North Bud Farms Provides Corporate Update - Seite 2

Failure-to-File Cease Trade Order Issued
The following is an update on the previously announced management cease trade order (the "MCTO") issued by the Ontario Securities Commission on March 31, 2020.  The MCTO was issued in connection with the delay by the Company in filing its annual financial statements, management's discussion and analysis and related officer certifications for the financial year ended November 30, 2019 (collectively, the "Required Filings") before the prescribed deadline of March 30, 2020.  

Sequence of Events
As previously disclosed, the Company completed two material U.S.-based acquisitions in November 2019, weeks prior to its year-end, thus obliging the Company to include purchase price accounting and post-acquisition activity for both acquired companies into its consolidated financial statements for the financial year ended November 30, 2019.

The Company took decisive steps to augment its capabilities to manage and report on its expanded operations including the appointment of advisors, valuation and taxation experts to assist with the year-end reporting and audit requirements; the appointments of Sean Homuth as CEO in December 2019, Adam Shapero as General Counsel in January 2020, and Jeffrey Stoss as CFO in February 2020; and, the addition of Jennifer Ross-Carriere and Lisa Mayhew as Directors in December 2019 and February 2020 respectively. Unfortunately, Sean Homuth had to take a medical leave of absence from the Company on April 28, 2020, which resulted in some delays to the progress of the year-end audit as he was interim CFO for the Company around the time of the U.S. acquisitions.

Due primarily to the inability of management, and its advisors and auditors to travel to the U.S. to conduct onsite field work, and due to ongoing travel and work restrictions in both Canada and the U.S. imposed by the impact of COVID-19 and the additional audit and reporting work related to the Company’s stated intention to divest of its U.S. operations as announced May 6, 2020, the Company could not complete and file the Required Filings for the year-ended November 30, 2019 and the quarter-ended February 29, 2020 before the end of the May 31, 2020 deadline contemplated by the MCTO.  The Company, its advisors and its independent auditor, are continuing to work diligently to complete the necessary work and the Company intends to make the Required Filings as soon as possible.