS. 6. MANAGEMENT S DISCUSSION AND ANALYSIS Please refer to Schedule E for the Bonanza management s discussion and analysis ( MD&A ) for the periods ended December 31, 2015 and to Schedule F for the period ended September 30, Please refer to Schedule G for the CRHC MD&A for the years ended March 31, 2016 and March 31, 2015 and to Schedule H for the six months ended September 30, MARKET FOR SECURITIES The Issuer Shares were not listed on any market prior to the CSE. 8. CONSOLIDATED CAPITALIZATION The following table sets forth the expected capitalization of the Issuer, as at November 24, 2016, after giving pro forma effect to the RTO. Designation of Security Amount Authorized or to be Authorized Amount Outstanding as of November 24, 2016 Common Shares unlimited 35,957,227 Stock Options Rolling 10% 75,000 Warrants 1,794,008 1,113,633 Restricted Share Units Rolling 10% (1) 2,684,800 Fully Diluted Common Shares N/A 40,580,660 Notes: (1) In accordance with CRHC s Share Unit Plan the board has reserved for issuance Restricted Share Units of 10% of the then issued and outstanding common shares of CRHC (including all granted RSUs). 9.1 Stock Option Plan 9. OPTIONS TO PURCHASE SECURITIES Following the completion of the RTO, CannaRoyalty will adopt, on the same terms, the below stock option plan. This stock option plan (the Option Plan ) was approved by Bonanza s Shareholders at the

40 Bonanza Meeting. Following the completion of the RTO, CannaRoyalty is expected to have 75,000 stock options issued and outstanding. The following is a summary of the material terms of the Option Plan. Capitalized terms in this section not otherwise defined shall have the meaning provided in the full version of the Option Plan, which has been included in Bonanza s management information circular attached as Schedule I hereto.! The maximum number of Bonanza Shares with respect to which Options may be granted pursuant to the Option Plan shall not exceed 10% of the outstanding Bonanza Shares;! The purpose of the Option Plan is to provide Bonanza with a share-related mechanism to attract, retain and motivate qualified directors, officers, employees and consultants, to reward such of those directors, officers, employees and consultants as may be awarded Options under the Option Plan by the Bonanza Board from time to time for their contributions toward the long term goals of Bonanza and to enable and encourage such directors, officers, employees and consultants to acquire Bonanza Shares as long term investments;! Options may be granted only to directors, officers, employees and consultants of Bonanza or any related entity of Bonanza;! The total number of Bonanza Shares that may be reserved for issuance to any one individual under the Option Plan shall not exceed 5% of the outstanding Bonanza Shares. The maximum number of Options that may be granted to any one consultant under the Option Plan, any other employer or stock options plans or options for serves, within any 12-month period, shall not exceed 2% of the issued and outstanding Bonanza Shares at the time of the grant;! The terms of an Option shall not exceed 10 years from the date of the grant of the Option. If, however, the date on which an Option expires occurs during any period imposed by Bonanza, pursuant to its insider trading policies or otherwise, during which an optionee may be restricted from trading in securities of Bonanza (a Blackout Period ) or within two business days after the last day of a Blackout Period, the date of the expiry of such Option will become the tenth business day following the end of the Blackout Period;! Subject to allowable adjustments, the option price of any Option shall not be lower than the market price on the date on which the grant of the Option is approved by Bonanza Board;! An Option shall be personal to the optionee and shall be non-assignable and non-transferable (whether by operation of law or otherwise), except that an Option may be assigned between a company that is wholly-owned by an Eligible Person and the Eligible Person associated with the company;! In the event that any optionee ceases to be an eligible person under the Option Plan (i.e. ceases to be an officer, director, employee or consultant for any reason other than death or termination with cause), the optionee will be entitled to exercise his or her Options which have vested as of such date of cessation only within a period of one year, in the case of optionees that are directors or officers, or 90 days, in the case of employees or consultants, following the date of such cessation or such other date as may be determined by the Bonanza Board subject to regulatory approval, but in no event may any Options be exercised following the expiry date thereof. In the event an optionee is terminated with cause, the Options held by such optionee will expire on the date of such termination. In the event of the death of an optionee, any Options held by such optionee which have vested as of the date of death may only be exercised within a period of one year succeeding the optionee s death, but in no event may any options be exercised following the expiry date thereof;! The Bonanza Board may at any time amend the Option Plan or any Options granted thereunder, subject to the receipt of all applicable regulatory approvals, provided that no such amendment

41 may, without the consent of affected optionees, materially decrease the rights or benefits accruing to such optionees or materially increase the obligations of such optionees; and! In the event that Bonanza proposes to amalgamate, merge or consolidate with any other corporation (other than a wholly-owned subsidiary) or to liquidate, dissolve or wind-up, or in the event an offer to purchase or repurchase Bonanza Shares or any part thereof shall be made to all or substantially all holders of Bonanza Shares, the Bonanza Board will have the discretion to deal with outstanding Options in the manner it deems fair and reasonable in the circumstances, which may include accelerated vesting or expiry of the Options. 9.2 Share Unit Plan Following the completion of the RTO, CannaRoyalty will adopt, on the same terms, the below share unit plan. This share unit plan (the Share Unit Plan ) was approved by Bonanza s Shareholders at the Bonanza Meeting. Following the completion of the RTO, CannaRoyalty is expected to have 2,684,800 restricted share units issued and outstanding. The following is a summary of the material terms of the Share Unit Plan. Capitalized terms in this section not otherwise defined shall have the meaning provided in the full version of the Share Unit Plan, which has been filed with Bonanza s management information circular and is attached as Schedule I hereto. Description of the Plan The purpose of the Share Unit Plan is to assist the Issuer in attracting, incentivizing and retaining those key Directors, officers, employees and consultants of the Issuer who are considered by the Board to be key to the growth and success of the Issuer, and to align the interests of key directors, officers, employees and consultants with those of the Issuer s Shareholders through longer term equity ownership in the Issuer. The following is a summary of the key terms of the Share Unit Plan:! The Share Unit Plan is established for employees, directors and officers of Bonanza and its affiliates, and for individuals retained as a consultant for Bonanza or companies providing management services to Bonanza, as may be determined by the Board or any other committee of the directors authorized by the Board to administer the Share Unit Plan;! The Share Unit Plan provides that Share Units may be granted by the Board or a compensation committee of the Board or any other committee of the Directors authorized by the Board to administer the Share Unit Plan. Share Units are units created by means of an entry on the books of Bonanza representing the right to receive one Bonanza Share (subject to adjustments) issued from treasury per Share Unit. All grants of Share Units must be evidenced by a confirmation Share Unit grant letter.! The maximum number of Common Shares that may be granted pursuant to the Share Unit Plan shall not exceed 10% of the then issued and outstanding Common Shares (including Shares underlying outstanding Share Units). Any Common Shares subject to a Share Unit which has been cancelled or terminated in accordance with the terms of the Share Unit Plan without settlement will again be available for grant of a Share Unit under the Share Unit Plan.! The number of Share Units granted and any applicable vesting conditions are determined in the discretion of the Board or a compensation committee of the Board, with the number of Share Units granted being determined based on the closing market price of the Common Shares on the grant date. In granting Share Units, the Board or a compensation committee of the Board may include any other terms, conditions and/or vesting criteria which are not inconsistent with the Share Unit Plan.! Share Units are settled by way of the issuance of Bonanza Shares from treasury as soon as practicable following the maturity date determined by the Board or a compensation committee of

42 the Board in accordance with the terms of the Share Unit Plan. Individuals granted Share Units who are Canadian residents or as otherwise may be designated in the Share Unit grant letter (with the exception of U.S. taxpayers) are permitted to elect to defer issuance of all or any part of the Bonanza Shares issuable to them, provided proper notice is provided to the Board or a compensation committee of the Board in accordance with the terms of the Share Unit Plan.! In the event a cash dividend is paid to shareholders on the Bonanza Shares while a Share Unit is outstanding, each participant will be credited with additional Share Units in lieu of any cash dividends paid to shareholders, equal to the aggregate amount of any cash dividends that would have been paid to the individual if the Share Units had been Common Shares, divided by the market price of the Common Shares on the date on which dividends were paid by the Corporation. If the foregoing shall result in a fractional Share Unit, the fraction shall be disregarded.! The termination provisions under the Share Unit Plan are as follows subject to any determination otherwise by the Board: o o o o in the event of retirement, any unvested Share Units will automatically vest on the date of retirement and the Bonanza Shares underlying such Share Units will be issued as soon as reasonably practical thereafter; in the event of the death, any unvested Share Units will automatically vest on the date of death and the Bonanza Shares underlying all Share Units will be issued to the estate of the deceased as soon as reasonably practical thereafter; in the event of disability (as may be determined in accordance with the policies, if any, or general practices of the Issuer or any subsidiary), any unvested Share Units will automatically vest on the date on which the participant is determined to be totally disabled and the Bonanza Shares underlying the Share Units will be issued as soon as reasonably practical thereafter; in the event of termination without cause of a Share Unit holder, (i) any unvested Share Units that are not subject to performance vesting criteria will automatically vest on the date on which the individual is terminated and the Bonanza Shares underlying the Share Units will be issued as soon as reasonably practical thereafter, and (ii) any unvested Share Units that are subject to performance vesting criteria will vest in accordance with their normal vesting schedule, except, in either case, as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the Board; and! In the event of termination with cause or resignation, all of the Share Units shall become void and the holder shall have no entitlement and will forfeit any rights to any issuance of Common Shares under the Share Unit Plan, except as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the Board or a compensation Committee of the Board in its sole and absolute discretion. Share Units that have vested but that are subject to an election to set a deferred payment date shall be issued forthwith following the termination with cause or the resignation of the holder.! In the event of a change of control, all unvested Share Units issued and outstanding shall automatically and immediately vest on the date of such change of control.! The grant of Share Units under the Share Unit Plan is subject to a restriction such that the number of Bonanza Shares: (i) issued to insiders of the the Issuer, within any one year period, and (ii) issuable to insiders of the the Issuer, at any time, under the Share Unit Plan, or when combined with all of the the Issuer s other security based compensation arrangements, shall not exceed 10% of Bonanza s total issued and outstanding Bonanza Shares, respectively

43 ! The amendment provisions of the Share Unit Plan provide the Board or a compensation committee of the Board with the power, subject to the requisite regulatory approval, to make the following amendments to the provisions of the Share Unit Plan and any Share Unit grant letter without shareholder approval (without limitation): o o o o amendments of a housekeeping nature; the addition or a change to any vesting provisions of a Share Unit; changes to the termination provisions of a Share Unit or the Share Unit Plan; and amendments to reflect changes to applicable securities or tax laws. However, any of the following amendments require shareholder approval: o o o o o o materially increasing the benefits to the holder of any Share Units who is an insider to the material detriment of Bonanza and Bonanza s shareholders; increasing the number of Bonanza Shares or maximum percentage of Bonanza Shares which may be issued pursuant to the Share Unit Plan (other than by virtue of adjustments permitted under the Share Unit Plan); permitting Share Units to be transferred other than for normal estate settlement purposes; removal or exceeding of the insider participation limits; materially modifying the eligibility requirements for participation in the Share Unit Plan; or modifying the amending provisions of the Share Unit Plan. 10. DESCRIPTION OF THE SECURITIES 10.1 General CannaRoyalty is authorized to issue an unlimited number of common shares (the Issuer Shares ) and 2,000,000 special redeemable, voting, non-participating preference shares (the Issuer Preference Shares ). There were 35,957,227 Issuer Shares and no Issuer Preference Shares issued and outstanding immediately following the completion of the RTO (subject to the exercise of previous issued convertible securities). The holders of Issuer Shares are entitled to receive notice of and to attend and vote at all meetings of the shareholders of the Issuer and each Issuer Share confers the right to one vote in person or by proxy at all meetings of the shareholders of Bonanza. The holders of the Issuer Shares are entitled to receive such dividends in any financial year as the board of directors of the Issuer may by resolution determine. In the event of the liquidation, dissolution or winding-up of the Issuer, whether voluntary or involuntary, the holders of the Issuer Shares are entitled to receive the remaining property and assets of the Issuer Miscellaneous Securities Provisions None of the matters set out in sections 10.2 to 10.6 of CSE Form 2A are applicable to Bonanza Shares, the CRHC Shares or the Issuer Shares Prior Sales In the 12 months preceding the date of this Listing Statement, the Issuer did not sell or distribute any securities

44 Please also refer to the Prior Sales section of Schedule B for information regarding CRHC s prior sales Stock Exchange Price None of the matters set out in sections 10.8 of CSE Form 2A are applicable to Bonanza Shares, the CRHC Shares, or the Issuer Shares. 11. ESCROWED SECURITIES As required under the policies of the CSE, principals of the Issuer entered into an escrow agreement (the Escrow Agreement ) as if it was subject to the requirements of National Policy Escrow for Initial Public Offerings ( NP ). The escrow agent is TSX Trust Company. Escrow releases will be scheduled at periods specified in NP for emerging issuers. The form of the Escrow Agreement must be as provided in NP , subject to the aforementioned modifications. The table below includes the details of escrowed securities that will be held by current principals of CRHC and by the new principals of the Issuer and others upon the completion of the Amalgamation. Name, Position(s) with CRHC, and Municipality of Residence of Security Prior to Giving Effect to the Amalgamation Number of Securities Held in Escrow Percentage of Class of Shares (1) After Giving Effect to the Amalgamation Number of Securities Held in Escrow (2) Percentage of Class of Shares (3) Marc Lustig President, CEO and Director West Vancouver, British Columbia 3,705,085 (4) CRHC Shares 11.39% 3,705,085 (4) Issuer Shares 10.03% James Gregory Wilson COO Ottawa, Ontario 700,000 (5) CRHC Shares 2.15% 700,000 (5) Issuer Shares 1.89% Todd Marcotte Chief Marketing Officer 1,325,000 (6) CRHC Shares 4.07% 1,325,000 (6) Issuer Shares 3.59% Total: 5,800,085 CRHC Shares 17.61% 5,800,085 Issuer Shares 15.51% (1) Based on 32,525,653 CRHC Shares outstanding, which number includes 884,000 vested and deferred RSUs prior to giving effect to the Amalgamation, but does not include any unvested RSUs. (2) TSX Trust Company acts as depositary. (3) Based on 36,949,563 Issuer Shares outstanding on a non-diluted basis on completion of the Amalgamation, which number includes 992,336 vested RSUs but does not include any unvested RSUs. (4) This includes 171,335 shares held by Lustig HoldCo, which is more than 50% held by Marc Lustig. This also includes 334,000 vested and deferred RSUs but does not include any unvested RSUs. (5) This includes 400,000 vested and deferred RSUs but does not include any unvested RSUs. (6) This includes 250,000 Issuer Shares held by Mr. Marcotte s spouse, Janine Marcotte, as well as 75,000 vested and deferred RSUs but does not include any unvested RSUs

45 12. PRINCIPAL SHAREHOLDERS Following the completion of the RTO, except as set out below, no person beneficially owns, directly or indirectly, or exercises control or direction over 10% or more of the outstanding Issuer Shares (either on an undiluted or fully diluted basis). Name Number of Shares Method of Ownership Percentages of Shares (1) Marc Lustig (2) 3,371,085 (3) Record and Beneficially 9.38% (1) Based on 35,957,227 undiluted Issuer Shares outstanding following the completion of the RTO. (2) Marc Lustig is expected to own 4,537,585 Issuer Shares on a fully diluted basis, which includes 171,335 Issuer Shares held by Lustig HoldCo. (3) This number includes the 171,335 Issuer Shares held by Lustig HoldCo but does not include 334,000 vested and deferred RSUs. (4) The information as to share ownership has been based on the CRHC share register, the Bonanza share register, and SEDI filings by Bonanza s insiders Directors and Officers 13. DIRECTORS AND OFFICERS The following table sets forth the name of all directors and officers of the Issuer, their municipalities of residence, their current positions with the Issuer, their principal occupations during the past five years and the number and percentage of Issuer Shares beneficially owned, directly or indirectly, or over which control or direction is exercised as at the date of this Listing Statement. Such persons were appointed to the positions indicated below immediately following the completion of the RTO

46 Name, Municipality of Residence (1), Proposed Position with the Issuer Principal Occupation or Employment Number (2) and Percentage of Issuer Shares Held (3) Marc Lustig West Vancouver, British Columbia Director, President and Chief Executive Officer François Perrault Ottawa, Ontario Chief Financial Officer Greg Wilson Ottawa, Ontario Director, Chief Operating Officer Todd Marcotte Ottawa, Ontario Chief Marketing Officer Rob Harris Milton, Ontario Director Chuck Rifici Ottawa, Ontario Director Chief Executive Officer of the Issuer 3,371,085 (4) 9.38% Chief Financial Officer of the Issuer Nil (5) CEO of Vida Cannabis Corp 300,000 (5) 0.83% Chief Branding Officer of CRHC 1,000,000 (5) Director of Aralez Pharmaceuticals Inc.; President, Chief Executive Officer of Tribute Pharma Canada Inc. and Tribute Pharmaceuticals Canada Ltd., December 2011 to February Chartered Professional Accountant; Director of Aurora Cannabis Inc., September 2015 to present; CEO of Tweed Marijuana Inc., March 2014 to August 2014; President of Rifici Services Inc., April 2010 to December 2012; CFO of Select Start Studios, June 2011 to January 2012; CFO of Teksavvy Solutions Inc., May 2011 to January % Nil (5) Nil (5) Dr. Jim Young Potomac, Maryland Director Chairman at Novavax, Inc.; Chairman at Targeted Microwave Solutions, Inc.; Director at 3-V Biosciences, Inc. 250,000 (5) 0.70% 1. The information as to municipality of residence and principal occupation, not being within the knowledge of CRHC, has been furnished by the respective directors and officers individually. 2. The information as to shares beneficially owned or over which a director or officer exercises control or direction, not being within the knowledge of CRHC or CannaRoyalty, has been furnished by the respective directors and officers individually. 3. Based on an issued and undiluted basis (i.e., 35,957,227 Issuer Shares). 4. This does not include vested and deferred RSUs or unvested RSUs currently held but this does include 171,335 Issuer Share held by Lustig HoldCo. 5. This does not include vested and deferred RSUs or unvested RSUs currently held. The following are brief biographical descriptions of the management and directors of the Issuer. Marc Lustig (age 43): Mr. Lustig holds MSc and MBA degrees from McGill University. He began his professional career in the pharmaceutical industry at Merck & Co. In 2000, he started his capital markets career in institutional equity research in the Life Sciences sector at Orion Securities. For the next 14 years, Mr. Lustig worked as a top producer at GMP Securities L.P. and as Head of Capital Markets at Dundee Capital Markets before becoming Principal at KES 7 Capital. Mr. Lustig founded Cannabis Royalties & Holdings Corp. in early Mr. Lustig works full time for the Issuer and is subject to non-competition and non-disclosure obligations pursuant to a written agreement with CRHC

47 François Perrault (age 51): Mr. Perrault is a CPA, CA and holds a Bachelor of Commerce (Honours) from the University of Ottawa. He has over twenty five years of experience in finance, management consulting, business development, service delivery and operations in a variety of industries in the public and private sectors. He was CFO for several subsidiaries and divisions of Computer Sciences Corporation (NYSE: CSC) where he spent over twelve years. Mr. Perrault also held senior positions with PwC, ProMetic Life Sciences and MCI Systemhouse. Mr. Perrault works full time for the Issuer and is subject to non-competition and non-disclosure obligations pursuant to a written agreement with CRHC. Greg Wilson (age 53): Mr. Wilson is an entrepreneur and corporate finance strategist with more than 20 years experience advising and structuring capital market financings for start-up and emerging growth enterprises. In 2005, Mr. Wilson co-founded Paramount Gold & Silver Corp., a precious metals exploration company that was sold to Coeur Mining for over $200 million in late Mr. Wilson is currently CEO of Vida Cannabis Corp. and also sits on the Board of Directors of Consumer Choice Awards, a Canadian private company. Mr. Wilson works full time for the Issuer. Mr. Wilson is subject to non-competition and non-disclosure obligations pursuant to a written agreement with CRHC. Todd Marcotte (age 54): Mr. Marcotte is founder and lead communication strategist for one of Ottawa s longest operating advertising and communications companies Electric Medialand Inc., formally known as Edels Marcotte Advertising. His deep grounding in the principles and practice of effective marketing, design and communications reflects a three decade long leadership role in the field. He has worked with an extensive list of clients in major retail, nonprofit and private sector. Mr. Marcotte and his firm have been heavily focused in the U.S. and Canada cannabis space since 2013 with numerous new brand launches throughout the United States. Mr. Marcotte works full time for the Issuer and is subject to non-competition and non-disclosure obligations pursuant to a written agreement with CRHC. Rob Harris (age 61): Mr. Harris has served as a director of Aralez Pharmaceuticals Inc. since February 5, He previously served as Founder, President, Chief Executive Officer and a director of Tribute Pharmaceuticals Canada Inc. from December 1, 2011 to February 2016 when it was amalgamated with POZEN Pharma to form Aralez Pharmaceuticals. Mr. Harris brings to the Board over 35 years of pharmaceutical industry experience in both Canada and the United States in sales, marketing, business development and general management in both human and animal health markets. Chuck Rifici (age 42): Mr. Rifici is the co-founder and former CEO of Tweed Marijuana Inc. ("Tweed") and currently a director of the Liberal Party of Canada. Prior to Tweed, he served as CFO of various technology firms such as Select Start Studios (acquired by Shopify), TekSavvy Solutions Inc. and Cybersurf Corp. Mr. Rifici is a chartered professional accountant. He obtained his MBA from Queen's University and a B.A.Sc. in Computer Engineering from the University of Ottawa. Dr. Jim Young (age 63): Dr. Young is the Chairman at Novavax, Inc., Chairman at Targeted Microwave Solutions, Inc. and sits on the board of directors at 3-V Biosciences, Inc. Dr. Young has over 30 years of experience in the fields of molecular genetics, microbiology, immunology and pharmaceutical development. Prior to being acquired by Astra Zeneca, Dr. Young was MedImmune s President of Research and Development. Dr. Young received his doctorate in microbiology and immunology from Baylor College of Medicine in Houston, Texas, and in 2005 was awarded the Albert B. Sabin Humanitarian Award Board Committees CannaRoyalty is expected to establish board committees, including an Audit Committee, Compensation Committee and Regulatory Committee. The composition and mandate of such committees will be determined by the CannaRoyalty Board

48 13.3 Corporate Cease Trade Orders No director, officer or promoter of the Issuer has, within the last ten years, been a director, officer or promoter of any company that, (a) was the subject of a cease trade or similar order or an order that denied the company access to any statutory exemption for a period of more than 30 consecutive; or (b) was subject to an order that was issued after he or she ceased to act in that capacity, which resulted from an event that occurred while that person was acting as director, officer or promoter Bankruptcies No director, officer, or promoter of the Issuer or any shareholder anticipated to hold a sufficient amount of securities of the Issuer, (a) (b) is, as at the date hereof, or has been within the last 10 years, a director or executive officer of any company that, while acting in that capacity, or within a year of ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or has, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder Penalties or Sanctions No director, officer, or promoter of the Issuer or any shareholder anticipated to hold a sufficient amount of securities of the Issuer, has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that would be likely considered important to a reasonable investor in making an investment decision Conflicts of Interest To the best knowledge of Bonanza, CRHC, and the Issuer, and other than as disclosed herein, there are no known existing or potential material conflicts of interest between Bonanza, CRHC or the Issuer, or a subsidiary of Bonanza, CRHC or the Issuer and a director, officer or promoter of Bonanza, CRHC or the Issuer except that certain of the directors, officers and promoters of Bonanza, CRHC and the Issuer serve as directors, officers and promoters of other companies and therefore it is possible that a conflict may arise between their duties as a director, officer or promoter of Bonanza and their duties as a director, officer and promoter of such other companies. See 17 RISK FACTORS. The directors, officers and promoters of Bonanza, CRHC and the Issuer are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosure by directors of conflicts of interest and Bonanza will rely upon such laws in respect of any directors and officers conflict of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with applicable law and they will govern themselves in respect thereof to the best of their ability in accordance with the obligation imposed upon them by law

49 14. CAPITALIZATION Issued Capital Number of Securities Number of Securities (fully-diluted) % of Issued (non-diluted) % of Issued (non-diluted) (fully diluted) Public Float Total outstanding (A) 35,957,227 40,580, % 100% Held by Related Persons or employees of the Issuer or Related Person of the Issuer, or by persons or companies who beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer (or who would beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer upon exercise or conversion of other securities held) (B) 13,100,167 15,716, % 38.73% Total Public Float (A-B) 22,857,060 24,044, % 58.25% Freely-Tradeable Float Number of outstanding securities subject to resale restrictions, including restrictions imposed by pooling or other arrangements or in a shareholder agreement and securities held by control block holders (C) 5,550,085 6,832, % 16.84% Total Tradeable Float (A-C) 30,407,142 33,928, % 83.61%

50 Public Securityholders (Registered) The Subscription Receipts were issued in book entry only form and registered in the name of CDS & Co. The common shares issued on conversion of the Subscription Receipts will also be in book entry only form and registered in the name of CDS & Co. Accordingly, the table below reflects the number of shareholders for pre-rto shareholders for CRHC together with one additional registered shareholder representing the converted Subscription Receipts. Information regarding the existing shareholders of Bonanza Blue Corp. has not been included as reliable information regarding post-consolidation holdings is not available. Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 0 0 5,000 or more securities ,993, ,993,486 Public Securityholders (Beneficial) This section only includes the Subscription Receipts, which were issued in book entry only form and registered in the name of CDS & Co. Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities 20 2, securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 1 4,000 5,000 or more securities 35 2,496,000 Unable to confirm

51 Non-Public Securityholders (Registered) This section only includes information on the non-public shareholders of CRHC. Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 0 0 5,000 or more securities 8 13,100, ,100,167 Compensation Discussion and Analysis 15. EXECUTIVE COMPENSATION The objectives, criteria and analysis of the compensation of the executive officers of the Issuer will be determined by the Issuer Board and are expected to be substantially similar to how CRHC compensated its executive officers. See CRHC s Statement of Executive Compensation attached as Schedule J to this Listing Statement. The named executive officers of the Issuer consist of Marc Lustig, the President and Chief Executive Officer of the Issuer, François Perrault, the Chief Financial Officer of the Issuer, Greg Wilson, the Chief Operating Officer of the Issuer, and Todd Marcotte, the Chief Marketing Officer of the Issuer (the Named Executive Officers ). Share Based Awards The Share Unit Plan adopted by Bonanza will remain the current Share Unit Plan of the Issuer. The Share Unit Plan reserves a rolling maximum of 10% of the issued and outstanding Issuer Shares (determined at the time of the share unit grant) for issuance upon the exercise of the share units granted pursuant to the Issuer Share Unit Plan. The pre-rto CRHC share units will be rolled into the Issuer s Share Unit Plan. Refer to section 9 Options to Purchase Securities for a summary of the Share Unit Plan. Option Based Awards The Option Plan adopted by Bonanza will remain the current Option Plan of the Issuer. The Issuer Option Plan reserves a rolling maximum of 10% of the issued and outstanding Issuer Shares (determined at the time of the stock option grant) for issuance upon the exercise of the stock options granted pursuant to the Issuer Option Plan. Refer to section 9 Options to Purchase Securities for a summary of the Option Plan

52 Employment Contracts In connection with the Closing, the Issuer assumed the employment agreements between CRHC and its Named Executive Officers. CRHC has entered into an employment agreement with each of its Named Executive Officers on substantially the same terms. Pursuant to the employment agreements, each of the Named Executive Officers is entitled to:! an annual base salary of $225,000 for Mr. Lustig, $200,000 for Mr. Wilson, and $175,000 for each of Messrs. Perrault and Marcotte;! a cash incentive award of up to 40% of base salary (50% for each of Messrs. Lustig and Wilson), based on the achievement of performance objectives during a financial period;! an annual RSU award, in an amount, and subject to vesting conditions, as determined by CRHC;! reimbursement for travel and other expenses, as well as a comprehensive benefits package (or a cash payment, until a benefits plan is implemented);! a matching contribution to the Named Executive Officer s registered retirement savings plan; and! on termination without cause, a lump sum payment equal to one year of base salary, automatic vesting of any unvested incentive awards, pro rata bonus payment (without consideration of the achievement of performance objectives), and continuation of all benefits for one year. Other than the aforementioned agreements, there are no compensatory plans, contracts or arrangements with any Named Executive Officer (including payments to be received from the Issuer or any subsidiary), which result or will result from the resignation, retirement or any other termination of employment of such Named Executive Officer or from a change of control of the Issuer or any subsidiary thereof or any change in such Named Executive Officer s responsibilities, where the Named Executive Officer is entitled to payment or other benefits. Directors Compensation Summary Compensation for Directors It is expected that the Issuer will grant 100,000 RSUs to each of its newly appointed non-executive directors, being Rob Harris, Chuck Rifici and Dr. Jim Young. The ongoing compensation of the nonexecutive directors will be determined by the Issuer Board. Compensation may be comprised of cash, equity awards, or a combination of both. The Issuer will also reimburse expenses incurred by such persons for acting as directors of the Issuer. No additional compensation will be paid to Issuer directors that also serve as Named Executive Officers. Pension Plan Benefits for Directors The Issuer is not expected to, and has no plan to, have a pension plan, defined benefit plan, defined contribution plan or deferred compensation plan that provides for payments or benefits to the directors, other than Named Executive Officers, at, following, or in connection with retirement. 16. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS No director, executive officer or senior officer the Issuer, or any associates of such persons, is indebted to the Issuer and no indebtedness of such persons is the subject of a guarantee, support agreement, letter of credit or other similar arrangement provided by the Issuer

53 17. RISK FACTORS The following are certain risk factors relating to the business carried on by the Issuer that prospective holders of Issuer Shares should carefully consider. Regulatory Risks The activities of CRHC s (and the Issuer s) Business Units is, and will continue to be, subject to evolving regulation by governmental authorities. The Business Units are directly or indirectly engaged in the medical and recreational cannabis industry in Canada and the United States where local state law permits such activities. The legality of the production, extraction, distribution and use of cannabis differs among North American jurisdictions, and there re is a growing movement in the United States supporting the legalization of cannabis for medical, as well as non-medical purposes. CRHC s investments have been focused in states that have legalized the recreational use of cannabis. Currently, the states of Washington, Oregon, Colorado and Alaska, and the District of Columbia, have legalized recreational use of cannabis. Almost half of the U.S. states have enacted legislation to legalize and regulate the sale and use of medical cannabis without limits on THC, while other states have legalized and regulate the sale and use of medical cannabis with strict limits on the levels of THC. However, the US federal government has not enacted similar legislation and the cultivation, sale and use of cannabis remains illegal under federal law pursuant to the U.S. Controlled Substance Act of While the US federal government has stated its present intention not to enforce federal laws relating to cannabis where the conduct at issue is legal under applicable state law, there can be no assurance that it will not enforce such laws in the future. This risk is further compounded due to the recent election of Donald Trump to the U.S. presidency, and his nomination of Sen. Jeff Sessions to the post of Attorney General. Mr. Trump s positions regarding marijuana are difficult to discern; however, Sen. Sessions has been a consistent opponent of marijuana legalization efforts throughout his political career. It remains unclear what stance the new administration s Department of Justice might take toward legalization efforts in U.S. states. The federal government of the United States has specifically reserved the right to enforce federal law in regards to the sale and disbursement of medical or adult-use use marijuana even if state law sanctioned such sale and disbursement. Further, there can be no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. It is also important to note that local and city ordinances may strictly limit and/or restrict the distribution of cannabis in a manner that will make it extremely difficult or impossible to transact business in the cannabis industry. If the federal government begins to enforce federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing state laws are repealed or curtailed, the Issuer s investments in such businesses would be materially and adversely affected notwithstanding the fact that the Issuer is not directly engaged in the sale or distribution of cannabis. Federal actions against any individual or entity engaged in the marijuana industry or a substantial repeal of marijuana related legislation could adversely affect the Issuer, its business and its investments. CRHC and the Issuer s funding of the activities of Business Units involved in the medical and recreational cannabis industry through loans, royalties or other forms of investment, may be illegal under the applicable federal laws of the United States and other applicable law. There can be no assurances the federal government of the United States or other jurisdictions will not seek to enforce the applicable laws against the Issuer. The consequences of such enforcement would be materially adverse to the Issuer and the Issuer s business and could result in the forfeiture or seizure of all or substantially all of the Issuer s assets. Change in Laws, Regulations and Guidelines The Business Units current and proposed operations are subject to a variety of laws, regulations and guidelines relating to the manufacture, management, transportation, storage and disposal of cannabis, but also including laws and regulations relating to consumable products health and safety, the conduct of

54 operations and the protection of the environment. These laws and regulations are broad in scope and subject to evolving interpretations, which could require the Issuer to incur substantial costs associated with compliance or alter certain aspects of our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt certain aspects of the Issuer s business plan and result in a material adverse effect on certain aspects of its planned operations. Unfavorable Publicity or Consumer Perception The legal cannabis industry in the United States and Canada is at an early stage of its development. Cannabis has been, and will continue to be, a controlled substance for the foreseeable future. Consumer perceptions regarding legality, morality, consumption, safety, efficacy and quality of cannabis are mixed and evolving. Consumer perception can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favorable to the cannabis market or any particular product, or consistent with earlier publicity. Future research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier research reports, findings or publicity could have a material adverse effect on the demand for cannabis and on the business, results of operations, financial condition and cash flows of the Issuer. Further, adverse publicity reports or other media attention regarding cannabis in general, or associating the consumption of cannabis with illness or other negative effects or events, could have such a material adverse effect. Public opinion and support for medical and recreational cannabis use has traditionally been inconsistent and varies from jurisdiction to jurisdiction. While public opinion and support appears to be rising for legalizing medical and recreational cannabis, it remains a controversial issue subject to differing opinions surrounding the level of legalization (for example, medical marijuana as opposed to legalization in general). CannaRoyalty s ability to gain and increase market acceptance of its products may requires it, and/or its Business Units, to establish and maintain its brand name and reputation. In order to do so, substantial expenditures on product development, strategic relationships and marketing initiatives may be required. There can be no assurance that these initiatives will be successful and their failure may have an adverse effect on the Issuer. Limited Operating History CRHC and its Business Units have varying and limited operating histories, which can make it difficult for investors to evaluate the Issuer s operations and prospects and may increase the risks associated with investment into the Issuer. Neither Bonanza nor CRHC has generated significant profits of revenues in the periods covered by their respective financial statements included herein, and, as a result, have only a very limited operating history upon which its business and future prospects may be evaluated. Although the Issuer expects to generate nominal revenues from its investments during the three months ended December 31, 2016, many of the investments will only start generating revenues in future periods and accordingly, the Issuer is therefore expected to remain subject to many of the risks common to early-stage enterprises for the foreseeable future, including challenges related to laws, regulations, licensing, integrating and retaining qualified employees; making effective use of limited resources; achieving market acceptance of existing and future solutions; competing against companies with greater financial and technical resources; acquiring and retaining customers; and developing new solutions. Competition There is potential that the Issuer will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and experience than the Issuer. Currently, the cannabis industry generally is comprised of individuals and small to medium-sized

55 entities, however, the risk remains that large conglomerates and companies who also recognize the potential for financial success through investment in this industry could strategically purchase or assume control of larger dispensaries and cultivation facilities. In doing so, these larger competitors could establish price setting and cost controls which would effectively price out many of the individuals and small to medium-sized entities who currently make up the bulk of the participants in the varied businesses operating within and in support of the medical and adult-use marijuana industry. While the trend in most state laws and regulations seemingly deters this type of takeover, this industry remains quite nascent, so what the landscape will be in the future remains largely unknown, which in itself is a risk. Because of the early stage of the industry in which the Issuer will operate, the Issuer expects to face additional competition from new entrants. To become and remain competitive, the Issuer will require research and development, marketing, sales and support. CannaRoyalty may not have sufficient resources to maintain research and development, marketing, sales and support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of the Issuer. Banking Since the production and possession of cannabis is illegal under US federal law, there is a strong argument that banks cannot accept for deposit funds from businesses involved with the marijuana industry. Consequently, businesses involved in the marijuana industry often have difficulty finding a bank willing to accept their business. The inability to open bank accounts with certain institutions may make it difficult to operate the Issuer s business. Additional Financing CannaRoyalty may require equity and/or debt financing to undertake capital expenditures or to undertake acquisitions or other business combination transactions. There can be no assurance that additional financing will be available to the Issuer when needed or on terms that are commercially viable. CannaRoyalty s inability to raise financing to fund capital expenditures or acquisitions could limit its growth and may have a material adverse effect upon future profitability. If additional funds are raised through further issuances of equity or convertible debt securities, existing shareholders could suffer significant dilution. Any debt financing secured in the future could involve restrictive covenants relating to capital raising activities and other financial and operational matters, which may make it more difficult for the Issuer to obtain additional capital and to pursue business opportunities, including potential acquisitions. Currency Fluctuations CannaRoyalty s revenues and expenses are expected to be primarily denominated in US dollars, and therefore may be exposed to significant currency exchange fluctuations. Recent events in the global financial markets have been coupled with increased volatility in the currency markets. Fluctuations in the exchange rate between the US dollar and the Canadian dollar may have a material adverse effect on the Issuer s business, financial condition and operating results. CannaRoyalty may, in the future, establish a program to hedge a portion of its foreign currency exposure with the objective of minimizing the impact of adverse foreign currency exchange movements. However, even if the Issuer develops a hedging program, there can be no assurance that it will effectively mitigate currency risks. Risks Associated with Acquisitions As part of the Issuer s overall business strategy, the Issuer intends to pursue select strategic acquisitions after the completion of the Listing, which would provide additional product offerings, vertical integrations, additional industry expertise, and a stronger industry presence in both existing and new jurisdictions. Future acquisitions may expose it to potential risks, including risks associated with: (a) the integration of new operations, services and personnel; (b) unforeseen or hidden liabilities; (c) the diversion of resources from the Issuer s existing business and technology; (d) potential inability to generate sufficient revenue to offset new costs; (e) the expenses of acquisitions; or (f) the potential loss of

56 or harm to relationships with both employees and existing users resulting from its integration of new businesses. In addition, any proposed acquisitions may be subject to regulatory approval. Research and Market Development Although the Issuer, itself and through its Business Units, is committed to researching and developing new markets and products and improving existing products, there can be no assurances that such research and market development activities will prove profitable or that the resulting markets and/or products, if any, will be commercially viable or successfully produced and marketed. Due to the early stage of the legal cannabis industry, forecasts regarding the size of the industry and the sales of products by the Business Units is inherently subject to significant unreliability. A failure in the demand for products to materialize as a result of competition, technological change or other factors could have a material adverse effect on the business, results of operations and financial condition of the Business Units, and consequently, the Issuer. Reliance on Management The success of the Issuer is dependent upon the ability, expertise, judgment, discretion and good faith of its senior management. While employment agreements or management agreements are customarily used as a primary method of retaining the services of key employees, these agreements cannot assure the continued services of such employees. Any loss of the services of such individuals could have a material adverse effect on the Issuer s business, operating results or financial condition. Operation Permits and Authorizations The Business Units may not be able to obtain or maintain the necessary licenses, permits, authorizations or accreditations, or may only be able to do so at great cost, to operate their respective businesses. In addition, the Business Units may not be able to comply fully with the wide variety of laws and regulations applicable to the cannabis industry. Failure to comply with or to obtain the necessary licenses, permits, authorizations or accreditations could result in restrictions on a Business Unit s ability to operate in the cannabis industry, which could have a material adverse effect on the Issuer s business. Liability, Enforcement Complaints, etc. CannaRoyalty s participation in the cannabis industry may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by various federal, state, or local governmental authorities against these subsidiaries. Litigation, complaints, and enforcement actions involving these subsidiaries could consume considerable amounts of financial and other corporate resources, which could have an adverse effect on the Issuer s future cash flows, earnings, results of operations and financial condition. Product Liability Certain of the Business Units manufacture, process and/or distribute products designed to be ingested by humans, and therefore face an inherent risk of exposure to product liability claims, regulatory action and litigation if products are alleged to have caused significant loss or injury. In addition, previously unknown adverse reactions resulting from human consumption of cannabis alone or in combination with other medications or substances could occur. A product liability claim or regulatory action against a Business Unit could result in increased costs, could adversely affect the Issuer s reputation, and could have a material adverse effect on the results of operations and financial condition of the Issuer. Reliance on Key Inputs The cultivation, extraction and processing of cannabis and derivative products is dependent on a number of key inputs and their related costs including raw materials, electricity, water and other local utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of the Business Units. Some of these inputs may only be available from a single supplier or a limited group of suppliers

57 If a sole source supplier was to go out of business, the relevant Business Unit might be unable to find a replacement for such source in a timely manner or at all. Any inability to secure required supplies and services or to do so on appropriate terms could have a materially adverse impact on the business, financial condition and operating results of a Business Unit, and consequently, the Issuer. Resale of Shares Although conditional approval for the Listing of the Issuer Shares has been obtained from the CSE, there can be no assurance that, an active and liquid market for the Issuer Shares will develop or be maintained and an investor may find it difficult to resell any securities of the Issuer. In addition, there can be no assurance that the publicly-traded stock price of the Issuer will be high enough to create a positive return for investors. Further, there can be no assurance that the stock of the Issuer will be sufficiently liquid so as to permit investors to sell their position in the Issuer without adversely affecting the stock price. In such event, the probability of resale of the Issuer s shares would be diminished. Price Volatility of Publicly Traded Securities In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market prices of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. There can be no assurance that continuing fluctuations in price will not occur. It may be anticipated that any quoted market for the shares of Bonanza will be subject to market trends generally, notwithstanding any potential success of Bonanza in creating revenues, cash flows or earnings. The value of the Issuer s shares will be affected by such volatility. An active public market for the Issuer s shares might not develop or be sustained after the completion of the Listing. If an active public market for the Issuer s shares does not develop, the liquidity of a shareholder s investment may be limited and the share price may decline. The Issuer is dependent upon its existing management, its key research and development personnel and its growing extraction personnel, and its business may be severely disrupted if it loses their service. CannaRoyalty s future success depends substantially on the continued services of its executive officers, its key research and development personnel and its key growth and extraction personnel. If one or more of its executive officers or key personnel were unable or unwilling to continue in their present positions, the Issuer might not be able to replace them easily or at all. In addition, if any of its executive officers or key employees joins a competitor or forms a competing company, the Issuer may lose know-how, key professionals and staff members. These executive officers and key employees could compete with and take customers away. Management of Growth CannaRoyalty may experience a period of significant growth in the number of personnel that will place a strain upon its management systems and resources. Its future will depend in part on the ability of its officers and other key employees to implement and improve financial and management controls, reporting systems and procedures on a timely basis and to expand, train, motivate and manage the workforce. CannaRoyalty s current and planned personnel, systems, procedures and controls may be inadequate to support its future operations. Dividends Neither the Issuer nor CRHC has paid dividends in the past, and the Issuer does not anticipate paying any dividends in the foreseeable future. Dividends paid by the Issuer would be subject to tax and, potentially, withholdings. Intellectual Property The success of the Issuer will depend, in part, on the ability of the Business Units to maintain and enhance trade secret protection over the various existing and potential proprietary techniques and

58 processes of the Business Units. The Business Units may be vulnerable to competitors who develop competing technology, whether independently or as a result of acquiring access to the proprietary products and trade secrets of the Business Units. In addition, effective future patent, copyright and trade secret protection may be unavailable or limited in certain foreign countries and may be unenforceable under the laws of certain jurisdictions. Insurance Coverage CannaRoyalty will require insurance coverage for a number of risks. Although the management of the Issuer believes that the events and amounts of liability covered by its insurance policies will be reasonable, taking into account the risks relevant to its business, and the fact that agreements with users contain limitations of liability, there can be no assurance that such coverage will be available or sufficient to cover claims to which the Issuer may become subject. If insurance coverage is unavailable or insufficient to cover any such claims, the Issuer s financial resources, results of operations and prospects could be adversely affected. Costs of Maintaining a Public Listing As a public company, there are costs associated with legal, accounting and other expenses related to regulatory compliance. Securities legislation and the rules and policies of the CSE require listed companies to, among other things, adopt corporate governance and related practices, and to continuously prepare and disclose material information, all of which add to a company s legal and financial compliance costs. CannaRoyalty may also elect to devote greater resources than it otherwise would have on communication and other activities typically considered important by publicly traded companies. Litigation CannaRoyalty may become party to litigation from time to time in the ordinary course of business which could adversely affect its business. Should any litigation in which the Issuer becomes involved be determined against the Issuer, such a decision could adversely affect the Issuer's ability to continue operating and the market price for Issuer Shares and could use significant resources. Even if the Issuer is involved in litigation and wins, litigation can redirect significant resources. Operational Risks CannaRoyalty and its Business Units may be affected by a number of operational risks and may not be adequately insured for certain risks, including: labour disputes; catastrophic accidents; fires; blockades or other acts of social activism; changes in the regulatory environment; impact of non-compliance with laws and regulations; natural phenomena, such as inclement weather conditions, floods, earthquakes and ground movements. There is no assurance that the foregoing risks and hazards will not result in damage to, or destruction of, the Business Units properties, grow facilities and extraction facilities, personal injury or death, environmental damage, adverse impacts on the Business Units operations, costs, monetary losses, potential legal liability and adverse governmental action, any of which could have an adverse impact on the Issuer s future cash flows, earnings and financial condition on the Issuer. Also, the Business Units may be subject to or affected by liability or sustain loss for certain risks and hazards against which they may elect not to insure because of the cost. This lack of insurance coverage could have an adverse impact on the Issuer s future cash flows, earnings, results of operations and financial condition. Difficulty Implementing Business Strategy The growth and expansion of the Issuer is heavily dependent upon the successful implementation of its business strategy. There can be no assurance that the Issuer will be successful in the implementation of its business strategy

59 Conflicts of Interest Certain of the Issuer s directors and officers are, and may continue to be, involved in other business ventures through their direct and indirect participation in corporations, partnerships, joint ventures, etc. that may become potential competitors of the technologies, products and services the Issuer intends to provide. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors and officers conflict with or diverge from the Issuer s interests. In accordance with applicable corporate law, directors who have a material interest in or who is a party to a material contract or a proposed material contract with the Issuer are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the contract. In addition, the directors and officers are required to act honestly and in good faith with a view to the Issuer s best interests. However, in conflict of interest situations, the Issuer s directors and officers may owe the same duty to another company and will need to balance their competing interests with their duties to the Issuer. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavourable to the Issuer. Available Talent Pool As the Issuer grows, it will need to hire additional human resources to continue to develop the business. However, experienced talent in the areas of medical marijuana research and development, growing marijuana and extraction is difficult to source, and there can be no assurance that the appropriate individuals will be available or affordable to the Issuer. Without adequate personnel and expertise, the growth of the Issuer s business may suffer. 18. PROMOTERS Lustig HoldCo, a corporation wholly-owned and controlled by Marc Lustig, a proposed director and CEO of the Issuer, may be considered a promoter of the Issuer, as this entity has taken the initiative in reorganizing and financing the Issuer. Other than disclosed herein, there is nothing of value, including money, property, contracts, options or rights of any kind received or to be received by Lustig HoldCo directly or indirectly from the Issuer or from a subsidiary of the Issuer, nor any assets, services or other consideration received or to be received by the Issuer or a subsidiary of the Issuer in return. Other than as disclosed herein, no asset has been acquired, within the two years before the date of this document, or is to be acquired by the Issuer or any subsidiary of the Issuer, from Lustig HoldCo. Lustig HoldCo is not, as at the date hereof, and was not within 10 years before the date hereof, a director, chief executive officer, or chief financial officer of any person or issuer that, (i) was subject to any cease trade order, order similar to a cease trade order or an order that denied the relevant person or issuer access to any exemption under securities legislation, and was in effect for a period of more than 30 consecutive days, that was issued while Lustig HoldCo was acting in the capacity as director, chief executive officer or chief financial officer; or (ii) was subject to any cease trade order, order similar to a cease trade order or an order that denied the relevant person or issuer access to any exemption under securities legislation, and was in effect for a period of more than 30 consecutive days, that was issued after Lustig HoldCo ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while Lustig HoldCo was acting in the capacity as director, chief executive officer or chief financial officer. Lustig HoldCo is not, as at the date hereof, nor has it been within the 10 years before the date hereof, a director or executive officer of any person or company that, while Lustig HoldCo was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. Nor has Lustig HoldCo, within the 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the promoter, state the fact

60 Lustig HoldCo has not been subject to any penalties or sanctions imposed by a court relating to provincial and territorial securities legislation or by a provincial and territorial securities regulatory authority nor has it entered into a settlement agreement with a provincial and territorial securities regulatory authority. Lustig HoldCo is also not subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable investor in making an investment decision. 19. LEGAL PROCEEDINGS AND REGULATORY ACTIONS As of the date of this Listing Statement, there are no legal proceedings material, and no contemplated legal proceedings known to be material, to the Issuer or its expected subsidiaries, to which the Issuer or its expected subsidiaries is a party or of which any of the Issuer or its expected subsidiaries respective property is the subject matter. As of the date of this Listing Statement, none of the Issuer nor any of its expected subsidiaries has been subject to any penalties or sanctions imposed by any court or regulatory authority relating to provincial and territorial securities legislation or by a securities regulatory authority, within the three years immediately preceding the date hereof, nor has any party entered into a settlement agreement with a securities regulatory authority within the three years immediately preceding the date hereof, or been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that are necessary to provide full, true and plain disclosure of all material facts relating to the Issuer s securities or would be likely to be considered important to a reasonable investor making an investment decision. 20. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than services as directors, executive officers and employees of CRHC or as disclosed below, CRHC has not acquired any assets or been provided any services in any material transaction, or in any proposed material transaction, from any director, executive officer, insider or promoter of CRHC, the proposed nominees for election as directors of the Issuer, the proposed executive officers, insiders or promoters of the Issuer, or their associates and affiliates. Other than as disclosed below, no director, executive officer, insider or promoter of CRHC or any associate or affiliate of any such person or company has or had any material interest, direct or indirect, in any transaction that has materially affected or will materially affect CRHC or the Issuer. On May 14, 2015, CRHC entered into a loan agreement with a shareholder for $179,880 (US$150,000) with maturity on June 30, 2015, bearing interest at 10% for the term of the loan. The loan was secured by the equity interest in Alternative Medical Enterprises, the royalty interest in Nutrae, and equity interest in Desert Grower s. CRHC repaid this loan in full. On March 2, 2015, CRHC entered into a consulting engagement with AJKNJ Capital Corp. ( Lustig HoldCo ), whereby Marc Lustig, the principal of Lustig HoldCo, was to provide non-exclusive strategic advisory services to CRHC. On March 5, 2015, the consulting agreement was assigned by Lustig HoldCo to KES 7 Capital. The fees paid and to be paid through the consulting agreement (not inclusive of tax) include (a) $25,000 paid as a signing bonus; (b) $375,000 paid for work and success fees; and (c) $314, accrued and to be paid for work and success fees. On November 30, 2016, the parties terminated the consulting agreement and Mr. Lustig entered into an employment contract with CRHC. On October 27, 2015, CRHC entered into a convertible loan payable with a shareholder for $129,870 (US$100,000) with maturity on May 16, 2016, bearing interest at 10% for the term of the loan. This loan is secured by the equity interest in AME and royalty stream investment in Cascadia. On May 16, 2016 the principal and interest on the convertible loan payable was repaid in cash. On December 29, 2015, CRHC entered into a loan agreement with a shareholder for $691,150 (US$500,000) with maturity of US$575,000 on January 22, The loan was secured by the 8.2% equity interest in Alternative Medical Enterprises, signed and funded subscription agreements for the

61 March 17, 2016 equity financing, CO2 supercritical extractors, the royalty interest in Nutrae, and the equity interest in Resolve. CRHC repaid this loan in full. On February 19, 2016, CRHC entered into a convertible loan payable with a shareholder for $150,000 with maturity on August 18, 2016, bearing interest at 10% for the term of the loan. The loan was secured by the equity interest in Alternative Medical Enterprises, all CO2 extraction equipment, and the royalty stream in Cascadia. On August 18, 2016 the principal and interest on this loan was settled with the issuance of 220,000 common shares of CRHC valued at $0.75 per share. On April 12, 2016, CRHC issued 1,300,000 common shares valued at $975,000 to certain CRHC officers and consultants in consideration for services rendered prior to March 31, On April 13, 2016, CRHC entered into a loan agreement with a shareholder for US$300,000 with maturity on May 13, 2016, bearing interest at 15% for the term of the loan. The loan was secured by CRHC s 8.2% equity interest in Alternative Medical Enterprises, signed and funded subscription agreements for the June 7, 2016 equity financing, CO2 supercritical extractors, CRHC s royalty interest in Nutrae, and the CRHC s equity interest in Resolve. The loan was repaid on May 16, On April 21, 2016, CRHC entered into a loan agreement with a shareholder for $200,000 with maturity on June 30, 2016, bearing interest at 10% for the term of the loan. The loan was repaid with interest of $20,000. On June 17, 2016, CRHC entered into a loan agreement with a shareholder for $459,095 (US$350,000) with maturity on October 31, 2016, bearing interest at 14.29% for the term of the loan. The loan is secured by an 8.2% equity interest in Alternative Medical Enterprises, 3.5% royalty interest in NuTrae, 35% equity interest in Resolve, and CO2 supercritical extractors. An amount of $262,340 (US$200,000) has been repaid on this loan, of which $131,170 (US$100,000) was repaid prior to September 30, At September 30, 2016, the shareholder loan payable totalled $378,560 which included $50,635 of interest accrued and payable. On June 28, 2016, CRHC issued 83,500 common shares in CRHC to the CEO and 16,700 common shares in CHRC to the prior CFO under CRHC s share unit plan. On August 17, 2016, a shareholder loaned CRHC $100,000, which was repaid on August 24, The loan was non-interest bearing. As at September 30, 2016, there is a loan payable of $491,888 (US$$375,000) to Wagner Dimas. The loan is non-interest bearing, unsecured, with no specific terms of repayment. This loan has been repaid in full. During the 2016 fiscal year, CRHC sold some equipment due to technological obsolescence, to a company owned by a director of the Issuer for proceeds of $110,053. A loss of $42,135 was recorded as the cost of the equipment sold was $152,188. During the 2016 fiscal year, a related company, controlled by a director of CRHC, provided an unsecured, non-interest bearing loan, due on demand, to CRHC in the amount of $1,758. The advance was repaid in full prior to September 30, During the 2016 fiscal year, a director provided an unsecured, non-interest bearing loan, due on demand, to CRHC in the amount of $20,848. The advance was repaid in full prior to September 30, During the 2016 fiscal year, CRHC settled debt of $192,251 by issuance of 256,335 common shares valued at $0.75 to a company controlled by a director of CRHC. During the second quarter of fiscal 2017, Resolve, an equity investee of CRHC, provided $100,000 of consulting services to CRHC

62 21. AUDITORS, TRANSFER AGENTS AND REGISTRARS Bonanza s shareholders have conditionally approved the appointment of Jackson & Company as the auditors of the Issuer following the RTO. TSX Trust Company, located in Toronto, Ontario, will continue to act as the transfer agent of the Issuer following the RTO. 22. MATERIAL CONTRACTS Except for contracts entered into by the Issuer in the ordinary course of business, the only current material contracts entered into or currently anticipated to be entered into by the Issuer which can reasonably be regarded as presently material are: (a) the Definitive Agreement; and (b) the Agency Agreement Special Agreements Not applicable Co-tenancy, Unitholders or Limited Partnership Agreements Not applicable. 23. INTEREST OF EXPERTS Neither auditor has, and neither is entitled to receive, any registered or beneficial interest, direct or indirect, in the property of the Issuer and neither is expected to own any securities of the Issuer or any associate, affiliate or Related Person of the Issuer. 24. OTHER MATERIAL FACTS There are no other material facts about the Issuer or Issuer Shares that are not disclosed under any other Item of this Listing Statement and are necessary in order for this Listing Statement to contain full, true and plain disclosure of all material facts relating to the Issuer or Issuer Shares. 25. FINANCIAL STATEMENTS Please refer to Schedule D for pro-forma financial statements of CannaRoyalty. Please refer to Schedule K for Bonanza s annual audited financial statements for the years ended December 31, 2015 and 2014 and to Schedule L for Bonanza s interim financial statements for the three and nine months ended September 30, Please refer to Schedule M for CRHC s annual audited financial statements for the year ended March 31, 2016 and the period from October 3, 2014 to March 31, 2015 and to Schedule N for CRHC s interim financial statements for the three and six months ended September 30, GLOSSARY In this Listing Statement, the following words and terms shall have the following meanings: Achelois means Achelois LLC; ACMPR means Access to Cannabis for Medical Purposes; AcquisitionCo means Canada Corp., a wholly-owned subsidiary of Bonanza; Agency Agreement means the agreement entered into by CRHC and a syndicate of agents co-lead by Clarus Securities Inc. and Sprott Private Wealth LP., and including Bloom Burton & Co. and KES 7 Capital Inc. in connection with the CRHC SR Financing;

63 Alternative Medical Enterprises means Alternative Medical Enterprises, LLC (formerly WP&RS Enterprises, LLC); Alternative Transaction means with respect to a party, an agreement, other than as specifically contemplated in this Agreement, which constitutes, or may reasonably be expected to lead to (in either case whether in one transaction or a series of transactions): (i) a direct or indirect acquisition from such party or from its shareholders of 20% or more of the voting securities of such party; (ii) a direct or indirect acquisition of assets of such party representing 20% or more of the book value (on a consolidated basis) of such party; (iii) an amalgamation, arrangement, merger, or consolidation involving such party; (iv) any take-over bid, issuer bid, exchange offer, recapitalization, liquidation, dissolution, reorganization into a royalty trust or income fund or similar transaction involving such party; or (v) any other transaction, the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the transactions contemplated by the Definitive Agreement or which would or could reasonably be expected to materially reduce the benefits under the Definitive Agreement or the RTO, it being acknowledged by BB that CRHC is in ongoing negotiations with respect to certain potential transactions (and in the future may enter into negotiations with respect to additional potential transactions) similar to those which it regularly considers and enters into in the ordinary course, and it being further acknowledged that nothing will restrict or otherwise limit or prevent CRHC from negotiating and completing such current and future potential transactions following the entering into of the Definitive Agreement; AltoTerra means AltoTerra Capital Partners Ltd.; AmalCo means the entity formed from the Amalgamation of CRHC and AcquisitionCo; Amalgamation means the amalgamation of CRHC and AcquisitionCo, in accordance with the terms of the Amalgamation Agreement; Amalgamation Agreement means the agreement to be entered into by Bonanza, CRHC, and AcquisitionCo, substantially in the form of the agreement attached hereto at Schedule O, to effect the Amalgamation pursuant to the terms of the Definitive Agreement; Aphria means Aphria Inc. Audit Committee means the audit committee of the Issuer, as defined by NI ; BAS means BAS Research; Bay Area Extraction means Bay Area Extraction Processing; Board means the board of directors of Bonanza, CRHC or the Issuer, as the context requires; Bohdi means Bohdi Research Development Inc.; Bonanza means Bonanza Blue Corp.; Bonanza Board means the board of directors of BB; Bonanza Financing has the meaning ascribed thereto under Schedule C ; Bonanza Meeting means the annual and special meeting of shareholders of Bonanza held on November 11, 2016 to approve, among other things, Bonanza Meeting Matters; Bonanza Meeting Matters has the meaning ascribed thereto under Schedule C ; Bonanza Pre-Consolidation Shares has the meaning ascribed thereto under Schedule C ; Bonanza Share Transfers has the meaning ascribed thereto under Schedule C ; Bonanza Shareholders means the shareholders of Bonanza;

64 Bonanza Shares means the common shares in the capital of Bonanza, on a post-consolidation basis; Bonanza Significant Shareholders has the meaning ascribed thereto under Schedule C ; Business Unit has the meaning ascribed thereto under Narrative Description of the Business ; CannaCraft means CannaCraft Inc.; Cannroy Delaware means Cannroy Delaware Inc.; Cannroy Distribution means Cannroy Distribution LLC; Cannroy Oregon means Cannroy Oregon LLC; Cascadia means Cascadia Holdings LLC; CBCA means the Canada Business Corporations Act, as amended; CERSA means California Extraction Research and Science Association; Certificate means a certificate of amalgamation issued by the Director pursuant to Section 185 of the CBCA; Closing means the closing of the RTO, being when a Certificate giving effect to the Amalgamation is issued, with the Amalgamation being effective on the date of such Certificate; Committee has the meaning ascribed thereto under 9.1 Stock Option Plan ; Consolidation has the meaning ascribed thereto under Schedule C ; Crescendo Chocolate means Crescendo Chocolate LLC; CRHC refers to Cannabis Royalties & Holdings Corp. and its subsidiaries prior to the RTO, on a consolidated basis; CRHC Board means the board of directors of CRHC; CRHC Financing has the meaning ascribed thereto under Schedule C ; CRHC Nominees has the meaning ascribed thereto under Schedule C ; CRHC Shareholders means the shareholders of CRHC; CRHC Shares means the common shares in the capital of CRHC; CRHC SR Financing means the agency offering of 2,502,000 subscription receipts of CRHC at a price of $2.00 per subscription receipt for total gross proceeds of $5,004,000; CRHC Warrants means the issued warrants in the capital of CRHC; CSE means the Canadian Securities Exchange; Debt Transfer has the meaning ascribed thereto under Schedule C ; Deferred Payment Date means for a participant of CRHC s Share Unit Plan, the date after the vesting date which is the earlier of (i) the date to which the participant has elected to defer receipt of CRHC Shares in accordance with the Share Unit Plan; and (ii) the date of the participant s retirement, resignation, termination with cause or termination without cause or a change of control of CRHC; Definitive Agreement means the agreement dated June 30, 2016 between Bonanza and CRHC regarding the terms of the RTO;

65 Desert Growers means Desert Growers Association LLC; Dreamcatcher means Dreamcatcher Labs Inc.; Effective Time has the meaning ascribed thereto under Schedule C ; Electric Medialand means Electric Medialand Inc.; Eligible Person means: (i) any director, officer, or employee of Bonanza or affiliate, or any other service provider (an Eligible Individual ); or (ii) a corporation controlled by an Eligible Individual, the issued and outstanding voting shares of which are, and will continue to be, beneficially owned, directly or indirectly, by such Eligible Individual and/or the spouse, children and/or grandchildren of such Eligible Individual; Escrow Agreement has the meaning ascribed thereto under 11 ESCROWED SECURITIES ; Escrowed Funds means the funds from the sale of the subscription receipts that will be deposited in escrow until the escrow release conditions have been satisfied; Escrow Release Conditions means, together, (i) the completion, satisfaction or waiver, as the case may be, of all conditions precedent to the business combination of CRHC and Bonanza set forth in the Letter Agreement, to the satisfaction of the Co-Lead Agents, acting reasonably, other than the filing of the articles of amalgamation; (ii) the receipt of all required shareholder, third party (as applicable) and regulatory approvals in connection with the RTO; (iii) the listing of the Issuer Shares on the CSE shall have been conditionally approved; and (iv) the representations and warranties of CRHC in the agency agreement dated October 4, 2016 between CRHC and the Agents are true and correct as of the Closing and as of the date of the release certificate, and without giving effect to any limitation indicated by the words material adverse effect, in all material respects, or material except where the failure of such representations and warranties to so be true and correct as of the Closing or as of the date of the release certificate, as the case may be, in the aggregate, would not have a material adverse effect; Eureka means Eureka Management Services; Freya means Freya Intimacy Oil; Green Rock means Green Rock Botanicals; Holdings has the meaning ascribed thereto under Narrative Description of the Business ; IFRS means the International Financial Reporting Standards, as issued by the International Accounting Standards Board; Issuer means CannaRoyalty Corp. Issuer Board means the board of directors of the Issuer; Issue Shares means the common shares in the capital of the Issuer; Introduced Parties has the meaning ascribed thereto under Schedule C ; Listing has the meaning ascribed thereto under 2.5 Summary of the RTO and Related Transactions ; Lustig HoldCo means AJKNJ Corp., a corporation controlled by the CEO of the Issuer, Marc Lustig; Magnolia means Magnolia Dispensary (Eureka Management Services); Material Adverse Effect means an effect, change, event, occurrence or state of facts, either individually or in the aggregate, that is, or would reasonably be expected to be, material and adverse to

66 the business, properties, assets, liabilities, obligations (including any contingent liabilities that may arise through outstanding, pending or threatened litigation or otherwise), capitalization, condition (financial or otherwise), operations or results of operations of a party and its subsidiaries taken as a whole, other than any change, effect, event or occurrence: (i) (ii) relating to the global economy, political conditions or securities markets in general; relating to a change in the market trading price of publicly traded securities of the party, either: A. related to the Definitive Agreement and the Transaction or the announcement thereof, or B. related to such a change in the market trading price primarily resulting from a change, effect, event or occurrence excluded from this definition of Material Adverse Effect under clauses (i), (ii) or (iii) hereof; (iii) relating to any generally applicable change in applicable laws or regulations (other than orders, judgments or decrees against that Party or any of its subsidiaries and material joint ventures) or in applicable accounting principles; or (iv) attributable to the announcement or pendency of the Definitive Agreement or the Transaction, or otherwise contemplated by or resulting from the terms of the Definitive Agreement; provided, however, that such effect referred to in clause (i) or (ii) above does not primarily relate only to (or have the effect of primarily relating only to) that party and its subsidiaries, taken as a whole, or disproportionately adversely affect that Party and its subsidiaries taken as a whole, compared to other companies of similar size operating in the industry in which that party and its subsidiaries operate. MMAR means the Marihuana Medical Access Regulations; MMPR means the Marijuana for Medical Purposes Regulations; Name Change has the meaning ascribed thereto under 2.5 Summary of the RTO and Related Transactions ; Natural Ventures means Natural Ventures PR, LLC; NuTrae means NuTrae LLC; OBCA means the Ontario Business Corporations Act, as amended; Option means an option to purchase Bonanza Shares granted to an Eligible Person under the Option Plan; Option Plan means the TriplePlay Sports Group Inc Stock Option Plan, as the same may be further amended or varied from time to time; Optioned Shares means Bonanza Shares pursuant to an exercise of Options; Outside Date has the meaning ascribed thereto under Schedule C ; Qualifying Participant means a participant (i) who is a resident of Canada for the purposes of the Income Tax Act (Canada) or (ii) who is designated as a Qualifying Participant in the participant s share unit grant letter, provided that the Participant is not a U.S. Taxpayer. Related Person means, (i) each director and executive officer, or (ii) an associate or permitted assign of such director or executive officer; Resolve means Resolve Digital Health Inc.; Restricted Actions means (i) making, soliciting, entertaining, encouraging, promoting or facilitating, including by way of permitting any visit to its facilities or properties or entering into any form of

67 agreement, arrangement or understanding, any inquiries or the making of nay proposals regarding an Alternative Transaction or that may reasonably be expected to lead to an Alternative Transaction; (ii) participating in any discussions or negotiations regarding, or furnishing to any person any information or otherwise cooperating with, responding to, assisting or participating in any Alternative Transaction or potential Alternative Transaction; (iii) remaining neutral with respect to, or agreeing to, approving or recommending any Alternative Transaction or potential Alternative Transaction (it being understood that publicly taking no position or a neutral position with respect to an Alternative Transaction until 10 business days following formal announcement of such Alternative Transaction shall not be considered to be a violation); or (iv) entering into any agreement, arrangement or understanding related to any Alternative Transaction; Rich Extracts means Rich Extracts LLC; Rock Vapor means Rock Vapor Technologies Inc.; RSU means a restricted share unit issued pursuant to the Share Unit Plan; RTO means the business combination of Bonanza, CRHC and AcquisitionCo by way of a threecornered amalgamation under the provisions of the CBCA; Santa Barbara means Santa Barbara Patients Collective Healing Centre; Share Unit Plan has the meaning ascribed thereto under 9.1 Stock Option Plan ; Stokes means Stokes Confections; Three Leaf means Three Leaf Holdings Corporation; Unit means one CRHC Share and one half warrant at a price of $1.50; Vida means Vida Cannabis Corp.; and Wagner Dimas means Wagner Dimas Inc

68 CERTIFICATE OF THE ISSUER The foregoing contains full, true and plain disclosure of all material information relating to the Issuer. It contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to prevent a statement that is made from being false or misleading in light of the circumstances in which it was made. Dated at Vancouver, British Columbia. this 5th day of December, Marc Lustig Marc Lustig Chief Executive Officer François Perrault François Perrault Chief Financial Officer Greg Wilson Director Chuck Rifici Director

69 SCHEDULE "A" INFORMATION CONCERNING BONANZA BLUE CORP. Please see attached. A-1 B-1

70 Schedule A Information Concerning Bonanza Blue Corp. ( Bonanza ) Terms not otherwise defined in this Appendix have the meanings given to them in the Listing Statement under Glossary. This Appendix is qualified in its entirety by, and should be read together with, the detailed information contained or referred to elsewhere, or incorporated by reference, in the Listing Statement and applicable Appendices. Corporate Structure Bonanza s corporate structure was the same as CannaRoyalty s corporate structure, described in the Listing Statement under 2 Corporate Structure Corporate Name and Head and Registered Officer. Jurisdiction of Incorporation Bonanza was incorporated under the OBCA. Diagram of Intercorporate Relationships Immediately prior to the RTO, Bonanza had one wholly-owned subsidiary, AcquisitionCo, which was formed on November 23, 2016 under the CBCA in connection with the RTO. The following diagram presents the corporate organization of Bonanza immediately prior to effecting the RTO. Bonanza Shareholders 100% Bonanza (Ontario) 100% AcquisitionCo (Canada) General Development of the Business A discussion of the general development of Bonanza s business is contained in the Listing Statement under the heading 3 General Development of the Business General Development. Narrative Description of the Business A discussion of the general development of Bonanza s business is contained in the Listing Statement under the heading 4 Narrative Development of the Business. Selected Consolidated Financial Information A-2

71 The following table provides a brief summary of Bonanza s financial operations for each of the three most recently completed financial years, and the nine month period ending September 30, Complete copies of Bonanza s audited financial statements for the years ended December 31, 2015, 2014 and 2013 are attached to the Listing Statement at Schedule J and Bonanza s unaudited interim financial statements for the nine months ended September 30, 2016 are attached to the Listing Statement as Schedule K. See also the following heading in the Listing Statement: Error! Reference source not found. Error! Reference source not found.. Description Year Ended December 31, 2013 Year Ended December 31, 2014 Year Ended December 31, 2015 Nine Months Ended September 30, 2016 (unaudited) Revenue $nil $nil $nil $nil Income from Continuing Operations $nil $nil $nil $nil Net Income (loss) (24,295) (19,678) (44,290) (36,418) Net loss per share (basic and diluted) (0.00) (0.00) (0.01) (0.00) Total Assets 5,518 23,086 6,036 5,790 Total Long-term Financial Liabilities $nil $nil $nil $nil Cash Dividends Declared per Share for each Class of Share $nil $nil $nil $nil Dividends Bonanza has not paid dividends prior to the RTO. Foreign GAAP Commencing with Bonanza interim financial statements for the three month period ended March 31, 2011, Bonanza s financial statements have been prepared in accordance with IFRS. Management s Discussion and Analysis Please see Schedule E of the Listing Statement for Bonanza s management s discussion and analysis for the period ended December 31, 2015 and Schedule F for the period ended September 30, Market for Securities Immediately prior to the RTO, none of Bonanza s securities were listed or posted for trading on any stock exchange or quotation system. Consolidated Capitalization The following table sets forth the capitalization of Bonanza as of the date hereof on a post-consolidation basis. A-3

72 Designation of Security Amount Authorized or to be Authorized Amount Outstanding as of, 2016 Common Shares unlimited 1,813,574 Special Preference Shares 2,000,000 nil Stock Options 161,000 Nil (1) Fully Diluted Common Shares N/A 1,813,574 Notes: (1) an aggregate of 75,000 Bonanza options will be granted prior to the Closing. See the Listing Statement heading 15 - Executive Compensation Options to Purchase Securities Bonanza s stock option plan was the same as that described in the Listing Statement under the heading 9 Options to Purchase Securities Stock Option Plan. Description of the Securities Bonanza s securities were the same as those described for CannaRoyalty in the Listing Statement under the heading 10 Description of the Securities General. There were 1,813,574 Bonanza Shares issued and outstanding (on a post-consolidation basis) immediately prior to the completion of the RTO. Prior Sales Bonanza s prior sales over the past 12 months are the same as those listed for the CannaRoyalty in the Listing Statement under 10 Description of the Securities Prior Sales. Principal Shareholders Except as set out below, no person beneficially owned, directly or indirectly, or exercises control or direction over 10% or more of the outstanding Bonanza Shares immediately prior to the RTO. Name Number of Shares Method of Ownership Percentages of Shares FSC Abel Financial Inc. (1)(2) 1,975,000 Beneficially 24.5% Brillco Inc. (3) 1,875,000 Record and Beneficially 23.3% (1) FSC Abel Financing Inc. owned 1,975,000 Bonanza Shares on a fully diluted basis. (2) Paul Stein, through ownership, control or direction over the securities of the company, is the principal shareholder of FSC Abel Financial Inc. (3) Brillco Inc. owned 1,875,000 Bonanza Shares on a fully diluted basis. (4) Jennifer Goldman, through ownership, control or direction over the securities of the company, is the principal shareholder of Brillco Inc. A-4

73 Directors and Officers The following table sets forth the name of all current directors and officers of Bonanza, their municipalities of residence, their current positions with Bonanza, their principal occupations during the past five years and the number and percentage of Bonanza Shares beneficially owned, directly or indirectly, or over which control or direction is exercised as at the date of this Listing Statement: Name, Municipality of Residence (1), Position(s) with Bonanza Principal Occupation or Employment during Past Five Years Director/Officer since Number (2) and Percentage of Bonanza Shares Held (3) Eric Klein (4) Toronto, Ontario, Canada President, Chief Executive Officer and Director Executive Vice President Corporate Development, Dundee Corporation (public holding and investment company) (May 2016 to present) June 8, 2011 Nil Partner, Klein Farber Corporate Finance Inc. (a financial services firm) May 2003 to April 2016) Carmelo Marrelli Woodbridge, Ontario, Canada Chief Financial Officer David Brill (4) Toronto, Ontario, Canada Director Vernon Nelson (4) Calgary, Alberta, Canada Director President, Marrelli Support Services Inc. (accounting and bookkeeping support services company) Principal, Brill & Associates (financial services consulting ) (2011 to present) Retired Business Executive (retired in 1989) June 8, ,000 (6) June 8, 2011 Nil June 8, , The information as to municipality of residence and principal occupation, not being within the knowledge of Bonanza, has been furnished by the respective directors and officers individually. 2. The information as to shares beneficially owned or over which a director or officer exercises control or direction, not being within the knowledge of Bonanza, has been furnished by the respective directors and officers individually. 3. On an issued and undiluted basis. 4. Member of the Audit Committee. 5. The terms of each director of Bonanza will expire at the earlier of (i) the close of the next annual meeting of shareholders of Bonanza or until their successors are elected or appointed; and (ii) the effective time of completion of the RTO. 6. Shares are held by DSA Capital Limited, a company controlled by Mr. Marrelli. As of the date of this Listing Statement, the directors and officers of Bonanza as a group beneficially own, directly or indirectly, an aggregate of 650,000 Bonanza Shares, representing approximately 8.1% of the issued and outstanding Bonanza Shares on a non-diluted basis. A-5

74 The following are brief biographical descriptions of the management and directors of Bonanza s pool of management. Eric Klein (age 56): Mr. Klein is a Chartered Accountant and Chartered Business Valuator. Mr. Klein is currently the Executive Vice President of a public holding company. Previously, Mr. Klein was a partner in a consulting practice specializing in corporate finance, mergers and acquisitions, business strategy and business valuations. He is currently a director of another public company where he serves as the chair of the audit committee as well as a member of the governance committee. Mr. Klein s work experience in consulting to public and private companies as well as his current and previous experience as an executive in a public company, as a business valuator and a chartered accountant has provided him with considerable experience in analyzing and understanding financial statements at an in depth level. Mr. Klein services are provided in a consulting capacity on a part-time basis. Carmelo Marrelli (age 45): Mr. Marrelli is the principal of Marrelli Support Services Inc., a firm that has delivered accounting and regulatory compliance services to listed companies on various exchanges for over twenty years. In addition, Mr. Marrelli is a controlling shareholder of DSA Corporate Services Inc., a firm providing corporate secretarial and regulatory filing services. Mr. Marrelli is a Chartered Professional Accountant (CPA, CA, CGA), and a member of the Institute of Chartered Secretaries and Administrators, a professional body that certifies corporate secretaries. He has a Bachelor of Commerce degree from the University of Toronto. Mr. Marrelli services are provided by Marrelli Support Services Inc. through a consulting arrangement on a part-time basis. David Brill (age 57): Mr. Brill has worked in the Canadian capital markets for over 25 years, with both large and small investment dealers as well as institutional and retail clients. He has been a bond trader, sold structured financial products to high net worth individuals, and worked as COO of a small retail investment dealer. Most recently, he was an equity research analyst for a boutique institutional investment bank, focused on alternative energy and clean technology. David has a B.Comm. (University of Toronto), MBA (The Wharton School, University of Pennsylvania), and is a CFA charterholder. Vernon Nelson (age 79): Mr. Nelson s business career was focussed on advertising and sales promotions. He was instrumental in the development of a 57 store rental chain across Canada and was in charge of development and acquisitions for that company. Through these activities, Mr. Nelson acquired the ability to read and understand financial statements. Mr. Nelson retired in Board Committees Bonanza has established an audit committee consisting of Eric Klein, David Brill and Vernon Nelson. Corporate Cease Trade Orders and Bankruptcies No director, officer or promoter of Bonanza has, within the last ten years immediately prior to the RTO, been a director, officer or promoter of any company that, (a) was the subject of a cease trade or similar order or an order that denied the company access to any statutory exemption for a period of more than 30 consecutive; or (b) was subject to an order that was issued after he or she ceased to act in that capacity, which resulted from an event that occurred while that person was acting as director, officer or promoter. No director, officer, or promoter of Bonanza or any shareholder anticipated to hold a sufficient amount of securities of Bonanza, (a) is, as at the date of the RTO, or has been within the last 10 years, a director or executive officer of any company that, while acting in that capacity, or within a year of ceasing to A-6

75 act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) has, within the 10 years before the date of the RTO, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder, other than Mr. Brill, who on May 24, 2012 made a proposal to his creditors under the Bankruptcy and Insolvency Act (Canada) which proposal was approved by creditors on August 28, 2012 and a Certificate of Full Performance was issued on June 15, Penalties or Sanctions No director, officer, or promoter of Bonanza or any shareholder anticipated to hold a sufficient amount of securities of Bonanza, has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that would be likely considered important to a reasonable investor in making an investment decision. Conflicts of Interest To the best of Bonanza s knowledge, and other than as disclosed herein, there are no known existing or potential conflicts of interest between Bonanza and any directors or officers of Bonanza, except that certain of the directors and officers serve as directors, officers, promoters and members of management of other companies and therefore it is possible that a conflict may arise between their duties as a director or officers of Bonanza and their duties as a director, officer, promoter or member of management of such other companies. The directors and officers of Bonanza are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and Bonanza will rely upon such laws in respect of any directors and officers conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with the Business Corporations Act (Ontario) and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law. Executive Compensation A discussion of Bonanza s executive compensation is contained in the management information circular dated September 30, 2016, which is available on SEDAR and is hereby incorporated by reference herein. Indebtedness of Directors and Executive Officers Immediately prior to the RTO, no director, executive officer or senior officer of Bonanza, or any associates of such persons, was indebted to Bonanza and no indebtedness of such persons was the subject of a guarantee, support agreement, letter of credit or other similar arrangement provided by Bonanza. A-7

76 Legal Proceedings and Regulatory Actions As of the date of the RTO, there were no material legal proceedings material, and no contemplated legal proceedings known to be material, to Bonanza to which it was a party or of which any of its property was the subject matter. As of the date of the RTO, Bonanza nor any of its respective subsidiaries had not been subject to any penalties or sanctions imposed by any court or regulatory authority relating to provincial and territorial securities legislation or by a securities regulatory authority, within the three years immediately preceding the date of the RTO, nor had any party entered into a settlement agreement with a securities regulatory authority within the three years immediately preceding the RTO, or been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that are necessary to provide full, true and plain disclosure of all material facts relating to Bonanza s securities or would be likely to be considered important to a reasonable investor making an investment decision. Interest of Management and Others in Material Transactions Other than services as directors, executive officers and employees of Bonanza, Bonanza has not acquired any assets or been provided any services in any material transaction, or in any proposed material transaction, from any director, executive officer, insider or promoter of Bonanza, the proposed nominees for election as directors of the Bonanza of the Resulting Issuer, the proposed executive officers, insiders or promoters of the Bonanza or the Resulting Issuer, or their associates and affiliates. Other than as disclosed below, no director, executive officer, insider or promoter of Bonanza or any associate or affiliate of any such person or company has or had any material interest, direct or indirect, in any transaction that has materially affected or will materially affect Bonanza. Auditors, Transfer Agents and Registrars The auditors for Bonanza were Stern & Lovrics LLP, 1200 Sheppard Ave. E, North York, Ontario M2K 2S5. The transfer agent of Bonanza is TSX Trust Company, located in Toronto, Ontario. Material Contracts Except for contracts entered into by Bonanza in the ordinary course of business, as of the date of the RTO, the only material contract entered into or anticipated to be entered into by Bonanza which can reasonably be regarded as presently material is the Definitive Agreement. Interests of Experts As of the date of the RTO, the auditors of Bonanza did not have, and were not entitled to receive, any registered or beneficial interests, direct or indirect, in the property of Bonanza and do not own any securities of Bonanza or any associates, affiliates or Related Person of Bonanza. Other Material Facts As of the date of the RTO, there are no other material facts about Bonanza or Bonanza Shares that are not disclosed under any other Item of this appendix or the Listing Statement and are necessary in order for the Listing Statement to contain full, true and plain disclosure of all material facts relating to Bonanza or Bonanza Shares. A-8

77 SCHEDULE "B" INFORMATION CONCERNING CANNABIS ROYALTIES & HOLDINGS CORP. Please see attached. B-1

78 Schedule B Information Concerning Cannabis Royalties & Holdings Corp. ( CRHC ) Terms not otherwise defined in this Appendix have the meanings given to them in the Listing Statement under Glossary. This Appendix is qualified in its entirety by, and should be read together with, the detailed information contained or referred to elsewhere, or incorporated by reference, in the Listing Statement and applicable Appendices. Corporate Name and Head and Registered Office CRHC was a widely held private incorporated company. CRHC was incorporated as ADIV Capital Corp. on October 3, 2014 and changed its name to Cannabis Royalties & Holdings Corp. under a Certificate of Amendment dated March 10, CRHC s head office and registered office was located at the HSBC Building, 885 West Georgia Street, Suite 2200, Vancouver, British Columbia, V6C 3E8. In addition to its head office in Vancouver, CRHC has a satellite office in Ottawa, Ontario and a registered address in County of Kent, Delaware., care of a registered agent. CRHC s trademark/trade dress is branded under the CRHC name. Jurisdiction of Incorporation CRHC was incorporated under the CBCA. Diagram of Intercorporate Relationships The diagram on the following page presents the corporate subsidiaries and certain business interests of CRHC. B-2

79 B-3

80 General Development of the Business The development of CRHC s business is described in the Listing Statement under the heading 3 General Development of the Business General Development. Narrative Description of the Business A narrative description of CRHC s business is described in the Listing Statement under the heading 4 Narrative Description of the Business Narrative Description of the Business. Selected Consolidated Financial Information The following table provides selected financial information from CRHC s consolidated financial statements for the year ended March 31, 2016 and for the period from October 3, 2014 to March 31, 2015 as well as for the six months ended September 30, Refer to Schedule L for complete copies of CRHC s audited financial statements for the year ended March 31, 2016 and the period from October 3, 2014 to March 31, 2015and Schedule M for the unaudited interim financial statements for the three and six months ended September 30, Description Consolidated statements of comprehensive loss For the six months ended September 30, 2016 For the year ended March 31, 2016 For the period of October 3, 2014 to March 31, 2015 Revenue $ 140,125 $nil $nil Loss from operations $ (2,760,904) $ (2,859,656) $ (142,914) Comprehensive loss $ (2,910,118) $ (3,032,938) $ (142,914) Net comprehensive loss per share basic and diluted $ (0.13) $ (0.26) $ (0.14) Cash Dividends declared $nil $nil $nil Consolidated statements of financial position September 30, 2016 March 31, 2016 March 31, 2015 Total Assets $ 12,291,945 $ 3,912,715 $ 518,790 Total Long-term liabilities $nil $nil $nil B-4

81 Dividends CRHC has not paid dividends in the past. Foreign GAAP The financial statements of CRHC are prepared in accordance with IFRS. Management s Discussion and Analysis Please refer to Schedule G for CRHC s MD&A for the years ended March 31, 2016 and March 31, 2015 and to Schedule H for the six months ended September 30, Market for Securities None of CRHC s shares are listed or posted for trading on any stock exchange or quotation system. Consolidated Capitalization The following table sets forth the capitalization of CRHC as of the date hereof. Designation of Security Amount Authorized or to be Authorized Amount Outstanding as of November 24, 2016 Common Shares unlimited 31,641,653 Stock Options N/A Nil Warrants 1,618, ,493 Restricted Share Units Rolling 10% 2,359,800 Fully Diluted Common Shares N/A 35,689,946 Share Unit Plan CRHC did not have a stock option plan, but maintained a share unit plan (the Share Unit Plan ). CRHC s share unit plan was passed by a board resolution dated April 29, The following table sets forth, as at November 24, 2016 information as to the outstanding share units under the Share Unit Plan. Name Number of Share Units Outstanding Date of Grant Vesting Date Vesting Schedule Number of Share Units Vested or which will Vest Marc Lustig 166,500 April 29, 2016 June 28, ,500 (1) June 28, ,250 June 28, ,250 1,000,000 September 1, 2016 September 9, ,000 (2) B-5

82 Name Number of Share Units Outstanding Date of Grant Vesting Date Vesting Schedule Number of Share Units Vested or which will Vest September 9, ,000 September 9, ,000 Ian MacNair 33,300 April 29, 2016 June 28, ,700 (3) June 28, ,650 June 28, ,650 Greg Wilson 700,000 November 1, 2016 November 1, ,000 (4) November 1, ,000 November 1, ,000 François Perrault 225,000 November 1, 2016 November 1, ,000 (5) November 1, ,000 November 1, ,000 Todd Marcotte 225,000 November 1, 2016 November 1, ,000 (6) November 1, ,000 November 1, ,000 Nancy J. White 10,000 November 1, 2016 January 31, ,000 (1) Upon vesting of the 83,500 Share Units, 83,500 Common Shares were issued to Marc Lustig on June 28, (2) Upon vesting of the 334,000 Share Units, Marc Lustig elected to defer payment of the 334,000 Common Shares to a later date as permitted under the Share Unit Plan. (3) Upon vesting of the 16,700 Share Units, 16,700 Common Shares were issued to Ian MacNair on June 28, (4) Upon vesting of the 400,000 Share Units, Greg Wilson elected to defer payment of the 400,000 Common Shares to a later date as permitted under the Share Unit Plan. (5) Upon vesting of the 75,000 Share Units, François Perrault elected to defer payment of the 75,000 Common Shares to a later date as permitted under the Share Unit Plan. (6) Upon vesting of the 75,000 Share Units, Todd Marcotte elected to defer payment of the 75,000 Common Shares to a later date as permitted under the Share Unit Plan. The following is a summary of the key terms of the Share Unit Plan:! The Share Unit Plan is established for employees, directors and officers of CRHC and its affiliates, and for individuals retained as a consultant for CRHC or companies providing management services to CRHC, as may be determined by the CRHC Board or any other committee of the directors authorized by the CRHC Board to administer the Share Unit Plan; B-6

83 ! The Share Unit Plan provides that Share Units may be granted by the CRHC Board or a compensation committee of the CRHC Board or any other committee of the Directors authorized by the CRHC Board to administer the Share Unit Plan. Share Units are units created by means of an entry on the books of CRHC representing the right to receive one Common Share (subject to adjustments) issued from treasury per Share Unit. All grants of Share Units must be evidenced by a confirmation Share Unit grant letter;! The maximum number of CRHC Shares that may be granted pursuant to the Share Unit Plan shall not exceed 10% of the then issued and outstanding CRHC Shares (including Shares underlying outstanding Share Units). Any CRHC Shares subject to a Share Unit which has been cancelled or terminated in accordance with the terms of the Share Unit Plan without settlement will again be available for grant of a Share Unit under the Share Unit Plan;! The number of Share Units granted and any applicable vesting conditions are determined in the discretion of the CRHC Board or a compensation committee of the CRHC Board, with the number of Share Units granted being determined based on the closing market price of the CRHC Shares on the grant date. In granting Share Units, the CRHC Board or a compensation committee of the CRHC Board may include any other terms, conditions and/or vesting criteria which are not inconsistent with the Share Unit Plan;! Share Units are settled by way of the issuance of CRHC Shares from treasury as soon as practicable following the maturity date determined by the CRHC Board or a compensation committee of the CRHC Board in accordance with the terms of the Share Unit Plan. Individuals granted Share Units who are Canadian residents or as otherwise may be designated in the Share Unit grant letter (with the exception of U.S. taxpayers) are permitted to elect to defer issuance of all or any part of the CRHC Shares issuable to them, provided proper notice is provided to the CRHC Board or a compensation committee of the CRHC Board in accordance with the terms of the Share Unit Plan;! In the event a cash dividend is paid to shareholders on the CRHC Shares while a Share Unit is outstanding, each participant will be credited with additional Share Units in lieu of any cash dividends paid to shareholders, equal to the aggregate amount of any cash dividends that would have been paid to the individual if the Share Units had been CRHC Shares, divided by the market price of the CRHC Shares on the date on which dividends were paid by CRHC. If the foregoing shall result in a fractional Share Unit, the fraction shall be disregarded;! The termination provisions under the Share Unit Plan are as follows subject to any determination otherwise by the CRHC Board: (i) (ii) (iii) in the event of retirement, any unvested Share Units will automatically vest on the date of retirement and the CRHC Shares underlying such Share Units will be issued as soon as reasonably practical thereafter; in the event of the death, any unvested Share Units will automatically vest on the date of death and the CRHC Shares underlying all Share Units will be issued to the estate of the deceased as soon as reasonably practical thereafter; in the event of disability (as may be determined in accordance with the policies, if any, or general practices of CRHC or any subsidiary), any unvested Share Units will automatically vest on the date on which the participant is determined to be totally disabled and the CRHC Shares underlying the Share Units will be issued as soon as reasonably practical thereafter; B-7

84 (iv) (v) in the event of termination without cause of a Share Unit holder, (i) any unvested Share Units that are not subject to performance vesting criteria will automatically vest on the date on which the individual is terminated and the CRHC Shares underlying the Share Units will be issued as soon as reasonably practical thereafter, and (ii) any unvested Share Units that are subject to performance vesting criteria will vest in accordance with their normal vesting schedule, except, in either case, as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the CRHC Board; and in the event of termination with cause or resignation, all of the Share Units shall become void and the holder shall have no entitlement and will forfeit any rights to any issuance of CRHC Shares under the Share Unit Plan, except as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the CRHC Board or a compensation Committee of the CRHC Board in its sole and absolute discretion. Share Units that have vested but that are subject to an election to set a deferred payment date shall be issued forthwith following the termination with cause or the resignation of the holder;! In the event of a change of control, all unvested Share Units issued and outstanding shall automatically and immediately vest on the date of such change of control;! The grant of Share Units under the Share Unit Plan is subject to a restriction such that the number of CRHC Shares: (i) issued to insiders of CRHC, within any one year period, and (ii) issuable to insiders of CRHC, at any time, under the Share Unit Plan, or when combined with all of CRHC's other security based compensation arrangements, shall not exceed 10% of CRHC's total issued and outstanding CRHC Shares, respectively;! The amendment provisions of the Share Unit Plan provide the CRHC Board or a compensation committee of the CRHC Board with the power, subject to the requisite regulatory approval, to make the following amendments to the provisions of the Share Unit Plan and any Share Unit grant letter without shareholder approval (without limitation): (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) amendments of a housekeeping nature; the addition or a change to any vesting provisions of a Share Unit; changes to the termination provisions of a Share Unit or the Share Unit Plan; and amendments to reflect changes to applicable securities or tax laws. However, any of the following amendments require shareholder approval: materially increasing the benefits to the holder of any Share Units who is an insider to the material detriment of CRHC and CRHC s shareholders; increasing the number of CRHC Shares or maximum percentage of CRHC Shares which may be issued pursuant to the Share Unit Plan (other than by virtue of adjustments permitted under the Share Unit Plan); permitting Share Units to be transferred other than for normal estate settlement purposes; removal or exceeding of the insider participation limits; B-8

85 (x) (xi) materially modifying the eligibility requirements for participation in the Share Unit Plan; or modifying the amending provisions of the Share Unit Plan. Description of the Securities CRHC was authorized to issue an unlimited number of common shares. Holders of CRHC Shares were entitled to receive notice of, attend and vote at all meetings of the shareholders of CRHC. Each CRHC Share carried the right to one vote in person or by proxy at all shareholder meetings of CRHC. The holders of CRHC Shares were entitled to receive dividends as and when declared by the CRHC Board and, subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of CRHC, were entitled to receive the remaining property of CRHC in the event of liquidation, dissolution or winding-up. There were 31,641,653 CRHC Shares issued and outstanding immediately prior to the completion of the RTO. Prior Sales Immediately prior to the RTO, there were 31,641,653 CRHC Shares issued and outstanding. CRHC issued the following securities within the 12 months before the date hereof: Date of Issue Description Number of CRHC Shares Sold Price Per Share (CAD$) Details of Consideration March 17, 2016 Common Shares 3,333,333 $0.75 Cash April 12, 2016 Common Shares 1,300,000 $0.75 Past services rendered June 7, 2016 Common Shares 3,000,000 $0.75 Cash June 28, 2016 Common Shares 100,200 N/A Issued Pursuant to Share Unit Plan July 4, 2016 Common Shares 3,500,000 $0.75 Pursuant to Binding Letter Agreement July 15, 2016 Common Shares 665,000 $0.75 Cash July 28, 2016 Common Shares 1,072,735 $0.75 Cash August 18, 2016 Common Shares 220,000 $0.75 Issued in satisfaction of outstanding loan August 24, 2016 Common Shares 750,000 $1.50 Issued pursuant to warrant exercise September 28, 2016 Common Shares 250,000 $2.00 Cash October 4, 2016 Subscription Receipts 2,502,000 (1) $2.00 Cash October 24, 2016 Common Shares 3,000,000 $2.00 Issued pursuant to a definitive Share Purchase Agreement B-9

86 November 1, 2016 Common Shares 750,000 $2.00 Issued in exchange for shares of Electric Medialand November 17, 2016 Common Shares 250,000 $1.50 Issued pursuant to warrant exercise November 17, 2016 Common Shares 250,000 $1.50 Issued pursuant to warrant exercise November 23, 2016 Common Shares 65,000 $1.50 Issued pursuant to warrant exercise November 23, 2016 Common Shares 65,375 $1.50 Issued pursuant to warrant exercise November 24, 2016 Common Shares 50,000 $1.50 Issued pursuant to warrant exercise (1) 2,502,000 subscription receipts were issued on October 4, 2016 each of which entitle the holder to one CRHC Share. The CRHC Shares are expected to be issued upon satisfaction of the Escrow Release Conditions on December 2, Principal Shareholders Except as set out below, no person beneficially owned, directly or indirectly, or exercised control or direction over 10% or more of the outstanding CRHC Shares immediately prior to the RTO. Name Number of Shares Method of Ownership Percentages of Shares (3) Marc Lustig (1) 3,371,085 (2) Record and Beneficially 10.65% (1) Marc Lustig owned 4,366,250 CRHC Shares on a fully diluted basis. (2) This number includes the 171,335 CRHC Shares held by AJKNJ Corp., a corporation controlled by Marc Lustig. (3) Based on 31,641,653 issued and outstanding shares (undiluted). Directors and Officers The following table sets forth the name of all directors and officers of CRHC immediately prior to the RTO, their municipalities of residence, their positions with CRHC, their principal occupations during the past five years and the number and percentage of CRHC Shares beneficially owned, directly or indirectly, or over which control or direction is exercised as at the date immediately prior to the RTO: B-10

87 Name, Municipality of Residence (1), Position(s) with CRHC Marc Lustig West Vancouver, British Columbia, Canada Director, President and Chief Executive Officer François Perrault Ottawa, Ontario Chief Financial Officer Greg Wilson Ottawa, Ontario, Canada Director, Chief Operating Officer Todd Marcotte Ottawa, Ontario, Canada Chief Branding Officer Principal Occupation or Employment Chief Executive Officer of CRHC Chief Financial Officer of CRHC CEO of Vida Cannabis Corp Chief Branding Officer of CRHC B-11 Director/Officer since (4) Number (2) and Percentage of CRHC Shares Held (3) March 6, ,371,085 (5) 10.65% November 1, 2016 Nil (6) November 1, ,000 (6) 0.95% November 1, ,000,000 (6) 3.16% 1. The information as to municipality of residence and principal occupation, not being within the knowledge of CRHC, has been furnished by the respective directors and officers individually. 2. The information as to shares beneficially owned or over which a director or officer exercises control or direction, not being within the knowledge of CRHC, has been furnished by the respective directors and officers individually. 3. On an issued and undiluted basis. 4. The terms of each director of the Issuer will expire at the Issuer s next annual general meeting or until a successor is duly elected or appointed, unless his office is earlier vacated in accordance with CRHC s Articles and applicable law. 5. This does not include vested and deferred RSUs or unvested RSUs currently held but this does include 171,335 Issuer Share held by AJKNJ Corp., a corporation controlled by Marc Lustig. 6. This does not include vested and deferred RSUs or unvested RSUs currently held. Immediately prior to the RTO, the directors and officers of CRHC as a group beneficially owned, directly or indirectly, an aggregate of 4,671,085 CRHC Shares, representing 14.76% of the issued and outstanding CRHC Shares on a non-diluted basis. Please see the Listing Statement 13 Directors and Officers for brief biographical descriptions of the management and directors of CRHC. Board Committees CRHC s sole director was Marc Lustig and therefore did not have any board committees. Corporate Cease Trade Orders and Bankruptcy No director, officer or promoter of CRHC has, within the last ten years immediately prior to the RTO, been a director, officer or promoter of any company that, (a) was the subject of a cease trade or similar order or an order that denied the company access to any statutory exemption for a period of more than 30 consecutive; or (b) was subject to an order that was issued after he or she ceased to act in that capacity, which resulted from an event that occurred while that person was acting as director, officer or promoter. officer was acting in the capacity while such person was acting in that capacity, or within a period of one year thereafter, was the subject of a cease trade or similar order or an order that denied the company access to any statutory exemption for a period of more than 30 consecutive days or was declared a bankrupt or made a voluntary assignment in bankruptcy, made a proposal under any legislation relating to

88 bankruptcy or been subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver-manager or trustee appointed to hold the assets of that person. No director, officer, or promoter of CRHC or any shareholder anticipated to hold a sufficient amount of securities of CRHC, (a) (b) is, as at the date of the RTO, or has been within the last 10 years, a director or executive officer of any company that, while acting in that capacity, or within a year of ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or has, within the 10 years before the date of the RTO, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder. Penalties or Sanctions As of the date of the RTO, no director, officer, or promoter of CRHC or any shareholder anticipated to hold a sufficient amount of securities of CRHC has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that would be likely considered important to a reasonable investor in making an investment decision. Conflicts of Interest Refer to section 13.6 Conflict of Interest in the body of the Listing Statement for more information. Capitalization Issued Capital Public Float Number of Securities (non-diluted) Number of Securities (fullydiluted) % of Issued (nondiluted) % of Issued (fully diluted) Total outstanding (A) 31,641,653 35,689, % 100% Held by Related Persons or employees of the Issuer or Related Person of the Issuer, or by persons or companies who beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer (or who would beneficially own or control, directly or indirectly, more than a 5% voting position in the Issuer upon exercise or conversion of 13,100,167 15,416, % 43.20% B-12

89 other securities held) (B) Total Public Float (A-B) 18,491,486 20,273, % 56.80% Freely-Tradeable Float Number of outstanding securities subject to resale restrictions, including restrictions imposed by pooling or other arrangements or in a shareholder agreement and securities held by control block holders (C) (1) Total Tradeable Float (A-C) Notes: (1) CRHC s shares are subject to private company resale restrictions under applicable Securities Laws and the constating documents of CRHC. Public Securityholders (Registered) Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 0 0 5,000 or more securities ,491, ,491,486 B-13

90 Public Securityholders (Beneficial) Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 0 0 5,000 or more securities 0 0 Unable to confirm 0 0 Non-Public Securityholders (Registered) Class of Security Size of Holding Number of holders Total number of securities 1 99 securities securities securities 0 0 1,000 1,999 securities 0 0 2,000 2,999 securities 0 0 3,000 3,999 securities 0 0 4,000 4,999 securities 0 0 5,000 or more securities 8 13,100, ,100,167 B-14

91 Description of Security (include conversion / exercise terms, including conversion / exercise price) Number of convertible / exchangeable securities outstanding Number of listed securities issuable upon conversion / exercise Convertible Debenture CRHC issued a convertible secured debenture in the principal amount of $1,500,000. The outstanding principal may be converted in whole or in part into CRHC Shares at a price of $2.00 per CRHC Share. Restricted Share Units The RSUs were issued pursuant to CRHC s Share Unit Plan, which is described under the heading Share Unit Plan in the Listing Statement. The vesting conditions of the RSUs were determined in the sole and absolute discretion of the CRHC Board. Generally, one-third of the granted RSUs will vest on the date of grant, one-third of the granted RSUs will vest on the first anniversary of the date of grant, and one-third of the granted RSUs will vest on the second anniversary of the date of grant. Upon the vesting of such RSUs, the holder may elect to defer receipt of the CRHC Shares ,000 2,359,800 2,359,800 Warrants 938, ,493 The warrants may be exercised at or before the date specified on the warrant certificate at a price of $1.50 for each warrant exercised. Indebtedness of Directors and Executive Officers Immediately prior to the RTO, no director, executive officer or senior officer of CRHC, or any associates of such persons, was indebted to CRHC and no indebtedness of such persons was the subject of a guarantee, support agreement, letter of credit or other similar arrangement provided by CRHC. B-15

92 Promoters The promoter of CRHC was the same as that listed for CannaRoyalty in the Listing Statement under the heading 18 - PROMOTERS. Legal Proceedings and Regulatory Actions As of the date of the RTO, there were no legal proceedings material, and no contemplated legal proceedings known to be material, to CRHC to which it is a party or of which any of its property is the subject matter. As of the date of the RTO, none of CRHC or any of its subsidiaries had been subject to any penalties or sanctions imposed by any court or regulatory authority relating to provincial and territorial securities legislation or by a securities regulatory authority, within the three years immediately preceding the date of the RTO, nor has any party entered into a settlement agreement with a securities regulatory authority within the three years immediately preceding the RTO, or been subject to any other penalties or sanctions imposed by a court or regulatory body or self-regulatory authority that are necessary to provide full, true and plain disclosure of all material facts relating to CRHC s securities or would be likely to be considered important to a reasonable investor making an investment decision. Interest of Management and Others in Material Transactions Other than services as directors, executive officers and employees of CRHC or as disclosed in the Listing Statement under the heading 20 - INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS CRHC and the Issuer, CRHC has not acquired any assets or been provided any services in any material transaction, or in any proposed material transaction, from any director, executive officer, insider or promoter of CRHC, the directors of CannaRoyalty, the executive officers, insiders or promoters of CannaRoyalty, or their associates and affiliates. Other than as disclosed below, no director, executive officer, insider or promoter of CRHC or any associate or affiliate of any such person or company has or had any material interest, direct or indirect, in any transaction that has materially affected or will materially affect CRHC or the CannaRoyalty. Auditors, Transfer Agents and Registrars The auditors for CRHC were Jackson & Company, West Hastings St., Vancouver, British Columbia V6E 3T5. The transfer agent of CRHC was Harrison Pensa LLP, located in London, Ontario. TSX Trust Company, located in Toronto, Ontario, acted as transfer agent with respect to the subscription receipts issued under the CRHC SR Financing. Material Contracts Except for contracts entered into by CRHC in the ordinary course of business, the only material contracts entered into or that were anticipated to be entered into by CRHC at the time of the RTO, which can reasonably be regarded as material were: (a) the Definitive Agreement; and (b) the Agency Agreement. Interest of Experts The auditors of CRHC did not have, and were not entitled to receive, any registered or beneficial interests, direct or indirect, in the property of CRHC and did not own any securities of the Issuer or any associates, affiliates or Related Person of the Issuer. B-16

93 Cassels Brock & Blackwell ( Cassels ), counsel to CRHC, did not have, and are not entitled to receive, any registered or beneficial interests, direct or indirect, in the property of CRHC and Cassels nor any partner, employee or consultant of Cassels owned 1% or more of the outstanding securities of CRHC or any associates, affiliates or Related Person of CRHC. Other Material Facts There are no other material facts about CRHC or the CRHC Shares that are not disclosed under any other Item of this Appendix or the Listing Statement and are necessary in order for the Listing Statement to contain full, true and plain disclosure of all material facts relating to CRHC or the CRHC Shares. B-17

94 SCHEDULE "C" INFORMATION CONCERNING THE RTO Please see attached. C-1

95 Schedule C Summary of the RTO Bonanza and CRHC completed the following transactions in the order listed below on December 5, 2016: (a) (b) (c) (d) (e) (f) the execution of the Definitive Agreement; the execution of the Agency Agreement; an application to the CSE for the listing of the Issuer Shares (the Listing ); the closing of the CRHC SR Financing in escrow; the closing of the Bonanza Financing; the issuance of conditional approval for Listing by the CSE; (g) the incorporation by Bonanza of AcquisitionCo, a wholly-owned subsidiary, for the purpose of completing the RTO; (h) (i) (j) (k) (l) the Bonanza Share Transfers; the Debt Transfer; the Consolidation; the Escrowed Funds released from escrow; Bonanza acquired CRHC via the RTO pursuant to which, on the effective date thereof: (i) CRHC and AcquisitionCo, a wholly-owned subsidiary of Bonanza, amalgamated and continued as one corporation, such amalgamated corporation (referred to herein as AmalCo ): (i) (ii) (iii) will have the name Cannabis Royalties & Holdings Corp. ; will be a wholly owned subsidiary of the Bonanza; and will own all of the assets, properties, rights, privileges and licences, and is subject to all of the liabilities, contracts and obligations of each of CRHC and AcquisitionCo; (ii) (iii) each shareholder of CRHC (including the former holders of subscription receipts) will be deemed to have exchanged such shareholder s CRHC Shares for Issuer Shares and receive an equivalent number of fully paid and non-assessable Issuer Shares; each holder of CRHC securities will be deemed to have exchanged such securityholder s other securities for like securities of the Bonanza Shares, on economically equivalent terms to the securities for which they were exchanged; (m) contemporaneously with the Closing, Bonanza was renamed CannaRoyalty Corp. (the Name Change ); and C-2

96 (n) the Listing on December 2, 2016 conditional approval for listing on the CSE was granted. Completion of the RTO was subject to the satisfaction or waiver of all conditions set forth in the Definitive Agreement, which are discussed further below under the heading 1.2 The Definitive Agreement Conditions of the RTO. The terms of the RTO, as set out in the Definitive Agreement and summarized below, were established through arm s length negotiations between the management of Bonanza and CRHC. The RTO was completed and effective on December 5, 2016, when the terms and conditions of the Definitive Agreement were satisfied (or waived, as applicable). 1.1 Background to and Details of the RTO Bonanza was incorporated as McGarry Minerals Ltd. on August 19, Bonanza was initially formed in order to acquire an interest in and to explore mineral prospects. In 1989, Bonanza abandoned its mineral prospects and changed its name to Whittier Capital Inc. and later to Whittier Industries Inc. In 1991, it acquired Best Sports Distribution Ltd., which was engaged in the development and distribution of sporting equipment, and changed its name to TriplePlay Sports Group Inc. During 1994, operations of Bonanza ceased due to lack of funds and other factors. On August 16, 2000, the name was changed again to the current name, Bonanza Blue Corp., in connection with a corporate reorganization effected to settle indebtedness with creditors. In June of 2011, Bonanza was recapitalized and a new board and management team was put in place with a focus of identifying prospective assets or businesses to acquire or merge with, with a view to increasing value for shareholders. Since that time, management has investigated a number of merger and acquisition opportunities for Bonanza. On April 13, 2015 Bonanza announced entering into a binding letter agreement to effect a business combination with Churchill Diamond Corporation, exploring for diamonds in Nunavut, however, the transaction was subsequently mutually terminated by the parties. On June 30, 2016, Bonanza and CRHC announced that they had signed a Definitive Agreement with respect to the RTO. Reasons for the RTO The Listing of Bonanza from the RTO, together with the release of the Escrowed Funds, will provide CRHC with additional capital to pursue its business objectives. The Listing will also provide CRHC with potentially greater access to the capital markets in the future and may facilitate the completion of acquisitions on accretive terms in the future. Further, the Listing provides the potential for liquidity to CRHC s existing shareholders. Procedure for the RTO to Become Effective The RTO will be carried out pursuant to the provisions of the CBCA. The following procedural steps were taken in order for the RTO to become effective: (a) (b) (c) the satisfaction or waiver of all conditions precedent to the RTO as set forth in the Definitive Agreement, including receipt of CSE approval for the Listing; execution of the Amalgamation Agreement on the date of closing by Bonanza, CRHC, and AcquisitionCo; and filing of the articles of amalgamation in the form prescribed by the CBCA. The RTO will legally become effective when a certificate of amalgamation is issued in respect of the amalgamation of CRHC and AcquisitionCo. C-3

97 Shareholder Approvals Necessary for the RTO Approval of the RTO by the shareholders of Bonanza was required for certain matters, including: (a) (b) (c) the Consolidation; the Name Change; and the conditional election of the CRHC Nominees; (collectively, the Bonanza Meeting Matters ) The Bonanza Meeting was held on November 11, 2016 and each of the Bonanza Meeting Matters was approved by the shareholders of Bonanza. Pursuant to the provisions of the CBCA, the RTO required the approval of CRHC shareholders and the approval of Bonanza, in its capacity as the sole shareholder of AcquisitionCo. Shareholders of each of CRHC and AcquisitionCo have approved the RTO. CSE Approval for the Listing CRHC and Bonanza applied to the CSE for the listing of the common shares of CannaRoyalty. Conditional listing approval was granted on December 2, 2016 and final approval of the listing was subject to CRHC meeting certain standard requirements of the CSE. Legally, the effective date of the RTO is on the date that a certificate of amalgamation was issued in respect of the amalgamation of CRHC and AcquisitionCo. 1.2 The Definitive Agreement The Definitive Agreement provides for the reverse takeover of Bonanza by CRHC by way of a threecornered amalgamation under the provisions of the CBCA, pursuant to which CRHC and AcquisitionCo shall amalgamate to form AmalCo, and AmalCo will continue as a wholly-owned subsidiary of the Bonanza. The following is a summary of the Definitive Agreement and is qualified in its entirety by the full text of the Definitive Agreement, which has been filed on SEDAR and is incorporated by reference herein. The Financings Bonanza and CRHC agreed, to the extent required to meet CSE listing requirements, or as may otherwise be required in CRHC s sole opinion, that CRHC would undertake one or more equity financings (each, a CRHC Financing ). In furtherance of this covenant, the CRHC SR Financing has closed in escrow. Bonanza and CRHC further agreed that Bonanza would undertake an equity financing for gross proceeds of not less than $50,000 and not more than $95,000 in cash (the Bonanza Financing ) with parties designated by CRHC by way of an issuance of subscription receipts at a price of $0.75, with each subscription receipt entitling the holder to one RI Share. In furtherance of this covenant, the Bonanza Financing was anticipated to close on November 30, 2016 whereby Bonanza issued 120,000 Bonanza Shares for gross proceeds of $90,000. The Consolidation Immediately prior to the completion of the RTO, Bonanza consolidated its issued and outstanding common shares (the Bonanza Pre-Consolidation Shares ) on the basis of one new common share of Bonanza (each a Bonanza Share ) for every 5 Bonanza Pre-Consolidation Shares issued and C-4

98 outstanding (the Consolidation ), subject to adjustment in the event less than the maximum Bonanza Share Transfers (as defined below) were completed or if the outstanding share capital of CRHC changed. Approval for the Consolidation was sought and received from Bonanza Shareholders at the Bonanza Shareholder Meeting. Ancillary Transactions In connection with the RTO, Bonanza agreed to cause the completion of certain transactions: (a) (b) the assignment of the outstanding related party debt of Bonanza in the aggregate amount of $61,930 by the creditors thereunder for normal consideration to parties designated by CRHC (the Debt Transfer ); the sale for normal consideration by certain significant shareholders of Bonanza (the Bonanza Significant Shareholders ) of such number of Bonanza Shares for purchase by parties designated by CRHC (the Introduced Parties ) that results in the Introduced Parties holding up to a maximum of 1,000,000 Bonanza Shares (the Bonanza Share Transfers ). None of the subscribers in the Bonanza Financing, none of the assignees of debt pursuant to the Debt Transfer and none of the Introduced Parties acquiring Bonanza Shares pursuant to Bonanza Share Transfers are or will be insiders of Bonanza or CRHC or associates or affiliates of such insiders. Representations, Warranties and Covenants The Definitive Agreement contains certain customary representations and warranties of each of the parties thereto relating to, among other things, their respective organization, capitalization, qualification, operations, compliance with laws and regulations and other matters, including their authority to enter into the Definitive Agreement and to consummate the RTO. Pursuant to the Definitive Agreement, the parties have agreed to use their commercially reasonable efforts to consummate the RTO in a timely manner, prepare this Listing Application, and agree to any ancillary documents required in connection with the RTO. Under the Definitive Agreement, Bonanza and CRHC have agreed not to, and have agreed not to allow any of their officers, directors, employees, representatives, advisors, agents or subsidiaries to, engage in any Restricted Actions. Further, Bonanza and CRHC shall, and shall direct and cause each of their respective officers, directors, employees, representatives, advisors, and agents and each of their respective subsidiaries and their officers, directors, employees, representatives, advisors, and agents to immediately cease and cause to be terminated any solicitation, encouragement, activity, discussion or negotiation with any parties that may be ongoing with respect to an Alternative Transaction. In the event either Bonanza, CRHC, or any of their respective affiliates, including any of their respective officers or directors, receives any proposals, offers or written inquiries relating to or which could result in an Alternative Transaction being consummated, or any request for non-public information relating to such party, such party shall promptly (and in any event within 24 hours) notify the other party, at first orally and then in writing of such offer or inquiry and the identity of the person making such proposal, inquiry or offer. Each party shall keep the other party fully informed on a prompt basis of the status, including any change to the material terms, of any such inquiry, proposal or offer. In addition, pursuant to the Definitive Agreement, each of the parties covenanted, among other things, until the completion of the RTO, to maintain their respective businesses and not to take certain actions outside the ordinary course without the consent of the other parties, and to hold information exchanged between the parties and their representatives in confidence. C-5

99 Conditions of the RTO The Definitive Agreement contains a number of condition precedents to the obligations of Bonanza and CRHC thereunder. Unless all such conditions were satisfied or waived by the party or parties for whose benefit such conditions exist, to the extent they may be capable of waiver, the RTO would not proceed. There was no assurance that these conditions would be satisfied or waived on a timely basis, or at all. The conditions to the RTO becoming effective are set out in the Definitive Agreement and are summarized below. The obligation of the parties to consummate the RTO was subject to the satisfaction or waiver, on or before the effective date of the RTO or such other time specified (the Effective Time ), of the following conditions and such other conditions as are customary for transactions of this nature: (a) (b) (c) (d) (e) (f) (g) (h) (i) Bonanza and CRHC will have obtained all necessary consents, waivers, permissions and approvals by or from relevant third parties (including board of directors approval and shareholder approval, if applicable), on terms and conditions satisfactory to the other party, acting reasonably, including without limitation all applicable regulatory approvals, orders, notices and consents (including, without limitation, those of the CSE in respect of Listing); the Issuer shall meet the minimum listing requirements of the CSE; the Effective Time shall have occurred no later than November 30, 2016, unless otherwise extended in writing by the mutual agreement of both parties (the Outside Date ); the representations and warranties made by each of Bonanza and CRHC in the Definitive Agreement shall be true and correct in all material respects as of the Effective Time as if made on and as of such date (except to the extent such representations and warranties speak as of an earlier date or except as affected by transactions contemplated or permitted by this Agreement or the Definitive Agreement), except where the failure of such representations and warranties to be true and correct, individually or in the aggregate, would not result or would not reasonably be expected to have a Material Adverse Effect or would not, or would not reasonably be expected to, materially impede completion of the RTO; provided that each party shall be entitled to cure any breach of a representation and warranty within five business days after receipt of written notice thereof from the other party (except that no cure period shall be provided for a breach which by its nature cannot be cured and, in no event, shall any cure period extend beyond the Outside Date); neither Bonanza nor CRHC shall be in material breach of its obligations under the Definitive Agreement; there shall not have been any event or change that has had or would be reasonably likely to have a Material Adverse Effect on either Bonanza or CRHC, as applicable; completion of the Consolidation and Name Change; if determined necessary by CRHC, in its sole discretion, completion of a CRHC Financing; completion of the Debt Transfer; C-6

100 (j) (k) (l) (m) (n) completion of the Bonanza Financing, on terms satisfactory to CRHC; completion of Bonanza Share Transfers; Bonanza s Significant Shareholders shall execute customary lock-up agreements in favour of CRHC with respect to securities of Bonanza held by them for a 180 day period following the closing of the RTO; the issuance of incentive stock options to certain directors of Bonanza, as directed by Bonanza, permitting the holders thereof to acquire an aggregate of 75,000 Issuer Shares at an exercise price of $1.00 for a period of one year following the Closing; and the availability of prospectus exemptions for the RTO under applicable securities laws. Bonanza or CRHC may refuse to proceed with the Closing if the conditions precedent inserted for its or their benefit are not fulfilled to its or their reasonable satisfaction prior to the Effective Time and it or they would incur no liability to any other party by reason of such refusal. The above conditions precedent, where not otherwise required by law, may be waived in whole or in part by the party or parties for whose benefit they are inserted in that party or those parties absolute discretion. No such waiver shall be of any effect unless it is in writing signed by the party or parties granting the waiver. Termination of Agreement The Definitive Agreement will terminate with each party having no obligations to the other, other than obligations relating to publicity and confidentiality, privacy, expenses, termination, and miscellaneous provisions of the Definitive Agreement, on the date on which any of the following events occurs: (a) (b) (c) (d) the mutual written agreement of Bonanza and CRHC; any applicable regulatory authority having notified in writing either Bonanza or CRHC that it will not permit the RTO to proceed; if shareholder approval of either or both of Bonanza and CRHC is required, the shareholders of Bonanza and/or CRHC Shareholders, as applicable, not approving the RTO in accordance with all applicable laws and the regulations of the CSE at a duly constituted meeting of shareholders; by either Bonanza or CRHC if: (i) (ii) Bonanza or CRHC do not execute the Amalgamation Agreement on or before the Outside Date, or such other date as Bonanza and CRHC may agree upon in writing; the other party has breached or is in default of any material term of the Definitive Agreement and fails to cure or remedy such breach or default within 10 days after receiving written notice thereof from the other party. For the purposes of that subparagraph of the Definitive Agreement, the failure to comply with any of the provisions of Section 11 of the Definitive Agreement (Conduct of Business), such that the conditions precedent specified in Section 5 of the Definitive Agreement have not been satisfied by the Outside Date, will be considered to be a breach of a material term of the Definitive Agreement; C-7

101 (iii) (iv) it determines, acting reasonably, that the results of its due diligence investigation of the other party are not satisfactory to it; or any of the conditions set forth in Section 5 of the Definitive Agreement for the benefit of the terminating Party is not satisfied or waived by the Outside Date; or by either party if it accepts and enters into an agreement in respect of an Alternative Transaction in compliance with the terms of the Definitive Agreement. Directors and Officers of the Bonanza At the Bonanza Meeting, Bonanza s shareholders conditionally elected Marc Lustig, Rob Harris, Chuck Rifici, Greg Wilson and Dr. Jim Young (the CRHC Nominees ) as directors of the Bonanza, to be effective immediately and automatically on completion of the RTO in replacement of the current directors of Bonanza. In addition, pursuant to the Definitive Agreement, Bonanza has agreed to cause the resignation of its existing officers. Accordingly, upon Closing, all current officers and directors of Bonanza were replaced by the CRHC Nominees and officer appointees of CRHC to constitute the Board and officers of the Bonanza. For information in respect of the Board and management of the Issuer, see the following heading in the Listing Statement, Error! Reference source not found. Error! Reference source not found.. C-8

102 SCHEDULE "D" PRO FORMA FINANCIAL STATEMENTS OF CANNAROYALTY Please see attached. D-1

103 Schedule D CRHC Pro Forma Statements D-2

104 D-3

105 D-4

106 D-5

107 1. Basis of Presentation The unaudited pro forma consolidated financial statements have been prepared by management from the unaudited condensed consolidated interim financial statements of Bonanza Blue Corp. ("BB") for the nine months ended September 30, 2016 and 2015; the unaudited condensed consolidated interim financial statements of Cannabis Royalties Holding Corp. ("CRHC") for the six month periods ended September 30, 2016 and 2015; the annual consolidated financial statements of BB for the year ended December 31, 2015; and the audited annual consolidated financial statement of CRHC for the year ended March 31, In the opinion of management, the pro forma consolidated financial statements include all material adjustments necessary for the fair presentation in accordance with International Financial Reporting Standards. The pro forma consolidated financial statements may not be indicative of the financial position or results of operations that actually would have occurred if the events reflected therein had been in effect on the dates indicated nor of the financial position or results of operations which may be obtained in the future. The pro forma consolidated financial statements are based on the general terms and conditions of the proposed transaction ( the Proposed Transaction ) pursuant to which BB will acquire all of the issued and outstanding securities of CRHC in exchange for securities of BB. The Proposed Transaction is anticipated to be carried out by way of a three-cornered amalgamation pursuant to which CRHC will amalgamate with a wholly-owned subsidiary of BB. These pro forma consolidated financial statements should be read in conjunction with the financial statements of BB and CRHC referred to above and other information included in the BB Management Information Circular dated October 21, 2016, which is available on BB s SEDAR profile on Upon completion of the acquisition, it is anticipated that the resulting issuer's name will be CannaRoyalty Corp. As a consequence of the Proposed Transaction, the shareholders of CRHC will acquire control over the combined entity and the acquisition of CRHC by BB will constitute a reverse take-over of BB. The consolidated entity is considered to be a continuation of CRHC, with the net identifiable assets of BB deemed to have been acquired by CRHC. Accordingly, in these pro forma consolidated financial statements BB is deemed to be the acquired company and its assets and liabilities are brought forward at their fair values (see note 3(a)). CRHC is deemed to be the acquiring company and its assets and liabilities, equity and historical operating results are included at their historical carrying values. The accounting policies used in the preparation of the unaudited pro forma consolidated financial statements are consistent in all material respects with those used by CRHC, as described in note 3 to CRHC's audited annual consolidated financial statements for the year ended March 31, 2016 and CRHC's unaudited condensed consolidated interim financial statements for the six month periods ended September 30, 2016 and There are no significant differences in the accounting policies of BB versus those of CRHC which give rise to any material difference in the amounts presented in the unaudited pro forma consolidated financial statements. D-6

108 2. Proposed Transaction Pursuant to the terms of the agreement (the BB Agreement ) between BB and CRHC dated June 30, 2016, the Proposed Transaction will be implemented by way of a three-cornered amalgamation whereby CRHC will amalgamate with a newly formed wholly owned subsidiary of BB ("Amalco"). To satisfy the conditions of the BB Agreement, BB held a meeting of its shareholders on November 11, 2016 to conditionally approve, among other things, a share consolidation of BB on a five (5) pre-consolidation shares for one (1) post-consolidation share basis, and the change of name for the resulting issuer from the Proposed Transaction to CannaRoyalty Corp. ( CannaRoyalty ). Upon the amalgamation of CRHC and Amalco, holders of common shares of CRHC will be entitled to receive one consolidated share of BB for each CRHC share held. The amalgamated company will continue as a wholly-owned subsidiary of CannaRoyalty, and CannaRoyalty will continue CRHC s business. Upon completion of the amalgamation former CRHC shareholders will own a majority of the CannaRoyalty consolidated shares and as such the transaction will constitute a reverse take-over of BB by CRHC. 3. Pro Forma Assumptions and Adjustments The pro forma consolidated financial statements as at September 30, 2016 and for the year then ended give effect to a series of transactions arising both from the required satisfaction of conditions precedent to the BB Agreement and to those that will become effective on the closing date of the merger as if, for illustrative purposes only, the closing date was April 1, 2015 with respect to the pro forma consolidated statement of operations and comprehensive loss and was September 30, 2016 with respect to the pro forma consolidated statement of financial position. The pro forma consolidated financial statements incorporate the following pro forma assumptions and adjustments: (a) Reverse take-over accounting The assets and liabilities of CRHC are included in the pro forma consolidated statement of financial position at their historic cost values as at September 30, The net assets of BB are included in the pro forma consolidated statement of financial position at their fair values as at September 30, The historical values of BB's share capital and deficit are eliminated. CRHC is deemed to have issued 1,611,002 common shares to BB, as BB is entitled to one share in the resulting issuer for each of its five shares. The consideration is based on the value of CRHC common shares in the last issuance prior to September 30, The shares issued to BB are recorded as additional amounts in shareholders' equity and are set out as follows along with a summary of the fair value of net identifiable assets acquired: D-7

109 As there were no identifiable tangible or intangible assets to allocate the remainder of the consideration, $3,352,094 has been included in listing expenses. (b) Direct transaction costs Direct transaction costs are estimated to total $440,000 with respect to legal, audit and accounting related, and financial advisory fees. Of this total, it is estimated that $35,000 relates directly to equity financing transactions which have been recorded as a reduction of share capital in the pro forma consolidated statement of financial position and $405,000 relates to merger costs which have been expensed in the pro forma consolidated statement of operations as listing expenses. (c) CRHC private placement In connection with the Proposed Transaction with BB, on October 4, 2016, CRHC completed a brokered offering ( the Offering ) of 2,502,000 subscription receipts at a price of $2 per subscription receipt for total gross proceeds of $5,004,000 through a syndicate of agents. The subscription receipts will be automatically converted into common shares in the capital of CRHC upon the completion of certain events which are assumed to have been completed for the purpose of these pro-forma financial statements. The agents are entitled to receive an aggregate fee of 7% of the gross proceeds from the Offering or $350,280. The agents will also be reimbursed for their fees and expenses incurred in connection with the Offering, which is estimated at $81,250. These costs are related to the Offering and are recorded as a reduction to share capital. As an additional consideration for the services of the agents, CRHC agreed to issue an amount of 175,140 non-transferable broker warrants. The amount of broker warrants is equal to 7% of the assumed subscription receipts. A fair value of $159,377 was estimated with respect to these broker warrants using the Black-Scholes pricing model with the following assumptions: dividend yield 0%; riskfree interest of 0.50%; volatility of 85%; and an expected life of 2 years. This is recorded within shareholder s equity as a warrant reserve with an offsetting reduction in share capital. D-8

110 (d) Assignment of BB related party debt In connection with the proposed transaction, $61,930 of BB s related party debt will be settled through the issuance of 82,573 additional CRHC shares at $0.75. (e) BB senior financing In connection with the proposed transaction, BB will undertake an equity financing for gross proceeds of $90,000 in cash with parties designated by CRHC, by way of an issuance of common shares at a price of $0.75 on a post consolidation basis. The number of common shares to be issued pursuant to this transaction is 120,000. (f) Issuance of incentive stock options to BB directors In connection with the proposed transaction, there will be an issuance of incentive stock options to certain directors of BB, as directed by BB, permitting the holders to acquire an aggregate of 75,000 BB Post-Consolidation Shares at an exercise price of $1.00 for a period of one year following the closing of the Transaction. The fair value of the 75,000 options deemed to be issued was $85,241. The fair value was estimated using the Black Scholes model with the following assumptions: grant date value of $2.00, dividend yield 0%, risk-free interest of 0.5%, volatility of 85%, and an expected life of 1 year. For the purpose of these pro forma statements these options were deemed to be issued on January 1, 2015, and were included in listing expenses. 4. Pro Forma Share Capital Pro forma share capital as at September 30, 2016 in the pro forma consolidated statement of financial position is comprised of the following: The pro forma weighted average number of common shares outstanding has been determined by taking the weighted average number of common shares outstanding of CRHC for the twelve month period ended December 31, 2015 and for the nine month period ended September 30, 2016, and giving effect to the pro forma share capital adjustments above as if they had occurred on the first day of those D-9

111 periods. The resulting pro forma weighted average number of common shares outstanding is 12,879,336 for the twelve month period ending December 31, 2015, and 21,695,865 for the nine month period ending September 30, Pro Forma Warrants Activity with warrants is as follows: Pro forma warrants as at September 30, 2016 are summarized as follows: 6. Pro Forma Share Plans As of September 30, 2016, CRHC had 1,199,800 restricted share units ( RSUs ) outstanding with an average grant date value of $1.38. Of those RSUs outstanding at September 30, 2016, 334,000 are vested but deferred and a further 432,900 RSUs will vest by September 30, In connection with the proposed transaction, there will be an issuance of incentive stock options to certain directors of BB, as directed by BB, permitting the holders to acquire an aggregate of 75,000 BB Post-Consolidation Shares at an exercise price of $1.00 for a period of one year following the closing of the Transaction. D-10

112 7. CRHC consolidated statement of operations and comprehensive loss for the twelve month period ended December 31, 2015, and the nine month period ended September 30, The consolidated statement of operations and comprehensive loss of CRHC for the twelve month period ended December 31, 2015, has been compiled as follows: D-11

113 The consolidated statement of operations and comprehensive loss of CRHC for the nine month period ended September 30, 2016, has been compiled as follows: D-12

114 SCHEDULE "E" BONANZA S MD&A FOR THE YEAR ENDED DECEMBER 31, Please see attached. E-1

115 BONANZA BLUE CORP. MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED DECEMBER 31, 2015 Prepared by: Bonanza Blue Corp. 36 Toronto Street, Suite 1000 Toronto, Ontario, M5C 2C5

116 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Introduction The following management s discussion and analysis ( MD&A ) of the financial condition and results of the operations of Bonanza Blue Corp. ( Bonanza or the Company ) constitutes management s review of the factors that affected the Company s financial and operating performance for the year ended December 31, This MD&A was written to comply with the requirements of National Instrument Continuous Disclosure Obligations. This discussion should be read in conjunction with the audited annual consolidated financial statements of the Company for the years ended December 31, 2015 and 2014, together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. The Company s consolidated financial statements and the financial information contained in this MD&A are prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ) and interpretations of the IFRS Interpretations Committee. Information contained herein is presented as of March 11, 2016, unless otherwise indicated. Further information about the Company and its operations is available on SEDAR at Cautionary Note Regarding Forward-Looking Information This MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as forward-looking statements ). These statements relate to future events or the Company s future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as plans, expects, is expected, budget, scheduled, estimates, continues, forecasts, projects, predicts, intends, anticipates or believes, or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results may, could, would, should, might or will be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this MD&A speak only as of the date of this MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this MD&A and provides the material assumptions used to develop such forwardlooking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements. Forward-looking statements Assumptions Risk factors The Company will be able to continue its business activities. The Company will be able to carry out anticipated business plans. The Company has anticipated all material costs and the operating activities of the Company, and such costs and activities will be consistent with the Company s current expectations; the Company will be able to obtain shareholder loans or equity funding when required. The operating activities of the Company for the twelve months ending December 31, 2016, will be consistent with the Company s current expectations. Unforeseen costs to the Company will arise; any particular operating cost increase or decrease from the date of the estimation; and capital markets not being favourable for funding and/or related parties discontinue funding the Company resulting in the Company not being able to obtain financing when required or on acceptable terms. Sufficient funds not being available; increases in costs; the Company may be unable to retain key personnel. Page 2

117 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company s ability to predict or control. Please also make reference to those risk factors referenced in the Risk Factors section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this MD&A. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company s actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law. Description of Business The Company was incorporated under the laws of the Province of Ontario on August 19, 1985, under the name of McGarry Minerals Ltd. The Company was initially formed in order to acquire an interest in and to explore mineral prospects. In 1989, the Company abandoned its mineral prospects and changed its name to Whittier Capital Inc. and later to Whittier Industries Inc. In 1991, it acquired Best Sports Distribution Ltd., which was engaged in the development and distribution of sporting equipment, and changed its name to TriplePlay Sports Group Inc. During 1994, operations of the Company ceased due to lack of funds and other factors. On August 16, 2000, the name was changed again to the current name, Bonanza Blue Corp., in connection with a corporate reorganization effected to settle indebtedness with creditors. The Company has no operations and is currently seeking new business opportunities. Success in identifying a suitable new business for the Company is uncertain. Furthermore, the Company has limited working capital to pursue such opportunities. The ability of the Company to continue as a going concern is dependent upon, among other things, its being able to obtain additional financing when required. On June 8, 2011, the Company completed a non-brokered private placement of common shares. The Company issued and sold 3,000,000 units at a price of $0.10 per unit, raising gross proceeds of $300,000. Each unit consisted of one common share and one-half common share purchase warrant. Each whole warrant was exercisable to acquire one additional common share at a price of $0.12 until June 9, The net proceeds from the placement were used by the Company to satisfy existing accounts payable of approximately $200,000 with the balance for general working capital. The Company also announced that Ontario Inc., Belesarius Inc. and Tonbridge Financial Corp., significant shareholders of the Company, had sold an aggregate of 2,500,000 common shares of the Company, representing approximately 58.75% of the number of outstanding common shares prior to the private placement, to investors in private sale transactions. Brillco Inc. ( Brillco ) and FSC Abel Financial Inc. ( FSC ), Toronto-based investment companies, acquired direct ownership of 1,550,000 and 1,650,000 common shares of the Company, respectively, representing approximately 21.4% and 22.7% of the number of outstanding common shares of the Company, respectively, at that time. These companies also each acquired 425,000 common share purchase warrants, which expired on June 9, Page 3

118 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, unexercised. Neither company previously owned any securities of the Company prior to these acquisitions. In conjunction with the private placement and share sale transactions, all directors of the Company resigned and were replaced by Eric Klein, David Brill and Vernon Nelson. All officers of the Company also resigned. Mr. Klein was appointed President and Chief Executive Officer and Carmelo Marrelli was appointed Chief Financial Officer ( CFO ). The focus of the Company continues to be the identification of prospective assets or businesses to acquire or merge with, with a view to increasing value for shareholders. On February 25, 2014, Bonanza announced that it had completed a non-brokered private placement of common shares raising gross proceeds of $40,000. The Company issued and sold 800,000 common shares at a price of $0.05 per share. The net proceeds from the financing are intended to be used to satisfy existing accounts payable and for general working capital. All of the participants in the placement were insiders of the Company as follows. Brillco, a greater than 20% shareholder of the Company, acquired ownership of 325,000 common shares of the Company in the private placement. Following this acquisition, Brillco owned directly 1,875,000 common shares, representing approximately 23.28% of the issued and outstanding common shares. FSC, a greater than 20% shareholder of the Company, acquired direct ownership of 325,000 common shares of the Company in the private placement. Following this acquisition, FSC owned directly 1,975,000 common shares, representing approximately 24.52% of the issued and outstanding common shares. C. Marrelli Services Limited ( Marrelli Services ), a company controlled by Carmelo Marrelli, the CFO of the Company, acquired direct ownership of 150,000 common shares of the Company in the private placement. Following this acquisition, Marrelli Services owned directly 250,000 common shares, representing approximately 3.1% of the issued and outstanding common shares. Overall Performance The Company has not conducted commercial operations and it is focused on the identification and evaluation of businesses or assets to acquire or merge with. On July 6, 2015, Bonanza announced that it and Churchill Diamond Corporation ( Churchill ) had mutually agreed to terminate their previously announced proposed business combination. Bonanza intends to continue its search for a prospective business or asset to merge with or acquire. At December 31, 2015, the Company had assets of $6,036 and shareholders deficit of $93,672. This compares with assets of $23,086 and shareholders deficit of $49,382 at December 31, At December 31, 2015, the Company had $99,708 of current liabilities, compared to $72,468 of current liabilities at December 31, At December 31, 2015, the Company had a working capital deficiency of $93,672, compared to a working capital deficiency of $49,382 at December 31, The Company had cash of $5,769 at December 31, 2015, compared to $22,875 at December 31, 2014, a decrease of $17,106, primarily due to the incurrence of professional fees in respect of the failed transaction with Churchill. The Company believes that additional financing will be required to fund its operating expenses as it searches for suitable assets or businesses to merge with or acquire and/or to pursue a transaction if an appropriate merger or acquisition opportunity is identified. See Liquidity and Financial Position. Page 4

119 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Trends The Company plans to continue to search for suitable assets or businesses to acquire or merge with in order to maximize value for shareholders. Management regularly monitors economic conditions and estimates their impact on the Company s operations and incorporates these estimates in both short-term operating and longer-term strategic decisions. Apart from these and the risk factors noted under the heading Risk Factors, management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company s business, financial condition or results of operations. Selected Annual Financial Information The following is selected financial data derived from the audited consolidated financial statements of the Company at December 31, 2015, 2014 and 2013 and for the years ended December 31, 2015, 2014 and Year Ended December 31, 2015 $ Year Ended December 31, 2014 $ Year Ended December 31, 2013 $ Net loss and comprehensive loss Net loss per share (basic and diluted) 44, As at December 31, 2015 $ 19, As at December 31, 2014 $ 24, As at December 31, 2013 $ Total assets Current liabilities Long-term liabilities 6,036 99,708 nil 23,086 72,468 nil 5,518 71,770 nil The net loss for the year ended December 31, 2015, consisted of general and administrative expenses of $44,290. The net loss for the year ended December 31, 2014, consisted of general and administrative expenses of $19,678. The net loss for the year ended December 31, 2013, consisted of general and administrative expenses of $24,295. As the Company has no revenue, its ability to fund its operations is dependent upon securing financing. See Trends and Risk Factors. Page 5

120 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Overall Objective The Company plans to continue to search for suitable assets or businesses to acquire or merge with in order to maximize value for shareholders. See Risk Factors. 0BOff-Balance-Sheet Arrangements The Company does not have any off-balance-sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations or financial condition, including, without limitation, such considerations as liquidity, capital expenditures and capital resources that would be considered material to investors. 7BProposed Transactions Although the Company has commenced the process of identifying and evaluating businesses or assets to acquire, it has not yet entered into any definitive agreements. Capital Management The Company includes equity, consisting of issued share capital, reserves and deficit, in the definition of capital, which as at December 31, 2015, totaled a deficit of $93,672 (December 31, 2014 deficit of $49,382) The Company s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its activities relating to identifying and evaluating a business or asset acquisition. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and completion of a business or asset acquisition. There has been no change with respect to the overall capital risk management strategy during the year ended December 31, The Company is not subject to any capital requirements imposed by a lending institution or any external capital requirements. Liquidity and Financial Position As at December 31, 2015, the Company had a working capital deficiency of $93,672. It is anticipated that further financing will be required from related party loans or an equity issue to continue corporate activities and/or to proceed with a transaction if an appropriate merger or acquisition opportunity is identified. Recently, the activities of the Company have been funded by a non-brokered private placement that was completed on February 25, 2014, raising gross proceeds of $40,000 from related parties. There can be no assurance that additional financing from related parties or others will be available at all, or on terms acceptable to the Company. Page 6

121 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Selected Quarterly Information Three Months Ended Total Sales ($) Total ($) Profit or Loss Per Share ($) December 31, (3,627) (0.01) September 30, (2,716) (0.00) June 30, (28,095) (0.00) March 31, (9,852) (0.00) December 31, (6,597) (0.00) September 30, (3,072) (0.00) June 30, (3,048) (0.00) March 31, (6,961) (0.00) Professional fees, shareholder information and office and general were primarily responsible for fluctuations over the eight quarters. Per share amounts are rounded to the nearest cent, therefore aggregating quarterly amounts may not reconcile to year-to-date per share amounts. Discussion of Operations Year ended December 31, 2015 compared with year ended December 31, 2014 For the year ended December 31, 2015, the Company reported a loss of $44,290 versus a loss of $19,678 in the corresponding period in No revenue was recorded in either period. Expenses in the current period related primarily to professional fees for the failed proposed business combination transaction with Churchill and ongoing public company reporting costs and disclosure obligations. In the comparative period, expenses related primarily to professional fees and corporate overhead charges to keep the Company compliant with its public company reporting and disclosure obligations and for the investigation and negotiation of prospective merger and acquisition opportunities. For the year ended December 31, 2015, professional fees were $27,103 representing an increase of $15,213 compared to $11,890 for the corresponding period in 2014 relating to the failed transaction with Churchill. Office and general costs increased by $8,144, as well as other expenses relating to shareholder information, which increased to $1,595 from $340, primarily due to the timing differences in the payment of ongoing public company reporting costs and the failed transaction with Churchill. Three months ended December 31, 2015 compared with three months ended December 31, 2014 For the three months ended December 31, 2015, the Company reported a loss of $3,627 versus a loss of $6,597 in the corresponding period in No revenue was recorded in either period. Page 7

122 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 In the current and comparative period, expenses related primarily to professional fees and corporate overhead charges to keep the Company compliant with its public company reporting and disclosure obligations and for the investigation and negotiation of prospective merger and acquisition opportunities. For the three months ended December 31, 2015, professional fees were $1,520 representing a decrease of $3,406 compared to $4,926 for the corresponding period in 2014 relating to decreased corporate activity requiring services from consultants. Office and general costs marginally increased by $436. New Standards and Interpretations Not Yet Adopted IAS 1 - Presentation of Financial Statements was amended in December 2014 in order to clarify among other things, that information should not be obscured by aggregating or by providing immaterial information, that materiality consideration apply to all parts of the financial statements and that even when a standard required a specific disclosure, materiality considerations do apply. The amendments are effective for annual periods beginning on or after January 1, IFRS 9 Financial Instruments ( IFRS 9 ) was issued by the IASB in July 2014 and will replace IAS 39 Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Final amendments released in July 2014 also introduce a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets. IFRS 9 is effective for annual periods beginning on or after January 1, Related Party Transactions Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. 1B(a) Bonanza entered into the following transactions with related parties: Names Year Ended December 31, 2015 $ Year Ended December 31, 2014 $ Marrelli Support Services Inc. ( Marrelli Support ) (i) 12,680 6,500 Total 12,680 6,500 (i) The CFO of Bonanza is the President of Marrelli Support. Fees relate to the CFO function performed. Page 8

123 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 (b) The following summary outlines amounts owing to related parties. The amounts are unsecured, noninterest bearing and due on demand: Names As at December 31, 2015 $ As at December 31, 2014 $ 3BAccounting fees payable to Marrelli Support 7,684 3,039 4BAdvances payable to Brillco 29,930 29,930 5BAdvances payable to FSC 32,000 32,000 Total 69,614 64,969 (c) Certain shareholders and an officer, all through companies they control, purchased common shares in the February 25, 2014 private placement: Brillco, a shareholder, acquired direct ownership of 325,000 common shares of the Company in the private placement; FSC, a shareholder, acquired direct ownership of 325,000 common shares of the Company in the private placement; and Marrelli Services, a company controlled by Carmelo Marrelli, the CFO of the Company, acquired direct ownership of 150,000 common shares of the Company in the private placement. (d) To the knowledge of the directors and officers of the Company, as at December 31, 2015, no person or corporation beneficially owned or exercised control or direction over common shares of the Company carrying more than 10% of the voting rights attached to all the common shares of the Company other than as set out below: Names Number of common shares Percentage of outstanding shares 4Brillco 1,875, % 5BFSC 1,975, % As at December 31, 2015, directors and officers of the Company controlled 250,000 common shares of the Company or approximately 3.1% of the shares outstanding. The Company is not aware of any arrangements that may at a subsequent date result in a change in control of the Company. Page 9

124 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 Additional Disclosure for Venture Issuers without Significant Revenue Expenses Year Ended December 31, 2015 $ Year Ended December 31, 2014 $ Professional fees 27,103 11,890 Shareholder information 1, Office and general 15,592 7,448 Total 44,290 19,678 Financial Instruments The Company's financial instruments, consisting of cash, amounts receivable, accounts payable and other liabilities, and due to related parties, approximate fair values due to the relatively short-term maturities of the instruments. It is management s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. As at December 31, 2015, the Company had a working capital deficit of $93,672 (December 31, working capital deficit of $49,382). The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity. Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company had cash of $5,769 at December 31, 2015 (December 31, $22,875) to settle current liabilities of $99,708 at December 31, 2015 (December 31, $72,468). The Company's liquidity and operating results may be adversely affected if its access to the capital markets is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities. Further financing will be required for working capital expenditures beyond December 31, While there is no assurance these funds can be raised, the Company believes such financing will be available as required. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity. Outlook The Company plans to continue to search for suitable assets or businesses to acquire or merge with to maximize value for shareholders. Share Capital As of the date of this MD&A, the Company has 8,055,009 common shares outstanding. In addition, the Company has 450,000 stock options outstanding, exercisable at $0.12 with an expiry date of June 24, Page 10

125 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, Warrants to acquire 1,500,000 common shares at a price of $0.12 per share expired on June 9, 2014 unexercised. The Company, therefore, has 8,505,009 common shares on a fully diluted basis. 6BRisk Factors At the present time, the Company does not hold any interest in an active operating business or asset. The Company's viability and potential success lie in its ability to develop, exploit and generate revenue from a future asset or business acquisition. Revenues, profitability and cash flow from any future asset or business acquisition involving the Company are difficult to predict and will be influenced by factors unknown to management at the present time. The Company has limited financial resources and there is no assurance that it will be able to obtain adequate financing in the future or that the terms of any such financing will be favourable. Failure to obtain such additional financing could result in delay or indefinite postponement of future business activities of the Company with the possible dilution or loss of such business activities. Additionally, directors and officers of the Company may also serve as directors and/or officers of other public companies from time to time. Consequently, such directors and officers will be dividing their time between their duties to the Company and their duties to their other reporting issuers. The Company has not purchased "key-man" insurance, nor has it entered into non-competition and nondisclosure agreements with management and has no current plans to do so. Disclosure of Internal Controls Management has established processes to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the consolidated financial statements, and (ii) the consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented. In contrast to the certificate required for non-venture issuers under National Instrument , Certification of Disclosure in Issuers Annual and Interim Filings ( NI ), the Venture Issuer Basic Certificate filed by the Company does not include representations relating to the establishment and maintenance of disclosure controls and procedures ( DC&P ) and internal control over financial reporting ( ICFR ), as defined in NI In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of: (i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and (ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with the issuer s generally accepted accounting principles (IFRS). Page 11

126 Bonanza Blue Corp. Management s Discussion & Analysis Year Ended December 31, 2015 Discussion dated: March 11, 2016 The Company s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in such certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. Page 12

127 SCHEDULE "F" BONANZA S MD&A FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 Please see attached. F-1

128 BONANZA BLUE CORP. INTERIM MANAGEMENT S DISCUSSION AND ANALYSIS QUARTERLY HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 Prepared by: Bonanza Blue Corp. 82 Richmond Street East Toronto, Ontario, M5C 1P1

129 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 Introduction The following interim Management Discussion & Analysis ( Interim MD&A ) of Bonanza Blue Corp. ( Bonanza or the Company ) for the three and nine months ended September 30, 2016 has been prepared to provide material updates to the business operations, liquidity and capital resources of the Company since its last annual management discussion & analysis, being the Management Discussion & Analysis ( Annual MD&A ) for the fiscal year ended December 31, This Interim MD&A does not provide a general update to the Annual MD&A, or reflect any non-material events since date of the Annual MD&A. This Interim MD&A has been prepared in compliance with section of Form F1, in accordance with National Instrument Continuous Disclosure Obligations. This discussion should be read in conjunction with the Company s Annual MD&A, audited annual consolidated financial statements for the years ended December 31, 2015, and December 31, 2014, together with the notes thereto, and unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2016, together with the notes thereto. Results are reported in Canadian dollars, unless otherwise noted. The Company s unaudited condensed interim consolidated financial statements and the financial information contained in this Interim MD&A are prepared in accordance with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee. The unaudited condensed interim consolidated financial statements have been prepared in accordance with International Standard 34, Interim Financial Reporting. Accordingly, information contained herein is presented as of October 17, 2016, unless otherwise indicated. For the purposes of preparing this Interim MD&A, management, in conjunction with the Board of Directors (the Board ), considers the materiality of information. Information is considered material if: (i) such information results in, or would reasonably be expected to result in, a significant change in the market price or value of Bonanza common shares; (ii) there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision; or (iii) it would significantly alter the total mix of information available to investors. Management, in conjunction with the Board, evaluates materiality with reference to all relevant circumstances, including potential market sensitivity. Further information about the Company and its operations is available on SEDAR at Cautionary Note Regarding Forward-Looking Information This Interim MD&A contains certain forward-looking information and forward-looking statements, as defined in applicable securities laws (collectively referred to herein as forward-looking statements ). These statements relate to future events or the Company s future performance. All statements other than statements of historical fact are forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as plans, expects, is expected, budget, scheduled, estimates, continues, forecasts, projects, predicts, intends, anticipates or believes, or variations of, or the negatives of, such words and phrases, or statements that certain actions, events or results may, could, would, should, might or will be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those anticipated in such forward-looking statements. The forward-looking statements in this Interim MD&A speak only as of the date of this Interim MD&A or as of the date specified in such statement. The following table outlines certain significant forward-looking statements contained in this Interim MD&A and provides the material assumptions used to develop such forward-looking statements and material risk factors that could cause actual results to differ materially from the forward-looking statements. Page 2

130 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 Forward-looking statements Assumptions Risk factors The Company will be able to continue its business activities. The Company will be able to carry out anticipated business plans. The Company will be able to complete the Proposed Transaction (as defined below), between Bonanza and CRHC (as described below under the heading Operational Highlights ). The Company has anticipated all material costs and the operating activities of the Company, and such costs and activities will be consistent with the Company s current expectations; the Company will be able to obtain shareholder loans or equity funding when required. The operating activities of the Company for the twelve months ending September 30, 2017, will be consistent with the Company s current expectations. The Proposed Transaction will be effected in accordance with the terms of the Agreement (as defined below). Unforeseen costs to the Company will arise; any particular operating cost increase or decrease from the date of the estimation; and capital markets not being favourable for funding and/or related parties discontinue funding the Company resulting in the Company not being able to obtain financing when required or on acceptable terms. Sufficient funds not being available; increases in costs; the Company may be unable to retain key personnel. Failure to obtain shareholder, regulatory or other consents or approvals for the Proposed Transaction. The parties otherwise failing to satisfy the conditions for completing the Proposed Transaction specified in the Agreement including, financing by both CRHC and Bonanza. Inherent in forward-looking statements are risks, uncertainties and other factors beyond the Company s ability to predict or control. Please also make reference to those risk factors referenced in the Risk Factors section below. Readers are cautioned that the above chart does not contain an exhaustive list of the factors or assumptions that may affect the forward-looking statements, and that the assumptions underlying such statements may prove to be incorrect. Actual results and developments are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in this Interim MD&A. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company s actual results, performance or achievements to be materially different from any of its future results, performance or achievements expressed or implied by forward-looking statements. All forward-looking statements herein are qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements, unless required by law. Page 3

131 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 Description of Business The Company was incorporated under the laws of the Province of Ontario on August 19, 1985, under the name of McGarry Minerals Ltd. The Company was initially formed in order to acquire an interest in and to explore mineral prospects. In 1989, the Company abandoned its mineral prospects and changed its name to Whittier Capital Inc. and later to Whittier Industries Inc. In 1991, it acquired Best Sports Distribution Ltd., which was engaged in the development and distribution of sporting equipment, and changed its name to TriplePlay Sports Group Inc. During 1994, operations of the Company ceased due to lack of funds and other factors. On August 16, 2000, the name was changed again to the current name, Bonanza Blue Corp., in connection with a corporate reorganization effected to settle indebtedness with creditors. The Company has no operations and is currently seeking new business opportunities. Success in identifying a suitable new business for the Company is uncertain. Furthermore, the Company has limited working capital to pursue such opportunities. The ability of the Company to continue as a going concern is dependent upon, among other things, its being able to obtain additional financing when required. Operational Highlights On June 30, 2016, Bonanza announced that it has entered into a binding agreement (the Agreement ) with Cannabis Royalties & Holdings Corp. ( CRHC ) which outlines the general terms and conditions of a proposed transaction pursuant to which Bonanza will acquire all of the issued and outstanding securities of CRHC in exchange for securities of Bonanza (the Proposed Transaction ). The Agreement was negotiated at arm s length and is dated June 30, As contemplated by the Agreement, Bonanza and CRHC intend to apply to the Canadian Stock Exchange ( CSE ) for the listing of the common shares of the consolidated entity. CRHC is a privately held company incorporated pursuant to the Canada Business Corporations Act. CRHC provides an integrated approach to the legal cannabis sector with a focus on three key verticals: brands and intellectual property, delivery systems and devices, and extraction. CRHC contributes strategic capital and expertise to maximize the return potential of its diversified portfolio of assets and holdings. The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approvals, regulatory approval, including approval of the CSE, and additional conditions, as described in the Agreement. Bonanza has called an annual and special meeting of its shareholders to be held on November 11, 2016 for the purpose of approving, among other matters, (i) a consolidation of the issued and outstanding Bonanza common shares on the basis of one new Bonanza common share for every 5 old Bonanza shares, subject to adjustment in certain events; (ii) a change of name of Bonanza to CannaRoyalty Corp. or such other name as Bonanza may determine and shall be acceptable to regulatory authorities; and (iii) the election of nominees of CRHC to the Board of Bonanza. Upon closing of the Proposed Transaction, the Board of Bonanza will be reconstituted in a manner that complies with the requirements of the CSE and applicable securities laws. CRHC shall be entitled to all nominees on the reconstituted Board, subject to the receipt of applicable regulatory approvals. In connection with the Proposed Transaction, on October 4, 2016 CRHC announced that it had completed its brokered offering of 2,502,000 subscription receipts (the Subscription Receipts ) at a price of $2.00 per Subscription Receipt for total gross proceeds of approximately $5 million (the Offering ) through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Page 4

132 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc (collectively with the Co- Lead Agents, the Agents ). The Subscription Receipts will be automatically converted into common shares in the capital of CRHC ( CRHC Shares ) upon collectively, (i) the completion, satisfaction or waiver, as the case may be, of all conditions precedent to the Proposed Transaction set forth in the Agreement, to the satisfaction of the Co-Lead Agents, acting reasonably, other than the filing of the articles of amalgamation; (ii) the receipt of all required shareholder, third party (as applicable) and regulatory approvals in connection with the Proposed Transaction; (iii) the listing of the common shares of Bonanza post-proposed Transaction (the Resulting Issuer ) on the CSE shall have been conditionally approved; and (iv) the representations and warranties of CRHC in the agency agreement dated effective August 17, 2016, between the Agents and CRHC are true and correct at the closing of the Offering and the date of the release of the Escrowed Proceeds (as defined below), except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a material adverse effect (the Escrow Release Conditions ). The proceeds from the sale of the Subscription Receipts less 50% of the Agents Fees (as defined below) and the expenses of the Agents (the Escrowed Proceeds ) will be deposited in escrow until the Escrow Release Conditions have been satisfied. Upon the successful completion of the Proposed Transaction, the CRHC Shares, including those issued pursuant to conversion of the Subscription Receipts, will be exchanged for common shares of the Resulting Issuer. If the Escrow Release Conditions have not been satisfied within 3 months of the Closing Date (as defined below), holders of Subscription Receipts will be refunded the gross proceeds paid for the Subscription Receipts and the Subscription Receipts will be cancelled. The Agents are entitled to receive an aggregate cash fee of 7% percent of the gross proceeds of the Offering (the Agents Fee ), of which 50% was paid on the closing of the Offering (the Closing Date ) and the remaining 50% will be paid upon the release of the Escrowed Proceeds. The Agents will also be reimbursed for their fees and expenses incurred in connection with the Offering. As additional consideration for the services of the Agents, CRHC has agreed to issue to the Agents such number of non-transferable broker warrants (the Broker Warrants ) as is equal to 7% percent of the number of Subscription Receipts sold pursuant to the Offering. The Broker Warrants will be issued on release of the Escrowed Proceeds. Each Broker Warrant shall entitle the holder to acquire, at any time during the period that is two years from the Closing Date, one common share of the Resulting Issuer at an exercise price of $2.00 per common share. The proceeds of the Offering are intended to be used by the Resulting Issuer for future acquisitions, general corporate and working capital purposes. In connection with the Proposed Transaction, Bonanza also intends to undertake an equity financing for gross proceeds of not less than $50,000 and not more than $95,000 in cash (the Bonanza Financing ). The Bonanza Financing is currently intended to be completed by way of an issuance of subscription receipts, with each subscription receipt entitling the holder to one post-consolidation Bonanza share upon conversion in accordance with its terms. Upon closing of the Proposed Transaction, all securities of CRHC issued in connection with the Offering will automatically be exchanged for post-consolidation Bonanza shares on the same terms as existing CRHC securities. During the quarter, the Company continued its search for a suitable business or asset to merge with or acquire culminating in the execution of the Agreement with CRHC. Page 5

133 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 There can be no assurance that the Proposed Transaction will be completed or on the terms currently proposed. Related Party Transactions Related parties include the Board, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties). 1B(a) Bonanza entered into the following transactions with related parties: Names Nine Months Ended September 30, 2016 $ Nine Months Ended September 30, 2015 $ Marrelli Support Services Inc. ( Marrelli Support ) (i) 8,104 11,000 Total 8,104 11,000 Names Three Months Ended September 30, 2016 $ Three Months Ended September 30, 2015 $ Marrelli Support (i) 1,500 1,500 Total 1,500 1,500 (i) The Chief Financial Officer ( CFO ) of Bonanza is the President of Marrelli Support. Fees relate to the CFO function performed. (b) The following summary outlines amounts owing to related parties. The amounts are unsecured, noninterest bearing and due on demand: Names As at September 30, 2016 $ As at December 31, 2015 $ 3BAccounting fees payable to Marrelli Support 18,144 7,684 Advances payable to Brillco Inc. ( Brillco ) 29,930 29,930 Advances payable to FSC Abel Financial Inc. ( FSC ) 32,000 32,000 Total 80,074 69,614 Page 6

134 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 (c) To the knowledge of the directors and officers of the Company, as at September 30, 2016, no person or corporation beneficially owned or exercised control or direction over common shares of the Company carrying more than 10% of the voting rights attached to all the common shares of the Company other than as set out below: Names Number of common shares Percentage of outstanding shares 4Brillco 1,875, % 5BFSC 1,975, % As at September 30, 2016, directors and officers of the Company controlled 250,000 common shares of the Company or approximately 3.1% of the shares outstanding. The Company is not aware of any arrangements that may at a subsequent date result in a change in control of the Company. Major Operating Milestones None Trends Management regularly monitors economic conditions and estimates their impact on the Company s operations and incorporates these estimates in both short-term operating and longer-term strategic decisions. During the nine months ended September 30, 2016, equity markets in Canada, and in particular for resource stocks, have showed very encouraging signs of improvement, with resource prices and related equities increasing significantly during this period. Strong equity markets and resource prices are favourable conditions for completing a public merger or acquisition transaction of the type being sought by the Company, and the Company is encouraged by these developments after a long period of extremely difficult equity markets. Apart from these and the risk factors noted under the heading Risk Factors, management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company s business, financial condition or results of operations. Financial Highlights Financial Performance For the three months ended September 30, 2016, the Company reported a loss of $18,466 versus a loss of $2,716 in the corresponding period in No revenue was recorded in either period. Expenses in the comparative period related primarily to corporate overhead charges to keep the Company compliant with its public company reporting and disclosure obligations and expenses in the current period included those costs as well as additional professional fees to pursue the Proposed Transaction with CRHC. For the three months ended September 30, 2016, professional fees were $16,580 representing an increase of $15,694 compared to $886 for the corresponding period in The increase is related to Page 7

135 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 legal costs incurred to pursue the Proposed Transaction with CRHC. Office and general costs were $1,886 representing a marginal increase of $56 compared to $1,830 for the corresponding period in At September 30, 2016, the Company had assets of $5,790 and shareholders deficit of $130,090. This compares with assets of $6,036 and shareholders deficit of $93,672 at December 31, At September 30, 2016, the Company had $135,880 of current liabilities, compared to $99,708 of current liabilities at December 31, 2015 Cash Flow At September 30, 2016, the Company had a working capital deficiency of $130,090, compared to a working capital deficiency of $93,672 at December 31, The Company had cash of $5,551 at September 30, 2016, compared to $5,769 at December 31, 2015, a decrease of $218, primarily due to the payment of public company reporting costs. The Bonanza Financing (see Operational Highlights above) is intended to fund the payment of outstanding liabilities. Liquidity and Financial Position As at September 30, 2016, the Company had a working capital deficiency of $130,090. It is anticipated that the proposed Bonanza Financing will provide the Company with funds to satisfy some of the Company s outstanding liabilities. Recently, the activities of the Company have been funded by a nonbrokered private placement that was completed on February 25, 2014, raising gross proceeds of $40,000 from related parties. There can be no assurance that additional financing from related parties or others will be available at all, or on terms acceptable to the Company. Outlook The Company plans to pursue the completion of the Proposed Transaction with CRHC. See Operational Highlights above. Risk Factors At the present time, the Company does not hold any interest in an active operating business or asset. The Company's viability and potential success lie in its ability to develop, exploit and generate revenue from a future asset or business acquisition. Revenues, profitability and cash flow from any future asset or business acquisition involving the Company are difficult to predict and will be influenced by factors unknown to management at the present time. The Company has limited financial resources and there is no assurance that it will be able to obtain adequate financing in the future or that the terms of any such financing will be favourable. Failure to obtain such additional financing could result in delay or indefinite postponement of future business activities of the Company with the possible dilution or loss of such business activities. Additionally, directors and officers of the Company may also serve as directors and/or officers of other public companies from time to time. Consequently, such directors and officers will be dividing their time between their duties to the Company and their duties to their other reporting issuers. The Company has not purchased "key-man" insurance, nor has it entered into non-competition and nondisclosure agreements with management and has no current plans to do so. Page 8

136 Bonanza Blue Corp. Interim Management s Discussion & Analysis Quarterly Highlights Three and Nine Months Ended September 30, 2016 Discussion dated: October 17, 2016 Disclosure of Internal Controls Management has established processes to provide it with sufficient knowledge to support representations that it has exercised reasonable diligence to ensure that (i) the unaudited condensed interim consolidated financial statements do not contain any untrue statement of material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it is made, as of the date of and for the periods presented by the unaudited condensed interim consolidated financial statements, and (ii) the unaudited condensed interim consolidated financial statements fairly present in all material respects the financial condition, results of operations and cash flow of the Company, as of the date of and for the periods presented. In contrast to the certificate required for non-venture issuers under National Instrument , Certification of Disclosure in Issuers Annual and Interim Filings ( NI ), the Venture Issuer Basic Certificate filed by the Company does not include representations relating to the establishment and maintenance of disclosure controls and procedures ( DC&P ) and internal control over financial reporting ( ICFR ), as defined in NI In particular, the certifying officers filing such certificate are not making any representations relating to the establishment and maintenance of: (i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and (ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer s generally accepted accounting principles (IFRS). The Company s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in such certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. Page 9

137 SCHEDULE "G" CRHC S MD&A FOR THE YEAR ENDED MARCH 31, 2016 Please see attached. G-1

138 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 Dated: October 25, 2016 Schedule G CRHC MD&A March 31, 2016 This Cannabis Royalties & Holdings Corp. (the Company or CRHC ) Management s Discussion and Analysis ( MD&A ) is dated October 25, It should be read in conjunction with the Company s audited consolidated financial statements (the Financial Statements ) for the year ended March 31, 2016, including the accompanying notes. Unless otherwise indicated, all financial information in this MD&A is reported in Canadian dollars, except share amounts. The Company prepared this MD&A of the Financial Condition and Results of Operations with reference to National Instrument Continuous Disclosure Obligations of the Canadian Securities Administrators ( NI ). This MD&A provides information for the year ended March 31, 2016 and up to and including October 25, The Consolidated Financial statements and this MD&A have been approved by the Company s Board of Directors. The accompanying Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards ( IFRS ) and include the accounts of the Company and its wholly-owned subsidiaries Cannroy Delaware Inc. and Desert Growers LLC located in the United States of America. All inter-company balances and transactions have been eliminated on consolidation. Additional information filed by us with the Canadian Securities Administrators is available on-line at and also on the Company s website at FISCAL 2016 HIGHLIGHTS! There were no revenues for the periods ended March 31, 2015 and March 31, 2016.! Cash and cash equivalents were $6,157 at year end.! Net loss of $3,032,938 and net loss per share of $0.26.! Current assets of $223,772. RECENT DEVELOPMENTS PROPOSED TRANSACTION On June 30, 2016, CRHC entered into a binding agreement with Bonanza Blue Corp. ( Bonanza ) in connection with a proposed transaction pursuant to which Bonanza will acquire all of the issued and G-2

139 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 outstanding shares of CRHC in exchange for securities of Bonanza (the Proposed Transaction). CRHC and Bonanza intend to apply to the Canadian Securities Exchange ( CSE ) for the listing of the common shares of the resulting issuer named CannaRoyalty Corp. (the Resulting Issuer ). Final approval of the listing is subject to the Company meeting certain standard requirements of the CSE. SUBSCRIPTION RECEIPT OFFERING On October 4, 2016, in connection with the Proposed Transaction, CRHC and Bonanza completed a brokered offering of 2,502,000 subscription receipts (the Subscription Receipts ) at a price of C$2.00 per Subscription Receipt for total gross proceeds of approximately $5 million (the Offering ) through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc. (collectively with the Co-Lead Agents, the Agents ). OTHER EQUITY FINANCINGS SINCE MARCH 31, 2016 In addition to the above noted subscription offering, the Company raised aggregate gross proceeds of $6,527,735 through the issuance of 11,607,935 common shares from the following financings:! On June 7, 2016, the Company issued 3,000,000 units in connection with a non-brokered financing at a price of $1.00 per unit for aggregate proceeds of $3,000,000. Each unit is comprised of one common share of the Company and one half of one share purchase warrant. Each whole share purchase warrant is exercisable for one common share of the Company at a price of $1.50 and will expire on December 7, As part of this financing, Aphria Inc. ( Aphria ), a publicly traded, licensed medical marijuana producer in Ontario, subscribed for 1,500,000 units. Aphria has been given pre-emptive rights to maintain their percentage ownership of the Company by buying a proportionate number of shares of any future issue of common shares and securities convertible into common shares of the Company.! On July 15, 2016, the Company closed a round of financing at $1 per unit issuing 665,000 units of the Company for gross proceeds of $665,000. Each unit is comprised of one common share of the Company and one half of one share purchase warrant. Each whole share purchase warrant is exercisable for one common share of the Company at a price of $1.50 and will expire on January 15, 2018.! On July 29, 2016, the Company closed a financing at $1 per unit issuing 1,072,735 units for gross proceeds of $1,072,735. Each unit is comprised of one common share of the Company and one half of one share purchase warrant. Each whole share purchase warrant is exercisable for one common share of the Company at a price of $1.50 and will expire on January 29, 2018.! On August 18, 2016, CRHC issued 220,000 CRHC Shares in satisfaction of amounts owing under an outstanding loan agreement dated February 19, 2016 at a conversion price of $0.75 per CRHC Share for aggregate proceeds of $165,000. G-3

140 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016! On August 24, 2016, the Company issued 750,000 common shares and generated gross proceeds of $1,125,000 as Aphria exercised its 750,000 common share purchase warrants for $1.50 per warrant.! On September 28, 2016, CRHC issued 250,000 CRHC Shares in connection with a non-brokered financing at a price of $2.00 per CRHC Share for aggregate proceeds of $500,000. BUSINESS UNITS AND HOLDINGS CRHC has built a platform of holdings via royalty agreements, equity interests, convertible and nonconvertible debt, and licensing agreements in various businesses in Canada and the United States ( business units or holdings ). CRHC s business units focus on research, brands, and devices covering key segments of the legal cannabis market. CRHC contributes strategic capital and expertise to maximize the return potential of its diversified portfolio of assets and holdings. Since its incorporation, CRHC has created or acquired a total of two business units at March 31, 2016: Alternative Medical Enterprises, LLC ( AME ), a Florida company focused on medical cannabis and Resolve Digital Health Inc., an integrated digital health platform designed for symptom relief. These investments are further explained under the Description of Interests section of this MD&A. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This MD&A contains certain forward-looking statements and forward-looking information within the meaning of Canadian securities laws, including such statements relating to:! assumptions and expectations described in the Company s critical accounting policies and estimates;! the Company s expectations regarding the adoption and impact of certain accounting pronouncements;! the Company s expectations regarding legislation, regulations and licensing related to the cultivation, production and sale of cannabis products by the company s wholly-owned subsidiaries;! the expected number of users of medical marijuana or the size of the medical marijuana market in Canada and the United States;! the potential time frame for the introduction of legislation to legalize recreational marijuana use in Canada and the United States, and the potential form that this legislation will take;! the potential size of the recreational marijuana market in Canada and the United States, should recreational use be legalized;! the ability to enter and participate in international market opportunities; G-4

141 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016! the Company s expectations with respect to the company s future financial and operating performance;! product sales expectations; and! the Company s ability to achieve profitability without further equity financing. The words plans, expects, is expected, budget, scheduled, estimates forecasts, intends, anticipates, or believes or variation (including negative variations) of such words and phrases, or statements that certain actions, events, or results may, could, would, might, or will be taken, occur or to achieve are all forward-looking statements. Forward-looking statements are based on the reasonable assumptions, estimates, internal and external analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to, the factors discussed in the section entitled RISKS AND UNCERTAINTIES. Although the Company has attempted to identify important factors that could cause actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors that cause actions, events, or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as at the date of the MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements. The Company does not undertake to update any forward-looking statements except as required by applicable securities laws. INTERNAL CONTROLS OVER FINANCIAL REPORTING The Chief Executive Officer and Chief Financial Officer, in accordance with NI , have both certified that they have reviewed the financial report and this MD&A (the Filings ) and that, based on their knowledge having exercised reasonable diligence, (a) the Filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made with respect to the period covered by the filings; and (b) the financial report together with the other financial information included in the Filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the Filings. Investors should be aware that inherent limitations on the ability of certifying officers of an issuer to design and implement on a cost effective basis Disclosure Controls and Procedures and Internal Controls over Financial Reporting as defined in NI may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities G-5

142 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 legislation. DESCRIPTION OF THE BUSINESS CRHC is a fully integrated, active participant in the legal cannabis sector, with a focus on building a portfolio of assets in 3 key verticals: research, brands, and devices. CRHC contributes strategic capital and functional expertise to maximize the return potential of its diversified portfolio of assets and holdings. CRHC intends to build on its existing relationships by developing operating plans and providing oversight, strategy and management of the business units growth and integration. Further, CRHC plans to expand its reach by building new partnerships with vertical market partners and end-user products companies, as well as exploring opportunities with successful cultivators and processors. Through its expansion efforts, CRHC intends to utilize online sales and marketing platforms, participate in relevant trade shows, and develop various advertising materials to communicate its approach to its intended audience and target market. CRHC is also well-positioned to participate in the large and growing market for enhanced downstream cannabis products and new products with various consumer and medical applications. MARIJUANA REGULATORY FRAMEWORK IN THE UNITED STATES In the United States, more than twenty-five states have legalized medical marijuana, while four states and Washington, D.C. have legalized recreational marijuana. Although cannabis currently remains a Schedule I drug under federal law, the U.S. Department of Justice issued a memorandum (the Cole Memorandum ) in 2013 to the U.S. Attorneys offices (federal prosecutors) directing that individuals and businesses that rigorously comply with state regulatory provisions in states that have strictly-regulated legalized medical or recreational cannabis programs should not be prosecuted for violations of federal law. This federal policy was reinforced by the passage of a 2014 federal budget bill that prohibits the use of federal funds to interfere in the implementation of state laws legalizing cannabis and state medical marijuana laws. This bill is targeted at the Department of Justice, which encompasses the Drug Enforcement Agency. This bill evidenced the development of bi-partisan support in the U.S. Congress for legalizing the use of cannabis. It is anticipated that the federal government will eventually repeal the federal prohibition on cannabis and thereby leave the states to decide for themselves whether to permit regulated cannabis cultivation and sale, just as states are free today to decide policies governing the distribution of alcohol or tobacco. BANKING REGULATORY FRAMEWORK IN CANADA AND THE UNITED STATES U.S. federal law also makes it illegal for financial institutions that depend on the Federal Reserve s money transfer system to take any proceeds from marijuana sales as deposits. Canadian banks are also hesitant to deal with cannabis companies, due to the uncertain legal and regulatory framework of the industry. Some Canadian banks have stopped providing certain services to marijuana-related businesses or companies engaged in the production and distribution of marijuana. Banks and other financial institutions could potentially be prosecuted and possibly convicted of money laundering for providing G-6

143 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 services to cannabis businesses. Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering or conspiracy. In the U.S., a bill has been tabled in Congress to grant banks and other financial institutions immunity from federal criminal prosecution for servicing marijuana-related businesses if the underlying marijuana business is in compliance with state law. This bill has not been passed and there can be no assurance with that it will be passed in its current form or at all. In both Canada and the Unites States, transactions involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Legislative changes could eliminate some or all of these challenges for companies in the cannabis space which in turn would improve the efficiency and effectiveness of both significant and minor financial transactions. MARIJUANA REGULATORY FRAMEWORK IN CANADA On August 24, 2016, the Access to Cannabis for Medical Purposes ( ACMPR ) was introduced to allow for reasonable access to cannabis for medical purposes for Canadians who have been authorized to use cannabis by their health care practitioner. The ACMPR will replace the Marijuana for Medical Purposes Regulations ( MMPR ), introduced in June 2013, reflecting the federal government s evolving view on medical marijuana policy. MMPR and The Marihuana Medical Access Regulations ( MMAR ) are both legislative schemes that were important early steps in the Canadian government s legislative path towards legalizing and regulating medical marijuana. Despite MMAR being repealed on March 31, 2014, and MMPR ceasing to be in effect on August 24, 2016; the marijuana medical research and patient treatment industries have continued to grow. The introduction of ACMPR further regulates the production and distribution of medical cannabis, demonstrating Health Canada s commitment to improving the regulatory landscape surrounding medical marijuana use, in addition to ensuring that production occurs under secure and regulated commercial production facilities. Under the ACMPR, Canadians who have been authorized by their health care practitioner will continue to have the option of purchasing safe, quality-controlled cannabis from one of the 34 producers licensed by Health Canada. Canadians will also be able to produce a limited amount of cannabis for their own medical purposes, or designate someone to produce it for them. On April 20, 2016, the Canadian Federal Government announced its intention to introduce, by the spring of calendar 2017, legislation to legalize the recreational use of cannabis in Canada. This position is promising given that legalization at a federal level will open the door to investment, innovation, and more opportunities. It will also relax restrictive tax policies and allow banks to deal with the cannabis industry more similarly to other industries. MARIJUANA USE IN THE UNITED STATES AND CANADA In the United States, sales of legal cannabis flowers and cannabis-infused derivative and edible products totalled $5.7 billion in 2015 and are expected to reach $7.1 billion in 2016 with approximately 70% of sales for medical use and 30% for full adult use. According to ArcView, Industry sales are forecasted to G-7

144 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 grow to $21.8 billion by 2020, and Cowen & Co. forecast the market in the U.S. will reach $50 billion by The California market alone is expected to grow from $2.7 billion in 2015 to $6.6 billion in 2020, and could reach $18 billion or higher in a full adult use market. Health Canada estimates that close to 70,000 patients in Canada used doctor prescribed medical marijuana in 2015, establishing a market worth in excess of $100 million. By 2024, Health Canada estimates that the number of patients using medical marijuana will grow to 450,000, creating a market worth an estimated $1.3 billion. CIBC World Markets reports estimates of the potential value of the recreational marijuana market in Canada range from $5 billion to $10 billion per year. INTERNATIONAL DEVELOPMENT Medical marijuana opportunities are becoming increasingly available as new jurisdictions move towards establishing new or improved medical marijuana systems. As Canada has developed an enviable regulatory model, companies acting within that framework have expertise, knowledge and potentially product to share with the global community. OVERVIEW OF CRHC CRHC is a private corporation, incorporated in Canada, with its head office located at the HSBC Building, 885 West Georgia Street, Suite 2200, Vancouver, British Columbia, V6C 3E8. CRHC s objective is to build one of the cannabis industry s first global, value-added, end-to-end solution providers encompassing research, brands and devices covering the key segments of the legal cannabis market. CRHC contributes strategic capital and functional expertise to maximize the return potential of its diversified portfolio of assets and holdings. Further, CRHC seeks to actively assist and drive the commercialization of its assets and business units. CRHC s business plan is targeted at the growth of its business units and expanding their reach to endusers and partners. CRHC will contribute by providing, among other things, capital, strategy, brand development, and accounting and administrative support. Although the business units will be primarily responsible for developing and operating the business, CRHC will be available to provide functional expertise, oversight and a framework of disciplined planning to the operations of the business units when needed. CRHC s short-term objective is to create a sustainable business in the key States of California, Washington, Arizona, and Oregon by integrating its Holdings to create synergies and a true end-to-end solution geared to the needs of patients and consumers. CRHC has positioned itself for commercial growth during this past year by focusing its expanded resource base on finding and partnering with the best and most innovative companies, projects, assets and overall business frameworks in the legal cannabis sector in these key states. To achieve its objective, the Company will continue making specific and deliberate investments, including acquisitions, to: G-8

145 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016! Increase the diversity and quality of the Company s product offerings across different market segments;! Increase the strength and segmentation of the Company s multiple brands. In addition, management believes that a significant opportunity exists today and will develop further in the future, to leverage the Company s expertise, financial strength and business model in legal marijuana markets around the world. CRHC intends on pursuing opportunities in a number of jurisdictions where medical marijuana is legally allowed presently, or where the government is actively moving towards such a legal framework. For example, CRHC has provided financing to Natural Ventures, a corporation that has been granted a license in Puerto Rico. Subject to regulatory approval, strategic business opportunities pursued by the Company could include:! Providing advisory services to third-parties that are interested in establishing licensed cannabis cultivation, processing and sales operations;! Entering into strategic relationships that create value by sharing their expertise and industry knowledge;! Providing capital in the form of debt, royalties, or equity to new business units; and! Entering into licensing agreements to generate revenue, create strategic partnerships, or other business purposes. At March 31, 2016 and March 31, 2015, the Company had no full-time employees. The Company has established service contracts for key executive, management, functional expertise and other support personnel. DESCRIPTION OF INTERESTS AS AT MARCH 31, 2016 Alternative Medical Enterprises, LLC The Company owns 1,500 Class A units in Alternative Medical Enterprises, LLC ( AME ), a Florida limited liability company focused on medical cannabis. The units were purchased for $1,850,070 ($1,500,000 USD) representing an 8.2% equity interest which is accounted for at cost. AME was founded by one of the principals of MedImmune (which was acquired by Astra Zeneca in 2007 for over $15 billion). The firm has three wholly owned subsidiaries: i) NuTrae LLC is developing a number of cannabis-based products including a transdermal patch, a metered dose inhaler, and a line of creams, lotions and balms. ii) AltMed North America LLC which has a 75% interest in a 34,000 square foot licensed indoor G-9

146 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 cultivation, extraction and post-processing facility in Arizona and a 10% interest in a company with real estate and agriculture holdings focused on the cannabis sector in Colorado. iii) AltMed LLC - this entity has plans for operations in Florida consisting of cultivation, dispensary, laboratory, and extraction, as well as a 50% ownership interest in Vida Pets LLC. Vida Pets is at the very early stages of designing a clinical trial on a colony of aged beagles to determine the effectiveness of pure CBD derived from hemp on joint mobility and anxiety in animals. Resolve Digital Health Inc. On November 16, 2015, a letter of intent was signed between CRHC and Resolve Digital Health Inc. ( Resolve ) to enter into a definitive agreement where CRHC would invest $750,000 cash in Resolve, in return for an 11% equity interest in Resolve. As of March 31, 2016, CRHC has invested $281,250 of the $750,000 into Resolve. Resolve is an integrated digital health platform designed for symptom relief. Resolve s Breeze product is a patent-pending dosage control smart inhaler. The Breeze product has been created with proprietary tracking and analytics software. The Breeze Smart Pods are pre-measured, hygienically packed individual dose of very high pharmaceutical grade cannabis with no need to handle or measure product. The pods are geared towards users specific symptoms and custom formulated by cannabis experts focusing on improving control, sleep, energy and appetite while suppressing stress, anxiety and inflammation. Each pod has disposable filter tips, which are flavoured or plain, are environmentally friendly and have magnetic closures. The Breeze product has also been developed with a system to ensure that vapour is at a cool temperature. The Resolve Digital Dosing & Tracking System monitors doses, dose effectiveness, symptoms, medicine, reporting, lifestyle, retail, supply chain management, and support. Users can connect to the app via Bluetooth on their smart phones to get information on genetics, place of origin, testing reports and expiration date. The Breeze Product also includes LCD and Touch Screen Displays that provide messages and security to users. The Breeze Product is equipped with a USB Port for charging and data transfer and with a built-in speaker and double chamber induction system. The firm s quality assurance includes over twenty steps to ensure the highest quality standards from genetics and cultivation to packaging. In addition, each Smart Pod has a distinct digital code to allow users to know exactly what the pods contain. AltoTerra Capital Partners Ltd. As of March 31, 2016, CRHC has invested $891,772 in AltoTerra Capital Partners Ltd. ( AltoTerra ) and provided the use of property and equipment in consideration for a thirty percent royalty stream on the gross revenues of its wholly owned subsidiary, Cascadia Holdings Inc. ( Cascadia ). G-10

147 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 Cascadia is a real estate holdings entity focused on owning and leasing facilities that offer full turnkey, equipped-to-rent solutions to tenants that have a valid license to cultivate and/or extract cannabis in the state of Washington. Specifically, Cascadia provides facility design, assistance with licensing, consulting, and distribution in exchange for a gross rent that is priced at a premium due to the value-add and turnkey nature of its offering to its tenant-clients. The two main real estate holdings include the American Nutraceutical building (9,000 sq. ft.), which it owns, and the Aroma Essential Oil Extractions building (18,000 sq ft.), which it leases and which is currently undergoing an expansion to a total of over 40,000 sq. ft of rentable facility space. INTERESTS ACQUIRED AFTER MARCH 31, 2016 Subsequent to the fiscal period ending March 31, 2016, CRHC has completed a number of strategic investments and has entered various letters of intent or term sheets to increase the diversity and quality of the Company s product offerings across different market segments. Bodhi On April 7, 2016, the Company entered into an agreement to purchase a 10% equity interest in Bodhi Research & Development Inc., an Ontario corporation that is conducting research trials for exploring the use of cannabis in the treatment of concussions and post concussive syndrome. The investment totals $250,000 which is to be paid in two installments. The first installment of $100,000 was advanced on April 7, On September 29, 2016, the Company paid the remaining installment of $150,000, and is providing ongoing strategic advice and direction to Bodhi Research as part of its 10% equity interest. AltoTerra During April 2016, CRHC invested an additional $122,206 into the royalty investment with Cascadia Holdings and AltoTerra. The Company also provided additional equipment totalling $40,248 for utilization. Stokes Confections On May 20, 2016, CRHC entered into a letter of intent with Progressive Marketing Partners LLC "Stokes Confections", a Limited Liability Company in California that produces low dose, cannabis infused edibles. CRHC will purchase a license from Stokes Confections to manufacture and sell Stokes Confections products in Arizona, Oregon, Washington, and when federal legislation permits, in Canada. An upfront license fee of $125,000 USD is required for a term of five years from the first commercial sale of any product from this agreement in any of the licensed territories. An advance of $50,000 USD was made as an up-front fee, but will be refunded in full with annual interest of 2.5% if a definitive agreement is not finalized by December 31, The royalties will be 13% of gross sales, paid on a quarterly basis. Wagner Dimas On May 25, 2016, CRHC acquired a 20% equity interest in Wagner Dimas, Inc. ( Wagner Dimas ), a Nevada Corporation which has an innovative process for creating machine rolled products. The Company committed to purchase 2,000,000 shares of Wagner Dimas for $625,000 USD of which $375,000 USD has been paid to date. Wagner Dimas brands and sells some of its products under the G-11

148 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 name Lucy s Pre-Rolls. Resolve On June 13, 2016, the Company subscribed for 73,027 shares in Resolve for a purchase price of $750,000 ($10.27 per share). An amount of $281,250 of the purchase price was paid as of March 31, The balance of $468,750 was paid subsequent to the year end. This transaction results in CRHC adding 11% to its equity holding in Resolve increasing its total holding to 35%. On June 13, 2016, CRHC subscribed for 73,027 shares in Resolve as part of its original investment of $750,000 and Vida s right to common shares increasing CRHC s holding in Resolve to 35%. The right to Vida s 50,351 common shares in Resolve was obtained pursuant to an April 1st binding letter agreement between Vida and CRHC in which the Company commits to purchase from Vida:! 3.5 % royalty on the net revenue of NuTrae LLC for a period of 10 years, commencing January 1, 2016;! Vida s rights and obligations to acquire 50,531 common shares of Resolve; and! 20% interest in Bay Area Extraction Processing. In exchange for these interests, CRHC commits to issue 3,500,000 common shares to Vida valued at $2,625,000 ($0.75 per share) on July 4, 2016, and to make cash payments totaling $200,000 during the period June 30, 2016 to December 31, To date, CRHC has paid $100,000 on its $200,000 cash commitment. Nutrae On June 26, 2016, CRHC acquired the interest to a royalty stream purchase agreement with NuTrae LLC, providing for a 3.5% royalty on the net revenues of NuTrae LLC for a period of 10 years, commencing January 1, This royalty stream was acquired pursuant to the April 1 st binding letter agreement between CRHC and Vida as described above under Resolve. Three Leaf On June 30, 2016, CRHC acquired a 1.5% royalty interest on gross revenue of Three Leaf Logistics for a two year period, plus a 2% fee on the gross value of all Three Leaf s referrals for one year, in exchange for a $100,000 investment. Achelois On June 30, 2016, a term sheet was entered into by the Company to subscribe for a 70% equity interest in Achelois LLC ( Achelois ), a company in the State of California that develops and manufactures cannabis infused skin lotions with fibroblast technology for healing and pain relief. CRHC and Achelois have developed DermaLeaf Skin Care, a brand that may be used to market products owned by Achelois. Consideration for the shares in Achelois is comprised of funding commitments, and the provision of services. As part of the funding commitments, CRHC will provide funding to Achelois on an as needed basis to allow Achelois to become commercially operational. To date, the Company has provided G-12

149 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 $50,300 USD in funding to Achelois. In addition, CRHC has provided services to Achelois relating to research and development of products, marketing and promotion, distribution management, strategic business development, executive management, back office administration, and where permitted, manufacturing, to assist in Achelois becoming commercially operational. CannaCraft On July 22, 2016, the Company entered into a joint venture agreement with CannaCraft Inc., a company in California that supplies equipment and cannabis based medicines. The joint venture is to be conducted under the name Mobile Medicine, whose purpose is to manufacture and lease mobile gelatin encapsulation machines. CannaCraft will contribute one third of the funds required, and will be responsible for the design and manufacturing of the machines. They will also manage and operate the machines. CRHC will contribute two thirds of the funding required for a 50% equity interest, of which $150,000 USD has been advanced to date. On May 16, 2016 CRHC advanced funds of $250,000 USD to CannaCraft, Inc., which has been partially offset by the purchase of equipment and product from CannaCraft, Inc. This advance is not part of the joint venture agreement referenced above. Dreamcatcher, Rock Vapor, Green Rock Botanicals Effective August 12, 2016, the Company entered into a binding term sheet with the following related entities, Dreamcatcher Labs Inc. ("Dreamcatcher"), Rock Vapor Technologies Inc. ("Rock Vapor"), and GreenRock Botanicals, Inc. ("GreenRock"), to: (i) acquire all of the issued and outstanding shares of Dreamcatcher, a corporation incorporated under the laws of the State of Nevada; (ii) acquire certain assets of Rock Vapor, a corporation incorporated under the laws of the State of Delaware; and (iii) acquire a controlling governing membership interest in GreenRock, a non-profit mutual benefit corporation incorporated under the laws of the State of California. On October 24, 2016, the Company entered into a definitive share purchase agreement (the DC SPA ) with Dreamcatcher and GreenRock to purchase all of the issued and outstanding shares of Dreamcatcher and the controlling governing membership interest in GreenRock. Pursuant to the DC SPA the Dreamcatcher shareholders and GreenRock governing member were issued 2,625,000 common shares in the capital of the Company (the "Acquisition Consideration") representing an implied value of $5,250, based on a valuation of $2.00 per common share, the price received per common share in the Company s most recent round of equity financing completed on October 4, 2016 (the October G-13

150 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, Financing ). In addition to the Acquisition Consideration, up to 2,000,000 common shares in the capital of the Company (the Earn-Out Shares ) may be issued to the Dreamcatcher shareholders upon the satisfaction of certain performance-based conditions precedent, namely, the ability of Dreamcatcher to obtain new customers, increase sales revenue and launch new products to market (the Earn-Out Release Conditions ). The Dreamcatcher shareholders have the option to decline the Earn-Out Shares should the Earn-Out Release Conditions be satisfied. The Earn-Out Shares shall be issued in two equal tranches on a pro rata basis amongst the Dreamcatcher shareholders with all fractional shares being rounded down. On October 24, 2016, Dreamcatcher (now a wholly-owned subsidiary of the Company) entered into a definitive asset purchase agreement with Rock Vapor for the purchase of certain assets of Rock Vapor for 375,000 common shares in the capital of the Company representing an implied value of $750, based on a valuation of $2.00 per common share, the price received per common share in the October 2016 financing. A previous director and officer of each of Dreamcatcher, Rock Vapor, and GreenRock, entered into an employment agreement with Dreamcatcher to act as Chief Executive Officer of Dreamcatcher and the sole governing member of GreenRock. To-date, the Company has advanced $65,298 USD to Dreamcatcher for working capital. Electric Medialand In July, 2016, CRHC entered into discussions to acquire all of the issued and outstanding shares in Electric Medialand Inc. ( EML ) The purchase price of EML will be $200,000 cash and 750,000 common shares of CRHC. The $200,000 cash portion of the purchase price will be paid in three equal installments on the closing date of this transaction, six months from closing, and the balance, twelve months from closing. The terms have been agreed by both parties and the agreement that will govern the transaction is in the final stages of review prior to closing. Rich Extracts On September 9, 2016, the Company entered into a term sheet to subscribe for a 50% equity interest in Rich Extracts LLC ( Rich Extracts ), a corporation engaged in the business of using a variety of proprietary extraction processes to produce premium cannabis concentrate and cannabis distillate products in the State of Oregon. Consideration for the shares in Rich Extracts is comprised of funding commitments, the provision of services, a transfer of equipment, inventory, and other tangible assets owned by CRHC into Rich Extracts, and a payment of $200,000 USD, which represents 50% of the estimated value of the equipment, inventory, and other tangible assets that the owner of Rich Extracts is personally transferring into Rich Extracts. As part of the funding commitments, CRHC will provide funding to Rich Extracts on an as needed basis to allow Rich Extracts to become commercially operational. Rich Extracts became commercially operational on July 30, To date, CRHC has provided $1,081,000 in funding to Rich Extracts. G-14

151 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 CRHC has provided services to Rich Extracts relating to research and development of products, marketing and promotion, distribution management, strategic business development, executive management, back office administration, and where permitted, manufacturing, to assist in Rich Extracts becoming commercially operational. To date, CRHC has paid $100,000 USD to the founder and CEO of Rich Extracts as partial payment for the value of equipment, inventory, and other tangible assets that he has personally transferred into Rich Extracts. In addition, there will be an assignment of intellectual property, a consulting agreement with the CEO of Rich Extracts for a minimum one year period, with a monthly consulting fee of $10,000 USD. Aphria On October 19, 2016, the Company entered into a license and royalty agreement with Aphria whereby the Company will grant a license to Aphria to sell or produce, in Canada, the products that the Company owns through its various investments. A 5% royalty on gross revenue from the sale of the products will be paid on a quarterly basis in exchange for the license. RESULTS OF OPERATIONS The following table sets forth consolidated statements of operations data for the indicated years as well as certain balance sheet data as at March 31, 2016 and the period ended March 31, SELECTED ANNUAL INFORMATION Year Ended March 31, 2016 Period Ended March 31, 2015 Consolidated statements of comprehensive loss Revenue $NIL $NIL Operating expenses $2,859,656 $142,914 Loss from operations $2,859,656 $142,914 Net loss after taxes $3,032,938 $142,914 Net loss per share basic and diluted $(0.26) $(0.14) Weighted average shares basic and diluted 11,873, ,837 G-15

152 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 Selected statements of financial position information Year Ended March 31, 2016 Period Ended March 31, 2015 Cash and cash equivalents $6,157 $487,017 Working capital (deficit) $(1,808,373) $475,798 Total assets $3,912,715 $518,790 Long-term debt $NIL $NIL Shareholders' equity $1,880,570 $475,798 Dividends, per share NIL NIL Results of operations for the year ended March 31, 2016 as compared to the period ended March 31, REVENUE There were no revenues for the year ended March 31, 2016 and for the period ended March 31, CRHC began generating revenue from its business units in August CRHC expects to progressively increase its revenues over the next 12 months from an increasing number of royalty agreements and business units coming on-line and from an increase in the amount of royalties and revenues generated by those business units. Refer to the Interests acquired after March 31, 2016 section of this MD&A for details on the new license agreements and business units coming on line. COST OF SALES There were no cost of sales during the fiscal year considering that no revenues were generated. OPERATING EXPENSES Sales and marketing expenses for the year ended March 31, 2016 and the period ended March 31, 2015, were $22,990 and $NIL, respectively. These costs include professional services incurred to provide expert marketing, packaging and promotion advice and services to CRHC s business units. These expenditures are consistent with the Company s view that early-mover advantage and strong brand recognition are essential to a successful ongoing acquisition strategy. These costs represent a strategic G-16

153 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 investment, which management believes will have a future benefit in the acquisition and retention of business units. Research and development ( R&D ) expenses for the year ended March 31, 2016 and the period ended March 31, 2015 were $869,435 and $NIL, respectively. The Company s development team is researching a variety of intellectual property and other related opportunities. The Company has been in discussion with several business units and has been working towards obtaining appropriate licensing that would allow research and development with respect to the extraction of cannabis oils and the development or licensing of potential delivery mechanisms. General and administrative (G&A) expenses for the year ended March 31, 2016 and the period ended March 31, 2015 were $1,967,231 and $142,914, respectively. G&A includes use of consultants and advisory services to expand and commercialize the Company s operations, compliance costs associated with meeting regulatory requirements, and other company related expenses. Overall, the increase in G&A reflects the Company s increased activity from the early start-up phase during its first fiscal period of six months and the increased investing and financing activities during a full fiscal year. A significant portion of the G&A expenses were incurred in connection with acquiring equity, debt, licensing, and royalty interests and in connection with the multiple financing arrangements the Company secured over the course of the fiscal year. These costs include fees paid to investment advisors, legal counsel and accounting services related to these transactions. The loss from operations for the year ended March 31, 2016 amounted to $2,859,565 (for the period ended March 31, $142,914), inclusive of share-based compensation of $993,750 (for the period ended March 31, $NIL) The share-based compensation, a non-cash expense, is related to the granting of shares to various contractors and consultants who provided executive management services and expert advice in selected areas. The shares are measured at fair value at the date of grant and expensed in the period the services were provided. Interest expense is $177,986 for the year ended March 31, 2016 and $NIL the period ended March 31, 2015, offset by interest income, it netted to interest expense of $160,401 and $NIL, respectively. Net loss for the year ended March 31, 2016 and the period ended March 31, 2015 was $3,032,938 and $142,914, respectively, or $0.26 and $0.14 net loss per share on a basic and diluted basis. G-17

154 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 FOURTH QUARTER REVIEW Results of Operations for the three months ended March 31, 2016 as compared to the three months ended March 31, 2015 SELECTED CONSOLIDATED QUARTERLY RESULTS (Unaudited) Canadian dollars Three months ended Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, Revenue Gross margin Operating expenses 13, , , , ,551 1,787,640 Loss from operations 13, , , , ,551 1,787,640 Net loss and comprehensive loss 13, , , , ,619 1,843,747 Net loss per share - basic and diluted (1,372.23) (0.07) (0.03) (0.04) (0.03) (0.14) Weighted average shares - basic 10 1,966,677 10,255,505 10,750,010 12,956,967 13,532,830 OPERATING EXPENSES General and administrative expenses for the three months ended March 31, 2016 and March 31, 2015 were $1,372,112 and $129,192 respectively. The increase is a reflection of the significant ramp-up in activities related to identifying investment opportunities and securing and closing deals. Research and development costs for the three months ended March 31, 2016 and March 31, 2015 were $402,825 and $NIL respectively. The increase is attributable to activity in researching a variety of intellectual property and other related opportunities. CRHC had not yet incurred research and development costs in the last quarter of fiscal 2015, which was only its second quarter of activity since incorporation. Sales and marketing costs for the three months ended March 31, 2016 and March 31, 2015 were $12,703 and $NIL respectively. The increase is attributable to the Company s assistance to its portfolio of business units in strategic marketing, brand development, packaging and promotion. CRHC had not yet incurred sales and marketing costs in the last quarter of fiscal 2015, which was only its second quarter of activity since incorporation. LIQUIDITY The Company s objectives when managing its liquidity and capital structure are to generate sufficient cash to fund the Company s operating, acquisition and organic growth requirements. The Company monitors its liquidity based on total liquid assets and working capital. G-18

155 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 The table below sets out the cash, short-term investments, long-term debt and working capital at March 31, 2016 and March 31, March 31, 2016 March 31, 2015 Cash & cash equivalents $ 6,157 $ 487,017 Restricted short-term investments NIL NIL Long-term debt NIL NIL Working capital (deficit) (1,808,373) 475,798 Working capital ratio (0.11) CRHC s only liquid assets as at March 31, 2016 and March 31, 2015 were cash and cash equivalents. The Company s level of liquid assets is relevant to meet the current operating needs of the company including providing services to its business units. The current operating needs of the Company are limited largely to professional services fees and the cost of contracted consultants. As at March 31, 2016, the Company had cash and cash equivalents available of $6,157, down from $487,017 at the end of Fiscal The decrease since the end of Fiscal 2015 was due primarily to the investments made in Alternative Medical Enterprises (AME) and Resolve Digital Health Inc. totalling $2,131,320, the royalty investment in AltoTerra Capital Partners Inc. for $891,772, the purchase of property and equipment for $684,924 and financing of the net loss of $3,032,938 is offset by the issue of shares for $4,500,210 net of share issuance costs, the increase in payables and accruals of $1,543,442 and the net increase in loans payable over loans receivable of $293,318. While the Company has incurred cash losses to date, management anticipates eventual cash profitability of the business, though there can be no assurance that the Company will gain adequate market acceptance for its products or be able to generate sufficient positive cash flow to reach sustained profitability. CRHC monitors its level of working capital and working capital ratio in order to assess the ability to continue to fund operating costs as well as to enter into strategic opportunities such as acquisitions and royalty investments. The level of working capital and the working capital ratio have decreased from March 31, 2016 as compared to March 31, 2015, from $475,798 and respectively, to a deficit of ($1,808,373) and (0.11) respectively. The decrease in the working capital is primarily driven by the investments made in AME, Resolve Digital Health Inc., and AltoTerra Capital Partners Inc., as noted above, as well as the operating losses incurred in the year. The company also incurred significant liabilities which were not settled at March 31, 2016, however the majority of these were for services to officers of the company which were intended to be settled, and have since been settled with common shares. As at March 31, 2016, CRHC had an insufficient amount of liquid assets and a working capital deficiency which has been addressed primarily through a number of common share issuances between April 1, 2016 and October 4, 2016 totalling $6,527,735 (see section in this MDA Other Equity Financings Since G-19

156 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 March 31, 2016 ). CRHC has also entered into various shareholder loans, which are mostly repaid, to meet short term liquidity needs. Significant liabilities to officers and other consultants for services provided have been settled with common shares which has helped to maintain liquidity and working capital. The above sources of financing and short term liquidity have allowed CRHC to continue to make certain strategic investments as well as to meet operating obligations. The Company is also relying on the completion of the following proposed transaction as a source of critical financing to continue to meet its strategic objectives and operational needs. On October 4, 2016, in connection with the Proposed Transaction, CRHC and Bonanza Blue completed a brokered offering of 2,502,000 subscription receipts at a price of C$2.00 per Subscription Receipt for total gross proceeds of approximately $5 million through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc. (collectively with the Co-Lead Agents, the Agents ). While CRHC could receive certain cash flows from revenues in the second half of the next fiscal year, these are not expected to be a significant source of funding for current operations. Therefore, if the Company is unable to complete the above Subscription Receipt and is unable to continue to find other sources of equity financing and loans, it may be unable to meet its strategic initiatives or be unable to meet its operating requirements. Please refer to note 2, Going Concern Uncertainty in the consolidated financial statements as at March 31, The Company has no lease commitments, purchase commitments or other liabilities beyond those that are shown on its balance sheet at March 31, The chart below highlights the Company s cash flows during the year ended March 31, 2016 and the period ended March 31, Net cash provided by (used in) Year Ended March 31, 2016 Period Ended March 31, 2015 Operating activities $ (1,485,082) $ (131,695) Financing activities 4,604, ,712 Investing activities (3,600,463) NIL Cash and cash equivalents, beginning of period 487,017 NIL Cash and cash equivalents, end of period $ 6,157 $ 487,017 CASH USED IN OPERATING ACTIVITIES G-20

157 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 The cash used in operating activities during the year ended March 31, 2016 of $1,485,082 was primarily due to changes in non-cash operating working capital items of $1,505,721 and funding a net loss of $3,032,938 which included the non-cash loss on sale of property and equipment of $42,135. For the period ended March 31, 2015, cash used in operating activities was $131,695, primarily due to changes in non-cash operating working capital items of $11,219 and funding a net loss of $142,914. CASH FROM FINANCING ACTIVITIES The cash provided by financing activities during the year ended March 31, 2016 of $4,604,685 mainly resulted from 4,145,000 shares issued in connection with private placements at $0.50 per share for proceeds of $2,052,178, net of share issue costs and 3,333,333 shares issued in connection with a private placement on March 17, 2016 at $0.75 per share for proceeds of $2,448,032, net of share issuance costs. For the period ended March 31, 2015, cash provided by financing activities of $618,712 resulted from the issuance of shares in connection with private placements at $0.02 per share for proceeds of $80,000 and the issuance of shares in connection with a private placement at $0.10 per share for proceeds of $476,212 net of share issuance costs. $62,500 was received by the Company for shares to be issued. CASH USED IN INVESTING ACTIVITIES The cash used in investing activities during the year ended March 31, 2016 of $3,600,463 was primarily due to purchases of equity investments in AME for $1,850,070 and Resolve Digital Health Inc. for $281,250 as well as a royalty interest in AltoTerra Capital Partners Ltd. for $891,772 and purchases of property and equipment for $684,924 offset by proceeds on disposal of equipment of $110,053. No investing activities were made during the period ended March 31, FINANCING AND CAPITAL RESOURCES The Company is subject to risks including, but not limited to, its ability to raise additional funds through debt and/or equity financing to support the Company s development and continued operations and to meet the Company s liabilities and commitments as they come due. Specifically, the Company has a history of losses with an accumulated deficit of $3,175,852, share capital of $5,056,422 and a working capital deficit of $1,808,373 as at March 31, This compares to an accumulated deficit of $142,914, share capital of $556,212 and working capital of $475,798 as at March 31, See below under the heading Risk Factors. CAPITAL ACTIVITIES The Company manages its capital with the objective of maximizing shareholder value and sustaining future development of the business. The Company defines capital as the Company s equity and any debt it may issue. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the Company s activities. The Company, upon G-21

158 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 approval from its Board of Directors, will undertake to balance its overall capital structure through new share issues, the issue of debt or by undertaking other activities as deemed appropriate under the specific circumstances. The Company s principal capital needs are for funds to use towards its current projects, pipeline projects, upcoming products launches, and general working capital requirements to support growth including new opportunities. Since its formation, the Company has financed its cash requirements primarily through the issuance of capital stock. The Company s objective in managing capital is to ensure sufficient liquidity to pursue its investment growth strategy, and undertake selective acquisitions, while at the same time taking a conservative approach toward financial leverage and management of financial risk. The Company s capital is composed entirely of equity. The Company s primary uses of capital are to invest in research, brands and devices in the cannabis industry. The Company also uses capital to finance operating losses, capital expenditures, and increases in non-cash working capital. The Company currently funds these requirements from cash raised through share issuances and short-term debt as required. The Company s objectives when managing capital are to ensure that the Company will continue to have enough liquidity help build its investments into successful businesses and obtain returns on its investments. The Company monitors its capital on the basis of the adequacy of its cash resources to fund its business plan. In order to maximize flexibility to finance the Company s ongoing growth, the Company does not currently pay a dividend to holders of its common shares. The Company did not institute any changes to its capital management strategy during the year. The Company s authorized share capital is an unlimited number of common shares of which 16,353,343 common shares were issued and outstanding as at March 31, 2016, (March 31, ,875,010 common shares); No common share warrants or agent options were outstanding or exercisable at March 31, 2016 or March 31, OFF-BALANCE SHEET ARRANGEMENTS The Company has no off-balance sheet arrangements other than those as stated below in the section titled Transactions with Related Parties. TRANSACTIONS WITH RELATED PARTIES The following is a description of transactions with related parties for the periods ended March 31, 2016 and 2015: (1) In March 2015, the Company paid a signing bonus of $28,250 to a company owned by a director for consulting work and capital markets advice. (2) From September 2015 to March 2016, a company owned by a director was paid for providing consulting services to CRHC in the amount of $98,875. As part of this consulting agreement, the related G-22

159 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 party earned a success fee of 2.5% on the private placements raised in September 2015, October 2015, and March The total success fee of $90,875 has been accrued as consulting fees to be paid. (3) As at March 31, 2016, $36,758 in prepaid consulting fees had been paid to a company owned by a director. (4) During the 2016 fiscal year, the Company sold some equipment due to technological obsolescence, to a company owned by a director for proceeds of $110,053. A loss of $42,135 was recorded as the cost of the equipment sold was $152,188. (5) During the 2016 fiscal year, a related company controlled by a director provided an unsecured, noninterest bearing loan, due on demand, to CRHC in the amount of $1,758. (6) During the 2016 fiscal year, a director provided an unsecured, non-interest bearing loan, due on demand, to CRHC in the amount of $20,848. (7) During the 2016 fiscal year, the Company settled debt of $192,251 by issuance of 256,335 common shares valued at $0.75 to a company owned by a director. ACCOUNTING MATTERS Critical Accounting Estimates The Consolidated Financial Statements include certain amounts that are inherently uncertain and judgmental in nature. As a result, management is required to make assumptions and best estimates in order to determine the reported values. The Company considers an accounting estimate to be critical if: (1) it requires that significant assumptions be made in order to deal with uncertainties; and (2) changes in the estimate could have a material impact on results of operations, financial condition or liquidity. The Company believes that the material items requiring such subjective and complex estimates are:! Determination of the recoverable amount of a royalty investment; and! Determination of the functional currency; The Company believes that the amounts included in these financial statements reflect management s best judgment. However, factors including, without limitation, those noted under Risks and Uncertainties below could cause actual events or results to differ materially from our underlying assumptions and estimates. Accordingly, this could lead to a material adverse impact on our results of operations, financial condition and/or liquidity. Adoption of New Accounting Policies None of the new accounting standards adopted during the year ended March 31, 2016 (see Note 4 of the Consolidated Financial Statements) resulted in a change in accounting policies. G-23

160 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 Future Accounting Pronouncements Refer to Note 4 of the Consolidated Financial Statements for the year ended March 31, FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS Refer to Note 17 of the Consolidated Financial Statements for the year ended March 31, RISKS AND UNCERTAINTIES Many factors could cause the Company s actual results, performance and achievements to differ materially from those expressed or implied by the forward-looking statements and forward-looking information, including without limitation, the following factors, which are discussed in greater detail in the Company s Listing Statement filed with securities regulators and available on which risk factors are incorporated by reference into this document, and should be reviewed in detail by all readers:! The activities of the Company are subject to regulation by governmental authorities;! Third parties with which the Company does business may perceive that they are exposed to reputational risk as a result of the Company s cannabis business activities;! The operation of the Company can be impacted by adverse changes or developments affecting the Company s subsidiaries and other interests;! The Company s ability to recruit and retain management, skilled labour and suppliers is crucial to the Company s success;! The Company and its subsidiaries and other interests have limited operating histories;! The Company has a history of net losses, may incur significant net losses in the future and may not achieve or maintain profitability;! Even if its financial resources are sufficient to fund its current operations, there is no guarantee that the Company will be able to achieve its business objectives. The continued development of the Company may require additional financing and there can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Company;! There is potential that the Company will face intense competition from other companies, some of which can be expected to have longer operating histories and more financial resources and manufacturing and marketing experience than the Company;! The Company believes the cannabis industry is highly dependent upon consumer perception G-24

161 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 regarding the safety, efficacy and quality of the cannabis produced. Consumer perception of the Company s products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, media attention and other publicity regarding the consumption of cannabis products. There can be no assurance that future scientific research, findings, regulatory proceedings, litigation, media attention or other research findings or publicity will be favourable to the medical cannabis market or any particular product, or consistent with earlier publicity;! The Company and its subsidiaries and other interests face an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury;! The products of the Company s subsidiaries and other interests could be subject to the recall or return of their products for a variety of reasons. If a product recall or return should happen, the Company could be required to incur unexpected expenses and divert management attention and could see harm caused to its image and product sales decline. In addition, as result of the product recall or return, the Company and its subsidiaries and other interests could face increased operational scrutiny by regulatory agencies, requiring further management attention and potential legal fees and other expenses;! Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of the Company;! The Company is largely reliant on its own market research to forecast sales as detailed forecasts are not generally obtainable from other sources at this early stage of the medical cannabis industry in Canada or the United States. A failure in the demand for its products to materialize as a result of competition, technological change or other factors could have a material adverse effect on the business, results of operations and financial condition of the Company;! The Company may be subject to growth-related risks including capacity constraints and pressure on its internal systems and controls;! The Company may engage in acquisitions or other strategic transactions or make investments that could result in significant changes or management disruption;! The Company could fail to integrate subsidiaries and other interests into the business of the Company;! Completed acquisitions, strategic transactions, or investments could fail to increase shareholder value;! Certain of the Directors and Officers of the Company are also directors and officers of other companies, and conflicts of interest may arise between their duties as officers and directors of G-25

162 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2016 the Company and as officers and directors of such other companies;! The Company, its subsidiaries, or other interests may become party to litigation, mediation and/or arbitration from time to time in the ordinary course of business which could adversely affect its business;! The Company s operations are subject to environmental and safety laws and regulations concerning, among other things, emissions and discharges to water, air and land; the handling and disposal of hazardous and non-hazardous materials and wastes, and employee health and safety;! The market price for the common shares may be volatile and subject to wide fluctuations in response to numerous factors, many of which are beyond the Company s control;! There can be no assurance that an active and liquid market for the common shares will be maintained and an investor may find it difficult to resell any securities of the Company;! A substantial number of common shares are owned by a limited number of existing shareholders and as such these shareholders are in a position to exercise influence over matters requiring shareholder approval or cause delay or prevent a change in control of the Company that could otherwise be beneficial to the Company s shareholders; and! The Company does not anticipate paying any dividends on the common shares in the foreseeable future. Dividends paid by the Company would be subject to tax and, potentially, withholdings. G-26

163 SCHEDULE "H" CRHC S MD&A FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Please see attached. H-1

164 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Dated: November 23, 2016 Schedule H CRHC MD&A September 30, 2016 This Cannabis Royalties & Holdings Corp. (the Company or CRHC ) Management s Discussion and Analysis ( MD&A ) is dated November 23, It should be read in conjunction with the Company s unaudited Condensed Consolidated Financial Statements (the Financial Statements ) for the second quarter (also referred herein as Q2 ) and first six months of the fiscal year ending March 31, 2017 ( Fiscal 2017 ) and with CRHC s audited Consolidated Financial Statements for the fiscal year ended March 31, 2016 ( Fiscal 2016 ), including without limitation, the risks and uncertainties as disclosed in the MD&A for Fiscal Unless otherwise indicated, all financial information in this MD&A is reported in Canadian dollars, except share amounts. The Company prepared this MD&A of the Financial Condition and Results of Operations with reference to National Instrument Continuous Disclosure Obligations of the Canadian Securities Administrators ( NI ). This MD&A provides information for the six months ended September 30, 2016 and up to and including November 23, The unaudited Condensed Consolidated Financial Statements and this MD&A have been approved by the Company s Board of Directors. The accompanying unaudited Condensed Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards ( IFRS ) and include the accounts of the Company and its wholly-owned subsidiaries Cannroy Delaware Inc., Cannroy Distribution LLC and Desert Growers LLC located in the United States of America. Cannroy Distribution LLC, a wholly owned subsidiary of Cannroy Delaware Inc., was incorporated on May 3, Desert Growers LLC was dissolved on September 22, 2016 and is not included in the statement of financial position as at September 30, All inter-company balances and transactions have been eliminated on consolidation. Additional information filed by us with the Canadian Securities Administrators is available on-line at and also on the Company s website at CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This MD&A contains certain forward-looking statements and forward-looking information within the meaning of Canadian securities laws, including such statements relating to:! assumptions and expectations described in the Company s critical accounting policies and estimates;! the Company s expectations regarding the adoption and impact of certain accounting pronouncements; H-2

165 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016! the Company s expectations regarding legislation, regulations and licensing related to the cultivation, production and sale of cannabis products by the company s wholly-owned subsidiaries;! the expected number of users of medical marijuana or the size of the medical marijuana market in Canada and the United States;! the potential time frame for the introduction of legislation to legalize recreational marijuana use in Canada and the United States, and the potential form that this legislation will take;! the potential size of the recreational marijuana market in Canada and the United States, should recreational use be legalized;! the ability to enter and participate in international market opportunities;! the Company s expectations with respect to the company s future financial and operating performance;! product sales expectations; and! the Company s ability to achieve profitability without further equity financing. The words plans, expects, is expected, budget, scheduled, estimates forecasts, intends, anticipates, or believes or variation (including negative variations) of such words and phrases, or statements that certain actions, events, or results may, could, would, might, or will be taken, occur or to achieve are all forward-looking statements. Forward-looking statements are based on the reasonable assumptions, estimates, internal and external analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable at the date that such statements are made. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, but are not limited to, the factors discussed in the section entitled RISKS AND UNCERTAINTIES. Although the Company has attempted to identify important factors that could cause actions, events or results to differ materially from those described in the forward-looking statements, there may be other factors that cause actions, events, or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as at the date of the MD&A. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements. The Company does not undertake to update any forward-looking statements except as required by applicable securities laws. Legal* H-3

166 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Q2 HIGHLIGHTS! There was $127,707 of revenues for the quarter ended September 30, 2016 as compared to NIL for the quarter ended September 30, 2015.! Cash and cash equivalents were $314,456 at September 30, 2016 as compared to $6,157 at March 31, 2016.! Net comprehensive loss of $1,866,845 and net loss per share of $0.07 for the three months ended September 30, 2016 as compared to a net comprehensive loss of $431,801 and net loss per share of $0.04 for the three months ended September 30, 2015.! Current assets of $2,829,212 as of September 30, 2016 compared to $223,772 as of March 31, 2016.! The aggregate of investments, royalty investments, and interests in equity investees increased to $7,890,176 at September 30, 2016 as compared to $3,023,902 at March 31, RECENT DEVELOPMENTS PROPOSED TRANSACTION On June 30, 2016, CRHC entered into a binding agreement with Bonanza Blue Corp. ( Bonanza ) in connection with a proposed transaction pursuant to which Bonanza will acquire all of the issued and outstanding shares of CRHC in exchange for securities of Bonanza (the Proposed Transaction). CRHC and Bonanza intend to apply to the Canadian Securities Exchange ( CSE ) for the listing of the common shares of the resulting issuer named CannaRoyalty Corp. (the Resulting Issuer ). Final approval of the listing is subject to the Company meeting certain standard requirements of the CSE. SUBSCRIPTION RECEIPT OFFERING On October 4, 2016, in connection with the Proposed Transaction, CRHC and Bonanza completed a brokered offering of 2,502,000 subscription receipts (the Subscription Receipts ) at a price of C$2.00 per Subscription Receipt for total gross proceeds of approximately $5 million (the Offering ) through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc. (collectively with the Co-Lead Agents, the Agents ). DESCRIPTION OF THE BUSINESS OVERVIEW OF CRHC CRHC is a private corporation, incorporated in Canada, with its head office located at the HSBC Building, 885 West Georgia Street, Suite 2200, Vancouver, British Columbia, V6C 3E8. Legal* H-4

167 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 CRHC is a fully integrated, active participant in the legal cannabis sector, with a focus on building a portfolio of assets in three key industry verticals: research, brands, and devices. CRHC also contributes strategic capital, infrastructure and functional expertise to maximize the return potential of its diversified portfolio of assets and holdings. CRHC intends to build on its existing relationships by developing operating plans and providing oversight, strategy and management of the business units growth and integration. Further, CRHC plans to expand its reach by building new partnerships with vertical market partners and end-user products companies as well as exploring opportunities with successful cultivators and processors. Through its expansion efforts, CRHC intends to utilize online sales and marketing platforms, participate in relevant trade shows, and develop various advertising materials to communicate its approach to its intended audience and target market. CRHC is also well-positioned to participate in the large and growing market for enhanced downstream cannabis products and new products with various consumer and medical applications. CRHC s business plan is targeted at the growth of its business units and expanding their reach to endusers and partners. Although the business units will be primarily responsible for developing and operating their respective businesses, CRHC will be available to provide functional expertise, oversight and a framework of disciplined planning to the operations of the business units when needed. CRHC s short-term objective is to create a sustainable business in the key States of California, Washington, Arizona, and Oregon by integrating its holdings to create synergies and a true end-to-end solution geared to the needs of patients and consumers. CRHC has positioned itself for commercial growth by focusing its expanded resource base on finding and partnering with the best and most innovative companies, projects, assets and overall business frameworks in the legal cannabis sector in these key states. To achieve its objective, the Company will continue making specific and deliberate investments, including acquisitions, to:! Increase the diversity and quality of the Company s product offerings across different market segments;! Increase the strength and segmentation of the Company s multiple brands. In addition, management believes that a significant opportunity exists today and will develop further in the future, to leverage the Company s expertise, financial strength and business model in legal marijuana markets around the world. CRHC intends on pursuing opportunities in a number of jurisdictions where medical marijuana is legally allowed, or where governments are actively pursuing legalization. Subject to legislative and regulatory compliance, strategic business opportunities pursued by the Company could include: Legal* H-5

168 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016! Providing advisory services to third-parties that are interested in establishing licensed cannabis cultivation, processing and sales operations;! Entering into strategic relationships that create value by sharing expertise and industry knowledge;! Providing capital in the form of debt, royalties, or equity to new business units; and! Entering into licensing agreements to generate revenue, create strategic partnerships, or other business opportunities. At September 30, 2016 and September 30, 2015, the Company had no full-time employees. The Company has established service contracts for key executive, management, functional expertise and other support personnel. Concrete plans are in place to convert some contract personnel to employees and to hire additional full time employees to support business objectives. BUSINESS UNITS AND HOLDINGS CRHC has built a platform of holdings via royalty agreements, equity interests, convertible and nonconvertible debt, and licensing agreements in various businesses in Canada and the United States ( business units or holdings ). At September 30, 2016, CRHC has a total of eighteen holdings in its portfolio of investments. The tables below summarize the holdings by type and highlight the carrying value at September 30, SUMMARY OF HOLDINGS Royalty Investments September 30, Alto Terra/Cascadia Holdings $ 973, Nutrae LLC $ 1,130, Three Leaf Holdings $ 100, Alto Terra/Cascadia Holdings LLC ( Cascadia ): As of March 31, 2016, CRHC entered into a royalty agreement with Cascadia, a subsidiary of AltoTerra Capital Partners Ltd. ( AltoTerra ), in which the Company provided the use of property and equipment in consideration for a thirty percent royalty stream on Cascadia s gross revenues. In April 2016, the Company paid the remaining $65,000 USD to Cascadia. Cascadia is incorporated in the state of Washington and is in the business of leasing turnkey builtout solutions to companies that produce and process cannabis products pursuant to a license issued by the Washington State Liquor and Cannabis Board. Legal* H-6

169 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, NuTrae LLC ( Nutrae ): Pursuant to an agreement dated April 1, 2016 between CRHC and Vida, the Company purchased a 3.5 % royalty on the net revenue of NuTrae for a period of 10 years, commencing January 1, NuTrae is a Colorado based company developing drug delivery systems and products. This firm has a fairly broad portfolio that includes a host of projects and assets. These projects and assets include transdermal patches, oral dissolvable film, creams, lotions and balms, intimacy oil, meter dosing inhaler and aerosolizer, disposable and rechargeable vape pens, and wax and shatter. 3. Three Leaf Holdings Inc. ( Three Leaf ): In accordance with a private placement on March 17, 2016, CRHC agreed to make an investment in Three Leaf. The investment was paid on June 30, 2016 and provides CRHC a 1.5% royalty on total Three Leaf revenue for a period of two years subsequent to March 12, 2016, plus a 2% fee on the gross value of all Three Leaf s referrals for one year subsequent to March 12, Three Leaf is a logistics and fulfillment company focused exclusively on the cannabis sector. This firm ensures the highest levels of security clearance and boasts proprietary tracking and fulfillment capabilities. Three Leaf is a sister company of JP Logistics, which is a global logistics company with operations in North America, Europe and Asia, and whose clients include Amazon, Costco and the Home Shopping Network. Equity Investments September 30, Resolve Digital Health Inc. $ 2,447, Wagner Dimas $ 817, Resolve Digital Health Inc. ( Resolve ): On November 16, 2015, a letter of intent was signed between CRHC, Vida Cannabis Corp. ( Vida ), and Resolve to enter into a definitive agreement where CRHC would invest in Resolve, in return for an 11% equity interest. On April 1, 2016, the Company purchased Vida s rights and obligations to acquire an additional 24% of the common shares of Resolve. This investment was fully paid on July 4, Due to the additional acquisition of shares, along with the option for CRHC to have a board member, CRHC now has significant influence and accounts for Resolve under the equity method. Resolve is an integrated digital health platform designed for symptom relief. Resolve s Breeze product is a patent-pending dosage control smart inhaler. The Breeze product has been created with proprietary tracking and analytics software. The Breeze Smart Pods are pre-measured, hygienically packed individual dose of very high pharmaceutical grade cannabis with no need to handle or measure product. The pods are geared towards users specific symptoms and custom formulated by cannabis experts focusing on improving control, sleep, energy and appetite while suppressing stress, anxiety and inflammation. Legal* H-7

170 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 The Resolve Digital Dosing & Tracking System monitors doses, dose effectiveness, symptoms, medicine, reporting, lifestyle, retail, supply chain management, and support. Users can connect to the app via Bluetooth on their smart phones to get information on genetics, place of origin, testing reports and expiration date. The Breeze Product also includes LCD and Touch Screen Displays that provide messages and security to users. The firm s quality assurance includes over twenty steps to ensure the highest quality standards from genetics and cultivation to packaging. 2. Wagner Dimas Inc. ( WD ): On May 25, 2016, CRHC acquired a 20% equity interest in WD which provided CRHC with significant influence. WD is a Nevada Corporation which has an innovative process for creating machine rolled products. The innovative process creates all-natural uniform, machine-rolled, and perfectly packaged joints made only from the finest 100% cannabis flowers. Lucy s Pre-Rolls have been independently labtested for safety. WD has also entered into co-packing agreements as well as the development of the branded products. Convertible notes receivable (including embedded derivatives) September 30, Eureka Management Services $ 539, BAS Research $ 398, Eureka Management Services Inc. ( Eureka ): During February 2016, the Company entered into a loan agreement with Eureka, which provides CRHC with an option for a 5% equity stake in lieu of repayment. The loan is to assist Eureka in expanding its operations in Oakland, California to add a licensed kitchen to produce edibles, distillates, concentrates and confectionary products. Eureka operates the Magnolia Wellness Dispensary in Oakland, CA. This firm has a fully integrated license relating to cultivation, extraction and dispensary, which has 27,000 registered patients and has a revenue forecast of $8.4 million in In addition to the investment, CRHC has secured a preferred supplier agreement that includes shelf space for brand testing and access to the kitchen facility. 2. BAS Research ( BAS ): During July 2016, the Company entered into a loan agreement with BAS, which provides CRHC the option to convert the loan receivable into common shares or preferred shares of BAS. If the option to receive equity is pursued, CRHC would not have significant influence over BAS. BAS is a fully licensed and compliant lab and manufacturing and processing facility located in Berkeley, CA. This firm carries out research and genetics work. The firm is a leading group of PhDs and chemists who have undertaken R&D work regarding advanced tissue culture and genetics. The research work and studies are to determine ailment-specific strains as well as extraction and postprocessing. The firm can tailor products to clients specific needs. Legal* H-8

171 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 In addition to the investment, CRHC has secured a supplier relationship that includes buying processed cannabis oil at preferred rates, and tailoring the product to specific requirements. Joint Venture and other investments September 30, CannaCraft/Mobile Medicine $ 192, Altermative Medical Enterprises LLC $ 1,850, Bodhi Research and Development $ 250, Eureka Management Services $ 128, CannaCraft/Mobile Medicine: On July 22, 2016, the Company entered into a joint venture with CannaCraft Inc., a company in California that supplies equipment and cannabis-based medicines. The joint venture is conducted under the name Mobile Medicine, whose purpose is to manufacture and lease mobile gelatin encapsulation machines. CannaCraft will contribute one third of the funds required, and will be responsible for the design and manufacturing of the machines. CannaCraft will also manage and operate the machines. CRHC will contribute two thirds of the funding required for a 50% equity interest, of which $192,540 has been advanced at September 30, At September 30, 2016, the Mobile Medicine joint venture is not commercially operational and has not conducted any activities. 2. Alternative Medical Enterprises LLC ( AME ): CRHC owns 1,500 Class A units in Alternative Medical Enterprises, LLC ( AME ), a Florida limited liability company focused on medical cannabis. The units represent an 8.2% equity interest which is accounted for at cost. AME was founded by one of the principals of MedImmune (which was acquired by Astra Zeneca in 2007 for over $15 billion). The firm has three wholly owned subsidiaries:! NuTrae LLC is developing a number of cannabis-based products including a transdermal patch, a metered dose inhaler, and a line of creams, lotions and balms;! AltMed North America LLC which has a 75% interest in a 34,000 square foot licensed indoor cultivation, extraction and post-processing facility in Arizona and a 10% interest in a company with real estate and agriculture holdings focused on the cannabis sector in Colorado; and! AltMed LLC which has plans for operations in Florida consisting of cultivation, dispensary, laboratory, and extraction as well as a 50% ownership interest in Vida Pets LLC. Vida Pets is at the very early stages of designing a clinical trial on a colony of aged beagles to determine the effectiveness of pure CBD derived from hemp on joint mobility and anxiety in animals. 3. Bodhi Research Development Inc. ( Bodhi ): On April 7, 2016, the Company entered into an agreement to purchase a 10% equity interest in Bodhi. Legal* H-9

172 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Bodhi is an Ontario corporation that is conducting research trials for exploring the use of cannabis in the treatment of concussions and post concussive syndrome. The collaboration is with foremost experts in concussions and pain management that include: (a) Dr. Neilank Jha (Neurosurgeon and Founder of Konkussion the largest network of concussion clinics in North America); and (b) Dr. Mark Ware (MD, Professor of Medicine McGill University, Director of Clinical Research and Pain Management Unit McGill University Health Centre). 4. Eureka Management Services ( Eureka ): On May 5, 2016, the Company acquired a 6% equity interest in Eureka. Loans and advances September 30, Natural Ventures PR, LLC $ 156, Stokes Confections $ 65, Rich Extracts $ 1,135, Achelois $ 56, Dreamcatcher $ 118, Cascadia Holdings LLC $ 382, CannaCraft Inc. $ 103, Santa Barbara Patients Collective and Healing Center $ 65, Natural Ventures PR, PLC: On May 15, 2016, the Company advanced funds to Natural Ventures PR, LLC, a corporation organized under the laws of Puerto Rico. A promissory note was taken back with interest charged at 5% per annum. 2. Progressive Marketing Partners LLC ( Stokes Confections ): On May 15, 2016, CRHC entered into a letter of intent (LOI) with Stokes Confections, a Limited Liability Company in California that produces low dose, cannabis infused edibles. Under the LOI, the Company will purchase for $125,000 USD a license from Stokes Confections to manufacture and sell Stokes Confections products in Arizona, Oregon, Washington, and when federal legislation permits, in Canada for a term of five years beginning from the first commercial sale of the products in any of the licensed territories. An advance of $65,585 ($50,000 USD) was made as an up-front fee, but will be refunded in full with annual interest of 2.5% if a definitive agreement is not finalized by December 31, Rich Extracts LLC ( Rich Extracts ): On September 9, 2016 CRHC entered into a term sheet to subscribe for a 50% equity stake in Rich Extracts LLC ( Rich Extracts ) which would constitute a joint venture once it is binding. Consideration for the shares in Rich Extracts is comprised of funding commitments, the provision of services, a transfer of equipment, inventory, and other tangible assets owned by CRHC into Rich Extracts, and a payment of $200,000 USD, which represents 50% of the estimated value of the equipment, inventory, and other tangible assets that the other joint venturer is personally transferring into Rich Extracts. In relation to these funding commitments, CRHC has provided funding and advances of $1,135,066 to Rich Extracts as of September. Legal* H-10

173 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Rich Extracts produces a Clear Oil product line, including concentrates, distillates, and shatter. This firm currently distributes its products in Oregon, and is looking to expand to California. They use a variety of proprietary extraction processes to produce premium cannabis concentrate and cannabis distillate products. The products of the TRU Extract s brand have experienced an average 29.3% monthly growth in transactions from June 2015 to May Achelois LLC ( Achelois ): On June 30, 2016, the Company entered into a term sheet to subscribe for a 70% equity interest in Achelois. Consideration for the shares in Achelois is comprised of funding commitments, and the provision of services. As part of the funding commitments, CRHC will provide funding to Achelois on an as needed basis to allow Achelois to become commercially operational. As of September 30, 2016 the company has provided funding of $56,088. Achelois is a company in the State of California that develops and manufactures cannabis infused skin lotions with fibroblast technology for healing and pain relief. DermaLeaf targets deep skin repair, burns, scar repair, wrinkle reduction, and tattoo enhancer. 5. Dreamcatcher Labs Inc. ( Dreamcatcher ): During August and September 2016, CRHC advanced funds to Dreamcatcher to provide them working capital. The loan is non-interest bearing, unsecured, with no specific terms of repayment. On October 24, 2016, CRHC acquired 100% of the shares of Dreamcatcher which became CRHC s wholly owned subsidiary. 6. Cascadia Holdings LLC ( Cascadia ): During the six-month period ended September 30, 2016, CRHC advanced a total of $382,561 to provide Cascadia additional working capital. The terms of a formal loan agreement are being finalized. Cascadia is one of CRHC s royalty investments. 7. CannaCraft Inc. ( CannaCraft ): CRHC advanced funds of $327,925($250,000 USD) to CannaCraft on May 16, This advance has been partially offset by CRHC s purchase of equipment and products from CannaCraft valued at $224,541. The balance of the advance at September 30, 2016 is $103,384 ($78,817 USD). This advance is not part of the joint venture agreement between the two companies. 8. Santa Barbara Patients Collective and Healing Center ( SBPCHC ): CRHC entered into a loan agreement with SBPCHC on August 19, 2015 for $131,170 to assist SBPCHC in opening a collective and healing center in Santa Barbara, California. Interest was calculated at 20% per annum and the loan was unsecured. The principal and accrued interest was due on August 19, As the amount is now past due and no payments have been received, the Company has engaged legal counsel to assist in aggressively pursuing collection of the entire amount of the loan and all accrued interest. However, due to the uncertainty regarding collectability, CRHC has provided an allowance of $65,585 against the principal balance. Legal* H-11

174 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 INVESTMENTS MADE SINCE SEPTEMBER 30, 2016 Aphria Inc. On October 19, 2016, the Company entered into a license and royalty agreement with Aphria Inc. ( Aphria whereby the Company will grant a license to Aphria to sell or produce, in Canada, the products that the Company owns through its various investments. A 5% royalty on gross revenue from the sale of the products will be paid on a quarterly basis in exchange for the license. Aphira is a publicly traded, Health Canada licensed producer of medical cannabis products who focus on quality medical cannabis that is 100% greenhouse grown. The Company is focused on producing and selling medical marijuana through a two-pronged growth strategy, including both retail sales and wholesale channels. Dreamcatcher, Rock Vapor and Green Rock Botanicals On October 24, 2016, pursuant to a binding term sheet entered into on August 12, 2016, CRHC executed a definitive share purchase agreement (the DSPA ) with Dreamcatcher Labs Inc. ("Dreamcatcher"), and GreenRock Botanicals, Inc. ("GreenRock"), to: (i) acquire all the issued and outstanding shares of Dreamcatcher, a corporation incorporated under the laws of the State of Nevada; (ii) acquire a controlling governing membership interest in GreenRock, a non-profit mutual benefit corporation incorporated under the laws of the State of California. Pursuant to the DSPA the Dreamcatcher shareholders and the GreenRock governing member were issued 2,625,000 common shares in the capital of the Company (the "Acquisition Consideration") representing an implied value of $5,250,000 based on a valuation of $2.00 per common share, the price received per common share in the Company s most recent round of equity financing completed on October 4, 2016 (the October 2016 Financing ). In addition to the Acquisition Consideration, up to 2,000,000 common shares in the capital of the Company (the Earn-Out Shares ) may be issued to the Dreamcatcher shareholders upon the satisfaction of certain performance-based conditions precedent, namely, the ability of Dreamcatcher to obtain new customers, increase sales revenue and launch new products to market (the Earn-Out Release Conditions ). The Dreamcatcher shareholders have the option to decline the Earn-Out Shares should the Earn-Out Release Conditions be satisfied. The Earn-Out Shares shall be issued in two equal tranches on a pro rata basis amongst the Dreamcatcher shareholders with all fractional shares being rounded down. On October 24, 2016, Dreamcatcher (now a wholly-owned subsidiary of the Company) entered into a definitive asset purchase agreement with Rock Vapor Technologies Inc. ( Rock Vapor ) for the purchase of certain assets of Rock Vapor for 375,000 common shares in the capital of the Company representing an implied value of $750,000 based on a valuation of $2.00 per common share, the price received per common share in the October 2016 financing. Legal* H-12

175 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 A previous director and officer of each of Dreamcatcher, Rock Vapor, and GreenRock, entered into an employment agreement with Dreamcatcher to act as Chief Executive Officer of Dreamcatcher and the sole governing member of GreenRock. To date, the Company has advanced $65,298 USD to Dreamcatcher for working capital. This amount is described in item #5 under the Loans and advances section of this MD&A. Rock Vapor supplies e-cigarettes and vaporizers for the tobacco market while Dreamcatcher is an industrial filling and packaging system. The firm has designed and manufactures a proprietary cartridge for the cannabis sector. The unique cartridge provides an array of strains that can be delivered through its highly cool and sleek cartridge and is safe and secure. The cartridge delivery system provides users an experience that is unique and very creative. The product ensures that users have an ability to access a vast array of extracts and oil and can enjoy different types of strains and experiences. A unique marijuana cartridge and battery unit have made GreenRock Botanical s E-Vaporizer an industry favourite. These E-Vaporizers are manufactured and produced by Dreamcatcher. This product is easy-touse, requires no charging of batteries, no changing of cartridges, causes no smoke or smell, and creates new fuss. This product is being distributed in California, and there are white label agreements in California and Arizona. GreenRock Botanical s E-Vaporizer has experienced an average 23.1% monthly growth in transactions from June 2015-May Electric Medialand Inc. ( EML ) Effective November 1 st, 2016, CRHC acquired all of the issued and outstanding shares in EML. The purchase price of EML was $200,000 cash and 750,000 common shares of CRHC valued at $2.00 per share. The $200,000 cash portion of the purchase price will be paid in three equal installments on the closing date of this transaction, six months from closing, and the balance, twelve months from closing. As a result of the transaction, the founder and owner of EML will be joining CRHC as Chief Marketing Officer. EML adds expertise in sales and marketing to support CRHC s brands and help grow their sales. RESULTS OF OPERATIONS The following tables set forth unaudited interim consolidated statements of operations data for the three and six months ended September 30, 2016 and 2015 as well as certain balance sheet data as of September 30, 2016 and March 31, SELECTED QUARTERLY INFORMATION Legal* H-13

176 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 RESULTS OF OPERATIONS FOR THE PERIODS ENDED SEPTEMBER 30, 2016 AND 2015 REVENUE Revenue for the three and six month periods ended September 30, 2016 was $127,707 and $140,125 as compared to nil for the comparable periods ending September 30, CRHC began generating revenue during the current fiscal year, the majority of which came from royalty streams generated from Legal* H-14

177 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 certain business units. It has also generated interest income for loans it has made to business units to fund their start-up operations. CRHC expects to progressively increase its revenues over the next 12 months from an increasing number of royalty agreements and business units coming on-line and due to positive recent developments in the legalization of marijuana. COST OF SALES Cost of sales for the three and six month periods ended September 30, 2016 were $36,438 and $48,422 as compared to nil for the comparable periods ending September 30, The cost of sales relate to the amortization of equipment which has been provided to a business unit which is generating royalty revenue for CRHC. OPERATING EXPENSES Total operating expenses have increased by 442% in the current quarter as compared to the same quarter ending September 30, This is driven primarily by professional and consulting services required for increased acquisition and financing activities, costs incurred in supporting business units, costs related to our merger transaction with Bonanza Blue, and the issuance of share units recorded as share based compensation. The Company was still at an early start-up phase during the periods ended September 30, Due to the Company s current stage of operations, operating expenses are not analyzed as a percentage of total revenues. For the three months ending September 30, 2016, sales and marketing (S&M) expenses were $86,190 as compared to NIL for the three months ending September 30, For the six months ending September 30, 2016 and September 30, 2015, S&M expenses were $89,129 and $5,099, respectively. These costs include professional services incurred to provide expert marketing, packaging and promotion advice and services to CRHC s business units. These expenditures are consistent with the Company s view that early-mover advantage and strong brand recognition are essential to a successful ongoing acquisition strategy. These costs represent a strategic investment, which management believes will have a future benefit in the acquisition and retention of business units. Legal* H-15

178 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 Research and development (R&D) expenses increased by 11% to $329,770 for the six months ending September 30, 2016 as compared to the six months ending September 30, The increase in R&D expenses is related to the additional technical services required for the increase in CRHC s business units over the past 12 months. For the three months ending September 30, 2016, R&D expenses held steady at $168,498 as compared to $169,476 for the comparable period in the prior year. The Company s development team is researching a variety of intellectual property and other related opportunities. The Company has been in discussion with several business units and has been working towards obtaining appropriate licensing that would allow research and development with respect to the extraction of cannabis oils and the development or licensing of potential delivery mechanisms. General and administrative (G&A) expenses increased by 801% to $1,670,264 for the three months ending September 30, 2016 as compared to $185,374 for the three months ending September 30, G&A expenses increased by 539% to $2,433,708 for the six months ending September 30, 2016 as compared to $380,768 for the six months ending September 30, The increase in G&A expenses is related to additional professional services required for acquisition and financing activities over the past 6 months as well as increasing costs to manage a larger base of business units in the post-acquisition phase. G&A includes use of consultants and advisory services to expand and commercialize the Company s operations, compliance costs associated with meeting regulatory requirements, and other company related expenses. A significant portion of the G&A expenses were incurred in connection with acquiring equity, debt, licensing, and royalty interests and in connection with the multiple financing arrangements the Company secured over the course of the period. These costs include fees paid to investment advisors, legal counsel and accounting services related to these transactions. Share-based compensation, a non-cash expense, was $582,266 and $671,651 for the three and six months ended September 30, 2016 as compared to Nil for the three and six months ended September 30, The expenses relate to shares issued under a share unit plan established in the current fiscal year, whereby the CEO and CFO were granted restricted share units that vest as service conditions are reached. These costs have been fully classified as G&A in accordance with their corporate functions. The shares are measured at fair value at the date of grant and expensed in the period the services were provided or over the service period in which they vest. Legal* H-16

179 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 OTHER INCOME AND EXPENSES The share of loss of equity accounted investees was $24,852 for the three-month period ending September 30, This current quarter represented the first quarter that CRHC was required to pick up profit or losses from its equity investees. Interest expense for the three and six month periods ending September 30, 2016 amounted to $41,097 and $145,618 respectively, as compared to $39,863 for the two similar periods ending September 30, This interest expense solely pertains to short-term financing as the Company does not have any long-term debt. Interest Income for the three and six month periods ending September 30, 2016 has been classified as revenue since providing working capital is one of the services that we provide to our business unit partners. OTHER COMPREHENSIVE INCOME CRHC obtained significant influence over Resolve in July 2016 which necessitated a switch to equity accounting. As a result, CRHC s original share in Resolve needed to be restated which resulted in a $26,875 gain recorded in other comprehensive income. There were no other significant items in other comprehensive income for the periods ended September 30, 2016 and NET COMPREHENSIVE LOSS The net comprehensive loss for the three and six month periods ended September 30, 2016 amounted to $1,866,845 and $2,910,118 respectively, as compared to losses of $431,801 and $785,572 for the similar periods ending September 30, In the current business stage of CRHC, losses are largely driven by the lack of sufficient revenues to fund operating expenses. Legal* H-17

180 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 SELECTED CONSOLIDATED QUARTERLY RESULTS The following table presents selected unaudited consolidated quarterly data: LIQUIDITY The Company s objectives when managing its liquidity and capital structure are to generate sufficient cash to fund the Company s operating, acquisition and organic growth requirements. The Company monitors its liquidity based on total liquid assets and working capital. The table below sets out relevant liquidity related financial information at September 30, 2016 and March 31, CRHC s liquid assets as of September 30, 2016 and March 31, 2016 include cash and cash equivalents and amounts receivable. The Company s level of liquid assets is relevant to meet the current operating needs of the company which are largely limited to professional services and contracted consulting as Legal* H-18

181 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 well as providing services to business units. The Company uses the quick ratio to measure its short term liquidity. As at September 30, 2016, the Company had liquid assets of $633,516 compared to $8,657 at March 31, Over the same period the quick ratio has increased from 0.00 to While the Company has increased its liquid assets, the quick ratio is still low. At this level, the Company may require short term financing to meet its current obligations. The Company has been able to successfully obtain financing in the current year to meet its obligations. While the Company has incurred cash losses to date, management anticipates eventual cash profitability of the business which will increase its liquid assets. However, there can be no assurance that the Company will gain adequate market acceptance for its products or be able to generate sufficient positive cash flow to reach sustained profitability. CRHC monitors its level of working capital and working capital ratio in order to assess the ability to enter into strategic opportunities such as acquisitions of equity, royalty investments and providing start-up working capital to its existing and/or future business units. The level of working capital has increased from a deficit position of $1.8 million at March 31, 2016 to $248,752 at September 30, While there has been an increase in working capital, the current level is not sufficient on its own to undertake new strategic opportunities. The Company has been able to pursue several strategic opportunities in the current fiscal year despite its level of working capital. This is largely due to proceeds totalling $6,304,382 from share and share purchase warrant issuances between April 1, 2016 and September 30, Furthermore, the Company has been able to use the issuance of equity instead of cash to complete certain acquisitions of equity interests and royalty investments, and to settle some of the services provided by various contractors. However, there can be no assurance that the Company will be able to continue to finance its strategic opportunities via the issuance of shares. As CRHC has a limited level of working capital at September 30, 2016, the Company is relying on the completion of the following proposed transaction as a critical source of financing to continue to meet its strategic objectives and operational needs. On October 4, 2016, in connection with the Proposed Transaction, CRHC and Bonanza Blue completed a brokered offering of 2,502,000 subscription receipts at a price of C$2.00 per Subscription Receipt for total gross proceeds of approximately $5 million through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc. (collectively with the Co- Lead Agents, the Agents ). While CRHC could receive certain cash flows from revenues in the second half of the current fiscal year, these are not expected to be a significant source of funding for current operations. Therefore, if the Company is unable to complete the above Subscription Receipt and is unable to continue to find other sources of equity financing and loans, it may be unable to meet its strategic initiatives or be unable to meet its operating requirements. Please refer to note 3, Going Concern Uncertainty in the unaudited interim condensed consolidated financial statements as at September 30, The Company has no significant lease commitments or other purchase commitments as at September 30, 2016 and March 31, Legal* H-19

182 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 The chart below highlights the Company s cash flows during the three and six months ended September 30, 2016 and 2015: CASH USED IN OPERATING ACTIVITIES The cash used in operating activities during the three and six months ended September 30, 2016 was $575,392 and $1,705,391 respectively. For the three and six months ended September 30, 2015 cash used in operating activities was $349,786 and $630,849 respectively. The use of cash from operating activities is primarily due to cash based operating expenses which in the current business stage are not yet offset by revenues. The increase in cash used in the current fiscal year is due to increased professional and consulting services related to investment and financing activities. CASH FROM FINANCING ACTIVITIES The cash provided by financing activities during the three and six months ended September 30, 2016 was $3,383,087 and $6,652,609 respectively. The largest source of financing has been the issuance of shares and share purchase warrants which have generated cash of $3.25 million in the current quarter and $6.30 million in the current fiscal year. The majority of proceeds from share and share purchase warrants have come from private placements in June and July 2016 and the subsequent exercise of some share purchase warrants in August For the three and six months ended September 30, 2015, cash provided by financing activities was $609,122 and $2,259,044 respectively. The largest source of financing was the issuance of shares in private placements which generated cash of $0.96 million in the second quarter and $1.99 million in the first two quarters. Shares were issued at $0.50 per share in the prior year as compared to an increasing range of $0.75 to $2.00 per share in the current fiscal year. The Company has used the additional financing raised in the current year to support its increased acquisition activity. Legal* H-20

183 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 CASH USED IN INVESTING ACTIVITIES The cash used in investing activities during the three and six months ended September 30, 2016 was $2,803,164 and $4,838,919, respectively. For the six months ending September 30, 2016 CRHC has made net cash outflows of $2.89 million related to loans and advances to current or prospective business units. CRHC provides working capital to assist these interests in their early business stage to become commercially operational. These loans are classified as investment activities as they are extended to businesses that are expected to become future revenue sources. During the six-month period ended September 30, 2016, the company also made cash payments of $1.61 million related to equity interests and royalty streams. The cash used in investing activities during the three and six months ended September 30, 2015 was $262,556 and $2,112,682 respectively. The use of cash for the six month period was primarily due to the purchase of an equity interest in AME for $1.85 million and the purchase of $164,588 of equipment. FINANCING AND CAPITAL RESOURCES The Company is subject to risks including, but not limited to, its ability to raise additional funds through debt and/or equity financing to support the Company s development and continued operations and to meet the Company s liabilities and commitments as they come due. Specifically, as of September 30, 2016 the Company has a history of losses with an accumulated deficit of $6,085,970, share capital of $14,016,520 and limited working capital of $248,752. This compares to an accumulated deficit of $3,175,852, share capital of $5,056,422 and working capital deficit of $1,808,373 as at March 31, See the risk factors in our annual MD&A. CAPITAL ACTIVITIES The Company manages its capital with the objective of maximizing shareholder value and sustaining future development of the business. The Company defines capital as the Company s equity and any debt it may issue. The Company manages its capital structure based on the funds available to support its activities. Upon approval from the Board, management will undertake to balance its overall capital structure through new share issues, the issue of debt or by undertaking other activities as deemed appropriate under specific circumstances. The Company s principal capital needs are for funds to use towards its current projects, pipeline projects, upcoming products launches, and general working capital requirements to support growth including new opportunities. Since its formation, the Company has financed its cash requirements primarily through the issuance of capital stock. The Company s objective in managing capital is to ensure sufficient liquidity to pursue its investment growth strategy, and undertake selective acquisitions, while at the same time taking a conservative approach toward financial leverage and management of financial risk. The Company s capital is composed entirely of equity. The Company s primary uses of capital are to invest in research, brands and devices in the cannabis industry. The Company also uses capital to finance operating losses, capital Legal* H-21

184 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 expenditures, and increases in non-cash working capital. The Company currently funds these requirements from cash raised through share issuances and short-term debt as required. The Company s objectives when managing capital are to ensure that the Company will continue to have enough liquidity help build its investments into successful businesses and obtain returns on its investments. The Company monitors its capital on the basis of the adequacy of its cash resources to fund its business plan. In order to maximize flexibility to finance the Company s ongoing growth, the Company does not currently pay a dividend to holders of its common shares. The Company did not institute any changes to its capital management strategy during the year. The Company s authorized share capital is an unlimited number of common shares of which 27,211,278 common shares were issued and outstanding as at September 30, 2016 (March 31, ,353,343 common shares). The Company has issued 1,199,800 share units to the CEO and CFO that have not been exercised as at September 30, 2016 including 334,000 that have vested (March 31, 2016 Nil). As of September 30, 2016 there are 3,237,735 share purchase warrants outstanding that can potentially be converted to 1,618,868 shares (March 31, 2016 Nil). INTERNAL CONTROLS OVER FINANCIAL REPORTING During the second quarter of Fiscal 2017, there have been no significant changes in the design of CRHC s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, CRHC s internal controls over financial reporting. ACCOUNTING MATTERS CRITICAL ACCOUNTING ESTIMATES The Consolidated Financial Statements include certain amounts that are inherently uncertain and judgmental in nature. As a result, management is required to make assumptions and best estimates in order to determine the reported values. The Company considers an accounting estimate to be critical if: (1) it requires that significant assumptions be made in order to deal with uncertainties; and (2) changes in the estimate could have a material impact on results of operations, financial condition or liquidity. The Company believes that the material items requiring such subjective and complex estimates are:! Determination of the recoverable amount of a royalty investment;! Determination of the fair value of an investment where required;! Determination of the functional currency; The Company believes that the amounts included in these financial statements reflect management s best judgment. However, factors including, without limitation, those noted under Risks and Uncertainties below could cause actual events or results to differ materially from our underlying Legal* H-22

185 Cannabis Royalties & Holdings Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE SECOND QUARTER ENDED SEPTEMBER 30, 2016 assumptions and estimates. Accordingly, this could lead to a material adverse impact on our results of operations, financial condition and/or liquidity. ADOPTION OF NEW ACCOUNTING POLICIES None of the new accounting standards adopted since March 31, 2016 (see Note 4 of the unaudited interim Condensed Consolidated Financial Statements) resulted in a change in accounting policies. FUTURE ACCOUNTING PRONOUNCEMENTS Refer to Note 4 of the unaudited Condensed Consolidated Financial Statements as at September 30, Legal* H-23

186 SCHEDULE "I" BONANZA S MANAGEMENT INFORMATION CIRCULAR DATED SEPTEMBER 30, 2016 Please see attached. I-1

187 BONANZA BLUE CORP. NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 11, 2016 AND MANAGEMENT INFORMATION CIRCULAR DATED SEPTEMBER 30, 2016

188 - BONANZA BLUE CORP. NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TAKE NOTICE THAT an annual and special meeting (the Meeting ) of the holders ( Shareholders ) of common shares ( Common Shares ) of Bonanza Blue Corp. (the Corporation ) will be held at the law offices of Cassels Brock & Blackwell LLP, Suite 2100 Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H 3C2 on November 11, 2016 at 10:00 a.m. for the following purposes: 1. to receive the Corporation s audited financial statements for the fiscal year ended December 31, 2016 together with the report of the auditor thereon; 2. to (a) appoint Stern & Lovrics LLP as auditor of the Corporation to hold office until the Change of Auditor Time (as defined in the Circular) and Jackson & Company, Chartered Accountants as auditor of the Corporation for the period following the Change of Auditor Time; and (b) authorize the directors of the Corporation to fix the remuneration of the auditors so appointed, as more fully described in the management information circular dated September 30, 2016 (the Circular ) accompanying this notice of Meeting; 3. (A) to elect directors of the Corporation (the Current Slate ) to serve from the close of the Meeting until the earlier of (i) the close of the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed and (ii) the effective time (the Change of Board Time ) of completion of the proposed transaction (the RTO ) with Cannabis Royalties & Holdings Corp. ( CRHC ), as more fully described in the Circular; and (B) to elect new directors of the Corporation (the New Slate ) to serve from the Change of Board Time until the close of the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed, as more fully described in the Circular; 4. to consider, and, if deemed appropriate, to pass, with or without variation, an ordinary resolution approving a new stock option plan for the Corporation (attached as Schedule B to the Circular), as more fully described in the Circular; 5. to consider, and, if deemed appropriate, to pass, with or without variation, an ordinary resolution approving the share unit plan of the Corporation (attached as Schedule C to the Circular), as more fully described in the Circular; 6. to consider and, if deemed appropriate, to pass, with or without variation, a special resolution approving an amendment to the articles of the Corporation to consolidate the issued and outstanding common shares in the capital of the Corporation at a ratio of one (1) post-consolidation common share for every five (5) pre-consolidation common shares (the Consolidation ), as more fully described in the Circular; 7. to consider and, if deemed appropriate, to pass, with or without variation, a special resolution approving an amendment to the articles of the Corporation to change the name of the Corporation to CannaRoyalty Corp., or such other name as the board of directors of the Corporation (the Board ), in its sole discretion, deems appropriate, as more fully described in the Circular; 8. to consider and, if deemed appropriate, to pass, with or without variation, a special resolution approving an amendment to the articles of the Corporation to set the number of directors of the Corporation at not less than one (1) and not more than ten (10); 9. to consider and, if deemed appropriate, pass with or without variation, an ordinary resolution approving, ratifying, and confirming all acts, proceedings, contracts, appointments, elections, payments and by-laws, done, instituted, made and enacted by the directors and officers of the Corporation since the date of incorporation as the same are set out or referred to in the resolutions of - i -

189 the directors or in the financial statements or otherwise properly enacted, passed, made done or taken, as more fully described in the Circular; 10. to consider and, if deemed appropriate, pass with or without variation, an ordinary resolution approving and ratifying the new By-law No. 1 of the Corporation (attached as Schedule D to the Circular), as more fully described in the Circular; and 11. to transact such other business as may be properly brought before the Meeting or any adjournment(s) or postponement(s) thereof. The nature of the business to be transacted at the Meeting is described in further detail in the accompanying Circular. The Circular is deemed to form part of this notice of Meeting. Please read the Circular carefully before you vote on the matters presented at the Meeting. The Board has fixed September 13, 2016 as the record date for determining Shareholders who are entitled to receive notice of and to vote at the Meeting. Only Shareholders whose names have been entered in the register of holders of Common Shares on the close of business on that date are entitled to notice of the Meeting and to vote at the Meeting or at any adjournment(s) or postponement(s) thereof. IMPORTANT Registered Shareholders may attend the Meeting in person or may be represented by proxy. Shareholders who are unable to attend the Meeting or any adjournment(s) or postponement(s) thereof in person are requested to date, sign and return the accompanying form of proxy for use at the Meeting or any adjournment thereof. To be effective, the enclosed proxy must be mailed or faxed so as to reach or be deposited with the Corporation s transfer agent, TSX Trust Company, 200 University Ave., Suite 300, Toronto, ON M5H 4H1 or fax (416) To vote by internet, please access the website listed on your proxy and follow the online voting instructions. Proxies must be received no later than 10:00 a.m. (Toronto time) on Wednesday, November 9, 2016, or 48 hours (excluding Saturdays, Sundays and statutory holidays in the Province of Ontario) prior to the time set for any adjournment of the Meeting. Late proxies may be accepted or rejected by the Chairman of the Meeting in his discretion, and the Chairman is under no obligation to accept or reject any particular late proxy. If you hold Common Shares through a broker, investment dealer, bank, trust company or other intermediary, you should follow the instructions provided by your intermediary to ensure your vote is counted at the Meeting (see the section in the accompanying Circular entitled Advice to Beneficial Holders for further information on how to vote your Common Shares). DATED at Toronto, Ontario this 30th day of September, By Order of the Board of Directors of Bonanza Blue Corp. (signed) Eric Klein Eric Klein Chief Executive Officer - ii -

190 Legal* BONANZA BLUE CORP. MANAGEMENT INFORMATION CIRCULAR SOLICITATION OF PROXIES This management information circular (this Circular ) is provided in connection with the solicitation of proxies by management of Bonanza Blue Corp. (the Corporation ) for use at an annual and special meeting (the Meeting ) of the holders ( Shareholders ) of common shares ( Common Shares ) in the capital of the Corporation. The Meeting will be held on November 11, 2016 at 10:00 a.m. at the law offices of Cassels Brock & Blackwell LLP, Suite 2100 Scotia Plaza, 40 King Street West, Toronto, Ontario, M5H 3C2, or at such other time or place to which the Meeting may be adjourned, for the purposes set forth in the notice of annual and special meeting accompanying this Circular (the Notice ). Although it is expected that the solicitation of proxies will be primarily by mail, proxies may also be solicited personally or by telephone, facsimile or other means of electronic communication. In accordance with National Instrument Communication with Beneficial Owners of Securities of a Reporting Issuer ( NI ), arrangements have been made with brokerage houses and other intermediaries, clearing agencies, custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the Common Shares held of record by such persons and the Corporation may reimburse such persons for reasonable fees and disbursements incurred by them in doing so. The costs thereof will be borne by the Corporation. These securityholder materials are being sent to both registered and non-registered owners of Common Shares. If you are a non-registered owner of Common Shares, and the Corporation or its agent has sent these materials directly to you, your name and address and information about your holdings of Common Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding Common Shares on your behalf. Accompanying this Circular (and filed with applicable securities regulatory authorities) is a form of proxy for use at the Meeting (an Instrument of Proxy ). Each Shareholder who is entitled to attend at meetings of shareholders is encouraged to participate in the Meeting and all Shareholders are urged to vote on matters to be considered in person or by proxy. Unless otherwise stated, the information contained in this Circular is given as of September 30, 2016 (the Effective Date ). Unless otherwise stated, all references to numbers of Common Shares and other securities are preconsolidation numbers (that is, prior to giving effect to the proposed consolidation of the Common Shares at a ratio of five (5) pre-consolidation shares for one (1) post-consolidation share to be considered at the Meeting). All time references in this Circular are references to Toronto time. Appointment of a Proxy APPOINTMENT AND REVOCATION OF PROXIES Those Shareholders who wish to be represented at the Meeting by proxy must complete and deliver a proper form of proxy to TSX Trust Company (the Transfer Agent ) either in person, or by mail or courier, to 200 University Avenue, Suite 300, Toronto, Ontario M5H 4H1, by fax at (416) or via the Internet at The persons named as proxyholders in the Instrument of Proxy accompanying this Circular are directors or officers of the Corporation, or persons designated by management of the Corporation, and are representatives of the Corporation s management for the Meeting. A Shareholder who - 1 -

191 wishes to appoint some other person (who need not be a Shareholder) to attend and act for him, her or it and on his, her or its behalf at the Meeting other than the management nominee designated in the Instrument of Proxy may do so by either: (i) crossing out the names of the management nominees AND legibly printing the other person s name in the blank space provided in the accompanying Instrument of Proxy; or (ii) completing another valid form of proxy. In either case, the completed form of proxy must be delivered to the Transfer Agent, at the place and within the time specified herein for the deposit of proxies. A Shareholder who appoints a proxy who is someone other than the management representatives named in the Instrument of Proxy should notify such alternative nominee of the appointment, obtain the nominee s consent to act as proxy, and provide instructions on how the Common Shares are to be voted. The nominee should bring personal identification to the Meeting. In any case, the form of proxy should be dated and executed by the Shareholder or an attorney authorized in writing, with proof of such authorization attached (where an attorney executed the proxy form). In order to validly appoint a proxy, Instruments of Proxy must be received by the Transfer Agent, at 200 University Avenue, Suite 300, Toronto, Ontario M5H 4H1, at least 48 hours, excluding Saturdays, Sundays and holidays, prior to the Meeting or any adjournment or postponement thereof. After such time, the Chairman of the Meeting may accept or reject a form of proxy delivered to him in his discretion but is under no obligation to accept or reject any particular late form of proxy. Revoking a Proxy A Shareholder who has validly given a proxy may revoke it for any matter upon which a vote has not already been cast by the proxyholder appointed therein. In addition to revocation in any other manner permitted by law, a proxy may be revoked with an instrument in writing signed and delivered to either the registered office of the Corporation or the Transfer Agent, 200 University Avenue, Suite 300, Toronto, Ontario M5H 4H1, at any time up to and including the last business day preceding the date of the Meeting, or any postponement or adjournment thereof at which the proxy is to be used, or deposited with the Chairman of such Meeting on the day of the Meeting, or any postponement or adjournment thereof. The document used to revoke a proxy must be in writing and completed and signed by the Shareholder or his or her attorney authorized in writing or, if the Shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. Also, a Shareholder who has given a proxy may attend the Meeting in person (or where the Shareholder is a corporation, its authorized representative may attend), revoke the proxy (by indicating such intention to the Chairman before the proxy is exercised) and vote in person (or withhold from voting). Signature on Proxies The form of proxy must be executed by the Shareholder or his or her duly appointed attorney authorized in writing or, if the Shareholder is a corporation, by a duly authorized officer whose title must be indicated. A form of proxy signed by a person acting as attorney or in some other representative capacity should indicate that person s capacity (following his signature) and should be accompanied by the appropriate instrument evidencing qualification and authority to act (unless such instrument has been previously filed with the Corporation). Voting of Proxies Each Shareholder may instruct his, her or its proxy how to vote his, her or its Common Shares by completing the blanks on the Instrument of Proxy. The Common Shares represented by the enclosed Instrument of Proxy will be voted or withheld from voting on any motion, by ballot or otherwise, in accordance with any indicated instructions. If a Shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly. In the absence of such direction, such Common Shares will be voted FOR THE RESOLUTIONS DESCRIBED IN THE INSTRUMENT OF PROXY AND BELOW. If - 2 -

192 any amendment or variation to the matters identified in the Notice is proposed at the Meeting or any adjournment or postponement thereof, or if any other matters properly come before the Meeting or any adjournment or postponement thereof, the accompanying Instrument of Proxy confers discretionary authority to vote on such amendments or variations or such other matters according to the best judgment of the appointed proxyholder. Unless otherwise stated, the Common Shares represented by a valid Instrument of Proxy will be voted in favour of the election of nominees set forth in this Circular except where a vacancy among such nominees occurs prior to the Meeting, in which case, such Common Shares may be voted in favour of another nominee in the proxyholder s discretion. As at the Effective Date, management of the Corporation knows of no such amendments or variations or other matters to come before the Meeting. Advice to Beneficial Shareholders The information set forth in this section is of importance to many Shareholders, as a substantial number of Shareholders do not hold Common Shares in their own name. Shareholders who hold their Common Shares through brokers, intermediaries, trustees or other persons, or who otherwise do not hold their Common Shares in their own name ( Beneficial Shareholders ) should note that only proxies deposited by Shareholders who are registered shareholders (that is, shareholders whose names appear on the records maintained by the registrar and transfer agent for the Common Shares as registered holders of Common Shares) will be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Beneficial Shareholder by a broker, those Common Shares will, in all likelihood, not be registered in the Shareholder s name. Such Common Shares will more likely be registered under the name of the Shareholder s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Common Shares held by brokers (or their agents or nominees) on behalf of a broker s client can only be voted at the direction of the Beneficial Shareholder. Without specific instructions, brokers (or their agents and nominees) are prohibited from voting shares for the broker s clients. Subject to the following discussion in relation to NOBOs (as defined below), the Corporation does not know for whose benefit the shares of the Corporation registered in the name of CDS & Co., a broker or another nominee, are held. There are two categories of Beneficial Shareholders for the purposes of applicable securities regulatory policy in relation to the mechanism of dissemination to Beneficial Shareholders of proxy-related materials and other securityholder materials and the request for voting instructions from such Beneficial Shareholders. Non-objecting beneficial owners ( NOBOs ) are Beneficial Shareholders who have advised their intermediary (such as brokers or other nominees) that they do not object to their intermediary disclosing ownership information to the Corporation, consisting of their name, address, e- mail address, securities holdings and preferred language of communication. Securities legislation restricts the use of that information to matters strictly relating to the affairs of the Corporation. Objecting beneficial owners ( OBOs ) are Beneficial Shareholders who have advised their intermediary that they object to their intermediary disclosing such ownership information to the Corporation. Beneficial Shareholders will receive a notice of meeting and a voting instruction form from the intermediary who holds their Common Shares. The intermediary is responsible for properly executing the voting instructions received from Beneficial Shareholders. Applicable securities regulatory policy requires intermediaries, on receipt of Meeting Materials that seek voting instructions from Beneficial Shareholders indirectly, to seek voting instructions from Beneficial Shareholders in advance of shareholders meetings on Form F7 Request for Voting Instructions Made by Intermediaries ( Form F5 ). Every intermediary/broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their Common Shares are voted at the Meeting or any adjournment(s) or postponement(s) thereof. Often, the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided to registered shareholders; however, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder. Beneficial - 3 -

193 Shareholders who wish to appear in person and vote at the Meeting should be appointed as their own representatives at the Meeting in accordance with the directions of their intermediaries and Form F7. Beneficial Shareholders can also write the name of someone else whom they wish to attend at the Meeting and vote on their behalf. Unless prohibited by law, the person whose name is written in the space provided in Form F7 will have full authority to present matters to the Meeting and vote on all matters that are presented at the Meeting, even if those matters are not set out in Form F7 or this Circular. The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. ( Broadridge ). Broadridge typically mails a voting instruction form in lieu of the form of proxy. Beneficial Shareholders are requested to complete and return the voting instruction form to Broadridge by mail or facsimile. Broadridge will then provide aggregate voting instructions to the Transfer Agent, which tabulates the results and provides appropriate instructions respecting the voting of shares to be represented at the Meeting or any adjournment or postponement thereof. All references to Shareholders in this Circular and the accompanying Instrument of Proxy and Notice are to registered Shareholders unless specifically stated otherwise. Background PROPOSED TRANSACTION The Corporation was initially formed in order to acquire an interest in and to explore mineral prospects. In 1989, the Corporation abandoned its mineral prospects and in 1991, it acquired Best Sports Distribution Ltd., which was engaged in the development and distribution of sporting equipment. During 1994, operations of the Corporation ceased due to lack of funds and other factors. In June of 2011, the Corporation was recapitalized and a new board and management team was put in place with a focus of identifying of prospective assets or businesses to acquire or merge with, with a view to increasing value for shareholders. Proposed Transaction On June 30, 2016 the Corporation has entered into a definitive agreement (the Definitive Agreement ) with Cannabis Royalties & Holdings Corp. ( CRHC ) to provide for the completion of a reverse takeover of the Corporation (the RTO ). It is proposed that the RTO will be structured as a three-cornered amalgamation under the provisions of the Canada Business Corporation Act ( CBCA ), pursuant to which, among other things, CRHC will become a wholly-owned subsidiary of the Corporation or otherwise combine its corporate existence with that of the Corporation. Upon completion of the RTO, the Corporation intends to change its name to CannaRoyalty Corp., or such other name as may be determined by the directors and acceptable to regulatory authorities. All references herein to the Resulting Issuer refer to the Corporation after completion of the RTO. CRHC is a privately held company incorporated pursuant to the CBCA. CRHC provides an integrated approach to the legal cannabis sector with a focus on three key verticals: brands and intellectual property, delivery systems and devices, and extraction. CRHC contributes strategic capital and expertise to maximize the return potential of its diversified portfolio of assets and holdings. In connection with the RTO, CRHC has completed a private placement (the Offering ) of 2,502,000 subscription receipts at a price of $2.00 per subscription receipt raising gross proceeds of approximately $5 million through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc (collectively with the Co-Lead Agents, the Agents ). The proceeds from the sale of the subscription receipts, less 50% of the Agents Fees (as defined below) and the expenses of the Agents (the Escrowed Proceeds ) have been deposited in escrow and the subscription receipts will be automatically converted into common shares in the capital of CRHC upon collectively, (i) the completion, satisfaction or waiver, as the case may be, of all conditions precedent to the RTO set forth in the letter agreement dated June 30, - 4 -

194 2016 between the Corporation and CRHC, to the satisfaction of the Co-Lead Agents, acting reasonably, other than the filing of the articles of amalgamation; (ii) the receipt of all required shareholder, third party (as applicable) and regulatory approvals in connection with the RTO; (iii) the listing of the common shares of the Resulting Issuer on the Canadian Securities Exchange (the CSE ) shall have been conditionally approved; and (iv) the representations and warranties of CRHC in the agency agreement dated effective August 17, 2016, between the Agents and CRHC are true and correct at the closing of the Offering and the date of the release of the Escrowed Proceeds, except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a material adverse effect (the Escrow Release Conditions ). Pursuant to the Definitive Agreement, the Corporation agreed to undertake an equity financing for gross proceeds of not less than $50,000 and not more than $95,000 in cash, which will be completed by way of an issuance of subscription receipts at a price of $0.75, with each subscription receipt entitling the holder to one post-consolidation common share of the Corporation. Upon the successful completion of the RTO, each CRHC share, including those issued pursuant to conversion of the subscription receipts, will be exchanged for one post-consolidation common share of the Corporation. If the Escrow Release Conditions have not been satisfied within three months of October 4, 2016, holders of subscription receipts will be refunded the gross proceeds paid for the subscription receipts, plus any accrued interest, and the subscription receipts will be cancelled. SHAREHOLDERS ARE NOT REQUIRED TO APPROVE THE RTO. However, the RTO is very important to the Corporation and certain matters to be considered at the Meeting are conditions to the RTO and necessary in order to permit the Corporation to complete the RTO. In connection with the RTO, an application is expected to be made to list the common shares of the Resulting Issuer on the CSE. Conditional approval for listing of the Resulting Issuer s common shares on the CSE (the Proposed Listing ) is a condition precedent to the completion of the RTO. Accordingly, if the Proposed Listing is conditionally approved by the CSE, full details regarding CRHC and the RTO will be disclosed by the Corporation prior to completion of the RTO in a CSE Form 2A: Listing Statement (the Listing Statement ) that will be posted on the Corporation s SEDAR profile on pursuant to Section 7.2 of Policy 2 of the CSE. Management of the Corporation will endeavour to post the Listing Statement on SEDAR as quickly as possible; however, the posting thereof will be dependent on prior receipt of CSE conditional approval for the Proposed Listing and may not occur until after the date of the Meeting. Shareholders are urged to review the press releases issued by the Corporation on June 30, 2016, August 18, 2016 and October 4, 2016 announcing the proposed RTO and the entering into of the Definitive Agreement as well as the Listing Statement if, as and when filed on SEDAR, as it will contain important disclosure regarding the Resulting Issuer and the RTO. Subject to receipt of all requisite approvals, including from the CSE, the RTO is anticipated to be completed prior to the end of Approval of certain of the resolutions sought to be passed by the Shareholders at the Meeting will be conditions to the completion of the RTO. Failure to pass these resolutions could impede or prevent the completion of the RTO. There can be no assurance that the RTO will be completed as proposed, or at all. VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SECURITIES Shareholders of record as of September 13, 2016 (the Record Date ) are entitled to receive notice and attend and vote at the Meeting. As at the Effective Date, the Corporation had 8,055,009 issued and outstanding Common Shares. These Common Shares are the only voting shares of the Corporation which are issued and outstanding as of the Record Date. Each Common Share entitles the holder to one vote in respect of any matter that may come before the Meeting

195 To the knowledge of the directors and officers of the Corporation, as at the Effective Date, no person or corporation beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the issued and outstanding Common Shares, other than: Name Type of Ownership Number of Common Shares Owned or Controlled at the Effective Date (1) Percent of Outstanding Common Shares FSC Abel Financial Inc. Beneficial 1,975, % Brillco Inc. Both of Record and Beneficial 1,875, % (1) As at the Effective Date, there were 8,055,009 Common Shares issued and outstanding. INDEBTEDNESS OF DIRECTORS AND OFFICERS No directors or officers of the Corporation, nor any proposed nominee for election as a director of the Corporation, nor any associate or affiliate of any one of them, is or was indebted, directly or indirectly, to the Corporation or its subsidiaries at any time since the beginning of the financial year ended December 31, INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS Except as disclosed in this Circular, no director or officer of the Corporation, nor any proposed nominee for election as a director of the Corporation, nor any other insider of the Corporation, nor any associate or affiliate of any one of them, has or has had, at any time since the beginning of the financial year ended December 31, 2015, any material interest, direct or indirect, in any transaction or proposed transaction that has materially affected or would materially affect the Corporation. INTEREST OF DIRECTORS AND OFFICERS IN MATTERS TO BE ACTED UPON No director or senior officer of the Corporation, nor any proposed nominee for election as a director of the Corporation, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting. EXECUTIVE COMPENSATION The following table provides information for the most recently completed financial years of the Corporation ended December 31, 2013, 2014 and 2015 regarding all compensation paid to or earned by the individuals who served as President and Chief Executive Officer and Chief Financial Officer of the Corporation during the fiscal year ended December 31, 2015 (collectively, the Named Executive Officers ). The Corporation had no executive officers whose total salary and bonus during the financial year ended December 31, 2015 exceeded $150,000. Summary Compensation Table Name and Principal Position Eric Klein, President and Chief Executive Officer Carmelo Marrelli, Chief Financial Officer Year Ended December 31, Salary Sharebased awards Optionbased awards (1) Non-equity incentive plan compensation Annual Incentive Plans Long-term incentive plans Pension value All other compensation 2015 Nil Nil Nil Nil Nil Nil Nil Nil 2014 Nil Nil Nil Nil Nil Nil Nil Nil 2013 Nil Nil Nil Nil Nil Nil Nil Nil Total compensation 2015 Nil Nil Nil Nil Nil Nil $12,680 (1) $12, Nil Nil Nil Nil Nil Nil $6,500 (1) $6, Nil Nil Nil Nil Nil Nil $10,155 (1) $10,155 Notes: (1) Paid to Marrelli Support Services Inc. for the provision of Mr. Marrelli s services to the Corporation as Chief Financial Officer.

196 Outstanding Share-Based Awards and Option-Based Awards Set forth in the table below is a summary of all share-based and option-based awards held by each of the Named Executive Officers outstanding as of December 31, Name Number of securities underlying unexercised options (#) Option-Based Awards Option exercise price ($) Option expiration date Value of unexercised inthe-money options (1) Number of shares or units of shares that have not vested (#) Share-Based Awards Market or payout value of sharebased awards that have not vested ($) Eric Klein Nil N/A N/A N/A N/A N/A Carmelo Marrelli Nil N/A N/A N/A N/A N/A For further details concerning the stock option plan of the Corporation (the Option Plan ), please see Matters to be Considered at the Meeting Approval of Stock Option Plan below. Incentive Plan Awards Value Vested During the Year Set forth below is a summary of the value vested during the financial year of the Corporation ended December 31, 2015 in respect of all option-based and share-based awards and non-equity incentive plan compensation granted to the Named Executive Officers. Name Option-based awards value vested during the year ($) Share-based awards value vested during the year ($) Non-equity incentive plan compensation value earned during the year ($) Eric Klein Nil Nil Nil Carmelo Marrelli Nil Nil Nil For further details concerning the incentive plans of the Corporation, please see Matters to be Considered at the Meeting Approval of Stock Option Plan below. Overview COMPENSATION DISCUSSION AND ANALYSIS The Board is responsible for setting the overall compensation strategy of the Corporation and for evaluating and approving the compensation of directors and executive officers. The Corporation has not delegated these responsibilities to a separate board committee. The Board annually reviews the base salary, incentive compensation and long-term compensation for the Corporation s executive officers to determine if the compensation package for executive officers continues to be appropriate, given the status and activities of the business, or if any modifications are required. Factors considered by the Board in establishing suitable compensation packages for its executive officers include, the early stage of development of the Corporation, activity level, the small number of executive officers, financial resources available to the Corporation, competitive factors and the time committed by the executive officer to the affairs of the Corporation. Objectives of Compensation Program It is the objective of the Corporation s compensation program to attract and retain highly qualified executives and to link incentive compensation to performance and shareholder value. It is the goal of the Board to endeavour to ensure that the compensation of executive officers is sufficiently competitive to achieve the objectives of the executive compensation program. The Board gives consideration to the Corporation s contractual obligations, performance, quantitative financial objectives including relative shareholder return as well as to the qualitative aspects of the individual s performance and achievements

197 Role of Executive Officers in Compensation Decisions The Board will receive and review any recommendations of the President and Chief Executive Officer relating to the general compensation structure and policies and programs for the Corporation and the salary and benefit levels for executive officers. Elements of the Compensation Program The Corporation s compensation program comprises (i) base salary, if appropriate in the circumstances, and (ii) long term incentives including the Option Plan. Each component of the executive compensation program is addressed below. Base Salaries and Benefits Salaries for executive officers, if any, are reviewed annually based on the nature and extent of the current activities of the Corporation, corporate and personal performance and on individual levels of responsibility. Salaries of the executive officers are not determined based on a specific formula. The Board considers, and, if thought appropriate, approves salaries recommended by the President and Chief Executive Officer for the other executive officers of the Corporation. As stated above, base salaries, if any, are established to be competitive in order to attract and retain highly qualified executives. The Corporation does not provide any pension or retirement benefits to its executive officers. Long Term Incentives and Stock Option Plan The Board administers the Plan that is designed to provide a long-term incentive that is linked to shareholder value. The Board determines the number of options to be granted to each executive officer based on the level of responsibility and experience required for the position. The Board regularly reviews and where appropriate adjusts the number of options granted to individuals and determines the vesting provisions of such options. The Board sets the number of options as appropriate designed to attract and retain qualified and talented personnel. The Board also takes account of the Corporation s contractual obligations and the award history for all participants in the Plan. Option based awards A description of the process that the Corporation uses to grant option-based awards to executive officers including the role of the Board and executive officers, is included under the heading Compensation Discussion and Analysis Elements of Compensation Program Long Term Incentives and Stock Option Plan above. Also for an additional description of the stock option plan of the Corporation see Matters to be Considered at the Meeting Approval of Stock Option Plan below. The Corporation did not grant any option-based awards to executive officers during the year ended December 31, As a condition precedent to the RTO, the Definitive Agreement contemplates the issuance of options to acquire an aggregate of 75,000 post-consolidation common shares of the Corporation to certain directors of the Corporation, each exercisable at a price of $1.00 for a period of one year following the closing of the RTO. TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS There are currently no employment contracts between the Corporation and any Named Executive Officer, nor any compensatory plan, contract or arrangement where a Named Executive Officer is entitled to receive payments from the Corporation in the event of a resignation, retirement or any other termination of the Named Executive Officer s employment with the Corporation, a change of control of the Corporation or a change in the Named Executive Officer s responsibilities following a change of control

198 COMPENSATION OF DIRECTORS Directors are currently not paid any fees for their services as directors of the Corporation but are reimbursed for travel and other out-of-pocket expenses incurred in attending directors and shareholders meetings. Directors are also entitled to receive compensation to the extent that they provide additional services to the Corporation at rates that would be charged by such directors for such services to arm s length parties. No such additional services were provided to the Corporation by any director in fiscal Directors are also entitled to participate in the Option Plan. Director Compensation The following table provides a summary of all annual and long-term compensation for services rendered in all capacities to the Corporation for the fiscal year ended December 31, 2015, in respect of the individuals who were, during the fiscal year ended December 31, 2015, directors of the Corporation other than the Named Executive Officers. Name Fees Earned Share-based awards Option-based awards Non-equity incentive plan compensation Pension value All other compensation David Brill Nil Nil Nil Nil Nil Nil Nil Vernon Nelson Nil Nil Nil Nil Nil Nil Nil Total Outstanding Share-Based Awards and Option-Based Awards Set forth in the table below is a summary of all share-based and option-based awards held by each of the directors of the Corporation other than the Named Executive Officers as of December 31, Name Number of securities underlying unexercised options (#) Option-Based Awards Option exercise price ($) Option expiration date Value of unexercised inthe-money options ($) (1) Number of shares or units of shares that have not vested (#) Share-Based Awards Market or payout value of sharebased awards that have not vested ($) David Brill Nil N/A N/A N/A N/A N/A Vernon Nelson Nil N/A N/A N/A N/A N/A Incentive Plan Awards Value Vested During the Year Set forth below is a summary of the value vested during the financial year of the Corporation ended December 31, 2015 in respect of all option-based and share-based awards and non-equity incentive plan compensation granted to the directors of the Corporation, other than the Named Executive Officers. Name Option-based awards value vested during the year ($) Share-based awards value vested during the year ($) Non-equity incentive plan compensation value earned during the year ($) David Brill Nil Nil Nil Vernon Nelson Nil Nil Nil AUDIT COMMITTEE National Instrument , Audit Committees ( NI ) requires that the Corporation, if management solicits proxies from the securityholders of the Corporation for the purposes of electing directors to its Board, to disclose in its information circular certain specified information, including the constitution of its audit committee and its relationship with its independent auditor, as set forth below

199 The Audit Committee s Charter The Corporation has adopted an Audit Committee Charter which is attached as Schedule A to this Circular. Composition of the Audit Committee A member of the Audit Committee is independent if the member has no direct or indirect material relationship with the Corporation. A material relationship means a relationship which could, in the view of the Board, reasonably interfere with the exercise of a member s independent judgment. A member of the Audit Committee is considered financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Corporation. During the financial year ended December 31, 2015, the members of the Audit Committee were Messrs. Klein, Brill and Nelson. Each member of the Audit Committee is financially literate and, other than Mr. Klein who is a member of management, each member is independent as defined by NI Relevant Education and Experience Name Eric Klein David Brill Vernon Nelson Relevant Education and Experience Mr. Klein is a Chartered Accountant and Chartered Business Valuator. Mr. Klein is currently the Executive Vice President of a public holding company. Previously, Mr. Klein was a partner in a consulting practice specializing in corporate finance, mergers and acquisitions, business strategy and business valuations. He is currently a director of another public company where he serves as the chair of the audit committee as well as a member of the governance committee. Mr. Klein s work experience in consulting to public and private companies as well as his current and previous experience as an executive in a public company, as a business valuator and a chartered accountant has provided him with considerable experience in analyzing and understanding financial statements at an in depth level. Mr. Brill has worked in the Canadian capital markets for over 25 years, with both large and small investment dealers as well as institutional and retail clients. He has been a bond trader, sold structured financial products to high net worth individuals, and worked as COO of a small retail investment dealer. Most recently, he was an equity research analyst for a boutique institutional investment bank, focused on alternative energy and clean technology. David has a B.Comm. (University of Toronto), MBA (The Wharton School, University of Pennsylvania), and is a CFA charterholder. Mr. Nelson s business career was focussed on advertising and sales promotions. He was instrumental in the development of a 57 store rental chain across Canada and was in charge of development and acquisitions for that company. Through these activities, Mr. Nelson acquired the ability to read and understand financial statements. Mr. Nelson retired in External Auditor Service Fees The Audit Committee has reviewed the nature and amount of the non-audit services provided by Stern & Lovrics LLP to the Corporation to ensure auditor independence. Fees incurred with Stern & Lovrics LLP for audit and non-audit services in the last two fiscal years for audit fees are outlined in the following table. Nature of Services Fees Paid to Auditor in Year Ended December 31, Fees Paid to Auditor in Year Ended December 31, 2014 Audit Fees (1) $2,000 $2,000 Audit-Related Fees (2) Nil Nil Tax Fees (3) $500 $500 All Other Fees (4) $1,200 Nil Total $3,700 $2,000 Notes: (1) Audit Fees include fees necessary to perform the annual audit and quarterly reviews of the Corporation s financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.

200 (2) Audit-Related Fees include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation. (3) Tax Fees include fees for all tax services other than those included in Audit Fees and Audit-Related Fees. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities. (4) All Other Fees include all other non-audit services. Exemption The Corporation is relying on the exemption provided by section 6.1 of NI which provides that the Corporation, as a venture issuer, is not required to comply with Part 5 (Reporting Obligations) of NI AUDITOR The auditor of the Corporation is Stern & Lovrics LLP, 1210 Sheppard Avenue East, Suite 302, Toronto, Ontario, M2K 1E3. Sterns & Lovrics LLP has served as the Corporation s auditor since October 29, CORPORATE GOVERNANCE National Policy , Corporate Governance Guidelines of the Canadian Securities Administrators has set out best practice guidelines for effective corporate governance (the Guidelines ). The Guidelines address matters such as the constitution and independence of corporate boards, the functions to be performed by boards and their committees and the effectiveness and education of board members. National Instrument , Disclosure of Corporate Governance Practices ( NI ) of the Canadian Securities Administrators requires that if management solicits proxies from its securityholders for the purposes of electing directors, specified disclosure of the corporate governance practices must be included in its management information circular. Set out below is a description of the Corporation s corporate governance practices in accordance with NI , based on the Guidelines. The Board of Directors For the purposes of NI , a director is considered to be independent if he or she does not have any direct or indirect material relationship with the Corporation. A material relationship is in turn defined as a relationship which could, in the view of the Board, be reasonably expected to interfere with such member s independent judgement. The Board is currently comprised of three members: Eric Klein, David Brill and Vernon. The Board has determined that a majority of the directors of the Corporation are independent within the meaning of NI Mr. Klein is not considered to be independent as the result of his role as President and Chief Executive Officer of the Corporation. Messrs. Brill and Nelson are each considered independent. The basis for this determination is that, since the beginning of the fiscal year ended December 31, 2014, none of the independent directors have worked for the Corporation, received remuneration from the Corporation in excess of $75,000 or had material contracts with or material interests in the Corporation which could interfere with their ability to act with a view to the best interests of the Corporation. Directorships Certain of the directors of the Corporation are also directors of other reporting issuers (or equivalent) in a jurisdiction or a foreign jurisdiction as follows: Name of Director David Brill Eric Klein Vernon Nelson Other Reporting Issuer (or equivalent in a foreign jurisdiction) N/A INV Metals Inc.(TSX); Liberty Silver Corp. (unlisted) N/A

201 Orientation and Continuing Education While the Corporation currently has no formal orientation and education program for new Board members, sufficient information is provided to any new Board member to ensure that new directors are familiarized with the Corporation s business and the procedures of the Board. In addition, new directors are encouraged to visit and meet with management on a regular basis. Ethical Business Conduct The Board monitors the ethical conduct of the Corporation and ensures that it complies with applicable legal and regulatory requirements, such as those of relevant securities commissions and stock exchanges. The Board has found that the fiduciary duties placed on individual directors by the Corporation s governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director s participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Corporation. Under corporate legislation, a director is required to act honestly and in good faith with a view to the best interests of the Corporation and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and disclose to the Board the nature and extent of any interest of the director in any material contract or material transaction, whether made or proposed, if the director is a party to the contract or transaction, is a director or officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. For these reasons the Board has not adopted a formal code of conduct. Nomination of Directors The Board performs the functions of a nominating committee with responsibility for the appointment and assessment of directors. The Board believes that this is a practical approach at this stage of the Corporation s development. While there are no specific criteria for Board membership, the Corporation attempts to attract and maintain directors with a wealth of business knowledge and a particular knowledge of the Corporation s industry or other industries, which provide knowledge, which would assist in guiding the officers of the Corporation. As such, nominations tend to be the result of recruitment efforts by management of the Corporation and discussions among the directors prior to the consideration of the Board as a whole. Compensation The directors decide as a Board the compensation for the Corporation s officers, based on industry standards and the Corporation s financial situation. The directors currently do not receive any cash remuneration for their acting in such capacity, however, they are entitled to participate in the Corporation s Stock Option Plan. Assessments The Board assesses, on an annual basis, the contributions of the Board as a whole, any committees of the Board and each of the directors, in order to determine whether each is functioning effectively. MATTERS TO BE CONSIDERED AT THE MEETING To the knowledge of the Board, the only matters to be brought before the Meeting are set forth in the accompanying Notice of Meeting. These matters are described in more detail under the headings below

202 1. Financial Statements Shareholders will receive and consider the Corporation s (i) audited financial statements for the fiscal year ended December 31, 2015 together with the report of the auditor thereon. 2. Appointment of Auditor At the Meeting, the Shareholders are required to appoint the auditor of the Corporation. Ordinarily, that would involve re-appointing Stern & Lovrics LLP, the Corporation s current auditor, to hold office until the next annual meeting of Shareholders. However, if the RTO is completed, it will be desirable to change the auditor of the Corporation to the auditor of CRHC. Accordingly, Shareholders will be asked to consider conditionally appointing the auditor of CRHC, Jackson & Company, Chartered Accountants, Licensed Public Accountants, West Hastings Street, Vancouver, BC V6E 3T5, as auditor of the Corporation subject to and following the completion of the RTO. At the time of the Meeting, the RTO will not yet have been completed and there can be no assurance that it will be completed. In order to avoid changing the auditor of the Corporation should it prove unnecessary to do so, and in order to dispense with the need to call an additional meeting of Shareholders to approve a change of auditor following completion of the RTO, Shareholders will be asked at the Meeting to consider, and if thought appropriate, to pass an ordinary resolution, the text of which is as follows: BE IT HEREBY RESOLVED that: (1) the appointment of Stern & Lovrics LLP as auditor of the Corporation to hold office until the earlier of: (a) (b) the close of the next annual meeting of the Shareholders; or 12:01 a.m. on the day following the date on which the RTO is completed (the Change of Auditor Time ), is hereby approved; (2) the appointment of Jackson & Company, Chartered Accountants as auditor of the Corporation to hold office following the Change of Auditor Time until the close of the next annual meeting of the Shareholders is hereby approved; and (3) the Board is hereby authorized to fix the remuneration of the auditors so appointed. The determination not to have Stern & Lovrics LLP continue as auditor of the Corporation following the RTO has been made in the context of the RTO and not because of any reportable event (as that term is defined in National Instrument Continuous Disclosure Obligations). The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the appointment of the auditors as set forth above and therein. 3. Election of Directors At the Meeting, Shareholders are required to elect the directors of the Corporation to hold office until the close of the next annual meeting of Shareholders or until their successors are elected or appointed. It is desirable, in connection with the RTO, to elect the directors of the Corporation to serve (A) from the close of the Meeting (the Current Slate ) until the earlier of (i) the close of the next annual meeting of Shareholders of the Corporation or until their successors are elected or appointed; and (ii) the effective time of completion of the RTO (the Change of Board Time ); and (B) the Change of Board Time until the close of the next annual meeting of Shareholders of the Corporation or until their successors are elected or appointed (the New Slate )

203 It is a condition to the completion of the RTO that the New Slate, comprised of five individuals, all of whom are nominees of CRHC, be elected, effective at the Change of Board Time, as directors of the Resulting Issuer. At the time of the Meeting, the RTO will not yet have been completed and there can be no assurance at that time that it will be completed. Shareholders will be asked at the Meeting to consider, and if thought appropriate, to pass an ordinary resolution, the text of which is as follows: BE IT HEREBY RESOLVED that: (1) the election of each of Eric Klein, David Brill and Vernon Nelson as directors of the Corporation to hold office until the earlier of: (a) (b) the close of the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed; and the Change of Board Time, as defined in the management information circular of the Corporation dated September 30, 2016; is hereby approved; and (2) the election of each of Marc Lustig, Rob Harris, Chuck Rifici, Greg Wilson and Dr. Jim Young as directors of the Corporation, to hold office from the Change of Board Time until the next annual meeting of Shareholders or until their successors are elected or appointed, is hereby approved. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the election of the directors as set forth above and therein. The Corporation does not contemplate that any of such nominees will be unable to serve as directors; however, if for any reason any of the proposed nominees do not stand for election or are unable to serve as such, proxies held by the persons designated as proxyholders in the accompanying Instrument of Proxy will be voted FOR another nominee in their discretion unless the Shareholder has specified in his or her form of proxy that his or her Common Shares are to be withheld from voting in the election of directors. Each director elected as a Current Slate director will hold office from the close of the Meeting until the earlier of (i) the next annual meeting of Shareholders or until their successors are elected or appointed, or (ii) until the Change of Board Time, as the case may be, unless his office is earlier vacated in accordance with the articles of the Corporation or the provisions of the Business Corporations Act (Ontario). Each director elected as a New Slate director will hold office from the Change of Board Time until the next annual meeting of Shareholders or until their successors are elected or appointed, as the case may be, unless his office is earlier vacated in accordance with the articles of the Corporation or the provisions of the Business Corporations Act (Ontario). See below for detailed information concerning the Current Slate and the New Slate. Current Slate The following sets forth the name of each of the persons proposed to be nominated for election as a director of the Corporation as part of the Current Slate, all positions and offices in the Corporation presently held by such nominees, the nominees municipality and country of residence, principal occupation at the present time and during the preceding five years, the period during which the respective nominees have served as directors, and the number and percentage of Common Shares beneficially owned by the nominees, directly or indirectly, or over which control or direction is exercised, as of the Effective Date

204 Name and Place of Residence Eric Klein (2) Toronto, Ontario David Brill (2) Toronto, Ontario Vernon Nelson (2) Calgary, Alberta Positions with the Corporation and Date First Appointed to the Board Director and Chief Executive Officer since June 8, 2011 Director since June 8, 2011 Present and Principal Occupation Executive Vice President Corporate Development, Dundee Corporation Independent Business Executive Number and Percentage of Common Shares Beneficially Owned or Controlled (1) Director since June 8, 2011 Retired Business Executive Nil Notes (1) Based on 8,055,009 Common Shares issued and outstanding as at the Effective Date. (2) Member of the Audit Committee. Nil Nil Please see Audit Committee Relevant Experience and Education above for biographical information regarding each member of the Current Slate. New Slate The following table sets forth the name of each of the persons proposed to be nominated for election as a director of the Corporation as part of the New Slate, all positions and offices in the Corporation presently held by such nominees, the nominees municipality and country of residence, current principal occupation, the period during which the nominees have served as directors, and the number and percentage of Common Shares beneficially owned by the nominees, directly or indirectly, or over which control or direction is exercised. Name and Place of Residence Marc Lustig West Vancouver, British Columbia, Canada Rob Harris Milton, Ontario, Canada Chuck Rifici Ottawa, Ontario, Canada Greg Wilson Ottawa, Ontario, Canada Dr. Jim Young Potomac, Maryland, USA Notes: Positions with the Corporation and Date First Appointed to the Board Proposed Chief Executive Officer and Proposed Director Proposed Director Proposed Director Proposed Chief Operating Officer and Proposed Director Proposed Director Principal Occupation Chief Executive Officer of CRHC Director of Aralez Pharmaceuticals Inc. Chartered Professional Accountant Chief Executive Officer of Vida Cannabis Corp. Director of Novavax, Targeted Microwave Solutions and 3V- Biosciences Number and Percentage of Common Shares Beneficially Owned or Controlled (1) Information concerning shares of the Resulting Issuer to be beneficially owned or controlled, directly or indirectly, on completion of the RTO, will be set out in the Application. Biographical information regarding the New Slate is set out below. Marc Lustig: Mr. Lustig holds MSc and MBA degrees from McGill University. He began his professional career in the pharmaceutical industry at Merck & Co. In 2000, he started his capital markets career in institutional equity research in the Life Sciences sector at Orion Securities. For the next 14 years, Mr. Lustig worked as a top producer at GMP Securities L.P. and as Head of Capital Markets at Dundee Capital Markets before becoming Partner at KES 7 Capital. Mr. Lustig founded Cannabis Royalties & Holdings Corp. in early Rob Harris: Mr. Harris has served as a director of Aralez Pharmaceuticals Inc. since February 5, He previously served as President, Chief Executive Officer and a director of Tribute Pharmaceuticals Canada Inc. from December 1, 2011 to February Mr. Harris founded Tribute Pharma, which later became Tribute Pharma Canada Inc. and Tribute Pharmaceuticals Canada Ltd. in November 2005.Tribute acquired both Tribute Pharma Canada Inc. and Tribute Pharmaceuticals Canada Ltd. on December 1, Nil Nil Nil Nil Nil

205 2011. Mr. Harris was formerly the President and CEO of Legacy Pharmaceuticals Inc. from September 2004 to October As the VP of Business Development at Biovail Corporation from October 1997 to September 2004, Mr. Harris was involved in, led and successfully concluded numerous business development transactions, including the licensing of new chemical entities, the acquisition of mature products, the completion of co-promotion deals, distribution agreements, product development and reformulation transactions. Mr. Harris joined Biovail in 1997 as the GM of Biovail Pharmaceuticals Canada at a time when the company experienced rapid growth in the Canadian division. Before Biovail, Mr. Harris worked in various senior commercial management positions during his twenty-year tenure at Wyeth (Ayerst) from 1977 to 1997 and has been involved in numerous product launches during his career. Mr. Harris brings to the Board over 35 years of pharmaceutical industry experience in both Canada and the United States in sales, marketing, business development and general management. Chuck Rifici: Mr. Rifici is the co-founder and former CEO of Canopy Growth Corp. (formerly Tweed Marijuana Inc.). Mr. Rifici is currently CEO at Nesta Holding Co. Ltd., Chairman at National Access Cannabis Corp. and a director at Aurora Cannabis Inc. Previously he served as Treasurer on the National Board of Directors of the Liberal Party of Canada. Mr. Rifici is a chartered professional accountant. He obtained his MBA from Queen s University and a B.A.Sc in Computer Engineering from the University of Ottawa. Greg Wilson: Mr. Wilson is an entrepreneur and corporate finance strategist with more than 20 years experience advising and structuring capital market financings for start-up and emerging growth enterprises. In 2005, Mr. Wilson co-founded Paramount Gold & Silver Corp., a precious metals exploration company that was sold to Coeur Mining for over $200 million in late Mr. Wilson is currently CEO of Vida Cannabis Corp. and also sits on the Board of Directors of Consumer Choice Awards, a Canadian private company. Dr. Jim Young: Dr. Young is the Chairman at Novavax, Inc., Chairman at Targeted Microwave Solutions, Inc. and sits on the board of directors at 3-V Biosciences, Inc. Dr. Young has over 30 years of experience in the fields of molecular genetics, microbiology, immunology and pharmaceutical development. Prior to being acquired by Astra Zeneca, Dr. Young was MedImmune s President of Research and Development. Dr. Young received his doctorate in microbiology and immunology from Baylor College of Medicine in Houston, Texas, and in 2005 was awarded the Albert B. Sabin Humanitarian Award. Other Reporting Issuer Experience The following table sets out the members of the New Slate that are directors of other issuers that are reporting issuers (or the equivalent) in Canada or a foreign jurisdiction, the name of such reporting issuers and the name of the exchange or market applicable to such reporting issuers: Name Name of Reporting Issuer Name of Exchange or Market (if applicable) Chuck Rifici Aurora Cannabis Inc. CSE Rob Harris Aralez Pharmaceuticals Inc. TSX; NASDAQ Jim Young Novavax, Inc. Targeted Microwave Solutions, Inc. NASDAQ TSXV Cease Trade Orders, Bankruptcies and Penalties No individual who is a member of the Current Slate or New Slate, or who will otherwise be a director of the Resulting Issuer upon completion of the RTO (a Subject Director ) is as at the Effective Date, or has been, within the 10 years prior to the Effective Date, a director, chief executive officer or chief financial officer of any company that: (a) was the subject of a cease trade or similar order, or an order that denied the other company access to any exemptions under applicable securities legislation for a period of

206 more than 30 consecutive days that was issued while the proposed director was acting as director, chief executive officer or chief financial officer; or (b) was the subject of a cease trade or similar order, or an order that denied the other company access to any exemptions under applicable securities legislation for a period of more than 30 consecutive days that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer. No Subject Director is as at the Effective Date, or has been, within the 10 years prior to the Effective Date, a director or executive officer of any other issuer that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person. No Subject Director is as at the Effective Date, or has been, within the 10 years prior to the Effective Date, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of that person other than Mr. Brill, who on May 24, 2012 made a proposal to his creditors under the Bankruptcy and Insolvency Act (Canada) which proposal was approved by creditors on August 28, 2012 and a Certificate of Full Performance was issued on June 15, No Subject Director is as at the Effective Date, or has been, within the 10 years prior to the Effective Date has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by any securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would be likely to be considered important to a reasonable securityholder in deciding whether to vote for the proposed director. 4. Approval of Stock Option Plan The Corporation s existing stock option plan (the Existing Option Plan ) is a fixed plan which was approved by the Board on June 14, 2000 and by Shareholders on July 12, The Corporation proposes to replace the Existing Option Plan with a new stock option plan (the New Option Plan ) to provide long term incentives to eligible directors, officers, employees and consultants of the Corporation. The New Plan will be the stock option plan of the Resulting Issuer following completion of the RTO and will continue to be effective after the closing of the RTO. Description of the Plan The purpose of the New Plan is to provide the Corporation with a share-related mechanism to attract, retain and motivate qualified directors, officers, consultants and employees, to reward such of those directors, officers, consultants and employees as may be awarded Options under the New Plan by the Board from time to time for their contributions toward the long term goals of the Corporation and to enable and encourage such directors, officers, consultants and employees to acquire Common Shares as long term investments. The following is a summary of the key terms of the New Plan: The New Plan provides for options to purchase a Common Share issued pursuant thereto (each, an Option ). The number of Common Shares issuable pursuant to Options granted under the Option Plan is limited to 10% of the number of Common Shares outstanding from time to time. There were an aggregate of 8,055,009 Common Shares issued and outstanding as of the Record Date. There are currently no

207 options outstanding under the Option Plan. Accordingly, the Corporation may grant further Options under the New Plan. As at the Record Date, the number of Common Shares remaining available for issuance under the New Plan is 805,500 (as calculated based upon 10% of the aggregate number of issued and outstanding Common Shares, less the number of Options outstanding under the New Plan). The total number of Common Shares which may be reserved for issuance to any one individual under the New Plan may not exceed 5% of the outstanding Common Shares. The maximum number of stock options which may be granted to any one consultant under the New Plan, any other employer stock options plans or options for services, within any 12 month period, must not exceed 2% of the Common Shares issued and outstanding at the time of the grant (on a non-diluted basis). The Options granted under the New Plan are non-assignable and may be granted for a term not exceeding 10 years from the date of grant. Notwithstanding, if the date on which an Option expires occurs during any period imposed by the Corporation, pursuant to its insider trading policies or otherwise, during which an optionee may be restricted from trading in securities of the Corporation (a Blackout Period ) or within two business days after the last day of a Blackout Period, the date of the expiry of such Option will become the tenth business day following the end of the Blackout Period. Options may be granted under the New Plan only to directors, officers, employees and consultants of the Corporation or any related entity of the Corporation, subject to the rules and regulations of applicable regulatory authorities. In the event that any optionee ceases to be an eligible person under the New Plan (i.e. ceases to be an officer, director, employee or consultant for any reason other than death or termination with cause), the optionee will be entitled to exercise his or her Options which have vested as of such date of cessation only within a period of one year, in the case of optionees that are directors or officers, or 90 days, in the case of employees or consultants, following the date of such cessation or such other date as may be determined by the Board subject to regulatory approval, but in no event may any Options be exercised following the expiry date thereof. In the event an optionee is terminated with cause, the Options held by such optionee will expire on the date of such termination. In the event of the death of an optionee, any Options held by such optionee which have vested as of the date of death may only be exercised within a period of one year succeeding the optionee s death, but in no event may any options be exercised following the expiry date thereof. In the event of a change of control of the Corporation (or an impending change of control), the Board will have the discretion to deal with outstanding Options in the manner it deems fair and reasonable in the circumstances, which may include accelerated vesting or expiry of the Options. Under the New Plan, a change of control is deemed to occur if one of the following events has taken place: the sale, transfer or other disposition of all or substantially all of the Corporation s assets in complete liquidation or dissolution of the Corporation; a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity, as a result of which the holders of Common Shares immediately prior to the completion of the transaction hold less than 50% of the outstanding voting securities of the successor corporation immediately after completion of the transaction; any person or combination of persons at arm s length to the Corporation and its affiliates acquires or becomes the beneficial owner of, directly or indirectly, more than 50% of the voting securities of the Corporation, whether through the acquisition of previously issued and outstanding voting securities, or of voting securities that have not been previously issued, or any combination thereof, or any other transaction having a similar effect; a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or as a result of or in connection with: (A) a contested election of directors of the Corporation; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition

208 involving the Corporation or any of its affiliates and another corporation or other entity (a Transaction ), fewer than 50% of the Corporation s directors following the Transaction are persons who were directors of the Corporation immediately prior to such Transaction The exercise price of Options granted under the New Plan will be determined by the Board and may not be lower than the market price of the Common Shares at the time the option is granted. If the Common Shares are not listed on a stock exchange, the maximum permissible discount is 25%. Options issued under the New Plan vest at the discretion of the Board, subject to certain specified limitations. The Board may at any time amend the New Plan or any Options granted thereunder, subject to the receipt of all applicable regulatory approvals, provided that no such amendment may, without the consent of affected optionees, materially decrease the rights or benefits accruing to such optionees or materially increase the obligations of such optionees. For greater certainty, the Option Plan provides that the Board may amend or terminate the New Plan or any Options granted thereunder without obtaining shareholder approval of such amendments or termination, other than the following amendments which shall be subject to the approval of shareholders (together with all applicable regulatory approvals): (i) amendments to the definition of categories of persons eligible to participate in the New Plan; (ii) amendments to the maximum number or percentage of Common Shares (or other securities) issuable under the New Plan; (iii) the limitations under the New Plan on the number of Options that may be granted to any one person or any category of persons; (iv) the method for determining the exercise price of Options; (v) the maximum term of Options; (vi) the expiry and termination provisions applicable to Options; and (vii) any other provision that is required to be approved by shareholders under applicable law. The full text of the New Plan is set out in Schedule B to the Circular. Vote Required Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, an ordinary resolution to approve the New Plan. To be effective, the resolution in respect of the New Plan must be approved by the affirmative vote of not less than a majority of the votes cast by the holders of Common Shares present in person or represented by proxy at the Meeting. The complete text of the ordinary resolution (the Stock Option Plan Resolution ) which management intends to place before the Meeting to approve the Option Plan is as follows: BE IT HEREBY RESOLVED as an ordinary resolution of the Corporation that: (1) the proposed stock option plan (the Plan ), substantially in the form attached as Schedule B to the Circular of the Corporation dated September 30, 2016, be and it is hereby approved, including the reservation for issuance under the Plan at any time of a maximum of 10% of the then issued and outstanding shares of the Corporation, and shall replace the existing stock option plan of the Corporation; (2) any director or officer be and is hereby authorized to make any and all additions, deletions and modifications to the Plan as may be necessary or advisable to give effect to this ordinary resolution or as may be required by applicable regulatory authorities or stock exchanges; (3) any director or officer be and is hereby authorized, to execute and deliver all such other deeds, documents and other writings and perform such other acts as may be necessary or desirable to give effect to this resolution; and (4) notwithstanding approval of the Shareholders of the Corporation as herein provided, the Board may, in its sole discretion, revoke this resolution before it is acted upon without further approval of the Shareholders of the Corporation

209 The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Stock Option Plan Resolution. 5. Approval of Share Unit Plan In connection with the RTO, the Corporation proposes to approve a share unit plan (the Share Unit Plan ) substantially in the same form as the share unit plan of CRHC. The Share Unit Plan will be the share unit plan of the Resulting Issuer following completion of the RTO and will continue to be effective after the closing of the RTO. Description of the Plan The purpose of the Share Unit Plan is to assist the Corporation in attracting, incentivizing and retaining those key Directors, officers, employees and consultants of the Corporation who are considered by the Board to be key to the growth and success of the Corporation, and to align the interests of key directors, officers, employees and consultants with those of the Corporation s Shareholders through longer term equity ownership in the Corporation. The following is a summary of the key terms of the Share Unit Plan: The Share Unit Plan is established for employees, directors and officers of the Corporation and its affiliates, and for individuals retained as a consultant for the Corporation or companies providing management services to the Corporation, as may be determined by the Board or any other committee of the directors authorized by the Board to administer the Share Unit Plan; The Share Unit Plan provides that Share Units may be granted by the Board or a compensation committee of the Board or any other committee of the Directors authorized by the Board to administer the Share Unit Plan. Share Units are units created by means of an entry on the books of the Corporation representing the right to receive one Common Share (subject to adjustments) issued from treasury per Share Unit. All grants of Share Units must be evidenced by a confirmation Share Unit grant letter. The maximum number of Common Shares that may be granted pursuant to the Share Unit Plan shall not exceed 10% of the then issued and outstanding Common Shares (including Shares underlying outstanding Share Units). Any Common Shares subject to a Share Unit which has been cancelled or terminated in accordance with the terms of the Share Unit Plan without settlement will again be available for grant of a Share Unit under the Share Unit Plan. The number of Share Units granted and any applicable vesting conditions are determined in the discretion of the Board or a compensation committee of the Board, with the number of Share Units granted being determined based on the closing market price of the Common Shares on the grant date. In granting Share Units, the Board or a compensation committee of the Board may include any other terms, conditions and/or vesting criteria which are not inconsistent with the Share Unit Plan. Share Units are settled by way of the issuance of Common Shares from treasury as soon as practicable following the maturity date determined by the Board or a compensation committee of the Board in accordance with the terms of the Share Unit Plan. Individuals granted Share Units who are Canadian residents or as otherwise may be designated in the Share Unit grant letter (with the exception of U.S. taxpayers) are permitted to elect to defer issuance of all or any part of the Common Shares issuable to them, provided proper notice is provided to the Board or a compensation committee of the Board in accordance with the terms of the Share Unit Plan. In the event a cash dividend is paid to shareholders on the Common Shares while a Share Unit is outstanding, each participant will be credited with additional Share Units in lieu of any cash dividends paid to shareholders, equal to the aggregate amount of any cash dividends that would

210 have been paid to the individual if the Share Units had been Common Shares, divided by the market price of the Common Shares on the date on which dividends were paid by the Corporation. If the foregoing shall result in a fractional Share Unit, the fraction shall be disregarded. The termination provisions under the Share Unit Plan are as follows subject to any determination otherwise by the Board: o o o o in the event of retirement, any unvested Share Units will automatically vest on the date of retirement and the Common Shares underlying such Share Units will be issued as soon as reasonably practical thereafter; in the event of the death, any unvested Share Units will automatically vest on the date of death and the Common Shares underlying all Share Units will be issued to the estate of the deceased as soon as reasonably practical thereafter; in the event of disability (as may be determined in accordance with the policies, if any, or general practices of the Corporation or any subsidiary), any unvested Share Units will automatically vest on the date on which the participant is determined to be totally disabled and the Common Shares underlying the Share Units will be issued as soon as reasonably practical thereafter; in the event of termination without cause of a Share Unit holder, (i) any unvested Share Units that are not subject to performance vesting criteria will automatically vest on the date on which the individual is terminated and the Common Shares underlying the Share Units will be issued as soon as reasonably practical thereafter, and (ii) any unvested Share Units that are subject to performance vesting criteria will vest in accordance with their normal vesting schedule, except, in either case, as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the Board; and In the event of termination with cause or resignation, all of the Share Units shall become void and the holder shall have no entitlement and will forfeit any rights to any issuance of Common Shares under the Share Unit Plan, except as may otherwise be stipulated in the applicable Share Unit grant letter or as may otherwise be determined by the Board or a compensation Committee of the Board in its sole and absolute discretion. Share Units that have vested but that are subject to an election to set a deferred payment date shall be issued forthwith following the termination with cause or the resignation of the holder. In the event of a change of control, all unvested Share Units issued and outstanding shall automatically and immediately vest on the date of such change of control. The grant of Share Units under the Share Unit Plan is subject to a restriction such that the number of Common Shares: (i) issued to insiders of the Corporation, within any one year period, and (ii) issuable to insiders of the Corporation, at any time, under the Share Unit Plan, or when combined with all of the Corporation s other security based compensation arrangements, shall not exceed 10% of the Corporation s total issued and outstanding Common Shares, respectively. The amendment provisions of the Share Unit Plan provide the Board or a compensation committee of the Board with the power, subject to the requisite regulatory approval, to make the following amendments to the provisions of the Share Unit Plan and any Share Unit grant letter without shareholder approval (without limitation): o o amendments of a housekeeping nature; the addition or a change to any vesting provisions of a Share Unit;

211 o o changes to the termination provisions of a Share Unit or the Share Unit Plan; and amendments to reflect changes to applicable securities or tax laws. However, any of the following amendments require shareholder approval: o o o o o o materially increasing the benefits to the holder of any Share Units who is an insider to the material detriment of the Corporation and the Corporation s shareholders; increasing the number of Common Shares or maximum percentage of Common Shares which may be issued pursuant to the Share Unit Plan (other than by virtue of adjustments permitted under the Share Unit Plan); permitting Share Units to be transferred other than for normal estate settlement purposes; removal or exceeding of the insider participation limits; materially modifying the eligibility requirements for participation in the Share Unit Plan; or modifying the amending provisions of the Share Unit Plan. The full text of the Share Unit Plan is set out in Schedule C to the Circular. Vote Required Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, an ordinary resolution to approve the Share Unit Plan. To be effective, the resolution in respect of the Share Unit Plan must be approved by the affirmative vote of not less than a majority of the votes cast by the holders of Common Shares present in person or represented by proxy at the Meeting. The complete text of the ordinary resolution (the Share Unit Plan Resolution ) which management intends to place before the Meeting to approve the Share Unit Plan is as follows: BE IT HEREBY RESOLVED as an ordinary resolution of the Corporation that: (1) the proposed share unit plan (the Share Unit Plan ), substantially in the form attached as Schedule C to the Circular of the Corporation dated September 30, 2016, be and it is hereby approved, including the reservation for issuance under the Share Unit Plan at any time of a maximum of 10% of the then issued and outstanding shares of the Corporation; (2) any director or officer be and is hereby authorized to make any and all additions, deletions and modifications to the Plan as may be necessary or advisable to give effect to this ordinary resolution or as may be required by applicable regulatory authorities or stock exchanges; (3) any director or officer be and is hereby authorized, to execute and deliver all such other deeds, documents and other writings and perform such other acts as may be necessary or desirable to give effect to this resolution; and (4) notwithstanding approval of the Shareholders of the Corporation as herein provided, the Board may, in its sole discretion, revoke this resolution before it is acted upon without further approval of the Shareholders of the Corporation. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Share Unit Plan Resolution. The Share Unit Plan will only be implemented in the event that the RTO is completed

212 6. Consolidation of Common Shares Reasons for Consolidation In connection with the RTO, the Corporation intends to issue Common Shares as consideration to the shareholders of CRHC. In order to align the value of the Common Shares to the price per Common Share at which the RTO will be completed, the Corporation proposes that, subject to obtaining all required regulatory approvals, immediately prior to the completion of the RTO the Corporation s issued and outstanding share capital be consolidated at a ratio of one (1) post-consolidation Common Share for every five (5) pre-consolidation Common Shares (the Consolidation ), with any resulting fraction being rounded down to the next lowest whole number, provided that any registered Shareholder that would otherwise be eliminated as a registered Shareholder as a result of such rounding will receive one post- Consolidation Common Share pursuant to the Consolidation. No fractional post-consolidation Common Shares will be issued under the Consolidation. Effect of Consolidation If approved, no further action on the part of the Shareholders would be required in order for the Board to implement the Consolidation. If implemented, the Consolidation will occur simultaneously for all of the Corporation s issued and outstanding Common Shares and will be implemented prior to the completion of the RTO. The Consolidation ratio will be the same for all such Common Shares and will affect all holders of Common Shares uniformly and will not affect any Shareholder s percentage ownership interest in the Corporation, except to the extent that the Consolidation would otherwise result in any shareholder owning a fractional Common Share. Notwithstanding the foregoing, as indicated in the text of the Consolidation Resolution below, the Board may, in its sole discretion, determine to not proceed with the Consolidation. As the Corporation currently has an unlimited number of Common Shares authorized for issuance, the Consolidation will not have any effect on the number of Common Shares that remain available for future issuance. As at the Effective Date, the Corporation has 8,055,009 pre-consolidation Common Shares issued and outstanding. Upon completion of the Consolidation, the number of post-consolidation Common Shares issued and outstanding, without giving effect to the RTO, will be 1,611,002 post- Consolidation Common Shares (approximately, on a non-diluted basis, subject to variation based on rounding). Procedure for Implementing the Consolidation If the Consolidation Resolution is approved by Shareholders and the Board decides to implement the Consolidation, the Corporation will file articles of amendment with the Director under the OBCA in the form prescribed by the OBCA to amend the Corporation s articles. The Consolidation will become effective as specified in the articles of amendment and the certificate of amendment issued by the Director under the OBCA. Share Certificates and Letter of Transmittal No delivery of a certificate evidencing a post-consolidation Common Share will be made to a Shareholder until the Shareholder has surrendered the issued certificates representing its pre- Consolidation Common Shares. Until surrendered, each certificate formerly representing pre- Consolidation Common Shares shall be deemed for all purposes to represent the number of post- Consolidation Common Shares to which the Shareholder is entitled as a result of the Consolidation. Upon implementation of the Consolidation, each certificate representing pre-consolidation Common Shares will, until surrendered and exchanged as described below, be deemed cancelled and, for all corporate purposes, will be deemed to represent, respectively, only a whole number of post-consolidation Common Shares, with any resulting fraction being rounded down to the next lowest whole number,

213 provided that any registered Shareholder that would otherwise not receive a post-consolidation Common Share as a result of such rounding will receive one post-consolidation Common Share pursuant to the Consolidation. Included with the Meeting Materials is a letter of transmittal to be used for the purpose of surrendering share certificates representing the currently outstanding Shares (the Letter of Transmittal ) in order to receive, in exchange, new share certificates representing whole post-consolidation Common Shares. Registered Shareholders are encouraged to complete and sign the Letter of Transmittal and deliver it, together with certificates representing their Common Shares and other required documents, to TSX Trust Company in accordance with the instructions contained in the Letter of Transmittal. The Letter of Transmittal contains procedural information relating to the Consolidation and should be reviewed carefully. The deposit of Common Shares pursuant to the procedures in the Letter of Transmittal will constitute a binding agreement between the depositing Shareholder and the Corporation upon the terms and subject to the conditions set forth in this Information Circular and the Letter of Transmittal. In the event that the Consolidation Resolution is not approved by Shareholders at the Meeting or the Corporation determines not to implement the Consolidation for any reason, all share certificates representing Common Shares that were delivered to TSX Trust Company will promptly be returned to the registered holders thereof. Additional copies of the Letter of Transmittal may be obtained by contacting TSX Trust Company at (416) , facsimile number (416) , or by to: TMXEInvestorServices@tmx.com at any time up to the Meeting Date. The Letter of Transmittal will also be available under the Corporation s profile on SEDAR at The Corporation reserves the right, if it so elects in its absolute discretion, to waive or not to waive any defect or irregularity contained and all errors or other deficiencies in any Letter of Transmittal or other document and any such waiver or non-waiver will be binding upon the depositing Shareholder. The granting of a waiver to one or more Shareholders does not constitute a waiver for any other Shareholders. The Corporation and TSX Trust Company reserve the right to demand strict compliance with the terms of the Letter of Transmittal. The method used to deliver the Letter of Transmittal and any accompanying certificates representing Common Shares is at the option and risk of the Shareholder surrendering them, and delivery will be deemed effective only when such documents are actually received by TSX Trust Company. If depositing share certificates, the Corporation recommends the use of registered mail with return receipt requested, and with proper insurance. Non-Registered Shareholders holding their Common Shares through an intermediary should note that such intermediaries may have various procedures for processing the Consolidation. If a Non-Registered Shareholder holds Common Shares with such an intermediary and has any questions in this regard, the Non-Registered Shareholder is encouraged to contact its intermediary. No Dissent Rights Under the OBCA, Shareholders do not have dissent and appraisal rights with respect to the proposed Consolidation. Vote Required Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, a special resolution authorizing the Board, in its sole discretion, to effect the Consolidation. To be effective, the resolution in respect of the Consolidation must be approved by the affirmative vote of not less than two-thirds (2/3) of the votes cast by the holders of Common Shares present in person or represented by proxy at the Meeting. The Consolidation is a condition precedent to the completion of the RTO and if approved, would be given effect prior to completion of the RTO. Accordingly, if Shareholders of Common Shares do not approve the special resolution, the RTO may not proceed. Shareholders are urged to vote FOR this special resolution

214 The complete text of the special resolution (the Consolidation Resolution ) which management intends to place before the Meeting authorizing the Consolidation is as follows: BE IT HEREBY RESOLVED as a special resolution of the Corporation that: (1) in connection with the closing of the RTO (as defined in the Circular of the Corporation dated September 30, 2016), the Consolidation of the Common Shares of the Corporation at a ratio of one (1) post-consolidation Common Share for every five (5) pre- Consolidation Common Shares, or such other lesser or greater ratio determined by the board of directors of the Corporation in its sole discretion, is hereby approved; (2) no fractional Common Shares shall be issued in connection with the Consolidation and, any resulting fractional shares shall be rounded down to the nearest whole Common Share, provided that no registered shareholder will be eliminated by the Consolidation; (3) upon articles of amendment having become effective in accordance with the Business Corporations Act (Ontario), the articles of the Corporation shall be amended accordingly; (4) any one director or any one officer be and is hereby authorized and directed to execute on behalf of the Corporation, and to deliver or to cause to be delivered all such documents, agreements and instruments and to do and to cause to be done all such other acts or things as he shall determine to be necessary or desirable to carry out the intent of this special resolution; and (5) notwithstanding approval of the Shareholders of the Corporation as herein provided, the Board may, in its sole discretion, revoke this resolution before it is acted upon without further approval of the Shareholders of the Corporation The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Consolidation Resolution. The Consolidation will only be implemented in the event that all other conditions to the effectiveness of the RTO have been satisfied or waived. Background 7. Name Change Upon completion of the RTO, it is intended that the business of CRHC, as currently conducted, will be the business of the Corporation. In connection therewith, the Corporation intends to change its name to CannaRoyalty Corp., or such other name as the Board, in its sole discretion, deems appropriate (the Name Change ). Management believes that the Name Change is in the best interests of the Corporation in order to reflect the proposed change in its business activities that will result if the RTO is completed. Vote Required Shareholders will be asked to consider and, if thought appropriate, to pass, with or without variation, a special resolution authorizing the Board, in its sole discretion, to effect the Name Change. To be effective, the resolution in respect of the Name Change must be approved by the affirmative vote of not less than two-thirds (2/3) of the votes cast by the holders of Common Shares present in person or represented by proxy at the Meeting. The Name Change is required in order to complete the RTO and if approved, would be given effect in connection with the completion of the RTO. Accordingly, if Shareholders of Common Shares do not approve the special resolution, the RTO may not proceed. Shareholders are urged to vote FOR this special resolution. The complete text of the special resolution (the Name Change Resolution ) which management intends to place before the Meeting authorizing the Name Change is as follows:

215 BE IT HEREBY RESOLVED as a special resolution of the Corporation that: (1) the name of the Corporation be changed to CannaRoyalty Corp. or such other name as the Board, in its sole discretion, deems appropriate and the Director appointed under the Business Corporations Act (Ontario) may permit; (2) any one director or any one officer be and is hereby authorized and directed to execute on behalf of the Corporation, and to deliver or to cause to be delivered all such documents, agreements and instruments and to do and to cause to be done all such other acts or things as he shall determine to be necessary or desirable to carry out the intent of this special resolution; and (3) notwithstanding approval of the Shareholders of the Corporation as herein provided, the Board may, in its sole discretion, revoke the special resolution before it is acted upon without further approval of the Shareholders of the Corporation. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Name Change Resolution. The Name Change will only be implemented in the event that all other conditions to the effectiveness of the RTO have been satisfied or waived. 8. Variation of the Number of Directors The Corporation wishes to amend its articles to set the number of directors of the Corporation at a minimum of one (1) and a maximum of ten (10). The articles currently set a minimum of three (3) and a maximum of seven (7) directors. The complete text of the special resolution (the Director Resolution ) which management intends to place before the Meeting is as follows: BE IT HEREBY RESOLVED as a special resolution of the Corporation that: (1) the number of directors of the Corporation required under the articles of the Corporation be amended to a minimum of one (1) and a maximum of ten (10) directors; (2) notwithstanding that this special resolution has been duly passed by the shareholders of the Corporation, the directors are hereby authorized in their sole discretion to revoke this special resolution before it is acted on without further approval of the shareholders of the Corporation; and (3) any director of the Corporation be and they are hereby authorized and directed to execute and deliver for and on behalf of the Corporation all such documents and to do all such other acts and things as may be considered necessary or desirable to give effect to this resolution. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Director Resolution. 9. Ratification of Past Acts Certain of the Corporation s past corporate records during the period from incorporation up to the present date are incomplete and certain of the past acts by the Corporation s directors, officers and shareholders during this period may not have been documented and certain documents may not have been executed. Accordingly, the Board has passed a ratifying resolution ratifying and confirming all past acts of the Board and officers of the Corporation. The shareholders of the Corporation are, in turn, being asked to consider, and if thought advisable, to approve a ratifying resolution approving, ratifying and confirming all the prior acts and proceedings of the

216 directors and officers of the Corporation made from and including incorporation to the date hereof including, but not limited to, those disclosed or referred to in the minute books or records of the Corporation, in information disseminated to the shareholders of the Corporation by the Corporation, or in the financial statements of the Corporation. The complete text of the ordinary resolution (the Past Acts Resolution ) which management intends to place before the Meeting authorizing the ratification of past acts is as follows BE IT RESOLVED that: (1) notwithstanding (i) any failure to properly convene, constitute, proceed with, hold or record any meeting of the board of directors or shareholders of the Corporation for any reason whatsoever, including, without limitation, the failure to properly waive or give notice of a meeting, hold a meeting in accordance with a notice of meeting, have a quorum present at a meeting, sign the minutes of a meeting or sign a ballot electing a slate of directors since incorporation; or (ii) any failure to pass any resolution of the directors or shareholders of the Corporation or any by-law of the Corporation for any reason whatsoever, all by-laws, approvals, appointments, resolutions, contracts, acts and proceedings, enacted, passed, made, done or taken since incorporation including those set forth or referred to in the minutes of the meetings, or resolutions of the board of directors of the Corporation, or in the financial statements of the Corporation, and all actions heretofore taken in reliance upon the validity of such minutes, documents and financial statements, are hereby sanctioned, ratified, confirmed and approved; and (2) without limiting the generality of paragraph 1 above, all by-laws, resolutions, contracts, acts and proceedings of the board of directors and officers of the Corporation enacted, passed, made, done or taken since incorporation including those set forth or referred to in the minutes or the meetings and resolutions of the board of directors in the minute and record book of the Corporation or in the financial statements of the Corporation are hereby approved, ratified and confirmed. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the Past Acts Resolution. 10. Ratification of By-Law On June 8, 2011 the directors of the Corporation adopted a new general by-law for the Corporation relating generally to the conduct of the affairs of the Corporation in order to bring the existing by-laws of the Corporation more in line with the current provisions of the OBCA and current practice.at the Meeting, the Shareholders will be asked to consider, and if deemed appropriate, to ratify the Corporation s By-Law No. 1, dated June 8, The complete text of the ordinary resolution (the By- Law Resolution ) which management intends to place before the Meeting authorizing the ratification of By-Law No.1 is as follows BE IT RESOLVED that: (1) By-Law No.1, a general by-law relating generally to the conduct of the affairs of the Corporation,, adopted by the Board of Directors of the Corporation on June 8, 2011, the full text of which is reproduced as Schedule D to this Information Circular, be ratified; and (2) any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation, to do all acts and things, as such director or officer may determine necessary or advisable to give effect to this resolution. The persons designated as proxyholders in the accompanying Instrument of Proxy (absent contrary directions) intend to vote FOR the By-Law Resolution

217 ADDITIONAL INFORMATION Financial information pertaining to the Corporation is provided in the Corporation s financial statements and management s discussion and analysis ( MD&A ) for the financial year ended December 31, Copies of the Corporation s financial statements and related MD&A can be obtained by contacting Carmelo Marrelli, Chief Financial Officer of the Corporation, 82 Richmond Street East, Toronto, Ontario M5C 1P1, Telephone: (416) Additional Information relating to the Corporation is available on its SEDAR profile at DIRECTOR APPROVAL The contents of this Circular and the sending thereof to the Shareholders of the Corporation have been approved by the Board. September 30, 2016 (signed) Eric Klein President and Chief Executive Officer

218 SCHEDULE A CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS Name There shall be a committee of the Board of Directors (the Board ) of Bonanza Blue Corp. (the Company ) known as the Audit Committee (the Committee ). Purpose The Committee has been established to assist the Board in fulfilling its oversight responsibilities and fiduciary obligations, in contemplation that the increasing regulatory focus on governance is principally employing audit committees as the instrumentality of the regulations. The primary functions and areas of responsibility of the Committee are to: Ensure the financial statements of the Company accurately reflect the financial condition of the Company; Review as well as report and provide recommendations to the Board on the annual and interim consolidated financial statements and related Management s Discussion and Analysis ( MD&A ); Identify and monitor the management of the principal risks that could impact the financial reporting of the Company; Ensure the Company has a disaster recovery plan in the case that any of the principal risks become realized; Make recommendations to the Board regarding the appointment, terms of engagement and compensation of the external auditor; Monitor the integrity of the Company s financial reporting process and system of internal controls regarding financial reporting and accounting compliance; Oversee the work of the external auditors engaged for the purpose of preparing or issuing an auditor s report or performing other audit, review or attest services for the Company; Resolve disagreements between management and the external auditor regarding financial reporting; Receive the report of the external auditors, who must report directly to the Committee; Review and approve all external communication in respect of the Company s financial press releases; and333 Provide an avenue of communication among the Company s external auditors, management, the internal accounting department and the Board. Composition and Qualifications All Committee members shall meet all applicable requirements prescribed under the Business Corporations Act (Ontario), as well as any requirements or guidelines prescribed from time to time under applicable securities legislation, including National Instrument as amended, restated or superseded. The Committee shall be comprised of not less than three directors as determined from time to time by the Board. Each member shall be an independent director who is free from any direct or indirect relationship that would, in the view of the Board, reasonably interfere with the exercise of the member s independent judgment. While it is not necessary for members to have a comprehensive knowledge of generally accepted accounting principles and standards, all members of the Committee shall be financially literate so as to be able to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the issues raised by the Company s financial statements. A director who is not financially literate may be appointed to the Committee by the Board provided that such director becomes financially literate within a reasonable period following his or her appointment, and provided that the Board has determined that such appointment will not materially adversely affect the ability of the Committee to act independently. A-1

219 Committee members shall be appointed by the Board. The Board shall designate the Chair of the Committee. If a Chair is not designated or present at any meeting, the members of the Committee may designate a Chair by majority vote. The Chair shall have responsibility for ensuring that the Committee fulfills its mandate and duties effectively. Each member of the Committee shall continue to be a member until a successor is appointed, unless the member resigns, is removed or ceases to be a director. The Board may fill a vacancy at any time. Meetings The Committee shall meet at least four times annually, or more frequently as circumstances dictate as determined by the Chair, and at least once in each fiscal quarter. A schedule for each of the meetings shall be prepared and disseminated to Committee members by the Chief Financial Officer prior to the start of each fiscal year. A majority of the members of the Committee shall constitute a quorum for meetings. An agenda shall be prepared by the Chair of the Committee as far in advance of each meeting as reasonably practicable. Minutes of all meetings of the Committee shall be prepared as soon as possible following the meeting and submitted for approval at or prior to the next following meeting. The Committee should meet privately at least once per year with senior management of the Company, the Company s external auditors, and as a committee to discuss any matters that the Committee or any of these groups believe should be discussed. Specific Responsibilities and Duties Specific responsibilities and duties of the Committee shall include, without limitation, the following: General Review Procedures 1. Review and reassess the adequacy of this Charter at least annually and submit any proposed amendments to the Board for approval. 2. Review the Company s annual audited financial statements, related MD&A, and other documents prior to filing or distribution of such documents or issuing a press release in respect of the financial statements and MD&A. Review should include discussion with management and external auditors of significant issues regarding accounting principles, practices, and significant management estimates and judgments. 3. Annually, in consultation with management, external auditors, and internal auditors, consider the integrity of the Company s financial reporting processes and controls. Discuss significant financial risk exposures and the steps management has taken to monitor, control and report such exposures. Review significant findings prepared by the external auditors and the internal auditing department together with management s responses. 4. Review the effectiveness of the overall process for identifying the principal risks affecting financial reporting and provide the Committee s views to the Board of Directors. 5. Review with financial management and the external auditors the Company s quarterly financial results, related MD&A and other documents prior to the filing or distribution of such documents or issuing a press release in respect of the financial statements and MD&A. Discuss any significant changes to the Company s accounting principles. The Chair of the Committee may represent the entire Committee for purposes of this review. External Auditors 6. The external auditors are ultimately accountable to the Committee, as representatives of the shareholders. The external auditors must report directly to the Committee, who shall review the independence and performance of the auditors and annually recommend to the Board the appointment of the external auditors or approve any discharge of auditors when circumstances warrant. The Committee shall approve the compensation of the external auditors. 7. The Committee must pre-approve all non-audit services to be provided to the Company or its subsidiary entities by the auditors, unless such non-audit services are reasonably expected to constitute not more than Legal* A-2

220 Legal* five (5) percent of the total fees paid by the Company to the external auditor during the particular fiscal year, or if the Company did not recognize such services as non-audit services at the time of engagement. The pre-approval requirement will be satisfied if such non-audit services are promptly brought to the attention of the Committee prior to the completion of the audit and approved by the Committee, or by one or more of its members to whom authority to grant such approvals has been delegated by the Committee. In addition, the Committee may satisfy the pre-approval requirement by adopting specific and detailed policies and procedures for the engagement of non-audit services, so long as the Committee is informed of each non-audit service and such procedures do not include delegation of the Committee s responsibilities to management. 8. On an annual basis, the Committee should review and discuss with the external auditors all significant relationships they have with the Company that could impair the auditors independence. 9. Review the external auditors audit plan and discuss and approve the audit scope, staffing, locations, reliance upon management, and internal audit and general audit approach. 10. Prior to releasing the year-end earnings, discuss the results of the audit with the external auditors. Discuss any matters that are required to be communicated to audit committees in accordance with the standards established by the Canadian Institute of Chartered Accountants. 11. Consider the external auditors judgments about the quality and appropriateness of the Company s accounting principles as applied in the Company s financial reporting. 12. Review and approve management s decisions related to the need for internal auditing. 13. Review the mandate, budget, plan, changes in plan, activities, organizational structure and qualifications of the internal audit department, as needed. 14. Review the appointment, performance and replacement of the senior internal audit executive. 15. Review significant reports prepared by the internal audit department together with management s response and follow-up to these reports. Other Miscellaneous Responsibilities 16. Annually assess the effectiveness of the Committee against its Mandate and report the results of the assessment to the Board. 17. Prepare and disclose a summary of the Mandate to shareholders. 18. Perform any other activities consistent with this Mandate, the Company s by-laws and governing law, as the Committee or the Board deems necessary or appropriate. 19. Review and approve the Company s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Company. Authority The Committee shall have the authority to: 1. Delegate approval-granting authority to pre-approve non-audit services by the external auditor to one or more of its members; 2. Engage independent counsel and other advisors as it determines necessary to carry out its duties; 3. Set and pay the compensation for any advisors employed by the Committee; 4. Communicate directly with the internal and external auditors; 5. Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of the Company regarding questionable accounting or auditing matters. A-3

221 Reporting The Committee shall report its deliberations and discussions regularly to the Board and shall submit to the Board the minutes of its meetings. Resources The Committee shall have full and unrestricted access to all of the Company s books, records, facilities and personnel as well as the Company s external auditors and shall have the authority, in its sole discretion, to conduct any investigation appropriate to fulfilling its responsibilities. The Committee shall further have the authority to retain, at the Company s expense, such special legal, accounting or other consultants or experts as it deems necessary in the performance of its duties and to request any officer or employee of the Company or the Company s external counsel or auditors to attend a meeting of the Committee. Limitation on the Oversight Role of the Committee Nothing in this Charter is intended, or may be construed, to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which all members of the Board are subject. Each member of the Committee shall be entitled, to the fullest extent permitted by law, to rely on the integrity of those persons and organizations within and outside the Company from whom he or she receives information, and the accuracy of the information provided to the Corporation by such persons or organizations. While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company s financial statements and disclosures are complete and accurate and in accordance with generally accepted accounting principles and applicable rules and regulations, each of which is the responsibility of management and the Company s external auditors. Legal* A-4

222 SCHEDULE B AMENDED AND RESTATED STOCK OPTION PLAN BONANZA BLUE CORP. WHEREAS Bonanza Blue Corp. (the Corporation ) desires to amend and restate its existing stock option plan last approved by its shareholders on July 12, 2000 (the Existing Plan ); AND WHEREAS all options to purchase common shares of the Corporation which were granted pursuant to the Existing Plan (the Existing Options ) shall remain outstanding in accordance with their terms, provided that from the effective date of this stock option plan (the Plan ), such Existing Options shall be governed by this Plan; NOW THEREFORE the Plan provides as follows: 1.1 Definitions ARTICLE 1 DEFINITIONS AND INTERPRETATION As used herein, unless there is something in the subject matter or context inconsistent therewith, the following terms shall have the meanings set forth below: (a) (b) (c) (d) (e) affiliate has the meaning ascribed thereto in the Securities Act (Ontario). Administrator means, initially, the Chief Financial Officer of the Corporation and thereafter shall mean such director or other senior officer or employee of the Corporation as may be designated as Administrator by the Board from time to time. Award Date means the date on which the Board awards a particular Option. Board means the board of directors of the Corporation or any committee thereof to which the board of directors of the Corporation has delegated the power to administer and grant Options under the Plan. Cause means: (i) (ii) (iii) in the case of an Employee or Officer (1) cause as such term is defined in the written employment agreement with the Employee or Officer or if there is no written employment agreement or cause is not defined therein, the usual meaning of just cause under the common law or the laws of the jurisdiction in which the employee is employed; or (2) the termination of employment as a result of an order made by any Regulatory Authority having jurisdiction to so order; in the case of a Consultant (1) the occurrence of any event which, under the written consulting contract with the Consultant or the common law or the laws of the jurisdiction in which the Consultant provides services, gives the Corporation or any of its affiliates the right to immediately terminate the consulting contract; or (2) the termination of the consulting contract as a result of an order made by any Regulatory Authority having jurisdiction to so order; or in the case of a Director, ceasing to be a Director as a result of (1) ceasing to be qualified pursuant to subsection 118(1) of the Business Corporations Act (Ontario); (2) a resolution having been passed under section 122 of the Business Corporations Act (Ontario) or by the resolution or method specified in the Corporation s Articles; or (3) an order made by any Regulatory Authority having jurisdiction to so order. B-1

223 (f) Change of Control means and shall be deemed to have occurred if one of the following events takes place: (i) (ii) (iii) (iv) (v) the sale, transfer or other disposition of all or substantially all of the Corporation s assets in complete liquidation or dissolution of the Corporation; a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity, as a result of which the holders of Common Shares immediately prior to the completion of the transaction hold less than 50% of the outstanding voting securities of the successor corporation immediately after completion of the transaction; any Person or combination of Persons at arm s length to the Corporation and its affiliates acquires or becomes the beneficial owner of, directly or indirectly, more than 50% of the voting securities of the Corporation, whether through the acquisition of previously issued and outstanding voting securities, or of voting securities that have not been previously issued, or any combination thereof, or any other transaction having a similar effect; a resolution is adopted to wind-up, dissolve or liquidate the Corporation; or as a result of or in connection with: (A) a contested election of directors of the Corporation; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its affiliates and another corporation or other entity (a Transaction ), fewer than 50% of the Corporation s directors following the Transaction are persons who were directors of the Corporation immediately prior to such Transaction. (g) (h) (i) (j) (k) (l) (m) (n) Common Share or Common Shares means, as the case may be, one or more common shares in the capital of the Corporation. Corporation means Bonanza Blue Corp., a corporation incorporated under the Ontario Business Corporations Act. Consultant has the meaning given to that term in National Instrument Prospectus Exemptions. consultant corporation means for an individual consultant, a corporation or partnership of which the individual is an employee, shareholder or partner. Director means a director of the Corporation, and for purposes of the Plan includes directors of any Related Entity of the Corporation. Discounted Market Price of the Common Shares for a particular Award Date shall be the Market Price as of such date less the maximum discount permitted pursuant to the policies of the Exchange. If the Common Shares are not listed on an Exchange, then the maximum permissible discount shall be 25%. Eligible Persons means Directors, Officers, Employees and Consultants. Employee means: (i) (ii) an individual who is considered an employee of the Corporation or a Related Entity of the Corporation under the Income Tax Act; an individual who works full-time for the Corporation or a Related Entity of the Corporation providing services normally provided by an employee and who is subject to the same control and direction by the Corporation or the affiliated entity of the Corporation over the details and methods of work as an employee of the Corporation or B-2

224 the affiliated entity of the Corporation, but for whom income tax deductions are not made at source, or (iii) an individual who works for the Corporation or a Related Entity of the Corporation on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Corporation or the affiliated entity of the Corporation over the details and methods of work as an employee of the Corporation or the affiliated entity of the Corporation, but for whom income tax deductions are not made at source. (o) (p) (q) (r) (s) (t) Exchange means any stock exchange, inter-dealer quotation network or other organized trading facility on which the Common Shares may be listed. Exercise Notice means the notice respecting the exercise of an Option, in the form set out as Appendix B hereto, duly executed by the Option Holder. Exercise Period means the period during which a particular Option may be exercised and is the period from and including the Award Date through to and including the Expiry Date. Exercise Price means the price at which an Option may be exercised as determined in accordance with paragraph 3.5. Expiry Date means the date determined in accordance with paragraph 3.4 and after which a particular Option cannot be exercised. Expiry Period has the meaning given to that term under paragraph 3.4(b). (u) Fixed Expiry Date has the meaning given to that term under paragraph 3.4. (v) (w) (x) (y) (z) (aa) (bb) (cc) insider has the meaning given to that term in the Securities Act (Ontario). Market Price of the Common Shares for a particular Award Date shall be the last closing price of the Common Shares on the Exchange. If the Common Shares are not listed on the Exchange, then the Market Price shall be, subject to the necessary approvals of the applicable Regulatory Authorities, the fair market value of the Common Shares on the Award Date as determined by the Board in its discretion. Management Corporation Employee means an individual employed by a Person providing management services to the Corporation or to a Related Entity of the Corporation, which are required for the ongoing successful operation of the business enterprise of the Corporation, but excluding a Person engaged in investor relations activities. Officer means an officer of the Corporation or a Management Corporation Employee, and for the purposes of the Plan includes officers of any Related Entity of the Corporation. Option means an option to acquire Common Shares, awarded to an Eligible Person pursuant to the Plan. Option Certificate means the certificate, in the form set out as Appendix A hereto, evidencing an Option. Option Holder means a Person who holds an unexercised and unexpired Option or, where applicable, the Personal Representative of such person. Other Share Compensation Arrangement means, other than this Plan and any Options, any stock option plan, stock options, employee stock purchase plan or other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares, including but not limited to a purchase of Common Shares from treasury which is financially assisted by the Corporation by way of loan, guarantee or otherwise. B-3

225 (dd) (ee) Person means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, regulatory body or agency, government or governmental agency or entity however designated or constituted. Personal Representative means: (i) (ii) in the case of a deceased Option Holder, the executor or administrator of the deceased duly appointed by a court or public authority having jurisdiction to do so; and in the case of an Option Holder who for any reason is unable to manage his or her affairs, the person entitled by law to act on behalf of such Option Holder. (ff) (gg) (hh) (ii) (jj) Plan means this stock option plan. Regulatory Authorities means the Exchange and all securities commissions or similar securities regulatory bodies having jurisdiction over the Corporation. Related Entity has the meaning given to that term in National Instrument Prospectus and Registration Exemptions. Securities Laws means securities legislation, securities regulations and securities rules, as amended, and the instruments, forms, notices and policy documents in force from time to time that are applicable to the Corporation. Termination Date means: (i) (ii) (iii) in the case of the Option Holder s resignation from employment or the termination of the Option Holder s consulting contract by the Option Holder, the date that the Option Holder provides notice of such resignation or termination to the Corporation or any of its affiliates; or in the case of the termination of the Option Holder s employment or consulting contract by the Corporation or any of its affiliates for any reason (whether such termination is lawful or unlawful) other than death, the date that the Corporation or any of its affiliates delivers written notice of such lawful or unlawful termination of the Option Holder s employment or consulting contract to the Option Holder; or in the case of the expiry of a fixed-term employment agreement or consulting contract that is not renewed or extended, the last day of the term. 1.2 Choice of Law The Plan is established under, and the provisions of the Plan shall be subject to and interpreted and construed in accordance with, the laws of the Province of Ontario. 1.3 Headings The headings used herein are for convenience only and are not to affect the interpretation of the Plan. 2.1 Purpose ARTICLE 2 PURPOSE AND PARTICIPATION The purpose of the Plan is to provide the Corporation with a share-related mechanism to attract, retain and motivate qualified Directors, Officers, Consultants and Employees, to reward such of those Directors, Officers, Consultants and Employees as may be awarded Options under the Plan by the Board from time to time for their contributions B-4

226 toward the long term goals of the Corporation and to enable and encourage such Directors, Officers, Consultants and Employees to acquire Common Shares as long term investments. 2.2 Participation The Board shall, from time to time and in its sole discretion, determine which of the Eligible Persons, if any, shall be awarded Options. The Board shall only award an Option to a Consultant, Employee or Management Corporation Employee if the Consultant, Employee or Management Corporation Employee is a bona fide Consultant, Employee or Management Corporation Employee of the Corporation or an affiliate of the Corporation, and the Corporation shall make such a representation if required by the Regulatory Authorities. The Board may, in its sole discretion, grant the majority of the Options to insiders of the Corporation. However, in no case shall: (a) (b) (c) (d) (e) the number of Options awarded in a one-year period to any one Consultant exceed 2% of the issued Common Shares (calculated at the time of award); the number of Options awarded in a one-year period to any one individual exceed 5% of the outstanding Common Shares (calculated at the time of award), unless disinterested shareholder approval has been obtained; the aggregate number of Options awarded in a one-year period to Persons employed to provide investor relations services exceed 2% of the issued Common Shares (calculated at the time of award); the aggregate number of Options awarded to insiders under the Plan and any previously established and outstanding stock option plans or grants in a one-year period exceed 10% of the issued Common Shares (calculated at the time of award), unless disinterested shareholder approval has been obtained; or the aggregate number of Common Shares reserved for issuance to insiders upon the exercise of Options awarded under the Plan and any previously established and outstanding stock option plans or grants, exceed 10% of the issued Common Shares (calculated at the time of award), unless disinterested shareholder approval has been obtained. 2.3 Notification of Award Following the award of an Option by the Board, the Administrator shall notify the Option Holder in writing of the award and shall enclose with such notice the Option Certificate representing the Option so awarded. 2.4 Copy of Plan Each Option Holder, concurrently with the notice of the award of the Option, shall be provided with a copy of the Plan. A copy of any amendment to the Plan shall be promptly provided by the Administrator to each Option Holder. 2.5 Limitation The participation of any Eligible Person in the Plan is entirely voluntary and not obligatory and shall not be interpreted as conferring any rights or privileges, other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment, appointment or engagement to provide services by any Eligible Person. Neither the Plan nor any action taken hereunder shall interfere with the right of the Corporation or a Related Entity of the Corporation to terminate the employment, appointment or provision of services of an Option Holder at any time. The payment of any sum of money in cash in lieu of notice of termination of employment, appointment or provision of services shall not be considered as extending the period of employment, appointment or the provision of services for the purposes of the Plan. 2.6 Rights Prior to Exercise An Option Holder shall have no rights whatsoever as a shareholder in respect of any of the Common Shares such Option Holder may be entitled to purchase on exercise of an Option (including any right to receive dividends or B-5

227 other distributions therefrom or thereon) other than in respect of Common Shares in respect of which the Option Holder has exercised the option to purchase hereunder and which the Option Holder has taken up and paid for. 2.7 Taxes The Corporation shall have the power and the right to deduct or withhold, or require an Option Holder to remit to the Corporation, the required amount to satisfy federal, provincial, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan, including the grant or exercise of any Option granted under the Plan. With respect to any required withholding, the Corporation shall have the irrevocable right to, and the Option Holder consents to, the Corporation setting off any amounts required to be withheld, in whole or in part, against amounts otherwise owing by the Corporation to the Option Holder (whether arising pursuant to the Option Holder s relationship as a Director, Officer, Employee or Consultant of the Corporation or otherwise), or may make such other arrangements that are satisfactory to the Option Holder and the Corporation. In addition, the Corporation may elect, in its sole discretion, to satisfy the withholding requirement, in whole or in part, by withholding such number of Common Shares issuable upon exercise of the Options as it determines are required to be sold by the Corporation, as trustee, to satisfy any withholding obligations net of selling costs. The Option Holder consents to such sale and grants to the Corporation an irrevocable power of attorney to affect the sale of such Common Shares issuable upon exercise of the Options and acknowledges and agrees that the Corporation does not accept responsibility for the price obtained on the sale of such Common Shares issuable upon exercise of the Options. 3.1 Board to Issue Common Shares ARTICLE 3 TERMS AND CONDITIONS OF OPTIONS The Common Shares to be issued to Option Holders upon the exercise of Options shall be authorized and unissued Common Shares the issuance of which shall have been authorized by the Board. 3.2 Number of Common Shares The aggregate number of Common Shares that may be reserved for issuance pursuant to Options shall not exceed 10% of the outstanding Common Shares at the time of the granting of an Option, less the aggregate number of Common Shares then reserved for issuance pursuant to any Other Share Compensation Arrangement. If any Option expires or otherwise terminates for any reason without having been exercised in full, the number of Common Shares in respect of which the option was not exercised shall be available for the purposes of the Plan. Any exercises of Options will make new grants available under the Plan, effectively resulting in a re-loading of the number of Options available for grant under the Plan. 3.3 Term of Option Subject to such other terms or conditions that may be attached to an Option granted hereunder, an Option Holder may exercise any vested portion or portions of an Option in whole or in part at any time or from time to time during the Exercise Period. Any Option or part thereof not exercised within the Exercise Period shall terminate and become null, void and of no effect as of 5:00 p.m. local time in Toronto, Ontario on the Expiry Date. 3.4 Termination Subject to subparagraphs (a) to (e) below, the Expiry Date of an Option shall be the date fixed by the Board at the time the particular Option is awarded (the Fixed Expiry Date ), provided that the Expiry Date shall be no later than the date that is 10 years following the Award Date of such Option: (a) Death If the Option Holder dies while his or her Option is outstanding, then unless otherwise provided for in the Option Certificate, the following shall apply. The Expiry Date for any vested portion or portions of the Option shall be the earlier of the Fixed Expiry Date and the date that is one year after the date of the Option Holder s death. The Expiry B-6

228 Date for any unvested portion of the Option shall be the date of the Option Holder s death. The right to purchase Common Shares under an Option shall not vest after the date of the Option Holder s death. (b) Ceasing to be a Director or Officer If the Option Holder holds an Option as a Director or Officer and the Option Holder ceases to be a Director or Officer (other than by reason of death), then the following shall apply. The Expiry Date for any vested portion or portions of the Option shall be the earlier of the Fixed Expiry Date and the date that is 90 days after the Option Holder ceases to be a Director and Officer (the Expiry Period ). Notwithstanding the foregoing, if the Option Holder ceases to be a Director or Officer for Cause, the Expiry Date shall be the date that the Option Holder ceases to be a Director or Officer. The Expiry Date for any unvested portion of the Option shall be the date that the Option Holder ceases to be a Director or Officer. The right to purchase Common Shares under an Option shall not vest after the date that the Option Holder ceases to be a Director or Officer. (c) Ceasing to be an Employee or Consultant If the Option Holder holds an Option as an Employee or Consultant and the Option Holder ceases to be an Employee or Consultant (other than by reason of death), then the following shall apply. The Expiry Date for any vested portion or portions of the Option shall be the earlier of the Fixed Expiry Date and the date that is 90 days after the Option Holders ceases to be an Employee or Consultant. Notwithstanding the foregoing, if the Option Holder ceases to be an Employee or Consultant for Cause, the Expiry Date shall be the Termination Date. The Expiry Date for any unvested portion of the Option shall be the Termination Date. The right to purchase Common Shares under an Option shall not vest after the Termination Date. For greater certainty, if the Corporation gives an Employee or Consultant working notice of termination of employment or the consulting contract or payment in lieu of notice or if the Corporation wrongfully or constructively dismisses the Employee or Consultant, no vesting shall occur during the working notice period or deemed notice period that the Employee or Consultant receives or should have received. The Expiry Period shall commence on the first day of such working notice period or deemed notice period. (d) Change of Control In the event of a Change of Control or impending Change of Control, the Board may, subject to any necessary prior written approval of the Regulatory Authorities, in its sole discretion, deal with outstanding Options in the manner it deems fair and reasonable in light of the circumstances. Without limiting the generality of the foregoing, the Board may, without any action or consent required on the part of any Option Holder: (i) (ii) (iii) deliver a notice to the Option Holder advising the Option Holder that the unvested portion of the Option held by the Option Holder, if any, shall immediately vest; deliver a notice to an Option Holder advising the Option Holder that the Expiry Date for any vested portion or portions of the Option shall be the earlier of the Fixed Expiry Date and the day that is 10 days following the date of the notice and the Expiry Date for any unvested portion of the Option shall be the date of the notice; or take such other actions, and combinations of the foregoing actions, as it deems fair and reasonable under the circumstances. (e) Black-out Period If an Option expires during, or within two business days after the end of, a Black-Out Period, then, notwithstanding any other provision of the Plan, the Option shall expire ten business days after the Black-Out Period is lifted by the Corporation. For the purposes hereof, a Black-Out Period means that period during which a trading black-out period is imposed by the Corporation, pursuant to its insider trading policies or otherwise, to restrict trades in the Corporation s securities by an Option Holder. The foregoing subparagraphs (b) and (c) shall only apply once an Option Holder ceases to fall into any of the categories of Eligible Persons. The Board and the Administrator shall look to which of the definitions of Employee, Director, Officer or Consultant the Option Holder met immediately prior to the Option Holder ceasing to be an B-7

229 Eligible Person to determine which of subparagraphs (b) or (c) shall apply. If the Option Holder met more than one definition, then the following shall apply. If the Option Holder was an Employee or Consultant, then the Option Holder shall be deemed to hold his or her Option as an Employee or Consultant regardless of whether the Option Holder was also a Director or Officer. 3.5 Exercise Price The price at which an Option Holder may purchase a Common Share upon the exercise of an Option shall be as set forth in the Option Certificate issued in respect of such Option and in any event shall not be less than the Discounted Market Price of the Common Shares as of the Award Date. 3.6 Additional Terms Subject to all applicable Securities Laws and the rules and policies of all applicable Regulatory Authorities, the Board may attach other terms and conditions to the award of a particular Option, such terms and conditions to be referred to in a schedule attached to the Option Certificate. These terms and conditions may include, but are not necessarily limited to, providing that an Option or a portion or portions of an Option expire on a certain date, after certain periods of time or upon the occurrence of certain events other than as provided for herein, provided that no Option shall expire more than ten years after the Award Date. 3.7 Assignment of Options Options may not be assigned or transferred, provided however that the Personal Representative of an Option Holder may, to the extent permitted by paragraph 4.1, exercise the Option within the Exercise Period. 3.8 Adjustments If: (a) (b) (c) (d) (e) the Common Shares are changed into or exchanged for a different number or kind of Shares of the Corporation or securities of another corporation, whether through an arrangement, amalgamation or other similar procedure or otherwise, or a share recapitalization, subdivision or consolidation; a dividend is declared upon the Common Shares, payable in Common Shares (other than in lieu of dividends paid in the ordinary course); the Corporation distributes by way of a dividend, or otherwise, to all or substantially all holders of Common Shares, property, evidences of indebtedness or Shares or other securities of the Corporation (other than Common Shares) or rights, options or warrants to acquire Common Shares or securities convertible into or exchangeable for Common Shares or other securities or property of the Corporation, other than as a dividend in the ordinary course; or there is any other change that the Board, in its sole discretion, determines equitably requires an adjustment to be made; then, subject to any required action by the shareholders of the Corporation and any necessary approval of the Regulatory Authorities, any term that the Board determines requires adjustment (including the number of Common Shares subject to each outstanding Option and the number of Common Shares that have been authorized for issuance under the Plan but as to which no Options have yet been granted or that have again become available for the purposes of the Plan, the Exercise Price of each outstanding Option, as well as any other terms that the Board determines require adjustment) shall be adjusted by the Board in the manner the Board deems appropriate and its determination shall be final, binding and conclusive. Except as the Board determines, no issuance by the Corporation of Common Shares of any class, or securities convertible into Common Shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Common Shares subject to an Option. No fractional shares shall be issued upon the exercise of an Option and accordingly, if as a result of the adjustment, an Option Holder would become entitled to a fractional Common Share, such Option B-8

230 Holder shall have the right to purchase only the next lowest whole number of Common Shares and no payment or other adjustment shall be made with respect to the fractional interest so disregarded. 3.9 Vesting The Board, subject to the rules or policies of the Exchange, may determine and impose terms upon which an Option shall become vested and exercisable. Unless otherwise specified by the Board at the time of the Option award, and subject to such other limits as may be imposed by Exchange rules or policies from time to time, all Options granted under the Plan shall vest and become exercisable in full upon grant. Notwithstanding the foregoing, unless otherwise permitted pursuant to Exchange policies, Options awarded to Consultants performing investor relations activities must vest in stages over 12 months with no more than onequarter vesting in any three month period Personal Information Form and Monitoring of Trading An Option Holder who becomes a new insider of the Corporation or who is undertaking investor relations activities must file a Personal Information Form or such other documents as may be required by the Regulatory Authorities. An Option Holder who performs investor relations activities must comply with all procedures established by the Board or the Regulatory Authorities to monitor the Option Holder s trading in the securities of the Corporation. 4.1 Exercise of Option ARTICLE 4 EXERCISE OF OPTION An Option may be exercised only by the Option Holder or the Personal Representative of the Option Holder. An Option Holder or the Personal Representative of the Option Holder may exercise the vested portion or portions of an Option in whole or in part at any time or from time to time during the Exercise Period up to 5:00 p.m. local time in Toronto, Ontario on the Expiry Date by delivering to the Administrator an Exercise Notice, the applicable Option Certificate and a certified cheque or bank draft payable to the Corporation in an amount equal to the aggregate Exercise Price of the Common Shares to be purchased pursuant to the exercise of the Option. 4.2 Issue of Share Certificates As soon as practicable following the receipt of the Exercise Notice, the Administrator shall cause to be delivered to the Option Holder a certificate for the Common Shares purchased by the Option Holder. If the number of Common Shares in respect of which the Option was exercised is less than the number of Common Shares subject to the Option Certificate surrendered, the Administrator shall forward a new Option Certificate to the Option Holder concurrently with delivery of the share certificate for the balance of the Common Shares available under the Option. 4.3 Condition of Issue The Options and the issue of Common Shares by the Corporation pursuant to the exercise of Options are subject to the terms and conditions of the Plan and compliance with the rules and policies of all applicable Regulatory Authorities with respect to the granting of such Options and the issuance and distribution of such Common Shares, and to all applicable Securities Laws. The Option Holder agrees to comply with all such laws, regulations, rules and policies and agrees to furnish to the Corporation any information, reports or undertakings required to comply with, and to fully cooperate with, the Corporation in complying with such laws, regulations, rules and policies. 4.4 Taxes The Board and the Corporation may take all such measures as they deem appropriate to ensure that the Corporation s obligations under the withholding provisions under income tax laws applicable to the Corporation and other provisions of applicable laws are satisfied with respect to the issuance of Common Shares pursuant to the Plan or the grant or exercise of Options under the Plan. Issuance of Common Shares or delivery of share certificates for B-9

231 Common Shares purchased pursuant to the Plan may be delayed, at the discretion of the Board, until the Board is satisfied that the applicable requirements of income tax laws and other applicable laws have been met. 5.1 Administration ARTICLE 5 ADMINISTRATION The Plan shall be administered by the Board. The Board may make, amend and repeal at any time and from time to time such regulations not inconsistent with the Plan as it may deem necessary or advisable for the proper administration and operation of the Plan and such regulations shall form part of the Plan. The Board may delegate to the Administrator or any director, officer or employee of the Corporation such administrative duties and powers as it may see fit. 5.2 Interpretation The interpretation by the Board of any of the provisions of the Plan and any determination by it pursuant thereto shall be final and conclusive and shall not be subject to any dispute by any Option Holder. No member of the Board or any person acting pursuant to authority delegated by it hereunder shall be liable for any action or determination in connection with the Plan made or taken in good faith and each member of the Board and each such person shall be entitled to indemnification with respect to any such action or determination in the manner provided for by the Corporation. 6.1 Amendments ARTICLE 6 AMENDMENT, TERMINATION AND NOTICE The Board may, subject to the approval of any regulatory authority whose approval is required and the approval of shareholders where required by such regulatory authority, amend the Plan or any Option at any time. Without limiting the generality of the foregoing, the Board is specifically authorized to amend the terms of the Plan or any Option without obtaining the approval of shareholders in the following circumstances, subject to any limitations that may be prescribed by the rules or policies of the Exchange from time to time: (a) (b) (c) (d) (e) (f) (g) (h) amendments of a housekeeping nature including, but not limited to, of a clerical, grammatical or typographical nature; to correct any defect, supply any information or reconcile any inconsistency in the Plan in such manner and to such extent as shall be deemed necessary or advisable to carry out the purposes of the Plan; a change to the vesting provisions of any Option or the Plan; amendments to reflect any changes in requirements of any Regulatory Authority to which the Corporation is subject; a change to the termination provisions of an Option which does not result in an extension beyond the original term of the Option; in the case of any Option, the substitutions and/or adjustments contemplated under section 3.8 of this Plan; and a change to the class of Eligible Persons that may participate under the Plan, provided that, in the case of any Option, no such amendment may, without the consent of the Option Holder, materially decrease the rights or benefits accruing to such Option Holder or materially increase the obligations of such Option Holder. Notwithstanding the foregoing, shareholder approval shall be required in respect of amendments to: B-10

232 (i) (j) (k) (l) (m) (n) (o) the definition of Eligible Persons hereunder; the maximum number or percentage of Common Shares (or other securities) issuable under the Plan; the limitations under the Plan on the number of Options that may be granted to any one Person or any category of Persons; the method for determining the exercise price of Options; the maximum term of Options; the expiry and termination provisions applicable to Options; and any other provision that is required to be approved by shareholders under applicable law (including, without limitation, the rules, regulations and policies of the Exchange). Where shareholder approval is sought for amendments under subsections (b) or (c) above, the votes attached to Common Shares held directly or indirectly by Insiders benefiting from the amendment will be excluded. 6.2 Amendment Subject to Approval If the amendment of an Option requires regulatory or shareholder approval, such amendment may be made prior to such approvals being given, but no such amended Options may be exercised unless and until such approvals are given. 6.3 Approvals The Plan and any amendments hereto are, and the award of any Option is, subject to all necessary or required approvals of the applicable Regulatory Authorities and shareholders. 6.4 Termination The Board may terminate the Plan at any time provided that such termination shall not alter the terms or conditions of any Option or impair any right of any Option Holder pursuant to any Option awarded prior to the date of such termination which shall continue to be governed by the provisions of the Plan. 6.5 Agreement The Corporation and every Option awarded hereunder shall be bound by and subject to the terms and conditions of the Plan. By accepting an Option granted hereunder, the Option Holder has expressly agreed with the Corporation to be bound by the terms and conditions of the Plan. 6.6 Notice Any notice or other communication contemplated under the Plan to be given by the Corporation to an Option Holder shall be given by the Corporation delivering or faxing the notice to the Option Holder at the last address for the Option Holder in the Corporation s records. Any such notice shall be deemed to have been given on the date on which it was delivered, or in the case of fax, the next business day after transmission. An Option Holder may, at any time, advise the Corporation of a change in the Option Holder s address or fax number. B-11

233 APPENDIX A BONANZA BLUE CORP. STOCK OPTION PLAN OPTION CERTIFICATE This Certificate is issued pursuant to the provisions of the Bonanza Blue Corp. (the Corporation ) Stock Option Plan (the Plan ) and evidences that is the holder (the Option Holder ) of an option (the Option ) to purchase up to Common shares (the Common Shares ) in the capital stock of the Corporation at a purchase price of $ per Common Share. Subject to the provisions of the Plan: (a) (b) (c) the Award Date of the Option is ; the Fixed Expiry Date of the Option is ; and the Expiry Period is. The vested portion or portions of the Option may be exercised at any time and from time to time from and including the Award Date through to 5:00 p.m. local time in Toronto, Ontario on the Expiry Date by delivering to the Administrator of the Plan an Exercise Notice, in the form attached, together with this Certificate and a certified cheque or bank draft payable to the Corporation in an amount equal to the aggregate of the Exercise Price of the Common Shares in respect of which the Option is being exercised. This Certificate and the Option evidenced hereby is not assignable, transferable or negotiable and is subject to the detailed terms and conditions contained in the Plan, the terms and conditions of which the Option Holder hereby expressly agrees with the Corporation to be bound by. This Certificate is issued for convenience only and in the case of any dispute with regard to any matter in respect hereof, the provisions of the Plan and the records of the Corporation shall prevail. The Option is also subject to the terms and conditions contained in the schedules, if any, attached hereto. All terms not otherwise defined in this Certificate shall have the meanings given to them under the Plan. Dated this day of. BONANZA BLUE CORP. Per: Administrator, Stock Option Plan B-12

234 APPENDIX B BONANZA BLUE CORP. STOCK OPTION PLAN EXERCISE NOTICE TO: The Administrator, Stock Option Plan Bonanza Blue Corp. (the Corporation ) The undersigned hereby irrevocably gives notice, pursuant to the Corporation s Stock Option Plan (the Plan ), of the exercise of the Option to acquire and hereby subscribes for (cross out inapplicable item): (a) (b) all of the Common Shares; or of the Common Shares; which are the subject of the Option Certificate attached hereto. The undersigned tenders herewith a certified cheque or bank draft (circle one) payable to the Corporation in an amount equal to the aggregate Exercise Price of the aforesaid Common Shares exercised and directs the Corporation to issue the certificate evidencing said Common Shares in the name of the undersigned to be mailed to the undersigned at the following address: By executing this Exercise Notice, the undersigned hereby confirms that the undersigned has read the Plan and agrees to be bound by the provisions of the Plan. All terms not otherwise defined in this Exercise Notice shall have the meanings given to them under the Plan or the attached Option Certificate. DATED the day of,. Signature of Option Holder Legal* B-13

235 SCHEDULE C SHARE UNIT PLAN BONANZA BLUE CORP. ARTICLE 1 INTRODUCTION Purpose of Plan This Plan provides for the granting of Share Unit Awards and payment in respect thereof through the issuance of one Share from treasury of the Corporation per Share Unit (subject to adjustments), for services rendered, for the purpose of advancing the interests of the Participants. 1.1 Definitions (A) (B) (C) (D) Affiliate means any Corporation that is an affiliate of the Corporation as defined in National Instrument Prospectus and Registration Exemptions, as may be amended from time to time. Associate with any person or company, is as defined in the Securities Act, as may be amended from time to time. Board means the board of directors of the Corporation, or any committee of the board of directors to which the duties of the board of directors hereunder are delegated. Change of Control means the occurrence of any one or more of the following events: (i) (ii) (iii) (iv) (v) (vi) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its Affiliates and another corporation or other entity, as a result of which the holders of Shares immediately prior to the completion of the transaction hold less than 50% of the outstanding shares of the successor corporation immediately after completion of the transaction; the sale, lease, exchange or other disposition, in a single transaction or a series of related transactions, of all or substantially all of the assets, rights or properties of the Corporation and its Subsidiaries on a consolidated basis to any other person or entity, other than transactions among the Corporation and its Subsidiaries; a resolution is adopted to wind-up, dissolve or liquidate the Corporation; any person, entity or group of persons or entities acting jointly or in concert (the Acquiror ) acquires, or acquires control (including, without limitation, the power to vote or direct the voting) of, voting securities of the Corporation which, when added to the voting securities owned of record or beneficially by the Acquiror or which the Acquiror has the right to vote or in respect of which the Acquiror has the right to direct the voting, would entitle the Acquiror and/or Associates and/or Affiliates of the Acquiror to cast or direct the casting of 50% or more of the votes attached to all of the Corporation s outstanding voting securities which may be cast to elect Directors of the Corporation or the successor corporation (regardless of whether a meeting has been called to elect Directors); as a result of or in connection with: (A) a contested election of Directors; or (B) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisition involving the Corporation or any of its Affiliates and another corporation or other entity (a Transaction ), fewer than 50% of the Directors of the Corporation are persons who were Directors of the Corporation immediately prior to such Transaction; or the Board adopts a resolution to the effect that a Change of Control as defined herein has occurred or is imminent. C-1 Legal*

236 For the purposes of the foregoing definition of Change of Control, voting securities means Shares and any other shares entitled to vote for the election of Directors and shall include any security, whether or not issued by the Corporation, which are not shares entitled to vote for the election of Directors but are convertible into or exchangeable for shares which are entitled to vote for the election of Directors, including any options or rights to purchase such shares or securities. (E) (F) Committee means the Board or, if the Board so determines in accordance with Section 2.2 of the Plan, any committee of Directors of the Corporation authorized to administer the Plan from time to time. Consultant means, in relation to the Corporation, an individual or a Consultant Company, other than an Employee, Director or Officer of the Corporation, that: (i) (ii) (iii) (iv) is engaged to provide on a continuous bona fide basis, consulting, technical, management or other services to the Corporation or to an Affiliate of the Corporation, other than services provided in relation to a distribution; provides the services under a written contract between the Corporation or the Affiliate and the individual or the Consultant Company; in the reasonable opinion of the Corporation, spends or will spend a significant amount of time and attention on the affairs and business of the Corporation or an Affiliate of the Corporation; and has a relationship with the Corporation or an Affiliate of the Corporation that enables the individual to be knowledgeable about the business and affairs of the Corporation. (G) (H) (I) (J) (K) (L) (M) (N) (O) (P) Consultant Company means for an individual Consultant, a company or partnership of which the individual is an employee, shareholder or partner. Corporation means Bonanza Blue Corp. and includes any successor corporation thereof. Deferred Payment Date for a Participant means the date after the Vesting Date which is the earlier of (i) the date to which the Participant has elected to defer receipt of Shares in accordance with Section 2.5 of this Plan; and (ii) the date of the Participant s Retirement, Resignation, Termination with Cause or Termination Without Cause or a Change of Control of the Corporation. Director means a director of the Corporation or any of its Subsidiaries. Disability means where the Participant: (i) is to a substantial degree unable, due to illness, disease, affliction, mental or physical disability or similar cause, to fulfill his or her obligations as an officer or employee of the Corporation either for any consecutive 12 month period or for any period of 18 months (whether or not consecutive) in any consecutive 24 month period; or (ii) is declared by a court of competent jurisdiction to be mentally incompetent or incapable of managing his affairs. Employee means an individual who is a bona fide employee of the Corporation or of any Subsidiary of the Corporation and includes a bona fide permanent part-time employee of the Corporation or any Subsidiary of the Corporation. Grant Date means the effective date that a Share Unit is awarded to a Participant under this Plan, as evidenced by the Share Unit grant letter. Insider has the meaning given to such term in the Securities Act (Ontario). Management Company Employee means an individual who is a bona fide employee of a company providing management services to the Corporation, which are required for the ongoing successful operation of the business enterprise of the Corporation. Market Price as at any date in respect of the Shares shall be the closing price of the Shares on the principal stock exchange on which such Shares are traded, on the trading day that the Share Unit is awarded. In the event that the Shares are not then listed and posted for trading on a stock C-2

237 exchange, the Market Price shall be the fair market value of such Shares as determined by the Committee in its sole discretion. (Q) (R) (S) (T) (U) (V) (W) (X) (Y) (Z) (AA) (BB) (CC) (DD) (EE) (FF) Officer means a senior officer of the Corporation or any of its Subsidiaries. Participant means an Employee, Director or Officer of the Corporation or any of its Subsidiaries, or an Affiliate, Consultant or Management Company Employee to whom Share Units are granted hereunder unless otherwise determined by the Committee, and, except in relation to a Consultant Company, includes a company that is wholly-owned by such persons. Plan means this Share Unit Plan, as may be amended from time to time. Qualifying Participant means a Participant (i) who is a resident of Canada for the purposes of the Income Tax Act (Canada) or (ii) who is designated as a Qualifying Participant in the Participant s Share Unit grant letter, provided that the Participant is not a U.S. Taxpayer. Resignation means the cessation of employment (as an Officer or Employee) of the Participant with the Corporation or any of its Subsidiaries or Affiliates as a result of resignation, other than as a result of Retirement. Retirement means the Participant ceasing to be an Employee or Officer of the Corporation or any of its Subsidiaries or Affiliates in accordance with the retirement policies of the Corporation or any of its Subsidiaries or Affiliates, if any, or such other time as the Corporation may agree with the Participant. Securities Act means the Securities Act, R.S.O. 1990, Chapter S.5, as amended from time to time. Share Unit means a unit credited by means of an entry on the books of the Corporation to a Participant, representing the right to receive one Share (subject to adjustments) issued from treasury. Share Unit Award means an award of Share Units under this Plan to a Participant. Shares means the common shares in the capital of the Corporation. Stock Exchange means the stock exchange on which the Shares are listed, or if the Shares are not listed on any stock exchange, then on the over-the-counter market. Subsidiary means a corporation which is a subsidiary of the Corporation defined under the Securities Act. Termination With Cause means the termination of employment (as an Officer or Employee) of the Participant with cause by the Corporation or any of its Subsidiaries or Affiliates (and does not include Resignation or Retirement). Termination Without Cause means the termination of employment (as an Officer or Employee) of the Participant without cause by the Corporation or any of its Subsidiaries or Affiliates (and does not include Resignation or Retirement) and, in the case of an Officer, includes the removal of or failure to reappoint the Participant as an Officer of the Corporation or any of its Subsidiaries or Affiliates. U.S. Taxpayer means a Participant who is a U.S. citizen, U.S. permanent resident or U.S. tax resident or a Participant for whom a benefit under this Plan would otherwise be subject to U.S. taxation under the U.S. Internal Revenue Code of 1986, as amended, and the rulings and regulations in effect thereunder. Vesting Date means the date that a Share Unit is eligible for payment, as determined by the Committee in its sole discretion in accordance with the Plan and as outlined in the Share Unit grant letter issued to the Participant. C-3

238 1.2 The headings of all articles, sections and paragraphs in this Plan are inserted for convenience of reference only and shall not affect the construction or interpretation of this Plan. 1.3 Whenever the singular or masculine are used in this Plan, the same shall be construed as being the plural or feminine or neuter or vice versa where the context so requires. 1.4 The words herein, hereby, hereunder, hereof and similar expressions mean or refer to this Plan as a whole and not to any particular article, section, paragraph or other part hereof. 1.5 Unless otherwise specifically provided, all references to dollar amounts in this Plan are references to lawful money of Canada. 2.1 Administration ARTICLE 2 ADMINISTRATION OF THE PLAN This Plan shall be administered by the Committee and the Committee shall have full authority to administer this Plan, including the authority to interpret and construe any provision of this Plan and to adopt, amend and rescind such rules and regulations for administering this Plan as the Committee may deem necessary in order to comply with the requirements of this Plan. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and conclusive and shall be binding on the Participants and the Corporation. No member of the Committee shall be personally liable for any action taken or determination or interpretation made in good faith in connection with this Plan and all members of the Committee shall, in addition to their rights as Directors of the Corporation, be fully protected, indemnified and held harmless by the Corporation with respect to any such action taken or determination or interpretation made in good faith. The appropriate Officers of the Corporation are hereby authorized and empowered to do all things and execute and deliver all instruments, undertakings and applications and writings as they, in their absolute discretion, consider necessary for the implementation of this Plan and of the rules and regulations established for administering this Plan. All costs incurred in connection with this Plan shall be for the account of the Corporation. Notwithstanding anything to the contrary in the Plan, the provisions of Schedule A shall apply to Share Unit Awards granted to a Participant who is a U.S. Taxpayer. 2.2 Delegation to Committee All of the powers exercisable hereunder by the Board may, to the extent permitted by applicable law and as determined by resolution of the Board, be exercised by a committee of the Board, including the Committee. 2.3 Register The Corporation shall maintain a register in which it shall record the name and address of each Participant and the number of Share Units (and their corresponding key conditions and Vesting Date) awarded to each Participant. 2.4 Participant Determination The Committee shall from time to time determine the Participants who may participate in this Plan. The Committee shall from time to time, and subject to any applicable blackout period, determine the Participants to whom Share Units shall be granted and the number, provisions and restrictions with respect to such grant, all such determinations to be made in accordance with the terms and conditions of this Plan. 2.5 Deferred Payment Date A Qualifying Participant may elect to defer to receive all or any part of their Shares to a date after the Vesting Date until a Deferred Payment Date. Qualifying Participants who elect to set a Deferred Payment Date must give the Corporation written notice of the Deferred Payment Date not later than five (5) days prior to the Vesting Date. For certainty, Qualifying Participants shall not be permitted to give any such notice after the day which is five (5) days prior to the Vesting Date and a notice once given may not be changed or revoked. C-4

239 In the event of the Retirement, Resignation, Termination with Cause or Termination Without Cause of the Qualifying Participant or a Change of Control following the Vesting Date and prior to the Deferred Payment Date, the Qualifying Participant shall be entitled to receive and the Corporation shall issue forthwith the applicable Shares in satisfaction of the Share Units then held by the Qualifying Participant that have vested. 3.1 General ARTICLE 3 SHARE UNIT AWARDS This Plan is hereby established for the Employees, Directors and Officers of the Corporation and any of its Subsidiaries and Affiliates, and for individuals retained as a Consultant to the Corporation or Management Company Employees, as may be determined by the Committee. 3.2 Share Unit Awards A Share Unit Award and any applicable vesting conditions may be made to a particular Participant as determined in the sole and absolute discretion of the Committee. The number of Share Units awarded will be determined based on the Market Price and will be credited to the Participant s account, effective as of the Grant Date. The Share Units will be settled by way of the issuance of Shares from treasury as soon as practicable following the Vesting Date or, if applicable, the Deferred Payment Date, unless otherwise provided under this Plan. For the avoidance of doubt, a Participant will have no right or entitlement whatsoever to receive any Shares until the Vesting Date or, if applicable, the Deferred Payment Date. 3.3 Dividends In the event a cash dividend is paid to shareholders of the Corporation on the Shares while a Share Unit is outstanding, each Participant will be credited with additional Share Units reflective of the cash dividends to such Participant. In such case, the number of additional Share Units will be equal to the aggregate amount of dividends that would have been paid to the Participant if the Share Units in the Participant s account on the record date had been Shares divided by the Market Price of a Share on the date on which dividends were paid by the Corporation. If the foregoing shall result in a fractional Share Unit, the fraction shall be disregarded. The additional Share Units will vest and be settled on the Participant s Vesting Date or, if applicable, the Deferred Payment Date of the particular Share Unit Award to which the additional Share Units relate. 3.4 Change of Control In the event of a Change of Control, all unvested Share Units outstanding shall automatically and immediately vest on the date of such Change of Control. Upon a Change of Control, Participants shall not be treated any more favourably than shareholders of the Corporation with respect to the consideration that the Participants would be entitled to receive for their Shares. 3.5 Death or Disability of Participant Subject to the Board determining otherwise, in the event of: (a) (b) the death of a Participant, any unvested Share Units held by such Participant will automatically vest on the date of death of such Participant and the Shares underlying all Share Units held by such Participant will be issued to the Participant s estate as soon as reasonably practical thereafter; or the Disability of a Participant (as may be determined in accordance with the policies, if any, or general practices of the Corporation or any Subsidiary), any unvested Share Units held by such Participant will automatically vest on the date on which the Participant is determined to be totally disabled and the Shares underlying the Share Units held will be issued to the Participant as soon as reasonably practical thereafter. C-5

240 3.6 Retirement Subject to the Board determining otherwise, in the event of Retirement of a Participant, any unvested Share Units held by such Participant will automatically vest on the date of Retirement and the Shares underlying such Share Units will be issued to the Participant as soon as reasonably practical thereafter. 3.7 Termination Without Cause (a) (b) Subject to the Board determining otherwise, in the event of Termination Without Cause of a Participant, any unvested Share Units held by such Participant that are not subject to Section 3.7(b) as a result of not being subject to performance vesting criteria, will automatically vest on the date of Termination Without Cause and the Shares underlying such Share Units will be issued to the Participant as soon as reasonably practical thereafter. Subject to the Board determining otherwise, in the event of Termination Without Cause of a Participant, any unvested Share Units with performance vesting criteria held by such Participant will vest in accordance with their normal vesting schedule unless otherwise stipulated in the Participant s Share Unit grant letter. For greater certainty, the date of Termination Without Cause shall mean the date the Participant ceases providing services to the Corporation or an Affiliate regardless of the reasons therefore and, for greater clarity, such date shall be as specified in the notice of termination from the Corporation or an Affiliate and shall not include or be deemed to include any period of notice of termination to which the Participant may be entitled under contract, statute, common law or otherwise. 3.8 Termination With Cause or Resignation In the event of Termination With Cause or the Resignation of a Participant, all of the Participant s Share Units shall become void and the Participant shall have no entitlement and will forfeit any rights to any issuance of Shares under this Plan, except as may otherwise be stipulated in the Participant s Share Unit grant letter or as may otherwise be determined by the Committee in its sole and absolute discretion. Share Units that have vested but that are subject to a Participant s election to set a Deferred Payment Date shall be issued forthwith following the Termination with Cause or the Resignation of the Participant. 3.9 Share Unit Grant Letter Each grant of a Share Unit under this Plan shall be evidenced by a confirmation Share Unit grant letter issued to the Participant by the Corporation. Such Share Unit grant letter shall be subject to all applicable terms and conditions of this Plan and may include any other terms and conditions which are not inconsistent with this Plan and which the Committee deems appropriate for inclusion in a Share Unit grant letter. The provisions of the various Share Unit grant letters issued under this Plan need not be identical Maximum Number of Shares The maximum number of Shares made available for issuance from treasury under this Plan or any other security based compensation arrangement (pre-existing or otherwise), subject to adjustments pursuant to Section 4.8, shall not exceed 10% of the then issued and outstanding Shares (including Shares underlying outstanding Share Units). Any Shares subject to a Share Unit which has been cancelled or terminated in accordance with the terms of the Plan without settlement will again be available for the grant of a Share Unit under this Plan. The grant of Share Units under the Plan is subject to a restriction such that the number of Shares: (i) issued to Insiders of the Corporation within any one (1) year period, and (ii) issuable to Insiders of the Corporation, at any time, under the Plan, or when combined with all of the Corporation s other security based compensation arrangements, shall not exceed 10% of the total issued and outstanding Shares, respectively. For greater certainty, the number of Shares outstanding shall mean the number of Shares outstanding on a non-diluted basis on the date immediately prior to the proposed Grant Date. A Share Unit Award granted to a Participant for services rendered will entitle the Participant, subject to the Participant s satisfaction of any conditions, vesting periods, restrictions or limitations imposed pursuant to this Plan or as set out in the Share Unit grant letter, to receive payment following the Participant s Vesting Date or, if applicable, the Deferred Payment Date through the issuance of Shares from treasury. C-6

241 The Corporation shall have the power to satisfy any Share Unit obligation of the Corporation by the issuance of Shares from treasury at a rate of one Share for each Share Unit, subject to adjustment Settlement of Share Units For greater certainty, notwithstanding any provision of this Plan, the Corporation shall not have the right to settle any Share Units for non-share consideration. 4.1 Effectiveness ARTICLE 4 GENERAL The Plan shall be effective following the approval of the Board by ordinary resolution, subject to the provisions of Section 4.2 hereof. This Plan shall remain in effect until it is terminated by the Committee or the Board. 4.2 Discontinuance of Plan The Committee or the Board, as the case may be, may discontinue this Plan at any time in its sole discretion, and without shareholder approval, provided that such discontinuance may not, without the consent of the Participant, in any manner adversely affect the Participant s rights under any Share Unit granted under this Plan. In the event this Plan is discontinued by the Committee or the Board, the balance of outstanding Share Units shall be maintained until the earlier of the Vesting Date for, or the Termination with Cause, Termination Without Cause, Resignation, Retirement, death or Disability of, each Participant as provided for under this Plan. 4.3 Non-Transferability Except pursuant to Section 3.5(a) or by a will or by the laws of descent and distribution, no Share Unit and no other right or interest of a Participant (excluding, for greater certainty, Shares previously issued to a Participant in accordance with this Plan) is assignable or transferable. 4.4 Income Taxes The Corporation or any of its Subsidiaries or Affiliates may take such steps as are considered necessary or appropriate for the withholding of any taxes or other source deduction which the Corporation or any of its Subsidiaries or Affiliates is required by any law or regulation of any governmental authority whatsoever to withhold in connection with the issuance of Shares pursuant to this Plan, including a sale on behalf of a Participant of a sufficient number of Shares to fund such withholding obligation or withholding from other remuneration owing to the Participant. 4.5 Amendments to the Plan The Committee may from time to time in its sole discretion, and without shareholder approval, amend, modify and change the provisions of this Plan and any Share Unit grant letter, in connection with (without limitation): (a) (b) (c) (d) amendments of a housekeeping nature; the addition or a change to any vesting provisions of a Share Unit; changes to the termination provisions of a Share Unit or the Plan; and amendments to reflect changes to applicable securities or tax laws. However, other than as set out above, any amendment, modification or change to the provisions of this Plan which would: (a) (b) materially increase the benefits to the holder of any Share Units who is an Insider to the material detriment of the Corporation and its shareholders; increase the number of Shares or maximum percentage of Shares which may be issued pursuant to this Plan (other than by virtue of adjustments pursuant to Section 4.9 of this Plan); C-7

242 (c) (d) (e) permit Share Units to be transferred other than for normal estate settlement purposes; remove or exceed the Insider participation limits; materially modify the eligibility requirements for participation in this Plan; or (f) modify the amending provisions of the Plan set forth in this Section 4.5, shall only be effective on such amendment, modification or change being approved by the shareholders of the Corporation. In addition, any such amendment, modification or change of any provision of this Plan shall be subject to the approval, if required, by any Stock Exchange having jurisdiction over the securities of the Corporation. 4.6 Participant Rights No holder of any Share Units shall have any rights as a shareholder of the Corporation. Except as otherwise specified herein, no holder of any Share Units shall be entitled to receive, and no adjustment is required to be made for, any dividends, distributions or any other rights declared for shareholders of the Corporation. 4.7 No Right to Continued Employment or Service Nothing in this Plan shall confer on any Participant the right to continue as an Employee or Officer of the Corporation or any of its Subsidiaries or Affiliates, as the case may be, or interfere with the right of the Corporation or any of its Subsidiaries or Affiliates, as applicable, to remove such Officer and/or Employee. 4.8 Adjustments In the event there is any change in the Shares, whether by reason of a stock dividend, consolidation, subdivision, reclassification or otherwise, an appropriate adjustment shall be made to outstanding Share Units by the Committee, in its sole discretion, to reflect such changes. If the foregoing adjustment shall result in a fractional Share, the fraction shall be disregarded. All such adjustments shall be conclusive, final and binding for all purposes of this Plan. 4.9 Effect of Take-Over Bid If a bona fide offer (the Offer ) for Shares is made to shareholders generally (or to a class of shareholders that would include the Participant), which Offer, if accepted in whole or in part, would result in the offeror (the Offeror ) exercising control over the Corporation within the meaning of the Securities Act, then the Corporation shall, as soon as practicable following receipt of the Offer, notify each Participant of the full particulars of the Offer. The Board will have the sole discretion to amend, abridge or otherwise eliminate any vesting schedule related to each Participant s Share Units so that notwithstanding the other terms of this Plan, the underlying Shares may be conditionally issued to each Participant holding Share Units so (and only so) as to permit the Participant to tender the Shares received in connection with the Share Units pursuant to the Offer. If: (a) (b) (c) the Offer is not complied with within the time specified therein; the Participant does not tender the Shares underlying the Share Units pursuant to the Offer; or all of the Shares tendered by the Participant pursuant to the Offer are not taken up and paid for by the Offeror, then at the discretion of the Committee or the Board, the Share Units shall be deemed not to have been settled and the Shares or, in the case of clause (c) above, the Shares that are not taken up and paid for, shall be deemed not to have been issued and will be reinstated as authorized but unissued Shares and the terms of the Share Units as set forth in this Plan and the applicable Share Unit grant letter shall again apply to the Share Units Unfunded Status of Plan This Plan shall be unfunded. C-8

243 4.11 Compliance with Laws If any provision of this Plan or any Share Unit contravenes any law or any order, policy, by-law or regulation of any regulatory body having jurisdiction, then such provision shall be deemed to be amended to the extent necessary to bring such provision into compliance therewith Governing Law This Plan shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein Effective Dates and Amendments Approved by the board of directors of Cannabis Royalties & Holdings Corp. on April 29, C-9

244 SCHEDULE A BONANZA BLUE CORP. SHARE UNIT PLAN Notwithstanding anything to the contrary in the Plan, the provisions of this Error! Reference source not found. shall apply to the Share Unit Awards made to a Participant during the period that he or she is a U.S. Taxpayer. 1. Retirement Notwithstanding Section 3.6 of the Plan, any unvested Share Units held by a Participant that is a U.S. Taxpayer will automatically vest on the date such Participant attains the age of 65 and the Shares underlying such Share Units will be issued to the Participant forthwith and in any event no later than March 15 of the following calendar year. 2. Inability to Elect a Deferred Payment Date For greater certainty, a Participant who is a U.S. Taxpayer will not be entitled to elect a Deferred Payment Date. C-10

245 SCHEDULE D BY-LAW BONANZA BLUE CORP. BY-LAW NO. 1 A by-law relating generally to the conduct of the affairs of BONANZA BLUE CORP. CONTENTS 1. Interpretation 2. Execution of Documents, Banking 3. Directors 4. Committees 5. Officers 6. Protection of Directors, Officers and Others 7. Dividends 8. Meetings of Shareholders 9. Notices 10. Repeal 11. Effective Date BE IT ENACTED AND IT IS HEREBY ENACTED as a by-law of Bonanza Blue Corp. (hereinafter called the Corporation ) as follows: 1.1 Definitions ARTICLE 1 INTERPRETATION In the by-laws of the Corporation, unless the context otherwise requires: (a) (b) (c) (d) (e) Act means the Business Corporations Act, R.S.O c. B. 16 and the regulations made pursuant thereto, as from time to time amended, and every statute that may be substituted therefor and, in the case of such substitution, any reference in the by-laws of the Corporation to provisions of the Act shall be read as references to the substituted provisions therefor in the new statute or statutes; appoint includes elect and vice versa; board means the board of directors of the Corporation; by-laws means this by-law and all other by-laws of the Corporation from time to time in force and effect; meeting of shareholders includes an annual meeting of shareholders and a special meeting of shareholders; special meeting of shareholders includes a meeting of any class or classes of D-1 Legal*

246 shareholders and a special meeting of all shareholders entitled to vote at an annual meeting of shareholders; (f) (g) (h) (i) (j) non-business day means Saturday, Sunday and any other day that is a holiday as defined in the Interpretation Act (Ontario); recorded address means in the case of a shareholder his latest address as recorded in the securities register; and in the case of joint shareholders the address appearing in the securities register in respect of such joint holding or the first address so appearing if there is more than one; and in the case of a director, officer, auditor or member of a committee of the board his latest address as recorded in the records of the Corporation; signing officer means, in relation to any instrument, any person authorized to sign the same on behalf of the Corporation by paragraph 2.1 or by a resolution passed pursuant thereto; all terms contained in the by-laws and which are defined in the Act shall have the meanings given to such terms in the Act; and the singular shall include the plural and the plural shall include the singular; the masculine shall include the feminine and neuter genders; and the word person shall include individuals, bodies corporate, corporations, companies, partnerships, syndicates, trusts, unincorporated organizations and any number or aggregate of persons. 1.2 Conflict with Laws In the event of any inconsistency between the by-laws and mandatory provisions of the Act or the Securities Transfer Act, the provisions of the Act or the Securities Transfer Act, as applicable, shall prevail. 2.1 Execution of Instruments ARTICLE 2 BANKING, EXECUTION OF DOCUMENTS Deeds, transfers, assignments, contracts and any other documents of the Corporation shall be signed by any officer or director or as otherwise directed by the board. Any director or officer of the Corporation is hereby authorized and directed to sign any articles on behalf of the Corporation. Notwithstanding any provision to the contrary contained in the by-laws of the Corporation, the Board may at any time or times direct the manner in which and the person or persons by whom any particular deed, transfer, assignment, contract or other document, or any class of deeds, transfers, assignments, contracts or other documents, shall be signed. 2.2 Banking Arrangements The banking business of the Corporation, or any part thereof, including, without limitation, the borrowing of money and the giving of security therefor, shall be transacted with such banks, trust companies or other bodies corporate or organizations as may from time to time be designated by or under the authority of the board. Such banking business or any part thereof shall be transacted under such agreements, instructions and delegations of powers as the board may from time to time by resolution prescribe or authorize. 2.3 Financial Year Until otherwise ordered by the board, the financial year of the Corporation shall end on the 31st day of December in each year. D-2

247 ARTICLE 3 DIRECTORS 3.1 Number of Directors and Quorum Until changed in accordance with the Act, the Board shall consist of not fewer than the minimum number and not more than the maximum number of directors provided in the articles of the Corporation, from time to time, a is determined by the directors, from time to time. Subject to the Act, the quorum for the transaction of business at any meeting of the Board shall be not less than a majority of the number of directors which then constitutes the Board. 3.2 Qualification No person shall be qualified for election as a director if he is less than 18 years of age; if he is a person who has been found under the Substitute Decisions Act, 1992 or the Mental Health Act to be incapable of managing property or who has been found to be incapable by a court in Canada or elsewhere; if he is not an individual; or if he has the status of a bankrupt. A director need not be a shareholder. At least 25 percent of the directors shall be resident Canadians, provided that if the Corporation has less than four directors, at least one director shall be a resident Canadian. At least one-third of the directors of the Corporation shall not be officers or employees of the Corporation or any of its affiliates. 3.3 Election and Term The election of directors shall take place at the first meeting of shareholders and at each succeeding annual meeting of shareholders and all the directors then in office shall retire but, if qualified, shall be eligible for reelection. The number of directors to be elected at any such meeting shall be the number of directors as specified in the articles or, if a minimum and maximum number of directors is provided for in the articles, the number of directors determined by special resolution or, if the special resolution empowers the directors to determine the number, the number of directors determined by resolution of the board. The voting on the election shall be by show of hands unless a ballot is demanded by any shareholder. If an election of directors is not held at the proper time, the incumbent directors shall continue in office until their successors are elected. 3.4 Removal of Directors Subject to the provisions of the Act, the shareholders may by ordinary resolution passed at a meeting specially called for such purpose remove any director from office and the vacancy created by such removal may be filled at the same meeting failing which it may be filled by a quorum of the directors. 3.5 Vacation of Office A director ceases to hold office when he dies or, subject to the Act, resigns; he is removed from office by the shareholders in accordance with the Act; he becomes of unsound mind and is so found by a court in Canada or elsewhere or if he acquires the status of a bankrupt. 3.6 Vacancies Subject to the Act, a quorum of the board may fill a vacancy in the board, except a vacancy resulting from an increase in the number or maximum number of directors or from a failure of the shareholders to elect the number of directors required to be elected at any meeting of shareholders. In the absence of a quorum of the board, or if the vacancy has arisen from a failure of the shareholders to elect the number of directors required to be elected at any meeting of shareholders, the directors then in office shall forthwith call a special meeting of shareholders to fill the vacancy. If the directors then in office fail to call such meeting or if there are no directors then in office, any shareholder may call the meeting. 3.7 Action by the Board The board shall manage or supervise the management of the business and affairs of the Corporation. Subject to paragraphs 3.8 and 3.9, the powers of the board may be exercised at a meeting at which a quorum is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the board. Where there is a vacancy in the board, the remaining directors may exercise all the powers of the board so long as a quorum of the board remains in office. D-3

248 3.8 Meeting by Telephone If all the directors of the Corporation present or participating in the meeting consent, a director may participate in a meeting of the board or of a committee of the board by means of such telephone, electronic or other communications facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed to be present at the meeting. Any such consent shall be effective whether given before or after the meeting to which it relates and may be given with respect to all meetings of the board and of committees of the board held while a director holds office. 3.9 Place of Meetings Meetings of the board may be held at any place within or outside Ontario. In any financial year of the Corporation a majority of the meetings of the board need not be held within Canada Calling of Meetings Subject to the Act, meetings of the board shall be held from time to time on such day and at such time and at such place as the board, the Chairman of the Board (if any), the President, a Vice-President who is a director or any two directors may determine and the Secretary, when directed by the board, the Chairman of the Board (if any), the President, a Vice-President who is a director or any two directors shall convene a meeting of the board Notice of Meeting Notice of the date, time and place of each meeting of the board shall be given in the manner provided in paragraph 9.1 to each director not less than 48 hours (exclusive of any part of a non-business day) before the time when the meeting is to be held. A notice of a meeting of directors need not specify the purpose of or the business to be transacted at the meeting except where the Act requires such purpose or business to be specified. A director may in any manner waive notice of or otherwise consent to a meeting of the board First Meeting of New Board Provided a quorum of directors is present, each newly elected board may without notice hold its first meeting immediately following the meeting of shareholders at which such board is elected Adjourned Meeting Notice of an adjourned meeting of the board is not required if the time and place of the adjourned meeting is announced at the original meeting Regular Meetings The board may appoint a day or days in any month or months for regular meetings of the board at a place and hour to be named. A copy of any resolution of the board fixing the place and time of such regular meetings shall be sent to each director forthwith after being passed, but no other notice shall be required for any such regular meeting except where the Act requires the purpose thereof or the business to be transacted thereat to be specified Chairman The chairman of any meeting of the board shall be the first mentioned of such of the following officers as have been appointed and who is a director and is present at the meeting: the Chairman of the Board, the President or a Vice-President. If no such officer is present, the directors present shall choose one of their number to be chairman Votes to Govern At all meetings of the board every question shall be decided by a majority of the votes cast on the question. In case of an equality of votes the chairman of the meeting shall not be entitled to a second or casting vote Conflict of Interest A director or officer who is a party to, or who is a director or officer of or has a material interest in any person who is a party to, a material contract or transaction or proposed material contract or transaction with the D-4

249 Corporation shall disclose in writing to the Corporation or request to have entered in the minutes of the meetings of the directors the nature and extent of his interest at the time and in the manner provided by the Act. Any such contract or transaction or proposed contract or transaction shall be referred to the board or shareholders for approval even if such contract is one that in the ordinary course of the Corporation s business would not require approval by the board or shareholders, and a director interested in a contract or transaction so referred to the board shall not attend any part of a meeting of the board during which the contract or transaction is discussed and shall not vote on any resolution to approve the same except as permitted by the Act. If no quorum exists for the purpose of voting on a resolution to approve a contract or transaction only because a director is not permitted to be present at the meeting by reason of this section, the remaining directors shall be deemed to constitute a quorum for the purposes of voting on the resolution. Where all of the directors are required to disclose their interests pursuant to this section, the contract or transaction may be approved only by the shareholders Remuneration and Expenses The directors shall be paid such remuneration for their services as the board may from time to time determine. The directors shall also be entitled to be reimbursed for travelling and other expenses properly incurred by them in attending meetings of the shareholders or of the board or any committee thereof or otherwise in the performance of their duties. Nothing herein contained shall preclude any director from serving the Corporation in any other capacity and receiving remuneration therefor. 4.1 Managing Director, Committee of Directors ARTICLE 4 COMMITTEES The board may appoint from their number a managing director or a committee of directors, however designated, and delegate to such managing director or committee any of the powers of the board except those which pertain to items which, under the Act, a managing director and committee of directors has no authority to exercise. 4.2 Transaction of Business The powers of a committee of directors may be exercised by a meeting at which a quorum is present or by resolution in writing signed by all members of such committee who would have been entitled to vote on that resolution at a meeting of the committee. Meetings of such committee may be held at any place within or outside Ontario. 4.3 Audit Committee The board shall elect annually from among its number an audit committee to be composed of not fewer than three directors of whom a majority shall not be officers or employees of the Corporation or its affiliates. The audit committee shall have the powers and duties provided in the Act. 4.4 Advisory Committees The board may from time to time appoint such other committees as it may deem advisable, but the functions of any such other committees shall be advisory only. 4.5 Procedure Unless otherwise determined by the board, each committee shall have power to fix its quorum at not less than a majority of its members, to elect its chairman and to regulate its procedure. 5.1 Appointment ARTICLE 5 OFFICERS The board may from time to time appoint a Chairman of the Board, a President, a Chief Executive Officer, a Chief Financial Officer, one or more Vice-Presidents (to which title may be added words indicating seniority or function), a Secretary, a Treasurer and such other officers as the board may determine, including one or more assistants to any of the officers so appointed. The board may specify the duties of and, in accordance with this bylaw and subject to the provisions of the Act, delegate to such officers powers to manage the business and affairs of D-5

250 the Corporation. Subject to paragraph 5.2, an officer may but need not be a director and one person may hold more than one office. In case and whenever the same person holds the offices of Secretary and Treasurer, he may but need not be known as the Secretary-Treasurer. All officers shall sign such contracts, documents, or instruments in writing as require their respective signatures. In the case of the absence or inability to act of any officer or for any other reason that the board may deem sufficient, the board may delegate all or any of the powers of such officer to any other officer or to any director for the time being. 5.2 Chairman of the Board The Chairman of the Board, if appointed, shall be a director and shall, when present, preside at all meetings of the board and committees of the board. The Chairman of the Board shall be vested with and may exercise such powers and shall perform such other duties as may from time to time be assigned to him by the board. During the absence or disability of the Chairman of the Board, his duties shall be performed and his powers exercised by the President. 5.3 President The President shall, and unless and until the board designates any other officer of the Corporation to be the Chief Executive Officer of the Corporation, be the Chief Executive Officer and, subject to the authority of the board, shall have general supervision of the business and affairs of the Corporation and such other powers and duties as the board may specify. The President shall be vested with and may exercise all the powers and shall perform all the duties of the Chairman of the Board if none be appointed or if the Chairman of the Board is absent or unable or refuses to act. 5.4 Vice-President Each Vice-President shall have such powers and duties as the board or the President may specify. The Vice-President or, if more than one, the Vice-President designated from time to time by the board or by the President, shall be vested with all the powers and shall perform all the duties of the President in the absence or inability or refusal to act of the President, provided, however, that a Vice-President who is not a director shall not preside as chairman at any meeting of the board and that a Vice-President who is not a director and shareholder shall not preside as chairman at any meeting of shareholders. 5.5 Secretary The Secretary shall give or cause to be given as and when instructed, all notices to shareholders, directors, officers, auditors and members of committees of the board; he shall be the custodian of the stamp or mechanical device generally used for affixing the corporate seal of the Corporation and all books, papers, records, documents and instruments belonging to the Corporation, except when some other officer or agent has been appointed for that purpose; and he shall have such other powers and duties as the board may specify. 5.6 Treasurer The Treasurer shall keep proper accounting records in compliance with the Act and shall be responsible for the deposit of money, the safekeeping of securities and the disbursement of the funds of the Corporation; he shall render to the board whenever required an account of all his transactions as Treasurer and of the financial position of the Corporation; and he shall have such other powers and duties as the board may specify. Unless and until the board designates any other officer of the Corporation to be the Chief Financial Officer of the Corporation, the Treasurer shall be the Chief Financial Officer of the Corporation. 5.7 Powers and Duties of Other Officers The powers and duties of all other officers shall be such as the terms of their engagement call for or as the board may specify. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the board otherwise directs. 5.8 Variation of Powers and Duties The board may from time to time and subject to the provisions of the Act, vary, add to or limit the powers and duties of any officer. D-6

251 5.9 Term of Office The board, in its discretion, may remove any officer of the Corporation, with or without cause, without prejudice to such officer s rights under any employment contract. Otherwise each officer appointed by the board shall hold office until his successor is appointed or until the earlier of his resignation or death Terms of Employment and Remuneration The terms of employment and the remuneration of an officer appointed by the board shall be settled by it from time to time. The fact that any officer or employee is a director or shareholder of the Corporation shall not disqualify him from receiving such remuneration as may be so determined Conflict of Interest An officer shall disclose his interest in any material contract or transaction or proposed material contract or transaction with the Corporation in accordance with paragraph Agents and Attorneys The board shall have power from time to time to appoint agents or attorneys for the Corporation in or outside Canada with such powers of management or otherwise (including the powers to sub-delegate) as may be thought fit Fidelity Bonds The board may require such officers, employees and agents of the Corporation as the board deems advisable to furnish bonds for the faithful discharge of their powers and duties, in such form and with such surety as the board may from time to time determine but no director shall be liable for failure to require any such bond or for the insufficiency of any such bond or for any loss by reason of the failure of the Corporation to receive any indemnity thereby provided. ARTICLE 6 PROTECTION OF DIRECTORS, OFFICERS AND OTHERS 6.1 Submission of Contracts or Transactions to Shareholders for Approval The board in its discretion may submit any contract, act or transaction for approval, ratification or confirmation at any meeting of the shareholders called for the purpose of considering the same and any contract, act or transaction that shall be approved, ratified or confirmed by a resolution passed by a majority of the votes cast at any such meeting (unless any different or additional requirement is imposed by the Act or by the Corporation s articles or any other by-law) shall be as valid and as binding upon the Corporation and upon all the shareholders as though it had been approved, ratified or confirmed by every shareholder of the Corporation. 6.2 For the Protection of Directors and Officers In supplement of and not by way of limitation upon any rights conferred upon directors by the provisions of the Act, it is declared that no director shall be disqualified by his office from, or vacate his office by reason of, holding any office or place of profit under the Corporation or under any body corporate in which the Corporation shall be a shareholder or by reason of being otherwise in any way directly or indirectly interested or contracting with the Corporation either as vendor, purchaser or otherwise or being concerned in any contract or arrangement made or proposed to be entered into with the Corporation in which he is in any way directly or indirectly interested either as vendor, purchaser or otherwise nor shall any director be liable to account to the Corporation or any of its shareholders or creditors for any profit arising from any such office or place of profit; and, subject to the provisions of the Act, no contract or arrangement entered into by or on behalf of the Corporation in which any director shall be in any way directly or indirectly interested shall be avoided or voidable and no director shall be liable to account to the Corporation or any of its shareholders or creditors for any profit realized by or from any such contract or arrangement by reason of the fiduciary relationship existing or established thereby. Subject to the provisions of the Act and to paragraph 3.17, no director shall be obliged to make any declaration of interest or refrain from voting in respect of a contract or proposed contract with the Corporation in which such director is in any way directly or indirectly interested. D-7

252 6.3 Limitation of Liability Except as otherwise provided in the Act, no director or officer for the time being of the Corporation shall be liable for the acts, receipts, neglects or defaults of any other director or officer or employee or for joining in any receipt or act for conformity or for any loss, damage or expense happening to the Corporation through the insufficiency or deficiency of title to any property acquired by the Corporation or for or on behalf of the Corporation or for the insufficiency or deficiency of any security in or upon which any of the moneys of or belonging to the Corporation shall be placed out or invested or for any loss or damage arising from the bankruptcy, insolvency or tortious act of any persons, firm or corporation including any person, firm or corporation with whom or which any moneys, securities or effects shall be lodged or deposited for any loss, conversion, misapplication or misappropriation of or any damage resulting from any dealings with any moneys, securities or other assets belonging to the Corporation or for any other loss, damage or misfortune whatever which may happen in the execution of the duties of his respective office or trust or in relation thereto unless the same shall happen by or through his failure to exercise the powers and to discharge the duties of his office honestly, in good faith and in the best interests of the Corporation and in connection therewith to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The directors for the time being of the Corporation shall not be under any duty or responsibility in respect of any contract, act or transaction whether or not made, done or entered into in the name or on behalf of the Corporation, except such as shall have been submitted to and authorized or approved by the board. If any director or officer of the Corporation shall be employed by or shall perform services for the Corporation otherwise than as a director or officer or shall be a member of a firm or a shareholder, director or officer of a company which is employed by or performs services for the Corporation, the fact of his being a director or officer of the Corporation shall not disentitle such director or officer or such firm or company, as the case may be, from receiving proper remuneration for such services. 6.4 Indemnity (a) (b) To the maximum extent permitted by law, the Corporation shall indemnify a director or officer of the Corporation, a former director or officer of the Corporation, or another individual who acts or acted at the Corporation s request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including any amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity. The Corporation may not indemnify an individual under paragraph (a) unless the individual: (i) (ii) acted honestly and in good faith with a view to the best interests of the Corporation or other entity for which the individual acted as director or officer or in a similar capacity at the Corporation s request, as the case may be; and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that the individual s conduct was lawful. (c) (d) The Corporation shall advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in paragraph (a), provided that such individual shall repay the moneys if the individual does not fulfill the conditions of paragraph (b). The provisions for indemnification contained in the by-laws shall not be deemed exclusive of any other rights to which any person seeking indemnification may be entitled under any agreement, vote of shareholders or directors or otherwise, both as to action in the individual s official capacity and as to action in another capacity, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs and legal representatives of such a person. 6.5 Insurance The Corporation may purchase and maintain insurance for the benefit of any person referred to in paragraph 6.4 against such liabilities and in such amounts as the board may from time to time determine and are permitted by the Act. D-8

253 ARTICLE 7 DIVIDENDS 7.1 Dividend Cheques A dividend payable in cash shall be paid by cheque drawn on the Corporation s bankers or one of them to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at his recorded address, unless such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all of such joint holders and mailed to them at their recorded address. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold. 7.2 Non-receipt of Cheques In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the board may from time to time prescribe, whether generally or in any particular case. 7.3 Record Date for Dividends and Rights The board may fix in advance a date, preceding by not more than 50 days the date for the payment of any dividend or the date for the issue of any warrant or other evidence of the right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of such dividend or to exercise the right to subscribe for such securities, and notice of any such record date shall be given not less than seven days before such record date in the manner provided by the Act. If no record date is so fixed, the record date for the determination of the persons entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to such dividend or right to subscribe is passed by the board. 7.4 Unclaimed Dividends Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation. 8.1 Annual Meetings ARTICLE 8 MEETINGS OF SHAREHOLDERS The annual meeting of shareholders shall be held at such time in each year as the board, the Chairman of the Board (if any) or the President may from time to time determine, and in any event no later than fifteen (15) months after the Corporation s last annual meeting of shareholders, subject to applicable stock exchange rules, for the purpose of considering the financial statements and reports required by the Act to be placed before the annual meeting, electing directors, appointing an auditor and for the transaction of such other business as may properly be brought before the meeting. 8.2 Special Meetings The board, the Chairman of the Board (if any), the President or a Vice-President who is a director shall have power to call a special meeting of shareholders at any time. 8.3 Place of Meetings Meetings of shareholders shall be held at the registered office of the Corporation or elsewhere in the municipality in which the registered office is situate or, if the board shall so determine, at some other place in Canada or, if all the shareholders entitled to vote at the meeting so agree, at some place outside Canada. D-9

254 8.4 Notice of Meetings Notice of the time and place of each meeting of shareholders shall be given in the manner provided in paragraph 9.1 not less than 21 days nor more than 50 days before the date of the meeting to each director, to the auditor and to each shareholder who at the close of business on the record date for notice is entered in the securities register as the holder of one or more shares carrying the right to vote at the meeting. Notice of a meeting of shareholders called for any purpose other than consideration of the financial statements and auditor s report, election of directors and reappointment of the incumbent auditor shall state or be accompanied by a statement of the nature of such business in sufficient detail to permit the shareholder to form a reasoned judgment thereon and the text of any special resolution or by-law to be submitted to the meeting. A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of or otherwise consent to a meeting of shareholders. 8.5 List of Shareholders Entitled to Notice For every meeting of shareholders, the Corporation shall prepare a list of shareholders entitled to receive notice of the meeting, arranged in alphabetical order and showing the number of shares held by each shareholder entitled to vote at the meeting. If a record date for the meeting is fixed pursuant to paragraph 8.6, the shareholders listed shall be those registered at the close of business on such record date. If no record date is fixed, the shareholders listed shall be those registered at the close of business on the day immediately preceding the day on which notice of the meeting is given, or where no such notice is given, the day on which the meeting is held. The list shall be available for examination by any shareholder during usual business hours at the registered office of the Corporation or at the place where the central securities register is maintained and at the meeting for which the list was prepared. 8.6 Record Date for Notice The board may fix in advance a date, preceding the date of any meeting of shareholders by not more than 60 days and not less than 30 days, as a record date for the determination of the shareholders entitled to notice of the meeting, provided that notice of any such record date shall be given not less than seven days before such record date by newspaper advertisement in the manner provided in the Act and, if any shares of the Corporation are listed for trading on a stock exchange in Canada, by written notice to each such stock exchange. If no record date is so fixed, the record date for the determination of the shareholders entitled to notice of the meeting shall be at the close of business on the day immediately preceding the day on which the notice is given or, if no notice is given, the day on which the meeting is held. 8.7 Meetings without Notice A meeting of shareholders may be held without notice at any time and place permitted by the Act: (a) (b) if all the shareholders entitled to vote thereat are present in person or represented by proxy waive notice of or otherwise consent to such meeting being held, and if the auditor and the directors are present or waive notice of or otherwise consent to such meeting being held, so long as such shareholders, auditor and directors present are not attending for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. At such a meeting any business may be transacted which the Corporation at a meeting of shareholders may transact. If the meeting is held at a place outside Canada, shareholders not present or represented by proxy, but who have waived notice of or otherwise consented to such meeting, shall also be deemed to have consented to the meeting being held at such place. 8.8 Chairman, Secretary and Scrutineers The chairman of any meeting of shareholders shall be the first mentioned of such of the following officers as have been appointed and who is present at the meeting: the President or a Vice-President who is a director and a shareholder. If no such officer is present within 15 minutes from the time fixed for holding the meeting, the persons present and entitled to vote shall choose one of their number to be chairman. If the Secretary of the Corporation is absent, the chairman shall appoint some person, who need not be a shareholder, to act as secretary of the meeting. If desired, one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting. D-10

255 8.9 Persons Entitled to be Present The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors and the auditor of the Corporation and others who, although not entitled to vote are entitled or required under any provision of the Act or the articles or the bylaws to be present at the meeting. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting Quorum Subject to paragraph 8.20, and subject to when the Corporation only has one shareholder, two persons entitled to vote at a meeting of shareholders, holding in the aggregate at least 5% of all issued and outstanding shares entitled to be voted at such meeting, whether present in person or represented by proxy, shall constitute a quorum. No business shall be transacted at any meeting unless the requisite quorum shall be present at the commencement of such business. When the Corporation has only one shareholder, any by-law, resolution or other action of the Corporation consented to at any time during the existence of the Corporation by the signature of the sole shareholder is as valid and effective as if passed at a meeting of shareholders duly called, constituted and held for that purpose Right to Vote Subject to the provisions of the Act as to authorized representatives of any other body corporate or association, at any meeting of shareholders for which the Corporation has prepared the list referred to in paragraph 8.5, a shareholder whose name appears on such list is entitled to vote the shares shown opposite his name at the meeting to which the list relates. At any meeting of shareholders for which the Corporation has not prepared the list referred to in paragraph 8.5, every person shall be entitled to vote at the meeting who at the time is entered in the securities register as the holder of one or more shares carrying the right to vote at such meeting Proxies Every shareholder entitled to vote at a meeting of shareholders may appoint a proxyholder, or one or more alternate proxyholders, who need not be shareholders, to attend and act at the meeting in the manner and to the extent authorized and with the authority conferred by the proxy. A proxy shall be signed in writing or by electronic signature by the shareholder or his attorney authorized by a document that is signed in writing or by electronic signature, and shall conform with the requirements of the Act Time for Deposit of Proxies The board may by resolution specify in a notice calling a meeting of shareholders a time, preceding the time of such meeting or an adjournment thereof by not more than 48 hours exclusive of any part of a non-business day, before which time proxies to be used at such meeting must be deposited. A proxy shall be acted upon only if, prior to the time so specified, it shall have been deposited with the Corporation or an agent thereof specified in such notice or, if no such time is specified in such notice, only if it has been received by the Secretary of the Corporation or by the chairman of the meeting or any adjournment thereof prior to the time of voting Joint Shareholders If two or more persons hold shares jointly, any one of them present in person or represented by proxy at a meeting of shareholders may, in the absence of the other or others, vote the shares; but if two or more of those persons are present in person or represented by proxy and vote, they shall vote as one the shares jointly held by them Votes to Govern At any meeting of shareholders every question shall, unless otherwise required by the articles or by-laws or by law, be determined by a majority of the votes cast on the question. In case of an equality of votes either upon a show of hands or upon a poll, the chairman of the meeting shall not be entitled to a second or casting vote Show of Hands Subject to the provisions of the Act, any question at a meeting of shareholders shall be decided by a show of hands unless a ballot thereon is required or demanded as hereinafter provided. Upon a show of hands every D-11

256 person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon is so required or demanded, a declaration by the chairman of the meeting that the vote upon the question has been carried or carried by a particular majority or not carried and an entry to that effect in the minutes of the meeting shall be prima facie evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against any resolution or other proceeding in respect of the said question, and the result of the vote so taken shall be the decision of the shareholders upon the said question Ballots On any question proposed for consideration at a meeting of shareholders, and whether or not a vote by show of hands has been taken thereon, any shareholder or proxyholder entitled to vote at the meeting may require or demand a ballot. A ballot so required or demanded shall be taken in such manner as the chairman shall direct. A requirement or demand for a ballot may be withdrawn at any time prior to the taking of the ballot. If a ballot is taken each person present shall be entitled, in respect of the shares which he is entitled to vote at the meeting upon the question, to that number of votes provided by the Act or the articles, and the result of the ballot so taken shall be the decision of the shareholders upon the said question Adjournment The chairman at the meeting of shareholders may with the consent of the meeting and subject to such conditions as the meeting may decide, or where otherwise permitted under the provisions of the Act, adjourn the meeting from time to time and from place to place. If a meeting of shareholders is adjourned for less than 30 days, it shall not be necessary to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of 30 days or more, notice of the adjourned meeting shall be given as for an original meeting Resolution in Writing A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders unless a written statement with respect to the subject matter of the resolution is submitted by a director or the auditor in accordance with the Act Meetings by Electronic Means A meeting of the shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting shall be deemed to be present at the meeting. 9.1 Method of Giving Notices ARTICLE 9 NOTICES A notice or document required by the Act, the regulations, or the articles or by-laws of the Corporation to be sent to a shareholder or director of the Corporation may be sent by prepaid mail addressed to, or may be delivered personally to: (a) (b) the shareholder at his recorded address; and the director at his recorded address or his address in the most recent notice filed under the Corporations Information Act, whichever is the more current. 9.2 Signature to Notices The signature of any director or officer of the Corporation to any notice or document to be given by the Corporation may be written, stamped, typewritten or printed or partly written, stamped, typewritten or printed. 9.3 Proof of Service A certificate of the Chairman of the Board (if any), the President, a Vice-President, the Secretary or the Treasurer or of any other officer of the Corporation in office at the time of the making of the certificate or of a transfer officer of any transfer agent or branch transfer agent of shares of any class of the Corporation as to the facts D-12

257 in relation to the mailing or delivery of any notice or other document to any shareholder, director, officer or auditor or publication of any notice or other document shall be conclusive evidence thereof and shall be binding on every shareholder, director, officer or auditor of the Corporation as the case may be. 9.4 Notice to Joint Shareholders All notices with respect to shares registered in more than one name shall, if more than one address appears on the records of the Corporation in respect of such joint holdings, be given to all of such joint shareholders at the first address so appearing, and notice so given shall be sufficient notice to the holders of such shares. 9.5 Computation of Time In computing the date when notice must be given under any provision requiring a specified number of days notice of any meeting or other event both the date of giving the notice and the date of the meeting or other event shall be excluded. 9.6 Undelivered Notices If any notice given to a shareholder pursuant to paragraph 9.1 is returned on three consecutive occasions because he cannot be found, the Corporation shall not be required to give any further notices to such shareholder until he informs the Corporation in writing of his new address. 9.7 Omissions and Errors The accidental omission to give any notice to any shareholder, director, officer, auditor or member of a committee of the board or the non-receipt of any notice by any such person or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise found thereon. 9.8 Deceased Shareholders Any notice or other document delivered or sent by post or left at the address of any shareholder as the same appears in the records of the Corporation shall, notwithstanding that such shareholder be then deceased, and whether or not the Corporation has notice of his decease, be deemed to have been duly served in respect of the shares held by such shareholder (whether held solely or with any person or persons) until some other person be entered in his stead in the records of the Corporation as the holder or one of the holders thereof and such service shall for all purposes be deemed a sufficient service of such notice or document on his heirs, executors or administrators and on all persons, if any, interested with him in such shares. 9.9 Persons Entitled by Death or Operation of Law Every person who, by operation of law, transfer, death of a shareholder or any other means whatsoever, shall become entitled to any share, shall be bound by every notice in respect of such share which shall have been duly given to the shareholder from whom he derives his title to such share prior to his name and address being entered on the securities register (whether such notice was given before or after the happening of the event upon which he became so entitled) and prior to his furnishing to the Corporation the proof of authority or evidence of his entitlement prescribed by the Act Waiver of Notice Any shareholder (or his duly appointed proxyholder), director, officer, auditor or member of a committee of the board may at any time waive any notice, or waive or abridge the time for any notice, required to be given to him under any provision of the Act, the regulations thereunder, the articles, the by-laws or otherwise and such waiver or abridgement, whether given before or after the meeting or other event of which notice is required to be given shall cure any default in the giving or in the time of such notice, as the case may be. Any such waiver or abridgement shall be in writing or by electronic means in accordance with the Act, except a waiver of notice of a meeting of shareholders or of the board or of a committee of the board which may be given in any manner. D-13

258 ARTICLE 10 REPEAL 10.1 Repeal Upon this by-law coming into force, all current general by-laws of the Corporation that may be in effect shall be repealed, provided that such repeal shall not affect the previous operation of such bylaws so repealed or affect the validity of any act done or right, privilege, obligation, acquired or incurred, or the validity of any contract or agreement made pursuant to such by-laws prior to their repeal. All resolutions of the shareholders and of the board with continuing effect passed under such repealed by-laws shall continue to be good and valid. [INTENTIONALLY LEFT BLANK] D-14

259 ARTICLE 11 EFFECTIVE DATE 11.1 Effective Date This by-law shall come into force upon being passed by the board. ENACTED the 8th day of June, (signed) Eric Klein Eric Klein, President & Chief Executive Officer (signed) Carmelo Marrelli Carmelo Marrelli, Chief Financial Officer D-15

260 SCHEDULE "J" STATEMENT OF EXECUTIVE COMPENSATION For the year ended December 31, 2015 Please see attached. J-1

261 Schedule J Executive Compensation Rider Compensation Discussion and Analysis STATEMENT OF EXECUTIVE COMPENSATION Executive Compensation is required to be disclosed for (i) each Chief Executive Officer (or individual who served in a similar capacity during the most recently completed financial year), (ii) each Chief Financial Officer (or individual who served in a similar capacity during the most recently completed financial year), (iii) each of the three most highly compensated executive officers (other than the Chief Executive Officer and the Chief Financial Officer) who were serving as executive officers at the end of the most recently completed fiscal year (or three most highly compensated individuals) and whose total compensation was, individually, more than $150,000; and (iv) each individual who would meet the definition set forth in (iii) but for the fact that the individual was neither an executive officer of the company, nor acting in a similar capacity, at the end of that financial year (the "Named Executive Officers"). The Named Executive Officers of CRHC during the most recently completed financial year were Marc Lustig, President and Chief Executive Officer (Mr. Lustig was appointed President and Chief Executive Officer on March 6, 2015), Francois Perrault, Chief Financial Officer (Mr. Perrault was appointed Chief Financial Officer on November 1, 2016), Greg Wilson, Chief Operating Officer (Mr. Wilson was appointed Chief Operating Officer on November 1, 2016), and Todd Marcotte, Chief Marketing Officer (Mr. Marcotte was appointed Chief Marketing Officer on November 1, 2016). Philosophy and Objectives As CRHC does not have a compensation committee, the functions of a compensation committee have been performed by the CRHC board of directors (the CRHC Board ). The objective of the CRHC Board in setting compensation levels is to attract and retain individuals of high calibre to serve as officers of CRHC, to motivate their performance in order to achieve CRHC s strategic objectives and to align the interests of executive officers with the long-term interests of the CRHC Shareholders. These objectives are designed to ensure that CRHC continues to grow on an absolute basis as well as to grow cash flow and earnings for CRHC Shareholders. The CRHC Board sets the compensation received by Named Executive Officers so as to be generally competitive with the compensation received by persons with similar qualifications and responsibilities who are engaged by other companies of corresponding size, stage of development, having similar assets, number of employees, market capitalization and profit margin. In setting such levels, the CRHC Board relies primarily on their own experience and knowledge. Compensation CRHC compensates its executive officers based on their skill and experience levels and the existing stage of development of CRHC. Executive officers are rewarded on the basis of the skill and level of responsibility involved in their position, the individual s experience and qualifications, CRHC s resources, industry practice, and regulatory guidelines regarding executive compensation levels. The CRHC Board has implemented two levels of compensation to align the interests of the executive officers with those of the shareholders. First, executive officers have been paid a monthly consulting fee or salary determined by the CRHC Board. Second, the CRHC Board has awarded executive officers long term incentives in the form of RSUs. CRHC also provides pension matching contributions and a standard benefits package to its executive officers. Legal* J-2

262 The base compensation of the executive officers is reviewed and set by the CRHC Board. In addition, the CRHC Board from time to time determines the RSU grants to be made. Previous grants of RSUs are taken into account when considering new grants. The CRHC Board does not have pre-existing performance criteria or objectives. The CRHC Board considers the implications of the risks associated with CRHC s compensation policies and practices when determining rewards for its executive officers and ensures that those policies do not encourage management to take inappropriate or excessive risks. The CRHC Board does not believe that there are any risks arising from the compensation programs that would be reasonably likely to have a material adverse effect on CRHC. CRHC s compensation program includes certain mechanisms to ensure risk taking behaviour falls within reasonable risk tolerance levels, including (i) the establishment of a compensation package that is competitive with the compensation received by persons with similar qualifications and responsibilities who are engaged by other companies of corresponding size, stage of development, having similar assets, number of employees, market capitalization and profit margin; and (ii) utilizing long term incentive plans (RSU awards) for diversification and alignment with risk realization periods. Executive officers and directors are discouraged from taking any derivative or speculative positions in CRHC s securities, to prevent the purchase of financial instruments that are designed to hedge or offset any decrease in the market value of CRHC s securities. Compensation for the most recently completed financial year should not be considered an indicator of expected compensation levels in future periods. All compensation is subject to and dependant on CRHC s financial resources and prospects. CRHC does not currently have any agreements in place setting the terms of the relevant Named Executive Officers compensation. Compensation of the Named Executive Officers is reviewed by the CRHC Board on an annual basis. Compensation of Executive Officers The following table provides information for the most recently completed financial years of CRHC ended March 31, 2015 and 2016 regarding all compensation paid to or earned by Marc Lustig, Chief Executive Officer, who was the only Named Executive Officer of CRHC for the relevant periods. Name and Principal Position Marc Lustig Chief Executive Year Ended Mar Salary ($) Nil Nil Share- Based Awards ($) 375,000 Nil Option -Based Award s ($) Nil Nil Non-Equity Incentive Plan Compensation ($) Annual Incentive Plans Nil Nil Long- Term Incentive Plans Nil Nil Pension Value ($) Nil Nil All Other Compensation 235,250 56,500 Total Compensation ($) 610,250 56,500 Officer (1) Notes: (1) Mr. Lustig was not directly compensated for acting in his capacity as Chief Executive Officer. The fees shown in the table above reflect the compensation paid to KES 7 Capital as consulting and success fees, part of which were paid to AJKNJ Corp., an entity controlled by Mr. Lustig. The consulting arrangement was terminated effective November 30, Refer to section 20 Interests of Management and Others in Material Transactions in the Listing Statement for more information. Legal* J-3

263 Incentive Plan Awards A summary of the material terms of the Issuer s Share Unit Plan, which is substantially the same as the CRHC Share Unit Plan, is contained in the Listing Statement under section 9 Options to Purchase Securities. CRHC does not have an option plan. No share or option-based awards were issued or outstanding during or as at the end of the financial year ended March 31, Securities Authorized for Issuance under Equity Compensation Plans No securities of CRHC were authorized for issuance under any equity compensation plans as at the end of CRHC s most recently completed financial year (March 31, 2016). Pension and Other Benefit Plans CRHC has not yet instituted defined benefit or defined contribution pension plans in place which provide for payments or benefits at, following, or in connection with retirement, but it has agreed to make certain matching contributions pursuant to the employment agreements with its Named Executive Officers. See Employment Contracts below. Employment Contracts CRHC has entered into an employment agreement with each of its Named Executive Officers on substantially the same terms. Refer to section 15 Executive Compensation in the Listing Statement for more information. Compensation of Directors Since the date of its incorporation, CRHC has not paid any compensation to Marc Lustig, its sole director, for serving in his capacity as director. Please refer to Compensation of Executive Officers above for information regarding the compensation paid to Marc Lustig in his capacity as Chief Executive Officer of CRHC. Legal* J-4

264 SCHEDULE "K" BONANZA S AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014 Please see attached. K-1

265 BONANZA BLUE CORP. Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars)

266 Stern & Lovrics LLP Chartered Accountants Samuel V. Stern, BA, CPA, CA George G. Lovrics, BComm, CPA, CA CPA (Illinois) To the Shareholders of Bonanza Blue Corp. INDEPENDENT AUDITOR'S REPORT Nazli Dewji, BA, CPA, CMA We have audited the accompanying consolidated financial statements of Bonanza Blue Corp. which comprise the consolidated statements of financial position as at December 31, 2015 and 2014, and the consolidated statements of loss and comprehensive loss, changes in shareholders deficit and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Bonanza Blue Corp. as at December 31, 2015 and 2014 and its financial performance and its cash flows for each of the years then ended in accordance with International Financial Reporting Standards. Emphasis of matter Without qualifying our opinion, we draw attention to note 1 in the consolidated financial statements which indicates the existence of material uncertainties that may cast significant doubt upon the Company s ability to continue as a going concern. Toronto, Ontario March 11, 2016 Chartered Accountants Licensed Public Accountants 1210 Sheppard Avenue East, Suite 302, Toronto, Ontario M2K 1E3 Tel: (416) Fax: (416)

267 Bonanza Blue Corp. Consolidated Statements of Financial Position (Expressed in Canadian Dollars) As at As at December 31, December 31, ASSETS Current assets Cash $ 5,769 $ 22,875 Amounts receivable Total assets $ 6,036 $ 23,086 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Accounts payable and other liabilities $ 30,094 $ 7,499 Due to related parties (note 6(b)) 69,614 64,969 Total liabilities 99,708 72,468 Shareholders' deficit Share capital (note 7) 388, ,712 Reserves for share-based payments (notes 8 and 9) 34,200 34,200 Deficit (516,584) (472,294) Total shareholders' deficit (93,672) (49,382) Total liabilities and shareholders' deficit $ 6,036 $ 23,086 The accompanying notes to the consolidated financial statements are an integral part of these statements. Nature of operations and going concern assumption (note 1) Approved on behalf of the Board: (Signed) "Eric Klein", (Signed) "David Brill", Director Director - 1 -

268 Bonanza Blue Corp. Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars) Year Ended December 31, Expenses General and administrative (note 12) $ 44,290 $ 19,678 Net loss and comprehensive loss for the year $ (44,290) $ (19,678) Basic and diluted net loss per share (note 10) $ (0.01) $ (0.00) Weighted average number of common shares outstanding - basic and diluted 8,055,009 7,890,325 The accompanying notes to the consolidated financial statements are an integral part of these statements

269 Bonanza Blue Corp. Consolidated Statements of Changes in Shareholders' Deficit (Expressed in Canadian Dollars) Reserves Share Share-based Capital Warrants Payments Deficit Total Balance, December 31, 2013 $ 352,164 $ 102,000 $ 34,200 $ (554,616) $ (66,252) Private placement (note 7(b)(i)) 40, ,000 Cost of issue (note 7(b)(i)) (3,452) (3,452) Expiry of warrants - (102,000) - 102,000 - Net loss for the year (19,678) (19,678) Balance, December 31, ,712-34,200 (472,294) (49,382) Net loss for the year (44,290) (44,290) Balance, December 31, 2015 $ 388,712 $ - $ 34,200 $ (516,584) $ (93,672) The accompanying notes to the consolidated financial statements are an integral part of these statements

270 Bonanza Blue Corp. Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) Year Ended December 31, Operating activities Net loss for the year $ (44,290) $ (19,678) Non-cash working capital items: Amounts receivable (56) 74 Accounts payable and other liabilities 22,595 1,159 Due to related parties 4,645 (461) Net cash used in operating activities (17,106) (18,906) Financing activities Private placement (note 7(b)(i)) - 40,000 Cost of issue (note 7(b)(i)) - (3,452) Net cash provided by financing activities - 36,548 Net change in cash (17,106) 17,642 Cash, beginning of year 22,875 5,233 Cash, end of year $ 5,769 $ 22,875 The accompanying notes to the consolidated financial statements are an integral part of these statements

271 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 1. Nature of operations and going concern assumption On October 12, 2000, Tripleplay Sports Group Inc. ("Tripleplay") acquired all of the issued and outstanding shares of Ontario Inc. for 3,420,000 post consolidated common shares and warrants to acquire 3,420,000 post consolidated common shares at $0.20 per share expiring on October 12, In connection with the acquisition, Tripleplay changed its name to Bonanza Blue Corp. ("Bonanza" or the "Company") and consolidated its common shares on a 1 for 10 basis. The Company has no operations and is currently seeking new business opportunities. Success in identifying a suitable new business for the Company is uncertain. Furthermore, the Company has limited working capital to pursue such opportunities. As at December 31, 2015, the Company had a working capital deficiency of $93,672 (December 31, working capital deficiency of $49,382) and accumulated deficit of $516,584 (December 31, 2014 accumulated deficit of $472,294). In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The Company s ability to continue operations is dependent on management s ability to obtain additional financing and to manage its cash resources. The Company's discretionary activities do have considerable scope for flexibility in terms of the amount and timing of expenditure, and expenditures may be adjusted accordingly. The primary office is located at 36 Toronto Street, Suite 1000, Toronto, Ontario, M5C 2C5. The Company's financial year ends on December 31. The consolidated financial statements of Bonanza for the year ended December 31, 2015 were reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on March 11, Significant accounting policies (a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ( IASB ) and interpretations issued by the IFRS Interpretations Committee. The accounting polices set out below have been applied consistently to all years presented in these consolidated financial statements. (b) Basis of presentation and consolidation These consolidated financial statements have been prepared on the historical cost basis, with the exception of financial instruments classified at fair value through profit or loss ("FVTPL"), which are measured at fair value. All items were initially recorded at fair value. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Ontario Inc. All inter-company transactions and balances have been eliminated. (c) Functional and presentation currency These consolidated financial statements have been prepared in Canadian dollars, which is the Company's and the subsidiary's functional and presentation currency. (d) Cash Cash includes cash on hand with a Canadian chartered bank

272 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 2. Significant accounting policies (continued) (e) Financial instruments The Company recognizes financial assets and financial liabilities when the Company becomes a party to a contract. Financial assets and financial liabilities, with the exception of financial assets classified as at FVTPL, are measured at fair value plus transaction costs on initial recognition. Financial assets at FVTPL are measured at fair value on initial recognition and transaction costs are expensed when incurred. Securities are accounted for at the trade date. Measurement in subsequent periods depends on the classification of the financial instrument. Financial assets: Financial assets are classified into the following categories: financial assets at 'FVTPL', held-to-maturity investments, available-for-sale and loans and receivable. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. i) Financial assets at FVTPL Financial assets are classified as FVTPL when acquired principally for the purpose of trading, if so designated by management (fair value option), or if they are derivative assets that are not part of an effective and designated hedging relationship. Financial assets classified as FVTPL are measured at fair value, with changes recognized in the consolidated statements of loss. The Company does not currently hold any derivative instruments or apply hedge accounting. ii) Available-for-sale financial assets Financial assets are classified as available-for-sale when so designated by management. Financial assets classified as available-for-sale are measured at fair value, with changes recognized in the other comprehensive income. The Company currently does not have any financial assets classified as available-for-sale. iii) Loans and receivables Loans and receivables are non-derivative financial assets that have fixed or determinable payments and are not quoted in an active market. Subsequent to initial recognition, loans and receivables are carried at amortized cost using the effective interest method. Financial liabilities: Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. i) Other financial liabilities: Other financial liabilities including borrowings are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest recognized on an effective yield basis. The effective interest method is a method of calculating the amortized cost of a financial liability and of allocating interest costs over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or (where appropriate) to the net carrying amount on initial recognition

273 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 2. Significant accounting policies (continued) (e) Financial instruments (continued) De-recognition of financial liabilities: The Company derecognizes financial liabilities when the obligations are discharged, cancelled or expired. The Company s financial instruments consist of the following: Financial assets: Cash Amounts receivable Financial liabilities: Accounts payable and other liabilities Due to related parties Classification: FVTPL Loans and receivables Classification: Other financial liabilities Other financial liabilities Impairment of financial assets: Financial assets are assessed for indicators of impairment at the end of each reporting period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial assets, the estimated future cash flows of the investments have been negatively impacted. Evidence of impairment could include: significant financial difficulty of the issuer or counterparty; or default or delinquency in interest or principal payments; or the likelihood that the borrower will enter bankruptcy or financial reorganization. The carrying amount of financial assets is reduced by any impairment loss directly for all financial assets with the exception of amounts receivable, where the carrying amount is reduced through the use of an allowance account. When an amount receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized. Financial instruments recorded at fair value: Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - valuation based on quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - valuation techniques based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 - valuation techniques using inputs for the asset or liability that are not based on observable market data (unobservable inputs). As of December 31, 2015 and December 31, 2014, other than cash, none of the Company s financial instruments are recorded at fair value on the consolidated statements of financial position. Cash is considered as a Level 1 financial instrument

274 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 2. Significant accounting policies (continued) (f) Impairment of non-financial assets At the end of each reporting period, the Company reviews the carrying amounts of its non-financial assets with finite lives to determine whether there is any indication that those assets have suffered an impairment loss. Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of an asset s fair value less cost to sell or its value in use. In assessing value in use, the estimated future cash flows are discounted at a rate that reflects current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount and the impairment loss is recognized in the consolidated statement of loss. In addition, long lived assets that are not amortized are subject to an annual impairment assessment. (g) Share-based payment transactions The fair value of share options granted to employees is recognized as an expense over the vesting period with a corresponding increase in equity. An individual is classified as an employee when the individual is an employee for legal or tax purposes (direct employee) or provides services similar to those performed by a direct employee, including directors of the Company. The fair value is measured at the grant date and recognized over the period during which the options vest. The fair value of the options granted is measured using the Black-Scholes option pricing model, taking into account the terms and conditions upon which the options were granted. At each financial position reporting date, the amount recognized as an expense is adjusted to reflect the actual number of share options that are expected to vest. (h) Income taxes Tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized

275 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 2. Significant accounting policies (continued) (i) Loss per share The Company presents basic loss per share data for its common shares, calculated by dividing the loss attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using a weighted average number of common shares outstanding plus the repurchased common shares at the average market price for the period using the proceeds to be received on the exercise of dilutive stock options and warrants. The effect of potential issuances of shares under stock options and warrants would be anti-dilutive, and accordingly basic and diluted loss per share are the same. (j) Significant accounting judgments and estimates The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of expenses during the reporting period. Actual outcomes could differ from these estimates. The consolidated financial statements include estimates which, by their nature, are uncertain. The impacts of such estimates are pervasive throughout the consolidated financial statements, and may require accounting adjustments based on future occurrences. Revisions to accounting estimates are recognized in the period in which the estimate is revised and the revision affects both current and future periods. Significant assumptions about the future that management has made that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: the recoverability of amounts receivable that are included in the consolidated statements of financial position; estimates of accounts payable and other liabilities; and the determination for deferred tax asset. (k) New standards not yet adopted and interpretations issued but not yet effective IAS 1 - Presentation of Financial Statements was amended in December 2014 in order to clarify among other things, that information should not be obscured by aggregating or by providing immaterial information, that materiality consideration apply to all parts of the financial statements and that even when a standard required a specific disclosure, materiality considerations do apply. The amendments are effective for annual periods beginning on or after January 1, IFRS 9 Financial Instruments ( IFRS 9 ) was issued by the IASB in July 2014 and will replace IAS 39 - Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Final amendments released in July 2014 also introduce a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets. IFRS 9 is effective for annual periods beginning on or after January 1,

276 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 3. Capital risk management The Company includes equity, comprised of issued share capital, reserves and deficit, in the definition of capital, which as at December 31, 2015, totalled a deficit of $93,672 (December 31, deficit of $49,382). The Company s primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund its activities relating to identifying and evaluating a business or asset acquisition. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity and completion of a business or asset acquisition. There has been no change with respect to the overall capital risk management strategy during the year ended December 31, The Company is not subject to any capital requirements imposed by a lending institution or any external capital requirements. 4. Financial instruments and risk factors The Company's financial instruments, consisting of cash, amounts receivable, accounts payable and other liabilities, and due to related parties, approximate fair values due to the relatively short term maturities of the instruments. It is management s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. As at December 31, 2015, the Company had working capital deficit of $93,672 (December 31, deficit of $49,382). The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity. Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. As at December 31, 2015, the Company had cash of $5,769 (December 31, $22,875) to settle current liabilities of $99,708 (December 31, $72,468). The Company's liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities. Further financing will be required for working capital expenditures beyond December 31, While there is no assurance these funds can be raised, the Company believes such financing will be available as required. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity. 5. Categories of financial instruments As at As at December 31, December 31, Financial assets: FVTPL Cash $ 5,769 $ 22,875 Loans and receivables Amounts receivable Financial liabilities: Other financial liabilities Accounts payable and other liabilities $ 30,094 $ 7,499 Due to related parties 69,614 64,

277 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 6. Due to related parties Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties). (a) Bonanza entered into the following transactions with related parties: Year Ended December 31, Marrelli Support Services Inc. ("Marrelli Support") (i) $ 12,680 $ 6,500 (i) The Chief Financial Officer ("CFO") of Bonanza is the President of Marrelli Support. Fees relate to the CFO function performed. (b) The following summary outlines amounts owing to related parties. The amounts are unsecured, non-interest bearing and due on demand: As at As at December 31, December 31, Accounting fees payable to Marrelli Support $ 7,684 $ 3,039 Advances from Brillco Inc. ("Brillco") (i) 29,930 29,930 Advances from FSC Abel Financial Inc. ("FSC") (i) 32,000 32,000 $ 69,614 $ 64,969 (i) Shareholders of the Company. (c) Certain shareholders and an officer, all through companies they control, purchased common shares in the February 25, 2014 private placement (see note 7(b)(i)): Brillco, a shareholder, acquired direct ownership of 325,000 common shares of the Company in the private placement; FSC, a shareholder, acquired direct ownership of 325,000 common shares of the Company in the private placement; and C. Marrelli Services Limited, a company controlled by Carmelo Marrelli, the CFO of the Company, acquired direct ownership of 150,000 common shares of the Company in the private placement

278 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 6. Due to related parties (continued) (d) To the knowledge of the directors and officers of the Company, as at December 31, 2015, no person or corporation beneficially owned or exercised control or direction over common shares of the Company carrying more than 10% of the voting rights attached to all the common shares of the Company other than as set out below: Percentage of Number of Outstanding Common Shares Shares Brillco 1,875, % FSC 1,975, % As at December 31, 2015, directors and officers of the Company controlled 250,000 common shares of the Company or approximately 3.1% of the shares outstanding. The Company is not aware of any arrangements that may at a subsequent date result in a change in control of the Company. 7. Share capital a) Authorized share capital Unlimited common shares with no par value 2,000,000 special preference shares, voting, non-participating and redeemable b) Common shares issued At December 31, 2015, the issued share capital amounted to $388,712. The change in issued share capital for the years was as follows: Number of Common Shares Amount Balance, December 31, ,255,009 $ 352,164 Private placement (i) 800,000 40,000 Cost of issue (i) - (3,452) Balance, December 31, 2014 and December 31, ,055,009 $ 388,712 (i) On February 25, 2014, Bonanza announced that it has completed a non-brokered private placement of common shares raising gross proceeds of $40,000. The Company has issued and sold 800,000 common shares at a price of $0.05 per share. Legal and other costs associated with the non-brokered private placement amounted to $3,452 (see note 6(c))

279 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 8. Stock options The following table reflects the continuity of stock options for the years presented: Number of Weighted Average Stock Options Exercise Price ($) Balance, December 31, 2013, 2014 and , The following table reflects the actual stock options issued and outstanding as of December 31, 2015: Weighted Average Number of Remaining Number of Options Number of Exercise Contractual Options Vested Options Expiry Date Price ($) Life (Years) Outstanding (Exercisable) Unvested June 24, , , Warrants Number of Grant Date Warrants Fair Value ($) Balance, December 31, ,500, ,000 Expired (1,500,000) (102,000) Balance, December 31, 2014 and December 31, Net loss per share The calculation of basic and diluted loss per share for the year ended December 31, 2015, was based on the loss attributable to common shareholders of $44,290 (year ended December 31, loss of $19,678) and the weighted average number of common shares outstanding of 8,055,009 (year ended December 31, ,890,325). Diluted loss per share is the same as basic loss per share. 11. Income taxes (a) Provision for income taxes The consolidated income tax expense for each of the years ended December 31, 2015 and 2014 is $nil. There are no income tax assets or liabilities that have been recognized. The consolidated actual income tax expense is as follows: Year Ended December 31, Loss before income taxes $ (44,290) $ (19,678) Expected income tax recovery based on statutory rate of 26.5% ( %) (11,737) (5,215) Adjustment to expected income tax benefit: Share issue expense deductible (1,075) (1,075) Benefit of tax losses not recognized 12,812 6,290 Income tax provision (recovery) $ - $

280 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 11. Income taxes (continued) (b) Deferred income tax balances The following assets have not been recognized for accounting purposes as it is not probable that taxable profits will be available against which the deferred tax assets can be utilized: As at As at December 31, December 31, Deferred income tax Non-capital losses carried forward $ 72,096 $ 59,323 Share issue costs 546 1,625 72,642 60,948 Deferred tax assets not recognized (72,642) (60,948) $ - $ - (c) Losses carried forward As at December 31, 2015, the Company and its subsidiary have non-capital losses available for carry forward of approximately $272,062 ( $223,862) for income tax purposes as follows: Expires: 2025 $ 9, , , , , , , , , ,300 $ 272, General and administrative Year Ended December 31, Professional fees $ 27,103 $ 11,890 Shareholder information 1, Office and general 15,592 7,448 $ 44,290 $ 19, Segmented information The Company's operations comprise a single reporting segment which is currently inactive. As the operations comprise a single reporting segment, amounts disclosed in the consolidated financial statements also represent segment amounts

281 Bonanza Blue Corp. Notes to Consolidated Financial Statements Years Ended December 31, 2015 and 2014 (Expressed in Canadian Dollars) 14. Termination of proposed business combination On July 6, 2015, Bonanza announced that it and Churchill Diamond Corporation had mutually agreed to terminate their previously announced proposed business combination. Bonanza intends to continue its search for a prospective business or asset to merge with or acquire

282 SCHEDULE "L" BONANZA S INTERIM FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 Please see attached. L-1

283 Bonanza Blue Corp. Condensed Interim Consolidated Financial Statements Three and Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited)

284 Bonanza Blue Corp. Condensed Interim Consolidated Statements of Financial Position (Expressed in Canadian Dollars) (Unaudited) As at As at September 30, December 31, ASSETS Current assets Cash $ 5,551 $ 5,769 Amounts receivable Total assets $ 5,790 $ 6,036 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Accounts payable and other liabilities $ 55,806 $ 30,094 Due to related parties (note 3(b)) 80,074 69,614 Total liabilities 135,880 99,708 Shareholders' deficit Share capital (note 4) 388, ,712 Reserve for share-based payments (note 5) - 34,200 Deficit (518,802) (516,584) Total shareholders' deficit (130,090) (93,672) Total liabilities and shareholders' deficit $ 5,790 $ 6,036 The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements. Nature of operations and going concern assumption (note 1) Approved on behalf of the Board: (Signed) "Eric Klein", (Signed) "David Brill", Director Director - 1 -

285 Bonanza Blue Corp. Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Expressed in Canadian Dollars) (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, Expenses General and administrative (note 7) $ 18,466 $ 2,716 $ 36,418 $ 40,663 Net loss and comprehensive loss for the period $ (18,466) $ (2,716) $ (36,418) $ (40,663) Basic and diluted net loss per share (note 6) $ (0.00) $ (0.00) $ (0.00) $ (0.01) Weighted average number of common shares outstanding - basic and diluted 8,055,009 8,055,009 8,055,009 8,055,009 The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements

286 Bonanza Blue Corp. Condensed Interim Consolidated Statements of Changes in Shareholders' Deficit (Expressed in Canadian Dollars) (Unaudited) Reserve for Share Share-based Capital Payments Deficit Total Balance, December 31, 2014 $ 388,712 $ 34,200 $ (472,294) $ (49,382) Net loss for the period - - (40,663) (40,663) Balance, September 30, 2015 $ 388,712 $ 34,200 $ (512,957) $ (90,045) Balance, December 31, 2015 $ 388,712 $ 34,200 $ (516,584) $ (93,672) Expiry of stock options - (34,200) 34,200 - Net loss for the period - - (36,418) (36,418) Balance, September 30, 2016 $ 388,712 $ - $ (518,802) $ (130,090) The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements

287 Bonanza Blue Corp. Condensed Interim Consolidated Statements of Cash Flows (Expressed in Canadian Dollars) (Unaudited) Nine Months Ended September 30, Operating activities Net loss for the period $ (36,418) $ (40,663) Non-cash working capital items: Amounts receivable 28 (3,738) Accounts payable and other liabilities 25,712 22,510 Due to related parties 10,460 3,322 Net cash used in operating activities (218) (18,569) Net change in cash (218) (18,569) Cash, beginning of period 5,769 22,875 Cash, end of period $ 5,551 $ 4,306 The accompanying notes to the unaudited condensed interim consolidated financial statements are an integral part of these statements

288 Bonanza Blue Corp. Notes to Condensed Interim Consolidated Financial Statements Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited) 1. Nature of operations and going concern assumption On October 12, 2000, Tripleplay Sports Group Inc. ("Tripleplay") acquired all of the issued and outstanding shares of Ontario Inc. for 3,420,000 post consolidated common shares and warrants to acquire 3,420,000 post consolidated common shares at $0.20 per share expiring on October 12, In connection with the acquisition, Tripleplay changed its name to Bonanza Blue Corp. ("Bonanza" or the "Company") and consolidated its common shares on a 1 for 10 basis. The Company has no operations and is currently seeking new business opportunities. Success in identifying a suitable new business for the Company is uncertain. Furthermore, the Company has limited working capital to pursue such opportunities. As at September 30, 2016, the Company had a working capital deficiency of $130,090 (December 31, working capital deficiency of $93,672) and accumulated deficit of $518,802 (December 31, 2015 accumulated deficit of $516,584). In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but not limited to, twelve months from the end of the reporting period. The Company s ability to continue operations is dependent on management s ability to obtain additional financing and to manage its cash resources. The Company's discretionary activities do have considerable scope for flexibility in terms of the amount and timing of expenditure, and expenditures may be adjusted accordingly. The primary office is located at 82 Richmond Street East, Toronto, Ontario, M5C 1P1. The Company's financial year ends on December Significant accounting policies (a) Statement of compliance The unaudited condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ( IASB ) and interpretations issued by the IFRS Interpretations Committee ("IFRIC"). These unaudited condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting. Accordingly, they do not include all of the information required for full annual financial statements required by IFRS as issued by the IASB and interpretations issued by the IFRIC. The policies applied in these unaudited condensed interim consolidated financial statements are based on IFRS issued and outstanding as of October 17, 2016, the date the Board of Directors approved the statements. The same accounting policies and methods of computation are followed in these unaudited condensed interim consolidated financial statements as compared with the most recent annual consolidated financial statements as at and for the year ended December 31, 2015, except as noted below. Any subsequent changes to IFRS that are given effect in the Company s annual consolidated financial statements for the year ending December 31, 2016 could result in restatement of these unaudited condensed interim consolidated financial statements. (b) Change in accounting policies IAS 1 - Presentation of Financial Statements was amended in December 2014 in order to clarify among other things, that information should not be obscured by aggregating or by providing immaterial information, that materiality consideration apply to all parts of the financial statements and that even when a standard required a specific disclosure, materiality considerations do apply. There was no impact on the unaudited condensed interim consolidated financial statements as a result of this adoption

289 Bonanza Blue Corp. Notes to Condensed Interim Consolidated Financial Statements Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited) 2. Significant accounting policies (continued) (c) New standards not yet adopted and interpretations issued but not yet effective IFRS 9 Financial Instruments ( IFRS 9 ) was issued by the IASB in July 2014 and will replace IAS 39 - Financial Instruments: Recognition and Measurement. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Final amendments released in July 2014 also introduce a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets. IFRS 9 is effective for annual periods beginning on or after January 1, Due to related parties Related parties include the Board of Directors, officers, close family members and enterprises that are controlled by these individuals as well as certain persons performing similar functions. Related party transactions conducted in the normal course of operations are measured at the exchange value (the amount established and agreed to by the related parties). (a) Bonanza entered into the following transactions with related parties: Nine Months Ended September 30, Marrelli Support Services Inc. ("Marrelli Support") (i) $ 8,104 $ 11,000 Three Months Ended September 30, Marrelli Support (i) $ 1,500 $ 1,500 (i) The Chief Financial Officer ("CFO") of Bonanza is the President of Marrelli Support. Fees relate to the CFO function performed. (b) The following summary outlines amounts owing to related parties. The amounts are unsecured, non-interest bearing and due on demand: As at As at September 30, December 31, Accounting fees payable to Marrelli Support $ 18,144 $ 7,684 Advances from Brillco Inc. ("Brillco") 29,930 29,930 Advances from FSC Abel Financial Inc. ("FSC") 32,000 32,000 $ 80,074 $ 69,

290 Bonanza Blue Corp. Notes to Condensed Interim Consolidated Financial Statements Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited) 3. Due to related parties (continued) (c) To the knowledge of the directors and officers of the Company, as at September 30, 2016, no person or corporation beneficially owned or exercised control or direction over common shares of the Company carrying more than 10% of the voting rights attached to all the common shares of the Company other than as set out below: Percentage of Number of Outstanding Common Shares Shares Brillco 1,875, % FSC 1,975, % As at September 30, 2016, directors and officers of the Company controlled 250,000 common shares of the Company or approximately 3.1% of the shares outstanding. The Company is not aware of any arrangements that may at a subsequent date result in a change in control of the Company. 4. Share capital a) Authorized share capital Unlimited common shares with no par value 2,000,000 special preference shares, voting, non-participating and redeemable b) Common shares issued At September 30, 2016, the issued share capital amounted to $388,712. The change in issued share capital for the periods was as follows: Number of Common Shares Amount Balance, December 31, 2014, September 30, 2015, December 31, 2015 and September 30, ,055,009 $ 388, Stock options The following table reflects the continuity of stock options for the periods presented: Number of Weighted Average Stock Options Exercise Price ($) Balance, December 31, 2014 and September 30, , Balance, December 31, , Expired (450,000) (0.12) Balance, September 30,

291 Bonanza Blue Corp. Notes to Condensed Interim Consolidated Financial Statements Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited) 6. Net loss per share The calculation of basic and diluted loss per share for the three and nine months ended September 30, 2016, was based on the loss attributable to common shareholders of $18,466 and $36,418, respectively (three and nine months ended September 30, loss of $2,716 and $40,663, respectively) and the weighted average number of common shares outstanding of 8,055,009 (three and nine months ended September 30, ,055,009). Diluted loss per share is the same as basic loss per share. 7. General and administrative Three Months Ended Nine Months Ended September 30, September 30, Professional fees $ 16,580 $ 886 $ 25,387 $ 25,583 Shareholder information - - 1,595 1,595 Office and general 1,886 1,830 9,436 13,485 $ 18,466 $ 2,716 $ 36,418 $ 40, Segmented information The Company's operations comprise a single reporting segment which is currently inactive. As the operations comprise a single reporting segment, amounts disclosed in the unaudited condensed interim consolidated financial statements also represent segment amounts. 9. Proposed transaction On June 30, 2016, Bonanza announced that it has entered into a binding agreement (the Agreement ) with Cannabis Royalties & Holdings Corp. ( CRHC ) which outlines the general terms and conditions of a proposed transaction pursuant to which Bonanza will acquire all of the issued and outstanding securities of CRHC in exchange for securities of Bonanza (the Proposed Transaction ). The Agreement was negotiated at arm s length and is dated June 30, As contemplated by the Agreement, Bonanza and CRHC intend to apply to the Canadian Stock Exchange ( CSE ) for the listing of the common shares of the consolidated entity. CRHC is a privately held company incorporated pursuant to the Canada Business Corporations Act. CRHC provides an integrated approach to the legal cannabis sector with a focus on three key verticals: brands and intellectual property, delivery systems and devices, and extraction. CRHC contributes strategic capital and expertise to maximize the return potential of its diversified portfolio of assets and holdings. The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approvals, regulatory approval, including approval of the CSE, and additional conditions, as described in the Agreement. Bonanza has called an annual and special meeting of its shareholders to be held on November 11, 2016 for the purpose of approving, among other matters, (i) a consolidation of the issued and outstanding Bonanza common shares on the basis of one new Bonanza common share for every 5 old Bonanza shares, subject to adjustment in certain events; (ii) a change of name of Bonanza to CannaRoyalty Corp. or such other name as Bonanza may determine and shall be acceptable to regulatory authorities; and (iii) the election of nominees of CRHC to the Board of Bonanza. Upon closing of the Proposed Transaction, the Board of Bonanza will be reconstituted in a manner that complies with the requirements of the CSE and applicable securities laws. CRHC shall be entitled to all nominees on the reconstituted Board, subject to the receipt of applicable regulatory approvals

292 Bonanza Blue Corp. Notes to Condensed Interim Consolidated Financial Statements Nine Months Ended September 30, 2016 (Expressed in Canadian Dollars) (Unaudited) 9. Proposed transaction (continued) In connection with the Proposed Transaction, on October 4, 2016 CRHC announced that it had completed its brokered offering of 2,502,000 subscription receipts (the Subscription Receipts ) at a price of $2.00 per Subscription Receipt for total gross proceeds of approximately $5 million (the Offering ) through a syndicate of agents co-led by Clarus Securities Inc. and Sprott Private Wealth LP (together, the Co-Lead Agents ), and including Bloom Burton & Co. and KES 7 Capital Inc (collectively with the Co- Lead Agents, the Agents ). The Subscription Receipts will be automatically converted into common shares in the capital of CRHC ( CRHC Shares ) upon collectively, (i) the completion, satisfaction or waiver, as the case may be, of all conditions precedent to the Proposed Transaction set forth in the Agreement, to the satisfaction of the Co-Lead Agents, acting reasonably, other than the filing of the articles of amalgamation; (ii) the receipt of all required shareholder, third party (as applicable) and regulatory approvals in connection with the Proposed Transaction; (iii) the listing of the common shares of Bonanza post-proposed Transaction (the Resulting Issuer ) on the CSE shall have been conditionally approved; and (iv) the representations and warranties of CRHC in the agency agreement dated effective August 17, 2016, between the Agents and CRHC are true and correct at the closing of the Offering and the date of the release of the Escrowed Proceeds (as defined below), except to the extent that the failure of such representations and warranties to be so true and correct, individually or in the aggregate, would not have a material adverse effect (the Escrow Release Conditions ). The proceeds from the sale of the Subscription Receipts less 50% of the Agents Fees (as defined below) and the expenses of the Agents (the Escrowed Proceeds ) will be deposited in escrow until the Escrow Release Conditions have been satisfied. Upon the successful completion of the Proposed Transaction, the CRHC Shares, including those issued pursuant to conversion of the Subscription Receipts, will be exchanged for common shares of the Resulting Issuer. If the Escrow Release Conditions have not been satisfied within 3 months of the Closing Date (as defined below), holders of Subscription Receipts will be refunded the gross proceeds paid for the Subscription Receipts and the Subscription Receipts will be cancelled. The Agents are entitled to receive an aggregate cash fee of 7% percent of the gross proceeds of the Offering (the Agents Fee ), of which 50% was paid on the closing of the Offering (the Closing Date ) and the remaining 50% will be paid upon the release of the Escrowed Proceeds. The Agents will also be reimbursed for their fees and expenses incurred in connection with the Offering. As additional consideration for the services of the Agents, CRHC has agreed to issue to the Agents such number of non-transferable broker warrants (the Broker Warrants ) as is equal to 7% percent of the number of Subscription Receipts sold pursuant to the Offering. The Broker Warrants will be issued on release of the Escrowed Proceeds. Each Broker Warrant shall entitle the holder to acquire, at any time during the period that is two years from the Closing Date, one common share of the Resulting Issuer at an exercise price of $2.00 per common share. The proceeds of the Offering are intended to be used by the Resulting Issuer for future acquisitions, general corporate and working capital purposes. In connection with the Proposed Transaction, Bonanza also intends to undertake an equity financing for gross proceeds of not less than $50,000 and not more than $95,000 in cash (the Bonanza Financing ). The Bonanza Financing is currently intended to be completed by way of an issuance of subscription receipts, with each subscription receipt entitling the holder to one post-consolidation Bonanza share upon conversion in accordance with its terms. Upon closing of the Proposed Transaction, all securities of CRHC issued in connection with the Offering will automatically be exchanged for post-consolidation Bonanza shares on the same terms as existing CRHC securities

293 SCHEDULE "M" CRHC S AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2016 AND THE PERIOD FROM OCTOBER 3, 2014 (DATE OF INCORPORATION) TO MARCH 31, 2015 Please see attached. M-1

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330 SCHEDULE "N" CRHC S INTERIM FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2016 Please see attached. N-1

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