Herbal Dispatch Announces Extension of Convertible Debentures

Rhea-AI Summary

Herbal Dispatch (OTCQB: LUFFF) amended its unsecured convertible debentures, extending the maturity date from January 31, 2026 to January 31, 2028. All other terms remain: 14% annual interest, conversion price CAD$0.06, and threshold price CAD$0.12.

The company obtained a CSE exemption for certain amendment requirements and relied on MI 61-101 exemptions for formal valuation and minority approval as the fair market values were under 25% of market capitalization. Both director-noteholders abstained from the Board vote; no material change report was filed 21 days prior due to ongoing negotiations.

Positive

• Maturity extended to Jan 31, 2028, providing near-term liquidity relief
• Interest rate and conversion price unchanged, preserving existing creditor economics
• CSE exemption obtained, reducing regulatory delays for the Amendment

Negative

• Related-party nature requires MI 61-101 disclosures and reliance on exemptions
• No material change report filed 21 days prior, which may concern minority investors

Vancouver, British Columbia--(Newsfile Corp. - February 3, 2026) - Herbal Dispatch Inc. (CSE: HERB) (OTCQB: LUFFF) (FSE: HA9) ("Herbal Dispatch" or the "Company"), a leading cannabis e-commerce and distribution platform, announces that is has amended the terms of the unsecured convertible debentures as entered into by the Company and each of 0971289 B.C. Ltd., a company controlled by Drew Malcolm ("Mr. Malcolm"), and Herb Dhaliwal ("Mr. Dhaliwal") on May 15, 2020, and December 13, 2023, respectively, as amended (collectively, the "Convertible Debentures").

This final amendment to the Convertible Debentures extends the maturity date from January 31, 2026, to January 31, 2028 (the "Amendment"). All other terms of the Convertible Debentures remain the same with the: (a) interest rate being 14% per annum, the conversion price being CAD$0.06, and the threshold price being CAD$0.12.

Prior to effecting the Amendment, the Company sought and obtained an exemption from the Canadian Securities Exchange (the "CSE") as it relates to certain requirements for convertible debenture amendments as provided for under Policy 6 "Distributions & Corporate Finance" of the CSE.

Related Party Transaction

As both Mr. Malcolm and Mr. Dhaliwal are also directors of the Company, the Amendment constitute "related party transactions" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Under Sections 5.4 and 5.6 of MI 61-101, the Company is required to obtain a formal valuation and minority shareholder approval, respectively, for the Amendment unless exemptions are available.

The Company is relying upon exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(1)(a), respectively, Fair Market Value Not More Than 25 Per Cent of Market Capitalization, on the basis that at the time the Amendment was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for, the Amendment, insofar as it involves interested parties, exceeds 25 per cent of the Company's market capitalization.

The Board of Directors of the Company have unanimously approved the Amendment, with each of Mr. Malcolm and Mr. Dhaliwal abstaining from the resolution approving the Amendment to their respective Convertible Debenture, and no materially contrary view, or abstention was expressed or made by any director in relation to the Amendment.

The Company did not file a material change report in respect of the "related parties" participation in the Amendment at least 21 days before the effective date of the Amendment, as the parties were still in negotiation and discussions as it relates to the Amendment at that time.

ABOUT HERBAL DISPATCH INC.

Herbal Dispatch Inc. is a leading operator of cannabis e-commerce platforms in Canada, delivering quality medical and recreational products to discerning consumers at competitive prices. Its flagship marketplace has earned trust as a premier destination for exclusive access to small-batch craft cannabis and a wide selection of curated cannabis products. The Company is also actively expanding through exports to international markets, positioning it for sustained growth and new revenue opportunities. The Company's common shares trade on the Canadian Securities Exchange under the symbol "HERB".

For further information:
Philip Campbell, CEO and Director
Email: IR@herbaldispatch.com
Telephone: 1-833-432-2420

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this news release, including statements or information containing terminology such as "anticipate", "believe", "intend", "expect", "estimate", "may", "could", "will", and similar expressions constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, that address activities, events, or developments that the Company or a third party expect or anticipate will or may occur in the future, including the Company's future growth, results of operations, performance, and business prospects and opportunities are forward-looking statements.

These forward-looking statements reflect the Company's current beliefs and are based on information currently available to the Company. These statements require the Company to make assumptions it believes are reasonable and are subject to inherent risks and uncertainties.

Actual results and developments may differ materially from the anticipated results and developments discussed in the forward-looking statements as certain of these risks and uncertainties are beyond the Company's control. These risk factors are interdependent and the impact of any one risk or uncertainty on a particular forward-looking statement is not determinable. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected effects on the Company. These forward-looking statements are made as of the date of this news release. Except as required by applicable securities legislation, the Company assumes no obligation to update publicly or revise any forward-looking statements to reflect subsequent information, events, or circumstances.

THE CANADIAN SECURITIES EXCHANGE (THE "CSE") HAS NEITHER APPROVED NOR DISAPPROVED THE CONTENTS OF THIS NEWS RELEASE. NEITHER THE CSE NOR ITS MARKET REGULATOR (AS THAT TERM IS DEFINED IN THE POLICIES OF THE CSE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.NEITHER THE CSE NOR ITS MARKET REGULATOR (AS THAT TERM IS DEFINED IN THE POLICIES OF THE CSE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/282416

FAQ

What change did Herbal Dispatch (LUFFF) make to its convertible debentures on February 3, 2026?

The company extended the debenture maturity from Jan 31, 2026 to Jan 31, 2028. According to the company, all other terms remain the same: 14% interest, conversion price CAD$0.06, and threshold price CAD$0.12.

How does the LUFFF amendment affect potential dilution for shareholders?

Immediate dilution terms were not changed; conversion price stays at CAD$0.06. According to the company, extending maturity delays conversion timing but does not alter the conversion rate that would create dilution if converted.

Why did Herbal Dispatch rely on MI 61-101 exemptions for the LUFFF debenture amendment?

The company relied on MI 61-101 exemptions because the fair market value involved was under 25% of market capitalization. According to the company, this allowed exemption from formal valuation and minority approval requirements.

Did directors with related-party debentures participate in the LUFFF approval vote?

No; the two director-noteholders abstained from the Board resolution approving the Amendment. According to the company, the Board unanimously approved the Amendment with those abstentions and no materially contrary views.

Was a material change report filed before the LUFFF debenture amendment became effective?

No material change report was filed at least 21 days prior to the effective date. According to the company, parties were still negotiating the Amendment during that 21-day period, so the report was not filed earlier.