North Bud Farms Provides Corporate Update

Divestment of U.S. Operations and Failure-to-File Cease Trade Order Issued

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TORONTO, June 02, 2020 (GLOBE NEWSWIRE) -- North Bud Farms Inc. (CSE: NBUD) (OTCQB: NOBDF) ("NORTHBUD" or the "Company") provides shareholders with the following corporate update:

U.S. Operations

The Company is pleased to announce that it has signed a definitive agreement to sell all the shares of its U.S. subsidiary, Bonfire Brands USA, Inc. (“BBUSA”), to an entity controlled by Mr. Justin Braune, the President of BBUSA.  The transaction constitutes a related-party transaction as defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as the fair market value of the shares of BBUSA sold to the acquiror does not exceed 25% of the Company’s market capitalization.  This determination is based upon the fact that the value of the net assets of BBUSA is negligible as the assets acquired were, and continue to be, highly leveraged.  In light of the current market conditions, it is no longer economically viable for the Company to continue to try to sustain and develop these assets.

Under the terms of the transaction, the acquiring party is responsible for and guarantees all of BBUSA’s past and future liabilities and capital requirements, including all of the outstanding intercompany debts owed to NORTHBUD up to a maximum of CDN$2 million.  The acquiror will retain rights to the name “Bonfire Brands” and the Company will no longer proceed with the change of name and symbol that was approved at the last shareholder meeting. 

“We are pleased with the successful completion of this deal to divest our U.S. holdings as it will significantly improve the Company’s balance sheet and available cash flow, a key Company objective in light of the difficult economic climate brought on by Covid-19,” said Ryan Brown, NORTHBUD’s Executive Chairman and Interim CEO.  “The structure of this transaction represents the achievement of the Company’s previously-announced plan to remove its direct exposure to the U.S. cannabis sector in order to eliminate the increasing administrative and capital costs associated with such holdings.”