Mr. Tim Conder reports

TILT HOLDINGS ENTERS INTO DEBT AND SECURITY AGREEMENT WITH SMOORE TECHNOLOGY LIMITED

Tilt Holdings Inc. and each of its subsidiaries have entered into a debt and security agreement, guaranty, and related collateral security documents with Smoore Technology Ltd., effective Jan. 28, 2024.

The agreements expand the company and Jupiter Research LLC's existing trade payable credit line with Smoore. Pursuant to the terms of the agreements, Smoore will continue to make sales of CCELL vape hardware products and ship on credit to Tilt's wholly owned subsidiary, Jupiter. In exchange, the Tilt companies have agreed to guarantee the payment of any amount owed by Jupiter to Smoore in excess of the amounts for which Smoore receives through insurance provided by Sinosure, a Chinese export and credit insurance corporation, for any non-payment by Jupiter of invoices aged over 120 days. Certain international trade payables are required to be insured in China to protect workers and ensure that manufacturers and exporters make full and timely payments for labour. The guarantee provided by the Tilt companies under the agreements enables Tilt to increase and secure the credit line to support customer demand and will be secured by Tilt's grant of a first-lien security interest in all Tilt assets.

"We believe coming to an agreement with Smoore was an important and necessary step to expand our business and meet our customer needs as they continue to grow," said Tilt's chief executive officer, Tim Conder. "We recently shipped one of the largest orders of CCELL products in Jupiter's history ahead of the upcoming Chinese New Year holiday. Further, given Smoore's new first-lien status, we have engaged in discussions for a forbearance agreement with our noteholders, who have been very supportive throughout this process as we work together to maximize stakeholder value."

Letter agreement

Under an associated letter agreement, the Tilt companies have agreed to reduce the outstanding balance of all currently existing accounts payable by Jupiter to Smoore in a stepped amount throughout the year to lower the overall balance to $25-million (U.S.) by Dec. 31, 2024. Further, the Tilt companies will have a transition period through April 15, 2024, under which the Tilt companies have agreed to pay any Smoore invoices outstanding more than 150 days after the invoice date, and through June 23, 2024, under which the Tilt companies have agreed to pay any Smoore invoices that are outstanding more than 120 days after the invoice date, provided certain conditions are satisfied, and no default or event of default is declared by the existing secured creditors of the Tilt companies under their respective loan documents. Any balance on any Smoore invoices that remains unpaid by more than 90 days after the respective invoice date plus, without duplication, the aggregate dollar amount of all outstanding amounts owed by the Tilt companies to Smoore, regardless of the date of the related invoice, in excess of $25-million (U.S.) will incur interest at the rate of 8 per cent per annum.

The guarantee provided by the Tilt companies under the agreements is secured by security interests in the assets of the Tilt companies, including a pledge of all of Tilt's equity interests in direct and indirect subsidiaries. The agreements include affirmative and negative covenants, events of default, representations and warranties, and other provisions that are customary for agreements of this type.

About Tilt Holdings Inc.

Tilt helps cannabis businesses build brands. Through a portfolio of companies providing technology, hardware, cultivation and production, Tilt services brands and cannabis retailers across 40 states in the United States, as well as Canada, Israel, South America and the European Union. Tilt's core businesses include Jupiter Research, a wholly owned subsidiary and leader in the vaporization segment focused on hardware design, research, development and manufacturing; and cannabis operations, Commonwealth Alternative Care Inc. in Massachusetts, Standard Farms LLC in Pennsylvania and Standard Farms Ohio LLC in Ohio. Tilt is headquartered in Phoenix, Ariz.