Mr. Jeff Holmgren reports

TREES CORPORATION AND 420 INVESTMENTS LTD. ANNOUNCE REVERSE TAKEOVER TRANSACTION

Trees Corp. has entered into a business combination agreement dated July 12, 2023, with 420 Investments Ltd., a private arm's-length company incorporated under the Business Corporations Act (Alberta), pursuant to which the company and 420 will amalgamate, constituting a reverse takeover of the company by 420 under the policies of Cboe Canada, the new business name of the Neo Exchange. A copy of the business combination agreement is available on Trees' SEDAR profile.

The amalgamated company resulting from the completion of the transaction (the resulting issuer) will be named 420 Investments or such other name as directed by 420. Subject to the approval of Cboe Canada, the common shares of the resulting issuer will be listed on Cboe Canada under a new trading symbol to be determined by 420. Prior to the execution of the business combination agreement, the directors, officers and certain significant shareholders of each of Trees and 420 entered into support agreements, pursuant to which such parties have agreed to vote in favour of the transaction contemplated by the business combination agreement at the meetings of the shareholders of Trees and 420, respectively.

"We are very excited to bring together 420 and Trees," commented Scott Morrow, chief executive officer of 420. "The union of these two well-established brands will give the combined company geographic diversity and create a new springboard for growth. The cannabis retail industry is ready for consolidation and this new company will be in a great position to capitalize on these opportunities."

Freida Butcher, chair of the board of 420, also commented: "We are very proud of the performance of 420 to not only survive the pandemic, but to have grown from 14 stores in 2020 to our current 40 stores. We are very pleased to have found another retailer in Trees with the same values and with stores that will expand our brand in Ontario and allow us to take our first steps into B.C. We are also very pleased to note that upon completion of the business combination, all significant long-term debt other than that tied up in litigation will have been either converted to equity or otherwise eliminated, leaving the company in a strong position to continue its path of strategic growth and service to its customers."

Jeff Holmgren, president and chief financial officer of Trees, added, "We are very pleased to have navigated towards a partner in 420 where together we will be well positioned to leverage our exceptional retail team, national presence and strong balance sheet towards the creation of significant shareholder value for both Trees and 420 shareholders alike."

420 Investments

420 is a Calgary, Alta.-based private company engaged in the business of retailing adult-use cannabis, with 40 operational retail locations across the provinces of Alberta and Ontario.

420 approaches cannabis retail in a socially responsible manner, ensuring consumers are provided with the best products, information and customer service to guide a customer's cannabis experience.

General terms of the transaction

Amalgamation

The transaction will be effected by way of an amalgamation between Trees and 420, without court approval, under the Canada Business Corporations Act (CBCA). At the time of the closing of the transaction:

• Each of the postconsolidation (as defined below) common shares in the capital of Trees will be cancelled and, in consideration for such Trees shares, each Trees shareholder will receive one resulting issuer share and one Series A preferred share (as defined below) for each one Trees share held.
• Each of the Class A common shares in the capital of 420 will be cancelled and, in consideration for such 420 shares, each 420 shareholder will receive one resulting issuer share and one Series B preferred share (as defined below) for each one 420 share held.
• All of the holders of share purchase warrants of 420 shall receive, in exchange for their 420 warrants, an equal number of resulting issuer share purchase warrants, each on the same terms and conditions as such 420 warrants.
• The holder(s) of agent options of 420 issued in connection with the concurrent financing (as defined below) shall receive, in exchange for the agent options, an equal number of resulting issuer share agent options, each on the same terms and conditions as such agent options.
• Each of the stock options of 420 shall receive, in exchange for their 420 options, an equal number of stock options of the resulting issuer, each on the same terms and conditions as such 420 options.
• Subject to the Trees warrant conversion (as defined below), holders of Trees share purchase warrants shall receive, in exchange for their Trees warrants, an equal number of resulting issuer share purchase warrants, each on the same terms and conditions as such Trees warrants, except to the extent their terms will be adjusted (in accordance with the terms of such Trees warrants) to reflect the consolidation, including the resulting issuer shares and Series A preferred shares issuable thereunder and the exercise price of each Trees warrant.

Concurrent financing

420 expects to conduct a brokered private placement financing of subscription receipts, led by one or more agents, to be completed prior to the closing. Each subscription receipt is expected to automatically be exchanged for underlying securities of 420, including 420 shares, immediately prior to closing, subject to the satisfaction of certain conditions to be set forth in the subscription receipt agreement governing the subscription receipts. Further details with respect to the concurrent financing will be provided in a press release of Trees to be issued at a later date.

Consolidation

Prior to the closing and subject to obtaining the required approval of the Trees shareholders, the Trees shares will be consolidated on such ratio as is required for Trees shareholders to hold 20.65 per cent and 420 shareholders to hold 79.35 per cent of the issued and outstanding resulting issuer shares immediately following closing.

Change of directors and officers

Upon closing and subject to prior acceptance by Cboe Canada, it is expected that the board of directors of the resulting issuer will consist of eight directors, of which up to seven directors will be nominated by 420 and one director will be nominated by Trees. In addition, each of the current officers of the company is expected to resign and individuals designated by 420 will be appointed in their place.

Additional information regarding the nominee directors and officers of the resulting issuer will be set out in a management information circular of Trees to be prepared by the parties as well as in a follow-up news release once determined.

Preferred shares

The articles of amalgamation of the resulting issuer will provide for the creation of Series A preferred shares and Series B preferred shares of the resulting issuer.

The share terms setting out the rights, privileges, restrictions and conditions of the Series A preferred shares and Series B preferred shares will provide that, in the event certain continuing litigation which 420 is a party to is: (a) decided or settled in favour of the resulting issuer, as successor to 420, the Series A preferred shares will be cancelled for nil consideration and the Series B preferred shares will convert into the number of resulting issuer shares equal to the quotient obtained by dividing the litigation proceeds received by the resulting issuer by the deemed price of the resulting issuer shares in the transaction; or (b) decided or settled against the resulting issuer, as successor to 420, the Series B preferred shares will be cancelled for nil consideration and the Series A preferred shares will convert into the number of resulting issuer shares equal to the quotient obtained by dividing the litigation proceeds paid by the resulting issuer by the deemed price of the resulting issuer shares in the transaction.

Shareholder approvals

The company will seek the approval of the Trees shareholders for the transaction, the board reconstitution, the name change and the consolidation, and 420 shall seek the approval of the 420 shareholders for the transaction and the continuation by 420 under the CBCA.

Trees conversions and settlements

Prior to closing, Trees will complete the following conversions and settlements:

• The outstanding principal amount of convertible promissory notes of Trees, together with accrued but unpaid interest, which as of June 30, 2023, is expected to be approximately $1,022,532, will convert into Trees shares at a price to be determined prior to closing.
• The outstanding amount of debt owed by Trees to a certain contractor of Trees pursuant to the terms of a contractor agreement dated Jan. 18, 2023, which as of June 30, 2023, is expected to be approximately $25,000, will convert into Trees shares at a price to be determined prior to closing.
• The outstanding amount of debt owed by Trees to 2583262 Ontario Inc., which as of June 30, 2023, is expected to be approximately $44,385.37, will convert into Trees shares at a price to be determined prior to closing.
• The participation interest of 1000321689 Ontario Ltd., equal to 49 per cent of profits earned and received by Trees in respect of certain of Trees' retail locations, will be converted into Trees shares at a price to be determined prior to closing.
• Shareholder loans provided to Trees in the aggregate principal amount plus accrued interest as at March 31, 2023, of $1,808,107 will be settled by way of: (a) share conversion into Trees shares, at a price to be determined prior to closing; (b) cash payments; and (c) new promissory notes, in accordance with debt conversion agreements to be entered into prior to closing.
• A total of 16,666,666 Trees warrants will be exercised into 33,333,332 Trees shares at an exercise price of 1.5 cents per Trees share.
• Trees will enter into option surrender and termination agreements with respect to options to purchase Trees shares, unvested restricted share units of Trees (Trees RSUs) and unvested performance share units of Trees (Trees PSUs), in a form satisfactory to 420, acting reasonably, which Trees surrender agreements will provide that each holder of Trees options, Trees RSUs or Trees PSUs, as applicable, agrees, conditional upon closing, to surrender to Trees its Trees options, unvested Trees RSUs and/or unvested Trees PSUs.

Conditions to the transaction

The closing of the transaction is subject to the satisfaction of various conditions precedent, including but not limited to:

• Cboe Canada will have conditionally approved the listing of the resulting issuer shares, including the resulting issuer shares issuable upon exercise of the replacement warrants and replacement options and underlying the Series A preferred shares and Series B preferred shares, and all conditions in connection therewith shall have been satisfied or waived;
• The company and 420 having each obtained all necessary approvals, including of its board of directors and shareholders and of the regulatory authorities, as applicable and in accordance with applicable corporate legislation, for the business combination agreement and the transactions contemplated thereby;
• The completion of the concurrent financing;
• Each of the board reconstitution and the management reconstitution;
• No material adverse effect with respect to Trees or 420 shall have occurred;
• The Trees debt conversion, Trees participation interest conversion, Trees shareholder loan settlement and Trees warrant conversion shall have been completed.

About Trees Corp.

Trees is a cannabis company at the intersection of community, content and commerce. Listed on Cboe Canada, Trees offers a differentiated retail experience, that aims to educate, amplify and unlock emerging consumer segments and need states that allow Trees to uniquely engage the 360-cannabis consumer. The company currently operates 14 Trees storefronts in Canada, including nine stores in Ontario and five stores operated in British Columbia.

We seek Safe Harbor.