IM Cannabis Corp.

Second Note

Pursuant to a note purchase agreement between the Company and Lender dated May 7, 2026 (the “Second Note Purchase Agreement”), the Company issued the Lender a note in the principal amount of US$300,000, with an original issuance discount of 10% (the “Second Note”).

The Second Note bears interest at a rate of 8% per annum, increasing to 14% upon the occurrence and continuation of an event of default. The Second Note is not repayable in cash and the Company’s obligations thereunder will be satisfied solely through the issuance of Common Shares upon conversion.

The conversion price in the Second Note was set to the lower of (i) a fixed price of US$0.266 per Common Share, or (ii) 90% of the lowest daily VWAP during the 20 consecutive trading days preceding the conversion date, subject to a floor price of US$0.05. The Second Note includes customary limitations, including a 4.99% beneficial ownership cap.

In connection with the Second Note, the Company issued a warrant to purchase up to 1,127,820 Common Shares (the “Second Note Warrants”) at an exercise price of C$0.36 per Common Share. The Second Note Warrants became exercisable immediately upon its issuance date, May, 7, 2026, and will expire after five years on May 7, 2031.

The Company intends to use the net proceeds for general corporate purposes.

In connection with the First Note Purchase Agreement and Second Note Purchase Agreement, the Company has agreed to reserve sufficient Common Shares for issuance upon conversion of the First Note and Second Note, respectively, and exercise of the First Note Warrants and Second Note Warrants, respectively, and to file a resale registration statements on Form F-3 with the U.S. Securities and Exchange Commission (the “SEC”) and to use commercially reasonable efforts to secure its effectiveness within the timeframes agreed with the Lender.

All securities issued under the financings described above are subject to: (i) a four month and one day hold period from the date of issuance and (ii) applicable legends as required pursuant to the U.S. Securities Act of 1933, as amended (the “Securities Act”). The private placements of the securities offered to the Lender were made in reliance on an exemption from (x) registration under Section 4(a)(2) of the Securities Act and (y) applicable Canadian securities laws. Accordingly, the securities issued in the private placements may not be offered or sold in the United States or Canada except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws or an exemption pursuant to Canadian securities laws.