C21 Investments Announces Settlement of Eco Firma Farms Litigation

Executive Summary

• C21 Investments Inc. has entered into a settlement agreement to resolve litigation (the "Oregon Actions" and "BC Action") brought by former owners of Proudest Monkey Holdings, LLC, regarding the 2018 acquisition of Eco Firma Farms LLC (EFF).
• The settlement involves a total cash payment of US$2,400,000 and the issuance of 555,793 common shares to the plaintiffs, effectively resolving all claims with prejudice.
• The cash liability is offset by the extinguishment of existing accruals, specifically a $1,156,259 Convertible Notes accrual and a $612,500 accounts payable litigation accrual, resulting in a net financial impact.

Key Details

• Settlement Amount: Total cash sum of US$2,400,000 payable to the plaintiffs.
• Payment Schedule:
  • US$500,000 payable on or before September 12, 2025.
  • US$100,000 per month for 19 months, commencing one month after the Initial Payment Date.
• Share Consideration: The Company agreed to issue an aggregate of 555,793 common shares to certain vendors. These shares are issued in connection with share payment notes issued under the original 2018 EFF Agreement.
• Litigation Background:
  • Oregon Actions: Filed in Oregon State Circuit Court for Clackamas County and the Oregon Court of Appeals by two vendors of Proudest Monkey Holdings, LLC. Claims included contract, employment, and statutory damages against C21, its subsidiaries, directors, officers, and a former employee.
  • BC Action: Filed in the Supreme Court of British Columbia by Proudest Monkey and one of its owners, stemming from C21's refusal to issue equity consideration due to alleged breaches by the vendors.
• Financial Impact: The settlement extinguishes specific liabilities recorded in the interim condensed consolidated financial statements for the three months ended June 30, 2025 and 2024:
  • Extinguishment of $1,156,259 Convertible Notes accrual.
  • Extinguishment of $612,500 accounts payable litigation-related accrual.
• Terms: The settlement includes a mutual release of all claims and is without admission of liability by any party.

Notable Quotes

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