6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

THE SECURITIES EXCHANGE ACT OF 1934

Date: May 7, 2020

Commission File No. 0-53646

Grown Rogue International Inc.
(formerly Novicius Corp.)

(Translation of Registrant’s name into English)

340 Richmond Street West

Toronto, Ontario, Canada M5V 1X2

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒            Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ☐           No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ☐           No ☒

TABLE OF CONTENTS

1.	ON Form 13-502F1 Class 1 and Class 3B Reporting Issuers – Participation Fee, as filed on Sedar on March 23, 2020.
2.	News Release – Grown Rogue Announces Issuance of Shares, as filed on Sedar on March 27, 2020.
3.	Unaudited Condensed Consolidated Interim Financial Statements for the three months ended January 31, 2020 and 2019, as filed on Sedar on March 31, 2020.
4.	Management Discussion & Analysis for the three months ended January 31, 2020, as filed on Sedar on March 31, 2020.
5.	CEO Certification of Interim Filings Venture Issuer Basic Certificate, as filed on Sedar on March 31, 2020.
6.	CFO and Corporate Secretary Certification of Interim Filings Venture Issuer Basic Certificate, as filed on Sedar on March 31, 2020.
7.	News Release – Grown Rogue Triples Gross Profit, Reports Positive Cash from Operations in Q1, as filed on Sedar on April 1, 2020.

1

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:  May 7, 2020	GROWN ROGUE INTERNATIONAL INC.
	(FORMERLY:  NOVICIUS CORP.)
	By:	/s/ Obie Strickler
	Name:	Obie Strickler
	Title:	President & Chief Executive Officer

2

EX-99.1

Exhibit 1

1

 

2

3

EX-99.2

Exhibit 2

GROWN ROGUE ANNOUNCES ISSUANCE OF SHARES

MEDFORD, OREGON / March 27, 2020 / Grown Rogue International Inc. (CSE: GRIN) (OTC: GRUSF) (“Grown Rogue” or the “Company”), is pleased to announce that the Company has issued a total of 1,100,000 common shares to certain former and current consultants of the Company. The above mentioned common shares were issued at a price of $0.10 per share and are subject to a four month hold period expiring on July 27, 2020.

About Grown Rogue

Grown Rogue International Inc. is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. Grown Rogue has combined an expert management team, award winning cultivation team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience”. The Grown Rogue family of products includes sungrown and indoor premium flower, patented nitrogen sealed pre-rolls along with chocolate edibles featuring a partnership with world-renowned chocolatier.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

For further information on Grown Rogue International please visit www.grownrogue.com or contact:

Obie Strickler

Chief Executive Officer
obie@grownrogue.com

Investor Relations Desk Inquiries
invest@grownrogue.com

(458) 226-2100

EX-99.3

Exhibit 3

Unaudited Condensed Consolidated Interim Financial Statements

Grown Rogue International Inc.

For the Three Month Periods ended January 31, 2020 and 2019

(Expressed in United States Dollars)

NOTICE TO READER

The accompanying unaudited condensed consolidated interim financial statements have been prepared by the Company’s management and the Company’s independent auditors have not performed a review of these interim financial statements.

Grown Rogue International Inc.

Unaudited Condensed Consolidated Interim Statements of Financial Position

Expressed in United States Dollars

	January 31, 2020 (Unaudited)			October 31, 2019 (Audited)
Assets
Current Assets
Cash	$	133,646		$	74,926
Accounts receivable (note 24)		106,093			99,188
Other receivable		39,311			35,235
Biological assets (note 5)		184,089			156,589
Inventory (note 6)		1,094,243			940,715
Prepaid expenses and other assets		121,837			126,309
		1,679,219			1,432,962
Property and equipment (note 9)		1,245,605			1,464,917
Right-of-use assets (note 10)		216,511			-
Intangible assets		26,938			34,597
	$	3,168,273		$	2,932,476
Liabilities
Current Liabilities
Accounts payable and accrued liabilities (note 23)	$	1,383,425		$	1,526,855
Finance lease payable (note 8)		104,130			129,876
Convertible debentures (note 14)		2,072,065			1,995,609
Current portion of long-term debt (note 12)		165,000			150,000
Unearned revenue (note 19)		-			35,000
Current portion of lease liabilities (note 11)		171,641			-
Interest payable (note 8, 12, 13 and 14)		73,852			55,829
Derivative liabilities (note 14)		248,633			249,320
		4,218,746			4,142,489
Accrued liabilities (note 7)		467,055			180,799
Finance leases payable (note 8)		3,164			12,329
Lease liabilities (note 11)		50,568			-
Deferred rent (note 24)		34,238			24,505
		4,773,771			4,360,122
Equity Holders’ Deficit
Share capital (note 16)		12,719,840			12,647,930
Shares to be issued (note 18)		5,136			5,136
Contributed surplus (notes 17, 19 and 20)		2,890,435			2,890,435
Accumulated other comprehensive income		105,345			121,920
Accumulated deficit		(17,329,647	)		(17,112,605	)
Deficit attributable to sharesholders of the Company		(1,608,891	)		(1,447,184	)
Non-controlling interest (note 1)		3,393			19,538
		(1,605,498	)		(1,427,646	)
	$	3,168,273		$	2,932,476

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

Approved on behalf of the Board of Directors

Signed “J. Obie Strickler”               , Director Signed “Stephen Gledhill”                , Director

-1-

Grown Rogue International Inc.

Unaudited Condensed Consolidated Interim Statements of Operations

For the three month periods ended January 31

Expressed in United States Dollars

	2020			2019
Revenue	$	1,106,296		$	834,309
Cost of Goods Sold
Cost of finished cannabis inventory sold (note 6)		(521,680	)		(669,920	)
Gross profit, excluding fair value items		584,616			164,389
Realized fair value amounts included in inventory sold		(632,630	)		47,111
Unrelaized fair value gain on growth of biological assets (note 5)		701,559			44,830
Gross profit		653,545			256,330
Expenses
Accretion expense (notes 13 and 14)		68,210			17,964
Amortization of intangible assets		7,659			7,233
Amortization of property and equipment (note 9)		49,677			158,814
Amortization of rights-of-use assets (note 11)		35,822			-
General and administrative (note 23 and 25)		670,768			1,007,305
Transaction costs (note 2)		-			3,723,724
		832,136			4,915,040
Loss from operations		(178,591	)		(4,658,710	)
Interest expense (notes 11, 12, 13 and 14)		(90,514	)		(164,852	)
Other income		15,000			10,000
Gain on derecognition of derivative liability (note 13)		-			15,000
Gain on disposal of property and equipment		20,918			-
Net loss		(233,187	)		(4,798,562	)
Other Comprehensive Income
Currency translation adjustment		(16,575	)		-
Comprehensive Loss	$	(249,762	)	$	(4,798,562	)
Loss per share - basic and diluted	$	-		$	(0.08	)
Weighted Average Number of Common Shares Outstanding - basic and diluted		72,562,742			61,324,047
Net Loss Attributiable to:
Non-controlling Interest	$	(16,145	)	$	-
Equity shareholders of the Company		(217,042	)		(4,798,562	)
	$	(233,187	)	$	(4,798,562	)
Comprehensive Loss Attributable to:
Non-controlling Interest	$	(16,145	)	$	-
Equity shareholders of the company		(233,617	)		(4,798,562	)
	$	(249,762	)	$	(4,798,562	)

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

-2-

Grown Rogue International Inc.

Unaudited Condensed Consolidated Interim Statements of Changes in Equity Holders’ Deficit

Expressed in United States Dollars

	Number of Common Shares		Share Capital		Common Units		Seed Round Preferred Units		Total Members’ Capital		Subscriptions Payable		Equity Component of Convertible Debentures		Contributed Surplus		Currency Translation Reserve			Accumulated Deficit			Non- Controlling Interest			Total Equity Holders’ Deficit
Balance - October 31, 2019		71,653,598	$	12,647,930	$	-	$	-	$	-	$	5,136	$	-	$	2,890,435	$	121,920		$	(17,112,605	)		19,538		$	(1,427,646	)
Common shares issued for services		1,058,750		71,910		-		-		-		-		-		-		-			-			-			71,910
Currentcy translation adjustment		-		-		-		-		-		-		-		-		(16,575	)		-			-			(16,575	)
Net loss		-		-		-		-		-		-		-		-		-			(217,042	)		(16,145	)		(233,187	)
Balance - January 31, 2020		72,712,348	$	12,719,840	$	-	$	-	$	-	$	5,136	$	-	$	2,890,435	$	105,345		$	(17,329,647	)	$	3,393		$	(1,605,498	)

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

-3-

Grown Rogue International Inc.

Unaudited Condensed Consolidated Interim Statements of Changes in Equity Holders’ Deficit

Expressed in United States Dollars

	Number of Common Shares		Share Capital			Common Units			Seed Round Preferred Units			Total Members’ Capital			Subscriptions Payable			Equity Component of Convertible Debentures		Contributed Surplus			Accumulated Deficit			Total Equity Holders’ Deficit
Balance - October 31, 2018		-	$	-		$	3,426,829		$	1,274,944		$	4,701,773		$	720,516		$	132,000	$	2,010,489		$	(7,812,383	)	$	(247,605	)
Common units issued pursuant to conversion of notes payable		-		-			1,374,317			-			1,374,317			-			-		-			-			1,374,317
Common units issued pursuant to technology license agreement		-		-			2,199,667			-			2,199,667			-			-		-			-			2,199,667
Common units issued pursuant to exercise of purchase option		-		-			1,258,784			-			1,258,784			-			-		(1,218,784	)		-			40,000
Subscription receipts		-		-			-			-			-			554,000			-		-			-			554,000
Common units issued pursuant to subscription receipts		-		-			913,698			-			913,698			(1,274,516	)		-		360,818			-			-
Exchange of Units for common shares pursuant to the Transaction		60,746,202		10,448,239			(9,173,295	)		(1,274,944	)		(10,448,239	)		-			-		-			-			-
Common units issued to existing shareholders of the Company pursuant to the Transaction		3,773,689		1,257,706			-			-			-			-			-		-			-			1,257,706
Common shares issued to former debt holders of the Company		839,790		279,888			-			-			-			-			-		-			-			279,888
Common shares pursuant to acquisition of Grown Rogue Canada		100,000		33,328			-			-			-			-			-		-			-			33,328
Common shares issued pursuant to subscription receipts		6,193,917		1,479,947			-			-			-			-			-		584,430			-			2,064,377
Fair value of broker warrants		-		(85,931	)		-			-			-			-			-		85,931			-			-
Issuance costs		-		(143,786	)		-			-			-			-			-		(56,781	)		-			(200,567	)
Fair value of Grown Rogue Canada replacement warrants		-		-			-			-			-			-			-		830,335			-			830,335
Debt settlements		-		-			-			-			-			85,136			-		-			-			85,136
Issuance of common share purchase
Net loss		-		-			-			-			-			-			-		-			(4,798,562	)		(4,798,562	)
Balance - January 31, 2019		71,653,598	$	13,269,391		$	-		$	-		$	-		$	85,136		$	132,000	$	2,596,438		$	(12,610,945	)	$	3,472,020

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

-4-

Grown Rogue International Inc.

Unaudited Condensed Consolidated Interim Cash Flow Statements

For the three month periods ended January 31

Expressed in United States Dollars

	2020			2019
Cash provided by (used in)
Operating Activities
Net loss	$	(233,187	)	$	(4,798,562	)
Adjustments for non-cash items in net loss
Amortization of property and equipment		49,677			158,814
Amortization of right of use assets		35,822
Amortization of intangible assets		7,659			7,233
Unrealized gain on changes in fair value of biological assets		(701,559	)		(44,830	)
Services paid in shares or membership units		18,375			-
Accretion expense		68,210			17,964
Gain on disposal of property and equipment		(20,918	)		-
Transaction costs		-			3,723,724
Gain on recognition of derivative liability		-			(15,000	)
Interest on lease liabilities		13,003			-
Effects of foreign exchange		(9,016	)		-
		(771,934	)		(950,657	)
Changes in non-cash working capital (note 21)		922,318			(1,217,946	)
Net cash generated by (used in) operating activities		150,384			(2,168,603	)
Investing Activities
Purchase of intangible asset		-			(8,376	)
Purchase of property and equipment		(4,528	)		(79,052	)
Cash acquired upon close of Transaction		-			5,875
Net cash used in investing activities		(4,528	)		(81,553	)
Financing Activities
Subscriptions receivable		-			(720,516	)
Option proceeds		-			40,000
Proceeds from long-term debt		15,000
Repayment of long-term debt		(34,911	)		(231,026	)
Proceeds of subscription receipts		-			3,234,893
Lease liability repayments		(67,225	)		-
Payment of equity and debenture issuance costs		-			(200,567	)
Transaction costs		-			(167,363	)
Net cash provided by financing activities		(87,136	)		1,955,421
Change in cash		58,720			(294,735	)
Cash - beginning of period		74,926			826,643
Cash - end of period	$	133,646		$	531,908

Supplemental cash flow disclosure (note 22)

The accompanying notes form an integral part of these condensed consolidated interim financial statements.

-5-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

1. Nature of Operations

These unaudited condensed consolidated interim financial statements for the three month periods ended January 31, 2020 and 2019, include the Company, its wholly-owned subsidiaries Grown Rogue Canada Corp. (“GRC”), and Grown Rogue Unlimited, LLC (“GR Unlimited”) and GR Unlimited’s wholly-owned subsidiaries and subsidiaries in which it has a controlling interest (collectively referred to as the “Subsidiaries”). GR Unlimited’s wholly-owned subsidiaries include Grown Rogue Gardens, LLC; Grown Rogue Distribution, LLC; GRU Properties, LLC; and GRIP, LLC. GR Unlimited also has 60% ownership interests in GRD Cali, LLC and Idalia, LLC and an 87% ownership interest in GR Michigan, LLC. Grown Rogue Gardens, LLC is engaged in cannabis cultivation activities. Grown Rogue Distribution, LLC is engaged in wholesale activities; GRU Properties, LLC is engaged in real estate activities; and GRIP, LLC is engaged in intellectual property activities.

These unaudited condensed consolidated interim financial statements are prepared on the basis of accounting principles applicable to a going concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of the business.

The Company’s ability to continue as a going concern is dependent upon, but not limited to, its ability to raise financing necessary to discharge its liabilities as they become due and generate positive cash flows from operations. During the three months period ended January 31, 2020, the Company incurred a net loss of $233,187 (2019 $4,798,562) and as of that date, the Company’s deficit was $17,329,647 (October 31, 2019 - $17,112,605). As at January 31, 2020, the Company had a working capital deficit of $2,539,527 (October 31, 2019 - $2,709,527). These aforementioned conditions have resulted in material uncertainties that may cast significant doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and to meet its obligations will be dependent upon successful sales of product and generating positive cash flows from operations as well as obtaining suitable financing. The accompanying unadited condensed consolidated financial statements do not reflect any adjustment that might result from the outcome of this uncertainty. If the going concern assumption is not used then the adjustments required to report the Company’s assets and liabilities at liquidation values could be material to these unaudited condensed consolidated financial statements.

2. Reverse Takeover

The Company entered into a definitive transaction agreement (the “Definitive Agreement”) dated October 31, 2018 with GR Unlimited and Grown Rogue Canada Inc. (“Grown Rogue Canada”) and Novicius Acquisition Corp. (“Novicius Subco”) which resulted, through a series of transactions, in the acquisition of all of the equity interests of GR Unlimited and Grown Rogue Canada by the Company (the “Transaction”), such that, immediately following completion of the Transaction, approximately 86% of the issued and outstanding shares of the Company were owned by the former unitholders of GR Unlimited. Prior to close of the Transaction the Company completed a consolidation of its common shares on the basis of 1.4 pre-consolidated common shares for 1 post-consolidated common share. Upon close of the Transaction, the Company issued, in aggregate, 60,746,202 common shares to the GR Unlimited unitholders for all of the outstanding units of GR Unlimited, 100,000 common shares to a director of Grown Rogue Canada and 839,790 common shares to former debtholders of the Company. Holders of warrants and convertible debentures of GR Unlimited and Grown Rogue Canada exchanged such securities for warrants and convertible debentures, with substantially the same terms, of the Company on a one for one basis.

-6-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

2. Reverse Takeover (continued)

The Transaction constituted a reverse takeover of the Company by the shareholders of GR Unlimited but did not meet the definition of a business combination under IFRS 3. As such, the Transaction is accounted for under IFRS 2, where the difference between the consideration given to acquire the Company and the net asset value of the Company is recorded as a transaction expense. Since GR Unlimited is deemed to be the accounting acquirer for accounting purposes, these financial statements present the historical financial information of GR Unlimited up to the date of the Transaction.

The allocation of the consideration transferred is as follows:

3,773,689 shares at a price of CAD$0.315 per share	$	900,403
Net assets (liabilities) of the Company acquired		(604,107	)
Transaction costs	$	1,504,510

The acquisition-date fair value of the consideration transferred by the existing equity holders of GR Unlimited is based on the number of equity interests GR Unlimited would have had to issue to give the owners of the Company the same percentage equity interest in the combined entity that results from the transaction described above. The fair value of the number of equity interests calculated was based on the private placement transactions entered into by GR Unlimited.

Upon completion of the Transaction, the former shareholder of Grown Rogue Canada controlled less than 1% of the issued and outstanding common shares of the Company (not including holders of subscription receipts of Grown Rogue Canada). For accounting purposes, the Company has been identified as the acquirer and Grown Rogue Canada the acquired company. Since Grown Rogue Canada’s operations do not constitute a business, this transaction has been accounted for as a sharebased payment. As such, Grown Rogue Canada’s balances are accounted for at fair value, with the balance of the purchase price in excess of the fair value of the acquired assets and liabilities of Grown Rogue Canada accounted for as transaction costs. Grown Rogue Canada’s historical share capital, deficit and contributed surplus have been eliminated.

The allocation of the consideration transferred is as follows:

100,000 common shares at a price of CAD$0.315 per share	$	23,860
Fair value of warrants of the Company issued (note 15vii)		893,646
Total consideration transferred		917,506
Net assets of Grown Rogue Canada acquired		61,447
Transaction costs	$	856,059

In addition to the costs mentioned above, the Company incurred cash transaction costs of $1,093,221 during the year ended October 31, 2019.

-7-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

3. Basis of Presentation

a) Statement of Compliance

The Company’s unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34 “Interim Financial Reporting”. These unaudited consolidated interim financial statements should be read in conjunction with the Company’s audited financial statements for the year ended October 31, 2019, which were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

These unaudited condensed consolidated interim financial statements were prepared folwoing the same accounting policies used in the preparation of the Company’s audited financial statements with the exception of certain amendments to accounting standards or new interpretaions issued by the IASB as described in note 4. These unaudited condensed consolidated interim financial statements have not been subject to audit and were approved and authorized for issuance by the Company’s Board of Directors on March 31, 2020.

b) Basis of Measurement

These unaudited condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain financial instruments and biological assets, which are measured at fair value as described herein.

c) Functional and Presentation Currency

The Company’s functional currency is the Canadian dollar and the functional currency of its Subsidiaries is the United States (“U.S.”) dollar. These unaudited condensed consolidated financial statements are presented in U.S. dollars.

Transactions denominated in foreign currencies are initially recorded in the functional currency using exchange rates in effect at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using exchange rates prevailing at the end of the reporting period. All exchange gains and losses are included in the statement of loss and comprehensive loss.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company are expressed in U.S. Dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognized in other comprehensive loss and reported as currency translation reserve in shareholders’ equity.

-8-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

3. Basis of Presentation (continued)

c) Functional and Presentation Currency (continued)

Foreign exchange gains or losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely to occur in the foreseeable future and which, in substance, is considered to form part of the net investment in the foreign operation, are recognized in other comprehensive loss.

d) Basis of Consolidation

The Subsidiaries are controlled by the Company, as the Company is exposed, or has rights, to variable returns from its involvement with the Subsidiaries and has the ability to affect those returns through its power over the Subsidiaries by way of its ownership of all of the issued and outstanding common shares. The financial statements of subsidiaries are included in these unaudited condensed consolidated financial statements from the date that control commences until the date control ceases. All intercompany balances and transactions have been eliminated upon consolidation.

4. Significant Accounting Policies and Significant Judgements

These unaudited condensed consolidated interim financial statements have been prepared using the same accounting policies, significant accounting judgements and estimates, and methods of computation as the annual consolidated financial statments of the Company as at and for the year ended October 31, 2019 as described in note 4 of those financial statements, with the exception of certain amendments to accounting standards or new interpretations issued by the IASB with are applicable for annual periods beginning on or after November 1, 2019.

Changes in accounting standards effective November 1, 2019:

IFRS 16 Leases (“IFRS 16”) was issued in January 2016 and replaces IAS 17 Leases. Under IAS 17, lessees were required to make a distinction between a finance lease and an operating lease. If the lease was classified as a finance lease, a lease liability was included on the statement of financial position. In applying IFRS 16, for all leases, the Company:

i.	Recognizes right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present value of the future lease payments:
ii.	Recognizes depreciation of right-of-use assets and interest expense on lease liabilities in the statements of income and comprehensive income;
iii.	Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the statement of cash flows.

On November 1, 2019, the Company adopted IFRS 16. As such, the Company reviewed all leases and assessed whether these contracts are or contains a lease. The Company has accounted for its leases upon adoption of IFRS 16 using a modified retrospective approach whereby it recognizes a lease liability and a right-of-use asset at the date of initial application, being November 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate. The Company has measured the right-of-use asset at an amount equal to the lease liability.

-9-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

5. Biological Assets

Biological assets consists of cannabis seeds and cannabis plants. The reconciliation of changes in the carrying amounts of biological assets as at January 31, 2020 and October 31, 2019 are as follows:

Balance - October 31, 2018	$	149,617
Add: Purchased cannabis plants		308,324
Change in fair value less costs to sell due to biological transformation		486,354
Allocation of operational overhead		438,859
Transferred to inventory upon harvest		(1,226,565	)
Balance - October 31, 2019		156,589
Add: Purchased cannabis plants		225,128
Change in fair value less costs to sell due to biological transformation		281,908
Allocation of operational overhead		30,278
Transferred to inventory upon harvest		(509,814	)
Balance - January 31, 2020	$	184,089

When determining the fair value of biological assets, the Company makes estimates and uses assumptions as follows:

● Expected costs required to grow the cannabis up to the point of harvest

● Estimated selling price per Kg

● Expected yield from the cannabis plants

● Estimated stage of growth – The Company applied a weighted average number of days out of the 60 day growing cycle that biological assets have reached as of the measurement date based on historical evidence. The Company assigns fair value basis according to the stage of growth and estimated costs to complete cultivation.

The estimates and assumptions used are subject to volatility in uncontrollable market conditions, may significantly impact the fair value of biological assets. Biological assets represent a level 3 assets in the fair value hierarchy. The following table quantifies each significant unobservable input and provides the impact of a 20% increase or decrease that each input would have on the fair value of biological assets:

	January 31, 2020			October 31, 2019			Impact of 20% change  – January 31, 2020		Impact of 20%  change - October 31, 2019
Estimated selling price per lb	$	1,000		$	840		$	25,257	$	37,747
Estimated stage of growth		43	%		60	%	$	21,405	$	30,970
Estimated flower yield per harvest (lb)		296			263		$	21,405	$	30,970

-10-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

6. Inventory

As at January 31, 2020, the Company’s inventory consists raw materials $34,324 (October 2019 - $27,860), work in progress of $733,003 (October 2019 - $ 819,675) and finished goods of $326,916 (October 2019 - $ 93,180).

Balance - October 31, 2019	$	940,715
Balance - January 31, 2020	$	1,094,243

The cost of inventories included as an expense and included in cost of goods sold, for the three month period ended January 31, 2020 was $521,680 (2019 - $669,920).

7. Accrued Liabilities

During the year ended October 31, 2019, the Company entered into an agreement with a vendor to defer payment of $180,799 beyond one year from January 31, 2020. During the three month period ended January 31, 2020, the Company entered into agreements with two other vendors to defer payment of an additional $286,256 beyond one year from January 31, 2020.

8. Finance Leases Payable

i) Effective July 11, 2017, and as amended on July 28, 2017, the Company entered into an agreement with a third party to lease equipment at a cost $134,289 over a thirty-six month period for monthly payments of $4,778. The terms and conditions of the lease predicate that substantially all of the risks and rewards of ownership of the leased asset transfer to the Company. Therefore, the Company has classified the agreement as a finance lease.

ii) Effective November 8, 2017, the Company entered into an agreement with a third party to lease equipment at a cost $158,193 over a thirty-six month period for monthly payments of $5,630. The terms and conditions of the lease predicate that substantially all of the risks and rewards of ownership of the leased asset transfer to the Company. Therefore, the Company has classified the agreement as a finance lease.

iii) Effective February 20, 2019, the Company entered into an agreement with a third party to lease equipment at a cost $62,516 over a twenty-four month period for monthly payments of $3,220. The terms and conditions of the lease predicate that substantially all of the risks and rewards of ownership of the leased asset transfer to the Company. Therefore, the Company has classified the agreement as a finance lease.

As at January 31, 2020, the related lease liabilities are payable as follows:

	Future minimum
	lease payments		Interest		Total
Less than one year	$	104,130	$	9,061	$	113,191
Between one and five years		3,164		56		3,220
	$	107,294	$	9,117	$	116,411

-11-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

9. Property and Equipment

	Furniture and Fixtures		Computer and Office Equipment			Production Equipment and Other		Construction in Progress - Warehouse			Leasehold Improvements		Total
Cost
Balance - October 31, 2018	$	-	$	75,883		$	357,115	$	578,158		$	1,067,725	$	2,078,881
Additions		-		50,481			86,483		17,308			242,745		397,017
Disposals		-		(70,403	)		-		(118,683	)		-		(189,086	)
Balance - October 31, 2019	$	-	$	55,961		$	443,598	$	476,783		$	1,310,470	$	2,286,812
Additions		-		3,635			-		-			893		4,528
Transfers		-		-			-		(378,875	)		378,875		-
Disposals		-		-			-		-			-		-
Balance - January 31, 2020	$	-	$	59,596		$	443,598	$	97,908		$	1,690,238	$	2,291,340
Accumulated Amortization
Balance - October 31, 2018	$	-	$	1,907		$	71,157	$	-		$	429,896	$	502,960
Amortization for the period		-		17,794			61,322		-			239,819		318,935
Balance - October 31, 2019		-		19,701			132,479		-			669,715		821,895
Transfers		-		-			-		-			-		-
Amortization for the period		-		6,566			26,223		-			191,051		223,840
Disposals		-		-			-		-			-		-
Balance - January 31, 2020	$	-	$	26,267		$	158,702	$	-		$	860,766	$	1,045,735
Net Book Value
As at October 31, 2019	$	-	$	36,260		$	311,119	$	476,783		$	640,755	$	1,464,917
As at January 31, 2020	$	-	$	33,329		$	284,896	$	97,908		$	829,472	$	1,245,605

At January 31, 2020, $45,397 in amortization costs were included in cost of sales, $41,592 in amortization costs were included in biological assets, and $87,174 in amortization costs were included in inventory

-12-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

10. Right-of-Use Assets

In connection with the adoption of IFRS 16 as disclosed in note 4, the Company has recognized a right-of-use asset for its office premises with a corresponding lease liability (see note 11) which are initially measured at the present value of the future lease payments. In accordance with IFRS 16, the Company then recognizes depreciation of right-of-use assets and interest expense on lease liabilities in the statements of income and comprehensive income.

	Land and Buildings
Balance, October 31, 2019	$	-
Additions		276,430
Amortization for the period		(59,919	)
Balance, January 31, 2020	$	216,511

11. Lease Liabilities

In connection with the adoption of IFRS 16 as disclosed in note 4, the Company has recognized a right-of-use asset (see note 10) for its office premises with a corresponding lease liability which are initially measured at the present value of the future lease payments. In accordance with IFRS 16, the Company then recognizes depreciation of right-of-use assets and interest expense on lease liabilities in the statements of income and comprehensive income.

The Company has entered into four leases for office and growing space. In order to calculate the present value of the future lease payments, the Company has used a discount rate of 20% which represents its current borrowing rate. Prior to the adoption of IFRS 16, these leases were accounted for as operating leases. Changes to the Company’s lease liabilities for the nine months ended September 30, 2019 are as follows:

	Land and Buildings
Balance, October 31, 2019	$	-
Additions		276,430
Interest Expense		13,004
Lease Payments		(67,225	)
		222,209
Less: current portion		(171,641	)
Balance, January 31, 2020	$	50,568

-13-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

12. Long-term Debt

Transactions related to GR Unlimited’s unsecured promissory notes during the year ended October 31, 2019 and the three month period ended January 31, 2020, include the following:

	Face value		Carrying amount		Interest payable
Balance - October 31, 2018	$	50,000	$	50,000	$	10,444
60% - October 2, 2019 (iii)		50,000		50,000		-
60% - October 17, 2019 (iv))		50,000		50,000		-
Interest expense on long-term debt		-		-		9,535
Debt repayments		-		-		(12,000	)
Balance - October 31, 2019		150,000		150,000		7,979
60% - December 5, 2019 (iii))		15,000		15,000		-
Interest expense on long-term debt		-		-		18,000
Balance - January 31, 2020		165,000		165,000		25,979
Less: current portion		165,000		165,000		25,979
Balance - January 31, 2020 net of current portion	$	-	$	-	$	-

i)	On February 1, 2017: Principal of $50,000 with simple interest accrued at a rate of 12% per annum. Interest only payments due on the following: (i) $6,000 on each of July 1, 2018 and July 1, 2019 and interest and principal payment, $56,000 due on July 1, 2020. As at January 31, 2020, accrued interest of $5,944 (October 31, 2019 - $4,444) was incurred.
ii)	On October 1, 2017: Principal of $500,000 with simple interest accrued at a rate of 25% per annum. During the year ended October 31, 2018, this Company formalized this debt by way of a convertible promissory note (see note 13 (iii)).
iii)	On October 2, 2019: Principal of $50,000 with simple interest accrued at a rate of 60% per annum and a maturity of 90 days. On December 5, 2019 an additional $15,000 was advanced under the same terms and conditions. As at January 31, 2020, accrued interest of $11,384 (October 31, 2019 - $2,384) was incurred. This amount is owed to a director and officer of the Company. Subsequent to January 31, 2020, all outstanding principal and accrued interest were repaid in full.
iv)	On October 17, 2019: Principal of $50,000 with simple interest accrued at a rate of 60% per annum and a maturity of 90 days. As at January 31, 2020, accrued interest of $8,651 (October 31, 2019 - $1,151) was incurred. This amount is owed to a key member of management. Subsequent to January 31, 2020, all outstanding principal and accrued interest were repaid in full.

-14-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes

Transactions related to GR Unlimited’s convertible promissory notes during the year ended October 31, 2019 and the three month period ended January 31, 2020, include the following:

	Face value			Carrying amount			Interest payable
Balance - October 31, 2018	$	1,343,171		$	1,299,376		$	454,775
Amortization of deferred financing costs		22,106			23,759			-
Interest expense on long-term debt		-			-			2,154
Interest accretion		-			5,502			-
Repaid		(265,277	)		(265,277	)		(137,889	)
Converted to common units		(1,100,000	)		(1,063,360	)		(279,040	)
Balance - October 31, 2019 and January 31, 2020		-			-			40,000
Less: current portion		-			-			40,000
Balance - January 31, 2020 net of current portion	$	-		$	-		$	-

During the period ended October 31, 2018, GR Unlimited issued the following unsecured convertible promissory notes:

i) Effective November 14, 2017, GR Unlimited entered into an agreement with certain purchasers (collectively the “Purchasers” and individually the “Purchaser”), to issue a series of notes with substantially similar terms, including maturity, interest rates, and conversion terms. Under the agreements, the Purchasers purchased convertible promissory notes with aggregate principal of $550,000. The notes accrue simple interest as follows:

a) Interest will accrue on the outstanding principal at an annual rate of 50% calculated on the basis of a year of 365 days.

b) Should the Purchasers extend the maturity date due to a Public Event prior to the end of the period, the Purchaser has the right to extend the Maturity date by up to 3 months after the consummation of the Public Event at an annual rate of 0% following the initial period. A Public Event means a transaction or other action that causes GR Unlimited’s membership units or securities for which such membership units are exchanged or substituted, to become publicly traded on a United States or Canadian stock exchange through which GR Unlimited (or its publicly held parent entity) raises aggregate proceeds net of any costs of not less than $5,000,000 (excluding these convertible promissory notes and the principal and accrued interest under any other promissory notes that are convertible into equity securities of GR Unlimited.

-15-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes (continued)

i) (continued)

c) Should purchasers extend the Maturity Date by 6 months on all but not less than all of the thenoutstanding principal; provided, however GR Unlimited shall pay Holder all principal not so extended, and all accrued but unpaid interest at the end of the initial period at an annual rate of 30% calculated on the basis of a year of 365 days.

d) Should the Purchaser extend the maturity date of this note by 18 months on not less than $10,000 of the thenoutstanding principal and unpaid interest accrued under the Note at the end of the initial period; provided, however GR Unlimited shall pay Purchaser all principal and/or interest for which the maturity date is not so extended at an annual rate of 20% calculated on the basis of a year of 365 days.

The notes, which includes any unpaid principal and accrued interest, unless converted in accordance with provisions stated in the agreement shall be due and payable on the earlier of the following: (a) the date on which the initial period ends (the Maturity Date) unless the Maturity Date is extended by Purchaser by 3, 6, or 18 months after the Public Event. The notes may not be prepaid, in whole or in part, prior to the Maturity Date without the prior written consent of a majority of the Purchasers.

If at any time prior to the maturity of the notes a qualified equity financing occurs, each Purchaser has the right to convert not less than $10,000 of the outstanding principal amount and all accrued and unpaid interest into the number of fully paid and nonassessable common membership units of GR Unlimited at a price per unit equal to the applicable conversion price. If the Purchaser has extended the maturity date and the qualified equity financing occurs during the 18 months following the initial period, the Purchaser shall have the obligation to convert all of the outstanding principal amount and all accrued and unpaid interest into the number of fully paid and nonassessable common membership until of GR Unlimited at a price per unit equal to the applicable conversion price. The conversion price represents the following:

a) In the event of a qualified equity financing, the lower of (i) the valuation cap divided by issued and outstanding share count immediately prior to the qualified equity financing, or (ii) eighty percent (80%) of the price per unit paid in cash by purchasers of New Units issued in such qualified equity financing; provided, however, that such percentage shall decline by two percent (2%) for each month an event of default occurs and is continuing after the end of the initial period, up to a maximum of ten percent (10%) (e.g., if such an event of default continues for five months, the conversion price under this paragraph (a) will be a price equal to seventy (70%) of the applicable price set forth in clause (ii) above); or

b) In the event of a public event the lower of (i) the valuation cap divided by the issued and outstanding share count immediately prior to the public event, or (ii) eighty percent (80%) of the price per unit paid in cash by purchasers of new units issued in such Public Event; provided, however, that such percentage shall decline by two percent (2%) for each month an event of default occurs and is continuing after the end of the Initial Period, up to a maximum of ten percent (10%) (e.g., if such an event of default continues for five months, the conversion Price under this paragraph (b) will be a price equal to seventy (70%) of the applicable price set forth in clause (ii) above); or

-16-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes (continued)

i) (continued)

c) In the event of a change of control transaction, the lower of (i) the valuation cap divided by the change of control issued and outstanding share count immediately prior to the qualified equity financing, or (ii) eighty percent (80%) of the price per unit paid by the purchaser(s) in such change of control transaction; provided, however, that such percentage shall decline by two percent (2%) for each month an event of default occurs and is continuing after the end of the initial period, up to a maximum of ten percent (10%) (e.g., if such an event of default continues for five months, the conversion price under this paragraph (c) will be a price equal to seventy (70%) of the applicable price set forth in clause (ii) above); provided, further, that if a transaction or event can be characterized both as a public event and as a change of control transaction, the conversion price shall be established as if such transaction or event were a change of control transaction; or

d) In the event of a nonqualified equity financing, the lower of (i) the valuation cap divided by Issued and outstanding share count immediately prior to the nonqualified equity financing, or (ii) eighty percent (80%) of the price per unit paid in cash by purchasers of new units issued in such nonqualified equity financing; provided, however, that such percentage shall decline by two percent (2%) for each month an event of default occurs and is continuing after the end of the initial period, up to a maximum of ten percent (10%) (e.g., if such an event of default continues for five months, the conversion price under this paragraph (a) will be a price equal to seventy (70%) of the applicable price set forth in clause (ii) above).

During the year ended October 31, 2018, GR Unlimited made aggregate principal repayments of $442,223. During the year ended October 31, 2019, GR Unlimited repaid the remaining aggregate principal of $107,777. As at October 31, 2018, accrued interest of $127,915 remained unpaid, which was subsequently paid during the year ended October 31, 2019.

ii) Effective December 15, 2017, GR Unlimited entered into an agreement whereby the holder purchased a convertible promissory note for the total principal of $1,000,000 with simple interest accrued at a rate of 25%, payable as follows:

a) As at October 31, 2018 interest accrued to $105,556 on the sum of $500,000, of debt previously held by the holder.

b) Interest shall accrue from the effective date of the note on the total sum of $1,000,000 and paid in monthly installments of $20,833 to the holder beginning on January 15, 2018. As at October 31, 2018, none of the monthly instalments had been paid.

c) A onetime additional interest payment equal to 5% of the unpaid principal balance payable concurrent with the 12^th scheduled monthly installment payment is otherwise due. In the event the holder completed a full or partial conversion within 12 months of the effective date, the onetime interest payment shall be prorated as at the date of the full or partial conversion.

-17-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes (continued)

ii) (continued)

The note, which includes any unpaid principal and accrued interest, unless converted in accordance with provisions stated in the agreement shall be due and payable on the earlier of the following: (a) 36 months from the effective date of the note; or (b) the occurrence of a change of control of GR Unlimited. Within the first 24 months from the effective date of the note, no prepayment will occur, except for payments of accrued interest or other payments as outlined above.

At any time prior to the 24 month anniversary of the effective date of the note, the holder has the right to fully or partially convert the outstanding principal and all accrued and unpaid interest into the number of fully paid and nonassessable common membership units of GR Unlimited at a price per unit equal to the applicable conversion price. The Conversion price represents an amount equal to the applicable conversion valuation divided by the number of issued and outstanding units of GR Unlimited at the time of conversion calculated immediately before the closing of a qualified equity financing event if the conversion is in conjunction with a qualified equity financing event.

If GR Unlimited consummates a going public event within the 12 months anniversary date of the note, the holder has the right to fully or partially convert the total principal outstanding at a price per unit equal to the applicable conversion price by providing written notice to GR Unlimited of its election to convert within 7 days after receipt from GR Unlimited of the financing notice. If the holder so converts, GR Unlimited will offer the holder a position as a strategic advisor to GR Unlimited for a 12 month term, which commences on the date of conversion. The holder will receive gross monthly compensation equal to $10,000 if the holder fully converts or a portion of the $10,000 equal to the ratio of the amount converted.

The conversion valuation represents the following a) $20,000,000 if the holder converts the note within 12 months of the effective date of the note and b) $40,000,000 if the holder converts the note after 12 months of the effective date of the note, but before 24 months of the effective date of the note. As at October 31, 2018, accrued interest of $248,958 was incurred. During the year ended October 31, 2019, the principle of $1,000,000 and unpaid interest of $272,991 were converted into 1,144.15 common units of GR Unlimited (4,782,284 common shares of the Company) as described in note 13 (iv).

During the period ended October 31, 2017, GR Unlimited issued the following unsecured convertible promissory notes:

iii) Effective February 1, 2017: Principal of $100,000 with simple interest accrued at a rate of 15%. Principal and interest due and payable on the three year anniversary of the promissory note, February 1, 2020. In the event GR Unlimited completes a qualified equity financing transaction on or before the maturity date of the promissory note, the holder has the right to convert in whole or in part the unpaid principal and interest balance into fully paid nonassessable shares of common stock of GR Unlimited. The conversion price per unit will equal 80% of the price per unit paid in cash by purchasers of new units in a qualified equity transaction. As at October 31, 2018, accrued interest of $26,219 was incurred. The fair value of the conversion option was estimated as $Nil. During the year ended October 31, 2019, the principle of $100,000 and unpaid interest of $22,438 were converted into 126.13 common units of GR Unlimited (485,379 common shares of the Company) as described in note 13(iii).

-18-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes (continued)

iv) Effective July 26, 2017, GR Unlimited through its wholly owned subsidiary GRU Properties, LLC entered into an agreement whereby the holder purchased a convertible promissory note for the total principal of $100,000 with simple interest calculated at a rate of 50% per annum for the first 6 months. The note became due on February 1, 2018 and was extendable for another 6 months at the holder’s option. If the holder extends the term an additional 6 months the rate of simple interest will change to 30%, such that at the end of the 12 month period, the total outstanding principal and interest amount would not exceed $140,000.

The holder of the convertible promissory note has the unrestricted right, at the holder’s option to convert a maximum of $125,000 of the outstanding balances into common units of GR Unlimited at a price per unit agreed upon by GR Unlimited and the holder, or if a conversion price per unit cannot be agreed upon, the price per unit will be determined by appraisal. The right to convert may be exercised after the extended maturity date of the convertible promissory note. The number of common shares into which the convertible promissory notes may or will be converted shall be determined by dividing the unpaid principal balance, together with all accrued and unpaid interest thereon, by the conversion price. On January 31, 2018, $50,000 of the outstanding principal was repaid and the remaining principal of $50,000 was extended to August 1, 2018. In addition, $7,406 of accrued and unpaid interest was converted into 52.06 common units of GR Unlimited (198,214 common shares of the Company) as described in note 13(v). On August 1, 2018, the holder of the convertible promissory note accepted a new convertible promissory note in the amount of $57,500 in exchange for the current note and $7,500 of accrued interest. The new convertible promissory note has a maturity date to August 1, 2019, with interest at 12.5% per annum, payable monthly. During the year ended October 31, 2019, the principal and accrued interest was paid in full. As at October 31, 2018, accrued interest of $1,197 (2017 $13,185) was incurred.

The fair value of the conversion option was estimated as $23,000 using the following inputs, assumptions and estimates:

Riskfree interest rate		1.36	%
Expected life		0.75 years
Expected volatility		70	%
Share price	$	612
Conversion price at time of conversion	$	612

During the year ended October 31, 2019, the Company derecognized the corresponding derivative liability resulting in a gain on derecognition of $39,500 included in the statement of loss and comprehensive loss.

-19-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

13. Convertible Promissory Notes (continued)

v) Effective October 20, 2017, Principal of $100,000 with simple interest accrued at a rate of 50% per annum. All unpaid principal and accrued interest become due and payable on the earlier of a) the 6 month anniversary of the note, unless extended at the sole discretion of the holder and b) the occurrence of a change in control of GR Unlimited. At the Maturity date, the holder has the right to either a) convert the total unpaid principal and accrued interest into other convertible notes then being offered by GR Unlimited or b) extend the maturity of the note by 6 months. Should the holder extend the note, interest will accrue on the original principal at a rate of 30% per annum. As the maturity date, October 31, 2017, the maturity date was extended by 6 months and fully matured on April 30, 2018. On April 20, 2018, the maturity was extended by 6 months to October 20, 2018 with interest accrued at a rate of 30% during the extension period. The maturity date was then extended further to November 8, 2018. During the year ended October 31, 2019, GR Unlimited repaid the principal of $100,000. As at October 31, 2019, and October 31, 2018, accrued interest of $40,000 was outstanding.

The fair value of the conversion option was estimated as $23,000 using the following inputs, assumptions and estimates:

Riskfree interest rate		1.27	%
Expected life		0.47 years
Expected volatility		70	%
Share price	$	612
Conversion price at time of conversion	$	612

-20-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

14. Convertible Debentures

Transactions related to the Company’s convertible debentures during the year ended October 31, 2019 and the three months ended January 31, 2020, include the following:

	Face value			Carrying amount			Interest payable
Balance - October 31, 2018	$	1,029,314		$	931,099		$	7,758
Issued during the year		1,105,127			1,105,127			-
Fair value of derivative liability		-			(232,925	)		-
Issuance costs		(38,064	)		(38,064	)		-
Amortization of issuance costs		54,748			54,748			-
Interest accretion		-			147,693			-
Interest expense		-			-			126,901
Interest payments		-			-			(126,809	)
Effects of foreign exchange		27,931			27,931			-
Balance - October 31, 2019		2,179,056			1,995,609			7,850
Interest accretion		-			68,210			-
Interest expense		-			-			23,194
Interest payments		-			-			(23,171	)
Effects of foreign exchange		(5,554	)		(5,554	)		-
Amortization of issuance costs		13,800			13,800			-
Balance - January 31, 2020		2,187,302			2,072,065			7,873
Less: current portion		2,187,302			2,072,065			7,873
Balance - January 31, 2020, net of current portion	$	-		$	-		$	-

-21-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

14. Convertible Debentures (continued)

Transactions related to GR Unlimited’s convertible debentures during the year ended October 31, 2019, include the following:

	Face value			Carrying amount			Interest payable
Balance - October 31, 2018	$	1,029,314		$	931,099		$	7,758
Issued during the year		1,105,127			1,105,127			-
Fair value of derivative liability		-			(232,925	)		-
Issuance costs		(38,064	)		(38,064	)		-
Amortization of issuance costs		54,748			54,748			-
Interest accretion		-			147,693			-
Interest expense		-			-			126,901
Interest payments		-			-			(126,809	)
Effects of foreign exchange		27,931			27,931			-
Balance - October 31, 2019		2,179,056			1,995,609			7,850
Less: current portion		2,179,056			1,995,609			7,850
Balance - net of current portion	$	-		$	-		$	-

(i) During the year ended October 31, 2019, the Company issued secured convertible debentures with aggregate principal of CAD$1,500,000 ($1,105,127). The convertible debentures bear interest at 2% quarterly payable on the last day of March, June, September, and December. The convertible debentures mature on August 10, 2020. The debentures will be secured by a general security agreement granting a security interest in the Company’s property and assets. The debentures can be converted by the holder into common shares of the Company at a conversion price of CAD$0.44 per share. If at any time while the debentures are outstanding, the Company issues securities at a price per security lower than CAD$0.44 per share, the conversion price for any unconverted portion of the convertible debentures will be reduced to such lower price per security. If within 90 days of the issuance of the convertible debentures, the Company fails to complete a Qualified Financing of not less than CAD$1,000,000, the conversion price of the convertible debentures will be adjusted to CAD$0.30. If any common shares of the company are issued or sold for a price less than $0.44 per common share the conversion price will be adjusted downward to the price of such issuance. The adjustment to the conversion price is considered a derivative as it changes in relation to the share price of the Company and does not meet the fixed for fixed criteria. In connection with the issuance of the convertible debentures, the Company paid issuance costs of $47,975. The Company also issued 3,409,091 warrants to the convertible debenture holders, as described in note 15(vi), the fair value was estimated to be $Nil. Of the total debt issuance costs of $47,975, $10,165 has been allocated to the derivative liability and included as expenses in the statement of loss and comprehensive loss.

-22-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

14. Convertible Debentures (continued)

(i) (continued)

GR Unlimited has allocated the proceeds from the issuance of the convertible debentures as follows:

Convertible debentures, principal	$	872,202
Conversion option		232,925
	$	1,105,127

The fair value of the derivative liability was calculated by way of a Monte Carlo simulation which utilized Geometric Brownian Motion to simulate share prices over the term of the convertible debenture. Estimates included in the Monte Carlo simulation included a market interest rate of 20% and share price volatility of 126.9%. The estimated fair value of the derivative liability upon initial recognition was estimated to be CAD$316,151 ($232,925).

As at October 31, 2019, the Company estimated the fair value of the derivative liability using the same methodologies as described above and an estimated market interest rate of 20% and a share price volatility of 105.4%. As at October 31, 2019, the estimated fair value of the derivative liability was CAD$164,053 ($124,660), and the change in the fair value since initial recognition of $121,811 has been included as income in the Company’s statement of loss and comprehensive loss. As at October 31, 2019, if the volatility, or discount rate used was increased by 10%, the impact would be an increase to the derivative of $5,000, with a corresponding increase to loss.

(ii) During the year ended October 31, 2018, GR Unlimited issued a series of secured convertible debentures with aggregate principal of CAD$1,500,000 ($1,141,060). This series of convertible debentures bear interest at 2% quarterly payable on the last day of March, June, September, and December. The convertible debentures mature twenty four months from the effective date of the agreement or December 1, 2018 if a change in ownership has not occurred. The debentures are secured by a general security agreement granting a security interest in all of GR Unlimited’s property and assets. The debentures can be converted by the holder into common units of GR Unlimited at a conversion price of CAD$0.44 per Unit. In the event of a default, the Conversion Price shall be reduced to CAD$0.05 per Unit. In connection with the issuance of the convertible debentures, GR Unlimited incurred issuance costs of $111,746.

GR Unlimited has allocated the proceeds from the issuance of the convertible debentures as follows:

Convertible debentures, principal	$	1,009,060
Conversion option		132,000
	$	1,141,060

The value of the conversion option was calculated by subtracting the net present value of the debenture from the face value of the convertible debentures. The net present value of the debenture was calculated using a discount rate of 15% over a period of 24 months.

Upon close of the Transaction, these debentures were replaced by convertible debentures of the Company with similar terms.

-23-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

14. Convertible Debentures (continued)

(ii) (continued)

As at October 31, 2019, the Company estimated the fair value of the derivative liability by way of a Monte Carlo simulation which utilized Geometric Brownian Motion to simulate share prices over the term of the convertible debenture. Estimates included in the Monte Carlo simulation included a market interest rate of 20% and share price volatility of 105.4%. As at October 31, 2019, the estimated fair value of the derivative liability was CAD$164,053 ($124,660). As at October 31, 2019, if the volatility, or discount rate used was increased by 10%, the impact would be an increase to the derivative of $5,000, with a corresponding increase to loss.

15. Members’ Capital

GR Unlimited is authorized to issue up to 20,000 common units, up to 750 Seed Round Preferred Units and up to 3,000 Incentive Units.

The following table summarizes the common unit activities of GR Unlimited during the year ended October 31, 2019, all of which occurred prior to completion of the Transaction:

	Number of Common Shares*		Member’s Capital
Balance, October 31, 2018		40,706,873		4,701,773
Issued pursuant to conversion of promissory notes		5,465,877		1,451,400
Issued in connection with Technology License Agreement (xi)		6,600,000		1,574,761
Issued upon exercise of unit purchase options		4,202,429		1,218,784
Issued pursuant to Subscription Receipts		3,771,023		913,968
Balance, October 31, 2019 and January 31, 2020		60,746,202	$	9,860,686

*The number of common shares per the table above represents the number of common shares exchanged for the common units, Seed Round Preferred Units and Incentive Units in connection with completion of the Transaction.

i) Effective January 31, 2018, the holder of two convertible promissory notes in the original principal amount of $100,000 took the following actions:

a.	Received a return of principal of $50,000 from one of the convertible promissory notes.
b.	Extended the maturity date of the continuing convertible promissory note for the principal amount of $50,000 to August 1, 2018 with a coupon interest rate of 30% per annum. All principal and accrued and unpaid interest, shall become due on the earlier of a) August 1, 2018 or b) the occurrence of a change of control of the Company; and
c.	Converted the original principal of the second convertible promissory note and accrued and unpaid interest of $50,000 into 89.8 uncertified common units of the GR Unlimited (462,500 common shares of the Company).

-24-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

15. Members’ Capital (continued)

ii) During the year ended October 31, 2018, GR Unlimited entered into a technology license agreement pursuant to which, GR Unlimited was granted the exclusive license to certain intellectual property in the field of development, breeding, cultivation, growing, harvesting, processing and commercializing cannabis, hemp and related plants and products (the “Technology”) in exchange for 6,600,000 common units of GR Unlimited (6,600,000 common shares of the Company). Immediately prior to the Transaction disclosed in note 2, GR Unlimited issued the common units. As at October 31, 2019, the Company determined that the license was impaired as the development of underlying technology had been halted. As such, the Company reduced the carrying amount to the estimated recoverable amount of $Nil, resulting in a loss on impairment of $1,574,761.

iii) Immediately prior to the Transaction disclosed in note 2, the holder of a convertible promissory note converted the original principal amount of $100,000 and all accrued and unpaid interest of $22,438 into 126.13 uncertified common units of GR Unlimited (485,379 common shares of the Company).

iv) Immediately prior to the Transaction disclosed in note 2, the holder of a convertible promissory note converted the original principal amount of $1,000,000 and accrued and unpaid interest of $248,958 into 1,144.15 uncertified common units of GR Unlimited (4,782,284 common shares of the Company).

v) Immediately prior to the Transaction disclosed in note 2, the holder of a convertible promissory note converted the original principal amount of $50,000 and accrued and unpaid interest of $7,644 into 52.06 uncertified common units of GR Unlimited (198,214 common shares of the Company).

vi) Immediately prior to the Transaction disclosed in note 2, GR Unlimited issued 1,475,179 common units (1,475,179 common shares of the Company) pursuant to the exercise of the unit purchase option disclosed in note 19(ii).

vii) Immediately prior to the Transaction disclosed in note 2, GR Unlimited issued 2,000,000 common units (2,000,000 common shares of the Company) pursuant to the exercise of the unit purchase option disclosed in note 19(iii).

-25-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

15. Members’ Capital (continued)

viii) Immediately prior to the Transaction disclosed in note 2, GR Unlimited issued 727,250 common units (727,250 common shares of the Company) pursuant to a partial exercise of the unit purchase option disclosed in note 18(i).

ix) In connection with the Transaction, GR Unlimited issued and sold on a subscription receipt basis, 3,771,023 units (the “GR Units”) containing one Common Unit and one GR Unlimited purchase warrant (the “GR Warrant”) for gross proceeds of CAD$1,646,050 ($1,274,516), of which $360,818 was allocated to the GR Warrants. Upon close of the Transaction, the GR Units were automatically converted into 3,771,023 common units of GR Unlimited (3,771,023 common shares of the Company) and 3,771,023 warrants of GR Unlimited (3,771,023 warrants of the Company).

16. Share Capital

The Company is authorized to issue an unlimited number of common shares at no par value and an unlimited number of preferred shares issuable in series.

During the three months ended January 31, 2020, the Company issued 1,058,750 common shares with an estimated fair value of $71,910 to certain directors, officers and consultants of the Company.

During the year ended October 31, 2019, the following share transactions occurred:

i) In connection with the Transaction disclosed in note 2, the Company completed a consolidation of its common shares on the basis of 1.4 preconsolidated common shares for 1 postconsolidated common shares. Following this consolidation, the Company had 3,773,689 common shares outstanding.

ii) In connection with the Transaction disclosed in note 2, the Company issued 60,746,202 common shares in exchange for the issued and outstanding common units and seed round preferred units of GR Unlimited.

iii) In connection with the Transaction disclosed in note 2, the Company assigned CAD$369,508 ($279,888) of indebtedness to Novicius Subco which was subsequently converted (the “Debt Conversion”) into 839,790 units of Novicius Subco at CAD$0.44 per unit (the “Debt Conversion Units”). Each Debt Conversion Unit was comprised of one common share of Novicius Subco (a “Debt Conversion Share”) and one Novicius Subco purchase warrant (“Novicius Subco Warrants”). In accordance with the Definitive Agreement, upon close of the Transaction, the Debt Conversion Shares were exchanged for 839,790 common shares of the Company and the 839,790 Novicius Subco Warrants were exchanged, without additional consideration or action, for the same number of warrants of the Company. Of the deemed proceeds of the Debt Conversion Units of $279,888 related to the assigned indebtedness, $200,651 were assigned to the common shares of Novicius Subco and $79,237 were allocated to the Novicius Subco Warrants.

-26-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

16. Share Capital (continued)

iv) In connection with the Transaction disclosed in note 2, Grown Rogue Canada, completed a brokered private placement of 6,193,917 subscription receipts (the “Brokered Subscription Receipts”) for gross proceeds of CAD$2,725,323 ($2,064,377). Under its terms, each Brokered Subscription Receipt is automatically converted and immediately cancelled, without any further action by the holder of such Brokered Subscription Receipt, and for no additional consideration, into one unit of Grown Rogue Canada (the “Grown Rogue Canada Units”) upon the satisfaction of the following conditions, among others: (a) the completion of the acquisition of all outstanding units of Grown Rogue by the Company; (b) requisite shareholder and regulatory approvals of the Transaction including, but not limited to, conditional approval of the Exchange for the listing of the Shares issuable in connection thereto; and (c) all documents and instruments have been tabled for the concurrent closing of the Transaction (the “Closing”). Each Grown Rogue Canada Unit consists of one share in the capital of Grown Rogue Canada (the “Grown Rogue Canada Shares”) and one Grown Rogue Canada common share purchase warrant (the “Grown Rogue Canada Warrants”).The Grown Rogue Canada Shares and Grown Rogue Canada Warrants issued upon conversion of the Brokered Subscription Receipts were immediately exchanged, without additional consideration or action, for common shares and warrants of the Company upon close of the Transaction. Of the gross proceeds of $2,064,377, $584,430 was allocated to the Grown Rogue Canada Warrants.

The fair value of the Grown Rogue Canada Warrants of $584,430 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate		1.710	%
Expected life		2.0 years
Expected volatility		100	%*

* Based on the volatility of comparable publicly traded companies

In connection with the issuance of the Grown Rogue Canada Units, Grown Rogue Canada paid cash commissions and expenses of $200,567, of which $143,786 was allocated to the Grown Rogue Canada shares and $56,781 was allocated to the Grown Rogue Canada Warrants. Grown Rogue also issued 757,125 Grown Rogue Canada Broker Warrants with each Grown Rogue Canada Broker Warrant entitling the holder to acquire one Grown Rogue Canada Unit at an exercise price of CAD$0.44 per Grown Rogue Canada Unit for a period of 24 months. Of the fair value of the Grown Rogue Canada Broker Warrants of $133,690, $50,508 was allocated to the Grown Rogue Canada shares and $19,871 was allocated to the Grown Rogue Canada Warrants. The remaining $63,311 was expensed as a transaction cost in relation to the Transaction.

v) In connection with the Transaction disclosed in note 2, the Company issued 100,000 common shares to a director of Grown Rogue Canada a payment for services rendered. The fair value of the common shares was estimated to by $23,860.

-27-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

16. Share Capital (continued)

vi) In connection with various service agreements, the Company issued 1,035,500 common shares to officers and directors resulting in an aggregate fair value of $255,360.

vii) In connection with various debt settlement agreements, the Company issued 530,818 common shares to service providers with an aggregate fair value of $121,587. In connection with the debt settlements, the Company incurred a loss on debt settlement of $4,942.

17. Warrants

The following table summarizes the warrant activities for the three months ended January 31, 2020:

	Number			Weighted Average Exercise Price
Balance - November 1, 2018		148,722		$	7.39
		-			-
Issued in connection with the Transaction (i, ii, vi, vii)		11,288,149			0.55
Issued pursuant to subscription receipts (iii, iv)		9,964,940			0.55
Issued in connection with convertible debentures (viii)		3,409,091			0.55
Issued to brokers (v)		757,125			0.44
Issed to terminate purchase agreement (viv)		2,148,117			0.44
Expired		(131,539	)		(6.52	)
Balance - October 31, 2019		27,584,605			0.53
Expired		(17,183	)		(14.00	)
Balance - January 31, 2020		27,567,422		$	0.54

During the year ended October 31, 2019, the Company:

i) Issued 839,790 warrants in exchange for the same amount of Novicius Subco Warrants as disclosed in note 16(iii). Each Novicius Subco Warrant was exercisable into one common share at an exercise price of CAD$0.55 per share for 24 months.

The fair value of the Novicius Subco Warrants of $73,237 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of com

-28-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

17. Warrants (continued)

ii) Issued 1,675,179 warrants in exchange for the same amount of GR Unlimited warrants disclosed in note 19(ii). Each warrant shall be exercisable period of two years following the date of option exercise (“the Expiration Date”); provided, however, that the expiration date shall be automatically extended for an additional three years (the “Extended Period”) if, during the initial two-year term the Company does not raise at least $18,000,000 in additional equity capital at an effective price per common unit at or above $0.70 (a “Qualified Offering”); and provided further, that the Company has the right, only during the Extended Period, if any, and only following the exercise of the Option, to accelerate the expiration date to forty-five days following written notice to the holder if during the Extended Period the Company closes a Qualified Offering.

The fair value of the warrants of $152,798 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate		1.710	%
Expected life		2.0 years
Expected volatility		100	%*

* Based on the volatility of comparable publicly traded companies

iii) Issued 3,771,023 warrants in exchange for the same amount of GR Unlimited warrants disclosed in note 15(xxvi). Each warrant allows the holder to purchase one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months.

The fair value of the warrants of $360,818 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

iv) Issued 6,193,917 warrants in exchange for the same amount of Grown Rogue Canada warrants disclosed in note 16(iv). Each warrant allows the holder to purchase one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months.

The fair value of the warrants of $584,430 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

-29-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

17. Warrants (continued)

v) Issued 757,125 broker warrants in exchange for the same amount of Grown Rogue Canada broker warrants disclosed in note 16(iv). Each warrant allows the holder to purchase one unit of the Company at an exercise price of CAD$0.44 per unit for a period of 24 months. Each unit contains one common share of the Company and one warrant entitling the holder to acquire one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months.

The fair value of the GR Broker Warrants of $119,864 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

vi) Issued 3,409,091 warrants in exchange for the same amount of Grown Rogue Canada warrants that were issued to subscribers of the GR Unlimited convertible debenture offering disclosed in note 14. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months.

The fair value of the warrants of $321,654 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

vii) Issued 5,364,089 warrants in exchange for the same amount of Grown Rogue Canada warrants that were issued to certain investors prior to the acquisition of Grown Rogue Canada. Each warrant entitles the holder to acquire one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months. In the event that the share price of the Company closes at or above CAD$0.70 per share for a period of ten (10) consecutive trading days on the CSE, the Company has the right to accelerate the expiry of the warrants to a date that is not less than 30 days from the date of delivery of a notice to the holder announcing the exercise of the acceleration right.

The fair value of the warrants of $506,101 was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

-30-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

17. Warrants (continued)

viii) Issued 3,409,091 warrants to subscribers of the convertible debenture offering disclosed in note 12(i). Each warrant entitles the holder to acquire one common share of the Company at an exercise price of CAD$0.55 per unit for a period of 24 months.

The fair value of the warrants of $376,594 was estimated at the grant date based on the BlackScholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Riskfree interest rate	1.710	%
Expected life	2.0 years
Expected volatility	101	%*

* Based on the volatility of comparable publicly traded companies

ix) Issued 2,148,117 warrants to finalize a termination agreement (note 27). Each warrant entitles the holder to acquire one common share of the Company at an exercise price of CAD$0.44 per unit for a period of 48 months. Of these warrants, 859,247 vest immediately, and the remaining 1,288,870 vest upon future activities.

The fair value of the warrants of $193,438 was estimated at the grant date based on the BlackScholes pricing model, using the following assumptions:

Expected dividend yield	Nil
Riskfree interest rate	1.640	%
Expected life	4.0 years
Expected volatility	101	%*

* Based on the volatility of comparable publicly traded companies

The fair value of the warrants that vested of $77,014 have been expensed as an acquisition cost on the statement of loss and comprehensive loss.

As at January 31, 2020, the following Warrants were issued and outstanding:

Exercise Price		Warrants Outstanding		Remaining Contractual Life (Years)		Expiry Date
$	0.44		757,125		0.79	November 30, 2020
$	0.55		21,253,089		0.78	November 30, 2020
$	0.55		3,409,091		1.25	May 1, 2021
$	0.44		2,148,117		3.41	June 28, 2023
			27,567,422		1.05

-31-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

18. Subscriptions Payable

i) During the year ended October 31, 2018, GR Unlimited received aggregate proceeds of CAD$923,630 ($720,516) for 2,099,159 Subscription Receipts related to the financing disclosed in note 15(xxvi). Each Subscription Receipt includes one common unit of GR Unlimited, and one purchase warrant of GR Unlimited. Each purchase warrant is exercisable at the option of the holder to purchase one common unit of GR Unlimited at a price of CAD$0.55 per common unit for a period of two years from the time GR Unlimited completes a transaction whereby all of the equity instruments of the issuer are acquired by a Reporting Issuer in exchange for common shares of the Reporting Issuer. During the year ended October 31, 2019, GR Unlimited received additional proceeds of CAD$735,620 ($554,000) in connection with the financing. During the year ended October 31, 2019, GR Unlimited issued the Subscription Receipts.

ii) During the year ended October 31, 2019, the Company and one of its vendors agreed to settle outstanding accounts payable of $5,136 through the issuance of common shares of the Company. As at October 31, 2019 and January 31, 2020, these shares had yet to be issued.

19. Unit Purchase Options

i) During the year ended October 31, 2018, GR Unlimited granted an option to purchase 2,727,250 common units of the Company for an aggregate amount of CAD$54,545 at any point prior to December 31, 2018. The exercise of the option is contingent upon the optionee having invested a minimum of CAD$1,050,000 of cash in securities of another party. As at October 31, 2018, this minimum investment had been completed. During the year ended October 31, 2019, GR Unlimited issued 727,250 common units in connection with the partial exercise of the option. The remaining portion of the option expired.

The fair value of the option of $871,230 was expensed as a finance charge expense during the year ended October 31, 2018 and was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil	%
Risk-free interest rate	1.710	%
Expected life	5.5 months
Expected volatility	99	%*

* Based on the volatility of comparable publicly traded companies

ii) During the year ended October 31, 2018, GR Unlimited received proceeds of CAD$649,351 ($500,000) in exchange for an option to acquire 1,475,979 common units and warrants to purchase a further 1,675,979 common units. Each warrant shall be exercisable period of two years following the date of option exercise (“the Expiration Date”); provided, however, that the expiration date shall be automatically extended for an additional three years (the “Extended Period”) if, during the initial two-year term GR Unlimited does not raise at least $18,000,000 in additional equity capital at an effective price per common unit at or above $0.70 (a “Qualified Offering”); and provided further, that GR Unlimited has the right, only during the Extended Period, if any, and only following the exercise of the Option, to accelerate the expiration date to forty-five days following written notice to the holder if during the Extended Period GR Unlimited closes a Qualified Offering. During the year ended October 31, 2019, GR Unlimited issued the common and units and warrants pursuant to the exercise of the option.

-32-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

19. Unit Purchase Options (continued)

iii) During the year ended October 31, 2018, GR Unlimited granted an option to purchase 2,000,000 common units of GR Unlimited for an aggregate amount of CAD$40,000 at any point prior to December 31, 2018. The exercise of the option is contingent upon the optionee having invested a minimum of CAD$1,050,000 of cash in securities of another party. As at October 31, 2018, this minimum investment had been completed. During the three month period ended January 31, 2019, GR Unlimited issued 2,000,000 common units pursuant to the exercise of the option.

The fair value of the option of $639,259 was expensed as a finance charge expense during the year ended October 31, 2018 and was estimated at the grant date based on the Black-Scholes pricing model, using the following assumptions:

Expected dividend yield	Nil	%
Risk-free interest rate	1.710	%
Expected life	2.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

-33-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

20. Stock Options

i) During the year ended October 31, 2019, the Company granted options to purchase 150,000 common shares of the Company to two consultants. Each option allows the holder to purchase one common share of the Company at a price of CAD$0.44 at any point prior to November 30, 2021.

The fair value of the options of $25,587 was estimated at the grant date based on the BlackScholes pricing model, using the following assumptions:

Expected dividend yield	Nil	%
Riskfree interest rate	1.710	%
Expected life	3.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

ii) During the year ended October 31, 2019, the Company granted options to purchase 500,000 common shares of the Company to two consultants. Each option allows the holder to purchase one common share of the Company at a price of CAD$0.44 at any point prior to January 1, 2022.

The fair value of the options of $86,493 was estimated at the grant date based on the BlackScholes pricing model, using the following assumptions:

Expected dividend yield	Nil	%
Riskfree interest rate	1.710	%
Expected life	3.0 years
Expected volatility	100	%*

* Based on the volatility of comparable publicly traded companies

As at January 31, 2020, the following Stock Options were issued and outstanding (all prices are in Canadian Dollars unless otherwise noted):

Exercise Price		Warrants Outstanding		Remaining Contractual Life (Years)		Expiry Date
$	0.44		150,000		1.83	November 30, 2021
$	0.44		500,000		1.92	January 1, 2022
			650,000		1.90

-34-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

21. Changes in Non-Cash Working Capital

The changes to the Company’s non-cash working capital for the three month periods ended January 31, 2020 and 2019 are as follows:

	2020			2019
Accounts receivable	$	(6,905	)	$	(62,784	)
Other receivable		(4,076	)		(12,303	)
Inventory		718,792			(58,355	)
Prepaid expenses and other assets		(13,903	)		3,909
Accounts payable and accrued liabilities		235,654			(1,020,058	)
Uneanred revenue		(35,000	)		-
Interest payable		18,023			(65,543	)
Deferred rent		9,733			(2,812	)
	$	922,318		$	(1,217,946	)

22. Supplemental Cash Flow Disclosure

	2020		2019
Interest	$	-	$	163,746
Fair value of common shares and units issued for services		71,910		-
Conversion of notes payable to common units		-		1,063,360

23. Related Party Transactions

During the three month period ended January 31, 2020, the Company incurred the following related party transactions:

i) Through its wholly owned subsidiary, GRU Properties, LLC leased a property located in Trail, Oregon owned by the Company’s President and CEO. The lease expires on December 31, 2020. Rent of $18,000 was included in facility expense for the peiod ended January 31, 2020 (2019 - $16,500). The Company had $72,000 (October 31, 2019 - $63,000) owing in accounts payable and accrued liabilities at January 31, 2020.

ii) The Company incurred employee/director fees of $12,000 (2018 - $12,000) with an individual related to the Company’s President and CEO. At October 31, 2019, accounts payable and accrued liabilities includes $4,000 (October 31, 2019, $8,000) payable to this individual.

iii) The Company incurred fees related to marketing and promotion services of $Nil (2019 - $94,292) from two companies owned by the Company’s Chief Strategy Officer (“CSO”). At January 31, 2020, accounts payable and accrued liabilities includes $Nil (October 31, 2019 - $6,000) payable to these companies.

-35-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

23. Related Party Transactions (continued)

iv) Key management personnel consists of the President and CEO; the CSO; and the CFO of GR Unlimited. The compensation paid or payable to key management for services for the three month periods ended January 31, 2020 and 2019 is as follows:

	2020		2019
Salaries and consulting fees	$	100,500	$	156,792
Share-based compensation	$	10,188	$	-

Accounts payable and accrued liabilities at January 31, 2020 includes $407,212 (October 31, 2019 - $94,000) and due to employee/directors includes $15,000 (October 31, 2019 - $Nil) payable to these parties.

Additional related party transactions are disclosed in notes 10(iii), 10(iv), 11(vi), 11(x), 13(vi) and 13(vii)

The transactions are in the normal course of operations and are measured at the exchange amounts being the amounts agreed to by the parties.

-36-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

24. Financial Instruments

Market Risk

i) Currency Risk

As at January 31, 2020, the Company has accounts payable of CAD$581,709 accrued liabilities of CAD$100,435 and convertible debentures of CAD$3,000,000. The Company is exposed to the risk of fluctuation in the rate of exchange between the Canadian Dollar and the United States Dollar. It is management’s opinion that this risk is not material.

ii) Interest Rate Risk

At January 31, 2020, and October 31, 2019, the Company’s exposure to interest rate risk relates to longterm debt, convertible promissory notes, and finance lease obligations, but its interest rate risk is limited as the aforementioned financial instruments are fixed interest rate instruments.

iii) Credit Risk

Credit risk is derived from cash and trade accounts receivable. The Company places its cash in deposit with major United States financial institutions. The Company has established a policy to mitigate the risk of loss related to granting customer credit.

The carrying amount of cash and trade accounts receivable represents the Company’s maximum exposure to credit risk, which amounted to $239,739 (October 31, 2019 $174,114) as at January 31, 2020. The allowance for doubtful accounts at January 31, 2020 is $164,594 (October 31, 2019 $129,131).

As at January 31, 2020 and October 31, 2019, the Company’s trade accounts receivable were aged as follows:

	January 31, 2020			October 31, 2019
Current	$	85,117		$	51,672
1-30 days		11,908			500
31 days-older		173,662			176,147
Allowance for doubtful accounts		(164,594	)		(129,131	)
	$	106,093		$	99,188

-37-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

24. Financial Instruments (continued)

iii) Credit risk (continued)

The change in the provision for expected credit losses is as follows:

	Three Months Ended January 31,			Year Ended October 31,
	2020			2019
Balance, beginning of period	$	129,131		$	106,443
Additional allowance		116,048			121,793
Ammounts collected		(76,175	)		(66,902	)
Amounts used		(4,410	)		(32,203	)
Balance, end of period	$	164,594		$	129,131

iv) Liquidity Risk

Liquidity risk represents the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities. The Company’s approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when they become due. At January 31, 2020, the Company has current assets of $1,679,219 (October 31, 2019 - $1,432,962) and current liabilities of $4,218,746 (October 31, 2019 - $4,142,489), which resulted in working deficit of $2,539,527 (October 31, 2019 - working capital deficit of $2,709,527). As at January 31, 2020 the Company had cash of $133,646.

The contractual maturities of the Company’s accounts payable and accrued liabilities, convertible promissory notes, longterm debt, and finance lease payable occurs over the next three years as follows:

	Year 1		Years 2 - 3
Accounts payable and accrued liabilities	$	1,383,425	$	467,055
Current portion of long-term debt		165,000		-
Convertible debentures		2,072,065		-
Lease liabilities		171,641		50,568
Interest payable		73,852		-
Deferred rent		-		34,238
Finance leases payable		104,130		3,164
Derivative liabilities		248,633		-
	$	4,218,746	$	555,025

-38-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

25. Financial Instruments (continued)

iv) Market Risk (continued)

e) Fair Values

The carrying amounts for the Company’s cash, accounts receivable, accounts payable and accrued liabilities, amounts due to employee/director, promissory notes and convertible promissory notes approximate their fair values because of the shortterm nature of these items.

vi) Fair Value Hierarchy

A number of the Company’s accounting policies and disclosures require the measurement of fair valued for both financial and nonfinancial assets and liabilities. The Company has an established framework, which includes team members who have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. The Company regularly assesses significant unobservable inputs and valuation adjustments. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

· Level 1: unadjusted quoted prices in active markets for identical assets or liabilities;

· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; or

· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The carrying values of the financial instruments at January 31, 2020 are summarized in the following table:

	Amortized Cost		FVTPL		Total
Financial Assets
Cash and Cash equivalents	$	133,646		-	$	133,646
Accounts receivable, net		106,093		-		106,093
Other receivable		39,311		-		39,311
Financial Liabilities
Accounts payable and accrued liabilities	$	1,850,480		-	$	1,850,480
Finance lease payable		107,294		-		107,294
Convertible debentures		2,072,065		-		2,072,065
Short-term debt		165,000		-		165,000
Interest payable		73,852		-		73,852
Lease liabilities		222,209		-		222,209
Derivative liabilities		-		248,633	$	248,633

During the three month period ended January 31, 2020 there were no transfers of amounts between levels.

-39-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

25. General and Administrative Expenses

General and administrative expenses for the three month periods ended January 31, 2020 and 2019 are as follows:

	2020			2019
Bad debt	$	35,463		$	51,594
Bank fees and foreign exchange		5,936			10,347
Business license and fees		6,470			18,339
Compliance costs		7,093			-
Facility expense		-			88,649
Foreign exchange		(5,564	)		-
Income tax expense		(32	)		-
Insurance		7,370			2,552
Investor relations		-			29,279
Legal and professional		165,352			135,072
Marketing and promotion		6,927			120,778
Miscellaneous		695			12,408
Office expense		12,272			16,389
Property tax		6,526			-
Repairs and maintenance		3,752			12,920
Research and development		1,245			-
Salaries and benefits		387,731			445,297
Supplies		1,688			7,247
Transfer agent fees		282			-
Travel		22,576			51,520
Utilities		4,986			4,914
	$	670,768		$	1,007,305

-40-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

26. Capital Disclosures

The Company includes equity, comprised of share capital, contributed surplus (including the fair value of equity instruments to be issued), equity component of convertible promissory notes and deficit, in the definition of capital.

The Company’s objectives when managing capital are as follows:

(i) to safeguard the Company’s assets and ensure the Company’s ability to continue as a going concern;

(ii) to raise sufficient capital to finance the construction of its production facility and obtain license to produce recreational marijuana; and

(iii) to raise sufficient capital to meet its general and administrative expenditures.

The Company manages its capital structure and makes adjustments to it, based on the general economic conditions, the Company’s shortterm working capital requirements, and its planned capital requirements and strategic growth initiatives.

The Company’s principal source of capital is from the issuance of common shares. In order to achieve its objectives, the Company expects to spend its working capital, when applicable, and raise additional funds as required.

The Company does not have any externally imposed capital requirements.

27. Commitments

a) The Company has commitments under operating leases for its facilities and commitments under a finance lease for equipment. The minimum lease payments due are as follows:

Fiscal Year	Amount
2020		227,772
2021		20,600

-41-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

27. Commitments (continued)

b) During the year ended October 31, 2019, the Company entered into a letter of intent (the Agreement”) with another party whose assets include the local approval for one retail dispensary in the state of Michigan and a 24,000 square foot indoor manufacturing facility that will include both cultivation and processing when fully constructed. The terms of the Agreement include the following provisions:

· The Company obtains the option to acquire a 51% interest in the other party, subject to state and regulatory approval, for a onetime payment of $250,000 due upon signing of the Agreement;

· The Company will provide up to $2,000,000 in financing by way of a loan for development and operational buildout of the cultivation, processing and dispensary centers of which the Company will be paid back under an established schedule;

· The Company will have the right to purchase the remaining 49% of the other party for either stock or cash or a combination of both at the earlier of the Company’s stock reaching CAD$1.00 per share on the CSE for a period of ten consecutive days or 24 months from the signing of the Agreement. Unless the other party permits, the Company may not exercise this option for a period of 12 months following the signing of the Agreement; and

· The Company will also issue 900,000 common shares to the other party based on milestones including signing of the Agreement, production of 500 pounds of dried cannabis flower and achieving $3,000,000 in topline revenue.

The completion of the terms of the Agreement were subject to Michigan regulatory approval and full licensing of the Company at the state level. During the three months ended January 31, 2020, the Company decided to terminate this agreement.

28. Acquisition Costs

During the year ended October 31, 2019, the Company entered into a binding letter of intent (the “LOI”) pursuant to which the Company was to acquire assets including real estate, intellectual property and other assets for aggregate consideration of $3,000,000, subject to certain adjustments. The Company decided to terminate the LOI and, in doing so, incurred acquisition costs of $49,188 which have been expensed in the statement of loss and comprehensive loss.

During the year ended October 31, 2019, the Company entered into a binding agreement for the option to acquire operational control of certain assets in Michigan. The Company decided not to move forward with this acquisition and, pursuant to a termination agreement, issued 2,148,177 warrants as disclosed in note 15(viii). The fair value of the vested warrants of $77,014 has been expensed as an acquisition cost in the statement of loss and comprehensive loss during the year ended October 31, 2019.

-42-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

29. Geographical Information

Geographical information relating to the Company’s activities is as follows:

	Revenue
	Three Month Periods ended January 31,
	2020		2019
United States	$	1,106,296	$	834,309
Canada		-	$	-
	$	1,106,296	$	834,309

	Long-Term Assets As at
	January 31, 2020		October 31, 2019
United States	$	1,489,054	$	1,499,514
Canada		-	$	-
	$	1,489,054	$	1,499,514

(1) Includes: Plant and equipment

30. Non-Controlling Interests

The changes to the non-controlling interest for the three month period ended January 31, 2020 and year ended October 31, 2019 are as follows:

	January 31, 2020			October 31, 2019
Balance, beginning of period	$	19,538		$	-
Net assets contributed		-			196,250
Non-controlling interest’s 40% share of GRD Cali, LLC		(19,935	)		(153,762	)
Non-controlling interest’s 40% share of Idalia, LLC		3,790			(22,950	)
Balance, end of period	$	3,393		$	19,538

The following is summarized financial information for GRD Cali, LLC:

	January 31, 2020		October 31, 2019
Current assets	$	75,400	$	93,460
Long-term assets	$	39,817	$	41,642
Current liabilities	$	35,651	$	25,801
Advances from parent	$	93,809	$	73,705
Net Loss for the period	$	49,838	$	384,404

-43-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

30. Non-Controlling Interests (continued)

The following is summarized financial information for Idalia, LLC:

	January 31,			October 31,
	2020			2019
Current assets	$	4,724		$	-
Long-term assets	$	12,489		$	13,248
Current liabilities	$	1,800		$	-
Advances from parent	$	57		$	-
Net Loss (Income) for the period	$	(9,475	)	$	57,376

31. Subsequent Events

Subsequent to the three month period ended January 31, 2020, the Company:

a) Entered into a purchase agreement to acquire an option to acquire a 60% controlling interest (the “Option”) of a fully-licensed Michigan based operator pending Municipal and State regulatory approval. In order to exericse the Option, the Company will pay $810,000 in cash and issue 800,000 common shares of the Company in four tranches:

(i) Payment of $150,000 within five days of signing the Option and the issuance of 200,000 common shares of the Company within 60 days after signing the Option.

(ii) Payment of $200,000 and the issuance of 200,000 common shares of the Company on the sixth-month anniversary of signing the Option. The Compay can elect to extend the due date of this tranche of the purchase consideration for an additional six months by paying an additional $25,000 and issuing an additional 25,000 common shares of the Company.

(iii) Payment of $260,000 and the issuance of 200,000 common shares of the Company on the twelve-month anniversary of signing the Option. The Compay can elect to extend the due date of this tranche of the purchase consideration for an additional six months by paying an additional $25,000 and issuing an additional 25,000 common shares of the Company.

(iv) Payment of $200,000 and the issuance of 200,000 common shares of the Company due upon exercise of the Option, pending Municipal and State regulatory approval.

b) Received a commitment to invest up to CAD$1,500,000 in a non-brokered private placement offering of units ( the “Units”) with each Unit comprising one common share of the Company and one common share purchase warrant (the “Warrants”). Each warrant entitles the holder to purchase one common share of the Company at a price equal to a 25% premium to the Unit price for a period of 24 months. The Company has the right to accelerate the expiry of the warrants to thirty days follwoing written notice to the holder if the common shares of the Company close at or above CAD$0.25 per share for a period of ten consecutive trading days on the Canadian Securities Exchange. As of the date of these financial statements, the Company has issued 5,000,000 Units for gross proceeds of CAD$500,000.

-44-

Grown Rogue International Inc.

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

For the three month periods ended January 31, 2020 and 2019

Expressed in United States Dollars

31. Subsequent Events (continued)

c) Entered into a subscription agreement to issue 15,000,000 common shares of the Company in exchange for 2,362,204 common shares fo Canabis Growth Opportunities Corporation at a deemed exchange price of approximately CAD $1,500,000.

d) Closed a secured debt investment of $600,000 (the “Debt Financing”). The debt carries a two-year term, with monthly payments of principal commencing June 15, 2020. Once the principal is repaid, each investor will receive a gross monthly royalty of 1% per $100,000 invested based on any cannabis business that is majority owned by GR Michigan, LLC (the “Royalty”). The Royalty has a term of two years with maximum amount of two times the amount of principal invested in the Debt Financing. The Company but not the obligation, to purchase the Royalty from any investor by paying the principal invested by such investor in the Debt Financing.

The Company has also agreed to pledge 100% of its ownership in GR Michigan, LLC to the investors in the Debt Financing until the principal is repaid in full, 50% during year one of the Royalty payments and 33% of the Royalty payments.

e) Issued a total of 1,100,000 common shares to certain former and current consultants of the Company. The common shares were issued at a deemed price of CAD$0.10 per share and are subject to a four-month hold period expiring on July 27, 2020.

Additional subsequent events are disclosed in notes 12 and 27.

-45-

EX-99.4

Exhibit 4

FORM 51-102F1

GROWN ROGUE INTERNATIONAL INC.
(the “Company” or “Grown Rogue”)

MANAGEMENT DISCUSSION & ANALYSIS

FOR THE THREE MONTHS ENDED JANUARY 31, 2020
(the “Reporting Period”)

This Management Discussion and Analysis (“MD&A”) made as of March 31, 2020, should be read in conjunction with the unaudited condensed consolidated interim financial statements of the Company for the three month periods ended January 31, 2020 and 2019, and the related notes thereto (the “Financial Statements”). The Company’s Financial Statements are presented on a consolidated basis with its wholly-owned subsidiaries: Grown Rogue Canada Corp. (“GRC”), Grown Rogue Unlimited, LLC (“GR Unlimited”) and GR Unlimited’s wholly-owned subsidiaries Grown Rogue Gardens, LLC (“GR Gardens”); Grown Rogue Distribution, LLC (“GR Distribution”); GRU Properties, LLC (“GRU Properties”); GRIP, LLC (“GRIP”); as well as GR Unlimited’s 60% ownership in GRD Cali, LLC and Idalia, LLC, and GR Unlimited’s 87% interest in GR Michigan, LLC. The Company’s reporting currency is the United States dollar and all amounts in this MD&A are expressed in United States dollars unless otherwise noted.

The Company’s comparative information included in this MD&A has been prepared in accordance with IFRS.

Additional information relating to the Company is also available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com. The common shares of GRIN are listed on the Canadian Securities Exchange under the symbol “GRIN”.

Management’s Responsibilities for Financial Reporting

The Financial Statements have been prepared by management in accordance with IFRS and have been approved by the Company’s board of directors (the “Board”). The integrity and objectivity of the Financial Statements are the responsibility of management. In addition, management is responsible for ensuring that the information contained in the MD&A is consistent where appropriate, with the information contained in the Financial Statements.

The Financial Statements may contain certain amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis to ensure that the Financial Statements are presented fairly in all material respects.

As the Company is a Venture Issuer (as defined under under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings) (“NI 52-109”), the Company and Management are not required to include representations relating to the evaluation, design, establishment and/or maintenance of disclosure controls and procedures (“DC&P”) and/or Internal Controls over Financial Reporting (“ICFR”), as defined in NI 52-109, nor has it completed such an evaluation. Inherent limitations on the ability of the certifying officers to design and implement on a cost-effective bases DC&P and ICFR for the issuer may result in additional risks of quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

1

Forward-Looking Statements

This MD&A contains information and projections based on current expectations. Certain statements herein may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this Listing Statement, such statements use such words as “will”, “may”, “could”, “intends”, “potential”, “plans”, “believes”, “expects”, “projects”, “estimates”, “anticipates”, “continue”, “potential”, “predicts” or “should” and other similar terminology. These statements reflect expectations regarding future events and performance but speak only as of the date of this MD&A. Forward-looking statements include, among others, statements with respect to planned acquisitions, strategic partnerships or other transactions and expansions not yet concluded; plans to market, sell and distribute products; market competition; plans to retain and recruit personnel; the ability to secure funding; and the ability to obtain regulatory and other approvals are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements.

There can be no assurance that any intended or proposed activity or transaction will occur or that, if any such action or transaction is undertaken, it will be completed on terms currently intended by the Company. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law.

Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The forward-looking statements herein speak only as of the date hereof. Actual results could differ materially from those anticipated due to a number of factors and risks including those described in this MD&A and under “Risk Factors” in section 17 of the Company’s Listing Statement dated November 15, 2018 which can be found under the Company’s profile on www.sedar.com.

Description of Business

Grown Rogue, headquartered in Medford, Oregon, is a multi-state cannabis company curating innovative products that allow consumers to enhance life experiences. Grown Rogue currently has two brands in its portfolio – Grown Rogue and GRAM. Grown Rogue is a mid-premium brand that describes products based on “Mind, Body & Mood” effects which resonates with consumers from the canna curious through the canna serious, while GRAM provides quality product at a value price. Grown Rogue is committed to educating, inspiring and empowering consumers with information about cannabis so they can “enhance experiences” by selecting the right product. The Grown Rogue portfolio of brands have a diverse cannabis product suite that includes premium flower (indoor and sungrown), flower pre-rolls, and chocolate edibles created in concert with an award-winning chocolatier.

Grown Rogue is strategically focused on high quality, low cost production of flower and flower-based products. Flower continues to be the leading product category in most every state as compared to other products such as edible, vape cartridges, pre-rolls, or concentrates. With its best-in-class production methods, low costs cultivation, award winning product, and geographic location in the famed Emerald Triangle, Grown Rogue is well positioned to execute on becoming a leader in flower production in the cannabis sector.

2

Oregon

Grown Rogue, through its wholly owned subsidiary, GR Gardens, operates three cultivation facilities, in Oregon comprising approximately 100,000 sq ft of cultivation area, that currently service the Oregon recreational marijuana market: “Manzanita Glen” (sungrown), “Trail’s End” (sungrown), and a state-of-the-art indoor facility (the “Warehouse”). GR Gardens currently holds three producer licenses in Oregon from the Oregon Liquor Control Commission (“OLCC”), for the three properties described above and GR Distribution holds one wholesaler license. GR Distribution and GR Gardens jointly hold the producer license and the wholesale license at the Warehouse as the licenses are co-located in the same facility. GR Distribution and GR Gardens have also applied for a processor license for the Warehouse.

GR Gardens is responsible for production of recreational marijuana using outdoor and indoor production methodologies. “Manzanita Glen” and “Trails End” are both outdoor, sungrown farms, with 40,000 sq ft of flowering canopy, for a total of 80,000 sq ft, sitting on a combined land package of approximately 45 acres.

Grown Rogue is located in the world-renowned Emerald Triangle, which is well-known for the quality of its cannabis. The company is able to capitalize on an ideal outdoor growing environment where it can produce high-quality, low-cost cannabis flower. The two sungrown farms produce one crop per year, planted in June and harvested in October.

With its approximately 17,000 sq ft indoor Warehouse, Grown Rogue is additionally able to produce high-quality indoor flower through controlled atmosphere environment (CAE) operations. By carefully controlling temperature, humidity, C02 levels and other criteria, Grown Rogue is able to provide year-round supply of high-quality cannabis flower with multiple harvests per month. The Warehouse is currently 85% constructed for production and distribution of Grown Rogue indoor cultivation and distribution. The remaining 15% is utilized for centralized drying, curing, and processing of Grown Rogue’s sungrown farms allowing us to centrally locate key components of the cultivation process allowing for reduced costs and superior products. Grown Rogue is currently converting this remaining space into a partial vegetative area allowing the Company to increase flowering square footage in the other areas of the Warehouse for 8 months out of the year, thus increasing production capacity. The Warehouse is also the location of GR Distribution, the sales division of Grown Rogue.

The total annual production capacity for Grown Rogue’s Oregon operations, based on the current constructed capacity, ranges between 5,000 and 6,000 pounds based on sungrown seasonality and strain performance.

California

Grown Rogue, through its 60% ownership in GRDCali, LLC, has a 16,000 sq ft facility located in Eureka, California (“Eureka Facility”). Grown Rogue has completed licensing and construction of the Eureka Facility to house distribution, while both volatile and non-volatile manufacturing, and retail licensing are part of the future opportunity for this asset. Grown Rogue is constructing the facility in phases with the distribution component of the business having received license approval in May 2019. The non-volatile manufacturing license is pending completion of construction and final approval by the local jurisdiction.

Due to overall cannabis capital markets and the lack of capital resources and the current regulatory environment in California, Grown Rogue has paused development of this asset. Many large companies in California have experienced missed revenue targets and completed significant employee layoffs due to a slower than anticipated regulatory rollout of licensed facilities limiting the growth and opportunity in California. Grown Rogue is currently focusing efforts on Oregon and Michigan.

3

Michigan

Subsequent to January 31, 2020, Grown Rogue, through its newly-incorporated subsidiary GR Michigan, LLC, signed an Option to Purchase Agreement (“Option”) to acquire a 60% ownership in Golden Harvests, LLC (“Golden Harvests”). Golden Harvests is a Michigan-based, fully licensed and operating cultivation company located in Bay City, Michigan. Golden Harvests has an approximately 80,000 sq ft facility of which approximately 10,000 sq ft is operational.

With the addition of Golden Harvests, Grown Rogue will be adding an additional 1,500 pounds of high-quality indoor flower production capacity in 2020 and an anticipated 3,500 pounds of production capacity in 2021. Grown Rogue will oversee this capacity under the terms of a management services agreement prior to exercising its purchase option upon regulatory approval.

Product

The Grown Rogue portfolio of brands produce a range of strains for consumers to enjoy (indicas, sativas, and hybrids), along with “Certified Fresh” Nitrogen Sealed Pre-Rolls and edibles. Grown Rogue has a mix of “core” and “select” strains to provide consumers with consistent and unique purchasing options at their local dispensary. Grown Rogue flower has won multiple awards in one of the most competitive cannabis production environments in the world. Grown Rogue has twice won the prestigious Growers Cup competition where a select number of reputable producers are all provided the identical genetic which tests the grower’s techniques. Grown Rogue won 1^st place for highest THC content, 1^st place for highest terpene content, and 3^rd place in the grower’s choice category 2018 and won 1^st place for highest terpene content in 2019 (there was no growers choice in category in 2019). In addition, Grown Rogue believes that it has achieved an outdoor production, potency record in the state of Oregon achieving a THC potency of 35.13% for its Monkey Train strain.

In addition, Grown Rogue’s product suite includes the following:

● The majority of Grown Rogue’s revenue is driven through sales of its award winning sungrown and indoor flower.

● Grown Rogue 1-gram “Certified Fresh” Nitrogen Sealed pre-rolls which are produced from the company’s award-winning indoor flower (no trim) and are packaged in environmentally responsible, patented, nitrogen sealed, glass tubes to ensure only the freshest products for the customer. Grown Rogue also provides, through its GRAM brand, a chocolate edible, produced in concert with a world-renowned chocolatier, and pre-rolls that are produced to provide quality products at an affordable price.

Grown Rogue has partnered with Hemp Press to produce all of its paper derived packaging which is 75% Recycled and 25% Hemp. This ensures not only best in class packaging quality, but environmental sustainability which is very important to the majority of cannabis consumers.

Genetics

Grown Rogue is committed to developing unique, proprietary genetics and have allocated R&D space to develop new strains, while also phenotype hunting to identify new and exciting strain options that will resonate with consumers. Grown Rogue has developed a compelling mix of proprietary strains, along with a library of “fan favorites” to ensure that consumer and dispensary demand will remain strong for its flower and flower-derived products. All Grown Rogue genetics are rigorously tested to establish the genetic makeup of each strain in its portfolio. Grown Rogue continues to focus on bringing new unique genetics into the markets it operates to ensure a steady flow of innovative flower and VAPs.

4

Distribution and Sales

Grown Rogue distributes product through its wholly owned subsidiary, GR Distribution which works directly with Oregon dispensaries to provide quality, consistency, and product variety year-round. Grown Rogue’s sales team works directly with dispensary owners and intake managers to provide consistent product, competitive prices, and service using sales techniques from other industries such as pharmaceutical and liquor.

By way of example, Grown Rogue has developed end user product marketing collateral and other educational information regarding Grown Rogue products as part of all sales with dispensaries that include strain type, testing results, information on the product and other necessary information to clearly articulate the product being provided. Each product is uniquely packaged all while maintaining brand consistency across the product suite.

Grown Rogue works with dispensary owners to develop promotional opportunities for the retail customers and bud tenders. Grown Rogue provides detailed tutorials to the staff and owners of the dispensaries around the product and how it is grown, processed, cured, packaged and other items so that they are intimately familiar with the Grown Rogue process. Grown Rogue also invites dispensary owners and operators to Grown Rogue’s operating facilities so they can see first-hand the methods and processes used to create the product.

Branding

Developing compelling branding that engages, inspires, and creates transparency and trust with consumers is one of the most important aspects of building a successful cannabis company. Cannabis product branding has been evolving from promising high-quality flower, to providing descriptions of the effect a consumer should expect from a particular product.

Grown Rogue was one of the first brands in the United States to go to market with this type of branding as part of the ROGUE Categorization: Relax, Optimize, Groove, Uplift and Energize. The focus was to provide consumers with “The Right Experience, Every time” made easier by a simple product description that was not cannabis based, such as sativa or indica.

While other brands have shifted into the “one word” product description, Grown Rogue has leveraged consumer insights and product feedback to evolve the messaging to provide significantly more detail so consumers can make a more informed choice about which Grown Rogue products will optimally enhance their experience.

Grown Rogue’s unique “Mind, Body & Mood” product descriptions provide a level of detail about the expected cannabis experience that is much more insightful and beneficial than competitors. Instead of one word, such as Relax, describing a product, Grown Rogue has six words across three categories. Still easy to understand, but much more informative. Grown Rogue is refining this branding effort and intends to launch this new and innovative approach to ensuring consumers select the right experience in 2020.

In order to grow the Grown Rogue community and spread knowledge of its products, Grown Rogue leverages social media and other digital platforms. Grown Rouge aspires to eliminate the “dark mystery” historically associated with cannabis by empowering consumers to learn about the plant and then “enhance experiences” as they desire. The transition from prohibition to legal cannabis has provided the cannabis community with an opportunity to welcome a large group of new members and it is vital that product education is completed in an authentic and informative manner to ensure that everyone’s first cannabis experience is not only positive but also as expected.

5

Marketing and Advertising

Grown Rogue’s marketing channels include a comprehensive, fully responsive (mobile) interactive website. The website has been search engine optimized (SEO) and includes calls to action (CTA) that encourage consumers to become part of the Grown Rogue community by joining its newsletter list or following the company on social media. Grown Rogue is focused on providing education to new and existing consumers, which is available through its monthly newsletter or via the Blog section of its website. Consumers can find information about Grown Rogue, different types of cannabis products and general industry information.

Grown Rogue strategically leverages digital advertising, primarily on industry sites such as Leafly and Weedmaps, and has selectively advertised in endemic and non-endemic magazines including Grow, Northwest Leaf, Oregon Leaf, Dope, Portland Mercury, and Willamette Weekly.

Grown Rogue has established a social media presence that includes Facebook, Twitter, and Instagram. Grown Rogue’s social identity will be defined by delivering fresh content and keeping interaction with followers/fans prompt and positive. Grown Rogue intends to attract existing cannabis industry participants as well as people not familiar with the industry by creating a positive, inclusive environment where dialogue is encouraged. The goal is to change existing stereotypes and overcome the stigmas associated with the cannabis industry.

Trademarks and Patents

Grown Rogue actively seeks to protect its brand and intellectual property. Grown Rogue currently has eleven different trademarks that have been submitted with three that have been Registered

● Grown Rogue was filed on September 22, 2017 and registered on August 7, 2018 under Registration No. 5537240

● The Right Experience Every Time was filed on September 29, 2017 and registered on August 7, 2018 under Registration 5537260.

● Sizzleberry was filed on September 29, 2017 and registered on August 7, 2018 under Registration 5537259.

● Groove; Relax; Optimize; Uplift; Energize, and GRAM are all under review by the United States Patent Office.

Grown Rogue filed a patent for its nitrogen sealed glass containers on February 15, 2018 with the United States Patent and Trademark Office (USPTO). The nitrogen sealed glass containers preserve the freshness of the flower and essential terpenes to improve the “entourage effect.” The USPTO issued Grown Rogue United States Patent Number 10,358,282 on July 23, 2019. Several third parties have reached out to Grown Rogue requesting licensing information on this technology. Grown Rogue plans on introducing the nitrogen sealed containers in each of the new markets the company enters with wholly owned operations and may license the technology to third parties operating in markets in which Grown Rogue is not currently licensed.

6

Social and Environmental Policies

Grown Rogue employs sustainable business models in all of its operations. On the cultivation side, Grown Rogue maintains the highest standards of environmental stewardship. This includes sustainable water sources with reclamation and recapture as much as possible from runoff and recycling of water input. Grown Rogue uses only natural and sustainable products in all of their applications from nutrients to integrated pest management. Grown Rogue maintains the highest level of sustainable cannabis practices through its focus on sustainable and natural cultivation methods.

Grown Rogue hires and pays living wage to all of its team members and is very involved in each of the communities where it operates.

Plans for Expansion & Economic Outlook

Grown Rogue continues to focus on taking its learnings and experience from Oregon into new markets across the US. During the last two years, Grown Rogue has established a platform that excels at licensing, compliance, understanding consumer purchasing preferences, and product innovation that places Grown Rogue in a unique position as compared to its peers to capitalize on new markets. Oregon is arguably the most competitive cannabis market in the world and Grown Rogue has excelled by implementing standard business practices that make the Company well suited for entering and building successful brand presence in newly legalized cannabis markets.

Grown Rogue intends to expand its current operating facilities in Oregon and continue its multi-state expansion strategy focused on best-in-class production methods with primary focus on the Golden Harvests Option. Grown Rogue is rapidly pursuing full licensing with Michigan State regulatory agencies and fulfilling its management services contract with Golden Harvests in the interim.

The future of the cannabis industry is in the branded products and the best brands are being created in the west coast, which is the area that has become synonymous with high quality cannabis. Unlike many current multi-state operators who prefer to obtain just a few licenses in a large volume of states, Grown Rogue is very focused on establishing a larger number of licenses in fewer states to capitalize on the economies of scale necessary to maximize profits. Over the next 12 months, Grown Rogue is focused on furthering its footprint and market share in the Oregon market, continuing to add to the portfolio projects in Michigan, looking at strategic opportunities in new states, and monitoring the regulatory environment in California to determine the correct course of action for its Eureka asset.

Definitive Transaction Agreement and Reverse Take-over Transaction

On October 31, 2018, the GR Unlimited, Novicius Corp. (“Novicius”), Grown Rogue Canada Inc. and Novicius Acquisition Corp. entered into a definitive transaction agreement which set out the terms for the reverse take-over of Novicius by GR Unlimited and the related transactions (the “Transaction”). The Transaction was completed on November 15, 2018 and the Company began trading its common shares through the facilities of the Canadian Securities Exchange under the symbol “GRIN” on November 26, 2018.

As part of the Transaction, the Company changed its name from “Novicius Corp.” to “Grown Rogue International Inc.” and consolidated its existing common shares on the basis of one common share for each 1.4 existing common shares. The unitholders of GR Unlimited exchanged their equity membership interests in GR Unlimited for common shares of the Company on a one-for-one basis. The Transaction resulted in the Company becoming the owner all of the equity membership interests in GR Unlimited. In connection with the Transaction, GR Unlimited, directly and through Grown Rogue Canada Inc., raised approximately CAD$6.5 million through brokered and non-brokered private placements.

For further details regarding the Transaction and related financings, please refer to the Company’s Listing Statement filed on SEDAR on November 23, 2018.

7

Going Concern

The Company’s ability to continue as a going concern is dependent upon, but not limited to, its ability to raise financing necessary to fund its development programs and general and administrative expenses, discharge its liabilities as they become due and generate positive cash flows from operations. There is no certainty that the Company will be successful in raising additional capital or creating positive cash flow from operations.

Selected Annual Information

The following selected financial data for each of the three completed financial years are derived from the audited annual financial statements of the Company.

Year Ended October 31	2019			2018			2017(1)
	$			$			$
Total revenue		3,924,983			1,932,128			156,066
Loss from operations		(7,622,956	)		(4,967,609	)		(138,854	)
Net loss		(9,476,934	)		(7,509,986	)		(302,397	)
Comprehensive Loss		(9,355,014	)		(7,509,986	)		(302,397	)
Total assets		2,932,476			5,366,268			2,914,491
Total non-current financial liabilities		217,633			2,292,634			1,069,139
Cash dividends		Nil			Nil			Nil

⁽¹⁾ For the period from October 16, 2016 to October 31, 2017

8

Results of Operations

Grown Rogue’s net losses from operations amounted to $178,591 for the three months ended January 31, 2020, a decrease of $4,480,119 when compared to losses from operations of $4,658,710 for the three months ended January 31, 2019. The main component that resulted in the significantly higher loss for the three months ended January 31, 2019, was transaction costs of $3,723,724 that did not recur during the three months ended January 31, 2020. In addition, there were reductions of general and administrative expenses of $336,537 and interest expense of $74,338 during the three months ended January 31, 2020.

Revenue for the three months ended January 31, 2020 increased by $271,987 to $1,106,296 from $834,309 during the three months ended January 31, 2019. This increase is a result of a significant increase in Indoor production volume along with price recovery in the Sungrown market, aided by the Company’s focus on long-term partnerships with many of the best retailers in Oregon. The Company also locked in pricing with a few key accounts as part of its ‘futures’ strategy.

Cost of finished cannabis inventory sold for the three months ended January 31, 2020 amounted to $521,680 compared to $669,920 for the three months ended January 31, 2019. Gross profit for the three months ended January 31, 2020 was reduced to $653,545 following the added expense of the realized fair value amounts included in inventory sold of $632,630, less the gain on the unrealized fair value on the growth of the Company’s biological assets of $701,559. For the three months ended January 31, 2019, the Company had a gross margin of $256,330 once the realized fair value recovery of amounts included in inventory sold of $47,111 and the unrealized fair value on the growth of the Company’s biological assets of $44,830 were added. These fair value adjustments related to the growth of the Company’s biological assets relate to increasing the fair value (less costs to sell) of the cannabis crops in various stages of growth prior to harvest and any further processing required to produce inventory available for sale. The valuation of Grown Rogue’s biological assets, and the resulting fair market adjustment, includes several estimates made by management based on inputs that, by their nature, are unobservable as at January 31, 2020 and 2019. These include the average harvest yield, average selling prices, standard costs to bring the plants to harvest, as well as the stage of growth. Changes in these estimates could result in changes to the fair value of the biological assets, as well as the unrealized gain on changes in the fair value of these biological assets.

For the three months ended January 31, 2020, the Company realized a gross margin of $653,545, or 59%, compared to a gross margin of $256,330, or 31%, realized during the three months ended January 31, 2019. The increased gross margin is a result of the efforts that Company has made to refine its cultivation processes to be more efficient resulting in lower cost of sales and a better gross margin.

Operating expenses for the three months ended January 31, 2020 were $832,136, a decrease of $4,082,904 when compared to expenses of $4,915,040 for the three months ended January 31, 2019. The main driver of the decrease is the absence of transaction costs of $3,723,724 that occurred during the quarter ended January 31, 2019. Also contributing was a reduction in general and administrative expenses of $336,538, and interest expense of $74,338. The reduction in the general and administrative costs was a function of a larger allocation of overhead to inventory, biological assets and, in turn cost of sales. The Company also reduced salaries, bad debts, promotional expenses and travel.

During the year ended October 31, 2018, GR Unlimited issued convertible debentures with aggregate principal of CAD$1,500,000, with the Company issuing a second round of convertible debenture financing with aggregate principal of CAD $1,500,000 during the year ended October 31, 2019. GR Unlimited has also entered into three finance leases for $354,998, in aggregate. The result of these various debt financings is interest expense of $90,514 for the three months ended January 31, 2020 a reduction of $74,338 when compared to interest expense of $164,852 for the three months ended January 31, 2019. These convertible debentures also gave rise to accretion expense of $68,210 for the three months ended January 31, 2020, which represents an increase of $50,246 when compared to accretion expense of $17,964 incurred during the three months ended January 31, 2019.

9

Capital Resources

During the year ended October 31, 2019, the Company issued secured convertible debentures with aggregate principal of CAD$1,500,000 ($1,105,127) which bear interest at 2% per quarter payable on the last day of March, June, September and December. The debentures mature August 10, 2020 and are convertible into common shares of the Company at a conversion price of CAD$0.44 per share, subject to certain adjustments resulting from future events. As the Company failed to complete a financing as contemplated in the debenture agreement, and issued other shares to employees, the conversion price has decreased from the original price of $0.44 per share. As such, the conversion price will be set equal to the price of a subsequent issuance of shares of the Company. The Company is in negotiations with the holder of the debenture to extend the maturity date beyond August 10, 2020.

Summary of Quarterly Results

The following table sets out selected quarterly results of the Corporation for the eight quarters ended on or before January 31, 2020. The information contained herein is drawn from the interim financial statements of the Corporation for each of the aforementioned eight quarters.

	2020			2019												2018
Fiscal Year Quarter	Jan			Oct			Jul			Apr			Jan			Oct			Jul			Apr
	$			$			$			$			$			$			$			$
Revenue		1,106,296			431,629			773,930			1,885,115			834,309			790,236			679,906			291,026
Net income (loss)		(233,187	)		(2,098,742	)		(931,184	)		(1,648,446	)		(4,798,562	)		(2,512,110	)		(1,460,380	)		(2,146,869	)
Net income (loss), per unit basic and diluted		Nil			(0.02	)		(0.01	)		(0.02	)		(0.08	)		(0.08	)		(0.04	)		(0.06	)

Other Selected Financial Information

Adjusted EBITDA (non-IFRS measure)

The Company’s “Adjusted EBITDA” is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The Company defines Adjusted EBITDA as the Company’s net income (loss) for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities and the effects of fair-value accounting for biological assets and inventory. The Company believes that this is a useful metric to evaluate its operating performance.

10

Adjusted EBITDA Reconciliation ¹

	Three months ended
	January 31,			January 31,
	2020			2019
	$			$
Net loss, as reported		(233,187	)		(4,798,562	)
Add back realized fair value amounts included in inventory sold		632,630			(47,111	)
Less unrealized fair value gain on growth of biological assets		(701,559	)		(44,830	)
		(302,116	)		(4,890,503	)
Add back accretion expense, as reported		68,210			17,964
Add back amortization of intangible assets, as reported		7,659			7,233
Add back amortization of property and equipment, as reported		49,677			158,814
Add back amortization of right-of-use assets		35,822			-
Add back interest expense (recovery), as reported		90,514			164,852
Add back transaction costs		-			3,723,724
Less gain on derecognition of derivative liability, as reported		-			(15,000	)
Adjusted EBITDA		(50,234	)		(832,916	)

¹ “Adjusted EBITDA” is the Company’s net income (loss) for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove finance charges, transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities and the effects of fair-value accounting for biological assets and inventory

Liquidity and Capital Resources

The Company’s cash and cash equivalents position was $133,646 as at January 31, 2020 as compared to $74,926 on October 31, 2019. The Company had working capital deficiency of $2,639,527 as at January 31, 2020 compared to a working capital deficiency of $2,709,527 as at October 31, 2019.

During the three months ended January 31, 2020, Grown Rogue generated cash of $150,384 through its operating activities, compared to cash spent on similar activities of $2,168,603 for the three months ended January 31, 2019. The Company invested $4,528 in property and equipment during the three months ended January 31, 2020, a decrease compared to investment in similar assets of $79,052 during the three months ended January 31, 2019. Finally, Grown Rogue had net cash paid of $87,136 with respect to its financing activities during the three months ended January 31, 2020, which was the result of lease payments of $102,136 which was offset by proceeds of $15,000 from long-term debt. Cash generated during the three months ended January 31, 2019 from financing activities was $1,955,421 and was related to the issuance of subscription receipts in connection with the Transaction which was offset by repayments of long-term debt, equity issuance costs and transaction costs.

The Company’s capital requirements to maintain its properties and fund exploration and general overhead expenses have been met primarily through the completion of private placements.

11

Commitments

As at January 31, 2020, Grown Rogue has commitments under operating leases for its facilities and commitments under finance lease for equipment. The minimum lease payments due are as follows:

Fiscal Year	Amount
2021	$	12,880

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Outstanding Share Data

As of the date of the MD&A, the Company has 95,618,897 common shares outstanding.

As of the date of this MD&A, the Company has the following warrants outstanding:

Exercise Price		Warrants Outstanding		Remaining Contractual Life (Years)		Expiry Date
$	0.44		757,125		0.63	November 15, 2020
$	0.55		21,253,089		0.63	November 15, 2020
$	0.55		3,409,091		1.08	May 1, 2021
$	0.44		2,148,117		3.24	June 28, 2023
$	0.125		5,000,000		1.87	February 10, 2022
			32,567,422		1.04

As of the date of this MD&A, the Company has the following stock options outstanding:

Exercise Price		Stock Options Outstanding		Remaining Contractual Life (Years)		Expiry Date
$	0.44		150,000		1.67	November 30, 2021
$	0.44		500,000		1.76	January 1, 2022
			650,000		1.74

12

Transactions with Related Parties

During the Reporting Period, the Company was involved in the following transactions with related parties:

a) Through its wholly owned subsidiary, GRU Properties, LLC leased 41.92 acres of real property located in Trail, Oregon owned by J. Obie Strickler, the Company’s President and CEO. The lease expires on December 31, 2020. Rent of $18,000 was included in facility expense for the period ended January 31, 2020 (2019 - $16,550). The Company had $72,000 (October 31, 2019 - $63,000) owing in accounts payable and accrued liabilities at January 31, 2020.

b) The Company incurred employee/director fees of $12,000 (2019 - $12,000) with an individual related to J. Obie Strickler, the Company’s President and CEO. At January 31, 2020, accounts payable and accrued liabilities includes $4,000 (October 31, 2019 - $8,000) payable to this individual.

c) The Company incurred fees related to marketing and promotion services of $Nil (2019 - $92,292) from two companies owned by Jacques Habra, the Company’s Chief Strategy Officer (“CSO”). At January 31, 2020, accounts payable and accrued liabilities includes $ (October 31, 2019 - $24,703) payable to these companies.

d) Key management personnel consists of the President and CEO; the CFO; the CMO; and the CFO of GR Unlimited. The compensation paid or payable to key management for services for the periods ended January 31, 2020 and 2019 is as follows:

	2019		2018
Salaries and consulting fees	$	100,500	$	156,792
Share-based compensation	$	10,188	$	-

Accounts payable and accrued liabilities at January 31, 2020 includes $83,000 (October 31, 2019 - $90,000) payable to these parties.

During the year ended October 31, 2019, a director and officer of the Company advanced $50,000 to the Company. The amount is payable on demand and bears interest at a rate of 60% per annum. During the three months ended January 31, 2020, the director and officer advanced a further $15,000 on the same terms. As at January 31, 2020, interest of $11,384 was accrued. Subsequent to January 31, 2020, all outstanding principal and accrued interest were repaid in full.

During the year ended October 31, 2019, a key member of the Company’s management advanced $50,000 to the Company. The amount is payable on demand and bears interest at a rate of 60% per annum. As at January 31, 2020, interest of $8,651 was accrued. Subsequent to January 31, 2020, all outstanding principal and accrued interest were repaid in full.

The transactions are in the normal course of operations and are measured at the exchange amounts being the amounts agreed to by the parties.

13

Critical Accounting Judgments and Estimation Uncertainties

The preparation of the consolidated financial statements in conformity with IFRS requires that the Company’s management make critical judgments, estimates and assumptions about future events that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the reporting period. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. The most significant judgments include those related to the ability of the Company to continue as a going concern, the determination of when property and equipment are available for use, and impairment of its financial and non-financial assets. The most significant estimates and assumptions include those related to the valuation of biological assets, the collectability of accounts receivable, the useful lives of property and equipment, inputs used in accounting the determination of the discount rate used to estimate the fair value of the liability component of convertible promissory notes, the inputs used in the estimate of the fair value of unit-based compensation and the inputs used in the estimate of the fair value of the unit purchase option and warrants issued.

Newly Adopted Accounting Pronouncements

The Company adopted the following accounting policies as of November 1, 2019:

IFRS 16 Leases (“IFRS 16”) was issued in January 2016 and replaces IAS 17 Leases. Under IAS 17, lessees were required to make a distinction between a finance lease and an operating lease. If the lease was classified as a finance lease, a lease liability was included on the statement of financial position. In applying IFRS 16, for all leases, the Company:

i. Recognizes right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present value of the future lease payments:

ii. Recognizes depreciation of right-of-use assets and interest expense on lease liabilities in the statements of income and comprehensive income;

iii. Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the statement of cash flows.

On November 1, 2019, the Company adopted IFRS 16. As such, the Company reviewed all leases and assessed whether these contracts are or contains a lease. The Company has accounted for its leases upon adoption of IFRS 16 using a modified retrospective approach whereby it recognizes a lease liability and a right-of-use asset at the date of initial application, being November 1, 2019. The lease liability is measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate. The Company has measured the right-of-use asset at an amount equal to the lease liability.

Financial Instruments and Other Risk Factors

i) Market Risk

a) Currency Risk

As at October 31, 2019, the Company had accounts payable and accrued liabilities of CAD$682,144 and convertible debentures of CAD$3,000,000. The Company is exposed to the risk of fluctuation in the rate of exchange between the Canadian Dollar and the United States Dollar. It is management’s opinion that this risk is not material.

b) Interest Rate Risk

At October 31, 2019 and October 31, 2018, the Company’s exposure to interest rate risk relates to long-term debt, convertible promissory notes, and finance lease obligations, but its interest rate risk is limited as the aforementioned financial instruments are fixed interest rate instruments.

14

c) Credit Risk

Credit risk is derived from cash and trade accounts receivable. The Company places its cash in deposit with major United States financial institutions. The Company has

established a policy to mitigate the risk of loss related to granting customer credit.

The carrying amount of cash and trade accounts receivable represents the Company’s maximum exposure to credit risk, which amounted to $239,739 (October 31, 2019 - $174,114) as at October 31, 2019. The allowance for doubtful accounts at October 31, 2019 is $164,594 (October 31, 2019 - $129,131)

d) Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its current obligations as they become due. The majority of the Company’s accounts payable and accrued liabilities are payable in less than 90 days. The Company prepares annual budgets and monitors expenditures to manage short-term liquidity. Due to the nature of the Company’s activities, funding for long-term liquidity needs is dependent on the Company’s ability to obtain additional financing through various means, including equity financing. At January 31, 2020, the Company has current assets of $1,679,219 and current liabilities of $4,218,746 which resulted in working capital deficiency of $2,539,527.

e) Fair Values

The carrying amounts for the Company’s cash, accounts receivable, amounts due from a related company, short-term advance to a related party, accounts payable and accrued liabilities, amounts due to employee/director, short-term advance payable, promissory notes and convertible promissory notes approximate their fair values because of the short-term nature of these items.

f) Fair Value Hierarchy

A number of the Company’s accounting policies and disclosures require the measurement of fair valued for both financial and non-financial assets and liabilities. The Company has an established framework, which includes team members who have overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. When measuring the fair value of an asset or liability, the Company uses observable market data as far as possible. The Company regularly assesses significant unobservable inputs and valuation adjustments. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

15

During the period ended January 31, 2020, there were no transfers of amounts between levels.

See additional risk factors relating to the Company as described in section 17 of the Company’s Listing Statement dated November 15, 2018 which can be found under the Company’s profile on www.sedar.com.

Subsequent Events

Subsequent to the period ended January 31, 2020, the Company:

a) Entered into a purchase agreement to acquire an option to acquire a 60% controlling interest (the “Option”) of a fully-licensed Michigan based operator pending Municipal and State regulatory approval. In order to exercise the Option, the Company will pay $810,000 in cash and issue 800,000 common shares of the Company in four tranches:

(i) Payment of $150,000 within five days of signing the Option and the issuance of 200,000 common shares of the Company within 60 days after signing the Option.

(ii) Payment of $200,000 and the issuance of 200,000 common shares of the Company on the sixth-month anniversary of signing the Option. The Company can elect to extend the due date of this tranche of the purchase consideration for an additional six months by paying an additional $25,000 and issuing an additional 25,000 common shares of the Company.

(iii) Payment of $260,000 and the issuance of 200,000 common shares of the Company on the twelve-month anniversary of signing the Option. The Company can elect to extend the due date of this tranche of the purchase consideration for an additional six months by paying an additional $25,000 and issuing an additional 25,000 common shares of the Company.

(iv) Payment of $200,000 and the issuance of 200,000 common shares of the Company due upon exercise of the Option, pending Municipal and State regulatory approval.

b) Received a commitment to invest up to CAD$1,500,000 in a non-brokered private placement offering of units ( the “Units”) with each Unit comprising one common share of the Company and one common share purchase warrant (the “Warrants”). Each warrant entitles the holder to purchase one common share of the Company at a price equal to a 25% premium to the Unit price for a period of 24 months. The Company has the right to accelerate the expiry of the warrants to thirty days following written notice to the holder if the common shares of the Company close at or above CAD$0.25 per share for a period of ten consecutive trading days on the Canadian Securities Exchange. As of the date of these financial statements, the Company has issued 5,000,000 Units for gross proceeds of CAD$500,000.

c) Entered into a subscription agreement to issue 15,000,000 common shares of the Company in exchange for 2,362,204 common shares of Cannabis Growth Opportunity Corporation at a deemed exchange price of approximately CAD $1,500,000.

d) Closed a secured debt investment of $600,000 (the “Debt Financing”). The debt carries a two-year term, with monthly payments of principal commencing June 15, 2020. Once the principal is repaid, each investor will receive a gross monthly royalty of 1% per $100,000 invested based on any cannabis business that is majority owned by GR Michigan, LLC (the “Royalty”). The Royalty has a term of two years with maximum amount of two times the amount of principal invested in the Debt Financing. The Company but not the obligation, to purchase the Royalty from any investor by paying the principal invested by such investor in the Debt Financing.

16

The Company has also agreed to pledge 100% of its ownership in GR Michigan, LLC to the investors in the Debt Financing until the principal is repaid in full, 50% during year one of the Royalty payments and 33% of the Royalty payments.

e) Issued a total of 1,100,000 common shares to certain former and current consultants of the Company. The common shares were issued at a deemed price of CAD$0.10 per share and are subject to a four-month hold period expiring on July 27, 2020.

Regulatory Disclosure

Grown Rogue derives a substantial portion of its revenues from the cannabis industry in the United States, which industry is illegal under United States federal law. Grown Rogue is indirectly involved (through subsidiaries) in the cannabis industry in the United States where local state laws permit such activities. Currently, its subsidiaries are directly engaged in the manufacture, possession, use, sale or distribution of cannabis in the recreational cannabis marketplace in the State of Oregon. Grown Rogue also intends to enter the California and Michigan markets.

The United States federal government regulates drugs through the Controlled Substances Act (the “CSA”), which places controlled substances, including cannabis, in a schedule. Cannabis is classified as a Schedule I drug. Under federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States and a lack of accepted safety for the use of the drug under medical supervision. The United States Food and Drug Administration has not approved marijuana as a safe and effective drug for any indication.

In the United States cannabis is largely regulated at the state level. Notwithstanding the permissive regulatory environment of medical cannabis at the state level, and the increasing number of states with legal recreational frameworks, cannabis continues to be categorized as a Schedule I controlled substance under the CSA and as such, violates federal law in the United States. Senators Elizabeth Warren and Cory Gardner have introduced a bipartisan Senate bill titled “Strengthening the Tenth Amendment Through Entrusting States (STATES) Act” that would lift the Controlled Substance Act’s restrictions on cannabis in states that have written their own laws. However, there can be no assurances as to when this bill will pass, or if it will pass at all. The Supremacy Clause of the United States Constitution and United States federal laws made pursuant to it are paramount and in case of conflict between federal and state law in the United States, the federal law shall apply.

As a result of the conflicting views between state legislatures and the United States federal government regarding cannabis, investments in cannabis businesses in the United States are subject to inconsistent legislation and regulation. The response to this inconsistency was addressed in August 2013 when then Deputy Attorney General, James Cole, authored a memorandum (the “Cole Memorandum”) addressed to all United States district attorneys acknowledging that notwithstanding the designation of cannabis as a controlled substance at the federal level in the United States, several US states had enacted laws relating to cannabis for medical and recreational purposes. The Cole Memorandum outlined certain priorities for the Department of Justice relating to the prosecution of cannabis offenses. In particular, the Cole Memorandum noted that in jurisdictions that enacted laws legalizing cannabis in some form and that also implemented strong and effective regulatory and enforcement systems to control the cultivation, distribution, sale and possession of cannabis, conduct in compliance with those laws and regulations is less likely to be a priority at the federal level.

17

In March 2017, newly appointed Attorney General Jeff Sessions again noted limited federal resources and acknowledged that much of the Cole Memorandum had merit; however, he disagreed that it had been implemented effectively and, on January 4, 2018, Attorney General Jeff Sessions issued a memorandum (the “Sessions Memorandum”) that rescinded the Cole Memorandum. As a result of the Sessions Memorandum, federal prosecutors are no longer bound by the priorities in the Cole Memorandum relating to the prosecution of cannabis activities despite the existence of state-level laws that may be inconsistent with federal prohibitions.

There is no guarantee that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions. Unless and until the United States Congress amends the Controlled Substances Act with respect to medical and/or adult-use cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current federal law. If the federal government begins to enforce federal laws relating to cannabis in states where the sale and use of cannabis is currently legal, or if existing applicable state laws are repealed or curtailed, Grown Rogue’s business, results of operations, financial condition and prospects would be materially adversely affected. Until Congress amends the federal law with respect to marijuana use, there is a risk that federal authorities may enforce current federal law against companies such as Grown Rogue for violation of federal law or they may seek to bring an action or actions against Grown Rogue and/or its investors for violation of federal law or otherwise, including, but not limited to, a claim against investors for aiding and abetting another’s criminal activities.

In light of the uncertainty surrounding the treatment of United States cannabis-related activities, including the rescission of the Cole Memorandum, the Canadian Securities Administrators published a staff notice (Staff Notice 51-352 (Revised)) on February 8, 2018 setting out certain disclosure expectations for issuers with United States cannabis-related activities. Staff Notice 51-352 (Revised) includes additional disclosure expectations that apply to all issuers with United States cannabis-related activities, including those with direct and indirect involvement in the cultivation and distribution of cannabis, as well as issuers that provide goods and services to third parties involved in the United States cannabis industry.

In accordance with the Canadian Securities Administrators Staff Notice 51-352 (Revised) – Issuers with U.S. Marijuana-Related Activities (“Staff Notice 51-352”), below is a table of concordance that is intended to assist readers in identifying the disclosure expectations outlined in Staff Notice 51-352.

In accordance with Staff Notice 51-352, this section provides a discussion of the federal and state-level U.S. regulatory regimes in the jurisdictions where Grown Rogue is currently directly involved through its subsidiaries or is planning to be directly involved in the future. Certain Grown Rogue subsidiaries are directly engaged in the manufacture, possession, use, sale or distribution of cannabis in the recreational cannabis marketplace in the State of Oregon. Grown Rogue also intends to enter the California and Michigan markets. In accordance with Staff Notice 51-352, Grown Rogue will evaluate, monitor and reassess this disclosure, and any related risks, on an ongoing basis and the same will be supplemented and amended to investors in public filings, including in the event of government policy changes or the introduction of new or amended guidance, laws or regulations regarding marijuana regulation. Any non-compliance, citations or notices of violation which may have an impact on Grown Rogue’s licenses, business activities or operations will be promptly disclosed by Grown Rogue.

18

All Issuers with US Marijuana- Related Activities	Response
Describe the nature of the issuer’s involvement in the U.S. marijuana industry and include the disclosures indicates for at least one of the direct, indirect and ancillary industry involvement types.	See above under “Description of Business”. See below under “U.S. Regulatory Matters”
Prominently state that marijuana is illegal under US federal law and that enforcement of relevant laws is a significant risk	See above
Discuss any statements and other available guidance made by federal authorities or prosecutors regarding the risk of enforcement action in any jurisdiction where the issuer conducts U.S. marijuana-related activities.	See below under “U.S. Regulatory Matters” See the following risk factors included in the Company’s Listing Statement available on www.SEDAR.com: Section 17 – Risk Factors – Grown Rogue’s Business is Illegal underz U.S. Federal Law Section 17 – Risk Factors – Because marijuana is illegal under federal law, investing in cannabis business could be found to violate the US Federal CSA
Outline related risks including, among others, the risk that third party service providers could suspend or withdraw services and the risk that regulatory bodies could impose certain restrictions on the issuer’s ability to operate in the U.S.	See the following risk factors included in the Company’s Listing Statement available on www.SEDAR.com: Section 17 – Risk Factors – Grown Rogue’s Business is Illegal under U.S. Federal Law Section 17 – Risk Factors – Because marijuana is illegal under federal law, investing in cannabis business could be found to violate the US Federal CSA Section 17 – Risk Factors – Risks Relating to Other Laws and Regulations Section 17 – Risk Factors – Current and Future Consumer Protection Regulatory Requirements Section 17 – Risk Factors – Operational Risks Section 17 – Risk Factors – Grown Rogue will not be able to deduct many normal business expenses Section 17 – Risk Factors – External Factors Section 17 – Risk Factors – Failure to Protect Intellectual Property

19

All Issuers with US Marijuana- Related Activities	Response
	Section 17 – Risk Factors – Agricultural Operations Section 17 – Risk Factors – Liability, Enforcement Complaints etc. Section 17 – Risk Factors – Grown Rogue’s business is highly regulated and it may not be issued necessary licenses, permits, and cards Section 17 – Risk Factors – Licenses Section 17 – Risk Factors – Local Laws and Ordinances Section 17 – Risk Factors – Third party service providers to Grown Rogue may withdraw or suspend their service Section 17 – Risk Factors – Grown Rogue may not be able to obtain or maintain a bank account Section 17 – Risk Factors – Grown Rogue’s contracts may be unenforceable and property may be subject to seizure Section 17 – Risk Factors – The protections of US bankruptcy law may be unavailable Section 17 – Risk Factors – Grown Rogue may have a difficult time obtaining insurance which may expose Grown Rogue to additional risk and financial liabilities Section 17 – Risk Factors – Grown Rogue’s websites are accessible in jurisdictions where medicinal or recreational use of marijuana is not permitted and, as a result Grown Rogue may be found to be violating the laws of those jurisdictions Section 17 – Risk Factors – The marijuana industry faces significant opposition in the United States
Given the illegality of marijuana under US federal law, discuss the issuer’s ability to access both public and private capital and indicate what financing options are/are not available in order to support continuing operations.	See above under “Description of Business”. See the following risk factor included in the Company’s Listing Statement available on www.SEDAR.com: Section 17 – Risk Factors – Grown Rogue may not be able to obtain or maintain a bank account
Quantify the issuer’s balance sheet and operating statement exposure to U.S. marijuana-related activities.	100% of Grown Rogue’s balance sheet and operating statements are exposed to U.S. marijuana-related activities.

20

All Issuers with US Marijuana- Related Activities	Response
Disclose if legal advice has not been obtained, either in the form of a legal opinion or otherwise, regarding (a) compliance with applicable state regulatory frameworks and (b) potential exposure and implications arising from U.S. federal law.	Grown Rogue has received legal advice from multiple attorneys regarding (a) compliance with applicable state regulatory frameworks and (b) potential exposure and implications arising from U.S. federal law.
CSA Requirement – US Marijuana Issuers with direct involvement in cultivation or distribution	Response
Outline the regulations for U.S. states in which the issuer operates and confirm how the issuer complies with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	See below under “U.S. Regulatory Matters”
Discuss the issuer’s program for monitoring compliance with U.S. state law on an ongoing basis, outline internal compliance procedures and provide a positive statement indicating that the issuer is in compliance with U.S. state law and the related licensing framework. Promptly disclose any noncompliance, citations or notices of violation which may have an impact on the issuer’s licence, business activities or operations.	See below under “U.S. Regulatory Matters” See the following risk factors included in the Company’s Listing Statement available on www.SEDAR.com: Section 17 – Risk Factors – Grown Rogue’s Business is Illegal under U.S. Federal Law Section 17 – Risk Factors – Risks Relating to Other Laws and Regulations Section 17 – Risk Factors – Grown Rogue’s business is highly regulated and it may not be issued necessary licenses, permits, and cards Section 17 – Risk Factors – Licenses Section 17 – Risk Factors – Liability, Enforcement Complaints etc.
US Marijuana Issuers with indirect involvement in cultivation or distribution	Response
Outline the regulations for U.S. states in which the issuer’s investee(s) operate.	N/A

21

All Issuers with US Marijuana- Related Activities	Response
Provide reasonable assurance, through either positive or negative statements, that the investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state. Promptly disclose any noncompliance, citations or notices of violation, of which the issuer is aware, that may have an impact on the investee’s licence, business activities or operations.	N/A
US Marijuana Issuers with material ancillary involvement	Response
Provide reasonable assurance, through either positive or negative statements, that the applicable customer’s or investee’s business is in compliance with applicable licensing requirements and the regulatory framework enacted by the applicable U.S. state.	N/A

U.S. Regulatory Matters

Grown Rogue (through its subsidiaries) has direct involvement in the cultivation and distribution of marijuana in the United States. Grown Rogue and its subsidiaries are primarily involved in the U.S. marijuana industry as a seed to retail company with operations currently in Oregon (a state that has legalized recreational marijuana). Currently Grown Rogue through its subsidiaries produces recreational marijuana and distributes it to dispensaries throughout Oregon.

Producing, manufacturing, processing, possessing, distributing, selling, and using marijuana is a federal crime in the United States. The United States federal government regulates drugs through the Controlled Substances Act (the “Federal CSA”), which places controlled substances, including cannabis, on one of five schedules. Cannabis is currently classified as a Schedule I controlled substance, which is viewed as having a high potential for abuse and having no currently accepted medical use in treatment in the United States. No prescriptions may be written for Schedule I substances, and such substances are subject to production quotas imposed by the United States Drug Enforcement Administration (the “DEA”). Schedule I drugs are the most tightly restricted category of drugs under the Federal CSA.

22

State and territorial laws that allow the use of medical cannabis or legalize cannabis for adult recreational use are in conflict with the Federal CSA, which makes cannabis use and possession illegal at the federal level. Because cannabis is a Schedule I controlled substance, however, the development of a legal cannabis industry under the laws of these states is in conflict with the Federal CSA, which makes cannabis use and possession illegal on a federal level. Additionally, the Supremacy Clause of the United States Constitution establishes that the Constitution, federal laws made pursuant to the Constitution, and treaties made under the Constitution’s authority constitute the supreme law of the land. The Supremacy Clause provides that state courts are bound by the supreme law; in case of conflict between federal and state law, including Oregon and other state law legalizing certain cannabis uses, the federal law must be applied.

Until Congress amends the Federal CSA with respect to marijuana use, there is a risk that federal authorities may enforce current federal law against companies such as Grown Rogue for violation of federal law or they may seek to bring an action or actions against Grown Rogue and/or its investors for violation of federal law or otherwise, including, but not limited to, a claim against investors for aiding and abetting another’s criminal activities. The US federal aiding and abetting statute provides that anyone who commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal. Additionally, even if the U.S. federal government does not prove a violation of the Federal CSA, the U.S. federal government may seize, through civil asset forfeiture proceedings, certain assets such as equipment, real estate, moneys and proceeds, or your assets as an investor in the Company, if the U.S. federal government can prove a substantial connection between these assets or your investment and marijuana distribution or cultivation.

Because many states in the United States have approved certain medical or recreational uses of cannabis, the U.S. Department of Justice, through the Cole Memorandum, had previously described a set of priorities for federal prosecutors operating in states that had legalized the medical or other adult use of cannabis. The Cole Memorandum represented a significant shift in U.S. federal government priorities away from strict enforcement of federal cannabis prohibition.

However, the Cole Memorandum was merely a directive regarding enforcement and did not overturn or invalidate the Federal CSA or any other federal law or regulation.

The Cole Memorandum was rescinded in January 2018 by Jeff Sessions, the former U.S. Attorney General, who deemed it “unnecessary”. This is based on Mr. Sessions’s belief, which was also expressed in the Cole Memorandum that each state’s federal prosecutor should “follow the well-established principles that govern all federal prosecutions. These principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.” The rescission of the Cole Memorandum, and comments made publicly by Mr. Sessions and other members of the Trump Administration, signal a significant shift by the U.S. federal government back to more strict enforcement of federal law.

On January 4, 2018, Billy J. Williams, the current United States Attorney for the District of Oregon and former Multnomah County (Oregon) Deputy District Attorney who handled major violent crimes and later served as a Chief of the Violent Crimes Unit and as the Indian Country AUSA/Tribal Liaison for the Department of Justice prior to being appointed as the federal prosecutor for Oregon, Mr. Williams provided the below statement on marijuana enforcement in the District of Oregon: “As noted by Attorney General Sessions, today’s memo on marijuana enforcement directs all U.S. Attorneys to use the reasoned exercise of discretion when pursuing prosecutions related to marijuana crimes. We will continue working with our federal, state, local and tribal law enforcement partners to pursue shared public safety objectives, with an emphasis on stemming the overproduction of marijuana and the diversion of marijuana out of state, dismantling criminal organizations and thwarting violent crime in our communities.”

23

In an editorial published on January 12, 2018, Mr. Williams wrote: “In sum, I have significant concerns about the state’s current regulatory framework and the resources allocated to policing marijuana in Oregon.”

At a meeting on February 2, 2018, Mr. Williams told Oregon’s top politicians and law enforcement officials that there’s more cannabis being produced in the state than can legally be consumed. “And make no mistake about it, we’re going to do something,” Williams told dozens of politicians, tribal leaders, sheriffs as well as representatives of the FBI and the U.S. Drug Enforcement Administration. “Here’s what I know, in terms of the landscape here in Oregon: We have an identifiable and formidable marijuana over-production and diversion problem,” Williams said. “That’s the fact. My responsibly is to work with our state partners to do something about it.”

Because producing, manufacturing, processing, possessing, distributing, selling, and using marijuana is illegal under U.S. federal law, investing in cannabis business could be found to violate the Federal CSA. As a result, individuals involved with cannabis business, including but not limited to investors and lenders, may be indicted under U.S. federal law. An investment in the Company may: (a) expose an investor personally to criminal liability under U.S. federal law, resulting in monetary fines and jail time; and (b) expose any real and personal property used in connection with Grown Rogue’s business to seizure and forfeiture to the U.S. federal government.

Active enforcement of the current federal law on cannabis may thus directly and adversely affect revenues and profits of Grown Rogue. The risk of strict enforcement of the Federal CSA remains uncertain.

U.S. Federal Laws Applicable to Banking

Because producing, manufacturing, processing, possessing, distributing, selling, and using marijuana is a crime under the Federal CSA, most U.S. banks and other financial institutions are unwilling to provide banking services to marijuana businesses due to concerns about criminal liability under the Federal CSA as well as concerns related to federal money laundering rules under the U.S. Bank Secrecy Act. Canadian banks are also hesitant to deal with cannabis companies, due to the uncertain legal and regulatory framework of the industry. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses.

Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering or conspiracy. In both Canada and the United States transactions by cannabis businesses involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape. Though guidelines issued in past years allow financial institutions to provide bank accounts to certain cannabis businesses, few U.S. banks have taken advantage of those guidelines and many U. S. cannabis businesses still operate on an all-cash basis.

Oregon State Regulation

The Oregon Medical Marijuana Program (“OMMP”) is a state registry program within the Public Health Division, Oregon Health Authority (“OHA”). The role of the OHA is to administer the Oregon Medical Marijuana Act. The OMMP allows individuals with a medical history of one or more qualifying illnesses and a doctor’s written statement to apply for registration with the OMMP. Qualified applicants are issued a medical marijuana card that entitles them to legally possess and cultivate cannabis, subject to certain limitations.

On November 4, 2014, Oregon voters passed Measure 91, known as the Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act (the “Act”), effectively ending the state’s prohibition of recreational marijuana and legalizing the possession, use, and cultivation of marijuana within legal limits by adults 21 years and older. The Act did not amend or effect the Oregon Medical Marijuana Act and the OMMP. The Act empowered the Oregon Liquor Control Commission (“OLCC”) with regulating sales of recreational marijuana in Oregon. It is possible that the voters could potentially repeal the law that permits both the medical and recreational marijuana industry to operate under state law.

24

Under current Oregon law, possession and home cultivation by adults at least 21 years old is allowed within legal limits. Public sales of marijuana and marijuana products may be done only through licensed retailers. The OLCC has the authority to decide how many licenses to allow in a specific area or location and may refuse granting a license if there are reasonable grounds to believe there are sufficient licenses in the area or if the granting of a license is not demanded by public interest or convenience. The OLCC may disqualify applicants for a number of reasons, including for lacking a good moral character, for lacking sufficient financial resources or responsibility, for relevant past convictions, and for using marijuana, alcohol, or drugs “to excess.”

Grown Rogue has a comprehensive compliance program administered through its Director of Compliance, which tracks all aspects of operations through the METRC program (an online software tool mandated through the State of Oregon that tracks seed to retail purchases), as well as compliance with all state and federal employment and other safety regulations.

Grown Rogue is periodically advised by various outside attorneys about the requirements for compliance with Oregon law.

Grown Rogue is in compliance with Oregon state law and its related licensing framework.

California State Regulation

As part of its business plan, Grown Rogue intends to enter the California market..

In 1996, California voters passed a medical marijuana law allowing physicians to recommend cannabis for an inclusive set of qualifying conditions including chronic pain. The law established a not-for-profit patient/caregiver system but there was no state licensing authority to oversee the businesses that emerged as a result of the system. In September of 2015, the California legislature passed three bills, collectively known as the “Medical Marijuana Regulation and Safety Act” (“MCRSA”). In 2016, California voters passed “The Adult Use of Marijuana Act” (“AUMA”), which legalized adult-use cannabis for adults 21 years of age and older and created a licensing system for commercial cannabis businesses. On June 27, 2017, Governor Brown signed SB-94 into law. SB-94 combines California’s medicinal and adult-use cannabis regulatory frameworks into one licensing structure under the Medicinal and Adult-Use of Cannabis Regulation and Safety Act (“MAUCRSA”).

Pursuant to MAUCRSA: (1) the California Department of Food and Agriculture, via CalCannabis, issues licenses to cannabis cultivators: (2) the California Department of Public Health, via the Manufactured Cannabis Safety Branch (the “MCSB”), issues licenses to cannabis manufacturers and (3) the California Department of Consumer Affairs, via the Bureau of Cannabis Control (the “BCC”), issues licenses to cannabis distributors, testing laboratories, retailers, and micro-businesses. These agencies also oversee the various aspects of implementing and maintaining California’s cannabis landscape, including the statewide track and trace system.

To operate legally under state law, cannabis operators must obtain a state license and local approval. Local authorization is a prerequisite to obtaining state licensure, and local governments are permitted to prohibit or otherwise regulate the types and number of cannabis businesses allowed in their locality. The state license approval process is not competitive and there is no limit on the number of state licenses an entity may hold. Although vertical integration across multiple license types is allowed under MAUCRSA, testing laboratory licensees may not hold any other licenses aside from a laboratory license. There are also no residency requirements for ownership under MAUCRSA.

25

California has implemented a robust regulatory system designed to ensure, monitor, and enforce compliance with all aspects of a cannabis operator’s licensed operations. Compliance with local law is a prerequisite to obtaining and maintaining state licensure, and all three state regulatory agencies require confirmation from the locality that the operator is operating in compliance with local requirements and was granted authorization to continue or commence commercial cannabis operations within the locality’s jurisdiction.

License types are designated into two classes: Type M (medical) or Type A (adult use). There are 20 types of licenses, and a single entity may possess both Type M and Type A licenses, across six different categories:

● Cultivation Facility: license to cultivate, process and package cannabis; and to sell cannabis to cannabis distributors, but not to consumers.

● Distributor: license to purchase cannabis from cultivators, manufacturers and other distributors; to store cannabis; to have cannabis tested by a testing facility; to sell cannabis to other distributors and to retailers; and to transport cannabis from a cannabis licensee’s premises to another cannabis licensee’s premises.

● Product Manufacturing Facility: license to purchase cannabis from distributors; to manufacture, process, and package cannabis and cannabis products; and to sell cannabis and cannabis products to distributors but not to consumers. Pursuant to this category, cannabis products include edibles, ointments, tinctures, oils and other concentrates.

● Testing Laboratory: license to test cannabis and cannabis products for potency and contaminants.

● Retailer: license to purchase cannabis and cannabis products from distributors, as well as to sell cannabis and cannabis products directly to consumers.

● Microbusiness: license to cultivate cannabis on an area less than 10,000 square feet; to purchase cannabis from cultivators, manufacturers and distributors; to store cannabis; to have cannabis tested by a testing facility; to sell cannabis to retailers and distributors; to transport cannabis from one cannabis licensee’s premises to another; to manufacture, process and package cannabis and cannabis products; and to sell cannabis and cannabis products directly to consumers.

The MAUCRSA permits vertical integration by licensees to hold licenses in more than two separate licensing categories. Licensees must conduct their commercial cannabis activity within a single-premises, which must be contiguous. Although multiple premises are allowed on a given parcel, each premises must be sufficiently separate from any other premises, i.e., having separate entrances and exits and no shared common areas. Importantly, licensees may not sublet any portion of their licensed premises, and therefore, a licensee cannot lease a multi-unit building and sublease one of the units to an affiliated licensee.

Only businesses engaged in “commercial cannabis activity” are required to have a license – ancillary services, technology, and know-how are not included unless their interests in the licensee amount to “ownership” or a “financial interest.”

Under MAUCRSA, an “owner” no longer distinguishes between public and private companies. An owner is: (1) anyone with an aggregate ownership interest of 20% or more in the applicant, unless the interest is solely a security, lien, or encumbrance, (2) the chief executive officer of a non-profit or other entity, (3) a member of the board of directors for a non-profit, or (4) an individual participating in the direction, control, or management of the applicant. Each owner of the entity applying for a cannabis license is required to submit fingerprint images and background checks. Such fingerprinting requirement extends to shareholders holding 5% or more of the equity of the applicant’s public company owner.

26

Under California state law, all state licensed cannabis businesses were entitled to rely on certain transition provisions until December 6, 2018. These provisions were included to ease the transition of businesses into the new regulatory regime introduced on January 1, 2018 in California. The transition provisions grandfathered the sale of certain products compliantly produced prior to January 1, 2018, and, among other things, also allow state licensees to transact with other state licensees regardless of the parties’ Type M (medical) or Type A (adult use) license.

Retail cannabis businesses must pay tax on gross receipts (i.e., all revenues in whatever form and before any deductions whatsoever). A cannabis tax return is required whether or not taxes are owed during the month. Failure to submit timely tax returns and payments result in a penalty equal to 25% of the amount of the tax in addition to the amount of the tax, plus interest on the unpaid tax calculated from the original due date.

Zoning and Land Use Requirements

Applicants are required to comply with all local zoning and land use requirements and provide written authorization from the property owner where the commercial cannabis operations are proposed to take place, which must dictate that the applicant has the property owner’s authorization to engage in the specific state-sanctioned commercial cannabis activities proposed to occur on the premises.

Record-Keeping and Continuous Reporting Requirements

California’s state license application process additionally requires comprehensive criminal history, regulatory history, financial and personal disclosures, coupled with stringent monitoring and continuous reporting requirements designed to ensure only good actors are granted licenses and that licensees continue to operate in compliance with the State regulatory program.

Operating Procedure Requirements

Applicants must submit standard operating procedures describing how the operator will, among other requirements, secure the facility, manage inventory, comply with the State’s seed-to-sale tracking requirements, dispense cannabis, and handle waste, as applicable to the license sought. Once the standard operating procedures are determined compliant and approved by the applicable state regulatory agency, the licensee is required to abide by the processes described and seek regulatory agency approval before any changes to such procedures may be made. Licensees are additionally required to train their employees on compliant operations and are only permitted to transact with other legal and licensed businesses.

Site-Visits & Inspections

All licencees will not be able to obtain or maintain state licensure, and thus engage in commercial cannabis activities in the state of California without satisfying and maintaining compliance with state and local law. As a condition of state licensure, operators must consent to random and unannounced inspections of the commercial cannabis facility as well as all of the facility’s books and records to monitor and enforce compliance with state law. Many localities have also enacted similar standards for inspections, and the state has already commenced site-visits and compliance inspections for operators who have received state temporary or annual licensure.

27

Michigan State Regulation

As part of its business plan, Grown Rogue intends to enter the Michigan state market.

In November 2008, Michigan residents approved the Michigan Medical Marihuana Act20 (the “MMMA”) to provide a legal framework for a safe and effective medical marijuana program. In September 2016, the Michigan Senate passed the Medical Marihuana Facilities Licensing Act21 (the “MMFLA”) and the Marihuana Tracking Act (the “MTA” and together with the MMMA and the MMFLA, the “Michigan Cannabis Regulations”) to provide a comprehensive licensing and tracking scheme, respectively, for the medical marijuana program. Additionally, the Michigan Department of Licensing and Regulatory Affairs and its licensing board (“LARA”) has supplemented the Michigan Cannabis Regulations with “Emergency Rules” to further clarify the regulatory landscape surrounding the medical marijuana program. LARA is the main regulatory authority for the licensing of marijuana businesses.

Under the MMFLA, LARA administrates five types of “state operating licenses” for medical marijuana businesses: (a) a “grower” license, (b) a “processor” license, (c) a “secure transporter” license, (d) a “provisioning center” license and (e) a “safety compliance facility” license. There are no stated limits on the number of licenses that can be made available on a state level; however, LARA has discretion over the approval of applications and municipalities can pass additional restrictions.

On November 6, 2018, Michigan voters approved Proposal 1, to make marihuana legal under state and local law for adults 21 years of age or older and to control the commercial production and distribution of marihuana under a system that licenses, regulates, and taxes the businesses involved. The act will be known as the Michigan Regulation and Taxation of Marihuana Act24. According to Proposal 1, LARA is required to art accepting applications for retail (recreational) dispensaries within 12 months of the measure’s effective date.

Michigan License

State operating licenses for marijuana businesses have a 1 year term and are annually renewable if certain conditions are met: (a) the renewal application is submitted prior to the date the license expires, or within sixty (60) days of expiration if all other conditions are met and a late fee is paid, (b) the licensee pays the regulatory assessment fee set by LARA and (c) the licensee continues to meet the requirements to be a licensee under the Michigan Cannabis Regulations. Each renewal application is reviewed by LARA, but there is no guarantee of a timely renewal. There is no ultimate expiry after which no renewals are permitted.

Michigan Regulations

Michigan Marijuana Products may be purchased in a retail setting from a provisioning center by a registered qualified patient or registered primary caregivers connected to a registered qualifying patient (“Michigan Qualified Purchaser”); in each case, Michigan Qualified Purchasers must present a valid registry identification card issued by LARA (a “Michigan Registry ID”). For a Michigan Qualified Purchaser to receive Michigan Marijuana Products, provision centers must deploy an inventory control and tracking system that is capable of interfacing with the statewide monitoring system to determine (a) whether a Michigan Qualified Purchaser holds a Michigan Registry ID and (b) whether the sale or transfer will exceed the then-current daily and monthly purchasing limit for the holder of the Michigan Registry ID.

In order to receive a Michigan Registry ID, an applicant must provide: a completed application dated within one year of submission, a written certification from a physician with a bona-fide physician-patient relationship to the underlying patient, the application or renewal fee, contact information for the patient, caregiver (if applicable) and physician, as well as proof of Michigan residency.

For registered qualifying patients, the daily purchasing limit is 2.5 ounces, and for registered primary caregivers, the daily purchasing limit is 2.5 ounces per underlying registered qualifying patient that the registered primary caregiver is connected with through the registration process. Finally, the licensee shall verify in the statewide monitoring system that the sale or transfer does not exceed the monthly purchasing limit of ten (10) ounces of marihuana product per month to a qualifying patient, either directly or through the qualifying patient’s registered primary caregiver.

28

Allowable forms of medical marihuana includes smokable dried flower, dried flower for vaporizing and marihuana infused products, which are defined under the Act to include topical formulations, tinctures, beverages, edible substances or similar products containing usable marijuana that is intended for human consumption in a matter other than smoke inhalation. Under the Michigan Cannabis Regulations, marijuana-infused products shall not be considered food.

Qualifying conditions for the medical marijuana program in Michigan are the following:

● Cancer, glaucoma, positive status for human immunodeficiency virus, acquired immune deficiency syndrome, hepatitis C, amyotrophic lateral sclerosis, Crohn’s disease, agitation of Alzheimer’s disease, nail patella or the treatment of these conditions;

● A chronic or debilitating disease or medical condition or its treatment that produces 1 or more of the following: cachexia or wasting syndrome; severe and chronic pain; severe nausea; seizures, including but not limited to those characteristic of epilepsy; or severe and persistent muscle spasms, including but not limited to those characteristic of multiple sclerosis;

● Post-Traumatic Stress Disorder (PTSD); and/or

● Any other medical condition or its treatment approved by the department under the Michigan Cannabis Regulations.

Reporting Requirements

Pursuant to the requirements of the MTA, Michigan selected Franwell’s METRC software as the state’s third-party solution for integrated marijuana industry verification. Using METRC, regulators are able to track third party inventory, permissible sales and seed-to-sale information. Additionally, provisioning centers can use the METRC API to connect their own inventory management and/or point-of-sale systems to verify the identity as well as permissible sales for Michigan Qualified Purchasers.

Storage and Security

To ensure the safety and security of cannabis business premises and to maintain adequate controls against the diversion, theft, and loss of cannabis or cannabis products, a provisioning center is required to:

Maintain and submit a security operations plan that includes the following at a minimum:

● Escorts for all non-employee personnel in limited access areas.

● Secure locks for all interior rooms, windows and points of entry and exits with commercial grade, nonresidential door locks.

● An alarm system. Licensees will make all information related to the alarm system including monitoring and alarm activity available to LARA.

● A video surveillance system that, at a minimum, consists of digital or network video recorders, cameras, video monitors, digital archiving devices and a color printer capable of delivering still photos.

● 24-hour surveillance footage with fixed, mounted cameras, tamper/theft proof secured storage mediums and a notification system for interruption or failure of surveillance footage or storage of surveillance footage. All surveillance footage must be of sufficient resolution to identify individuals, have accurate time/date stamps and be stored for a minimum of 14 days unless state regulators notify that such recordings may be destroyed.

29

● State access to view and obtain copies of any surveillance footage through LARA or related investigators, agents, auditors and/or state police. A facility shall also provide copies of recordings to LARA upon request.

● Logs of the following: the identities of the employee or employees responsible for monitoring the video surveillance system, the identity of the employee who removed the recording from the video surveillance system storage device and the time and date removed and the identity of the employee who destroyed any recording.

Maintain marijuana storage plan for provisioning centers that includes the following at a minimum:

● A secured limited access area for inventories of Michigan Marijuana Products.

● Clearly labeled containers (a) marked, labeled or tagged, (b) enclosed on all sides and (c) latched or locked to keep all contents secured within. All such containers must be identified and tracked in accordance with the MTA.

● A locked area for chemical and solvents separate from Michigan Marijuana Products.

● Separation of marijuana-infused products from toxic or flammable materials.

● A sales or transfer counter or barrier separated from stock rooms to ensure registered qualifying patients or registered primary caregivers do not have direct access to Michigan Marijuana Products.

There are significant risks associated with the business of the Company, as described above and in Section 17 – Risk Factors of the Company’s Listing Statement as filed on www.sedar.com. Readers are strongly encouraged to carefully read all of the risk factors contained in Section 17 – Risk Factors of the Company’s Listing Statement.

Internal Control over Financial Reporting and Disclosure Controls

Management, including the President and Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), is responsible for designing, establishing, and maintaining a system of internal controls over financial reporting (“ICFR”) to provide reasonable assurance that all information prepared by the Company for external purposes is reliable and timely. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in accordance with IFRS.

The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately reflect the transactions of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated Financial Statements. Due to its inherent limitations, internal control over financial reporting and disclosure may not prevent or detect all misstatements.

The CEO and CFO have evaluated whether there were changes to the ICFR during the period ended January 31, 2020 that have materially affected, or are reasonably likely to materially affect, the ICFR. As a result, no such significant changes were identified through their evaluation.

There have been no material changes in the Company’s internal control over financial reporting during the period ended January 31, 2020 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

 30

EX-99.5

Exhibit 5

Form 52-109FV2

Certification of Interim Filings – Venture Issuer Basic Certificate

I, J. Obie Strickler, President and Chief Executive Officer of Grown Rogue International Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Grown Rogue International Inc. (the “issuer”) for the interim period ended January 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: March 31, 2020

“J. Obie Strickler”

J. Obie Strickler

President and Chief Executive Officer

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.

EX-99.6

Exhibit 6

Form 52-109FV2

Certification of Interim Filings – Venture Issuer Basic Certificate

I, Michael Johnston, Chief Financial Officer and Corporate Secretary of Grown Rogue International Inc., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Grown Rogue International Inc. (the “issuer”) for the interim period ended January 31, 2020.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: March 31^st, 2020

“Michael Johnston”

Michael Johnston

Chief Financial Officer and Corporate Secretary

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation. 

EX-99.7

Exhibit 7

Grown Rogue Triples Gross Profit, Reports Positive Cash from
Operations in Q1

Medford, Oregon, April 1, 2020 – Grown Rogue International Inc. (“Grown Rogue” or the “Company”) (CSE: GRIN) (OTCQX: GRUSF), a multi-state cannabis company with operations and assets in Oregon, California and Michigan, has released its financial and operating results for the three months ended January 31, 2020. Since Q2 2019, the company has been committed to shifting its business strategy away from low margin, third party product distribution and towards highly profitable Grown Rogue branded product sales. This has allowed the Company to streamline its organizational structure, evaluate and improve internal production efficiencies, and adjust its sales strategy to focus on building long term partnerships with many of the best retailers in the state. In addition, Grown Rogue has benefited from a large increase in sungrown flower pricing vs Q1 2019, which the Company locked in with key accounts as part of its ‘futures’ strategy. The Company’s new business strategy generated very tangible benefits in Q1 2020 as margin rates nearly tripled to 53%, Grown Rogue branded product sales doubled, and overall revenue was up 33% vs Q1 2019.

All amounts are expressed in United States dollars unless otherwise indicated. Certain metrics, including those expressed on an adjusted basis, are non-IFRS measures.

Q1 2020 Highlights

● Generated over $150k in positive cash flow from operations for the first time as a public company

● Revenue grew 33% year over year to $1.1m, with sales of Grown Rogue branded product more than doubling from 1Q 2019

● Margin Rate increased significantly from 20% to 53%

● Average sungrown flower selling price almost doubled vs Q1 2019

● Indoor flower sales volume almost tripled with average selling price increasing 9% YoY

● Subsequent to quarter end signed a subscription agreement for a $1.5M CAD equity investment by Cannabis Growth Opportunity Corp (CGOC)

● Subsequent to quarter end signed an option to acquire, pending regulatory approval, a controlling interest in Golden Harvests, LLC a fully licensed and operating cultivator in Michigan

“We are very proud of our Q1 2020 results as our strong performance reflects the tremendous commitment the Grown Rogue team has put into streamlining operations, procedures, and our product line in order to drive increased revenue in a much more efficient manner,” said Obie Strickler, CEO of Grown Rogue. “The ability to build a fundamentally sound cannabis business, in the incredibly competitive Oregon market, has us all very excited about transporting our winning formula to the Golden Harvests partnership in Michigan, one of the fastest growing cannabis markets in the country.”

1

 

Highlights by State

Oregon Operations

● Operated ~90,000 sq. ft. of canopy in Oregon including two outdoor farms and a state-of-the-art indoor facility with annual production rates of approximately 6,000 pounds increasing to 7,000 pounds at full construction of the indoor facility

● Sungrown flower price nearly doubled versus Q1 2019

● Indoor flower sales volume almost tripled and average sales price increased by 9% as compared to Q1 2019

● Product line was focused on low cost and high margin branded flower, and majority of 3^rd party product distribution was eliminated

Michigan Operations

● Subsequent to quarter end, Company signed option to acquire, pending regulatory approval, a controlling interest of fully licensed and operating Michigan cultivator Golden Harvests

● Golden Harvests operates a 80,000 sq ft indoor cultivation facility, with ~10,000 sq ft currently producing.

● Grown Rogue signed an exclusive management agreement with Golden Harvest to oversee production to increase efficiencies and quality during the option period

● Grown Rogue has begun the licensing process with the State of Michigan, whose approval is required prior to exercising the option. Grown Rogue expects this to be complete during calendar year 2020

California Operations

● Market instability due to legislative and regulatory confusion has developed a negative incentive to enter a hyper-competitive state with significant illicit sales

● The Company continues to evaluate its future plans for this market

2

 

Selected Financial Information (Complete financial tables have been filed on www.sedar.com)

(in $000s except per share amounts)	Three Months
Three Months Ended January 31	2020			2019
Revenue		1,106			834
Gross Profit, excluding fair value items		585			164
Adjusted EBITDA1		(50	)		(833	)
Cash flow from operating activities		150			(2,169	)
Net loss per share		-			(0.08	)
Weighted Common Shares Outstanding		72,563			61,324

For the first quarter of fiscal 2020 Grown Rogue revenue grew to $1.1m, an increase of 33% from revenue of $0.8m in its fiscal first quarter ended January 31, 2019. Since the Company’s products first began selling in late 2017, Grown Rogue has demonstrated meaningful sales traction in one of the world’s most competitive cannabis markets. In 2019, the company implemented a new sales strategy focused on “fewer, better” which led to the development of strong partnerships with several best in class single and multi-door retailers in Oregon. Grown Rogue, by combining the new sales strategy with a more efficient and streamlined operational structure, has seen a strong increase in consistent repeat sales to well respected retail partners.

F2020 Q1 gross profit, excluding fair value items was $0.6m, or 53% of revenues, a substantial improvement from $0.2m (20%) for the same period last year. The new sales strategy, rising product pricing, along with a streamlined and more efficient operation structure, drove a significant increase in margin versus Q1 2019.

General and Administrative expenses declined from $1.0m to $0.7m, dropping from 121% of revenue to 61%. These improvements were the result of the streamlined operations noted above, along with a larger allocation of overhead to inventory.

The Company earned $150K cash flow from operations, driven by the operational improvements noted above and aided by the seasonal increase in sales from its Sungrown product.

3

 

NOTES:

1.     The Company’s “Adjusted EBITDA” is a non-IFRS measure used by management that does not have any prescribed meaning by IFRS and that may not be comparable to similar measures presented by other companies. The Company defines Adjusted EBITDA as the Company’s net income (loss) for a period, as reported, before interest, taxes, depreciation and amortization, and is further adjusted to remove transaction costs, stock-based compensation expense, accretion expense, gain (loss) on derecognition of derivative liabilities and the effects of fair-value accounting for biological assets and inventory. The Company believes that this is a useful metric to evaluate its operating performance. The following is a reconciliation of the Company’s net income (loss) to Adjusted EBITDA.

Adjusted EBITDA Reconciliation ¹

	Three months ended
	January 31,			January 31,
	2020			2019
	$			$
Net loss, as reported		(233,187	)		(4,798,562	)
Add back realized fair value amounts included in inventory sold		632,630			(47,111	)
Less unrealized fair value gain on growth of biological assets		(701,559	)		(44,830	)
		(302,116	)		(4,666,469	)
Add back accretion expense, as reported		68,210			17,964
Add back amortization of intangible assets, as reported		7,659			7,233
Add back amortization of property and equipment, as reported		49,677			158,814
Add back amortization of right-of-use assets		35,822			-
Add back interest expense (recovery), as reported		90,514			164,852
Add back transaction costs		-			3,723,724
Less gain on derecognition of derivative liability, as reported		-			(15,000	)
Adjusted EBITDA		(50,234	)		(832,916	)

4

 

About Grown Rogue

Grown Rogue International (CSE: GRIN | OTC: GRUSF) is a vertically-integrated, multi-state Cannabis family of brands on a mission to inspire consumers to “enhance experiences” through cannabis. We have combined an expert management team, award winning grow team, state of the art indoor and outdoor manufacturing facilities, and consumer insight based product categorization, to create innovative products thoughtfully curated from “seed to experience.” The Grown Rogue family of products include sungrown and indoor premium flower, indoor and sungrown pre-rolls along with chocolate edibles created in partnership with a world-renowned Chocolatier.

FORWARD LOOKING STATEMENTS

This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of the Company with respect to future business activities. Forward- looking information is often identified by the words “may,” “would,” “could,” “should,” “will,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect” or similar expressions and include information regarding: (i) statements regarding the future direction of the Company (ii) the ability of the Company to successfully achieve its business and financial objectives, (iii) plans for expansion of the Company into Michigan and securing applicable regulatory approvals, and (iv) expectations for other economic, business, and/or competitive factors. Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company’s management’s expectations, estimates or projections concerning the business of the Company’s future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although the Company believes that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: changes in general economic, business and political conditions, including changes in the financial markets; and in particular in the ability of the Company to raise debt and equity capital in the amounts and at the costs that it expects; adverse changes in the public perception of cannabis; decreases in the prevailing prices for cannabis and cannabis products in the markets that the Company operates in; adverse changes in applicable laws; or adverse changes in the application or enforcement of current laws; compliance with extensive government regulation and related costs, and other risks described in the Company’s public disclosure documents filed on www.sedar.com.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.

Safe Harbor Statement:

This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company’s financing plans; (ii) trends affecting the Company’s financial condition or results of operations; (iii) the Company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words “may,” “would,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “intend” and similar expressions and variations thereof are intended to identify forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date hereof. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the Company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the risk disclosed in the Company’s Form 20-F and 6-K filings with the Securities and Exchange Commission.

5

The Company is indirectly involved in the manufacture, possession, use, sale and distribution of cannabis in the recreational cannabis marketplace in the United States through its indirect operating subsidiaries. Local state laws where its subsidiaries operate permit such activities however, these activities are currently illegal under United States federal law. Additional information regarding this and other risks and uncertainties relating to the Company’s business are disclosed in the Company’s Listing Statement filed on its issuer profile on SEDAR at www.sedar.com. Should one or more of these risks, uncertainties or other factors materialize, or should assumptions underlying the forward-looking information or forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

For further information on Grown Rogue International please visit www.grownrogue.com or contact:

Obie Strickler

Chief Executive Officer

obie@grownrogue.com

Investor Relations Desk Inquiries

invest@grownrogue.com

(458) 226-2100

6