North Bud Farms Announces the Closing of the Second Tranche of its Non-Brokered Private Placement of Debenture Units

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

TORONTO, Feb. 14, 2020 (GLOBE NEWSWIRE) -- North Bud Farms Inc. (CSE: NBUD) (OTCQB: NOBDF) ("NORTHBUD" or the "Company") is pleased to announce the closing of the second tranche (the “Second Tranche”) of its non-brokered private placement of convertible debenture units (the "Units") of the Company for gross proceeds of C$613,000. Each Unit 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 (each a “Warrant”) of the Company. The terms of the Units were previously announced by the Company in its press release dated January 27, 2020.

Ryan Brown, Executive Chairman of the Company, participated in the Second Tranche and beneficially acquired 400 Units for total proceeds of $400,000. André Audet, a Director of the Company, also participated in the Second Tranche and beneficially acquired 60 Units for total proceeds of $60,000. The participation of each of Ryan Brown and André Audet in the Second Tranche constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The issuance of Units to Ryan Brown and André Audet is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, as the fair market value of the Units issued to and the consideration paid by Ryan Brown and André Audet did not exceed 25% of the Company’s market capitalization.

Certain finders (the "Finders") received a cash commission of $39,040 on the sale of the Second Tranche. The Finders also received 216,889 compensation warrants (the “Compensation Warrants”), each carrying the right to purchase 1 common share in the capital of the Company at a price of $0.18 per Compensation Warrant for a period of 24 months from the closing date.

The proceeds of the Second Tranche will be used by the Company for expansion of the Company's facilities and for general corporate and working capital purposes.

The Convertible Debentures, Warrants and Compensation Warrants issued pursuant to the Second Tranche of the Offering and any common shares in the capital of the Company (“Common Shares”) issued on conversion of such Convertible Debentures or exercise of such Warrants and Compensation Warrants will be subject to a statutory hold period in Canada of four months and one day following the closing date, in accordance with applicable securities laws. Common Shares issued in lieu of interest payments in accordance with the terms of the Convertible Debentures (the “Prepaid Interest Shares”) will be subject to a statutory hold period in Canada of four months and one day from the date on which such Prepaid Interest Shares are issued, in accordance with applicable securities laws. Additional resale restrictions may be applicable under the laws of other jurisdictions, if any.