Mr. Robert Eadie reports

YELLOW STEM ENHANCES DISTRIBUTION AGREEMENT WITH SWEET POISON

As disclosed in December, 2022, Yellow Stem Tech Inc. signed both a product distribution agreement and an option agreement with Sweet Poison Spirits S de RL de CV, a Mexican company headquartered in Guadalajara, Mexico, and Sweet Poison Spirits LLC, a California limited liability corporation headquartered in San Diego, Calif. The distribution agreement granted the company the worldwide distribution rights to Sweet Poison's premium tequila and mezcal products under the Sweet Poison brand names for an initial period of 10 years, renewable for a further 10 years and beyond. The option agreement grants the company the right to acquire Sweet Poison in the future for $1-million (U.S.).

The company has now reached agreement with Sweet Poison, amending both the distribution agreement and the option agreement to include the acquisition of Sweet Poison's formula for one blend of Sweet Poison's tequila and four blends of mezcal. The company can now more effectively execute its marketing plans, solidly backed by worldwide distribution rights to Sweet Poison spirits, and ownership of the proprietary formulas for the tequila and mezcal. The cost of acquiring the formulas will be deducted from the purchase price under the option agreement, in the event the company exercises the option.

In consideration for acquiring the formulas, the company will issue to Sweet Poison a total of 2.5 million postconsolidated shares at a deemed price of 10 cents, with hold periods as follows:

• Twenty-five per cent of the shares will become free trading four months following the date of issuance.
• An additional 25 per cent of the shares will become free trading 12 months following closing.
• An additional 25 per cent of the shares will become free trading 18 months following closing.
• The remaining 25 per cent of the shares will become free trading 24 months following closing.

A finder's fee of 250,000 postconsolidated shares will be issued related to this transaction for the finder's efforts in negotiating and facilitating the transaction, such shares to be restricted in the same manner as those shares to be issued to Sweet Poison.

Name change proposed

To demonstrate its commitment to the Sweet Poison goals and objectives, the board of directors has approved changing the company's name from Yellow Stem Technologies to Sweet Poison Spirits Inc. The company is proceeding with meeting all of the regulatory requirements related to a name change, and will confirm the effective date upon receipt of regulatory acceptance.

Private placement

To meet the milestones and business objectives as disclosed in its listing statement as filed with the Canadian Securities Exchange and on SEDAR (see news release of March 28, 2023) the company announces that it has arranged a non-brokered private placement of up to $1-million through the issuance of up to 10 million units at a price of 10 cents per unit. Each unit will comprise one common share and one-half of one common share purchase warrant, with each whole warrant entitling the holder to purchase one common share at a price of 25 cents per share for a period of 24 months from closing, provided that if, after the expiry of all resale restrictions, the closing price of the company's shares is equal to or greater than 40 cents per share for 30 consecutive trading days, the company may, by notice to the warrantholders (which notice may be by way of general news release), reduce the remaining exercise period of the warrants to not less than 30 days following the date of such notice.

The company may pay finders' fees of up to 8 per cent in cash and 8 per cent in half warrants for subscriptions attributable to finders. Finders' warrants will be valid for a period of two years, with each warrant exercisable on the same terms as the warrants sold under the financing.

The net proceeds of the financing will be budgeted as displayed in the attached table.

Use of funds                                                                                Amount

Costs associated with regulatory filings and related approvals                             $50,000
Formulation of initial marketing and distribution plans                                     50,000
Costs related to signing up distribution agents in North and South America and Europe       50,000
Purchase of initial inventory for distribution (excluding sales)                           500,000
General and administrative expenses                                                        164,000
Costs of financing                                                                          80,000
Working capital                                                                            106,000
Total                                                                                   $1,000,000

There is no material fact or material change about the company that has not been generally disclosed.

We seek Safe Harbor.