XS Financial Announces Amendment to Unsecured Convertible Notes, Maturity Date Extension

LOS ANGELES, CA / ACCESSWIRE / June 12, 2023 / XS Financial Inc. ("XS Financial", "XSF" or the "Company") (CSE:XSF)(OTCQB:XSHLF), a leading equipment finance company to the cannabis industry in the United States, announced today that it has amended its unsecured convertible notes ("Notes") in the aggregate principal amount of US$43.5 million, which were originally issued on October 28, 2021 and October 10, 2022.

The Notes were originally scheduled to mature on October 28, 2023, subject to a one-year extension in certain circumstances. Pursuant to the terms of the amendment, the Notes will now mature on either (i) December 31, 2024 (the "December Maturity Date") if the Company secures a written commitment by one or more third party lenders prior to December 31, 2023, providing for the advance of senior indebtedness to the Company in an aggregate minimum principal amount of US$50,000,000; or (ii) otherwise, June 30, 2024. The Company has the option of extending the December Maturity Date for an additional one-year period to December 31, 2025, by providing written notice to the Note holders and making a cash payment equal to 1% of the aggregate principal amount of the Notes outstanding at the date of such notice.

In addition, the amendments (i) provide that the principal and interest outstanding under the Notes may be converted by the holders into subordinate voting shares of the Company at a conversion price equal to the lesser of: (I) CAD$0.12 per share; or (II) 80% of the offering price per security in a "qualified offering" as defined therein (subject to adjustment to the extent that the holders have not achieved an internal rate of return on their investment in the Notes equal to or greater than 12% upon conversion); (ii) provide that interest on the Notes will accrue at the rate of 9.50%per annum, of which 7.00%shall be payable in cash and the remaining 2.50%shall be payable in kind by the issuance of additional Notes, subject to adjustment in certain circumstances; (iii) remove a restriction providing that the ratio of (x) total indebtedness to (y) tangible net worth of the Company, shall not be greater than 4.25 to 1.0, all as further detailed therein; and (iv) and give effect to certain other housekeeping amendments.