Greetings, and welcome to the TILT Holdings Fourth Quarter and Year Ended 2019 Conference Call. At this time, all participants are in a listen-only mode. And as a reminder, this conference is being recorded. Following the initial formal remarks, we will conduct a question-and-answer session. Webcast participants can submit a question directly through the webcast. Further instructions will be provided as the Q&A begins. Hosting today’s conference will be Joe Milton, TILT’s Senior Vice President of Business Development. And now, I’d like to turn the conference over to Mr. Milton. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Thank you for joining TILT Holdings Q4 and year ended conference call. On the call with me today with prepared remarks are Mark Scatterday, Chief Executive Officer, Tim Conder, President and Chief Operating Officer; and David Caloia, Chief Financial Officer. And we will discuss results for the fourth quarter and year ended 2019. Our fourth quarter earnings release was issued after closed today and a copy of that press release can be found in the Investor Relations section on the TILT’s website and on SEDAR. I would like to remind you that during this call, management’s prepared remarks may contain forward-looking statements, which are subject to risks and uncertainties. Management may make additional forward-looking statements during the Q&A section. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them. We refer you to the forward-looking information disclaimer and all risk factors contained in the fourth quarter press release and in filings with the Canadian Securities Administrators for a more detailed discussion of the factors that could cause actual results to differ materially from those projections and any forward-looking statements. The company undertakes no objection to publicly correct or update the forward-looking statements made during the presentation to reflect future events or circumstances except as may be required under applicable securities laws. Finally, please note, on today’s call, management will refer to non-IFRS financial measures such as EBITDA and adjusted EBITDA, in which TILT Holdings excludes certain expenses from its IFRS financial results. Please refer to TILT Holdings earnings release and Q4 filings for a full reconciliation of non-IFRS performance measures to the most comparable IFRS financial measures. At this time, it is my pleasure to introduce TILT Holdings Chief Executive Officer, Mark Scatterday.

Thank you, Joel. Welcome, everyone, to the TILT Holdings fourth quarter and 2019 fiscal year-end earnings webcast. It is my honor to be part of this call as full-time CEO of TILT. I was pleased to announce the removal of my interim from my title in February, confirming my personal commitment to TILT success, but also remain the company’s largest individual equity shareholder and debtholder. Joining me on the call today is our President and Chief Operating Officer, Tim Conder; and our Chief Financial Officer, David Caloia. Before reviewing recent developments at TILT, along with our fourth quarter and year-end financial results, I would like to recognize the current global environment we are all facing. First, with COVID-19 and now the civil unrest taking place nationwide. Throughout my career, I’ve led organizations through change in crisis before. I don’t think anyone could have anticipated the serious events we are now facing together. I know you’re expecting us to report financials on April 29, and appreciate your patience and understanding as we work with our new team at Baker Tilly remotely to complete our audit. We also appreciate that Canadian Securities Administrators acknowledged the unusual circumstances companies are navigating due to this pandemic, and provides a blanket extension for filing that has been utilized by many companies in our industry. I also want to acknowledge the impressive dedication, ingenuity and compassion demonstrated by TILT’s employees for the past few months. Our team has truly gone above and beyond to keep essential businesses in business during this time and continue to deliver on our commitments to clients and patients with minimal disruption. Know that the safety of our staff, customers and local communities remains foremost in our minds, and we are taking every necessary precaution. We will emerge from this period stronger and more deeply aligned with our clients, [indiscernible] and stakeholders. As noted in our recent press release and earnings announcement today, our business has moved rapidly to address critical operational issues and client needs in this dynamic environment we found ourselves in over the past several months. Our first priority action was to ensure the safety and hygiene of our cultivation, production and dispensary facilities in Massachusetts and Pennsylvania, as well as our Blackbird software and services business operating on the West Coast. Additionally, we’ve restructured our Blackbird delivery business in California, Nevada, to address changing regulations and the mission-critical needs of our Blackbird corporate partners. Later in the call, TILT’s President and Chief Operating Officer, Tim Conder, will provide additional information about these business developments. Stabilization was our focus in 2019. By maximizing the powerful capabilities within our assets, we’re able to capitalize on their effectiveness and the important role they play in building and supporting brands in this dynamic marketplace. We achieved a number of significant milestones in the fourth quarter, including the completion of our debt refinancing and the appointment of two highly qualified independent directors TILT support. During Q4 and into 2020, TILT continues to focus on building up cash position, while securing a stable cost foundation. As we advance through 2020, we will continue to take decisive action to optimize operating income and increase our cash position. All new initiatives will be evaluated on their break-even timing and potential for attractive near-term ROI. This is familiar territory, as our cornerstone business, Jupiter, was quickly built with minimal seed the cap – seed capital into a nine-figure business. At the heart of our cultures and enthusiastic embrace of being nimble, focus, and lean, these values drive the execution of our 2020 operating plan. During our third quarter earnings call, I touched on number of 2019 goals set up for myself and the rest of our operating team, which I’d like to briefly revisit. Our first goal, create and adhere to a path for profitability with our newly integrated software and services business. Since our last earnings call, we have achieved two milestones at Blackbird. First, a major relaunch of the platform integrating legacy systems and incorporating new CRM functionality and features. Second, we have made some hard decisions to resize our distribution and delivery model, leading to a $3.5 million in annualized run rate savings as we look to accelerate the break-even timeline for Blackbird. Our second goal, drive revenue growth while maintaining profitability. While we anticipate improving upon the $2.7 million positive adjusted EBITDA that TILT achieved in Q3, marketplace concerns related to illegal vape products had a material impact in Q4. In spite of decreased volumes at Jupiter, its EBITDA remained solidly positive in Q4. The black market base were identified by the CDC as the culprit and the categories market share subsequently rebounded in Q1. It is our view that the last quarter of 2019 represents the apex of this issue’s negative impact on our business. As such, we believe Jupiter centralized an highly efficient product development and distribution platform, demonstrates the resiliency and continued ongoing profitability. Similarly, our plant-touching business, Commonwealth Alternative Care and Standard Farms Pennsylvania, remain accretive in Q4. As Standard Farms’ production capacity matures, we anticipate greater production yield and throughput volume. Positive trend lines across our cash-generating businesses, when combined with Jupiter strong inventory position and market share, Blackbird’s accelerated break-even timeline and TILT’s thoughtful management of corporate overhead map an encouraging pathway towards increased cash flow generation and EBITDA. Our third goal. Acknowledge and reward the talent commitment of our employees. Now more than ever, our business success depends on our employees. Their commitment and fortitude is a remarkable and humbling thing to experience. Through TILT’s evolution, we have all made necessary short-term sacrifices in order to write the ship and set long-term course for success. We are reaping the rewards of our collective efforts, and I’m proud of the culture we have created together, one that fosters creativity and innovation, celebrate success as well learning from mistakes and recognizes loyally and hard work. Our fourth goal. Embody corporate governance best practices by strengthening our Board of Directors. In November, we announced the addition of two new Independent Directors, Jane Batzofin and Mark Coleman, which was followed by the recent appointment of John Barravecchia. Jane and Mark brings deep private equity experience, while John comes to us with a strong financial background, having previously served as CFO for a number of companies through their ultimate acquisitions. Together with Gary Smith, they form a robust group of independent directors, representing the majority of our Board. We would also like to acknowledge Joel Milton’s departure from the Board and thank him for his service. Joel was essential in helping the company close its most recent financing and has moved into a business development role, where he has already excelled and bringing important partnerships and business initiatives to fruition. And our fiscal look for new opportunities to grow our global footprint in the cannabis industry. Jupiter continues to work with partners across 33 states in the U.S., as well as in Canada, Israel, Mexico, South America, and the European Union to capitalize on a first-mover advantage within the global market. Our growth in these markets have been commensurate with overall market growth in these countries can only move as quickly as regulation will allow. We can set ourselves to be well-positioned and prepared as additional foreign markets mature. Blackbird has also expanded its global reach through its software offerings, which are licensed to operate in Canada, Puerto Rico and Jamaica. Without a doubt, 2019 presented us with unexpected challenges. And I could not be more proud of the way our team weathered them together and grew even stronger. The resilience, perseverance and intelligence of our team has been extraordinary. While new challenges continue to arise, I’m super excited about this company we’re building together based on our employees, customers, partners, shareholders and Board members. Next, I will turn the call over to Tim, who will provide individual updates for our three business pillars.

Thank you, Mark, and good afternoon, everyone. As Mark discussed, Q4 presented challenges for TILT and the cannabis industry as a whole, and our portfolio of businesses performed solidly in the fourth quarter in light of this macro environment. Above all, we are intensely focused on increasing positive cash flow and derisking our business model in a period when the capital markets are difficult to access on reasonable terms. We’ve taken a proactive steps to rightsize TILT’s operating footprint, refined commercial arrangements with Jupiter and Blackbird customers to better align with opportunities in our markets and continues to grow our strong relationships with financially sound and credit worthy corporate partners and clients. Our discipline is paying off and TILT’s businesses are performing well. Our medical, cultivation, production and dispensary operations in Massachusetts and Pennsylvania were deemed essential businesses, allowing them to remain operational, while stay-at-home orders were in effect. In Nevada, where recreational cannabis sales were restricted to delivery only on March 20, our Blackbird retail delivery business rapidly scaled to provide us clients with an effective comprehensive solution. Additionally, as previously reported, our Jupiter vape hardware business successfully navigated through potential supply chain risks associated with Chinese New Year and the initial onset of COVID-19, creating a competitive inventory position. With that, I’ll now spend sometime talking about each of our businesses, beginning with Jupiter, our largest revenue-generating business. I’d like to take the opportunity to drill down a bit on the strategy underpinning our Jupiter Research business, which represented three quarter of the firm’s revenue in 2019. Jupiter’s model has proven to be durable and accretive to overall TILT results on an operating basis through a variety of market conditions, including the fourth quarter of 2019. Jupiter’s market-leading franchise is a compelling one, driven by a strong, technically-oriented client value proposition and expert sales force focused on providing solutions to inhalation facing technology challenges and a lean, centralized and highly productive operating footprint. On these foundations, we have built enduring relationships with other industry-leading client brands, who share our commitment to the highest safety standards, best-in-class consumer product experiences, and cutting-edge product innovation. As the industry continues to evolve and mature, Jupiter is singularly positioned to provide a gamut of value added vaporization technology solutions to help our customers succeed in the race to build brands and control shelf space with products that are safe, reliable and unique. Solutions available to our clients include proprietary products designed by Jupiter with the benefit of our in-house expertise and deep upstream supply chain relationships. This capability is supported by our Phoenix, Arizona-based technical team, led by Dr. San Li, as well as personnel embedded on-site with supply chain partners and subcontractors in Shenzhen. So we have a designed in Arizona, built in China model, which our clients leverage for success. Jupiter’s recognize acumen in providing technically sophisticated high value client solutions is also illustrated by the partnership announced in December with Convectium, a provider of automated filling solutions to THC and CBD oil producers. Through this partnership, Jupiter and Convectium were able to unlock production efficiencies for customers who operate in the highly competitive oil extraction segment of our industry. We build lasting relationships with Jupiter clients by helping them come to market with differentiated products in order to standout among the rapid proliferation of brands facing cannabis consumers today. Customized solutions represented over 60% of Jupiter’s revenue in 2019. Demand for customized and proprietary products is driven by large, well-capitalized clients who place larger orders more often. We see this as an indicator for the quality of our customer base, as well as Jupiter’s reputation for developing unique client solutions, such as the upcoming introduction of our Infinity line and Liquid Que. Reflective of its scrappy capital light roots, Jupiter’s operating model is lean and highly focused. Our Phoenix hub serves as a single platform for product development, sales, logistics and warehousing. This centralized model is a primary driver for consistent operational profitability. Jupiter is also advantaged by a strong sales team mission with a single goal of marketing our menu of inhalation products to our diverse customer base. This dedicated focus promotes nuance understanding of the clients’ needs and capabilities on the part of our sales reps and contributes to Jupiter strong per capita productivity. In keeping with this culture of efficiency, Jupiter manages its balance sheet with care, as demonstrated by the following. First, in Q4, we took a thoughtful view of forecast market demand ahead of the Chinese New Year in anticipation of our typically highest seasonal inventory levels and balance sheet usage. For our March 4 update, this inventory positioning enabled our sales force to take a highly active role in the marketplace during Q1, even in the face of supply chains severely tested by the onset of COVID-19. Second, as part of its focused sales coverage model, Jupiter has found an advantageous from the outset to limit its stock inventory to a small universal skews to complement the robust flow of customized inventory preordered by clients. To date, Jupiter has experienced no material challenges with respect to canceled customer purchase orders. Third, Jupiter’s attentiveness to understanding its customer base is reflected in the very manageable level of access and obsolete charges taken in 2019. Total Jupiter E&O last year was an immaterial portion of overall Jupiter cost of sales. Additionally, Jupiter conducts credit and financial checks as part of the onboarding process for all new customers. We are proud of the industry-leading franchise that Jupiter has built. That said, Jupiter is not the only iron in the fire itself with attractive prospects. Let’s now turn our attention to Blackbird, where there have been a number of noteworthy developments since our last reporting period. The increasing intricacy of supply chain logistics, consumer demand patterns, and the evolving regulatory landscape offers Blackbird a significant opportunity to provide a sophisticated enterprise offerings to a large cohort of business-to-business players in the cannabis space. The potential upside for Blackbird is significant, as the overall cannabis market continues to grow in size and complexity. Blackbird’s omni-channel model derives revenue from multiple businesses – business lines, but it’s native to a single platform, which exponentially increases the potential aggregate impact. A notable example, Blackbird accumulates and normalizes large volumes of transactional information, which offer attractive data analytics opportunities to our clients. We have been diligent and thoughtful about aligning Blackbird’s capabilities and operational footprint to this attractive and dynamic marketplace situation. Our governing principle is to profitably scale Blackbird as we surprise and delight our customers along the way. In late Q4, we announced the completion of a major overhaul of the Blackbird platform, which incorporated features from Baker and Brightside and introduced a host of new features and functionality for our users. During Q4 and continuing into the New Year, we have taken action to more closely align Blackbird’s cost structure with the available marketplace opportunity, resulting in $3.5 million in annualized run rate cost savings. I will go into more detail on those cost savings numbers after a quick update on Blackbird’s value proposition, marketplace positioning and strategy. Blackbird provides business solutions to cannabis brands and retailers, ultimately, getting cannabis products into the hands of consumers. In its position, as one of the largest infrastructure and technology companies in cannabis, Blackbird touches the entire value chain and is built with business logic, calibrated to our industry’s unique demands. On the B2B side, my Blackbird provides a logistics platform for wholesalers, brands and retailers to manage the downstream movement of products through the supply chain. In 2019, more than $250 million worth of wholesale product moved through Blackbird software and distribution infrastructure in Nevada and California. On the B2C side of the market, our Blackbird solution suite connects brands and retailers to end consumers through BlackbirdGo.com. Our recently revamped platform has been well received by the market, arming cannabis brands and retailers with a powerful array of tools. Blackbird’s integrated operational support model is highly differentiated. Blackbird is unique in its ability to offer operational support to complement its platform offerings in select markets, thereby relieving operational pain points for brands and retailers with comprehensive outsourced solutions. Blackbird currently provides many of the top brands in Nevada with end-to-end wholesale, logistical and retail delivery support. This well-established infrastructure allow Blackbird to rapidly pivot and provide scaled solutions for its clients when Nevada restricted adult use to delivery during COVID-19. The outcome has been dramatic with average basket size for orders, increasing from an in-store average of $60 in February to over $140 per delivery order. These results are best-in-class in the Nevada market, thereby highlighting Blackbird’s ability to efficiently deliver mission-critical solutions to its clients in a highly dynamic environment. Outside of Nevada, Blackbird also holds a prominent position providing outsourced logistical support to the Nevada wholesale or the California wholesale market. During Q4 and into the New Year, we have chosen to take a cautious measured approach to that big and complicated state, resizing our operations to fit the available market opportunity. Over that period, we have also become more selective in our client base and more conservative with the commercial terms governing our wholesale logistics agreements. Blackbird’s strategy is deeply aligned with TILT’s overall focus on increasing near-term positive cash flow. Blackbird is focused on the twin goals of capturing the sizable market opportunity available, while supporting TILT’s overarching goal to further strengthen its corporate balance sheet. Accordingly, throughout Q4 and continuing into – on into Q1 and Q2, we undertook significant right-sizing expense reductions after a deep dive review of Blackbird. The resulting $3.5 million of annualized run rate savings consists of $3 million of personnel costs associated with the RIF [ph] of 42 Blackbird staff, predominantly aligned with California wholesale operations, as well as legacy businesses folded into the new Blackbird release. About half of these personnel reductions took place in Q4. Non-comp cost run rate reductions of $500,000 were achieved through a combination of cutbacks and distribution fleet cost and discretionary items such as travel, marketing and PR costs. Additionally, as part of our review of the Blackbird business, we made a number of significant changes to our pricing model and the terms of our commercial agreements with our customer base. Collectively, these decisions lead Blackbird leaner and better position to realize high ROI opportunities available to it in the marketplace, as we continue to provide solutions and resolve pain points for our clients. Finally, on the heels of the Blackbird review, let’s spend a moment in the performance of our plant-touching cannabis businesses. As we have noted in the past, TILT is continually evaluating available strategic options with respect to our plant-touching businesses in terms of the relative merits of retaining them in our portfolio of businesses versus potentially monetizing their value through divestiture. While at this time, we have no updates to share on the strategic front, we are in the fortunate position that our plant-touching businesses CAC in Massachusetts and Standard Farms in Pennsylvania contributed significant revenue to the positive cash flow to TILT’s overall results in Q4. The narrow geographic footprint of our plant-touching businesses in robust state markets has proven to be a boon to our overall results. In Q4, CAC and Standard Farms, Pennsylvania generated a total of $7.7 million in revenue. This decrease was in part driven by liquidation of elevated levels of inventory at CAC in Q3, which resulted in a challenging sequential revenue comparison from Q3 to Q4. CAC’s introduction of higher yield, high potency strains during Q4 was well received in the marketplace and commanded premium wholesale pricing. For sometime, we have been providing updates on the additional 50,000 square feet of Taunton cultivation and production space, which is fully funded, but has yet to come online. We now anticipate that this additional capacity will be activated in the second-half of 2020, more than doubling our Massachusetts canopy. We continue to work with regulators to secure additional retail licenses for Taunton, plus our two locations in Brockton and Cambridge. The Standard Farms operation in Pennsylvania continues to enjoy high sales velocity for its available inventory, particularly in the concentrate category. In keeping with robust overall Pennsylvania medical market demand dynamics, we fell out literally within hours of announcing new product availability. A relatively deep history in the market has allowed us to build strong long-term relationships with our dispensary partners after opening our doors in Q1 of 2018, as the second grower producer operating in the state. We anticipate continued risk demand for an increasing supply of Standard Farms inventory. This increased level of available Standard Farms product will be driven by incremental greenhouse cultivation capacity, which was activated in late Q2 2019. We also look to leverage revenue synergies across our portfolio of businesses, an initiative, which we have begun to measure and quantify. As part of this initiative, we saw increased coordination between Jupiter and Blackbird sales team yield a 38% increase in quarter-over-quarter across a shared client base, a trend we expect will accelerate. Across TILT, our operating teams are hyper-focused on increasing cash flow and shareholder value. We will continue to support our core assets, seek opportunities to optimize and further entrench our position as the leaders in technology and solutions for cannabis businesses worldwide. And with that, I’ll turn it over to Dave Caloia to detail our Q4 financials.

Thanks, Tim. Q4 of 2019 feels like a lifetime ago at this point, as various states emerge from COVID-19, social distancing, and George Floyd’s tragic passing prompts demonstrations in cities and towns across the U.S. In Q4, TILT’s revenue was $33.4 million, down 27.5% from $46.1 million in Q3. This quarter-over-quarter decrease was largely driven by lower volumes at Jupiter, with the remainder predominantly attributed to CAC, which had challenging sequential comparison first Q3 revenue that include the liquidation of a significant inventory position. Both Jupiter and our plant-touching business remain profitable in Q4. And at this point, both CAC and Standard Farms Pennsylvania build outs, have either been completed or fully funded. Going forward, we’ll be focused on execution and cash generation. Before adjusting for changes in fair value of biological assets and inventory, the company’s gross margin percentage declined from 30.2% in Q3 2019 to 20% in Q4 2019. Contributing to this decline was a decrease in gross margin at Jupiter, reflecting a shift in client mix and seasonal increases in international freight costs ahead of the Chinese New Year. Adjusted EBITDA for Q4 was negative $2.7 million. The swing from Q3’s positive $2.7 million adjusted EBITDA was driven predominantly by lower revenues and volume at Jupiter and our plant-touching businesses. SG&A, active share-based compensation and depreciation and amortization was relatively flat from Q3 to Q4, growing 3.7% from $12.7 million to $13.1 million, while wages and benefits declined 14% quarter-over-quarter from $7.4 million to $6.3 million. This $1 million sequential decrease of wages and benefits is primarily attributable to reductions in workforce at Blackbird and the company’s focus on cost control and efficient operations. Q4 non-operating expenses are primarily attributed to $27.2 million and non-cash impairment charges related to Sante Veritas and Brightside and the loans receivable balance determined to the uncollectible.

Thank you, Dave and Tim, for your remarks today, your leadership – and your leadership over the past year. Earlier today, we announced that Dave will be part of the company effective tomorrow. And that Brad Hoch, Controller at Jupiter Research, will assume responsibilities as an Interim CFO and Corporate Controller, while the company completes its search for a permanent CFO. We are grateful today for his contributions to the company during his tenure dating back to early last year, including his efforts to close our 2019 fiscal year with the audit committee. On behalf of the TILT management team and Board and employees, we wish him all the best in his future endeavors. Thank you, Dave. While Q4 and Q1 have certainly presented obstacles, we have worked hard to stabilize TILT and position our business for long-term growth, commensurate with that of the cannabis industry as a whole. Our ability to maintain our market leadership, despite internal growing pains, an industry-wide headwinds is a testament to your ability to adapt to a change and prevail in the face of adversity. We began this year in a position of strength after our successful $35.8 million debt raise late last year, and we are continuing to build TILT on the back of revenue generated through efficient operations and a sharp focus on our bottom line. We will continue to be there for our clients as a reliable partner, whether we’re bringing new vape technology to market or providing solutions and software, delivery or distribution. While these may be uncertain times, we’re confident that TILT strategy remains bullish of our industry, our business and our ability to deliver strong returns to our shareholders. Thank you.

Thank you, Mark, Tim and Dave for your prepared remarks. We’ll now be happy to answer questions about TILT in our fourth quarter and 2019 year-end results. First, the operator will open the line to any equity analyst questions before we turn the questions over to the ones we’ve received from shareholders via our open webcast question submission system. If you have any questions that you have not asked yet, please ask them through the webcast. For now, operator, are there any questions from our analysts?

Yes, thank you. Our first question has come from the line of Bobby Burleson with Canaccord. Please proceed with your question.

Hey, guys, thanks for taking my question. Can you hear me okay?

Yes, we can hear you, buddy.

Great. So, I guess, my first one is just – it’s interesting the synergies you’re getting with Blackbird and Jupiter. But I’m curious, is there anything else that you could add in terms of non-plant-touching products to your portfolio to complement that success and maybe build on it?

Bobby, are you talking about potentially outside acquisitions or products, specifically of existing brands?

It seems like you’re having a good internal synergy, right, between Blackbird and Jupiter. I believe you referenced that on the call? Or is that not correct?

Yes. No, it absolutely is. I mean, I think…

Okay. So is there something else that you could add to the portfolio internally, that would build on the success you’re having with Jupiter, that would exploit that dynamic?

Yes. I mean, I think, we continue to look for those opportunities wherever they exist. Right – I mean, right now, we’re really focused on the – on creating efficiencies with the brands and products that we currently offer, especially on the heels of the integration between Blackbird, Brightside and Baker. But what we’re finding and what I kind of alluded to in the script is that, our customers and clients appreciate working with like-minded business solutions providers, and they find that in Jupiter and Blackbird. We’re strong operators, we’re attentive to their needs, and we’re here for the long-term, so they can – they know what to expect from both companies. And if there’s an opportunity to expand that both with products from our existing brands or potentially through acquisition efforts in the future, we’re always evaluating those opportunities.

Great, great. And then, obviously, with the disruption from COVID, delivery has been very important. You guys have been an enabler of delivery for some of your customers. I’m thinking about markets like Nevada, et cetera. Some of these customers that took that business in-house and built out their own fleets and has made that investment as successful in terms of what the margins look like. When you look at your customer landscape, are there guys that just aren’t capable of doing that? What would you say your mix of customers are that and they’re capitalized well enough to be able to bring that in-house?

Yes. I mean, I would say like, not everybody is going to be able to do that well, right? I mean, look at mature markets like Pizza. Domino’s, they’ve been able to bring that in-house and it’s effectively become their business, whereas Pizza Hut outsources their deliveries. So I think that, there’s always going to be the potential that people are able to take that in-house, if they determine that as part of their core competency, but not everybody is going to, and that’s where Blackbird steps up and becomes that facilitator. So I think, we’ll continue to see that there will be kind of that mix, right, of groups that want to take it in-house, in which case, we still have a software solution for them, or groups that want to leverage our outsourced transportation and last-mile resources. So either way, we’re prepared to provide that solution.

It sounds net-net, that’s a positive growth driver for you guys. And I’m wondering, when you kind of get through normalized margins there, what does that look like versus the corporate average and normalized margin? And how sticky do you think some of these delivery businesses that you’ve been winning more recently?

Yes. I mean, I think…

Yes. I guess, how do you think this mix shift to delivery is for the industry as well?

I mean, I think that all industries, whether it be a nascent industry like cannabis or more established industry, like normal retail, see value in e-commerce solutions and specifically delivery. And while it may not ever become all of the projected total addressable market, it will make up some mix. And so, we have definitely seen delivery remain sticky on the sort of the heels of states reopening for business that the levels are not as elevated as they were during COVID for very – which is understandable given that customers could only order for delivery in Nevada specifically. But we believe that delivery will be sticky long-term, and we look to sort of other industries to make that assumption.

Okay. And then just the last one for me in Massachusetts, and I think maybe more generally, but I think it’s more relevant Massachusetts for you guys. There’s not a lot of work getting done in terms of government, and I’m just wondering if the Cannabis Control Commission backed up, what’s prognosis for additional licenses that you’re seeking? How much of that pushed out the timetables that you were looking at previous to COVID? And things were opening up and is there a nice resurgence maybe in some of the retail or some of the rec business that you might have been shipping to through cultivation going forward?

Yes, absolutely. I mean, obviously, we saw some softness in our own wholesale efforts through the sort of stay-at-home order in Massachusetts and the shutdown of the adult use dispensaries in that state. As they reopened for curbside, obviously, we saw that business pick back up. And with the sort of reopening of in-store sales, we’re seeing a continuation of that business continue to sort of pick up, like I mentioned. So, we are seeing, obviously, sales increase. On the licensing front, yes, COVID-19 introduced a new slew of potential problems to licensure in Massachusetts, particularly the inability of the CCC to make on-site visits. So, that has created some additional slowness for us in achieving those licenses, as I mentioned, but we’re still very hopeful to see that come to fruition on the back-half of 2020, and look forward to providing updates as we can.

And that includes cultivation expansion, or is that just…?

It does impact – yes. No, it does, because that’s actually specifically what was affected by state regulators’ inability to do an on-site inspection. So, we’re – that created some slowness there. But as that market opens back up, and as people return to work, including regulators, we’ll see that, that business start to move forward.

Okay. Thank you.

Thank you, Bobby.

Our next questions come from the line of Aaron Grey of Alliance Global Partners. Please proceed with your questions.

Hi, guys, thanks for the questions, and Mark, congrats on the official CEO title. First question that I have is just on Jupiter line of business. So just want to think how best think about the revenue increases going forward as a function of your growth within your current customer base and then adding on new customers? You referenced a focus on those larger customers, so I want to know how best to kind of think about that? And then, part two on that, in Jupiter is, kind of how best to think about the market opportunities outside of the U.S., specifically in Canada, where the sale of vape products did become legal December 2019? So any color there would be helpful as well? Thanks.

Yes. Thanks, Aaron. Listen, I mean, as we think about growth opportunities for Jupiter comes in both emerging markets and the growth of those emerging markets. Our big customers that were – that we feel very secure in providing the product to these customers are getting bigger and representing a pretty significant volume. We’re continuing to add different higher level of service, new product offerings for these customers. So not only the growth within our customer base, and then new customers coming online ad recognizing. Since the vape crisis, what we’ve seen in Q1 or beyond the vape crisis is, people aren’t so sensitive to or less sensitive to price, recognizing that they have a quality product, or their brand is represented with quality product, a reliable product. So we – we’ve seen that where people were chasing price before have been coming back to our business and not being so sensitive to the little higher level of price, since Jupiter represents the gold standard. As far as emerging markets outside of the U.S., we’re making great strides on both developing products and developing – addressing the medical market as regulatory environment increases this or increase in regulation as opposed to for medical device and so forth. So we’re exploring all kinds of opportunities with new technologies utilizing in our very talented inside team, as well as third-party, vendors. And very strategically, Jupiter grew in the beginning, because we’re well-positioned on when cannabis was just getting going, well, it’s no different than our international market. We’ve got boots on the ground. We’ve got – we’re really cultivating those relationships early, and our customers and who were getting to work with are recognizing the quality of Jupiter’s products. And So we’re really forging those relationships, which we’re really counting on a tremendous payoff in the future.

All right, great. Thanks for that color. And just to kind of tag on some commentary you made in terms of the price sensitivity on that. Just as we juxtapose that with kind of your current customers getting bigger and bigger, is that so that you feel comfortable, kind of with your gross margin profile? I think it’s been in the low to mid-20s kind of historically. So do you feel kind of comfortable that as you kind of – or able to get that pricing less sensitivity? And also, I’m sure gain efficiencies and potentially get higher margin products with that innovation you spoke to before?

Well, that’s how we combat. It’s those value engineering with new products. We’re creating products with a higher perceived value for less money or lower cost. We’re looking for those opportunities. Supply chain efficiencies also, how we warehouse the product, our distribution points, so forth. We’re looking for those efficiencies, because I’m not going to lie that the bigger our customers get, the more leverage they have over us, the drive cost out. But it’s – we have a – we go about it with our customers as a very mutualistic relationship. But to sustain long-term recognizing that if we’re beating them up or they’re beating us up, it’s not very sustainable long-term. So we go about it as just really forging great relationship with our customers and be able to provide them not only just low-cost, but really address of value, really looking at tremendous value and the relationship.

All right, great. Thanks for that. And then just shifting over, it’s kind of overall kind of Blackbird platform as we look at it, it’s kind of end-to-end offerings through inventory, software end-to-end delivery now that BlackbirdGo. I think one of the big value adds and upside to that is kind of as you’re touching each part of the sale, being able to either offer that to one of your consumers or kind of encompass it all? So can you kind of speak to how – what you’ve seen with COVID and kind of the increase in delivery? How that helps to bring on kind of new consumers potentially offer them the other areas that you’re able to in terms of the Blackbird kind of profile? And how you’re kind of leveraging the situation today and the advantage you have with delivery to potentially introduce to your consumers via the other platforms they have available? Thanks.

Yes, absolutely. Thanks, Aaron. I mean, I would say that through COVID, we saw a substantial increase to the number of registered users on BlackbirdGo.com, specifically in Nevada, where we – where our delivery – our last-mile retail delivery footprint is substantial. And there’s a lot of benefits that brands and retailers can derive from consumers accessing that sight, right? Because we’re – Blackbird is – normalizing and aggregating data all along the supply chain, and ultimately returning that data back to brands and retailers to provide them insights on what consumers want to purchase. And so by sort of expanding the data that we collect, especially through COVID-19, it only sort of pin down those – that analysis even further for brands and retailers that are our customers. So the more people that use the platform, the better it gets. And the better it gets, the more money that our brand partners and retailers make.

Great. Thank you. I appreciate that color. And then just one last one if I could. I appreciate that you guys wouldn’t normally want to give guidance just given the delays that we had today, just kind of how best to think about the puts and takes as we do look at the first quarter with Jupiter and kind of the rebound we saw in vape? And then you’re also going to have your cannabis operations where you had some impact in Massachusetts. So how best think about your consolidated kind of top line portfolio and as well as kind of the EBITDA as well, given that you did mention an increase in cash balance for the march ended quarter. So just want to know, kind of how to think about first quarter high level, if you could offer that? Thanks.

Yes. Yes, absolutely, Aaron, again, I appreciate the question. I mean, we released the Q1 cash balance for a reason, right? We wanted to highlight the fact that we’re focused internally on optimization and efficiencies that are going to organically build our balance sheet and cash position. And so, hopefully, that’s a reflection of that. Obviously, in the fourth quarter, our top line revenue and adjusted EBITDA has impacted significantly by the vape crisis, but that is in the rearview mirror at this point. And so, I mean, honestly, we move on to the next challenge, right, which is COVID-19. And while some of our business through COVID saw an increase, some saw decrease, I think, we’re addressing those challenges adeptly, and looking forward to providing sort of more specifics in a couple of weeks on our Q1 earnings call.

All right, great. Thanks for that and catch up with you again in a couple of weeks.

Awesome. Thanks, Aaron.

Appreciate, Aaron. Thank you.

There are no further questions from TILT Holdings covering analysts. I will now hand the call back over to Joel Milton to take any webcast questions.

Great. Thanks, operator, and thank you, Bobby and Aaron, for all the questions. And thanks to all the other investors who tuned in and I’ll do my best to get through all the questions that came through the webcast. We’ll start, Mark. First one probably for you. Q4 revenue was down. How much of that was related to the vape crisis? And do you think this is behind you/do you expect this to continue into Q1?

Yes. Thanks, Joel. Our – absolutely, our Q4 was related to the vape crisis. Our customers, they kind of manage our inventory levels with forecast, and I think there was just some concern of how long that was going to last or how deep that was going to go. So they just put up – put a temporary pause on ordering and really kind of keeping lower inventory levels. We saw that release after fourth quarter once people got confidence that the crisis was really related to the black market base. And with our customer base, being really diverse, not just highly concentrated in California, but really diverse over 33 markets. We had a really strong rebound. And so we definitely feel that crisis is behind us.

Great. And following up on that two questions that came through that are both related. One, can you talk about the inventory position going into Chinese New Year? And two, have there been any supply chain challenges with manufacturing overseas?

Certainly. With – since we got our financing complete in the end of November, we really took a strong inventory position, anticipating, Chinese New Year we do every year, but it’s only how much we’ve got the capital – enough capital to provide. So we took a very strong inventory position. And what was interesting is, as due to COVID-19 and the disruption in the supply chain, there’s – out of four, five-week beyond the typical four-week disruption from China, we were positioned really well. And as a matter of fact, our competitors – a lot of our competitors became customers of Jupiter. So it was really interesting and it played out really well for us.

Great. Thank you, Mark. Next couple of questions. Tim, I know you sort of answered this with one of the analysts questions, but a couple of questions around the cash balance. Basically, was the growth organic or just an increase in payables? Any concerns about capital will need to do an additional raise? Any other color you can give around that topic, please?

Yes. I mean, as Mark – as I said, we released Q1 cash balance for a reason. And as Mark just alluded to that strategic inventory position is that he and his Jupiter team were sort of able to enter CNY with this year, paid dividends in this – in actual revenue generation. So to answer your question, no, it’s not just a choice to not pay payables, but really is – should highlight the operational sort of prowess that, that Jupiter has and TILT has overall.

Got it. Thank you. And then again, another question, that’s also been sort of talked about on – with the analysts. But more questions around Massachusetts, whether it’s both the expansion of the cultivation facility or the retail stores, someone asked, it seems like the CCC is punishing TILT for the control issue. Someone asked – else asked if the delays related to COVID, any other updates you can give around that topic, please?

Yes, I mean, I definitely wouldn’t. I think there’s obviously a continued slowness because of COVID and some of the challenges that presented as I outlined earlier. I would absolutely not say that the CCC is on the same TILT, but being thorough in their evaluation of some of the affiliate partnerships that we’ve talked about before. So, we feel confident that at some point, we’ll be able to move forward. We’re doing everything on our part that we can to accelerate that. And, again, we’ll look forward to giving more updates as they’re available.

Awesome. And then one, just quick follow-up on that. Is there any additional capital needed for the – whether it’s the expansion or the retail facilities?

No, in fact, these facilities are both fully funded and in most cases completely built out. And in the case where there’s a little bit less – a little bit more CapEx to invest, it’s on essentially fixtures for the dispensaries themselves, but it’s a nominal sort of CapEx investment. So now that these assets are fully funded and ready to be operational.

Perfect. And then staying on the plant-touching assets, a couple of questions around Sante Veritas. Is there an update there? Any update on the write-off, and then also any other future write-downs expected?

So I’ll let Dave touch on the write-down piece. But as it relates to our plants in Canada, I think, we are still actively pursuing a license in Canada. I think, the entire Canadian market has seen some material challenges over the past six months to a year. And so, again, we’re evaluating opportunity and allocating capital based on the opportunity available to us. But the license is – the licensing is still in process. And, as we – again, as we have updates, we’ll – we’re happy to provide them so. And I’ll let David to address the write-down.

Yes. So specifically on Sante Veritas, I think, Tim hit it pretty well. We are still waiting on final license for the Sante Veritas asset. And the Canadian market has just continued to see challenges and headwinds as it’s progressed over the last few years. So we thought it was right to make the adjustment to really reflect what the business looks like now in the context of market that hasn’t developed as we expected it to, as well as the continued delay on the license approval. And the last piece is really related to our Brightside asset. Last year, we wrote up the large majority of it. There were some smaller pieces remaining this year, as TILT becoming a more focused, leaner business as Mark and Tim talked about, that’s one of the business units, where the remaining pieces were just not in a position where we’re going to focus our efforts on. And Tim has also had mentioned that the e-commerce portion of Brightside was rolled into BlackbirdGo platform. And in light of that, we thought it was right to remove those assets and really have a more focused approach with the Blackbird business versus pursuing any future opportunities on what was left on the bright side business. So, we think this is the right thing for the business. I think it’s shows that TILT is continuing to refine its focus and become a strong operator focused on cash generation. And I think these are both efforts in doing that.

Perfect. Thank you. Tim, I know you just sort of touched on this, but maybe wasn’t quite clear enough, because I did get just two or three questions in a row, the similar question. Going back to the cash balance and cash increase. Can we clarify whether or not TILT expecting to need additional capital in the very immediate short-term?

Oh, yes, sorry. I think I probably forgot to answer that part of your question. I apologize. But no, TILT does not anticipate access in the capital markets in the immediate future, but we, obviously, always are evaluating potential opportunities. Today, we have where we’re able to sort of facilitate our business cash needs through our own internal operation.

Perfect. Thank you. Switching gears, Mark, maybe this one for you, a couple of people just asking about the news about the CFO transition, and if there’s any color you want to give there?

Yes. First, I just want to say, we’re grateful for Dave. Dave was really instrumental in 2019 through the transition of every thing, just a monumental task of everything we had to work through. Dave was clearly instrumental, and he has done a great job getting us through our 2019 audit. So we’re just – we’ve been really fortunate. Also, we’re very fortunate, Dave is going to be playing – continue playing a role helping us out through a transition over the next 60 and 90 days. So we’re grateful for that. With Brad Hoch stepping into the role as Interim CFO. As soon as recognizing the transition with Dave, we thought who is going to be the best person to step in. And that was, without a doubt, Brad. Brad is a known commodity. Now here at Jupiter, he has been with us for well over about 18 months. And Brad just proven himself. He has done such a great job with Jupiter, and he is just going to be perfect for this interim role. Brad’s also very intimate with all of the – with all the entities in the different business units. So he is just going to really do a terrific role. And we’re also looking forward to – we’re starting the process to find a permanent CFO candidate, and we’re going to be – we’re going to find ourselves a superstar.

Yes. And Mark I just add, I think you guys are in a phenomenal shape with Brad. I’m going to be on to help support the transition anything the team needs. And I’m looking forward to rooting until from the sidelines and watching the story continue to develop and TILT continue to be a success story with your leadership. So I’m really encouraged and we’re going to be good.

Appreciate that, Dave. Thanks. I don’t think there’s any question that – I don’t think there’s any question that anyone questions, Brad capability, that’s for sure.

Awesome. Mark, one more two-part question for you. One, are there any medical vaporizer devices in the product landscape, or anything on the international front? And then just any other new Jupiter products on the horizon?

Yes. I think, like I mentioned with Aaron’s question, I think, that was Aaron’s question. But we’re definitely – Jupiter is a technology company. And we know that is our future is new technology or new foundational technologies that we can build suites of products around. And the – we were – we introduced a handful of new products at last December at MJBizCon. Those are going to be coming online second-half of this year, the infinity in the queue. More importantly, the technical and our science team that we’ve assembled here at Jupiter, we’re going to start to see some developments coming out of our technical department. So we – we’re not only working on exciting things internally, but we’re aligning ourselves with third parties, that more on the medical front, so we can address the requirement for the outside global markets. But I’m super excited about Jupiter’s future and the products, as well as always looking at product innovation and value engineering to be able to deliver a greater value to both our customers and ultimately, the end users. And what’s also really interesting is, we get wrapped around kind of more focused on – Jupiter has been a vaporization company, but what we’re seeing is new product innovation that is outside of vaporization. Jupiter’s mission is on inhalation, not necessarily just vaporization. So we’re really excited that the – what the future holds on inhalation, not necessarily just vaporization.

Awesome. Thank you. I guess, last question, probably for both of you guys. A combination of a couple of questions. But basically, with everything going on whether it’s vape crisis, COVID, civil unrest, et cetera, how is TILT positioned to combat these challenges weather the storm, or is it susceptible to them?

Yes, I can start. I mean, I would say, at TILT, we’re no stranger to challenges, right, whether those challenges exist internally or from a macro economic market perspective, we’ve weathered some pretty substantial challenges since Mark’s tenure and him asking me to take on the Chief Operating role. So, I’m encouraged by our team’s ability to navigate those challenges and feel very confident that we will be able to going forward.

Yes. I mean – let me add, I couldn’t have any more confidence in the team. We are seasoned operators. We’ve been through in our careers and through we’ve experienced with TILT. We’ve been through all the different seasons, not everyone is prepared for it. We’ve always been prepared for it just -- that’s the way we’ve been operating. So with the perseverance and intelligence of my team, I feel like there’s nothing we can’t handle.

Okay. Well, thank you, Mark and Tim and Dave, and thank you, everyone, for the questions and for tuning in, and Bobby and Aaron for the question. This concludes our webcast for Q4 in 2019 year ended.

Great. Thanks, everybody.

Thanks, everyone. Really appreciate your time.

Thank you. Once again, this does conclude our webcast. You may disconnect at this time. Thank you for your participation and have a great evening.