Mr. Blair Wilson reports

FORBIDDEN SPIRITS PROVIDES UPDATE ON FORECLOSURE OF LEASED PROPERTY

On Feb. 19, 2025, the Supreme Court of British Columbia approved an offer from a purchaser to acquire the property located at 4380 Wallace Hill Rd., Kelowna, B.C., upon which Forbidden Spirits Distilling Corp. operates its business. The court's approval of the offer was subject to, among other things, the purchaser entering into negotiations with the company on the terms of a new lease agreement for the property. If, after seven days, the parties cannot reach agreement on the terms of a new lease, the sale of the property will proceed.

As previously announced by the company on Feb. 11, 2025, if the company is required to provide vacant possession of the property, the company will need to source an alternative location from which to operate its business. Such disruption in the company's operations would have a material and adverse effect on the company. Moreover, the company would need to acquire new assets to replace the company's fixtures located on the property. The company does not have the financial resources to acquire such assets, and the company can provide no assurance that it will be able to raise sufficient financing to do so in the future.

The company continues to be subject to a failure-to-file cease trade order that was issued by the B.C. Securities Commission against the company on May 8, 2023, for failing to file certain outstanding continuous disclosure documents in a timely manner. On July 9, 2024, the BCSC granted the company a partial revocation order which permitted the company to raise a limited amount of funds. The amounts raised were not sufficient to enable the company to complete all rectification matters required to seek a full revocation order of the FFCTO. The company can provide no assurance that it will be able to raise additional financing in the future, and, at this time, does not anticipate being in a position to rectify its continuous disclosure record, seek a full revocation of the FFCTO and apply to the TSX Venture Exchange to return to trading.

We seek Safe Harbor.