Form 51-102F3

Material Change Report

Item 1          Name and Address of Company

Old PSG Wind-down Ltd. (formerly, Performance Sports Group Ltd.)(the “Company”)

666 Burrard Street, Suite 1700

Vancouver, British Columbia

V6C 2X8 Canada

Item 2          Date of Material Change

March 27, 2017.

 

Item 3          News Release

A press release describing the material change was disseminated by the Company on March 31, 2017 through Marketwired. A copy of the Company’s current report on Form 8-K, which includes the press release as an exhibit thereto, has been attached hereto as Schedule “A” and filed on EDGAR at www.sec.gov and on SEDAR at www.sedar.com.

Item 4          Summary of Material Change

On March 27, 2017, KPMG LLP (“KPMG”), a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity, resigned as the Company’s independent auditor and provided notification pursuant to Section 10A of the U.S. Securities Exchange Act (the “Resignation”).

Item 5          Full Description of Material Change

5.1          Full Description of Material Change

On March 27, 2017, the Company was notified of the Resignation.

As previously disclosed, the Company’s Audit Committee (the “Audit Committee”) has been conducting an independent investigation (the “Investigation”) in connection with the finalization of the Company’s financial statements in respect of the fiscal year ended May 31, 2016 (the “Annual Financial Statements”) and related certification process, and the Company is cooperating with regulatory inquiries, including an investigation by the Division of Enforcement of the U.S. Securities and Exchange Commission (the “SEC”). KPMG believes that during the audit of the Annual Financial Statements it had been misled by certain members of management on matters critical to the audit. The Investigation is intended to investigate, among other things, KPMG’s concerns and the matters identified to the Company’s Board of Directors (the “Board”) by KPMG as potential accounting errors and irregularities that came to its attention during the course of its audit of the Annual Financial Statements. During the course of the Investigation, KPMG received periodic updates regarding the scope, depth and status of the Investigation.

On March 6, 2017, the Audit Committee (with KPMG in attendance) received an interim report from Richards Kibbe & Orbe LLP, its independent counsel, and Alix Partners, its financial consultants, in relation to their work performed and their interim findings prior to the sale of substantially all of the assets of the Company (the closing of which was announced on February 28, 2017) and authorized its independent counsel to present an interim report to the SEC staff, which occurred on March 23, 2017. The Board anticipates having additional discussions with the SEC staff in light of the interim nature of the report, including the future course of action in relation to the Investigation.

In its March 27, 2017 letter notifying the Company of the Resignation, KPMG stated that it has determined that the Board has been informed with respect to possible illegal acts that have come to the attention of KPMG during the course of its audit of the  Annual Financial Statements; that possible illegal acts have been the subject of an investigation conducted by the Board, which was requested by KPMG and which, the Company’s counsel has informed KPMG, will not be completed; that it does not consider the Investigation to have had an adequate scope or depth; that, because the Investigation will not be completed, KPMG is unable to complete its audit, and that, because of the timing of the Resignation, it has not concluded on the various items set forth in Section 10A(b)(2), but that it has concluded that the possible illegal acts may have had a material effect on the consolidated financial statements of the Company; that the Company to date has not taken timely and appropriate remedial actions with respect to the possible illegal acts; and that the Company’s decision to not complete the Investigation results in a failure to take timely and appropriate remedial actions.

During the Company’s two most recent fiscal years and the interim period between May 31, 2016 and March 27, 2017, the effective date of the Resignation, there have been no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of KPMG, would have caused it to make reference to the subject matter of the disagreement in connection with its report. During such period, there was a “reportable event” within the meaning of Item 304(a)(1)(v) of Regulation S-K relating to KPMG’s belief that during the audit of the Annual Financial Statements it had been misled by certain members of management on matters critical to the audit, and the potential accounting errors and irregularities noted above that were identified by KPMG, which potentially could have had a material impact on the fairness or reliability of the Company’s financial statements or caused KPMG to be unwilling to rely on management’s representations or be associated with the Company’s financial statements, and relating to the fact that KPMG resigned prior to the completion of the Investigation.

The audit report of KPMG on the consolidated financial statements of the Company as of and for the year ended May 31, 2015 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. As previously disclosed, KPMG did not complete its audit for the fiscal year ended May 31, 2016.

The Company provided KPMG with a copy of the disclosure set forth under Item 4.01 of the Company’s current report on Form 8-K and KPMG was requested to furnish a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of the letter from KPMG is attached as Exhibit 16.1 to the Company’s current report on Form 8-K.

5.2          Disclosure for Restructuring Transactions

Not applicable.

Item 6          Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7          Omitted Information

Not applicable.

Item 8          Executive Officer

Michael J. Wall

President

(603) 430-2111

Item 9          Date of Report

April 3, 2017.

Caution Regarding Forward-Looking Statements

This material change report includes forward-looking statements within the meaning of applicable securities laws including with respect to the Investigation being conducted on behalf of the Audit Committee in relation to the finalization of the Annual Financial Statements and related certification process. The words “may,” “will,” “would,” “should,” “could,” “expects,” “plans,” “intends,” “trends,” “indications,” “anticipates,” “believes,” “estimates,” “predicts,” “likely” or “potential” or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements.

Forward-looking statements, by their nature, are based on assumptions, which, although considered reasonable by the Company at the time of preparation of such disclosure, may prove to be incorrect, and are subject to important risks and uncertainties. Many factors could cause the Company’s actual results to differ materially from those expressed or implied by its forward-looking statements, including, without limitation, the inherent risk and uncertainty involved in the Company’s bankruptcy proceedings, the degrees of cooperation of creditors and other stakeholders of the Company, the extent of the Company’s ability to meet certain obligations during the bankruptcy proceedings, the extent of the Company’s ability to obtain approval with respect to motions in its bankruptcy proceedings, the courts’ rulings in the bankruptcy proceedings or a decision of any other

Canadian or U.S. court in respect thereof, the outcome of the bankruptcy proceedings in general, the length of time of the bankruptcy proceedings, risks associated with third-party motions in the bankruptcy proceedings, increased legal and advisory costs related to the bankruptcy proceedings and other litigation, the timing and outcome of the results of the Investigation being conducted on behalf of the Audit Committee in relation to the finalization of the Annual Financial Statements and related certification process, and other applicable factors identified in the “Risk Factors” sections of the Company’s annual report on Form 10-K dated August 26, 2015, and quarterly report on Form 10-Q dated April 14, 2016, which are available on EDGAR at www.sec.gov and on SEDAR at www.sedar.com.

Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not intend and undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Schedule “A”

See attached.

 

British Columbia, Canada (State or other jurisdiction of incorporation or organization)	001-36506 (Commission File Number)			Not Applicable (I.R.S. Employer Identification Number)
100 Domain Drive Exeter, NH (Address of principal executive offices)			03833-4801 (Zip Code)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Exhibit No.	Description
16.1	Letter from KPMG to the SEC, dated March 31, 2017.
99.1	Press Release, dated March 31, 2017.

	OLD PSG WIND-DOWN LTD.
	By:	/s/ Michael J. Wall
		Name:	Michael J. Wall
		Title:	President

 

          EXHIBIT 16.1

 

EXHIBIT 99.1