The Hempshire Group, Inc. announced the execution of a binding USD 1.25 million purchase agreement (the "Purchase Agreement") with European exclusive master distributor Montagnaria Group AG ("Montagnaria"), in respect of MOUNTAIN Smokes destined for Europe and the European Union ("EU"). The Purchase Agreement follows Hempshire's recent receipt of approval to sell MOUNTAIN Smokes in Belgium, resulting in access to the entire EU through member state reciprocity. The Purchase Agreement includes a binding commitment from Montagnaria to purchase a minimum of USD 1.25 million of MOUNTAIN Smokes over the twelve-month period from September 2022 through to August 2023.

All purchase orders under the Purchase Agreement require a payment of 50% of the total purchase order upon issuance, and payment of the balance prior to the order being shipped by Hempshire. The Purchase Agreement was executed to facilitate an orderly and efficient roll-out of MOUNTAIN Smokes across Europe and the EU. Hempshire is working closely with Montagnaria to ensure the MOUNTAIN Smokes product complies with individual member nations' specific 'local' regulations, such as packaging in the local language, and inclusion of any locally required warning labels.

Through its initial test orders in 2021, Montagnaria has been successful in the placement of MOUNTAIN Smokes into approximately 400 retail stores and smoke shops throughout Switzerland. In addition, Montagnaria was a key partner in assisting Hempshire to obtain Belgian government approval to sell MOUNTAIN Smokes in that country, opening the door to the entire EU. Montagnaria will also be arranging European warehousing and fulfillment facilities to facilitate servicing of retailer accounts, convenience stores and smoke shops across Europe, and will be working closely with Hempshire to finalize a European-wide sales and distribution plan.