UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-56422

TILT Holdings Inc.

(Exact name of registrant as specified in its charter)


British Columbia		83-2097293
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)

2801 E. Camelback Road #180
Phoenix, Arizona		85016
(Address of principal executive offices)		(Zip code)

(623) 887-4990

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2024, there were 346,969,492 common shares, without par value, of TILT Holdings Inc. outstanding, excluding limited partnership units of Jimmy Jang, L.P. exchangeable for 43,821,379 common shares.

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TILT HOLDINGS INC.

INDEX

PART I — FINANCIAL INFORMATION	5

Item 1. Financial Statements (Unaudited)	5

Condensed Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	5

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	6

Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	7

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)	8

Notes to the Condensed Consolidated Financial Statements (Unaudited)	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	42

Item 4. Controls and Procedures	42

PART II — OTHER INFORMATION	44

Item 1. Legal Proceedings	44

Item 1A. Risk Factors	44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3. Defaults Upon Senior Securities	45

Item 4. Mine Safety Disclosures	45

Item 5. Other Information	45

Item 6. Exhibits	46

Signatures	47

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USE OF NAMES AND CURRENCY

In this Quarterly Report on Form 10-Q, unless the context otherwise requires, the terms “we,” “us,” “our,” “Company,” or “TILT” refer to TILT Holdings Inc. together with its wholly owned subsidiaries.

Unless otherwise indicated, all references to “$,” “US$,” “USD,” or “USD$” in this Quarterly Report on Form 10-Q refer to United States dollars, and all references to “C$,” “CAD,” or “CAD$” refer to Canadian dollars.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian and United States (“U.S.”) securities laws (collectively, “forward-looking statements”). Such statements include, but are not limited to, statements with respect to expectations, projections, or other characterizations of future events or circumstances, and the Company’s objectives, goals, strategies, beliefs, intentions, plans, estimates, projections and outlook, including statements relating to the Company’s plans and objectives, or estimates or predictions of actions of customers, suppliers, competitors or regulatory authorities. These statements are subject to certain risks, assumptions and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. The words “believe,” “plan,” “intend,” “estimate,” “expect”, “likely,” “potential,” “proposed,” “scheduled,” “forecast,” or “anticipate,” and similar expressions, as well as future or conditional verbs such as “will,” “should,” “would,” “may,” “might,” and “could” identify forward-looking statements.

Management of the Company has based the forward-looking statements on its current views with respect to future events and financial performance and has made assumptions and applied certain factors regarding, among other things: future product pricing; costs of inputs; the Company’s ability to successfully market its products to its anticipated clients; the Company’s reliance on its key personnel; certain regulatory requirements; the application of federal and state environmental laws; the impact of increasing competition; the Company’s ability to successfully execute its operating plan for the next 12 months; the Company’s ability to obtain additional financing on favorable terms; the Company’s ability to defer principal and interest payments on certain notes; the Company’s ability to successfully negotiate a mutually agreeable waiver and forbearance agreement with certain noteholders; the receipt of applicable regulatory approvals; and the regulatory environments in which the Company operates. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose.

By its nature, forward-looking information is subject to risks and uncertainties, and there are a variety of risk factors, many of which are beyond the control of the Company, and that may cause actual outcomes to differ materially from those discussed in the forward-looking statements. Such factors include, among others, the status of cannabis as a controlled substance under the U.S. Federal Controlled Substances Act; risks related to the enforcement activities by the U.S. Department of Justice; risks related to the Company’s ability to continue as a going concern; reputational risk to third parties; risks associated with banking, financial transactions and anti-money laundering laws and regulations; risks related to federal and state forfeiture laws; the risk of heightened scrutiny by regulatory authorities; risks related to the potential negative impact of regulatory scrutiny on raising capital; risks related to regulatory or political change; risks due to industry immaturity or limited comparable, competitive or established industry best practices; risks related to the uncertainty surrounding existing protection from U.S. federal prosecution relating to cannabis laws; risks related to uncertainty with respect to geo-political disruptions; risks related to regulatory changes in relation to vaporization devices and subsequent impacts to interstate commerce, registrations and revenue reporting requirements, and potential excise tax applicability; risks relating to tax status; risks associated with the Company’s business model; risks related to the Company’s dependency on skilled labor, equipment, parts, components and key inputs; risks related to the reliance on third party suppliers; risks related to adverse economic conditions, labor shortages, supply chain disruptions, inflationary pressures and increasing interest rates; risks that the Company’s actual financial position and results of operations may differ materially from the expectations of the Company’s management; risks related to the costs and obligations relating to the Company’s investment in infrastructure, growth, regulatory compliance and operations; risks related to the

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Company’s dependency on regulatory approvals and licenses to conduct its business; risks related to the potential for changes in laws, regulations and guidelines which could adversely affect the Company’s future business; risks related to a failure on the part of the Company to comply with applicable regulations; risks related to the legal, regulatory and scientific status of cannabis; risks related to the Company’s ability to find suitable candidates and capital necessary to complete strategic alliances or partnerships; risks related to the Company’s ability to successfully identify and execute future acquisitions or dispositions; risks related to indebtedness and the Company’s ability to extend, refinance or repay such indebtedness; risks related to the Company’s ability to develop its products; risks related to the Company’s ability to achieve successful cultivation; risks related to adverse environmental conditions, accidents and labor disputes; risks related to the Company’s ability to turn a profit or generate immediate revenues; risks related to limitations on the permissible ownership of licenses; risks related to constraints on marketing the Company’s products under varying state laws; risks related to the potential results of future clinical research; risks related to the Company’s ability to effectively manage its growth and operations; risks related to the regulation of medical cannabis by the U.S. Food and Drug Administration; risks related to the differing local rules and regulations and the impact this may have on the Company’s ability to expand into new markets; risks related to the protection and enforcement of intellectual property rights and allegations that the Company is in violation of intellectual property rights of third parties; risks relating to access to banking; risks relating to disclosure of personal information to government or regulatory entities; risks related to the potential requirement to disclose personal identifying information to government or regulatory entities; risk that the Company may be forced to litigate or defend its intellectual property rights, or to defend against claims by third parties against the Company relating to intellectual property rights; risks related to data privacy laws, rules and regulations; risks relating to fraudulent activity by employees, contractors and consultants; risks regarding the enforceability of contracts; risk of litigation generally; risks relating to increasing competition in the industry; risks relating to the Company’s ability to secure adequate or reliable sources of funding; risks relating to product recalls; risks relating to reliance on technology systems that may be subject to cyber-attacks or security breaches; risks that the Company’s officers and directors may be engaged in a range of business activities resulting in conflicts of interest; risks that the Company’s officers, directors and other parties may exert significant influence on the Company; risks relating to the Company’s inability to successfully implement adequate internal controls over financial reporting; risks relating to restrictions on entry to the U.S. for the Company’s Canadian individuals; risks relating to the potential that bond requirements and insurance premiums may be economically prohibitive; risks relating to global economic and political instability and conflicts; the risk that the Company’s web presence’s visibility is not limited by geography; risks relating to volatility in the market price of the Company’s securities; risks related to price volatility of publicly traded securities; risks related to dilution of the Company’s securities; risks related to the Company’s securities being currently quoted on the OTCQB; and other factors beyond our control, as more particularly described under the heading “Risk Factors” in the Form 10-K for the fiscal year ended December 31, 2023 filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on March 22, 2024 (the “Form 10-K”) and on the System for Electronic Document Analysis and Retrieval Plus (“SEDAR+”) at www.sedarplus.com.

Readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Although we have attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information and statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such information and statements. Accordingly, readers should not place undue reliance on forward-looking information and statements. The forward-looking information and statements contained herein are presented for the purposes of assisting readers in understanding our expected financial and operating performance and our plans and objectives and may not be appropriate for other purposes.

The forward-looking information and statements contained in this Quarterly Report on Form 10-Q represent our views and expectations as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments may cause our views to change. However, while we may elect to update such forward-looking information and statements at a future time, we have no current intention of doing so except to the extent required by applicable law.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

TILT HOLDINGS INC.

Condensed Consolidated Balance Sheets

(Amounts Expressed in Thousands of United States Dollars, Except for Share Amounts)


	September 30, 2024		December 31, 2023
	(unaudited)		(audited)
ASSETS
Current assets
Cash and cash equivalents	$	2,609	$	2,034
Restricted cash		1,300		1,298
Trade receivables, net		10,332		17,919
Inventories		22,922		32,908
Prepaid expenses and other current assets		2,593		2,115
Total current assets		39,756		56,274

Non-current assets
Property, plant and equipment, net		31,704		51,185
Right-of-use assets – finance, net		1,659		2,242
Right-of-use assets – operating, net		12,045		12,296
Investments		—		1
Intangible assets, net		75,086		84,801
Loans receivable		945		1,066
Deferred tax asset		520		3,657
Goodwill		17,721		17,721
Other assets		3,158		1,945
TOTAL ASSETS	$	182,594	$	231,188

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	47,898	$	49,098
Income taxes payable		2,498		2,564
Deferred revenue		3,734		6,083
Finance lease liability, current portion		1,148		1,203
Operating lease liability, current portion		102		72
Notes payable, current portion		28,063		17,052
Total current liabilities		83,443		76,072

Non-current liabilities
Finance lease liability, net of current portion		2,208		3,041
Operating lease liability, net of current portion		12,728		12,743
Notes payable, net of discount, net of current portion		37,916		35,108
Massachusetts lease liability		41,362		40,774
Other liabilities		536		1,057
TOTAL LIABILITIES		178,193		168,795

Shareholders’ equity
Common shares, without par value, unlimited shares authorized, 390,558,148 and 384,833,546 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively		856,558		856,422
Additional paid-in capital		226,105		225,250
Warrants		5,106		5,835
Accumulated other comprehensive income		966		973
Accumulated deficit		(1,084,334)		(1,026,087)
TOTAL SHAREHOLDERS’ EQUITY		4,401		62,393
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	182,594	$	231,188

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TILT HOLDINGS INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

(Amounts Expressed in Thousands of United States Dollars, Except Share and Per Share Amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues, net	$	26,967	$	44,555	$	91,052	$	128,418
Cost of goods sold		(23,172)		(36,595)		(76,281)		(107,622)
Gross profit		3,795		7,960		14,771		20,796

Operating expenses:
Wages and benefits		4,453		4,707		13,586		16,362
General and administrative		2,691		3,721		9,497		13,870
Sales and marketing		140		175		469		869
Share-based compensation expense (benefit)		131		190		261		(1,875)
Depreciation and amortization		3,856		3,891		11,584		12,732
Impairment loss		—		—		15,740		5,135
Total operating expenses		11,271		12,684		51,137		47,093
Operating loss		(7,476)		(4,724)		(36,366)		(26,297)

Other income (expense):
Interest income (expense)		—		—		3		—
Other income		105		2		819		102
Gain on sale of assets and membership interests		—		483		—		8,884
Unrealized loss on investment		—		(1)		(1)		(6,401)
Loan receivable losses		—		(14)		—		(5,602)
Loss on foreign currency exchange		—		(17)		(4)		(18)
Interest expense		(6,683)		(6,369)		(19,518)		(15,927)
Total other expense		(6,578)		(5,916)		(18,701)		(18,962)
Loss from operations before income tax and non-controlling interest		(14,054)		(10,640)		(55,067)		(45,259)

Income taxes:
Income tax benefit (expense)		1,405		1,977		(3,180)		3,393
Net loss before non-controlling interest		(12,649)		(8,663)		(58,247)		(41,866)
Less: Net loss attributable to non-controlling interest		—		—		—		1,433
Net loss attributable to TILT Holdings Inc.	$	(12,649)	$	(8,663)	$	(58,247)	$	(40,433)

Other comprehensive loss:
Net loss before non-controlling interest	$	(12,649)	$	(8,663)	$	(58,247)	$	(41,866)
Foreign currency translation differences		1		(7)		(7)		(12)
Comprehensive loss before non-controlling interest		(12,648)		(8,670)		(58,254)		(41,878)
Less: Net loss attributable to non-controlling interest		—		—		—		1,433
Comprehensive loss attributable to TILT Holdings Inc.	$	(12,648)	$	(8,670)	$	(58,254)	$	(40,445)


Weighted average number of shares outstanding:
Basic and diluted		389,524,790		379,610,460		387,916,718		378,541,584
Net loss per common share attributable to TILT Holdings Inc.
Basic and diluted	$	(0.03)	$	(0.02)	$	(0.15)	$	(0.11)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TILT HOLDINGS INC.

Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

(Amounts Expressed in Thousands of United States Dollars, Except Share Amounts)


									Accumulated Other						Shareholders'
	Common Shares				Additional				Comprehensive		Accumulated		Non-Controlling		Equity
	Shares		Amount		Paid-in Capital		Warrants		Income (Loss)		Deficit		Interest		Total
Balance - December 31, 2023	384,833,546	$	856,422	$	225,250	$	5,835	$	973	$	(1,026,087)	$	—	$	62,393
Share-based compensation	—		—		17		—		—		—		—		17
Issuance and vesting of restricted share units	2,613,463		90		—		—		—		—		—		90
Comprehensive loss for the period	—		—		—		—		(7)		(9,651)		—		(9,658)
Balance - March 31, 2024	387,447,009	$	856,512	$	225,267	$	5,835	$	966	$	(1,035,738)	$	—	$	52,842
Share-based compensation	—		—		3		—		—		—		—		3
Issuance and vesting (forfeiture) of restricted share units	3,044,399		20		—		—		—		—		—		20
Comprehensive loss for the period	—		—		—		—		(1)		(35,947)		—		(35,948)
Balance - June 30, 2024	390,491,408	$	856,532	$	225,270	$	5,835	$	965	$	(1,071,685)	$	—	$	16,917
Share-based compensation	—		—		106		—		—		—		—		106
Warrants expired	—		—		729		(729)		—		—		—		—
Issuance and vesting (forfeiture) of restricted share units	66,740		26		—		—		—		—		—		26
Comprehensive income (loss) for the period	—		—		—		—		1		(12,649)		—		(12,648)
Balance - September 30, 2024	390,558,148	$	856,558	$	226,105	$	5,106	$	966	$	(1,084,334)	$	—	$	4,401


								Accumulated Other						Shareholders’
	Common Shares			Additional				Comprehensive		Accumulated		Non-Controlling		Equity
	Shares	Amount		Paid-in Capital		Warrants		Income (Loss)		Deficit		Interest		Total
Balance - December 31, 2022	377,515,391	$	858,143	$	225,127	$	796	$	988	$	(963,703)	$	166	$	121,517
Share-based compensation	—		—		31		—		—		—		—		31
Warrants expired	—		—		67		(67)		—		—		—		—
Issuance and vesting of restricted share units	370,744		209		—		—		—		—		—		209
Shares reserved for contingent consideration	—		53		—		—		—		—		—		53
Warrants issued as part of debt modification	—		—		—		5,106		—		—		—		5,106
Comprehensive (loss) income for the period	—		—		—		—		(2)		(4,875)		9		(4,868)
Balance - March 31, 2023	377,886,135	$	858,405	$	225,225	$	5,835	$	986	$	(968,578)	$	175	$	122,048
Share-based compensation	—		—		3		—		—		—		—		3
Issuance and vesting (forfeiture) of restricted share units	642,726		(1,074)		—		—		—		—		—		(1,074)
Shares reserved for contingent consideration	—		(1,287)		—		—		—		—		—		(1,287)
Comprehensive loss for the period	—		—		—		—		(3)		(26,895)		(1,442)		(28,340)
Balance - June 30, 2023	378,528,861	$	856,044	$	225,228	$	5,835	$	983	$	(995,473)	$	(1,267)	$	91,350
Share-based compensation	—		—		26		—		—		—		—		26
Issuance and vesting of restricted share units	2,934,977		164		—		—		—		—		—		164
CGSF/SFNY Divestiture	—		—		—		—		—		—		1,267		1,267
Comprehensive loss for the period	—		—		—		—		(7)		(8,663)		—		(8,670)
Balance - September 30, 2023	381,463,838	$	856,208	$	225,254	$	5,835	$	976	$	(1,004,136)	$	—	$	84,137

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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TILT HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts Expressed in Thousands of United States Dollars)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(58,247)	$	(41,866)
Adjustments to reconcile net loss to net cash provided by operating activities:
Unrealized loss on investments		1		6,401
Gain on sale of assets and other		(717)		(8,133)
Depreciation and amortization		14,611		16,527
Amortization of operating lease right of use assets		2,112		1,887
Payments on operating lease liability		(1,845)		—
Change in allowance for doubtful accounts		(117)		328
Deferred tax		3,137		(3,947)
Share-based compensation expense (benefit)		261		(1,875)
Accretion of debt discount		1,246		1,466
Loan receivable losses		—		5,602
Impairment loss and loss on disposal of assets		15,740		5,135
Inventory adjustments		498		5,831
Non-cash interest expense		12,216		4,255
Net change in working capital items:
Trade receivables, net		7,704		5,394
Inventories		7,172		8,644
Prepaid expenses and other current assets		(34)		(1,185)
Accounts payable and accrued liabilities		(1,004)		(1,788)
Income tax payable		(66)		435
Deferred revenue		(2,349)		(1,720)
Net cash provided by operating activities		319		1,391

Cash flows from investing activities:
Purchases of property, plant, and equipment		(572)		(351)
Proceeds from sale of property, plant and equipment		—		15,000
Repayment of loan receivable, net of advances		121		(2,806)
Proceeds from CGSF/SFNY Divestiture		—		1,400
Net cash (used in) provided by investing activities		(451)		13,243

Cash flows from financing activities:
Payments on financing lease liability		(889)		(2,348)
Repayments on notes payable and Massachusetts Lease Liability		—		(14,825)
Repayments on Revolving Facility		(64,613)		(94,870)
Debt issuance costs		—		(1,507)
Proceeds from Revolving Facility		63,219		91,283
Proceeds from 2024 Standard Farms Loan		3,000		—
Proceeds from notes payable and Massachusetts Lease Liability		—		4,000
Proceeds from Employee Retention Credit		—		2,930
Net cash provided by (used in) financing activities		717		(15,337)

Effect of foreign exchange on cash and cash equivalents		(8)		(14)

Net change in cash and cash equivalents and restricted cash		577		(717)

Cash and cash equivalents and restricted cash, beginning of year		3,332		3,500

Cash and cash equivalents and restricted cash, end of year	$	3,909	$	2,783

Supplemental disclosures of non-cash investing and financing activities:
Increases to right-of-use assets related to Ohio facility	$	80	$	—
Increases to operating lease liability related to Ohio facility	$	80	$	—
Decrease in inventory related to the 2024 Standard Farms Loan	$	2,316	$	—
Increase in other assets related to the 2024 Standard Farms Loan	$	1,654	$	—
Increase in notes payable, discount related to the 2024 Standard Farms Loan	$	662	$	—
2023 Refinanced Notes interest paid-in-kind	$	11,878	$	—
Increases to right-of-use assets related to Pennsylvania Transaction	$	—	$	11,974
Increase to operating lease liability related to Pennsylvania Transaction	$	—	$	11,880
Reclassification from accounts payable and accrued liabilities to notes payable related to 2023 New Notes (see Note 10)	$	—	$	8,260
Warrants issued related to 2023 Notes (equity classified)	$	—	$	5,106
Noteholder representative fee related to 2023 Refinanced Notes	$	—	$