a. Change of Accountant.
i. On December 1, 2005, Montello acquired the issued and outstanding shares of Moonshine Resources Ltd. ("Moonshine"). The transaction was approved by the TSX Venture Exchange on or about December 28th, 2005.
ii. Moonshine actively owns and operates on behalf of third parties producing oil and gas wells in the Peace River area of Alberta.
iii. Moonshine's accountant retired at the end of May -- early June 2006.
iv. A new firm was hired to replace Moonshine's accountant effective June 30, 2006.
v. During the course of preparing the books and records of Montello for audit, management discovered several errors and omissions in the accounting of transactions in Moonshine by the new accountant.
vi. Consequently, there were delays in getting the books and records of Montello to the auditors.
vii. Furthermore, management has requested the auditors to expand their audit procedures.
b. Change of Management
i. During the course of the year, all of the previous management team of Montello has been replaced.
ii. During the course of the year, all of the board of directors of Montello has been replaced.
c. Change of Head Office
i. During the course of the year, all of the previous management team of Montello has been replaced.
ii. During the course of the year, all of the board of directors of Montello has been replaced.
c. Change of Head Office
i. During the course of the year, the Company's head office has been moved from Vancouver to Calgary.
3. The Company expects to file its financial statements on or before December 8, 2006.
4. The Company recognizes that the securities commissions or regulators may impose an issuer CTO if:
a. The financial statements are not filed on or before February 1, 2007, or
b. The Company fails to file its Default Status Reports on a timely basis.
5. The Company intends to satisfy the provisions of Appendix B as long as the Company remains in default of the financial statement filing requirements.
6. The Company is not subject to ay insolvency proceedings.
7. All material information concerning the affairs of the Company has been disclosed.
