Initiating Coverage

April 3, 2020
Cannabis

Aaron Grey, CFA, CPA

agrey@allianceg.com TILT Holdings Inc. Buy
Sales & Trading 888-543-4448 Volatility: 5
(CSE: TILT) TILTing in the Right Direction; Initiate Buy
Price C$0.21 We initiate coverage on TILT Holdings with a Buy rating and C$0.75 price target. We
52 Week Range (C$0.13 - C$3.20) believe TILT's new management team has helped to transform the company into a
Price Target C$0.75 more simplified organization of core & non-core assets, with a focus on its technology
Market Cap (mil) C$88.00 businesses long-term. We see Jupiter's vape business as one of the market leaders in
the category and core to our thesis, with notable upside from its Blackbird distribution/
Exchange rate 1US$ = 1.41 C$
technology brand. Meanwhile, the company's non-core cannabis assets are positioned
Shares out (mil) 360.00
to generate cash flow and may be divested over time.
3-Mo Avg Vol 415,591
New Management Brings a More Simplified Structure
Today, TILT is focused on building a long-term business model through its technology
EPS $
platform. When the company first went public over a year ago, we believe it quickly
Yr Dec 2019E 2020E 2021E developed into a company with a number of subsidiaries, with various brands that made
Actual Curr Curr it difficult to see how everything aligned. New management has developed a more
focused strategy of core assets with Jupiter and Blackbird, and non-core assets - which
Mar (0.99)A (0.06)E –
we believe sets the company up well for long-term success. We view Jupiter as the
Jun (0.16)A (0.06)E – crown jewel within the portfolio, as one of the leaders in the vape segment and a history
Sep 0.11A (0.05)E – of operating on a profitable basis and innovation. Blackbird now encompasses all of the
Dec (0.09)E (0.05)E – company's distribution & technology platforms, and the company looks to ramp up this
business in 2020. TILT's cannabis assets in MA & PA represent non-core assets that
YEAR (0.52)E (0.22)E (0.06)E generate cash and the company may look to sell off these assets over time.
P/E NM NM NM
Our Base Case Starts With its Crown Jewel Jupiter Business
Revenues (thousands) $
TILT's Jupiter business is one of the leading distributors of CCELL vape hardware and
Yr Dec 2019E 2020E 2021E has benefited from growing vape sales across the US. While the decline in vape sales
Actual Curr Curr has likely impacted the business in 4Q19, data indicates vape sales have been on the
rebound - and we expect the vape category to continue to gain share long-term. As
Mar 34,378A 42,848E –
one of the leading suppliers of CCELL, we look for Jupiter to benefit from category
Jun 39,007A 45,181E – growth as the company serves brands, Canadian LP & MSOs in legal cannabis markets.
Sep 46,123A 53,222E – Importantly, with the company already generating low to mid-teens EBITDA margins,
Dec 38,422E 57,326E – we look for Jupiter to become increasingly profitable via scale & innovation.

YEAR 157,931E 198,576E 265,877E Blackbird Offers Notable Upside, But Could Take Time
The company has worked to consolidate its multiple technology brands under its
Adj. EBITDA (thousands) $ Blackbird label and looks to build a technology/distribution ecosystem. Under this
Yr Dec 2019E 2020E 2021E ecosystem, the company has developed the infrastructure to generate revenues from
Actual Curr Curr wholesale through the supply chain to the end consumer sale. This is accomplished
through its SaaS platform, distribution system, CRM technology, loyalty program, and
Mar (8,704)A 935E – last mile delivery capabilities (see Figure 22). While still in its early days of bringing all
Jun (4,573)A 1,397E – these platforms together, we see Blackbird as offering notable opportunity to TILT's top
Sep 1,475A 4,552E – & bottom line trends. We see this business as offering the most upside to our model.
Dec (2,077)E 5,559E – Cannabis Assets Are Cash Cows Until Potential Divestiture
YEAR (12,686)E 12,443E 39,468E Management does not view its cannabis assets as core to its business and has said
that it would be open to divesting these assets. In the meantime, the company's PA &
MA assets are beginning to generate cash flow. In fact, the company's cannabis assets
generated sales of $8M and was profitable 3Q19, with cultivation expansion in PA & MA
expected to drive further top-line growth - though timing is uncertain given regulatory
bottlenecks in MA (adult-use not deemed essential & stores awaiting approval).
Valuation & Price Target
Admittedly, valuation can get complex for TILT given the company has differing core
assets as well as non-core assets on the P&L. However, we see the company’s
valuation as attractive, looking at the consolidated company & core assets. We derive
our C$0.75 price target based on a consolidated sales multiple of 1.25x our 2021
estimate, which represents a slight discount to US operators. This implies a 2021
EBITDA multiple of 6.0x. Based on its core assets, our price target is based on an
implied sales multiple of 1.5x 2021 sales & an EBITDA multiple of 13x. This multiple is
roughly in-line with packaging/distribution peers outside cannabis (despite TILT’s more
robust growth profile) and notable discount to SaaS peers (which gap we believe will
narrow as the company builds out the Blackbird platform).

Please refer to important disclosure information and Regulation Analyst Certification found on pages 22 - 23 of this report.
TILT Holdings Inc. April 3, 2020

Investment Summary:
We initiate coverage on TILT Holdings with a Buy rating and C$0.75 price target. We believe TILT's new management team has helped to transform
the company into a more simplified organization of core & non-core assets, with a focus on its technology businesses long-term. We see Jupiter's
vape business as one of the market leaders in the category and core to our thesis, with notable upside from its Blackbird distribution/technology brand.
Meanwhile, the company's non-core cannabis assets are positioned to generate cash flow and may be divested over time.

Valuation:
We derive our C$0.75 price target based on a consolidated sales multiple of 1.25x our 2021 estimate, which represents a slight discount to US operators.
This implies a 2021 EBITDA multiple of 6.0x. Based on its core assets, our price target is based on an implied sales multiple of 1.5x 2021 sales & an
EBITDA multiple of 13x. This multiple is roughly in-line with packaging/distribution peers outside cannabis (despite TILT’s more robust growth profile)
and notable discount to SaaS peers (which gap we believe will narrow as the company builds out the Blackbird platform).

Risks to achievement of target price:

Downside Risks to our PT:
• Continued Growth of the Cannabis Market: Our estimates assume the US cannabis market continues to grow at a robust rate. Failure of overall
consumer adoption of cannabis could negatively impact the top-line.

• COVID-19: Concerns around COVID-19 (aka Coronavirus) could negatively impact consumer purchasing trends amid social distancing and
uncertainty around people’s employment standing. While cannabis has been deemed essential in most states, some states could enact partial bans
such as only allowing medical or delivery sales – with could impact the company’s revenues.

• Capital Requirements: While we model the company to be EBITDA positive in 2020, operating losses could result in TILT needing additional
capital and could lead to the dilution of existing shareholders. In addition, potential M&A opportunities could result in capital needs, further diluting
shareholders.

• Reliance on CCELL Technology: The vape category represents a majority of sales for TILT through its Jupiter subsidiary, with distribution on
CCELL vaporizer products accounting for revenues in the segment. If the company were to lose its right as a distributor of CCELL products, that
could negatively impact sales as the company looks to find a replacement manufacturer. Additionally, if vape technology were to displace CCELL
as at vape category leader this could negatively impact revenues.

• Vape Category: Given more than half of the company's revenues are derived from the vape category, a resurgence of negative news headlines on
vape illnesses could impact consumer purchasing - and cause sales to fall below our estimates.

• Execution Risk: Given the rapid growth of the business, execution risk exists in terms of the company's ability to operate the business efficiently and
at a profitable level. We view this to be of particular risk for its Blackbird business as the company looks to integrate various technology platforms.

Company description:
TILT Holdings (TILT) is an ancillary player in the US cannabis market, with a mix of core & non-core assets. The company’s core strategy focuses on
Jupiter’s vape distribution business as well as its Blackbird technology brand, which was expanded to encompass other areas of technology (previously
known as Baker & Briteside). Non-core assets consisted of TILT’s plant touching businesses primarily in PA & MA. The company may divest these
assets, but continues to operate these cash generating assets in the interim.

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 2 of 23

TILT Holdings Inc. April 3, 2020

TILTing in the Right Direction: Initiate Buy

We initiate coverage on TILT Holdings (TILT) with a Buy rating and C$0.75 PT. More than a year
after it began publicly trading in December 2018, we believe TILT has repositioned itself under
new management and now has a more focused strategy to capitalize on the growing cannabis
space. Our base case thesis on the stock revolves around the company’s vape hardware business
Jupiter, which has been consistently profitable, and we expect will continue to grow. Our bull
case scenario revolves around TILT’s initiative to build a technology ecosystem around its
Blackbird brand, encompassing online ordering, delivery, SaaS & CRM platforms – which presents
upside for the stock, in our view. The company also has non-core cannabis assets, which have
become cash flow positive and the company intends to use to fuel business growth until potential
divestiture.

Key Points to Buy Rating:

- Ancillary Play on the US Cannabis Space: TILT’s core business provides an ancillary play on
the growing US cannabis space through its vape hardware, distribution & technology
business. We expect the US cannabis could reach $90B at maturity, vs $12.5B in 2019, with
TILT positioned to benefit from the industry’s continued growth.

- New Management Brings a More Focused Strategy: TILT started as a complex organization
with multiple businesses that did not completely fit together and embedded notable
integration risk, in our view. Today, we believe new management has a focused strategy for
its core technology & vape assets to succeed long-term, and its non-core assets to drive near-
term cash flow.

- Our Base Case Revolves Around Jupiter: The base of our thesis on TILT revolves around its
Jupiter subsidiary, which distributes CCELL vape hardware. The business has seen robust
growth (ex the recent hit from vape scare) and most importantly has been consistently
profitable.

- Our Bull Case Embeds Blackbird Technology: The company has brought its distribution &
technology businesses together under its Blackbird brand and aims to create an ecosystem
that generates revenue form wholesale to the end user sale. If able to execute on its
strategy, this offers notable revenue & margin upside - however this business is currently a
loss-leader for TILT, and we view as riskier than Jupiter.

- Plant-Touching Assets = Non-Core & Cash Flow: The company could potentially divest its
plant-touching cannabis operations in Massachusetts and Pennsylvania. In the meantime,
we expect the company to benefit from the strong cash flows generated from the business as
MA & PA both represent strong cannabis markets.

- Moving to Consistent Profitability: The company posted positive EBITDA in 3Q19, and while
we expect that to worsen in sequentially due the vape crisis impact, we believe the company
will generate consistent profitability in 2020 as vape rebounds and its cannabis operations
ramp (ex. impact from COVID-19).

- Cash Less of a Concern, And We View Valuation as Attractive: While cash had been a
concern for the company, a $36M credit facility raise in November 2019 gave TILT the capital
to pay down onerous debt & fund growth. Trading at less than 0.5x our 2021 sales estimate
and 2.0x 2021 EBITDA, we believe the company’s valuation is attractive at these levels.

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 3 of 23

TILT Holdings Inc. April 3, 2020

Company Overview

TILT was created as a company meant to deliver a variety of products and services to the cannabis
industry, with management aiming to bring together a number of assets that would provide a
one-stop shop for players in the cannabis industry. The company was created in July 2018
through a business combination agreement via RTO (reverse takeover), merging the businesses of
Baker Technologies, Briteside Holdings, Sea Hunter, and Sante Veritas Holdings. In early
December 2018, the company announced the acquisitions of Standard Farms, Jupiter
Technologies & Blackbird. The company officially began trading on the CSE on December 6, 2018,
under the ticker TILT.
At inception, the company consisted of seven portfolio companies offering a variety of
technology, distribution, hardware and cannabis operation services under several brands – as
depicted in Figure 1. While we believe prior management aimed for this to be an “all things”
cannabis related company – the task of integrating a number of different platforms proved too
difficult, in our view. This combined with onerous bridge financing left the company in a cash-
constrained position through much of 2019.
In May 2019, TILT named Mark Scatterday as interim CEO. Mark had been the CEO and founder of
Jupiter – who we consider the crown jewel of TILT’s portfolio. CEO Scatterday along with newly
appointed COO Tim Conder aimed to simplify the company’s portfolio.
The company started by segmenting between core and non-core assets.
• Core Assets: The company’s core strategy consists of focusing around its Jupiter’s vape
brand, as well as its Blackbird technology brand which was expanded to encompass
other areas of technology (previously known as Baker & Briteside).
• Non-Core Assets: Non-core assets consisted of TILT’s plant touching assets. The
company aims to divest these assets, but continue to operate these cash generating
assets (ex Canada) in the interim.
We believe this new strategy allows the company to better execute on the business with a clearer
focus. That said, we still see integration and execution risk – particularly on the Blackbird side as
the company aims to create an ecosystem for its technology & distribution businesses. Our base
case thesis on the stock revolves around Jupiter, where we see less execution risk as the business
has been consistently profitable. Blackbird represents our bull case, and if able to successfully
build up and integrate the businesses we see notable upside to revenues and profits. Meanwhile,
we see the company’s plant-touching cannabis assets as cash flow generators until TILT as able to
divest these non-core assets at attractive prices.
Figure 1: TILT Now Has a More Simplified Business of Core & Non-Core Assets

Source: AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 4 of 23

TILT Holdings Inc. April 3, 2020

Industry

TILT competes in the burgeoning cannabis industry through its subsidiaries that provide ancillary
services to the market including its vape hardware business, SaaS businesses, and cannabis
distribution company. In addition, the company has actual cannabis operations within the states
of Massachusetts & Pennsylvania – though these are considered non-core assets to the business.

The US cannabis industry includes 11 states that have legalized adult-use cannabis and 33 states
that have legalized medical cannabis. We believe combined medical and adult-use sales grew
over 20% to roughly $12.5B in 2019. We estimate cannabis in the US could become a $90B
market by 2035, assuming a mature market under federal legalization. For further detail on the
cannabis market, please reference our white paper (link) and 2020 outlook report (link).
TILT’s competition varies within each of its subsidiaries, but broadly consists of other ancillary
players within each business segment (vape hardware, software, distribution, etc.) as well as US
MSO’s being competition for its cannabis operations.

Similar to others in the space, TILT’s greatest competition is the black market, which we estimate
represented $45B in revenue in 2018.

Figure 2: We Expect the US Cannabis Market to Continue to Grow at a Robust Clip

$100 US Cannabis Sales ($ in B)
$90

$80

$60 $55

$40
$45
$20

$10 ~$12.5
$0
2018 2019E 2035E
US Legal Market US Illicit Market
Source: NSDUH, US Census & AGP Estimates

In addition to US cannabis, TILT is positioned to capitalize on the current CBD, particularly through
its Jupiter business. However, given continued regulatory uncertainty within the US, we do not
embed notable contribution from CBD within our model.

Figure 3: The CBD Market Also Offers Potential, But Not Embedded in Our Estimates

$25 CBD Market ($ in B)

$19
$20
$16
$15 $12
$10
$10 $7
$5
$5 $3

$0
2019 2020 2021 2022 2023 2024 2025

Source: Factset & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 5 of 23

TILT Holdings Inc. April 3, 2020

Company Segments

TILT breaks out revenue segments within five categories including accessories, technology,
distribution, cannabis, and other. Accessories represents TILT’s Jupiter Technologies vape
hardware business. Technology includes legacy Baker and Briteside (as well as some Blackbird
revenue), while distribution is its legacy Blackbird business - and we believe it is best to look at the
two segments together given they will all fall under the Blackbird umbrella. Cannabis primarily
represents its Massachusetts & Pennsylvania cannabis operations.

Accessories make up the largest portion of revenue at 70% in 3Q19, followed by cannabis at 17%,
and technology & distribution at a combined 13%. Going forward, we expect cannabis sales to
increase as a % of sales, as the company expands cultivation in PA & MA, and opens up
dispensaries in MA. As a result, we forecast Jupiter % of sales to come down for the company, but
$ sales to increase. We model combined technology & distribution revenues mix around 10% –
but also see this segment as the biggest upside to our model.

Figure 4: Vape is TILT’s Primary Source of Revenue Figure 5: We Look for Cannabis to Increase its Sales Mix
3Q19 Quarterly Revenue Mix TILT Quarterly Mix of Revenues
Distribution, 3% 100%
Other, 0% 1% 3% 4% 4% 3% 3%
3% 10% 4%
3% 5%
12% 10% 6% 5% 6% 6% 7%
80% 17% 23% 22% 17% 26% 26%
60%
Cannabis,
17% 40% 83% 82%
70% 67% 69% 72% 64% 63%
20%
Technology,
10% 0%

Accessories,
70%
Accessories Cannabis Technology Distribution Other

Source: Company Reports & AGP Source: Company Reports & AGP

On profits, Jupiter has historically been the only EBIT profitable segment, though cannabis has
quickly caught up and surpassed Jupiter as the company’s PA & MA assets have ramped up. We
look for this to continue going forward, with technology & distribution improving their
profitability profile in the back-half of the year.

Figure 6: Jupiter & Cannabis Are TILT’s Primary Source… Figure 7: …of Gross Profits & EBIT Currently
Gross Profit by Segment ($ in M) EBIT by Segment ($ in M)
10.0 4 2.8
7.9 7.6 1.1
8.0 2 0.5
6.1 0
6.0 5.3
-2 -0.5
4.0 -2.0 -1.6-1.5
-4 -2.4
1.8 -3.4 -3.3
2.0 1.0 0.9 1.0 1.3
-6 -4.6
0.0 -8
-10 -8.6
-2.0 -1.0-0.7 -0.8
Accessories Technology Distribution Cannabis (ex Accessories Technology Distribution Cannabis (ex
FV) FV)
1Q19A 2Q19A 3Q19A 1Q19 2Q19 3Q19
Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 6 of 23

TILT Holdings Inc. April 3, 2020

The Base Case = Jupiter As the Crown Jewel

Our base case thesis on the stock is primarily around the company’s Jupiter vape hardware
business, a wholly owned subsidiary of TILT. Jupiter distributes CCELL vape technology, which
vape products are regarded as the highest quality in the market, based on our field work. The
technology utilized ceramic heating elements creating more consistent performance and ease of
use after first puff (versus multiple puffs needed to launch). CCELL is a manufacturer of vape
products and represents roughly 60% of legal vaporizers per TILT management. With just four
licensed distributors of CCELL, this offers tremendous opportunity to service the thousands of end
customers, which includes US MSO, Canadian LPs and brand manufacturers within THC & CBD.

Figure 8: Jupiter is One of Four Distributors for CCELL’s Vape Technology

Source: Company Reports & AGP

Jupiter is one of the leading distributors of CCELL technology. Sales have grown at a healthy clip,
nearly tripling from ~$12M in 1Q18 to over $32M in 3Q19, as the company benefitted from the
overall growth of the vaping category. Indeed, the vaping category had been gaining share in the
cannabis space until August 2019 when issues around vapes causing lung illnesses impacted sales.

Figure 9: Jupiter’s Revenues Had Been Climbing… Figure 10: …And Benefitting From Vape Gaining Share
Jupiter Revenues ($ in M) Cannabis Sales Mix By Product in US
100% States
35.0 4% 3% 4% 5% 6%
32.0 32.2 12% 10% 9% 8% 11%
28.6 5% 11% 12% 13% 10%
30.0 6% 4% 6%
25 5% 5% 6% 10%
24 6% 20%
25.0
50% 7%
20.0 68% 67% 63% 58%
14 46%
15.0 11.7
10.0 0%
2014 2015 2016 2017 2018
5.0 Flower Pre-Roll Vape Pens
0.0 Concentrates Edibles Other
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19
Source: Company Reports & AGP Source: Company Reports, Headset & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 7 of 23

TILT Holdings Inc. April 3, 2020

As shown in the figure below, vape share fell amid fear of vaping illnesses, with its share of the
market in 4Q19 down roughly 400 bps from its peak in 2Q19. However, the vape category has
gained share from its trough in October, which we believe indicates the consumer is regaining
confidence in vape being a safe form of consumption of cannabis. This makes sense to us given
reports and CDC headlines continues to point to the illicit market as the primary culprit of vaping
illnesses from using vitamin E acetate to thicken oil used in vape cartridges. We expect the vape
category to continue to gain share from regained consumer confidence as well as consumers
switching from buying products in legal markets vs illicit market prior (though fears of inhalation
amid COVID-19 could have an impact). We believe consumers will now be more prone to paying a
premium to ensure products are properly tested. Furthermore, we look for TILT to benefit from
manufacturers wanting to use the highest quality products, and therefore be willing to pay a
higher price for CCELL branded products vs lower-priced products that do not offer the same
quality. Overall, we expect TILT and other distributors of CCELL technology to be long-term
beneficiaries from its exposure to the vape category and look for sales to continue to rebound
from its 4Q19 trough.

Figure 11: We Model Jupiter Returning to Sales Figure 12: …Following Negative Headlines From Vape
Growth... Illnesses
Jupiter Revenues ($ in M) Vape Market Share
40 36 27%
32 32 33 34
29 30
30 25 24 26 24%

20 21%
12 14
18%
10
15%
0

Sep-18

Mar-19
Mar-18

Sep-19
May-19
May-18
Jan-18

Jul-18

Jul-19

Jan-20
Jan-19
Nov-18

Nov-19
Source: Company Reports & AGP Source: BDS & AGP

Historically, the majority of Jupiter sales have come from the US, with the company’s primary
customers being brand manufacturers & MSOs. With Cannabis 2.0 now in progress in Canada,
TILT has increased its exposure to geographies outside of the US as the company is supplying
Canadian LPs with vape hardware products. That said, we continue to temper our expectations
for Cannabis 2.0 in Canada, and view a notable lift in Canadian sales to Jupiter as upside to our
estimates. Outside North America, the company looks to expand into Europe & other regions,
which will primarily be done via CBD products, and expand to THC as it becomes legal. We do not
embed notable revenue contribution outside the US within our model.
Beyond benefitting from underlying growth of cannabis & the vape market, we also expect Jupiter
to benefit from innovation. Indeed, given CCELL is a technology-based device, we believe it is
imperative for the company to stay ahead of the curve in terms of best available vape technology.
Jupiter continues to work with CCELL on innovative technology and has launched additional
products in 2020 including new pod products vs cartridges, which should also be margin accretive.
Figure 13: Innovation Will Be Key to CCELL’s Continued Dominance in Vape

Source: Company Website

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 8 of 23

TILT Holdings Inc. April 3, 2020

With CCELL controlling an estimated 60% of the vape market, innovation will key as technology
companies in hyper-growth industries can experience notable share displacement – as we’ve seen
in the e-cig category. The e-cig industry saw 3 players attain at least a 40% share of the market
before JUUL became the dominant market leader in 2017 - demonstrating how brand leaders of
today could be displaced as the market evolves.

Today, CCELL is regarded as the best vaporizer product on the market, though copy-cat products
have reportedly been getting closer to the quality of CCELL, on our work. We believe this makes it
more important for CCELL to innovate products, but believe CCELL is best positioned to stay ahead
of the curve given its scale relative to smaller competitors.

Figure 14: Innovation and Changes in Consumer Trends Has Caused Share Disruption
in the E-Cig Vape Category

Source: Bloomberg

Importantly, TILT’s Jupiter business has consistently operated on a profitable basis which we
believe is important as it demonstrates the company’s ability to grow profitably in a prudent
fashion. Gross margins had been as high as 27% in 1Q18, but declined due to the Chinese tariff hit
that impacted Jupiter and competitors in the industry beginning 2018. However, gross margins
have since rebounded and returned to the mid-20’s the past two quarters. We model gross
margins at 24% in 2020, but see opportunity for margins to reach the prior peak of 27% with
potential upside as the company benefits from scale. The company continues to produce positive
EBITDA, with Jupiter achieving 13% margins in 2018, and management implying EBITDA margins
have increased YTD, similar to gross margins. On a dollar basis, mid-teens margins of 14%
(assuming EBITDA margin enhancement in-line with GMs) would imply $16M of EBITDA in 2019
on our sales estimates – compared to the company’s enterprise value of $110M.

Figure 15: Jupiter GMs Should Run Mid to High 20s Figure 16: With EBITDA Margins in the Mid-Teens
Jupiter Gross Margins Jupiter Margin Metrics

30% 27% 25.0%

20.5% 21.4%
25%
25% 24% 24% 24% 24% 24% 24% 20.0%
Mid -Teens
15.0% 12.6%
20% 17% 17%
10.0%
15%
5.0%
10%
0.0%
Gross Margin EBITDA Margin

2018 3Q19 YTD

Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 9 of 23

TILT Holdings Inc. April 3, 2020

The Bull Case = Technology & Distribution:

The TILT technology & distribution platform of yesterday included a number of subsidiaries when
the company was originally formed. Blackbird was its distribution, Baker was CRM, and Briteside
had delivery. Today, TILT has simplified its business structure encompassing all of these
capabilities under the Blackbird umbrella.
The bull case to our thesis embeds the company being able to build an ecosystem to better
leverage its distribution and technology platforms - allowing the company to capture revenue
through various areas of the supply chain from wholesale to customer sale.
Figure 17: TILT Aims To Build a Technology Ecosystem Under its Blackbird Brand

Source: Company Reports & AGP

Blackbird CRM (Legacy Baker). Blackbird CRM (customer relationship management) technology
platform helps dispensaries manage relationships with customers and suppliers. Its CRM platform
is historically been known as Baker but management plans to transition under the Blackbird
brand. Baker currently has a customer base of over 1,100 dispensaries across all medical legal
states. The program captures customer information including name, phone number and email –
this allows the dispensary to build its customer list and database. The platform also allows the
dispensaries to push messages or promotions via text or email to a target customer based on
preference to drive greater engagement by the consumer vs. blanket messaging across the
consumer database. The system can be leveraged with the company’s Blackbird delivery system,
by integrating Blackbird’s online ordering and menus, as well as its delivery service. Baker also
has a featured loyalty program that allows the respective dispensary to tailor the program to how
they want the loyalty program set up – including a tiered loyalty system, to provide the best
benefits for the most frequent customers.
Figure 18: Blackbird CRM (Formerly known as Baker)

Source: Company Website

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 10 of 23

TILT Holdings Inc. April 3, 2020

Blackbird Distribution. Blackbird is a logistics & technology business that helps customers
manage inventory through distribution fulfillment, transportation, and delivery. The platform’s
customer base includes brands, wholesalers and dispensaries. For wholesale, Blackbird transports
products from manufacturers to dispensaries, and then provides dispensaries with inventory
management capabilities – with the systems helping store operate efficiently and improve
revenue performance. The current customer base includes more than 800 dispensaries and
“hundreds” of brands predominately in Nevada & California.

Figure 19: Legacy Blackbird

Blackbird
Business Distribution Software BlackbirdGo (Briteside)
Manufacturers Manufacturers
Customer
Cultivators Cultivators Retailers
Base
Retailers Retailers
Online Menu
Distributes Cananbis in Inventory Management
Business Allows delivery & pick-
NV & CA System
up
Source: APG

Blackbirdgo. Blackbirdgo is the company’s e-commerce platform that allows retailers to display
their menus online as well as generate sales via delivery & pick-up in store orders. In Nevada,
blackbird will provide last mile deliveries (final delivery to end consumer) services, with the
retailers being responsible for delivery logistics in other markets. We believe the key to
blackbirdgo is being able to scale and become the go-to source for online ordering, and liken the
platform to Uber Eats or Seamless. That said, there are other competitors such as Eaze, Driven, &
Weedmaps. The ability to drive consumer traffic to the website will be key to the company
building on its success in CA, NV and other markets, in our opinion. The company also plans to
launch a Blackbirdgo loyalty program in 2020, which can be used in tandem with the retailers’
own loyalty program offered on Blackbirds CRM platform. COVID-19 has provided blackbirdgo an
opportunity to expand its presence in existing markets as consumer increasingly look for delivery
options – we believe this could help Blackbirdgo accelerate its adoption and scale the platform
sooner than it would have otherwise.

Figure 20: Blackbirdgo Has Dispensary Menus, as well as Figure 21: COVID-19 Has Caused a Surge in Delivery
Delivery or Pick Up In Store Options for Blackbirdgo & Others

Source: Company Website Source: Company Website

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 11 of 23

TILT Holdings Inc. April 3, 2020

Summary Sources of Revenue within Distribution/Technology Ecosystem

Wholesaler:

- SaaS payments from inventory management system

- Distribution fees paid by wholesaler
Retailer:
- SaaS fees for retail software
- Fees paid from transactions completed on platform such as pick up in store, with these fees
generally representing a % of the sale
- Selling of database to give retailers insights into customer trends
- Last mile delivery
- Transactional CRM fees (sending text messages, etc)

Brands:

- Advertising on Blackbirdgo
- Targeted promotion leveraging customer database
- Selling of database to give retailers insights into customer trends

Together, the company aims for Blackbird to offer a one-stop-shop for supply chain management
from wholesale to consumer. This is primarily due to the ability of its CRM platform
wholesale/retail inventory management & consumer (online menus & delivery) all communicating
with each other. Management believes this makes it easier for customers to operate the business
in an efficient matter with all information available under one umbrella. That said, customers are
still able to participate in just one of the platforms while using a platform outside of TILT’s for
other services. For instance, a wholesaler using Blackbirds wholesale inventory management
system could still be used effectively to communicate with a POS system outside of Blackbird.

Figure 22: Blackbird Aims to Generate Revenue Throughout the Cannabis Supply Chain

Source: AGP, Company Website & Global Integrity

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 12 of 23

TILT Holdings Inc. April 3, 2020

Taking a look at revenue impact by segment, the technology segment includes revenues from
Baker as well as Blackbirdgo, while the distribution revenue segment is based on revenues from
Blackbird’s legacy distribution business. Technology revenues had fallen from a ~$2M per
quarter average in 2018 to $1M a quarter in 1H19, but jumped to $4.4M in 3Q19 – though this
does not appear to be the new run-rate as management said there had been some reclassifying of
revenue from Blackbird and back invoicing. Gross margins for the business had been around 80%
but fell in the most recent quarter to 23% (due to reclassifications mentioned above), and
management looks for margins to climb back to the 70-80% range by end of year. On distribution,
Blackbird’s revenues have been volatile in 2019 primarily due to the California market, but up
meaningfully the past two quarters. The business continues to operate at a loss with negative
margins at nearly $1M per quarter in negative gross profits the past 3 quarters.

Figure 23: Sales Have Been Volatile for Technology & Figure 24: Distribution Look to Inflect to Positive Gross
Distribution Profits

Source: Company Reports & AGP Source: Company Reports & AGP

Going forward, we believe these segments offer the biggest upside to our model. In our opinion,
this business is all about scale – particularly on the distribution side & Blackbirdgo platform. The
bigger they can grow Blackbirdgo’s platform to hold menus for operators across the US, enable
delivery options and pick up in store, and build out the company’s CRM/POS system – the more
data the company collects, the more powerful it becomes and the more valuable it is for
customers. That said, we look for combined revenue to increase modestly in 2020 and look for
technology margins to creep back up to the 70%+ range as the year progresses with distribution
approaching break-even gross profits.

Figure 25: We Model Modest Growth… Figure 26: … Across Technology & Distribution
Technology Sales & GMs 3.0 Distribution Sales & GMs 100%
6.0 100% 2.3 2.2
4.4 4.2 1.8 1.9 2.0
80% 2.0 1.6 1.7 0%
4.0 3.4
2.9 60%
2.2 2.2
40% 1.0 -100%
2.0 1.1 1.0 0.4
20%
0.0 -200%
0.0 0%

Technology sales Technology Gross Margin Distribution sales Distribution Gross Margin
Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 13 of 23

TILT Holdings Inc. April 3, 2020

Near to Medium Term Cash Cow: Cannabis

Cannabis. TILT also has plant touching assets including Standard Farms in Pennsylvania and
Commonwealth Alternative Care in Massachusetts. Management has stated that it may sell these
assets, but expects these assets to act as growth capital in the meantime as they have started to
generate cash flow. Outside the US, TILT’s subsidiary Santé Veritas Therapeutics is a late applicant
to become a licensed producer in Canada, though given saturation in the Canadian market we do
not believe TILT will invest behind this asset and instead look to eventually sell.
Massachusetts: Commonwealth Alternative Care is the company’s subsidiary in Massachusetts –
which operates a medical dispensary as well as a cultivation facility. The cultivation facility is
located in Taunton, Massachusetts and the company is roughly doubling cultivation space from
50k to 100k, which is expected to come online in 1H20. The company is awaiting approval for
adult-use sales license for its Taunton dispensary. Additionally, the company has two stores built
and ready to open in Brockton & Cambridge, but is awaiting receipt of its adult-use license for
these stores as well.
The company has primarily been selling products produced in Massachusetts to the wholesale
market, but plans to shift this to sales into its own stores once the company receives approval to
open up adult-use stores. Once vertically integrated in the state, we expect this to enhance
margins, or at least mitigate potential pricing pressure in the wholesale market. Indeed, current
wholesale prices in MA are robust and nearly $4,000 per pound, well above that of mature
cannabis state such as CO at roughly $1,000 per pound.
The company also has four affiliate partners that the Massachusetts Cannabis Control Commission
had previously deemed as controlling agreements (requirement to buy product etc.). However,
TILT has restructured the agreements with the affiliates so that they are not deemed as
controlled. Instead, they are simple loans and will not be recorded on TILT’s P&L.
Massachusetts represents an attractive market, and seen robust growth since adult-use sales
began in November 2018. Growth has been consistent excluding the temporary vape ban MA
placed on the market from September to December 2019, and the market was generating
annualized sales of over $650M in February 2020. We expect there to be another dip in March &
April however, as the state did not deem adult-use medical sales as essential during the COVID-19
shut down of non-essential businesses. We expect the MA cannabis market to return once this
temporary disruption passes – with growth primarily driven by new store growth, including TILT’s
three stores which await final adult-use license approval. Given MA’s average adult-use store
generates $15M annualized revenues, we believe TILT’s license approval should prove a catalyst
for revenues.

Figure 27: Mass Represents an Attractive Market… Figure 28: …And Boasts Robust Sales Per Store
Mass Cannabis Sales by Month ($ in M) Annulized Sales Per Store ($ in M)
60

50 $16 $15

40 $14
$12 $11
30
$10
20 $8
10 $6
$3
$4
0 $1
$2
Oct-19
Mar-19
Jan-19

Jan-20
Feb-19

Jul-19

Sep-19

Feb-20
Apr-19
May-19

Aug-19
Dec-18

Jun-19

Dec-19
Nov-18

Nov-19

$0
OR CO NV MA
Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 14 of 23

TILT Holdings Inc. April 3, 2020

Pennsylvania: In Pennsylvania, the company owns Standard Farms, which operated greenhouse
cultivation and CO2 extraction facility that produces products to sell to the Pennsylvania medical
cannabis market. Products sold in the market primarily consist of non-flower products including
vape cartridges, & capsules – with the company’s products carried across 95% of PA’s
dispensaries. The company has historically produced products within its 30,000 sq foot facility,
but recently expanded capacity by adding four additional green houses in June 2019, and now has
a canopy of 60,000 sq ft in the state. The company is currently processing all flower in the state
and is able to sell everything that they produce. We believe PA represents one of the more
attractive cannabis markets, with a total patient count of 153k as of January 2020, more than
doubling in the past year.

Figure 29: PA’s Medical Cannabis Market Continues to Grow

PA Registered Patients
200 180
159 165

150 131
121
98 147 153
100 80 120
60
102 106 111
87.5
50 25
10 66
51
0

Oct-19
Oct-18
Mar-18

Mar-19

Aug-19
Sep-19
Feb-18

Aug-18
Sep-18

Feb-19

Jun-19
Jun-18

Jan-20
Jan-18

Apr-18

Jul-18

Jan-19

Apr-19

Jul-19
Dec-17

Dec-18

May-19

Dec-19
May-18

Nov-18

Nov-19
Registered Patients Active Purchasers
Source: State Websites and AGP

Cannabis revenues have increased notably over the past few quarters as cultivation capabilities
have ramped in MA & PA. We expect revenues to continue to ramp through 2020, with some
near-term headwinds as the company will be limited to just medical sales in MA (adult-use not
granted essential designation). We model cannabis revenues increase to $46M in 2020, and a
$60M annual run-rate by 4Q20. Gross margins have been healthy, including 76% GMs in 3Q19,
though management expects the normalized run-rate to be between 40 & 50%. Margins will be
dependent on several factors including wholesale pricing in MA & PA, as well as the timing of the
company’s adult-use retail licenses in MA (allowing for higher margins via vertical integration).
Figure 30: We Look For Cannabis Sales to Increase… Figure 31: …With Healthy Margins
Cannabis Sales ($ in M) Gross Margins
16 15.1 80% 76%
13.7
14 70%
12 60% 55% 55% 55%
50%
10 8.8 9.2 50% 45% 45%
8.0 7.8
8 40% 33%
6 30%
4.0 3.8
4 20%
2 10%
0 0%
1Q19A2Q19A3Q19A 4Q19E 1Q20E 2Q20E 3Q20E 4Q20E 1Q19A2Q19A3Q19A4Q19E 1Q20E 2Q20E3Q20E 4Q20E

Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 15 of 23

TILT Holdings Inc. April 3, 2020

Financial Outlook

Revenues. We model revenues of $158M in 2019, with 4Q19 revenues coming down sequentially,
primarily from lower Jupiter sales following the vape crisis. For 2020, we model revenues
increasing over 25% to $199M, driven by growth in the company’s Jupiter and cannabis segment.
While we only model growth of 5% vs the 2H19 run-rate in the company’s distribution/cannabis
business, we see this having the most upside to our model this year (as well as in 2021), and
expect revenues to ramp in the back half of 2020 as a positive indicator of proof of concept.
Given COVID uncertainty, we temper our 2Q expectations, as the company’s business in MA will
likely be impacted given only medical cannabis was deemed as essential – which could be
somewhat offset by increased delivery on Blackbirdgo.

Figure 32: The Vape Crisis & COVID-19 Likely Creates Figure 33: Long-Term, we Look For Sale Growth Across TILT’s
Volatility in Quarterly Growth Segments
TILT Revnues by Quarter TILT Revenues ($ in M)
57
60 53 300 266
50 46 46 47
250 29
39 41 199
40 34 200 64
158 20
30 150 14 46
25
20 100
172
119 132
10 50

- 0
2019 2020E 2021E
Accessories Cannabis Distribution & Technology Other
Source: Company Reports & AGP Source: Company Reports & AGP

GM & SG&A. We look for gross margins to increase on an annual basis, primarily due to a
function of mix, as we look for cannabis to increase its sales mix, as well as technology.
Specifically, we model a consolidated gross margin of 27% in 2019, increasing to 32% in 2020 and
34% in 2021. On the SG&A side, the company should benefit from leverage as the company scales
the business. We model SG&A as a % of sales falling meaningfully as a result, with 35% in 2019
falling to 25% in 2020 & 20% in 2021.

Figure 34: We Model Gross Margin Expansion… Figure 35: …And SG&A Leverage for TILT
TILT Gross Margins TILT Core SG&A as a % of Sales
35% 34.4%
35.6%
33% 36%
31.7%
31% 31%

25.4%
29% 26%

26.8% 19.5%
27% 21%

25% 16%
2019E 2020E 2021E 2019E 2020E 2021E
Source: Company Reports & AGP Source: Company Reports & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 16 of 23

TILT Holdings Inc. April 3, 2020

EBITDA. Putting the pieces together, we model volatility on a quarterly basis in terms of EBITDA –
driven by the vape crisis in 4Q & COVID-19 in 2Q. Overtime, we look for the company to become
consistently profitable with margin expansion, which our model points to beginning to ramp in the
back-half of 2020. We model EBITDA margins for 2020 at 6.3% expanding to 15% in 2021, and see
upside to these estimates - particularly if the company is able to ramp up revenues for its high-
margin technology platform.

Figure 36: There May Be Near-Term Profit Volatility… Figure 37: …But We See Long-Term EBITDA Margin
Opportunity
TILT EBITDA ($ in M) TILT EBITDA Margins
8.0 14.8%
5.6 15%
6.0 4.6
4.0 2.7 10%
0.9 1.4 6.3%
2.0
0.0 5%
-2.0
-2.1 0%
-4.0
-6.0 -4.0
-5%
-8.0
-10.0 -8.0 -10% -8.0%
1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 2019E 2020E 2021E
Source: Company Reports & AGP Source: Company Reports & AGP

Balance Sheet

Turning to the balance sheet, the company had $3.6M of cash as of 9/30/2019. However, the
company raised $36M through the sale of senior secured notes in November 2019 – payable in 36
months and carrying 8% interest. The financing was used to pay down a $20M bridge loan which
carried interest of 18.75% per annum. The excess capital will be used to fund growth of the
company’s existing assets. Importantly, management believes its heavy CAPEX spend is now
behind the company after CAPEX expenditures of $18M in 2018 & $26M 9M YTD 2019. With
spending on the buildout of cultivation and expansion in MA & PA now complete, and the stores
in MA already built out and awaiting approval – the company expects CAPEX to come down
meaningfully in 2020. The company’s assets should start to generate cash in 2020 on our model,
predominately driven by the company’s cannabis & Jupiter assets. And, if the company were to
sell off its non-core cannabis assets, we believe cash received could be used to further fund the
business. As such, we do not foresee the company being in a cash-constrained position in the
immediate future.

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 17 of 23

TILT Holdings Inc. April 3, 2020

Valuations

Given the company operates several businesses including core and non-core assets, valuing the
company can be admittedly complicated. However, we believe the company is attractively valued
looking at various valuation approaches.

Consolidated Numbers. On a consolidated basis, TILT currently trades at less than 0.5x our 2021
sales estimate, and ~2.0x our 2021 EBIDTA estimate. We derive our C$0.75 price target based on
consolidated 2021 sales multiple of 1.25x. This implies a 2021 EBITDA multiple of 6.0x.

Focusing on Core Assets. Additionally, we believe it is appropriate to look at the company based
on just its core assets. Taking our 2021 sales estimates of $201M for Jupiter & Blackbird equates
to a 0.7x multiple relative to current levels. Assuming a low-teens EBITDA margin on its core
business – which we view as conservative with Jupiter already generating mid-teens EBITDA
margins – with the stock trading at an ~6x EBITDA multiple to these numbers. Additionally, this
does not take into account any cash the company would receive by selling off its cannabis assets.
Focusing on core assets, our implied 2021 sales multiple is 1.5x, and EBITDA multiple is 13x. These
multiples represent a discount to peers outside of cannabis, with packaging companies trading at
an average 1.5x multiple, despite TILT’s more robust growth profile. TILT trades at a significant
discount to SaaS companies, which trade at nearly a 7.0x sales multiple, given the structurally
higher margin profile associated with SaaS companies.

Figure 38: US Cannabis Valuations

EBITDA
Market Enterpris 2020 2021 EV/2020 EV/2021 2020 2021 EV/ 2020 EV/ 2021 Margin
Ticker Cap Price e Value Sales Sales Sales Sales EBITDA EBITDA EBITDA EBITDA (FY3)
US Cannabis Operators
MMEN-CA C$150 C$0.31 C$603 C$345 C$473 1.7x 1.3x -C$79 C$9 -7.6x 66.7x 2%
ACRG.USD-CA $294 C$2.32 $294 $150 $295 2.0x 1.0x -$46 $30 -6.4x 10.0x 10%
ACRG.USD-CA $294 C$2.32 $294 $278 $542 1.1x 0.5x -$35 $54 -8.5x 5.5x 10%
GTII-CA C$1,074 C$8.20 C$1,210 C$620 C$1,027 2.0x 1.2x C$144 C$278 8.4x 4.4x 27%
IAN-CA C$90 C$0.53 C$224 C$314 C$465 0.7x 0.5x C$44 C$104 5.1x 2.2x 22%
CURA-CA C$3,534 C$5.55 C$3,772 C$682 C$1,115 5.5x 3.4x C$144 C$399 26.2x 9.5x 36%
CURA PF C$4,369 C$5.55 C$4,608 C$926 C$1,467 5.0x 3.1x C$230 C$514 20.0x 9.0x 35%
CL-CA C$1,467 C$4.21 C$1,627 C$742 C$1,232 2.2x 1.3x C$151 C$363 10.7x 4.5x 29%
TRUL-CA C$1,423 C$12.90 C$1,550 C$565 C$708 2.7x 2.2x C$222 C$283 7.0x 5.5x 40%
HARV-CA C$413 C$1.30 C$619 C$302 C$465 2.1x 1.3x C$6 C$97 106.4x 6.4x 21%
GRWG-US $145 $3.81 $143 $135 $187 1.1x 0.8x $16 $25 8.8x 5.7x 13%
KSHB $78 $0.65 $89 $169 $257 0.5x 0.3x -$14 $12 -6.3x 7.4x 5%
TILT-CA C$82 C$0.23 C$112 C$266 C$356 0.4x 0.3x C$17 C$53 6.7x 2.1x 15%
GNLN $161 $1.72 $117 $135 $172 0.9x 0.7x -$11 $6 -10.2x 18.4x 4%
MSO Average 2.0x 1.3x 5.9x
US Ancillary Players 0.7x 0.5x 8.4x
Total US Cannabis Avg. 1.9x 1.2x 6.9x
Source: Fact Set & AGP

Figure 39: TILT Sales Multiple Comparison

CY 2021 EV/Sales Multiple
8x 6.8x
6x

4x

2x 1.4x
0.5x 0.3x 0.6x
0x
Packaging SaaS Companies US Ancillary TILT Core TILT
Companies Cannabis
Source: Fact Set & AGP

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 18 of 23

TILT Holdings Inc. April 3, 2020

Figure 40: TILT Income Statement (USD in thousands)

2018A 1Q19A 2Q19A 3Q19A 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E
Net Sales $3,502.3 $34,378.0 $39,007.2 $46,123.3 $38,422.1 $157,930.5 $42,847.7 $45,180.7 $53,221.5 $57,326.3 $198,576.2 $265,876.8
COGS 3,360.1 27,071.7 29,452.7 32,199.5 26,843.7 115,567.6 29,676.2 31,357.3 35,853.0 38,760.8 135,647.2 174,472.1
Gross Profit Pre FV Adj. $142.3 $7,306.2 $9,554.4 $13,923.9 $11,578.4 $42,362.9 $13,171.5 $13,823.4 $17,368.5 $18,565.6 $62,929.0 $91,404.7
Unrealized Gain on Changes in Fair Value of Biological
151.0 Assets 222.1 15,972.2 (2,427.5) - 13,766.8 - - - - - -
Gross Profit $293.3 $7,528.3 $25,526.7 $11,496.4 $11,578.4 $56,129.8 $13,171.5 $13,823.4 $17,368.5 $18,565.6 $62,929.0 $91,404.7
Depreciation 8,467.5 6,757.3 5,987.4 5,987.4 27,199.6 5,987.4 6,187.4 6,387.4 6,587.4 25,149.6 26,149.6
G&A 7,596.0 10,240.0 8,847.4 9,047.4 35,730.7 9,047.4 9,047.4 9,247.4 9,247.4 36,589.4 37,589.4
Sales & Marketing 7,232.2 3,351.9 3,688.6 4,488.6 18,761.3 3,488.6 3,688.6 3,888.6 4,088.6 15,154.5 15,654.5
Stock Comp Expense 28,967.3 59,772.5 50,297.0 (37,355.8) 15,000.0 87,713.7 15,000.0 15,000.0 15,000.0 15,000.0 60,000.0 45,000.0
Transactions - 1,844.4 734.2 174.6 - 2,753.1 - - - - -
Other Non-Cash/Non Recurring - 1,372.6 875.1 - - 2,247.7 - - - - - -
Cash SG&A 22,776.5 16,010.3 14,127.3 12,448.7 13,655.7 56,242.0 12,236.6 12,426.6 12,816.6 13,006.6 50,486.4 51,936.4
Total SG&A 56,591.2 86,285.2 72,255.4 (18,657.8) 34,523.4 174,406.2 33,523.4 33,923.4 34,523.4 34,923.4 136,893.5 124,393.5
Operating Income ($56,297.8) ($78,756.9) ($46,728.7) $30,154.2 ($22,945.0) ($118,276.4) ($20,351.9) ($20,099.9) ($17,154.9) ($16,357.8) ($73,964.5) ($32,988.8)
Interest Expense 3,165.3 5,750.2 5,750.2 14,665.7 700.0 700.0 700.0 700.0 2,800.0 2,800.0
Other Income/Expense 493,773.4 1,438.8 1,393.1 2,018.9 2,018.9 6,869.7 2,018.9 2,018.9 2,018.9 2,018.9 8,075.7 8,075.7
Pre-Tax Income ($550,071.3) ($77,318.1) ($48,500.9) $26,422.9 ($26,676.3) ($126,072.4) ($19,033.0) ($18,781.0) ($15,835.9) ($15,038.9) ($68,688.8) ($27,713.1)
Income Taxes 47.7 577.6 439.1 290.2 - 1,307.0 - - - - - (9,699.6)
Net Income ($550,119.0) ($77,895.7) ($48,940.0) $26,132.7 ($26,676.3) ($127,379.3) ($19,033.0) ($18,781.0) ($15,835.9) ($15,038.9) ($68,688.8) ($18,013.5)
FX Translation (2,339.8) 240.1 - - - - - - - -
Net Income ($552,458.8) ($77,895.7) ($48,940.0) $26,372.7 ($26,676.3) ($127,379.3) ($19,033.0) ($18,781.0) ($15,835.9) ($15,038.9) ($68,688.8) ($18,013.5)
Non-Controlling Interest 4,597.2 3,893.5 (87.6) 8,425.1 - - - - - - - -
Net Income ($547,861.7) ($74,002.2) ($49,027.6) $34,797.9 ($26,676.3) ($127,379.3) ($19,033.0) ($18,781.0) ($15,835.9) ($15,038.9) ($68,688.8) ($18,013.5)

Basic Shares Outstanding 30,070 74,621 304,038 304,261 304,565 246,871 304,870 305,175 305,480 305,785 305,327 308,843
Dil Shares Outstanding 30,070 74,621 304,038 304,261 304,565 246,871 304,870 305,175 305,480 305,785 305,327 308,843

EPS ($18.22) ($0.99) ($0.16) $0.11 ($0.09) ($0.52) ($0.06) ($0.06) ($0.05) ($0.05) ($0.22) ($0.06)

EBITDA Metrics
2018A 1Q19A 2Q19A 3Q19A 4Q19E 2019E 1Q20E 2Q20E 3Q20E 4Q20E 2020E 2021E
EBITDA -551,621.3 -69,015.5 -38,732.1 37,382.6 -17,077.3 -88,663.1 -14,065.1 -13,603.2 -10,448.1 -9,441.0 -47,557.4 -5,531.7
FV Adjustments 0.0 0.0 -15,972.2 2,427.5 0.0 -13,544.7 0.0 0.0 0.0 0.0 0.0 0.0
Stock Comp 28,967.3 59,772.5 50,297.0 -37,355.8 15,000.0 87,713.7 15,000.0 15,000.0 15,000.0 15,000.0 60,000.0 45,000.0
Other 500,019.7 1,196.8 394.8 216.3 0.0 1,807.9 0.0 0.0 0.0 0.0 0.0 0.0
Adjusted Operating EBITDA -22,634.3 -8,046.2 -4,012.6 2,670.7 -2,077.3 -12,686.3 934.9 1,396.8 4,551.9 5,559.0 12,442.6 39,468.3
Source: Company Reports & AGP Estimates

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 19 of 23

TILT Holdings Inc. April 3, 2020

Figure 41: TILT Balance Sheet

2018A 1Q19A 2Q19A 3Q19A 2019E 2020E 2021E
Cash $97,247 $12,109 $4,534 $3,578 $19,726 $24,294 $57,308
Restricted Cash $0 $0 $0
Accounts receivable 2,115 10,376 17,204 18,295 19,707 13,172 20,652
Prepaid and other 9,654 10,044 10,842 6,855 9,654 9,654 9,654
Inventory 6,667 26,724 44,471 39,448 51,652 50,247 66,477
Biological Assets 1,868 2,191 8,021 8,624 8,868 8,868 8,868
Notes Recievable 7,927 8,675 10,369 10,841 11,427 11,427 11,427
Other Current Assets 470 0 470 470 470 470 470
Total current assets $125,948 $70,118 $95,912 $88,113 $121,505 $118,133 $174,857

Goodwill 7,346 145,822 139,302 139,302 140,346 140,346 140,346

Intangible assets 18,735 210,764 207,211 202,918 202,735 202,735 202,735
Notes Recievable 17,471 18,454 20,553 21,339 21,471 21,471 21,471
Equity Investment 0 1,000 1,000 1,000 0 0 0
PP&E 51,737 76,255 82,301 82,389 84,537 68,130 50,673
Other assets 0 18,967 18,940 23,288 23,000 23,000 23,000
Total assets $221,236 $541,380 $565,220 $558,348 $593,594 $573,814 $613,082

Accounts payable 14,448 66,783 69,980 71,275 74,428 63,337 75,618

Lease liability 0 1,914 1,992 3,093 4,000 4,000 4,000
Income Tax Payable 17 345 440 731 11,017 11,017 11,017
Notes payable - current 0 0 16,319 18,804 0 0 0
Deferred Revenue 196 3,997 6,534 1,232 196 196 196
Other - current 1,711 51,195 51,021 51,021 1,711 1,711 1,711
Total current liabilities $16,372 $124,233 $146,286 $146,156 $91,352 $80,261 $92,543

Deferred Income Taxes 0 0 0 0 0 0 0

Notes payable 0 0 0 0 36,043 36,043 36,043
Lease liability 0 17,991 18,210 21,960 22,000 22,000 22,000
Other Liabilities 0 0 0 0 0 0 0
Total liabilities 16,372 142,223 164,496 168,116 149,395 138,304 150,586
Total stockholders' equity $204,864 $399,157 $400,724 $390,232 $444,199 $435,510 $462,496

Liabilities and Shareholders Equity $221,236 $541,380 $565,220 $558,348 $593,594 $573,814 $613,082
Source: Company Reports & AGP Estimates

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 20 of 23

TILT Holdings Inc. April 3, 2020

Figure 42: TILT Cash Flow Statement

2018A 1Q19A 2Q19 3Q19 2019E 2020E 2021E

Net income ($550,119) ($77,896) ($126,836) ($100,703) ($127,379) ($68,689) ($18,014)

Depreciation and amortization 649 9,084 16,520 22,553 27,200 26,407 27,457
Allowance for doubtful accounts 127 51 41 (50) 0 0 0
Loss on Extinguishment of Debt 0 0 0 0 0 0 0
Accounts receivable (777) 1,546 (5,273) (6,273) (17,592) 6,535 (7,480)
Bio Assets (1,717) 1,246 14,626 22,098 (7,000) 0 0
Inventory (6,193) (5,060) (22,808) (17,785) (44,986) 1,406 (16,231)
Accounts payable 3,401 42,752 9,100 7,209 59,980 (11,091) 12,281
Accrued expenses and other (3,606) 4,834 4,036 8,023 4,000 0 0
Change in Working Capital (8,891) 45,318 (319) 13,272 (5,597) (3,150) (11,430)
Stock compensation expense 28,967 59,772 110,069 72,714 87,714 60,000 45,000
Unrealized gain in FV sold (151) (924) (20,133) (28,209)
Gain or loss on sale of property 493,680 (79) 6,325 15,142 0 0 0
Deferred income tax 17 666 961 175 (4,000) 0 0
Other 46 (4,543) (2,006) (7,308) (15,500) 0 0
Operating cash flow (35,674) 31,450 (15,378) (12,414) (37,563) 14,568 43,014

Capex (18,105) (15,379) (24,761) (25,505) (30,000) (10,000) (10,000)

Acquisitions (2,794) (98,914) (58,235) (59,898) (63,000) 0 0
Proceeds from sale of investing 0 (1,000) (1,000) (1,000) (1,000) 0 0
Other Investing 83,421 (3,277) (7,070) (8,322) (4,000) 0 0
Investing cash flow 62,522 (118,570) (91,066) (94,726) (98,000) (10,000) (10,000)

Proceeds from debt/loans 0 2,929 16,000 16,243 52,043 0 0

Repayment of debt/loans 0 (946) (1,270) (1,773) (16,000) 0 0
Proceeds from line of credit 0 0 0 0 0 0 0
Repayment of line of credit 0 0 0 0 0 0 0
Stock option exercises 0 0 0 0 0 0 0
Sale of stock (Buyback) 72,088 0 0 0 0 0 0
Other finance 495 0 (999) (999) 22,000 0 0
Finance cash flows 72,583 1,983 13,731 13,471 58,043 0 0

FX Exchange (2,296) 0 0 0 0 0 0

Net Decrease/Increase in Cash 97,134 (85,137) (92,712) (93,669) (77,520) 4,568 33,014

Beginning Cash 113 97,247 97,247 97,247 97,247 19,726 24,294

Ending Cash 97,247 12,109 4,534 3,578 19,726 24,294 57,308
Source: Company Reports & AGP Estimates

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 21 of 23

TILT Holdings Inc. April 3, 2020

Important Research Disclosures

Rating and Price Target History for: TILT Holdings Inc. (TILT) as of 04-01-2020
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
Q1 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021

Created by: BlueMatrix

Distribution of Ratings/IB Services

IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY] 60 80.00 20 33.33
HOLD [NEUTRAL] 13 17.33 2 15.38
SELL [SELL] 0 0.00 0 0
NOT RATED [NR] 2 2.67 0 0
UNDER REVIEW [UR] 0 0.00 0 0

Disclosures
"Firm" used in the this section of the report entitled "Disclosures" refers to A.G.P. / Alliance Global Partners or Euro
Pacific Capital, a division of A.G.P. / Alliance Global Partners. The Firm expects to receive or intends to seek
compensation for investment banking services from all companies under research coverage within the next three months.
The Firm or its officers, employees or affiliates, other than the research analyst authoring this report and his/her supervisor,
may execute transactions in securities mentioned in this report that may not be consistent with the report’s conclusions.
Sources referenced in this report: The information and statistics in this report have been obtained from sources we believe
are reliable but we do not warrant their accurance or completeness.
Acted as Placement Agent Disclosure - The Firm or its affiliates served as placement agent in a financing to raise capital
for TILT Holdings Inc. within the last 12 months. As such, the Firm or its affiliates have received compensation for these
"investment banking services" in the last twelve months.
Investment Banking Compensation Disclosure - The Firm or its affiliates have received compensation for investment
banking services from TILT Holdings Inc. in the last 12 months.
Regulation Analyst Certification ("Reg AC") — Aaron Grey,
The views expressed in this report (which include the actual rating assigned to the company as well as the analytical
substance and tone of the report) accurately reflect the personal views of the analyst(s) covering the subject securities.
An analyst's sector is the universe of companies for which the analyst provides research coverage. Accordingly, the rating
assigned to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months
relative to the analyst's sector average.
Furthermore, in accordance with FINRA Rules 2711, 2241, and their amendments related to disclosure of conflicts of
interest, the analyst preparing this report certifies:

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 22 of 23

TILT Holdings Inc. April 3, 2020

• The analyst or member of the analyst's household does not have a financial interest in the company that is the subject
of this report, including a position in the debt or equity of the company, without limitation, whether it consists of any
option, right, warrant, future, long or short position.

• The analyst or member of the analyst's household does not serve as officer, director or advisory board member of the
company that is the subject of this report.

• The analyst has not received any compensation from the subject company or from investment banking revenues,
directly or indirectly, for preparing this report.

• The report discloses all material conflicts of interest related to the analyst, the member firm, and the subject company
that are known at the time of publishing this report.

Ratings
Buy: Expected to materially outperform sector average over 12 months and indicates total return of at least 10% over
the next 12 months.
Neutral: Returns expected to be in line with sector average over 12 months and indicates total return between negative
10% and 10% over the next 12 months.
Sell: Returns expected to be materially below sector average over 12 months and indicates total price decline of at least
10% over the next 12 months.
Not Rated: We have not established a rating on the stock.
Under Review: The rating will be updated soon pending information disclosed from a near-term news event.
Volatility Index
1 (Low): Little to no sharp movement in stock price in a 12 month period
2 (Low to medium): Modest changes in stock price in a 12 month period
3 (Medium): Average fluctuation in stock price in a 12 month period
4 (Medium to High): Higher than average changes in stock price in a 12 month period
5 (High): Extremely sharp movements in stock price in a 12 month period
All financial information is taken from company disclosures and presentations (including Form 10Q, 10K and 8K filings
and other public announcements), unless otherwise noted. Any prices or quotations contained herein are indicative only
and are not a commitment by A.G.P. / Alliance Global Partners to trade at any price.
If A.G.P. / Alliance Global Partners acts in a principal capacity with respect to the instruments mentioned herein it will be
disclosed in the previous section of this report entitled “Disclosures.” In the event that A.G.P. / Alliance Global Partners
does act in a principal capacity, the commentary is therefore not independent from the proprietary interests of A.G.P. /
Alliance Global Partners, which interests may conflict with your interests. Opinions expressed herein may differ from
the opinions expressed by other divisions and/or business units of A.G.P. / Alliance Global Partners. The Firm does not
undertake any obligation to update this material. This material is current as of the indicated date and as of the time it was
sent to you. This material was prepared from information believed to be reliable, but A.G.P. / Alliance Global Partners
makes no representations or warranties as to its accuracy or completeness.
This communication and the information contained herein is neither an offer to buy or sell nor a solicitation of an offer to
buy or sell any security or instrument or to participate in any particular trading strategy.
This report should not be used as a complete analysis of the company, industry or security discussed in the report.
Additional information is available upon request. Any opinions or estimates in this report are subject to change without
notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially
from the forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may
not be suitable for all investors. No part of this report may be reproduced without the express written permission of A.G.P. /
Alliance Global Partners, member FINRA/SIPC. Copyright 2020.

A.G.P. / Alliance Global Partners member FINRA | SIPC Page 23 of 23