North Bud Farms Announces Proposed Terms for the Second Tranche of its Non-Brokered Private Placement and Provides a Corporate Update

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TORONTO, Jan. 27, 2020 (GLOBE NEWSWIRE) -- North Bud Farms Inc. (CSE: NBUD) (OTCQB: NOBDF) ("NORTHBUD" or the "Company") is pleased to announce that it is arranging a closing for the second tranche (the "Second Tranche") of its non-brokered private placement of 10% secured convertible debenture units (the "Units") of the Company at a price of C$1,000 for gross proceeds of up to C$4,000,000, originally announced on November 6, 2019 (the "Offering"). The first tranche of the Offering closed on November 6, 2019, at which time the Company issued an aggregate of 1,264 Units for gross proceeds of $1,264,000. Accordingly, the Company can issue up to an additional $2,736,000 of Units under the Second Tranche.

Each Unit issued in connection with the Second Tranche of the Offering is comprised of one C$1,000 principal amount of secured convertible debenture (a "Convertible Debenture") accruing interest at 10.0% per annum, payable semi-annually in arrears until maturity, and 5,556 common share purchase warrants of the Company (each, a "Warrant"). The Convertible Debentures will have a maturity date of 36 months from the date of issuance. In addition, under the Second Tranche, the Company has the right to prepay an amount equal to the 1st year of interest to be earned by issuing common shares at a deemed price of $0.25 per common share (the “Prepaid Interest Shares”) on the 15^th day following the Closing Date should the holders of the Convertible Debentures not elect to receive their 1st year interest paid in cash.

Each Convertible Debenture shall be convertible into common shares in the capital of the Company (each, a "Conversion Share") at a price of $0.18 (the "Conversion Price") per Conversion Share.

Each Warrant entitles the holder thereof to acquire one common share in the capital of the Company (each, a "Warrant Share") for an exercise price of $0.30 per Warrant Share for a period of 36 months following the closing date.

The Convertible Debentures are direct secured obligations of the Company and rank pari passu in right of payment of principal and interest with all other Convertible Debentures issued under the Offering.

Certain directors of the Company have indicated that they may participate in the private placement. Any such purchase would constitute a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The proposed issuance to directors of the Company would be exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as the fair market value of any Units issued to or the consideration paid by such insiders would not exceed 25% of the Company’s market capitalization.