TILT Holdings Inc. (PNK:TLLTF) Q4 2024 Earnings Call Transcript

TILT Holdings Inc. (PNK:TLLTF) Q4 2024 Earnings Call Transcript March 19, 2025

TILT Holdings Inc. beats earnings expectations. Reported EPS is $-0.0206, expectations were $-0.0253.

Operator: Good afternoon, everyone, and welcome to TILT Holdings Fourth Quarter and Full Year 2024 Conference Call and Webcast. Today’s call is being recorded for replay purposes. A replay of this audio webcast will be available in the Investor section of the company’s website approximately two hours after the completion of the webcast and will be archived for 30 days. I would now like to turn the conference call over to your host today, TILT’s Head of Investor Relations and Corporate Communications, Lynn Ricci. Please go ahead.

Lynn Ricci: Thank you operator. Good afternoon everyone and thank you for joining us. Earlier today we issued our fourth quarter and full year 2024 earnings press release. The release along with our report on Form 10-K is available on the U.S. Securities and Exchange Commission’s website at www.sec.gov, on SEDAR+ at www.sedarplus.ca, and our website at www.tiltholdings.com. Please note that during this webcast, remarks made regarding future expectations, plans, and prospects for the company constitute forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, which we disclose in more detail in our most recent 10-K filed by TILT with the SEC and on SEDAR+.

We remind you that any forward-looking statements represent our views as of today and should not be relied upon as representing our views as of any subsequent date. While we may update such forward-looking statements in the future, we specifically disclaim any obligation to do so, except as otherwise required by law. As of today’s call, we are presenting our financial results in accordance with the United States Generally Accepted Accounting Principles, or GAAP. During the call, management will also discuss certain financial measures that are not calculated in accordance with GAAP. We generally refer to these as non-GAAP financial measures. These measures should not be considered in isolation or as a substitute for TILT’s financial results prepared in accordance with GAAP.

A reconciliation of these non-GAAP measures to their nearest equivalent GAAP measure is available in our earnings press release that is an exhibit to our current report on Form 8-K that we filed with the SEC and SEDAR+ today, and can be found in the Investor Relations section of our website. Joining on today’s call is our CEO, Tim Conder; and our Interim CFO, Brad Hoch. Following the prepared remarks, we will open up the call for questions. During today’s prepared remarks, we may offer metrics to provide greater insight into our business and/or our financial results. Please be advised that we may or may not continue to provide these additional metrics in the future. With that, I will now turn the call over to our CEO, Tim Conder.

Tim Conder: Thank you, Lynn, and good afternoon, everyone. At the start of 2024, we committed to making meaningful changes to better position TILT for long-term success. Throughout the year, we took decisive action to sharpen our focus and streamline our business. And in the fourth quarter of 2024, we announced a strategic review that had been underway of our plant-touching business which has resulted in the signing of a definitive agreement for the purchase of our retail stores in Massachusetts. We expect to divest our remaining assets this year. We believe the confirmation of these divestitures will allow us to unlock the value of Jupiter and expand upon its existing book of business in new territories and with new products and increasing access to mainstream financing options and U.S. Exchanges.

Today, I’ll provide updates on the strategic review, the momentum in our Jupiter business and vision for the future, as well as the steps we are taking to create long-term financial health for the company by addressing balance sheet challenges. First, in February, we announced a definitive agreement to divest our Massachusetts operational retail locations to In Good Health, a private single state Cannabis operator for $2 million. Under the terms of the transaction, we will transition ownership of our Taunton dispensary to In Good Health and shut down our location in Brockton. That shutdown has already taken place. To minimize any short-term disruptions from this divestiture and position both the dispensary and our cultivation for long-term success, In Good Health has also committed to purchase product from our cultivation facility to help ensure operational continuity and to add value to the transaction.

In Good Health has been a great partner through this process and we are excited for what the future holds for our retail team in Taunton. This transaction is currently under state regulatory review, and we expect final approvals for the retail divestiture in the second quarter. The In Good Health transaction leaves cultivation and manufacturing in Massachusetts in Pennsylvania and manufacturing in Ohio. As mentioned, we believe that the active process we pursued in 2024 will result in a transaction in 2025. We hope to be able to share more in the second quarter. With so much expected movement in plant-touching as we work to divest of those assets, I will just briefly cover the performance of those businesses. In the fourth quarter, we made changes to our cost structure and team composition in preparation for divestiture, which had a temporary impact on revenue.

We also experienced continued pressure in the Massachusetts and Pennsylvania markets that we and other cannabis operators have been experiencing for some time and a slower-than-expected rollout of adult use in Ohio. However, I am pleased to see a market pickup to date in Q1. With our changes fully implemented and are focused tailored to accommodate current and future divestiture, revenue is increasing. We are especially pleased with the renewed focus on our in-house brand standard farms and the solventless products that we have brought to market under the Standard Farms banner. Once again, we were awarded best vape at NECANN in Massachusetts for our Live Rosin in a Jupiter Voca Pro Max vaporization device. We have also seen a great deal of success in our vape and concentrate products selling out in Pennsylvania and widely recognized by patients in that market for superior quality.

In Ohio, we expect to launch solventless vape products in Q2 and despite Ohio’s somewhat lackluster transition to adult use, it has continued to be a bright spot for us from a growth and profitability standpoint. The changes that we have implemented to further streamline our plant-touching businesses by optimizing our product portfolio and streamlining our team structure will position these assets to be immediately accretive for the right buyer. I want to emphasize that divestitures are about more than just financial restructuring. They represent a strategic decision to focus on the most actionable opportunity within our portfolio of businesses. And on that note, turning to Jupiter. It should be clear from our strategic review and pending divestitures that we are doubling down on our commitment to Jupiter as we look to reassert ourselves as the leading provider of vape hardware technology in the industry.

Our goal is to redefine the standards for innovation and service in the vaporization space. To achieve this, we are making key investments in our leadership team and internal operations. As mentioned last quarter, we welcomed Ken Yuan and Khalid Al Naser to the Jupiter team. Khalid came in as our SVP of Commercial and we have just elevated his role to Chief Commercial Officer of Jupiter as we rolled Jupiter’s marketing, sales and product teams all under his umbrella. Both Khalid and Ken bring a wealth of experience that better aligns with our future vision for Jupiter, which I will expand on momentarily. These additions over the last few quarters may be subtle changes to the outside world, but critical for us as a company and a team. We are not just refocusing on Jupiter the way it was but transforming Jupiter to reach its full potential.

Ken’s executive background in private equity in C-suite positions and that a Fortune 100 company brings strong supply chain, financial restructuring and strategic operational and leadership experience. Khalid’s strong entrepreneurial and cannabis industry experience brings deep relationships, product and consumer knowledge and a passion for cannabis vaporization and the plant that will inspire our team and customers. As the co-founder of one of the largest vape brands in the U.S., Raw Garden, Khalid has bought and filled more hardware than most people in the world. Some of our competitors see their knowledge of plant extracts as a competitive advantage. However, with Khalid on our team, we believe our ability to support our partners and their innovation teams is unmatched.

Together, Ken and Khalid bring invaluable experience to the Jupiter leadership team as TILT looks to divest plant-touching and turn all our energy to Jupiter. Their contributions will be critical to achieve our long-term vision. In addition, we are continuing to evaluate our cost structure as well as our existing team composition to ensure that we are purpose-built for sustained long-term growth. The vaporization space is evolving rapidly. We must regain our rightful position as the leader of those changes, as Jupiter was in 2017 when it introduced the ceramic heater in partnership with CCELL. With these leadership enhancements and organizational refinements, we believe we are well positioned to accelerate our growth and cement our role as the partner of choice for innovative brands and operators looking to scale their vaporization businesses.

Over the past couple of years, vaporization products have evolved dramatically. The growth of all-in-one vaporizer sales as well as the evolution of input materials and consumer preferences has transformed the vape market. Vaporization remains the number two category behind flower across demographics, but is the number one product category for Gen Z. There are also potentially transformative regulatory changes as a reaction to the move to all-in ones that we must contend with, like the potential banning of single-use batteries. Add in the increasing tariffs in China, we have our hands full. Our job through all of this is to ensure that our customers have the right products at the right price to help their brands win. And given the uncertainty that we face as well as the need to constantly evolve to meet market demands, we have begun to add additional suppliers’ products to our portfolio.

Since 2017, we have been single source with CCELL. They are still our largest supplier by far, but we are looking to other suppliers to fill in gaps in our portfolio create redundancy for our customers and drive innovation through competition. Jupiter is also actively developing new hardware solutions internally that address specific market opportunities and could dramatically expand our business. As we touched on last quarter, one of our key initiatives have been working with the European Union medical device regulation for medical certification of our LMID and QMID devices. Earlier this month, we received correspondence from the notified body that all audit activities were closed and that our application was in final review for certification.

We expect to commercialize the QMID device in Q2 of this year. We are optimistic that we will also hear more on the LMID certification process during the second quarter. The last two years have been focused on rebuilding the company from our decision to explore strategic alternatives to pushing forward with how we envision the future of Jupiter. This has been a major undertaking. However, we believe that we are taking meaningful steps forward and expect by the second half of the year, we will be a narrowly focused business. I want to take a moment to thank our employees for their dedication and hard work during this period of transformation. I also want to express my appreciation to our investors, customers and partners for their continued support.

With that, I’ll let Brad take us through the financial highlights for the quarter and year before returning for closing remarks.

Brad Hoch: Thanks, Tim, and good afternoon, everyone. As a reminder, all results today are presented in U.S. dollars and are on a year-over-year basis unless stated otherwise. Jumping into our results. Revenue for the fourth quarter was $24.6 million compared to $27 million sequentially and $37.5 million in the prior year period. The decrease in year-over-year revenue was primarily driven by Jupiter Hardware business. For Jupiter, revenue increased to $17.4 million compared to $16.8 million in Q3, but decreased from $27.3 million in the year ago period. As a reminder, on our third quarter call, we discussed the number of large Jupiter customers we’re shifting to a direct invoice model with our Asian supplier and Jupiter would be on a commission-based model for those customers.

We expect this will alleviate working capital needs based on import-export insurance challenges as we have previously discussed. This model is generally the reason for the decline in revenue year-over-year. On a full year basis, revenue was $115.6 million compared to $166 million for 2023. The shift in some customers to a commission-based model just mentioned will impact revenue throughout the year. However, we believe it will create a positive impact on Jupiter’s results, and that is the end goal, which create a healthier and more sustainable company moving forward. Gross margin in Q4 increased to 22% compared to 14% in Q3 and 10% in the year ago period. The increase in gross margin was primarily driven by the commission-based model just discussed.

Adjusted gross margin, which excludes noncash inventory adjustments in the fourth quarter increased to 24% compared to 15% in Q3 and 14% in the year ago period. Gross margins on a full year basis increased to 17% compared to 15% in 2023. Operating expenses less noncash adjustments for stock compensation, depreciation and amortization and impairment charges in the fourth quarter decreased 18% to $7.3 million compared to $8.9 million in the year ago period. The year-over-year decline was primarily driven by lower headcount, legal and professional fees, as well as lower administrative expenses as part of our cost reduction initiatives. Operating expenses less noncash adjustments for stock compensation, depreciation and amortization and impairment charges for the full year 2024 decreased 23% to $30.9 million compared to $40 million, reflecting our continued focus on efficiency in the business.

Net loss in the fourth quarter was $41.4 million compared to $12.6 million in Q3 and $22 million in the year ago period. The increase in net loss for the fourth quarter was attributed to intangible asset impairments and fair value measurements. Adjusted EBITDA in Q4 improved to $500,000 compared to a negative $1.6 million in both Q3 and the year ago period. On a full year basis, net loss was $99.7 million compared to a loss of $62.4 million for the full year 2023. Full year 2024 adjusted EBITDA was a loss of $2.2 million compared to $2.1 million in 2023, driven by EBITDA losses in our plant-touching division. Cash used in operations for the fourth quarter was $500,000 compared to cash flow from operations of $2 million in Q3 and $4 million in the year ago period.

At December 31, 2024, TILT had $4.3 million of cash, cash equivalents and restricted cash compared to $3.3 million at December 31, 2023, and notes payable net of discount at December 31, 2024, was $72.1 million compared to $52.2 million at December 31, 2023. I would like to now touch briefly on the plant-touching divestitures underway. We expect the transaction with In Good Health to close in the second quarter, along with other strategic transactions we aim to complete later this year. Our goal is to pay down the trade payable with Smoore in order to strengthen our balance sheet and continue implementing efficiency measures to enhance our core business, Jupiter. We expect as the year progresses and our situation continues to improve we will also seek additional opportunities to address our debt.

We recognize that our debt obligations are unsustainable compared to revenue. We are committed to resolving this issue with collaboration and cooperation of our debt holders who support of our strategic vision, we believe will help assure business continuity. With that, I’ll turn it back to Tim.

Tim Conder: Thank you, Brad. Before we wrap it up, I want to take a moment to acknowledge the resilience and dedication of the entire cannabis community. Despite the challenges our industry continues to face both from a regulatory perspective as well as economically given persistent pressure on the consumer from inflation and rising costs, I’m incredibly proud of our team and brand partners that show up to work every day to continue providing plant-based medicine and recreational products to the community we serve. As we move forward, we are hopeful for legislative advancements, particularly around federal rescheduling and banking reform, which have the potential to unlock new opportunities for operators across the industry.

Specifically for TILT, we believe that our strategic divestiture of our plant-touching assets will position Jupiter for better financing and capital markets opportunities regardless of legislative outcomes, given that our sole remaining business will be focused on vape hardware, ancillary to the cannabis market. We are excited for what lies ahead and remain focused on driving innovation, deepening our partnerships and positioning Jupiter as the leading vape technology provider in the space. Thank you all for your time today, for your continued support and for being part of this journey with us. We look forward to updating you on our progress during our next earnings call. Operator, we will now open it up for questions.

Q&A Session

Operator: [Operator Instructions]. Our first question comes from the line of Aaron Grey with Alliance Global Partners. Please proceed with your question.

Aaron Grey: Hi, good evening and thank you for the questions. So first question for me, I just wanted to talk a little bit on tariff impact. You touched on it briefly in your prepared remarks. So, can you help us understand how we should think about what you can do to mitigate potential tariffs, passing on costs et cetera, and maybe different ways you might be able to — I don’t think — because obviously, a lot is coming over from China there. So just different ways you’re looking to either pass on or absorb any tariff costs, that would be helpful. Thanks.

Tim Conder: Yes, for sure. Thanks for the question, Aaron. So yes, obviously, tariffs are top of mind for everybody given the most recent increases for us, they’ve been top of mind for quite some time. And I think in a previous call, we disclosed that our main supplier, CCELL and Smoore had already set up operations in Indonesia. So for the past year or so, we’ve already been shifting production to Indonesia and a material amount is our — especially of cartridges is already being produced in Indonesia, and we have plans to have essentially the totality of our product portfolio being manufactured out of Indonesia before the end of this year. In the meantime, at this point, we have not raised prices to our customers even with the increase to cost through tariffs. And so that’s sort of where we stand and the work that we’ve been doing to address that preemptively kind of assuming that this would take place pending the results of the election.

Aaron Grey: Okay. Appreciate that color there. I want to stick on Jupiter for a bit here and talk about potential growth opportunities. So you’re expanding beyond the exclusivity with CCELL. Can you talk about where are you now in conversations with other hardware providers? How should we think about the timing of them coming on board and then you having those catalog offerings, if you will, to your client base? And then any other growth opportunities we should think about via innovation and some other things you were speaking around, I think, it was LMID and QMID. So just different growth opportunities we should think about and the timing to where it could impact the P&L in 2025. Thank you.

Tim Conder: Yes, for sure, Aaron. I mean the decision to add additional suppliers like I commented on in the prepared remarks, is really to ensure that we always have the right product for our customer, given their priorities for their brand and their business. And there we’ve identified as a team, certain gaps in our portfolio or in CCELL’s portfolio that we are filling with additional suppliers and then also ensuring redundancy from a product standpoint so that we can always meet the needs of our customers as they scale. So initially, probably the most immediate opportunity that we’ve seen is from a sustainability standpoint as the industry transitions from primarily 510 threaded cartridges to all-in-ones, the sort of single-use battery aspect of those devices is something that we believe really needs to be focused on from a supplier standpoint.

And so that’s sort of been the initial and primary focus for us, but we’ll continue to look for opportunities to ensure that we have a robust portfolio of product offerings for our customer that address their needs, whether that’s from a product differentiation standpoint, pricing standpoint, material standpoint, et cetera. The opportunity for us, again, in meeting our customers’ needs, ultimately helps us to grow our business or maintain the size of our business. So we see it as an opportunity. We haven’t put specific numbers to that opportunity publicly, but it’s absolutely sort of a growth opportunity for our business going forward. As far as the opportunity — sorry, I forgot the second part of your question, Aaron, but as far as the devices that we currently have in review for medical certification in Europe, like we mentioned in the prepared remarks, QMID, which is a pod device that we are doing an exclusive partnership with Curaleaf has completed audit activities last month.

And we believe that we’ll have final certification in the short, short-term, and we’re already preparing production orders to be able to commercialize in the second quarter. This, we believe, is a huge opportunity. It will be the first medically certified handheld device in the European Union. Today, consumers cannot purchase a handheld vaporization device — sorry, patients, I should say, rather, cannot purchase a handheld vaporization device in the EU. So this will be — this will give them the ability to do so. We’re not only excited about sort of expanding offerings to patients there, but obviously, in partnership with Curaleaf who has a substantial footprint in the European market and is – has always proven to be a tremendous commercialization partner.

Aaron Grey: Okay. Great. Appreciate that. And last one for me. I know we touched on it in November or with the last call. But just as we think about the business ex plant-touching, so it sounds like Massachusetts store should come or you saw the one in Cambridge, but that completed in the second quarter, you plan for the rest to be done by end of year. How should we think about the business that’s non-plant-touching going forward as you’re looking to recapitalize — I’m sorry, refinance the debt potential or you alluded to that, but then also have more opportunity in terms of exchange listings and otherwise. How do you then holistically look at the business now once you’ve gotten all the plant-touching assets off your books? Thank you.

Tim Conder: Yes, for sure. So like we said in the prepared remarks, we anticipate that the work that we did in 2024 will lead to the outcome of divestiture for the remaining plant-touching assets sometime this year. We’re in sort of active and ongoing, either conversations or negotiation around those divestitures. So we feel confident in that outcome. The way that we’re looking at the business going forward is with focus on Jupiter and the distribution, innovation and service for customers, commercializing vaporization products across the globe, right? And that is going to be our focus. And we think there is a tremendous amount of opportunity. I think we talked about it in a previous call, but the market size in North America alone, we estimate to be somewhere between — somewhere in the range of $875 million, of which we are only a piece of that.

And so we see a huge opportunity to recapture business and grow our business through new customers, not just in North America but abroad. And so that’s where our focus will be. To address your question about how this may help the company from a financial standpoint or capital market standpoint without plant-touching will no longer be subject to 280E, right? So there are opportunities, whether it’s from a refinancing standpoint or an uplifting standpoint that could be available to us that are currently not available to us today. And so that’s another aspect that underpins our strategic path forward and something that, while it’s in its infancy of exploring, we anticipate we’ll sort of escalate in priority as we complete these divestitures.

Aaron Grey: Okay, great. Thanks for the commentary. I’ll jump back into the queue.

Tim Conder: Awesome. Thanks, Aaron.

Operator: Thank you. Our next question comes from the line of Pablo Zuanic with Zuanic & Associates. Please proceed with your question.

Pablo Zuanic: Yes, thank you. Tim, can you give us a reminder of the plant-touching assets that are left for sale? I mean you have cultivation on processing, I think, Massachusetts, Pennsylvania and processing, I believe in Ohio, but just give a sense of how big are these facilities? How well developed are they? Are they still have a lot of capacity to expand? Are they unutilized. But as part of that also, what gives you confidence that you will be able to close these deals this year. We just saw IIPR let of their tenants walk away from the list in Massachusetts. In Pennsylvania, there’s been also some stress rec could happen if you can expand on that. So just remind me what you have there and the confidence in getting the deals done. Thank you.

Tim Conder: Yes, for sure. Thanks for the question, Pablo. So I mean you covered it, right? The assets, as you described, are cultivation and manufacturing in Massachusetts and a 100,000-ish square-foot facility in Taunton. The Pennsylvania assets are also — our asset is also cultivation and manufacturing in White Haven, Pennsylvania, a little smaller than our Massachusetts asset. And then Ohio is or manufacturing only in Garfield Heights. And so kind of to touch on each asset and for their respective markets, as you mentioned, Massachusetts has been a really challenging market. especially for multistate operators. We’ve seen a retreat from that market from several starting with Trulieve, right? I think 2 years ago at this point.

And — and so it is a challenging market. You also mentioned IIPR with whom we have leases in both Massachusetts and Pennsylvania. What I’d like to say about our partnership with them is they’ve been incredibly supportive of our effort to divest of these assets and have been working in collaboration with us to ensure that, that happens smoothly. So I want to thank them for that support. But yes, the Massachusetts market has been challenging. Our distribution penetration there has not — even though we’ve been in the market for quite some time, is just now starting to grow, which is great to see, so that our door count has expanded materially over the past quarter, but prices continue to drop and competition continues to pop up within that market.

So that’s probably the most challenging state where we operate currently. But given the time in market, the portfolio of products and the quality of the products as well as the low — sort of the low cost structure that we have from an operating standpoint, we believe that for the right buyer, that would be an accretive asset. Pennsylvania, the challenge in Pennsylvania really has been, as you touched on, the slow transition or the non-existing transition from medical to adult use, continue to hear murmurings from the legislature or from the governor’s office that we may see movement in Pennsylvania. But for now, we’re focused on the market as it exists today. That’s a market where we have deep penetration from a distribution standpoint, we’re a 90% plus of all doors in that state.

We have great relationships with multistate operators who command the sort of retail footprint in that market. And we have a team and an asset that has been operational really since the inception of the Pennsylvania medical market. So patients love our products. We’ve had especially quite a bit of success with solventless products, whether that’s in concentrate or vape form and really widely known throughout the state for those products. So we feel confident that the right buyer will appreciate that asset for all of those attributes that I just mentioned. And then in Ohio, while we are stand-alone processing or manufacturing, we have strengthened our relationships with whole flower suppliers to make sure that we have sort of a consistent and quality supply chain for flower that we process to create the products that we sell and distribute into that market.

We’ll be launching solventless products here in the next month or so, depending on state approval to sort of mirror our portfolio in both Massachusetts and Pennsylvania. So the work that we’ve done, the cost cutting that we’ve been able to accomplish and then the sort of portfolio optimization that we’ve — that we have sort of evolved over the past year, leads me to believe that these are great assets for the right buyer. And then as I mentioned, I think maybe in Aaron’s question, the conversations, the interest and the work that we’ve done as a team to divest of these assets with prospective buyers is encouraging and fulsome and I believe will result in a transaction like we mentioned.

Pablo Zuanic: That’s great color, thank you for that. Look, just moving on to Jupiter. Talk about this shift with some of your clients to the fee-based model, direct invoicing from Smoore, I don’t know what percentages or metrics you can give to remind us of how big that is. Is that fit or are you planning to unboard more clients to these directing voicing model, just trying to understand what that goes and what – what’s the REIT [ph] so far in terms of how that’s working out.

Tim Conder: Yes. So we’re constantly evaluating the viability of that model. It has tested the sort of our ability to collaborate directly with our suppliers, CCELL and Smoore. CCELL and its parent company Smoore in Asia. And while we worked through some kinks with those customers that are on that model, it has resulted in a substantial amount of cost savings for our business that have been taken on by the supplier and is also, I think, been beneficial for us in increasing our gross margin related to those customers that we’ve shifted to that commission model. Just to answer your question as to which customers, how many customers and if we anticipate additional customers going to that model, it was sort of an initial group of 5, [indiscernible] it was 5 of our more sizable customers, long-standing relationships.

We’ve since added a couple additional customers in Canada and one in the U.S. We are not currently contemplating the addition of more customers to that model because, again, we’re really evaluating how effective it is primarily for customers, but then obviously also for our business. It makes up a material amount of top line revenue, but the commission structure is such that like I mentioned, we still have a strong — we have a stronger gross margin and I’ve offloaded some of our costs related to the servicing of those customers. Does that answer your question Pablo?

Pablo Zuanic: No. Yes, it does, of course. And just a follow-up. So obviously, that’s been done in accordance with Smoore, CCELL. So it shows the strength of relationship we have with them. I’m trying to understand when you are trying to come out with products from other suppliers and from other and your own proprietary, what is the dialogue like with Smoore in the sense of do they get first refusal on some of those products? And on the flip side, given that you are going with other suppliers potentially and doing your own proprietary products, what can Smoore do on their own? Can they go direct to some people if they want to? I’m just trying to understand, obviously, the relationship seems to be in a great place, but how do these things get worked out? Thank you.

Tim Conder: Yes, absolutely. It’s a great question. I don’t know how much time we have, hopefully, at least an hour, but just in — but as far as the relationship with CCELL and Smoore, from my perspective given the past two years I’ve been in this role it’s stronger than it’s ever been. And that’s because they have proven to be – continue to be a very important partner. And — but it doesn’t mean, obviously, the relationship is without challenges. And so people may not be aware, but a couple of the founding sort of President or GM of CCELL retired about 8 months ago, and they brought in someone to replace them. And then she left just last month, and they brought in a new gentleman to head up the CCELL division. He also heads up a division of their nicotine business.

So he’s been with Smoore, the parent company for I believe over 12 years or really, really soon after inception. He has been fantastic to work with, as has the rest of the — as has the rest of the team. And so the partnership is strong. Unfortunately, right, our previous management built up a sizable payable with CCELL and Smoore that we are now tasked with addressing. And so in collaboration with Smoore and CCELL, that is the thing that we need to address. Brad kind of mentioned that in relation to our debt stack. So that is one of our — the creditors that we are working through working through the impacts on their business and ours to address that. And so — but they have been, I think, supportive partners in doing so. As far as new products are concerned, so using like the QMID, for example, Smoore is the exclusive manufacturer of that product.

That’s a product that was developed in-house and Jupiter, but that we rely on our partnership with Smoore to commercialize with our partner, Curaleaf and ultimately bring to market, leveraging the manufacturing prowess of Smoore. So we have not only that history, but a long history of innovating new products, manufacturing them through Smoore and CCELL and commercializing them in a very sort of material and long-standing way. Arow is probably the most in the L9 is probably the thing that we would point to. Just as a reminder, the L9 was a device developed in-house by Jupiter led by Mark Scatterday, the founder and the exclusive rights of that device reside with Arrow. And they have done a tremendous job since 2017 of building a market for that product and really become one of our largest customers with a Jupiter device manufactured by Smoore.

So we’ll continue to do that. I think that’s one of the sort of unique value propositions that Jupiter has an in-house design, industrial design and engineering team that can bring products with that kind of commercial opportunity to fruition. And as we think about and communicate with our existing supplier about new opportunities or additional suppliers. It’s really done with the customer in mind, right? And so we’re very communicative about that. There’s no desire whatsoever to move away from CCELL, right? It is to make sure that customers don’t have to go to one of our competitors to source a product that may or may — that we don’t have, right. And so I think that’s actually a benefit to our existing supplier is that we keep customers on our platform by having a variety of offerings that make — so they don’t — they can essentially multisource through Jupiter instead of having to multisource through our competitors.

Pablo Zuanic: Thank you. And one very last one, and correct me if I’m wrong here, but the very fast growth that we’ve seen in all-in-ones we would say that the CCELL ecosystem has been slow to adapt to that, and you’ve seen companies like Aspire, ADB gained share because they’ve been quick on all-in ones. First of all, is that true? And are you being able to catch up in that regard, specifically in all-in-ones or too early to expect that change there? Thank you. That’s it.

Tim Conder: Yes. Thanks, Pablo. I would say yes. I mean, the shift to all-in-one started before I came back into my role. But yes, I would say, overall, CCELL may have been slow to that transition. But today, we have a wide variety of all-in-one products including Palm style, which has really been the lion share of the all-in-one growth that we’ve seen, especially in the past year. So at this point, CCELL definitely has a robust portfolio of all-in-one products, palm-style products and is on the verge of now releasing post list all-in-one products that really meet the competition and maybe even exceed where the competition is from an innovation standpoint related to all-in-ones. So we’re excited about those offerings. We’re excited about additional offerings that we may have within our portfolio that address that move to all-in-one, specifically around sustainability and reusability.

But while they may have been — may have not been at the sort of leading that charge. We’re definitely proud up now and taking back market share from our competitors.

Pablo Zuanic: That’s great. Thank you very much, Tim.

Tim Conder: Yes, thank you Pablo.

Operator: Thank you. And we have reached the end of the question-and-answer session. I would like to turn the floor back to Tim Conder for closing remarks.

Tim Conder: Thanks, operator, and I just want to thank everybody who was able to join the call today. Quickly, I just want to give a huge thank you to our team who continues to sort of prove every day and that resilience is a value that TILT and all of these assets embody. I’m very proud to work alongside the individuals, and I get the opportunity to work alongside every day and to work with the customers and partners that we have. Really, my belief in the future of TILT and the future of Jupiter and even in the future of the plant-touching assets that we are on the path to divest is really based on my belief in the teams, the respective teams that put in the work every day. So I just want to say thank you to all of our stakeholders and to everyone for joining the call, and we’ll see you next quarter.

Operator: And ladies and gentlemen, this does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation.