TORONTO, ONTARIO--(Marketwired - June 4, 2014) - GreenStar Agricultural Corporation (TSX VENTURE:GRE) ("GreenStar" or the "Company") announces that a temporary cease trade order has been issued by the Ontario Securities Commission ("OSC") on June 3, 2014. The OSC has issued the order due to the Company's delay in filing its audited financial statements for the year ended December 31, 2013 and unaudited interim financial statements of the Company for the three month period ended March 31, 2014, accompanying management's discussion and analysis, and related CEO and CFO certifications, as required by Ontario securities law (the "Required Filings").
The Company previously applied for, and was granted a management cease trade order on May 16, 2014 (the "MCTO") which MCTO imposes restrictions on all trading in and all acquisitions of securities of the Company, whether direct or indirect, by the Chief Executive Officer and the Chief Financial Officer of the Company until the Company files the Required Filings.
Notwithstanding the MCTO, the Company believes that the OSC decided to issue the temporary cease trade order due to the concern that the audit wouldn't be completed by June 30, 2014. The temporary order directs that all trading in the securities of the Company, whether direct or indirect, cease for a period of fifteen days from June 3, 2014. The OSC also gave notice that if the default continues, a hearing will be held to consider whether an order should be made that all trading in the securities of the Company cease permanently or for such period as is specified in such order by reason of the continued default.
The delay in filing was the result of GreenStar having received notice from its auditors that they were not able to provide an audit opinion by the filing deadline for the Annual Filings. On May 21, 2014, GreenStar announced that its audit committee has identified certain corporate governance and administrative deficiencies which contributed to the delay in the audit. The audit committee has since been working with Mr. Guan Lianyun, President and CEO of the Company, to ascertain further details of these deficiencies. Mr. Guan has advised that the Company's Pucheng, PRC finance department, led by the Company's local controller, have not been co-operative with the Company's auditors or the Company's audit committee's efforts to complete the 2013 year end audit on schedule. In particular, the local controller has taken control of the Company's finance chop (seal) which has resulted in the inability of the Company to obtain assistance and certain required information from the Company's banks and tax authorities during the auditing process. Mr. Guan is in control of the Company's legal representative chop. Both the legal representative chop and the finance chop are required to execute banking transactions; as such, the finance chop alone does not allow the local controller to undertake banking transactions and Mr. Guan has advised that the bank accounts are secure. Mr. Guan has advised the board that the local controller and other PRC finance department staff are taking such actions with a view to advance their positions in negotiations regarding elements of their remuneration.
Mr. Guan, at the direction of, and in cooperation with the board of directors of the Company, has now initiated steps to remove the banking authority of the local controller and to replace the finance chop. In this regard, the loss of the finance chop has been reported to local government and law enforcement authorities. Local governmental authorities have advised that the replacement of the finance chop normally takes approximately 30 days to complete, but Mr. Guan has been assured that this process is being expedited in an effort to replace the finance chop. Once the finance chop is replaced, the auditors and the audit committee can then complete certain procedures at the banks and the tax bureaus which are part of the audit process.
The Board has been assured by Mr. Guan that he will provide his full cooperation in an effort to undertake all steps necessary to complete the audit and implement additional corporate governance systems to avoid such situations in the future. In the interim, the board is taking all reasonable steps to verify the circumstances as presented, and the Company's legal counsel and CFO will attend at the Company in Pucheng later this week. It is likely that full verification steps cannot be completed until the Company finance chop is replaced.
The Company's intention is to take all action in its power to complete the Required Filings as soon as possible in order to lift the cease trade order. It is the goal and expectation of the Board that the audit will be completed by June 30, 2014, and while this target date cannot be assured, the Board is taking all possible steps to meet this timeline. This update does not mean that the Company has finished its work, nor can it provide any assurance on the timing or the likelihood of the completion of the audit.
Mr. Guan Lianyun, President and CEO of GreenStar commented, "While it is very unfortunate that this situation arose and caused delays in completing the Company's audit and the Annual Filings, we confirm that GreenStar has contingencies in place and has taken steps to continue to operate its business operations in China."
The Company also cancelled the annual and special meeting of shareholders originally scheduled for June 26, 2014 due to the delay in completing the Annual Filings. The Company has rescheduled the meeting to September 19, 2014.
The Company confirms that it will satisfy the provisions of the alternative information guidelines under NP 12-203 by issuing bi-weekly default status reports in the form of news releases as long as it remains in default of the filing requirements to file the Required Filings within the prescribed period of time. GreenStar is not subject to any insolvency proceedings at the present time. The Company confirms that there is no other material information relating to its affairs that has not been generally disclosed.
A copy of the temporary cease trade order can be found at the Company's website at www.greenstaragricultural.com.
GreenStar operates two main divisions, agricultural and food processing. The agricultural division is involved in the cultivation and harvesting of agricultural products such as fresh fruit and vegetables, for sale either directly as fresh fruit and vegetables or canned, and sold overseas and domestically. The food processing division is primarily involved in the processing of canned food, which includes canned tomato paste, canned boiled bamboo shoots, canned oranges, canned peaches and various other types of fruits and vegetables.
GreenStar has been operating for over 19 years. Through the application of science and technology in production, quality control and assurance, and business operations and management, GreenStar has focused on maintaining product and reputational excellence with a high standard of food quality. Key assets include a well established management team, modern production facilities, and a close partnership with local farmers.
GreenStar Agricultural Corp. is listed on the TSX Venture Exchange under the symbol "GRE".
For further information on GreenStar please visit our web site at www.greenstaragricultural.com.
Neither the TSX Venture Exchange nor its Regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution Regarding Forward-Looking Information:
Certain statements in this press release 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 to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. When used in this press release, such statements may use such words as "may", "will", "expect", "believe", "plan" and other similar terminology. These statements reflect management's current expectations regarding future events and operating performance and speak only as of the date of this press release. Forward looking information in this press release includes, but is not limited to but is not limited to, management's expectation on make the Required Filings, management's intention to comply with the Alternative Information Guidelines, management's plan to remove the banking authority of the accountant and to replace the finance chop; management's expectation on the timing for replacing the finance chop, management's expectation to complete the procedures of the audit committee; management's expectation that it will be remediate the corporate governance deficiencies and resolve all outstanding audit issues, management's plan of sending the CFO and legal counsel to Pucheng to perform verification steps, management's intention to complete the audit by June 30, 2014 and management's plan to lift the cease trade order. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Company believes the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking information contained in this press release. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking information contained in this press release include, but are not limited to: international, national and local business and economic conditions; political or economic instability in the Company's markets; competition; legislation and governmental regulation; and accounting policies and practices. The foregoing list of factors is not exhaustive. Please see the Company's annual MD&A dated April 25, 2013, available on www.sedar.com, for a more detailed description of the risk factors. The Company undertakes no obligation to update publicly or revise any forward looking information, whether a result of new information, future results or otherwise, except as required by law.
GreenStar Agricultural Corporation
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