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Pyxus International, Inc.

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FY2020 Annual Report · Pyxus International, Inc.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED March 31, 2020

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

EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______.

001-13684

(Commission File Number)

OLD HOLDCO, INC.
(Exact name of registrant as specified in its charter)

Virginia

(State or other jurisdiction of incorporation)

 8001 Aerial Center Parkway

Morrisville, North Carolina

(Address of principal executive offices)

54-1746567

(I.R.S. Employer Identification No.)

27560

(Zip Code)

(919) 379-4300
(Registrant’s telephone number, including area code)

Pyxus International, Inc.
(Former Name)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Exchange On Which Registered

Common Stock (no par value)

(1)

(1)

(1) On June 30, 2020, the New York Stock Exchange filed a Notification of Removal from Listing and/or Registration under Section 12(b) of the Securities Exchange Act of
1934 on Form 25 with the Securities and Exchange Commission with respect to the registrant’s common stock (no par value) which became effective to strike the registrant’s
common stock from listing on the New York Stock Exchange 10 days thereafter and will become effective to withdraw the registrant’s common stock from registration under
Section 12(b) of the Act 90 days thereafter (or such shorter period as the Securities and Exchange Commission may determine).

Securities registered pursuant to Section 12(g) of the Act: Common Stock (no par value)

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐☐ No ☒☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐☐ No ☒☒   

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 transaction 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  has  filed  a  report  on  and  attestation  to  its  management’s  assessment  of  the  effectiveness  of  its  internal  control  over  financial  reporting  under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒☒

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 September 30, 2019, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $109.7 million based on the closing price of
the common stock as reported on the New York Stock Exchange.

As of May 31, 2020, there were 9,190,562 shares of common stock outstanding (no par value), excluding 785,313 shares owned by a wholly owned subsidiary.

                                           
                                                                
DOCUMENTS INCORPORATED BY REFERENCE
None

Part I

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

Part II

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

Part III

Item 10.

Item 11.

Item 12.

Item 13.

Item 14.

Part IV

Item 15.

Item 16.

Table of Contents

Preliminary Note
Forward-Looking Statements

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Selected Financial Data

Management's Discussion and Analysis of Financial Condition and Results of Operations

Quantitative and Qualitative Disclosures About Market Risk

Financial Statements and Supplementary Data

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Controls and Procedures

Other Information

Directors, Executive Officers, and Corporate Governance

Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accounting Fees and Services

Exhibits, Financial Statement Schedules

Form 10-K Summary

Signatures

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PRELIMINARY NOTE

This Form 10-K is being filed by Old Holdco, Inc. which was formerly named “Pyxus International, Inc.” (the “Company,” “Pyxus,” “we” or “us,” which terms,
when  used  with  respect  to  periods  commencing  after  the  effectiveness  of  the  Plan  (as  defined  below),  would  include  New  Pyxus  (as  defined  in  "Note  28.
Subsequent  Events" to  the  "Notes  to  Consolidated  Financial  Statements"),  unless  the  context  would  indicate  otherwise.  This  Form  10-K  is  being  signed
concurrently with the effectiveness of the Plan.

Bankruptcy Proceedings
On June 15, 2020 (the "Petition Date"), the Company (then named Pyxus International, Inc.) and its then subsidiaries Alliance One International, LLC, Alliance
One North America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11
Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”) to implement a prepackaged chapter 11 plan of reorganization (“Prepack Plan”) that effectuates a financial restructuring of the Company’s secured debt
(the “Restructuring”). The Company commenced solicitation of the Prepack Plan with a related disclosure statement (“Disclosure Statement”) on June 14, 2020.
The Chapter 11 Cases have been administered jointly under the caption In re Pyxus International, Inc., et al. On August 21, 2020, the Bankruptcy Court issued an
order (the “Confirmation Order”) confirming the Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) filed by the Debtors in the Chapter
11 Cases. This Form 10-K is being signed concurrently with the effectiveness of the Plan. These and other related matters are discussed in greater detail in the
"Note 28. Subsequent Events" to the "Notes to Consolidated Financial Statements" for additional information.

FORWARD-LOOKING STATEMENTS

Readers are cautioned that the statements contained in this report regarding expectations of our performance or other matters that may affect our business, results
of operations, or financial condition are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which
are  based  on  current  expectations  of  future  events,  may  be  identified  by  the  use  of  words  such  as  “strategy,”  “expects,”  “continues,”  “plans,”  “anticipates,”
“believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets,” and other words of similar meaning. These statements also may be identified by the fact
that they do not relate strictly to historical or current facts. If underlying assumptions prove inaccurate, or if known or unknown risks or uncertainties materialize,
actual results could vary materially from those anticipated, estimated, or projected. Some of these risks and uncertainties include

•

•

•

risks  and  uncertainties  relating  to  the  Chapter  11 Cases,  including  but  not  limited  to:  whether  our  leaf  tobacco  customers,  farmers  and  other  suppliers
might lose confidence in us as a result of the Chapter 11 Cases and may seek to establish alternative commercial relationships, whether, as a result of the
Chapter  11  Cases,  foreign  lenders  that  have  provided  short-term  operating  credit  lines  to  fund  leaf  tobacco  operations  at  the  local  level  may  lose
confidence in us and cease to provide such funding, and uncertainty and continuing risks associated with our ability to achieve our goals and continue as a
going concern;

risk and uncertainties related to our leaf tobacco operations, including changes in the timing of anticipated shipments, changes in anticipated geographic
product sourcing, changes in relevant capital markets affecting the terms and availability of short-term seasonal financing, political instability, currency
and  interest  rate  fluctuations,  shifts  in  the  global  supply  and  demand  position  for  tobacco  products,  changes  in  tax  laws  and  regulations  or  the
interpretation of tax laws and regulations, resolution of tax matters, adverse weather conditions, the impact of disasters or other unusual events affecting
international commerce, and changes in costs incurred in supplying products and related services;

risks and uncertainties related to the COVID-19 pandemic, including possible delays in shipments of leaf tobacco, including from the closure or restricted
activities at ports or other channels, disruptions to our operations or the operations of suppliers and customers resulting from restrictions on the ability of
employees  and  others  in  the  supply  chain  to  travel  and  work,  border  closures,  determinations  by  us  or  shippers  to  temporarily  suspend  operations  in
affected  areas,  whether  our  operations  that  have  been  classified  as  “essential”  under  various  governmental  orders  restricting  business  activities  will
continue  to  be  so  classified  or,  even  if  so  classified,  whether  site-specific  health  and  safety  concerns  related  to  COVID-19  might  otherwise  require
operations  at  any  of  our  facilities  to  be  halted  for  some  period  of  time,  negative  consumer  purchasing  behavior  with  respect  to  our  products  or  the
products of our leaf tobacco customers during periods of government mandates restricting activities imposed in response to the COVID-19 pandemic, and
the extent to which the impact of the COVID-19 pandemic on our operations and the demand for our products may not coincide with impacts experienced
in  the  United  States  due  to  the  international  scope  of  our  operations,  including  in  emerging  markets  that  have  only  recently  experienced  COVID-19
outbreaks; and

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•

risks and uncertainties related to our new business lines, including with respect to the impact of regulation associated with new business lines, including
the  risk  of  obtaining  anticipated  regulatory  approvals  for  cannabis  products  in  Canada  and  for  nicotine  e-liquids  products  in  the  United  States,
uncertainties regarding the regulation of the production and distribution of industrial hemp products and continued compliance with applicable regulatory
requirements,  uncertainties  with  respect  to  the  development  of  the  industries  and  markets  of  the  new  business  lines,  consumer  acceptance  of  products
offered by the new business lines, uncertainties with respect to the timing and extent of geographic and product-line expansion, the impact of increasing
competition in the new business lines, uncertainties regarding the viability of facilities expansions, the possibility of delays in the completion of facilities
expansions and uncertainties regarding the potential production yields of new or expanded facilities, as well as the progress of legalization of cannabis for
medicinal and adult recreational uses in other jurisdictions.

A further description of these risks, uncertainties, and other factors can be found in the “Risk Factors” section of this annual report on Form 10-K and in our other
filings with the Securities and Exchange Commission. We do not undertake to update any forward-looking statements that we may make from time to time.

Item 1. Business

PART I

Our company changed its name from Alliance One International, Inc. to Pyxus International, Inc. on September 12, 2018. Pyxus International, Inc. ("we," "Pyxus"
or the "Company") is a Virginia corporation with consolidated revenues of approximately $1.5 billion for the year ended March 31, 2020. As the context requires,
"we" or the "Company" also includes the consolidated subsidiaries of Pyxus International, Inc.

Bankruptcy Proceedings
On June 15, 2020 (the "Petition Date"), the Company (then named Pyxus International, Inc.) and its then subsidiaries Alliance One International, LLC, Alliance
One North America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11
Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”) to implement a prepackaged chapter 11 plan of reorganization (“Prepack Plan”) that effectuates a financial restructuring of the Company’s secured debt
(the “Restructuring”). The Company commenced solicitation of the Prepack Plan with a related disclosure statement (“Disclosure Statement”) on June 14, 2020.
The Chapter 11 Cases have been administered jointly under the caption In re Pyxus International, Inc., et al. On August 21, 2020, the Bankruptcy Court issued an
order (the “Confirmation Order”) confirming the Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) filed by the Debtors in the Chapter
11 Cases. This Form 10-K is being signed concurrently with the effectiveness of the Plan. These and other related matters are discussed in greater detail in the
"Note 28. Subsequent Events" to the "Notes to Consolidated Financial Statements" for additional information.

Company Overview
Pyxus  provides  responsibly  produced,  independently  verified,  and  traceable  agricultural  products,  ingredients  and  services  to  businesses  and  customers.
Headquartered  in  the  Research  Triangle  Park  region  of  North  Carolina,  we  contract  with  growers  across  five  continents  to  help  them  produce  sustainable,
compliant crops.

Historically,  Pyxus’  core  business  has  been  as  a  tobacco  leaf  merchant,  purchasing,  processing,  packing,  storing  and  shipping  tobacco  to  manufacturers  of
cigarettes and other consumer tobacco products throughout the world. Through our predecessor companies, we have a long operating history in the leaf tobacco
industry with some customer relationships beginning in the early 1900s. In an increasing number of markets, we also provide agronomy expertise for growing leaf
tobacco. Our contracted tobacco grower base often produces a significant volume of non-tobacco crop utilizing the agronomic assistance that our team provides.
Pyxus is working to find markets for these crops as part of our ongoing efforts to improve farmer livelihoods and the communities in which they live.

We are committed to responsible crop production that supports economic viability for the grower, provides a safe working atmosphere for those involved in crop
production and minimizes  negative  environmental  impact.  Our agronomists  maintain  frequent  contact  with growers prior to and during the growing and curing
seasons to provide technical assistance to improve the quality and yield of the crop. Throughout the entire production process, from seed through processing and
final  shipment,  our  SENTRISM traceability  system  provides  clear  visibility  into  how  products  are  produced  throughout  the  supply  chain,  supporting  product
integrity.

As announced in February 2018, we have begun a strategic process designed to diversify the Company's products and services by leveraging our core strengths in
agronomy and traceability. In general, our diversification strategy focuses on products that

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are value-added, require some degree of processing and play well to our strengths as well as offering higher margin potential than our core tobacco leaf business.

In support of this strategy, the Company has made the following investments over the past five years:

•

•

•

•

•

On  August  21,  2017,  the  Company  completed  a  purchase  of  a  40%  interest  in  Nicotine  River,  LLC  ("Nicotine  River"),  a  manufacturer,  retailer  and
wholesale supplier of compounds used for e-liquid production.

On December 18, 2017, a subsidiary of the Company completed a purchase of a 40% interest in Criticality LLC ("Criticality"), a North Carolina-based
industrial  hemp  company  to  engage  in  cannabidiol  ("CBD")  extraction  and  other  applications  for  industrial  hemp.  On  April  22,  2020,  that  subsidiary
completed  a  purchase  of  the  60%  interest  in  Criticality  not  owned  by  the  subsidiary,  and  as  a  result  Criticality  became  a  wholly  owned  subsidiary  of
Pyxus.

On January 25, 2018, a Canadian subsidiary of the Company acquired a 75% equity position in Canada’s Island Garden Inc. (“Figr East”). Figr East is
fully licensed to produce and sell medicinal cannabis in the Canadian province of Prince Edward Island. We acquired an additional 18% and 1.2% equity
interest in Figr East on March 22, 2019 and October 15, 2019, respectively.

On January 29, 2018, a Canadian subsidiary of the Company acquired an 80% equity position in Figr Norfolk, Inc. ("Figr Norfolk" and, together with Figr
East "Figr"), formerly known as Goldleaf Pharm Inc., which is licensed to produce cannabis in the Canadian province of Ontario.

On April 2, 2018, we purchased a 51% interest in Humble Juice, LLC ("Humble Juice"), a manufacturer and distributor of flavored e-liquids. On August
14, 2020, we acquired an additional  14.3% interest  in Humble Juice Co, LLC ("Humble"), increasing the Company's ownership interest  in Humble to
65.3%.

To support these business lines, we have broad geographic processing capabilities, a diversified product offering, an established customer base for our core leaf
tobacco  business  and  a  growing  customer  base  for  our  new  business  lines.  As  certain  of  these  diversification  investments  are  accounted  for  under  the  equity
method and others were made only recently and involve early-stage businesses, our core leaf tobacco operations continued to account for almost all of our revenues
for the fiscal year ended March 31, 2020.

Our consolidated operations are managed and reported in ten operating segments that are organized by product category and geographic area and aggregated into
three reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. The Other Products and
Services segment includes Global Specialty Products ("GSP") - Cannabis, GSP - E-liquids, GSP - Hemp, GSP - Other, and Value-Added Agriculture Products.

As  of  March  31,  2020,  we  did  not  have  a  controlling  interest  in  Criticality,  Nicotine  River,  and  Purilum,  LLC  ("Purilum"),  a  50%  owned  U.S.  company  that
develops, produces, and sells consumable e-liquids and e-liquid components to manufacturers and distributors of vapable products. During the periods reported in
the financial statements included in this annual report on Form 10-K, the results of Criticality, Nicotine River, and Purilum are not consolidated in our financial
results reported in this annual report on Form 10-K and we accounted for our respective interests in these businesses during those periods under the equity method
of accounting. Accordingly, our interest in their financial results for those periods, along with our interests in the financial results of several unconsolidated joint
ventures with leaf tobacco operations, are reflected as “Income from unconsolidated affiliates, net” in our Consolidated Statement of Operations.

Pyxus Employees
Pyxus' consolidated entities employed approximately 3,385 persons, excluding seasonal employees, in our worldwide operations at March 31, 2020. We consider
the Company's employee relations to be satisfactory.

Government Regulation and Environmental Compliance
See Item  1A.  “Risk  Factors  -  Risks  Relating  to  the  Tobacco  Industry” for  a  discussion  of  additional  government  regulation.  Currently,  there  are  no  material
estimated capital expenditures related to environmental control facilities. In addition, there is no material effect on capital expenditures, results of operations or
competitive position anticipated as a result of compliance with current or pending federal or state laws and regulations relating to protection of the environment.

Available Information
Our  website  is  www.pyxus.com.  Our  Annual  Report  on  Form  10-K,  quarterly  reports  on  Form  10-Q,  current  reports  on  Form  8-K,  and  amendments  to  those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at http://investors.pyxus.com as soon as reasonably
practicable after we file such material with, or furnish it to, the U.S. Securities and Exchange Commission ("SEC"). The information contained on our website shall
not be deemed part of this

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annual report on Form 10-K. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC.

Following the effectiveness of the Plan, the common stock of New Pyxus will be deemed to be registered under Section 12 of the Securities Exchange Act of 1934,
as amended, pursuant to Rule 12g-3 thereunder. Accordingly, following the effectiveness of the Plan, New Pyxus will be obligated to file with the SEC annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other filings. New Pyxus intends to make such filings available free of
charge at http://investors.pyxus.com as soon as reasonably practicable after it files such material with, or furnishes it to the SEC.

Leaf Tobacco Operations
Our leaf tobacco revenues are primarily comprised of sales of processed leaf tobacco and fees charged for processing and related services to these manufacturers of
tobacco products. Processing and other revenues are approximately 5% of our total revenues. Our leaf tobacco operations deal primarily in flue-cured, burley, and
oriental tobaccos that are used in international brand cigarettes. Leaf tobacco revenues are primarily comprised of sales of processed tobacco and fees charged for
processing and related services to these manufacturers of tobacco products.

We purchase tobacco in more than 35 countries and ship to approximately 90 countries. We primarily purchase tobacco directly from suppliers. In those instances,
we assume the risk of matching the quantities and grades required by our customers to the entire crop we must purchase under contract. Our arrangements with
suppliers vary depending on our predictions of future supply and demand, local historical practice and availability of capital. In some locales, we purchase seeds,
fertilizer, pesticides, and other products related to growing tobacco, which represent prepaid inventory, and issue them to suppliers with whom we have purchase
contracts. Under longer-term arrangements with suppliers, we may advance or guarantee financing on suppliers' capital assets, which are also recovered through
the delivery of tobacco to us by our suppliers.

Our agronomists maintain frequent contact with suppliers prior to and during the growing and curing seasons to provide technical assistance to improve the quality
and yield of the crop. As a result of various factors including weather, not all suppliers are able to settle the entire amount of advances through delivery of tobacco
in a given crop year. Throughout the crop cycle, we monitor events that may impact the suppliers’ ability to deliver tobacco. If we determine we will not be able to
recover the original cost of the advances with deliveries of the current crop, or future crop deliveries, the unit cost of tobacco actually received is increased when
unrecoverable costs are within a normal range which is based on our historical results or expensed immediately when they are above a normal range based on our
historical results. We account for the unrecoverable costs in this manner to ensure only costs within a normal range are capitalized in inventory and costs that are
above a normal range are expensed immediately as current period charges.

We process tobacco to meet each customer's specifications as to quality, yield, chemistry, particle size, moisture content, and other characteristics. Unprocessed
tobacco  is  a  semi-perishable  commodity.  The  processing  of  leaf  tobacco  facilitates  shipping  and  prevents  spoilage  and  is  an  essential  service  to  our  customers
because  the  quality  of  processed  leaf  tobacco  substantially  affects  the  quality  of  the  manufacturer’s  end  product.  Accordingly,  we  have  located  our  production
facilities in proximity to our principal sources of tobacco. We process tobacco in Company-owned and third-party facilities around the world, including Argentina,
Brazil, China, Zimbabwe, Jordan, Guatemala, India, Tanzania, the United States, Malawi, Thailand, Indonesia, Macedonia, Kenya, and Turkey. These facilities
encompass  all  leading  export  locations  of  flue-cured,  burley,  and  oriental  tobaccos.  In  addition,  we  have  entered  into  contracts,  joint  ventures  and  other
arrangements for the purchase of tobacco grown in substantially all other countries that produce export-quality flue-cured and burley tobacco.

During the three years ended March 31, 2020, 2019, and 2018, approximately 15%, 17%, and 25%, respectively, of our purchases of leaf tobacco were from the
Leaf - North America operating segment and approximately 85%, 83%, and 75%, respectively, were from the Leaf - Other Regions operating segment. Within the
Leaf - Other Regions operating segment, approximately 67%, 67%, and 61% of our total purchases for the three years ended March 31, 2020, 2019, and 2018,
respectively, were from China, Brazil, Turkey, and the Africa Region. We have entered into contracts, joint ventures and other arrangements for the purchase of
tobacco grown in substantially all other countries that produce export-quality flue-cured and burley tobacco.

Key Customers
In our leaf tobacco business, our primary customers are major consumer tobacco product manufacturers. Including their respective affiliates, accounting for more
than 10% of our revenues were each of Philip Morris International, Inc. ("PMI") and China Tobacco International, Inc. for the years ended March 31, 2020 and
2018,  and  PMI,  China  Tobacco  International,  Inc.,  and  Imperial  Brands,  PLC  for  the  year  ended  March  31,  2019.  In  the  year  ended  March  31,  2020,  Pyxus
delivered approximately 35% of its tobacco sales to customers in Europe and approximately 14% to customers in the United States. The remaining sales of leaf
tobacco are to customers located in Asia, Africa, and other geographic regions of the world.

7

Competition
The leaf tobacco industry is highly competitive and competition is based primarily on the price charged for products and services as well as the merchant's ability
to meet customer specifications in the buying, processing, residue compliance and financing of tobacco. The Company is one of only two global, publicly held leaf
tobacco merchants. We hold a leading position in most major tobacco growing regions in the world, including the principal export markets for flue-cured, burley
and oriental tobacco. In addition to the primary global independent leaf tobacco merchants, there are a number of other independent global, regional or national
competitors. Local independent leaf merchants with low fixed costs and overhead also supply cigarette manufacturers. In many areas, total leaf tobacco processing
capacity exceeds demand.

Seasonality
The purchasing and processing activities  of our leaf  tobacco  business are seasonal. Tobacco purchases vary by market  and tobacco variety. Flue-cured  tobacco
grown  in  the  North  America  is  purchased,  processed,  and  marketed  generally  during  the  five-month  period  beginning  in  July  and  ending  in  November.  North
American burley tobacco is purchased, processed, and marketed usually from late November through January or February. Tobacco grown in South America is
usually purchased, processed, and marketed from January through July and in Africa from April through September. Other tobacco markets around the world have
similar purchasing periods, although at different times of the year. During the purchasing, processing and marketing seasons, inventories of unprocessed tobacco,
inventories of redried tobacco, and trade accounts receivable normally reach peak levels in succession. Current liabilities, particularly advances from customers,
and short-term notes payable to banks, normally reach their peak in this period as a means of financing the seasonal expansion of current assets. At March 31, the
end of our fiscal year, the seasonal components of our working capital reflect primarily the operations related to foreign-grown tobacco.

Research and Development
We routinely cooperate with both our customers and the manufacturers of the equipment used in our leaf processing facilities to improve processing technologies.
However, no material amounts are expended for research and development, and we hold no material patents, franchises, or concessions.

Track and Trace Technology
In connection with its leaf tobacco operations, the Company uses a proprietary “track and trace” system, which we have branded as the SENTRISM platform, which
we believe provides transparency into the lifecycle of agricultural products by monitoring information and obtaining data related to the growth, cultivation, harvest,
processing, formulation, testing, and release of individual batches of products. By obtaining data on products at each stage of the supply chain, SENTRISM permits
proactive decision-making for both the Company and its leaf tobacco customers. The key features of the SENTRISM platform include:

•

•

•

•

•

Product Tracking: Data collection and tracking at various stages in the product lifecycle permits customers and consumers to gain an understanding of
where products originate from, how they were produced, and the product testing data in order to understand ingredients and the product journey.

Control and Visibility: With access to increased data regarding the supply chain, we are able to monitor quality control at various points in the product
route to market.

Sustainability Commitments: SENTRISM incorporates visibility into the practices and procedures of the product supply chain.

Lot Number Tracking: We are able to track specific products through the manufacturing process by lot number with full visibility to our customers. This
permits us and our customers to discover more about the product, its origin and other information relevant to quality control and product transparency.

Agronomic Services: SENTRISM utilizes an experienced team of agronomists to track data and insights regarding growing practices.

Operations of New Business Lines
The new business lines encompass both consolidated operations (which for the fiscal years ended March 31, 2020 and 2019 included the cannabis and certain e-
liquids  businesses,  which  together  comprised  the  Other  Products  and  Services  segment)  and  investments  that  are  accounted  for  under  the  equity  method,  and
generally are early-stage businesses. It is our plan that, as these new businesses further develop and we pursue other diversification opportunities, these business
lines will begin to meaningfully contribute to future years’ revenues with a more significant impact toward profitability.

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Canadian Cannabis Businesses
Legislation in Canada legalized recreational adult use of cannabis nationwide effective in October 2018. We refer to this legislation as the “Canadian Cannabis
Act.” Pursuant to the Canadian Cannabis Act, the production and sale of cannabis products for medical or adult recreational use is subject to licensing by Health
Canada and by various provincial authorities.

Figr East and Figr Norfolk operate cannabinoid businesses from their facilities in Charlottetown, Prince Edward Island, and Simcoe, Ontario, respectively. Figr
East and Figr Norfolk are licensed to produce, package, and label dried cannabis, fresh cannabis, cannabis seeds, cannabis plants, and cannabis oil, and to sell such
cannabis products for recreational and medical purposes within Canada in accordance with Canadian regulatory provisions. Figr Norfolk has a processing license
to extract and sell bulk cannabis oil to other licensed producers. As of March 31, 2020, approximately 330,000 square feet of Figr East's Prince Edward Island
facility  is  licensed  for  the  cultivation  and  processing  of  cannabis.  Figr  East’s  facility  employs  supercritical  carbon  dioxide  extraction  equipment  for  the  on-site
production of cannabis oil. As of March 31, 2020, approximately 19,500 square feet of Figr Norfolk's Simcoe facility is licensed for the cultivation and processing
of  cannabis.  Figr  tests  its  products  for  potency,  microbiological,  heavy  metal,  and  pesticide  contamination  using  third  party  labs,  as  well  as  internal  testing
processes. These data points are logged and made available to consumers through the SENTRISM platform.

Figr currently offers a line of legal cannabinoid consumer products, branded “Figr”, for sale to the medical and adult-use market, with premium product offerings
of dried cannabis flowers, pre-rolls, and cannabis oils containing varying levels of tetrahydrocannabinol (“THC”), the primary psychoactive compound in cannabis,
and CBD intended  to appeal  to a range  of consumer  segments.  Figr products  are  currently  licensed  for  sale  in the  following  Canadian  provinces  through retail
locations and online stores: Prince Edward Island, Nova Scotia, New Brunswick, Ontario and British Columbia.

Subsidiaries of the Company are exploring further international cannabis opportunities as other jurisdictions move towards establishing new or improved medical
and/or recreational cannabis systems. Company subsidiaries will conduct cannabis business activities only in jurisdictions where such activities are permitted by
applicable law.

Competition
The markets in which Figr competes are competitive. Certain of these competitors have significantly greater financial, production, marketing, R&D and technical,
and human resources than Figr does. As a result, these competitors may be more successful in gaining market penetration and market share than Figr. Figr also
faces competition from the illicit cannabis market. Illegal dispensaries and “black market” operations and participants, despite not having a valid license, may be
able to offer products with higher concentrations of active ingredients than Figr is authorized to produce and sell, sell products at lower prices and market products
in ways not permissible by law.

Marketing
The Canadian Cannabis Act places a general ban on promotion of cannabis, cannabis accessories or any service related to cannabis, unless the promotional activity
is  specifically  authorized  under  the  Canadian  Cannabis  Act.  Cannabis  products  may  be  promoted  at  their  point  of  sale  if  the  promotion  indicates  only  its
availability and/or price. Further, brand preference and informational promotion is permitted if such promotion is:

•

•

•

in a communication that is addressed and sent to an individual who is of legal consumption age or older and is identified by name;

in a place where young persons are not permitted; or

communicated by means of a telecommunication, where the person responsible for the content of the promotion has taken reasonable steps to ensure that
the promotion cannot be accessed by a young person.

As a result of the general prohibition against cannabis advertising under the Canadian Cannabis Act, investments in branding and other marketing activities may
have limited effect on consumer perception of Figr’s products.

Regulation
The Canadian Cannabis Act and the regulations thereunder (the “Canadian Cannabis Regulations”) became effective on October 17, 2018, thereby legalizing the
production, distribution, and sale of cannabis for adult non-medicinal (i.e., recreational) purpose, as well as incorporating the existing medical cannabis regulatory
scheme under one complete framework. The Canadian Cannabis Regulations, among other things, provide more detailed rules and standards that apply to the legal
cultivation,  processing,  research,  testing,  distribution,  sale,  importation,  and  exportation  of  cannabis  in  Canada  by  federal  license  holders  under  the  Canadian
Cannabis Act.

Pursuant to the federal regulatory framework in Canada, each province and territory may adopt its own laws governing the distribution, sale and consumption of
cannabis and cannabis accessories within the province or territory. All Canadian

9

provinces and territories have enacted their own legislation to regulate the distribution and sale of cannabis for recreational purposes within those jurisdictions, and
retail models vary between jurisdictions.

The Canadian Cannabis Regulations set out the product categories that are permitted for sale. The THC content and serving size of cannabis products is limited by
the Canadian Cannabis Regulations. The Canadian Cannabis Regulations set out strict requirements pertaining to the packaging and labelling of cannabis products.
Vendors must package cannabis in a way that is tamper-proof, child-resistant, prevents contamination and ensures dryness. The Canadian Cannabis Regulations
also require plain packaging, with strict requirements for logos, colors and branding. For example, all-over packaging wraps must be clear, and the interior surface
and exterior surface of any container in which a cannabis product is packaged must be one uniform color.

The Canadian Cannabis Act provides that the provinces and territories of Canada have authority to regulate certain aspects of recreational cannabis, such as sale
and distribution, minimum age requirements, places where cannabis can be consumed, and a range of other matters. All Canadian provinces and territories have
enacted regulatory regimes for the distribution and sale of cannabis for recreational purposes within those jurisdictions. There are three general frameworks that the
provinces  and  territories  have  followed:  (i)  private  cannabis  retailers  licensed  by  the  province;  (ii)  government-run  retail  stores;  or  (iii)  a  combination  of  both
frameworks  (e.g.,  privately  licensed  retail  stores,  while  online  retailers  are  operated  by  the  applicable  provincial  government).  Regardless  of  the  provincial  or
territorial framework, the recreational cannabis market in Canada is required to be supplied by federally licensed producers. The minimum age for purchase and
possession of cannabis in each Canadian jurisdiction is 19 years old, except for Quebec and Alberta, where it is 18.

E-liquids
The  Company  conducts  an  e-liquids  business  through  its  majority-owned,  consolidated  subsidiary,  Humble  Juice,  and  has  investments  in  unconsolidated  joint
ventures  with  involvement  in  e-liquids  businesses,  Nicotine  River  and  Purilum.  Humble  Juice  sells  branded,  flavored  e-liquids  (that  is,  the  liquid  containing
tobacco-derived  nicotine  used  in  vaporizers,  electronic  cigarettes,  and  other  vaping  hardware  and  accessories)  to  retailers  for  sale  to  consumers.  Humble  Juice
offers consumer flavored e-liquid products under the Humble Juice Co. brand name. Humble Juice is registered with the U.S Food and Drug Administration (the
“FDA”) as a manufacturer of tobacco products (nicotine containing vaping products). Humble Juice operates out of a facility in Thousand Oaks, California.

Nicotine River supplies liquid tobacco-derived nicotine to commercial e-liquid producers nationwide and also retails online the materials necessary to permit the
home manufacture of e-liquids, including lab equipment, vegetable glycerin, liquid nicotine, propylene glycol, polyethylene glycol, flavor extracts, titration kits
and do-it-yourself kits.

Purilum  offers  flavor  formulation  and  development  for  vaping  products,  including  e-liquids.  In  addition  to  creating  original  flavors  for  customers,  Purilum
replicates  formulations  and  flavors,  matching  brand  requirements.  In  addition,  Purilum  develops  and  manufactures  vaping  products,  including  vapable  oils  and
nicotine salts, for direct sale, as well as for business-to-business commerce.

Competition
The market for the e-liquid products is highly competitive and subject to rapid change and regulatory requirements. While historically the e-liquids niche of the
vaping  industry  had  low  barriers  to  entry,  recent  regulatory  requirements  in  the  U.S.  have  created  regulatory  hurdles  and  approvals  for  new  entrants  to  those
markets.  The  e-liquids  market  is  currently  intensifying  with  continual  innovations  and  upgrades  being  the  primary  characteristics  of  the  market.  The  e-liquids
market is highly fragmented, and many of the competitors of each of Humble Juice, Nicotine River, and Purilum have significantly greater resources than it does.
Each  of  Humble  Juice,  Nicotine  River,  and  Purilum  competes  primarily  on  the  basis  of  product  quality,  brand  recognition,  brand  loyalty,  service,  marketing,
advertising, and price.

Regulation
The  FDA  has  authority  to  regulate  e-liquids,  e-cigarettes  and  other  vaping  products  that  contain  (or  are  used  to  consume  e-liquid  containing)  tobacco-derived
ingredients (e.g., nicotine) as "tobacco products" under the federal Food, Drug and Cosmetic Act (the "Food, Drug and Cosmetic Act"), as amended by Family
Smoking Prevention and Tobacco Control Act of 2009 (the "Tobacco Control Act"). Via the issuance of "Deeming Regulations" that became effective on August
8, 2016, the FDA began regulating e-liquids, e-cigarettes, and other vaping products that qualify as "tobacco products" under the Food, Drug and Cosmetic Act's
requirements  added  by  the  Tobacco  Control  Act.  The  Deeming  Regulations  extended  the  FDA's  "tobacco  products"  authorities  to  apply  to  most  previously
unregulated products that meet the statutory definition of "tobacco product," including e-liquids, e-cigarettes and other vaping products that contain (or are used to
consume e-liquid containing) tobacco-derived ingredients ("Deemed Tobacco Products"). Beginning August 8, 2016, Deemed Tobacco Products became subject to
all existing statutory controls initially applicable only to cigarettes, cigarette tobacco, roll-your-own tobacco, and smokeless tobacco (including components, parts,
and accessories of such products) as well as some existing and some new FDA

10

regulations  related  to  the  sale  and  distribution  of  tobacco  products.  As  a  result,  Deemed  Tobacco  Products  are  now  subject  to  various  federal  restrictions  and
requirements, including without limitation:

•

•

•

•

•

•

•

•

a prohibition on sales to those younger than 21 years of age and requirements for verification by means of photographic identification by purchasers under
27;

requirements to include addictiveness warnings on product packages and in advertisements;

a ban on vending machine sales unless the vending machines are located in a facility where the retailer ensures that individuals under 18 years of age are
prohibited from entering at any time;

requirements  for  owners  and  operators  of  domestic  tobacco  product  manufacturing  establishments  to  register  their  establishments  with  the  FDA  and
submit listings of products manufactured at those establishments to the FDA;

requirements  for  submission  of  health  documents,  ingredient  listings,  and  listings  of  the  quantities  of  harmful  and  potentially  harmful  constituents  in
products and their emissions;

a  prohibition  on  marketing  of  "new  tobacco  products"  (i.e.,  products  not  commercially  marketed  in  the  United  States  "as  of"  February  15,  2007,  or
modified in any physical respect since) without prior FDA authorization;

a  prohibition  on  making  direct  and  implied  claims  of  reduced  risk  such  as  through  the  use  of  "light",  "low"  and  "mild"  descriptors  unless  the  FDA
confirms (a) that scientific evidence supports the claim and (b) that marketing the product will benefit public health; and

a ban on the distribution of free samples.

The Food, Drug and Cosmetic Act requires that any Deemed Tobacco Product that was not commercially marketed as of the "grandfathering" date of February 15,
2007  obtain  premarket  authorization  before  it  can  be  marketed  in  the  United  States.  However,  the  FDA  has  announced  a  compliance  policy  for  such  Deemed
Tobacco Products that qualify as "new tobacco products" and that the agency will not enforce these requirements for non-finished products (i.e., those intended
solely for use in future manufacturing), which include certain products manufactured by Purilum. As modified by orders issued by the United States District Court
for the District of Maryland, the current compliance policy generally allows companies to market finished Deemed Tobacco Products that qualify as "new tobacco
products" but that were on the U.S. market on August 8, 2016, until September 9, 2020, and the continued marketing of such products without otherwise-required
authorization for up to one year during the FDA's review of a pending marketing application submitted by September 9, 2020. The current compliance policy does
not  apply  to  flavored,  cartridge-based  e-liquid  products,  other  than  tobacco-  or  menthol-flavored  products,  which  the  Company  does  not  market  directly.  The
current  compliance  policy  also  does  not  apply  to  otherwise-eligible  products  (i)  for  which  the  manufacturer  has  failed  to  take  (or  is  failing  to  take)  adequate
measures to prevent minors’ access and (ii) that are targeted to minors or with marketing that is likely to promote use by minors. In the absence of this policy,
Humble Juice, Nicotine River and Purilum would have had to obtain prior authorization from the FDA to market these products after August 8, 2016. Accordingly,
such  finished  e-liquid  products  have  been  marketed  pursuant  to  the  FDA's  current  compliance  policy  based  on  evidence  that  they  were  on  the  U.S.  market  on
August 8, 2016, and have not been physically modified since.

FDA authorization to introduce a "new tobacco product" (or to continue marketing a "new tobacco product" covered by the current compliance policy for Deemed
Tobacco Products that were on the U.S. market on August 8, 2016) could be obtained via any of the following three authorization pathways: (1) submission of a
premarket tobacco product application ("PMTA") and receipt of a marketing authorization order; (2) submission of a substantial equivalence report and receipt of a
substantial equivalence order; or (3) submission of a request for an exemption from substantial equivalence requirements and receipt of a substantial equivalence
exemption determination. The Company cannot predict if the finished, nicotine-containing e-liquid products of Humble Juice, Nicotine River and Purilum, all of
which  would  be  considered  "new  tobacco  products,"  will  receive  the  required  marketing  authorization  from  the  FDA  if  they  were  to  seek  premarket  approval
through an available authorization pathway.

Since  there  were  few,  if  any,  e-liquid,  e-cigarette  or  other  vaping  products  on  the  market  as  of  February  15,  2007,  there  is  no  way  to  utilize  the  less  onerous
substantial equivalence or substantial equivalence exemption pathways that traditional tobacco corporations can utilize for cigarettes, smokeless tobacco, and other
traditional tobacco products. In order to obtain marketing authorizations, manufacturers of practically all e-liquid, e-cigarette or other vaping products would have
to use the PMTA pathway, which could potentially cost hundreds of thousands of dollars or even millions of dollars per application. Furthermore, the Deeming
Regulations created a significant barrier to entry for any new e-liquid, e-cigarette or other vaping product seeking to enter the market after August 8, 2016, since
any such product would require an FDA marketing authorization through one of the aforementioned pathways. The Company expects that Humble Juice will file
PMTA applications by September 9, 2020.

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State  and  local  governments  also  currently  regulate  tobacco  products,  including  nicotine-containing  vaping  products.  Certain  municipalities  have  enacted  local
ordinances that prohibit the use of e-liquid, e-cigarette and other vaping products where traditional tobacco-burning cigarettes cannot be used, and certain state and
local jurisdictions have enacted total or partial bans on the sale of flavored tobacco products, including e-liquid, e-cigarette and other vaping products. A growing
number  of  states  have  imposed  excise  taxes  on  e-liquids,  e-cigarettes,  and  other  vaping  products.  Other  states  and  local  jurisdictions  imposed  restrictions  or
prohibitions  on  internet  sales  of  such  products,  and  have  challenged  the  marketing  of  such  products  under  consumer  protection  statutes  (e.g.,  on  the  basis  that
certain marketers unlawfully target underage consumers or make unsubstantiated or misleading claims about their products).

Industrial Hemp
Criticality produces products containing extracts of industrial hemp, including CBD products, specializing in the production of bulk and white label hemp-extract
and  CBD  products,  as  well  as  the  production  of  its  own  branded  product  lines  (Korent™  and  Korent  Select™).  The  Company  sources  industrial  hemp  from
growers to supply Criticality. Prior to our acquisition of the majority of interests in Criticality on April 22, 2020, Criticality was an unconsolidated equity method
investment. The market for hemp-extract and CBD products is highly competitive and highly fragmented. Many of the Criticality’s competitors have significantly
greater  resources  than  it  does,  access  to  more  retail  distribution  channels  and  a  longer  operating  history.  Criticality  competes  primarily  on  the  basis  of  product
quality, brand recognition, brand loyalty, production chain transparency, marketing, advertising, and price.

Regulation
In  2014,  the  Agriculture  Act  of  2014  (the  “2014  Farm  Bill”)  was  enacted  in  the  United  States.  The  2014  Farm  Bill  allowed  for  the  domestic  cultivation  of
"industrial  hemp"  (i.e.,  cannabis  plants,  plant  parts,  and  derivatives  with  no  more  than  0.3%  THC)  as  part  of  agricultural  pilot  programs  adopted  by  individual
states for the purposes of research by state departments of agriculture and institutions of higher education. Until October 13, 2020, the 2014 Farm Bill governs
domestic production of industrial hemp for growers holding licenses from states that do not have industrial hemp plans approved by the United States Department
of Agriculture ("USDA"). These states include Colorado, New York, North Carolina, and Virginia.

There is significant uncertainty concerning the permissible scope of commercial activity under the 2014 Farm Bill. The 2014 Farm Bill authorized only institutions
of  higher  education  and  state  agriculture  departments  to  cultivate  industrial  hemp,  and  only  to  do  so  for  research  purposes.  However,  it  also  gave  significant
discretion to states to regulate industrial hemp pilot programs. Many states that have adopted pilot programs have registered private companies to cultivate and
process industrial hemp. Additionally, many states, including North Carolina, where Criticality is based, have interpreted the 2014 Farm Bill to permit marketing
research concerning industrial hemp through, among other things, commercial marketing and sale of industrial hemp and industrial hemp products. In contrast, the
FDA, the U.S. Drug Enforcement Agency (the “DEA”) and the USDA have taken the position that, under the 2014 Farm Bill, industrial hemp products may not be
sold for the purpose of general commercial activity or in states without agricultural pilot programs that permit their sale for research marketing purposes; these
agencies have also taken the position that, under the 2014 Farm Bill, industrial hemp plants and seeds may not be transported across state lines. There is evidence
that  Congress  does  not  agree  with  these  agencies’  interpretation  of  the  2014  Farm  Bill,  including  through  its  insertion  in  various  appropriations  bills  language
prohibiting the DEA from using funds to impede state agricultural pilot programs. Further, with the enactment of the Agricultural Improvement Act of 2018 (the
“2018 Farm Bill”), discussed below, industrial hemp products meeting the 2018 Farm Bill’s definition of “hemp” do not qualify as controlled substances under the
U.S. Controlled Substances Act, regardless of their compliance with the 2014 Farm Bill.

On  December  20,  2018,  the  2018  Farm  Bill  was  signed  into  law.  The  2018  Farm  Bill,  among  other  things,  removes  “hemp”  and  its  derivatives  (including  its
cannabinoids, such as CBD) from the U.S. Controlled Substances Act and amends the Agricultural Marketing Act of 1946 to provide for commercial production of
hemp  in  the  United  States.  The  law  defines  "hemp"  as  "the  plant  Cannabis  sativa  L.  and  any  part  of  that  plant,  including  the  seeds  thereof  and  all  derivatives,
extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol ("THC") concentration of not more
than 0.3 percent on a dry weight basis." The 2018 Farm Bill tasked the USDA with establishing a regulatory framework for the commercial hemp industry.

Hemp-producing states currently have the option either (a) to submit a plan to the USDA that (if approved) would allow that state’s plan-compliant growers to
operate under the requirements and protections of the 2018 Farm Bill, or (b) until October 13, 2020, to continue to operate under the requirements and protections
for the agricultural pilot programs under the 2014 Farm Bill. The 2018 Farm Bill also permits individual growers in states without USDA approved plans to apply
for a federal license from the USDA and to operate individually under the 2018 Farm Bill.

On October 31, 2019, the USDA published an interim final rule which became effective immediately. The interim final rule governs hemp production under the
2018 Farm Bill, subject  to public review and comment  and any changes made when the formal  rule is promulgated.  The interim final rule provides for certain
minimum requirements for state plans, provides a plan

12

for the USDA to review and approve state-submitted hemp plans, and establishes a federal licensing and regulatory system for hemp production in states without
an approved state plan. Although the interim final rule became effective immediately, until such time as the USDA approves state hemp plans or issues federal
licenses to hemp cultivators in states without plans in the approval process, hemp production is governed by the more restrictive 2014 Farm Bill, and commercial
production  of  hemp  may  be  deemed  to  violate  federal  law.  As  of  May  27,  2020,  the  most  current  data  available  from  the  USDA,  the  USDA  had  approved
seventeen state plans and thirty-two tribal plans and one territorial plan under the 2018 Farm Bill. As of that date, North Carolina, where Criticality is based, had
not  submitted  a  plan  that  had  been  approved  by  the  USDA.  Accordingly,  it  continues  to  permit  research-related  activities  involving  industrial  hemp  under  the
more-restrictive 2014 Farm Bill, as do several other states from which Criticality purchases hemp.

In North Carolina, where Criticality is based, the state has issued, and continues to issue, licenses for an agricultural pilot program under the 2014 Farm Bill. On
October  31,  2015,  the  state  general  assembly  passed  Senate  Bill  313  (as  amended,  the  “NC  Hemp  Act”),  establishing  a  state  pilot  program  to  research  the
cultivation of industrial hemp. Consistent with the 2014 Farm Bill, the NC Hemp Act defined industrial hemp to include any part of the cannabis plant, whether
growing or not, with a delta-9 THC concentration of not more than 0.3% on a dry weight basis. The NC Hemp Act further created a North Carolina Industrial
Hemp Commission (the “NC Hemp Commission”) to oversee the state’s pilot program. The NC Hemp Commission was charged with, among other things, issuing
licenses allowing persons, firms or corporations to cultivate industrial hemp for research purposes. The NC Hemp Act provided that those licensed to grow and
cultivate  industrial  hemp  under  the  pilot  program  could  engage  in  any  of  eleven  authorized  research-related  activities,  including,  among  others,  studying  and
investigating marketplace opportunities for hemp products; studying and investigating methods of industrial hemp cultivation; studying the economic feasibility of
developing an industrial hemp market in various types of industrial hemp that can be grown in the state, including by commercial marketing and sale of industrial
hemp; researching and promoting on the world market industrial hemp and hemp seed that can be grown in the state; and promoting research into the development
of industrial hemp and commercial markets for North Carolina industrial hemp and hemp products. Criticality is a registered processor of industrial hemp under
North Carolina’s agricultural pilot program.

Criticality sells industrial hemp-derived products, including CBD products, to consumers in other states. The 2018 Farm Bill permits states to establish additional
restrictions on hemp production and hemp products than required under federal law, although states may not interfere with the interstate transportation of hemp or
hemp products produced in compliance with the 2018 Farm Bill. Further, in May 2019, the USDA issued a legal opinion asserting its view that states may not
interfere with the interstate transportation of industrial hemp or products derived from industrial hemp produced in compliance with the 2014 Farm Bill, although
whether the individual states will heed and reviewing courts will defer to this opinion remains uncertain.

Under the 2018 Farm Bill, any cannabis plant, plant part or plant product that contains a higher concentration of THC than permitted in hemp is still considered a
Schedule I substance under the Controlled Substances Act (i.e., marijuana) and is not protected by the 2018 Farm Bill. Further, the 2018 Farm Bill specifies certain
consequences  for  domestic  production  of  hemp  in  violation  of  the  applicable  state  or  USDA  hemp  plan.  These  include  potential  disqualification  from  hemp
production for a five-year period beginning on the date of a third violation.

Further, under the 2018 Farm Bill, the FDA has retained authority over hemp, including CBD derived from hemp, in products that qualify as regulated articles
under the Food, Drug, and Cosmetic Act, including foods, drugs, dietary supplements, and cosmetics. The statutory text of the 2018 Farm Bill expressly left in
place  the  authority  of  the  FDA  over  hemp-derived  products,  including  hemp-derived  CBD  products,  under  the  Food,  Drug,  and  Cosmetic  Act.  The  FDA  has
exercised  this  regulatory  authority  over  hemp-derived  products  sold  in  interstate  commerce  to  the  extent  that  they  qualify  as  regulated  articles  under  the  Food,
Drug, and Cosmetic Act–i.e., they meet the statutory definition of “food,” “drug,” “cosmetic,” etc.

In particular, the FDA has continued to assert its view that the Food, Drug and Cosmetic Act prohibits the marketing of CBD dietary supplements or the addition of
CBD  to  food,  regardless  of  whether  the  CBD  is  hemp-derived,  because  CBD  was  not  marketed  as  a  food  or  dietary  supplement  prior  to  the  authorization  of
substantial clinical investigations of CBD-containing drug products. Stakeholders have questioned the validity of the FDA’s stated positions as applied to some or
all CBD-containing food or dietary supplement products (e.g., those containing full- or broad-spectrum hemp extracts containing naturally occurring quantities of
CBD). Regardless, the FDA has express statutory authority to decide whether to issue regulations permitting the marketing of CBD dietary supplements and use of
CBD as a conventional food additive. The FDA has never previously used these authorities to promulgate regulations permitting the use of active drug ingredients
in dietary supplements and conventional foods.

While the FDA has taken preliminary steps to explore the possibility of using these authorities and continues to invite submission of evidence establishing the prior
marketing of CBD dietary supplements and CBD-containing foods, we cannot assure you that the FDA will change its current positions or proceed with issuing
regulations  overriding  the  statutory  provisions  on  which  the  agency  relies  in  asserting  its  current  positions.  Indeed,  even  after  soliciting  submissions  regarding
potential regulations, the FDA has continued to send warning letters to certain producers of CBD products asserting its position and

13

warning those producers to cease production and marketing of their products. Even if the FDA chooses to proceed with rulemaking, the timing and content of any
final regulations cannot be assured, nor can it be predicted which particular products would be permitted and under what circumstances. In addition, even if FDA
ultimately permits the marketing of CBD dietary supplements or CBD-containing conventional foods, such products must otherwise comply with all applicable
requirements of the Food, Drug, and Cosmetic Act and the FDA’s implementing regulations and policies for these categories of products, including restrictions on
the types of claims that marketers may make for them. Additionally, the Federal Trade Commission ("FTC") regulates advertising of all products, including for
FDA-regulated articles made from hemp and CBD derived from hemp.

In addition to regulating hemp and industrial hemp under the aegis of the 2014 and 2018 Farm Bills, states regulate hemp and industrial hemp in other ways. States,
including North Carolina, have retained regulatory authority through their own analogs to the Food, Drug, and Cosmetic Act and have the authority to regulate the
marketing of hemp and industrial hemp products, including CBD products, in food, drugs, dietary supplements and cosmetics as well as the claims made about
them.  Some  states  have  adopted  the  FDA’s  positions  regarding  CBD  dietary  supplements  and  CBD  in  conventional  foods.  Other  states  have  not  established
industrial hemp pilot programs or otherwise prohibit the sale of all or certain hemp and industrial hemp products, including CBD products, under state controlled
substances laws that do not include the same exceptions for excluded parts and hemp found in the U.S. Controlled Substances Act, as amended by the 2018 Farm
Bill, or that restrict  the sale of such products only for certain limited medical uses. In addition, the sales and marketing of hemp and industrial hemp products,
including  CBD  products,  are  subject  to  regulation  by  state  consumer  regulatory  and  health  agencies  and  are  subject  to  enforcement  actions  by  state  attorneys
general.

Criticality’s industrial hemp activities are and likely will continue to be governed by a complex fabric of rapidly evolving and sometimes-conflicting federal and
state laws and regulations, including among others the unique and varied laws of the states from which Criticality sources its hemp and industrial hemp and to
which Criticality ships its products. The Company cannot provide assurance that all states will amend their laws to mirror the federal Controlled Substances Act’s
exclusions for hemp or otherwise permit the broad commercial distribution of hemp-derived products, including CBD products.

Intellectual Property
We routinely cooperate with both our customers and the manufacturers of the equipment used in our leaf processing facilities to improve processing technologies.
Building consumer product brands is a critical element of our diversification strategy and we promote our products through trademarks that distinguish them in the
market.

Item 1A. Risk Factors

The following risk factors should be read carefully in connection with evaluating our business and the forward-looking statements contained in this Annual Report
on Form 10-K. Any of the following risks could materially adversely affect our business, our operating results, our financial condition, and the actual outcome of
matters as to which forward-looking statements are made in this Annual Report.

We may from time to time make written or oral forward-looking statements, including statements contained in filings with the SEC, in reports to stockholders and
in press releases and investor calls and webcasts. You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,”
“plans,” “anticipates,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning. You can also identify them by
the fact that they do not relate strictly to historical or current facts.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of
future  results  is  subject  to  risks,  uncertainties  and  inaccurate  assumptions.  Should  known  or  unknown  risks  or  uncertainties  materialize,  or  should  underlying
assumptions  prove  inaccurate,  actual  results  could  vary  materially  from  those  anticipated,  estimated,  or  projected.  Investors  should  bear  this  in  mind  as  they
consider forward-looking statements and whether to invest in or remain invested in Pyxus International, Inc. securities or in the securities of New Pyxus following
the effectiveness of the Plan, as it, though its subsidiaries, will continue to operate the businesses we operate immediately prior to the effectiveness of the Plan. In
connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we are identifying important risk factors that, individually or
in  the  aggregate,  could  cause  actual  results  and  outcomes  to  differ  materially  from  those  contained  in  any  forward-looking  statements  made  by  us;  any  such
statement  is  qualified  by  reference  to  the  following  cautionary  statements.  We  elaborate  on  these  and  other  risks  we  face  throughout  this  document.  It  is  not
possible to predict or identify all risk factors. Consequently, the following should not be considered a complete discussion of all potential risks or uncertainties. We
do not undertake to update any forward-looking statement that we may make from time to time.

14

Risks Related to the Chapter 11 Cases

As a result of the Chapter 11 Cases, our historical financial information may not be indicative of our future performance, which may be volatile.
During the Chapter 11 Cases, we expect our financial results to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims
assessments  significantly  impact  our  consolidated  financial  statements.  As  a  result,  our  historical  financial  performance  is  likely  not  indicative  of  our  financial
performance after the date of the filing of the Chapter 11 Cases.

Certain information contained in our historical financial statements will not be comparable to the information contained in our financial statements after
the application of fresh start accounting.
If the Company meets the criteria set forth in Accounting Standards Codification Topic 852 – Reorganizations (“ASC 852”), New Pyxus will adopt the fresh start
accounting rules upon emergence from Chapter 11, in which case its assets and liabilities will be recorded at fair value as of the fresh start reporting date, which
may differ materially from the recorded values of assets and liabilities on our consolidated balance sheets. The accompanying consolidated financial statements do
not reflect the adoption of fresh start accounting.

The Chapter 11 Cases may have a material adverse impact on our business, financial condition, results of operations, and cash flows.
The  Chapter  11  Cases  could  have  a  material  adverse  effect  on  our  business,  financial  condition,  results  of  operations  and  liquidity.  In  the  months  prior  to  and
during the pendency of the Chapter 11 Cases, our management was required to spend a significant amount of time and effort dealing with the restructuring instead
of focusing on our business operations. In addition, as a result of the Chapter 11 Cases, our customers, farmers and other suppliers might lose confidence in us and
may  seek  to  establish  alternative  commercial  relationships,  which  may  cause,  among  other  things,  our  suppliers,  farmers,  vendors,  counterparties  and  service
providers to renegotiate the terms of our agreements, attempt to terminate their relationship with us or require financial assurances from us. Many of our suppliers,
farmers, vendors and other providers may require stricter terms and conditions, and we may not find these terms and conditions acceptable. Any failure to timely
obtain suitable inventory at competitive prices could materially adversely affect our businesses, financial condition, liquidity and results of operations.

We have typically financed our non-U.S. local leaf tobacco operations with short-term operating credit lines at the local level. These operating lines are typically
seasonal  in  nature,  normally  extending  for  a  term  of  180  to  270  days  corresponding  to  the  tobacco  crop  cycle  in  that  location.  Certain  of  these  facilities  are
uncommitted in that the lenders have the right to cease making loans or demand payment of outstanding loans at any time. As a result of the Chapter 11 Cases,
these local lenders may lose confidence in us and, with respect to uncommitted facilities, may cease making loans or demand payment of outstanding loans or, with
respect to committed facilities, decline to renew or extend existing facilities, or require stricter terms and conditions with respect to future facilities, and we may
not find these terms and conditions acceptable  or they may overly  restrict  our ability  to conduct  our businesses successfully.  An inability  to maintain  adequate
financing to fund our non-U.S. local leaf tobacco operations in any significant location could result in a significant decline in our revenues, profitability and cash
flow.

Even if the Plan is consummated and becomes effective, we may not be able to achieve our stated goals and we cannot assure you of our ability to continue
as a going concern.
Even if the Plan is consummated and becomes effective, we may continue to face a number of risks, such as changes in economic conditions, continued impacts of
the COVID-19 pandemic, changes in the leaf tobacco market and the markets for our other products, other changes in demand for our products and increasing
expenses.  Some  of  these  risks  may  become  more  acute  because  of  our  involvement  in  the  Chapter  11  Cases.  As  a  result  of  these  risks  and  others,  we  cannot
guarantee that the Plan will achieve our stated goals. Furthermore,  even though certain of our debts will be discharged through the Plan, we may need to raise
additional  funds  through  public  or  private  debt  or  equity  financing  or  other  various  means  to  fund  our  business  after  the  completion  of  the  Chapter  11  Cases,
including short-term operating credit lines to fund the needs of our non-U.S. local leaf tobacco operations. Our access to necessary financing may be limited, if it is
available at all. Therefore, adequate funds may not be available when needed or may not be available on favorable terms, or at all. As a result, we cannot assure
you of our ability to continue as a going concern following the consummation and effectiveness of the Plan.

Risks Relating to Our Tobacco Operations

Our reliance on a small number of significant customers may adversely affect our financial statements.
The  customers  of  our  leaf  tobacco  business  are  manufacturers  of  cigarette  and  other  tobacco  products.  Several  of  these  customers  individually  account  for  a
significant portion of our sales in a normal year.

For the year ended March 31, 2020, each of Philip Morris International, Inc. and China Tobacco International Inc., including their respective affiliates, accounted
for  more  than  10%  of  our  revenues  from  continuing  operations.  In  addition,  tobacco  product  manufacturers  have  experienced  consolidation  and  further
consolidation among our customers could decrease such

15

customers’ demand for our leaf tobacco or processing services. The loss of any one or more of our significant customers could have a material adverse effect on
our financial statements.

Continued vertical integration by our customers could materially adversely affect our financial statements.
Demand  for  our  leaf  tobacco  or  processing  services  could  be  materially  reduced  if  cigarette  manufacturers  continue  to  significantly  vertically  integrate  their
operations,  either  through  acquisition  of  our  competitors,  establishing  new  operations  or  contracting  directly  with  suppliers.  Japan  Tobacco,  Inc.  has  vertically
integrated operations in Malawi, Brazil, and the United States. In addition, Philip Morris International, Inc. acquired supplier contracts and related assets in Brazil
in order to procure leaf directly. In general, our results of operations have been adversely affected by vertical integration initiatives. Although some customers have
reversed certain aspects of their previous vertical integration of operations, further vertical integration by our customers could have a material adverse effect on our
financial statements.

Global shifts in sourcing customer requirements may negatively affect our organizational structure and asset base.
The global leaf tobacco industry has experienced shifts in the sourcing of customer requirements for tobacco. For example, significant tobacco production volume
decreases have occurred in the United States and Europe from historical levels. At the same time, production volumes in other sourcing origins have stabilized.
Additional  shifts  in  sourcing  may  occur  as  a  result  of  currency  fluctuations,  including  changes  in  currency  exchange  rates  against  the  United  States  Dollar
("USD"), the imposition of tariffs and other changes in international trade policies. A shift in sourcing origins in Europe has been influenced by modifications to
the tobacco price support system in the European Union ("EU"). Customer requirements have changed due to these variations in production, which could influence
our ability to plan effectively for the longer term in the United States and Europe.

We may not be able to timely or efficiently adjust to shifts in sourcing origins, and adjusting to shifts may require changes in our production facilities in certain
origins  and  changes  in  our  fixed  asset  base.  We  have  incurred,  and  may  continue  to  incur,  restructuring  charges  as  we  continue  to  adjust  to  shifts  in  sourcing.
Adjusting our capacity and adjusting to shifts in sourcing may have an adverse impact on our ability to manage our costs and could have an adverse effect on our
financial performance.

We may not have access to available capital to finance our local leaf tobacco operations in non-U.S. jurisdictions.
We have typically financed our non-U.S. local leaf tobacco operations with uncommitted short-term operating credit lines at the local level. These operating lines
are typically seasonal in nature, normally extending for a term of 180 to 270 days corresponding to the tobacco crop cycle in that location. These facilities are
typically uncommitted  in that the lenders have the right to cease making loans or demand payment of outstanding loans at any time. In addition, each of these
operating lines must be renewed with each tobacco crop season in that jurisdiction. Although our foreign subsidiaries are the borrowers under these lines, many of
them are guaranteed by us.

As  of  March  31,  2020,  we  had  approximately  $540.2  million  outstanding  on  the  short-term  foreign  seasonal  lines  with  maximum  capacity  of  $745.5  million,
subject  to limitations  under  our asset-based  revolving  credit  facility  (the  "ABL Facility").  Additionally,  against  these  lines  there  was $12.8 million  available  in
unused letter of credit capacity with $7.0 million issued but unfunded.

Because the lenders under these operating lines typically have the right to cancel the loan at any time and each line must be renewed with each crop season, we
cannot assure you that this capital will be available to our subsidiaries. If a number of these lenders cease lending to our subsidiaries or dramatically decrease such
lending, it could have a material adverse effect on our liquidity. Further, there is additional risk that certain banks that are lenders under seasonal lines could be
unable to meet contractually obligated borrowing requests in the future if their financial condition were to deteriorate.

Our financial results will vary according to growing conditions, customer indications and other factors, which reduces your ability to gauge our quarterly
and annual financial performance.
Our financial  results,  particularly  the  quarterly  financial  results,  may be significantly  affected  by fluctuations  in tobacco  growing seasons  and crop sizes  which
affect the supply of tobacco. Crop sizes may be affected by, among other things, crop infestation and disease, the volume of annual tobacco plantings and yields
realized by suppliers, and suppliers' elections to grow crops other than tobacco. The cultivation period for tobacco is dependent upon a number of factors, including
the weather and other natural events, such as hurricanes or tropical storms, and our processing schedule and results of operations for any quarterly period can be
significantly altered by these factors.

The cost of acquiring tobacco can fluctuate greatly due to crop sizes and increased competition in certain markets in which we purchase tobacco. For example,
short crops in periods of high demand translate into higher average green prices, higher throughput costs and less volume to sell. Furthermore, large crops translate
into lower average green prices, lower throughput costs and excess volume to sell.

16

The timing and unpredictability of customer indications, orders, and shipments cause us to keep tobacco in inventory, increase our risk, and result in variations in
quarterly  and  annual  financial  results.  The  timing  of  shipments  can  be  materially  impacted  by  shortages  of  containers  and  vessels  for  shipping  as  well  as
infrastructure and accessibility issues in ports we use for shipment. We may, from time to time in the ordinary course of business, keep a significant amount of
processed tobacco in inventory for our customers to accommodate their inventory management and other needs. Sales recognition by us and our subsidiaries is
based on the passage of ownership, usually with shipment of product. Because individual shipments may represent significant amounts of revenue, our quarterly
and annual financial results may vary significantly depending on our customers’ needs and shipping instructions. These fluctuations result in varying volumes and
sales in given periods, which also reduces your ability to compare our financial results in different periods or in the same periods in different years.

Suppliers  who  have  historically  grown  tobacco  and  from  whom  we  have  purchased  tobacco  may  elect  to  grow  other  crops  instead  of  tobacco,  which
affects the world supply of tobacco and may impact our quarterly and annual financial performance.
Increases  in the prices for  other  crops have  led  and may in the  future  lead suppliers  who have historically  grown tobacco,  and from whom we have purchased
tobacco,  to  elect  to  grow  these  other,  more  profitable,  items  instead  of  tobacco.  A  decrease  in  the  volume  of  tobacco  available  for  purchase  may  increase  the
purchase price of such tobacco. As a result, we could experience an increase in tobacco crop acquisition costs, which may impact our quarterly and annual financial
performance.

Our advancement of inputs to tobacco suppliers could expose us to losses.
Advances to tobacco suppliers are settled as part of the consideration paid upon the suppliers delivering us unprocessed tobacco at market prices. Two primary
factors determine the market value of the tobacco suppliers deliver to us: the quantity of tobacco delivered and the quality of the tobacco delivered. Unsatisfactory
quantities or quality of the tobacco delivered could result in losses with respect to advances to our tobacco suppliers or the deferral of those advances.

When we purchase tobacco directly from suppliers, we bear the risk that the tobacco will not meet our customers’ quality and quantity requirements.
In countries where we contract directly with tobacco suppliers, we bear the risk that the tobacco delivered will not meet quality and quantity requirements of our
customers. If the tobacco does not meet such market requirements, we may not be able to sell the tobacco we agreed to buy and may not be able to meet all of our
customers’ orders, which would have an adverse effect on our profitability and results of operations.

Weather and other conditions can affect the marketability of our inventory.
Like other agricultural products, the quality of tobacco is affected by weather and the environment, which can change the quality or size of the crop. If a weather
event is particularly severe, such as a major drought or hurricane, the affected crop could be destroyed or damaged to an extent that it would be less desirable to our
customers, which would result in a reduction in revenues. If such an event is also widespread, it could affect our ability to acquire the quantity of products required
by customers. In addition, other items can affect the marketability of tobacco, including, among other things, the presence of:

•
•
•

non-tobacco related material;
genetically modified organisms; and
excess residues of pesticides, fungicides and herbicides.

A significant event impacting the condition or quality of a large amount of any of the tobacco crops we buy could make it difficult for us to sell such tobacco or to
fill  our  customers’  orders.  In  addition,  in  the  event  of  climate  change,  adverse  weather  patterns  could  develop  in  the  growing  regions  in  which  we  purchase
tobacco. Such adverse weather patterns could result in more permanent disruptions in the quality and size of the available crop, which could adversely affect our
business.

We face increased risks of doing business due to the extent of our international operations.
Some of the countries  we do business in do not have stable  economies  or governments.  Our international  operations  are  subject to international  business risks,
including  unsettled  political  conditions,  uncertainty  in  the  enforcement  of  legal  obligations,  including  the  collection  of  accounts  receivable,  fraud  risks,
expropriation,  import  and  export  restrictions,  exchange  controls,  inflationary  economies,  currency  risks,  and  risks  related  to  the  restrictions  on  repatriation  of
earnings  or  proceeds  from  liquidated  assets  of  foreign  subsidiaries.  These  risks  are  exacerbated  in  countries  where  we  have  advanced  substantial  sums  or
guaranteed  local  loans  or  lines  of  credit  for  the  purchase  of  tobacco  from  suppliers.  For  example,  in  2006  as  a  result  of  the  political  environment,  economic
instability, foreign currency controls, and governmental regulations in Zimbabwe, we deconsolidated our Zimbabwe subsidiary, Mashonaland Tobacco Company
LTD ("MTC"). Subsequently, we determined that the significant doubt about our ability to control MTC was eliminated and reconsolidated MTC as of March 31,
2016. The Company utilizes the Zimbabwe RTGS system for local transactions. RTGS is a local currency equivalent that is exchanged at a government specified
rate with the USD. In order to convert these units to USD, the Company must obtain foreign currency resources from the Reserve Bank of Zimbabwe, which are
subject to the monetary and exchange control policy in Zimbabwe. If the foreign exchange restrictions and government-imposed controls become severe, we may
have to reassess our ability to control MTC.

17

Our international operations are in areas where the demand is for the export of lower priced tobacco. We have significant investments in our purchasing, processing
and exporting operations in Argentina, Brazil, Malawi, Tanzania and Turkey.

In  recent  years,  economic  problems  in  certain  countries  where  we  have  international  operations  have  received  wide  publicity  related  to  devaluation  and
appreciation  of  the  local  currency  and  inflation,  including  the  classification  of  the  Argentina,  Malawi,  and  Zimbabwe  economies  as  highly  inflationary.
Devaluation and appreciation of the local currency and inflation can affect our purchase costs of tobacco and our processing costs. In addition, we conduct business
with suppliers and customers in countries that have recently had or may be subject to dramatic political regime change. In the event of such dramatic changes in the
government  of  such  countries,  we  may  be  unable  to  continue  to  operate  our  business,  or  adequately  enforce  legal  obligations,  after  the  change  in  a  manner
consistent with prior practice.

Failure  of  foreign  banks  in  which  our  subsidiaries  deposit  funds  or  the  failure  to  transfer  funds  or  honor  withdrawals  may  affect  our  results  of
operations.
Funds  held  by  our  foreign  subsidiaries  are  often  deposited  in  their  local  banks.  In  addition,  we  maintain  deposit  accounts  with  numerous  financial  institutions
around the world in amounts that exceed applicable governmental deposit insurance levels. Banks in certain foreign jurisdictions may be subject to a higher rate of
failure or may not honor withdrawals of deposited funds. In addition, the countries in which these local banks operate may lack sufficient regulatory oversight or
suffer from structural weaknesses in the local banking system. Due to uncertainties and risks relating to the political stability of certain foreign governments, these
local banks also may be subject to exchange controls and therefore unable to perform transfers of certain currencies. If our ability to gain access to these funds was
impaired, it could have a material adverse effect on our results of operations.

We are subject to the Foreign Corrupt Practices Act (the “FCPA”) and we operate in jurisdictions that pose a high risk of potential FCPA violations.
We are subject to the FCPA, which generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of
obtaining  or  keeping  business  and/or  other  benefits.  We  operate  in  a  number  of  jurisdictions  that  pose  a  high  risk  of  potential  FCPA  violations.  Although  our
corporate policy prohibits foreign bribery and we have adopted procedures to promote compliance, we cannot assure you that our policy or procedures will work
effectively all of the time or protect us against liability under the FCPA for actions taken by our agents, employees, and intermediaries with respect to our business
or any businesses that we acquire. Failure to comply with the FCPA, other anti-corruption laws and other laws governing the conduct of business with government
entities (including local laws) could lead to criminal and civil penalties and other remedial measures (including further changes or enhancements to our procedures,
policies, and controls, the imposition of a compliance monitor at our expense and potential personnel changes and/or disciplinary actions), any of which could have
an adverse impact on our business, financial condition, results of operations, and liquidity. Any investigation of any potential violations of the FCPA or other anti-
corruption laws by U.S. or foreign authorities also could have an adverse impact on our business, financial condition, and results of operations.

In  2010,  we  entered  into  settlements  with  the  SEC  and  the  U.S.  Department  of  Justice  to  resolve  their  investigations  regarding  potential  criminal  and  civil
violations  of  the  FCPA.  The  settlements  resulted  in  the  disgorgement  in  profits  and  fines  totaling  $19.45  million,  which  have  been  paid.  Both  settlements  also
required us to retain an independent compliance monitor for a three-year term that was completed September 30, 2013.

Our exposure to foreign tax regimes, and changes in U.S. or foreign tax regimes, could adversely affect our business.
We do business in countries that have tax regimes in which the rules are not clear, are not consistently applied and are subject to sudden change. This is especially
true  with  regard  to  international  transfer  pricing.  Our  earnings  could  be  reduced  by  the  uncertain  and  changing  nature  of  these  tax  regimes.  Certain  of  our
subsidiaries are and may in the future be involved in tax matters in foreign countries. While the outcome of any of these existing matters cannot be predicted with
certainty, we are vigorously defending them and do not currently expect that any of them will have a material adverse effect on our business or financial position.
However, should one or more of these matters be resolved in a manner adverse to our current expectation, the effect on our results of operations for a particular
fiscal reporting period could be material.

We  seek  to  optimize  our  tax  footprint  across  all  operations  in  U.S.  and  non-U.S.  jurisdictions  alike.  These  benefits  are  contingent  upon  existing  tax  laws  and
regulations in the U.S. and in the countries in which our international operations are located. Future changes in domestic or international tax laws and regulations
could adversely affect our ability to continue to realize these tax benefits.

Fluctuations in foreign currency exchange and interest rates could adversely affect our results of operations.
We conduct our business in many countries around the world. Our business is generally conducted in USD, as is the business of the leaf tobacco industry as a
whole. We generally must purchase tobacco in non-U.S. countries using local currency. As a result, local country operating costs, including the purchasing and
processing costs for tobaccos, are subject to the effects of

18

exchange fluctuations of the local currency against the USD. When the USD weakens against foreign currencies, our costs for purchasing and processing tobacco
in  such  currencies  increases.  We  attempt  to  minimize  such  currency  risks  by  matching  the  timing  of  our  working  capital  borrowing  needs  against  the  tobacco
purchasing  and  processing  funds  requirements  in  the  currency  of  the  country  where  the  tobacco  is  grown.  Fluctuations  in  the  value  of  foreign  currencies  can
significantly affect our operating results.

In addition, the devaluation of foreign currencies has resulted and may in the future result in reduced purchasing power from customers whose capital resources are
denominated in those currencies. We may incur a loss of business as a result of the devaluation of these currencies now or in the future.

Competition could erode our earnings.
The leaf tobacco industry is highly competitive. Competition is based primarily on the prices charged for products and services as well as the merchant’s ability to
meet customer specifications in the buying, processing, and financing of tobacco. In addition, there is competition in all countries to buy the available tobacco. The
loss or substantial reduction of any large or significant customer could reduce our earnings.

In  addition  to  the  two  primary  global  independent  publicly  held  leaf  tobacco  merchants,  the  cigarette  manufacturers  increasingly  buy  tobacco  directly  from
suppliers. We also face increasing competition from new local and regional independent leaf merchants with low fixed costs and overhead and good local customer
connections, where the new entrants have been able to capitalize in the global transition to those markets. Any of these sources of new competition may result in
less tobacco available for us to purchase and process in the applicable markets.

Risks Related to the COVID-19 Pandemic

We have been and will likely continue to be negatively impacted by the COVID-19 global pandemic and its related impacts to our employees, operations,
customers and suppliers.
The pandemic arising from the disease caused by the novel coronavirus ("COVID-19") has adversely affected, and is likely to continue to adversely affect, our
businesses, and we have experienced and expect to continue to experience delays in shipments of leaf tobacco and other disruptions to our operations. Although, in
many jurisdictions, our operations have been classified as “essential” under various governmental orders restricting business activities implemented in response to
the COVID-19 outbreak, that classification has not been universal and we have been, and may in the future be, required to suspend operations at certain facilities as
a result of similar governmental orders. We cannot predict whether our operations classified as “essential” will continue to be so classified or, even if so classified,
whether site-specific health and safety concerns related to COVID-19 might otherwise require operations at any of our facilities to be halted for some period of
time. Other operational disruptions may result from restrictions on the ability of employees and others in the supply chain to travel and work, such as caused by
quarantine or individual illness, or which may result from border closures imposed by governments to deter the spread of COVID-19, or determinations by us or
shippers  to temporarily  suspend  operations  in affected  areas,  or  other  actions  which  restrict  the  ability  to  ship  our products  or  which  may otherwise  negatively
impact  our  ability  to  ship  our  products.  Ports  or  channels  of  entry  may  be  closed,  operate  at  only  a  portion  of  capacity  or  require  quarantining  of  vessels,  or
transportation of products within a region or country may be limited, if workers are unable to report to work due to travel restrictions or personal illness. These
factors have also impacted certain of our suppliers and we have been and will likely continue to be impacted by disruptions in the supply of certain materials used
in our operations.

The  COVID-19  pandemic  may  further  damage  our  business  due  to  negative  consumer  purchasing  behavior  with  respect  to  the  products  of  our  leaf  tobacco
customers  and  our  other  products.  Public  health  officials  around  the  world  have  recommended,  and  local,  state,  and  national  governments  have  mandated,
precautions  to  mitigate  the  spread  of  COVID-19,  including  prohibitions  on  congregating  in  groups,  shelter-in-place  orders  or  similar  measures.  Consumer
purchasing behavior may be impacted by reduced consumption by consumers who may not be able to leave home or otherwise shop in a normal manner as a result
of  these  restrictions. In  addition,  in  view  of  uncertainties  with  respect  to  the  spread  of  COVID-19  and  the  duration  and  terms  of  related  governmental  orders
restricting activities, we cannot predict whether demand for our products will persist at current levels or decrease on a global or regional basis.

Due to the scope of our operations, including in emerging markets, and our sale to customers around the world, the impact of the COVID-19 pandemic on our
operations  and  the  demand  for  our  products  may  not  coincide  with  impacts  experienced  in  the  United  States.  Our  operations  in  jurisdictions  only  recently
experiencing COVID-19 outbreaks, such as portions of Africa and South America, may continue to be subject to governmental orders restricting activities after
such governmental orders are lifted in the United States. Accordingly, to the extent that the impact of the COVID-19 pandemic in the United States may improve
over time, results of operations may continue to be adversely affected by COVID-19 impacts in other areas of the world.

19

Risks Related to New Business Lines

Our investments in new business lines as part of our expanded business strategy have been in companies with limited histories that are operating in newly
developing markets and are subject to numerous risks and uncertainties.
Our investments, including indirect investments, in Figr East, Figr Norfolk, Criticality, Purilum, Nicotine River, and Humble Juice (collectively, the "new business
lines") and the operation of these businesses, involve a high degree of risk. These investments are in businesses with limited operating histories and are dependent
upon receipt of requisite licenses and approvals. We cannot assure you that as these operations further develop they will be profitable or otherwise sustainable.
While certain of these businesses involve the cultivation and/or processing of agricultural products, similar in certain ways to leaf tobacco, and accordingly share
commonality  with  our  agronomy,  traceability  and  agricultural  product  processing  expertise,  they  are  subject  to  commercial  and  regulatory  challenges  different
from  our  leaf  tobacco  business  and  with  respect  to  which  we  do  not  have  the  same  level  of  experience.  In  addition,  these  businesses  are  subject  to  numerous
additional risks and uncertainties, including those specified in the risk factors below.

The results of operations and financial position of the new business lines may differ materially from the expectations of
the Company's management.
Due  to  numerous  uncertainties,  the  results  of  operations,  and  financial  position  of  the  new  business  lines  may  differ  materially  from  the  expectations  of  the
Company's management. The process for estimating the revenue, net income, and cash flow of the new business lines requires the use of judgment in determining
the appropriate assumptions and estimates. These estimates and assumptions may be revised as additional information becomes available and as additional analyses
are  performed.  In  addition,  the  assumptions  used  in  planning  may  not  prove  to  be  accurate,  and  other  factors  may  affect  the  financial  condition  or  results  of
operations of the new business lines.

Given the rapid changes affecting global, national, and regional economies generally, including for example the economic decline associated with the COVID-19
pandemic,  the  success  of  the  new  business  lines  will  depend  on  the  ability  to  respond  to,  among  other  things,  changes  in  the  economy,  regulatory  conditions,
market conditions, and competitive pressures. Any failure to anticipate or respond adequately to such changes could have a material adverse effect on its financial
condition, operating results, liquidity, cash flow, and operational performance.

The Company expects to incur significant ongoing costs and obligations related to its investment in infrastructure, growth, regulatory compliance, and
operations of the new business lines.
The Company expects to incur significant ongoing costs and obligations related to its investment in infrastructure and growth and for regulatory compliance with
respect  to  the  new  business  lines,  which  could  have  a  material  adverse  impact  on  the  Company's  results  of  operations,  financial  condition,  and  cash  flows.  In
addition,  future  changes  in  regulations,  changes  in  the  enforcement  thereof  or  other  unanticipated  events  could  require  extensive  changes  to  the  Company's
operations,  increased  compliance  costs  or  give  rise  to  material  liabilities,  which  could  have  a  material  adverse  effect  on  the  business,  results  of  operations  and
financial condition of the Company. Efforts to grow the business of the new business lines may be costlier than the Company expects, and the Company may not
be  able  to  increase  its  revenue  enough  to  offset  higher  operating  expenses.  The  new  business  lines  may  incur  significant  losses  in  the  future  for  a  number  of
reasons, including the other risks described in this Form 10-K, and unforeseen expenses, difficulties, complications, and delays, and other unknown events.

The technologies, processes, and formulations used by the new business lines may face competition or become obsolete.
Rapidly  changing  markets,  technology,  emerging  industry  standards,  and  frequent  introduction  of  new  products  characterize  the  new  business  lines.  The
introduction of new products embodying new technologies, including new manufacturing processes or formulations, and the emergence of new industry standards
may render the new business lines’ products obsolete, less competitive or less marketable. The process of developing the new business lines' products is complex
and  requires  significant  continuing  costs,  development  efforts,  and  third-party  commitments.  The  failure  to  develop  new  technologies  and  products  and  the
obsolescence of existing technologies or processes could adversely affect the Company's business, financial condition, and results of operations. The new business
lines may be unable to anticipate changes in their respective potential customers' preferences that could make their existing technologies, processes or formulations
obsolete. The success of the new business lines will depend in part on their ability to continue to enhance their existing technologies, develop new technologies that
address the increasing sophistication and varied news of the market, and respond to technological advances and emerging industry standards and practices on a
timely and cost-effective basis. The development of the new business lines' proprietary technologies, processes and formulations entails significant technical and
business risks. The new business lines may not be successful in using new technologies, exploiting niche markets effectively or adapting their respective businesses
to evolving customer or medical requirements or preference or emerging industry standards.

As the markets in which the new business lines compete continue to develop, competition from market participants may have a negative impact on their
business and prospects.
The markets  in which the new business lines  compete  are competitive  and are expected  to become  increasingly  competitive.  Certain  of these competitors  have
significantly greater financial, production, marketing, research & development, technical, and

20

human resources than the Company does. The commercial opportunity for the new business lines could be reduced or eliminated if their competitors produce and
commercialize  products  that,  among  other  things,  are  safer,  more  effective,  more  convenient  or  less  expensive,  have  greater  sales,  marketing,  and  distribution
support, enjoy enhanced timing of market introduction and perceived advantages of better effectiveness and receive more favorable publicity. As a result, these
competitors may be more successful in gaining market penetration and market share. If the new business lines do not achieve an adequate level of acceptance in
their respective markets, the new business lines may not generate sufficient revenue from their products, and their businesses may not become profitable.

The  industries  that  the  new  business  lines  operate  in  are  undergoing  rapid  growth  and  substantial  change,  which  has  resulted  in  an  increase  in  competitors,
consolidation  and  formation  of  strategic  relationships,  particularly  with  respect  to  legal  adult-use  cannabis  products  in  Canada.  Such  acquisitions  or  other
consolidating  transactions  could  harm  the  Company  in  a  number  of  ways,  including  by  losing  strategic  partners  if  the  partners  are  acquired  by  or  enter  into
relationships  with  a  competitor,  losing  customers,  revenue  and  market  share,  or  forcing  the  Company  to  expend  greater  resources  to  meet  new  or  additional
competitive threats, all of which could harm the operating results of the new business lines. As competitors enter the market and become increasingly sophisticated,
this may intensify and place downward pressure on retail prices, which could negatively impact the profitability of the new business lines. To remain competitive
while complying with regulatory requirements, the new business lines will require continued significant investment in research and development, marketing, sales,
and  customer  support.  The  new business  lines  may  not  have  sufficient  resources  to  maintain  research  and  development,  marketing,  sales  and  customer  support
efforts on a competitive basis, which could materially and adversely affect the business, financial condition and results of operations of the Company.

Figr also faces competition from license holders authorized to produce cannabis under the Cannabis Act who may not fully comply with applicable regulations.
Such  producers  may  have  lower  operating  costs,  make  impermissible  claims  and  utilize  other  competitive  advantages  based  on  circumvention  of  regulatory
requirements.  Furthermore,  Figr  also  faces  competition  from  the  illicit  cannabis  market.  Illegal  dispensaries  and  illicit  operations  and  participants,  despite  not
having a valid license under the Canadian Cannabis Regulations Act, may be able to: (i) offer products with higher concentrations of active ingredients than Figr is
authorized to produce and sell; (ii) brand products more explicitly; (iii) sell products at lower prices; and (iv) market products in ways not permissible by law. As
these illicit market participants do not comply with applicable regulations, their operations may also have significantly lower costs.

As the Canadian adult-use cannabis market continues to mature, consumers who once solely relied on the medical cannabis market may shift some, or all, of their
consumption  away  from  medical  cannabis  and  towards  adult-use  cannabis,  resulting  in  increased  levels  of  competition  in  the  adult-use  cannabis  market.  The
Cannabis Act allows individuals in Canada to cultivate, propagate, harvest and distribute up to four cannabis plants per household provided that each plant meets
certain  requirements.  If  Figr  is  unable  to  effectively  compete  with other  suppliers  to  the adult-use  cannabis  market,  or a  significant  number  of individuals  take
advantage of the ability to cultivate and use their own cannabis, the success of Figr may be limited and may not fulfill the expectations of management.

The number of competitors in the hemp and CBD markets is expected to increase, both in the United States and internationally, which could negatively impact
Criticality’s market share and demand for its products. Additionally, the introduction of an adult-use model for non-hemp cannabis production and distribution in
various  jurisdictions  may  cause  producers  in  those  jurisdictions  to  expand  beyond  the  medical  cannabis  market  and  compete  with  Criticality’s  hemp  and  CBD
products. The impact of this potential development may be negative for Criticality and could result in increased levels of competition in its existing market and/or
the entry of new competitors in the hemp market in which Criticality operates.

Any  failure  by  the  new  business  lines  to  anticipate  or  respond  adequately  to  such  changes  could  have  a  material  adverse  effect  on  their  respective  financial
condition, operation results, liquidity, cash flow, and operational performance.

The new business lines may be unable to obtain additional financial resources on favorable terms or at all.
If  the  new  business  lines  are  not  able  to  reach  or  sustain  profitability  or  if  any  requires  additional  capital  to  fund  growth  or  other  initiatives,  they  may  require
additional equity or debt financing. We cannot assure you that any new business line will be able to obtain additional financial resources on favorable commercial
terms or at all. Failure to obtain such financial resources could affect the Company's plan for growth or result in the Company being unable to satisfy its obligations
as they become due, either of which could have a material adverse effect on the business, financial condition and results of operations of the Company.

Changing consumer preferences may adversely affect consumer retention and results of operations.
As  a  result  of  changing  consumer  preferences,  many  novel  products,  dietary  supplements,  and  other  innovative  products  attain  financial  success  for  a  limited
period of time. Even if the products of the new business lines find retail success, we cannot assure you that any of these products will continue to see extended
financial success. The success of the new business lines will be significantly dependent upon their ability to develop new and improved product lines and to adapt
to consumer preferences. Even if the new business lines are successful in introducing new products or developing current products, a failure to gain

21

consumer acceptance or to update products with compelling content could cause a decline in popularity of these products that could reduce revenues and harm the
Company's brands, business, financial condition, and results of operations.

Consumer perception and reputational risk may negatively affect the new business lines.
The respective markets for the products of the new business lines are highly dependent upon consumer perception regarding the safety, efficacy and quality of their
products.  Consumer  perception  can  be  significantly  influenced  by  scientific  research  or  findings,  regulatory  proceedings,  litigation,  media  attention  and  other
publicity  regarding  the  consumption  of  these  products.  We  cannot  assure  you  that  future  scientific  research,  findings,  regulatory  proceedings,  litigation,  media
attention or other research findings or publicity will be favorable to the these markets or any particular product, or consistent with currently held views. Future
research reports, findings, regulatory proceedings, litigation, media attention or other publicity that are perceived as less favorable than, or that question, earlier
research  reports,  findings  or  publicity  could  have  a  material  adverse  effect  on  the  respective  industries  and  demand  for  the  products  of  the  new business  lines,
which could affect their businesses, results of operations and cash flows. This dependence upon consumer perception means that adverse scientific research reports,
findings, regulatory proceedings, litigation, media attention or other publicity, whether or not accurate or with merit, could have a material adverse effect on the
new  business  lines  and  their  respective  business,  financial  condition,  results  of  operations  and  cash  flows.  Further,  adverse  publicity,  reports  or  other  media
attention regarding the safety, efficacy and quality of these industries in general, or associating the consumption of these types of products with illness or other
negative  effects  or  events,  could  have  a  material  adverse  effect.  Such  adverse  publicity  reports  or  other  media  attention  could  arise  even  if  the  adverse  effects
associated  with  such  products  resulted  from  consumers'  failure  to  consume  such  products  legally,  appropriately,  or  as  directed.  Any  litigation  that  might  affect
consumer perception regarding the new business lines' products could take the form of class proceedings or individual proceedings.

There have been a number of highly publicized cases involving lung and other illness and deaths that appear to be related to vaporizer devices or products used in
such  devices.  For  example,  in  February  2020,  the  U.S.  Centers  for  Disease  Control  (the  “CDC”)  reported  that  federal  and  state  agencies  were  investigating  an
outbreak of over 2,807 lung injury cases involving patients from all 50 states and one U.S. territory, including 68 confirmed deaths. As a result of the outbreak or
future  developments  related  to  potential  health  risks  associated  with  vaping,  governments  and  private  sector  parties  initiated  actions  aimed  at  reducing  the
incidence of vaping and/or seeking to hold manufacturers of nicotine e-liquids, THC or CBD vapable oils, and other vaping products, responsible for the adverse
health effects associated with the use of vaping products. As there has been a limited period of time to study the long-term effects of vaporizer use, there is limited
data on the safety and health effects. If scientific or medical research ultimately determines that use of vaporizer devices poses a significant risk to health or safety,
the  demand  for  vaporizer  products  may  decrease,  and  regulation  of  these  products  could  become  significantly  more  restricted.  The  composition  of  Canadian
cannabis vaporizer products is already stringently regulated. For example, the federal government in Canada has limited the permissible ingredients in a cannabis
vape product to (i) carrier substances, (ii) flavoring agents; and (iii) substances necessary to maintain the quality or stability of the product. Additionally, certain
states  and  local  governments  have  already  implemented  regulations  that  prohibit  the  sale  of  vaporizers,  the  sale  of  flavored  products  (including  nicotine,  non-
nicotine, THC and CBD e-liquid, e-cigarette and other vaping products) or have implemented additional restrictions on the composition of the product. Additional
states  and  localities  may  implement  similar  restrictions  and  the  regulations  may  become  more  restrictive  at  the  federal  level.  Additional  or  more  restrictive
regulatory changes may have a material adverse effect on the Company's business, financial condition and results of operations.

Actions by the FDA and other federal, state, or local governments or agencies may impact consumers’ acceptance of or access to nicotine e-liquids, THC or CBD
vapable oils and other vaping products (for example, through product standards related to flavored products promulgated by the FDA), limit consumers’ choices,
delay  or  prevent  the  launch  of  new  or  modified  products  or  products  with  claims  of  reduced  risk,  require  the  recall  or  other  removal  of  products  from  the
marketplace (for example, as a result of product contamination or regulations that ban certain flavors or ingredients), restrict communications to consumers, restrict
the ability to differentiate products, create a competitive advantage or disadvantage for certain companies, impose additional manufacturing, labeling, or packaging
requirements, interrupt manufacturing or otherwise significantly increase the cost of doing business, or restrict or prevent the use of specified products in certain
locations or the sale of products by certain retail establishments. Any one or more of these actions may have a material adverse impact on the Company's business,
financial condition, and results of operations.

Entities with which the Company does business may cease to provide services to the Company or the new business lines.
Parties outside of the cannabis industry in Canada with which the Company does business may perceive that they are exposed to reputational risk as a result of
Figr's cannabis business activities. For example, the Company could receive a notification from a financial institution advising it that the financial institution would
no longer  maintain  banking relationships  with  those in  the  cannabis  industry,  even  though  the Company’s  involvement  is through  indirect,  separately  managed
foreign subsidiaries. It is possible that the Company may in the future have difficulty establishing or maintaining bank accounts or other business relationships that
it needs to operate its business. Failure to establish or maintain such business relationships could have a material adverse effect on the Company.

22

The Company and its U.S. subsidiaries are subject to laws and regulations related to money laundering, financial record keeping, and proceeds of crime
and may be unable to receive any funds generated by Figr and such funds may not be used to fund the payment of obligations of our U.S. based
operations.
The Company is subject to a variety of laws and regulations that involve money laundering, financial recordkeeping and proceeds of crime, including the U.S.
Currency and Foreign Transactions Reporting Act of 1970 (commonly known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening
America  by  Providing  Appropriate  Tools  Required  to  Intercept  and  Obstruct  Terrorism  Act  of  2001  (USA  PATRIOT  Act),  the  Proceeds  of  Crime  (Money
Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada), as amended, and the rules and regulations thereunder, and any related or similar
rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the United States and Canada.

For example, under U.S. federal law, it is unlawful to engage in financial transactions involving the proceeds of unlawful activity, including the sale of controlled
substances, which in the United States includes marijuana (i.e., cannabis plants, plant parts, or derivatives that do not qualify as either hemp, the mature stalks of
non-hemp  plants,  the  sterilized  seeds  of  non-hemp  plants,  or  derivatives  or  such  mature  stalks  or  seeds).  Also  under  U.S.  federal  law,  banks  or  other  financial
institutions that provide a marijuana-related business with a checking account, debit or credit card, small business loan, or any other service could be found guilty
of money laundering, aiding and abetting a violation of federal law (e.g., the Controlled Substances Act), or conspiracy (e.g., to violate the Controlled Substances
Act).

The Company does not believe any of its activities implicate any applicable money laundering, conspiracy, or related statutes. However, if any of the Company's
investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments in the United States or
Canada were found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under one or more of the
statutes noted above or any other applicable legislation and any persons found to be aiding and abetting or conspiring to commit such violations could be subject to
liability. This could restrict or otherwise jeopardize the ability of Figr to declare or pay dividends, effect other distributions or otherwise repatriate funds to Pyxus
or any Pyxus subsidiary in the United States. Accordingly, funds generated by Figr’s operations, or in certain circumstances the potential future sale of either or
both of Figr East and Figr Norfolk subsidiaries, may not be available to fund the payment of obligations of the Company’s U.S. based operations, including the
debt obligations of Pyxus.

The adult-use cannabis market in Canada has experienced, and may in the future experience, supply, and demand fluctuations.
There have been fluctuations in the supply and demand in the Canadian adult-use cannabis market since legalization in October 2018. If the inventory levels of
Figr  in  the  future  become  greater  than  consumer  demand,  they  may  have  to  engage  in  sale  of  excess  inventory  at  discounted  prices,  which  could  significantly
impair  their  brand  image  and  reduce  their  net  income,  if  any,  or  result  in  net  losses.  Conversely,  if  they  underestimate  demand  for  their  products,  they  may
experience inventory shortages, which might delay shipments to customers, reduce revenue, negatively impact customer relationships and diminish brand loyalty.
In addition, demand for cannabis and cannabis products is dependent on a number of social, political and economic factors that are beyond their control, including
the  novelty  of  legalization,  which  may  diminish  over  time.  Market  demand  for  cannabis  may  not  continue  to  be  sufficient  to  support  the  current  or  future
production levels of Figr, and each may not be able to generate sufficient revenue to be profitable.

Due to these fluctuations and uncertainties, the current market conditions in the cannabis industry generally, the ability to access financing due to both the market
and the more recent economic downturn due to the COVID-19 pandemic, any expansion of Figr facilities is subject to significant risks and uncertainties. These
risks and uncertainties  are more pronounced in the cannabis  industry, as not only must the license  holder make significant  capital  investments  in the plans and
construction, any expansion plans must be applied for and approved by Health Canada. To date, Health Canada has been significantly delayed in both processing
applications  and  approving  license  amendments  required  for  expansions  to  facilities.  Further,  any  contemplated  facilities  expansions  may  not  be  completed  on
schedule due to delays in construction, including delays in securing necessary funding, and may not receive necessary licenses and permits to permit operations to
commence once construction is completed. In addition, Figr may not be able to attract and retain sufficiently qualified personnel to adequately staff the expanded
facilities.  It  is  also  possible  that  any  expansion  plans  may  cost  more  than  anticipated  and  need  to  be  curtailed,  or  the  timeframes  for  completion  extended.
Accordingly, Figr may not be successful in executing its strategy to expand production capacity at its facilities.

There  are  limited  long-term  data  with  respect  to  the  efficacy  and  side  effects  of  the  new  business  lines’  products,  and  future  studies  may  lead  to
conclusions  that  dispute  or  conflict  with  the  Company's  understanding  and  belief  regarding  the  benefits,  viability,  safety,  efficacy,  dosing  and  social
acceptance of such products.
If the products of the new business lines are not perceived to have the effects intended by the end user, the Company's business may suffer. With the exception of
nicotine, which is highly addictive, there are limited long-term data with respect to efficacy, unknown side effects and/or interaction of the substances contained in
the products of the new business lines with human or

23

animal biochemistry. As a result, these products could have unexpected side effects, the discovery of which could materially and adversely affect the Company's,
business, financial condition, and results of operations.

In particular, the rapid development of nicotine e-liquids, THC or CBD vapable oils, and other vaping products has not provided sufficient time for the medical
profession to study the long-term health effects of using such products. Therefore, it is uncertain as to whether or not nicotine e-liquids, THC or CBD vapable oils,
and other vaping products are safe for their intended use. If the medical profession were to determine that using nicotine e-liquids, THC or CBD vapable oils, and
other vaping products posed a significant threat to long-term human health, consumption could decline rapidly and the new business lines may be forced to modify
certain or all of their respective, e-liquids, vapable oils, and other vaping products. Such an outcome may have a material adverse effect on the Company's financial
condition, and results of operations

Research in Canada, the United States, and internationally regarding the benefits, viability, safety, efficacy, dosing and social acceptance of cannabis or isolated
cannabinoids, such as CBD and THC, remains in early stages. There have been relatively few studies conducted to determine the benefits, safety, and side effects
of cannabis or isolated cannabinoids (such as CBD and THC). Although the Company believes that the articles, reports, and studies support its beliefs regarding
the benefits, viability, safety, efficacy, dosing, and social acceptance of hemp and cannabis, future research and clinical trials may prove such articles, reports, and
studies to be incorrect, or could raise concerns regarding cannabis, and perceptions relating to cannabis. Given these risks, uncertainties, and assumptions, undue
reliance should not be placed on such articles and reports.

Future research studies and clinical trials may draw opposing conclusions, or reach negative conclusions, regarding the benefits, viability, safety, efficacy, dosing,
social  acceptance,  or  other  facts  and  perceptions  related  to  cannabis  and  hemp  use,  which  could  have  a  material  adverse  effect  on  the  demand  for  products
containing THC or CBD with the potential to lead to a material adverse effect on the Company’s business, financial condition, results of operations, and prospects.

The Company believes the hemp and CBD industries in the United States are highly dependent upon positive consumer perception regarding the safety, efficacy,
and quality of hemp-derived products, as well as consumer views concerning regulatory compliance and perceived similarities or differences between hemp and
marijuana. Consumers, vendors, landlords/lessors, industry partners, or third-party service providers may incorrectly perceive hemp products as marijuana thereby
confusing them for having the high THC content of marijuana or for being controlled substances under U.S. federal law.

The new business lines are subject to risks related to the retail distribution of their respective products.
Retail chains typically procure products in defined cycles depending on their internal procurement needs. If the new business lines (with the exception of Figr, as
discussed below) are successful in obtaining retail distribution for their products, they will be subject to the cyclical nature of the procurement strategies of their
respective retail partners.

While the Canadian federal government regulates the cultivation and production of cannabis and authorizes distribution of cannabis, each province and territory
regulates  the  wholesale  and  retail  distribution  of  cannabis  within  their  province  or  territory.  In  many  provinces  and  territories,  the  provincial  or  territorial
government has a monopoly over adult-use sales and thus Figr derives a significant portion of its revenue from supply agreements with provincial governments. In
the context of brick and mortar retail, most provinces and territories  allow private parties to apply for retail licenses, however, these private sector retailers  are
required  to  purchase  products  from  the  applicable  provincial  or  territorial  government  and  thus  Figr  can  sell  its  products  only  to  the  provincial  or  territorial
government. A small number of provinces do allow for direct sales by federally licensed producers to retailers. In all cases, in order for Figr to be able to sell its
products it must apply to the applicable provincial or territorial government and complete the onboarding process which varies from one provincial or territorial
government to the next and, in some cases, is quite onerous and more akin to licensing. In addition, and once approved, Figr must abide by the applicable rules,
policies and regulations of the applicable provincial or territorial government, which are subject to change any time.

Currently, Figr Norfolk does not have any supply agreements with provincial or territorial governments. Figr East has secured supply agreements or arrangements
with  the  provinces  of  Ontario,  British  Columbia,  New  Brunswick,  Prince  Edward  Island,  Nova  Scotia,  and  New  Brunswick  and  has  initiated  the  process  of
securing  supply  agreements  with  Alberta,  Quebec  and  Manitoba.  We  cannot  assure  you  that  Figr  East  will  obtain  supply  agreements  or  arrangements  with  the
provinces of Alberta, Quebec, and Manitoba, or any other province or territory. While Figr East is authorized to sell product in Saskatchewan, it has yet to sell any
product  in  this  province.  Generally,  provincial  supply  agreements  or  other  supply  arrangements  do  not  contain  purchase  commitments  or  otherwise  obligate
provincial distributors to buy a minimum or fixed volume of products. As a result, the amount of cannabis that these provincial distributors may purchase under
supply agreements or other arrangements, or its price, may deviate significantly from the Company's desires or expectations. In addition, revenues could fluctuate
materially  in  the  future  and  could  be  materially  and  disproportionately  impacted  by  the  purchasing  decisions  of  existing  government  purchasers  and  any  other
future government purchasers. If any of the existing purchasers decides to purchase lower volumes of products than expected, insist on a price that is lower than
expected, alter its purchasing patterns at any time with limited notice,

24

decide not to continue or begin to purchase the Figr East cannabis products at all or do not enter into or renew supply agreement with Figr East on similar terms or
other terms acceptable to them, Figr East's revenues could be materially adversely affected.

The Company’s new business lines may be unable to maintain or promote the reputation of their respective brands or may incur excessive expense in
doing so.
Management  believes  that  maintaining  and  promoting  the  respective  brands  of  the  new  business  lines  is  critical  to  expanding  their  respective  customer  bases.
Maintaining and promoting such brands will depend largely on the ability of new business lines to continue to provide quality, reliable and innovative products,
which they may not do successfully. In addition, any introduction of new products or services that their respective customers do not like, which may negatively
affect their respective brand and reputation. Maintaining and enhancing these brands may require substantial investments, and these investments may not achieve
the desired goals. Further, the restriction on the use of logos and brand names on cannabis products could have a material adverse impact on the business, financial
condition, and results of operations of Figr, as it may be difficult to establish brand loyalty.

The  future  growth  and  profitability  of  the  new business  lines  will  depend  on the  effectiveness  and  efficiency  of  advertising  and  promotional  expenditures  with
respect to their products, including the ability to: (i) create greater awareness of the products; (ii) determine the appropriate creative message and media mix for
future advertising expenditures; and (iii) effectively manage advertising and promotional costs in order to maintain acceptable operating margins. We cannot assure
you that advertising and promotional expenditures will result in revenues in the future or will generate awareness of these products or services. In addition, the
plain packaging requirements and restrictions or promotion of the Canadian cannabis regulatory regime combined with the oversight of Criticality’s and Purilum's
operations in the United States by the FTC and FDA may limit the ability to effectively advertise and promote these products. We cannot assure you that the new
business lines will be able to manage their respective advertising and promotional expenditures on a cost-effective basis.

The  new  business  lines  are  heavily  dependent  on  their  respective  intellectual  property  and  trade  secrets.  If  they  are  unable  to  effectively  defend  their
respective intellectual property and trade secrets, their respective image, brand or competitive position may be harmed.
The success of the new business lines is heavily dependent upon their respective intangible property and technology. The new business lines rely upon copyrights,
patents,  trademarks,  trade  secrets,  unpatented  proprietary  know-how  and  continuing  innovation  to  protect  important  intangible  property,  technology  and
information. The Company relies on various methods to protect its proprietary rights, including confidentiality agreements with consultants, service providers and
management  that  contain  terms  and  conditions  prohibiting  unauthorized  use  and  disclosure  of  confidential  information.  However,  despite  efforts  to  protect
intangible property rights, unauthorized parties may attempt to copy or replicate intangible property, technology or processes. We cannot assure you that the steps
taken by the new business lines to protect their intangible property, technology and information will be adequate to prevent misappropriation or independent third-
party  development  of  the  new  business  lines'  intangible  property,  technology  or  processes.  Other  companies  may  also  be  able  to  materially  duplicate  Figr's
proprietary plant strains.

With respect to any intangible property rights claim against a new business line, the Company may have to pay damages or the new business line may be forced to
stop using intangible property found to be in violation of a third party's rights. Such new business line may have to seek a license for the intangible property, which
may not be available  on reasonable  terms  and may  significantly  increase  operating  expenses. The technology  also may not be available  for license  at all.  As a
result, the new business line may also be required to pursue alternative options, which could require significant effort and expense. If the new business line cannot
license or obtain an alternative for the infringing aspects of its business, it may be forced to limit product offerings and may be unable to compete effectively. Any
of these results could harm the Company's brand and prevent it from generating sufficient revenue or achieving profitability.

To  the  extent  that  any  of  the  above  occur,  revenue  could  be  negatively  affected,  and  in  the  future,  the  Company  may  have  to  litigate  to  enforce  its  intangible
property rights, which could result in substantial costs and divert management's attention and other resources.

Each of the new business lines' ability to successfully implement its business plan depends in part on its ability to obtain, maintain and build brand recognition
using  its  trademarks,  service  marks,  trade  dress,  domain  names  and  other  intellectual  property  rights.  If  their  efforts  to  protect  their  intellectual  property  are
unsuccessful or inadequate, or if any third-party misappropriates or infringes on their intellectual property, the value of their brands may be harmed, which could
have a material adverse effect on their business and might prevent their brands from achieving or maintaining market acceptance.

The industries in which the new business lines operate are highly regulated and the Company may not always succeed in complying fully with applicable
regulatory requirements in all jurisdictions where the Company carries on business.
The Company's new business lines are heavily regulated in all jurisdictions  where they carry on business. For example, Figr's operations are subject to various
laws, regulations, and guidelines by governmental authorities (including Health Canada)

25

relating to the manufacture, marketing, management, transportation, storage, sale, pricing, and disposal of cannabis and cannabis oil, and also including laws and
regulations relating to health and safety, insurance coverage, the conduct of operations, and the protection of the environment. Additionally, certain activities of the
new  business  lines  are  legally  permissible  only  in  select  jurisdictions  or  pursuant  to  select  specified  regulations  and  restrictions.  For  example,  while  Canadian
national and provincial law authorizes the cultivation and sale of cannabis subject to regulatory requirements, United States federal law prohibits the cultivation
and sale of non-hemp cannabis. Similarly, the cultivation and sale of industrial hemp or hemp in the United States is governed by a patchwork of federal, state, and
local regulations, including without limitation the 2014 Farm Bill, the 2018 Farm Bill, the USDA interim final rule, state agricultural pilot program requirements,
and state commercial hemp plans. Laws and regulations, applied generally, grant government agencies and self-regulatory bodies broad administrative discretion
over such activities, including the power to limit or restrict business activities as well as impose additional disclosure requirements on these products and services.

The Company intends to pursue the new business lines only in the jurisdictions where legal, and only to the extent permitted by applicable law and regulation.
Among other things, the Company does not intend to grow, cultivate, manufacture, or distribute non-hemp cannabis in the United States, or to export any cannabis
grown,  or  cannabis  products  manufactured,  in  Canada  to  the  United  States,  while  such  activities  remain  illegal  under  United  States  federal  law.  However,  any
failure  to  comply  with  the  regulatory  requirements  applicable  to  the  operations  of  the  new  business  lines  may  lead  to  civil,  criminal,  and/or  administrative
enforcement actions, which could result in possible penalties and other sanctions for the Company, its officers, directors, and/or other parties, including but not
limited to, the revocation or imposition of additional conditions on licenses to operate; the suspension or expulsion from a particular market or jurisdiction or of
key personnel; the imposition of additional or more stringent inspection, testing and reporting requirements; the imposition of fines and censures; and the cessation
of business activities, each of such circumstances could have a material adverse effect on the Company's business, financial condition, and results of operations. In
addition,  changes  in  regulations,  more  vigorous  enforcement  thereof  or  other  unanticipated  events  could  require  extensive  changes  to  operations,  increase
compliance costs or give rise to material  liabilities or a revocation of licenses and other permits, which could have a material adverse effect on the Company's
business,  financial  condition,  and  results  of  operations.  Furthermore,  governmental  authorities  may  change  their  administration,  application,  or  enforcement
procedures at any time, which may adversely impact the ongoing costs relating to regulatory compliance.

The  industry  and  the  regulations  governing  adult-use  cannabis  in  Canada  are  rapidly  developing,  and  if  they  develop  in  ways  that  differ  from  the
Company’s expectations, its business and results of operations may be adversely impacted.
The Cannabis Act federally legalized adult-use (non-medical) cannabis in Canada effective as of October 17, 2018. Under the Cannabis Act, each province and
territory of Canada has the ability to separately regulate the distribution and sale of adult-use cannabis within such province or territory, and the laws (including
associated  regulations)  adopted  by  each  province  and  territory  may  vary  significantly.  Each  Canadian  province  and  territory  has  enacted  and  implemented
regulatory regimes for the distribution and sale of cannabis for adult use. Regulations continue to be promulgated and amended. There is no guarantee that federal,
provincial and territorial legislation regulating the production, distribution and sale and promotion of cannabis for adult use, or the application and enforcement of
such legislation, will not change in the future or that its interpretation by the applicable regulatory and judicial bodies will not differ from that of the Company.
Any  such  change  or  difference  in  interpretation  could  result  in  significant  additional  compliance  or  other  costs  and  may  make  participation  in  such  markets
uneconomical.  Since  cannabis  for  adult  use  was  only  recently  legalized  in  Canada,  there  may  be  inconsistencies  in  the  interpretation  and  enforcement  of  the
Cannabis  Act  and  associated  provincial  and  territorial  rules  and  regulations.  At  the  federal  level,  there  are  limitations  on  sales  and  marketing  activities,  the
packaging of cannabis products and use of branding and other promotional activities. The provinces and territories have also imposed certain restrictions that are
more stringent than the federal rules or regulations, such as bans on certain products, raising minimum age of purchase and flavor restrictions. In addition, Health
Canada has experienced delays in approving applications for new licenses, capacity expansions and security clearances required under the Cannabis Act, including
with respect to Figr. Any inconsistencies in the interpretation and enforcement of the Cannabis Act, changes or delays could have a material adverse effect on the
Company's business, financial condition and results of operations.

In  October  2019,  new  regulations  permitting  and  governing  the  production,  distribution,  promotion  and  sale  of  edible  cannabis,  cannabis  extracts  and  topical
cannabis came into effect. Uncertainty remains, however, with respect to the implementation of regulations under the Cannabis Act that will govern the sale and
use of cannabis-related products as well as the various provincial and territorial regimes governing the distribution and sale of cannabis for adult-use purposes. The
impact of these laws, regulations and guidelines on Figr, including increased costs of compliance and other potential risks remain uncertain and, accordingly, may
cause  Figr  to  experience  adverse  effects  on  their  business,  financial  condition  and  results  of  operations.  In  Canada,  the  federal  and  provincial  or  territorial
legislation  and  regulatory  regimes  for  cannabis  products  also  include  excise  duties  payable  by  licensed  cannabis  producers  on  adult-use  cannabis  products,  in
addition to goods and services tax or harmonized sales tax in certain provinces and territories. The rate of the excise duties for cannabis products varies by province
and  territory.  Any  significant  increase  in  the  rate  of  excise  duties  on  adult-use  cannabis  products  in  the  future  could  reduce  consumer  demand  for  adult-use
cannabis products and adversely impact the adult-use cannabis industry and market in general.

26

In addition, any increase in the rate of excise duties on cannabis products in the future could reduce the margins and profitability of Figr.

The  Canadian  federal  regulatory  regime  includes  plain  packaging  requirements.  Among  other  things,  the  packaging  of  cannabis  products  may  only  display  the
brand name once on each principal display panel in prescribed font and size and only one other brand element, such as a logo, may be displayed in addition to the
brand name. Further, the packaging and promotion of cannabis products must not be appealing to youth.

In addition, the Cannabis Act allows for licenses to be granted for outdoor cultivation and Health Canada commenced granting outdoor cultivation licenses in May
2019. The implications of permitting outdoor cultivation are not yet known, but outdoor cultivation could reduce start-up capital required for new entrants in the
cannabis industry, or permit lower cost expansions by existing industry participants as capital expenditure requirements related to outdoor growing are typically
much  lower  than  those  associated  with  indoor  growing.  Similarly,  it  may  also  ultimately  lower  prices.  Accordingly,  competition  from  firms  holding  outdoor
cultivation licenses may have a material adverse impact on the business, financial condition, and results of operation of Figr.

Changes to these laws or regulations could negatively affect the competitive position of Figr within its industry and the markets in which it operates, and we cannot
assure you that various levels of government in the jurisdictions in which Figr operates will not pass legislation or regulations that adversely impact their business.

The new business lines are reliant on obtaining and maintaining licenses, authorizations, approvals, and permits for each of its businesses.
Each  of  the  new  business  lines  will  be  required  to  obtain  and  maintain  certain  licenses,  approvals  and  permits  in  the  jurisdictions  where  their  products  are
produced, licensed or sold. There are also certain approvals and clearances required for directors, officers, parent corporations and any individual in a position to
exercise control over Figr. We cannot assure you that the Company will be able to obtain or maintain all necessary licenses, approvals and permits or be able to
obtain  them  on  a  timely  basis.  Failure  to  obtain  such  licenses,  permits  or  approvals  may  have  a  material  adverse  effect  on  the  Company's  business,  financial
condition and results of operations.

Criticality  may  be  required  to  submit  a  New  Dietary  Ingredient  ("NDI")  notification  to  the  FDA  with  respect  to  hemp  extracts.  This  could  depend  on  whether
Criticality can establish that a particular extract was marketed as a dietary ingredient in a dietary supplement prior to October 15, 1994, or is otherwise currently in
the  food  supply  in  the  same  chemical  form  as  used  in  its  dietary  supplement  product.  If  the  FDA  objects  to  Criticality's  NDI  notification,  this  would  have  a
materially adverse effect upon Criticality and its business.

Further, the FDA’s current compliance policy generally requires that the Company file PMTAs for its finished nicotine-containing e-liquid products by September
9, 2020, or remove them from the market. The Company intends to file PMTAs for certain products by such date. In the event that these applications are not timely
submitted or approved, the Company may be required to remove these products from the market.

The Company is subject to uncertainty regarding legal and regulatory status and changes.
Achievement  of  the  Company's  business  objectives  is  contingent,  in  part,  upon  compliance  by  the  new  business  lines  with  regulatory  requirements  enacted  by
governmental authorities. The new business lines will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with regulations may
result  in  additional  costs  for  corrective  measures,  penalties  or  in  restrictions  on  operations.  In  addition,  changes  in  regulations  or  in  interpretations  of  existing
regulations, more vigorous enforcement thereof or other unanticipated events could require extensive changes to operations, increased compliance costs or give rise
to material liabilities, which could have a material adverse effect on the business, results of operations and financial condition of the Company.

Criticality is subject to uncertainty regarding the legal and regulatory status of hemp, including with respect to U.S. federal and state implementation of
the 2018 Farm Bill and related laws, and changes to such laws and regulations may have material adverse effects on the operations of Criticality.
As  discussed  in  Item  1,  “Business—Operations  of  New  Business  Lines—Industrial  Hemp—Regulation”  of  this  Form  10-K,  there  is  significant  uncertainty
concerning the permissible scope of commercial activity involving industrial hemp, hemp, and hemp-derived products including CBD, as well as the timing and
manner  of  implementation  of  relevant  regulations.  The  2014  Farm  Bill  only  authorized  institutions  of  higher  education  and  state  agriculture  departments  to
cultivate industrial hemp, and only to do so for research purposes. However, it also gave significant discretion to states to regulate industrial hemp pilot programs.
Many  states  that  have  adopted  pilot  programs  have  registered  private  companies  to  cultivate  and  process  industrial  hemp.  Additionally,  many  states,  including
North  Carolina,  where  Criticality  is  based,  have  interpreted  the  2014  Farm  Bill  to  permit  marketing  research  concerning  industrial  hemp  through,  among  other
things, commercial marketing and sale of industrial hemp and industrial hemp products. In contrast, the DEA, FDA, and USDA have taken the position that, under
the

27

2014 Farm Bill, industrial hemp products may not be sold for the purpose of general commercial activity or in states without agricultural pilot programs that permit
their sale for research marketing purposes. These agencies have also taken the position that, under the 2014 Farm Bill, industrial hemp plants and seeds may not be
transported across state lines; although the USDA’s general counsel has issued a legal opinion that interstate shipment of hemp is permitted under the 2014 Farm
Bill, not all of the agencies may agree. There is evidence that Congress does not agree with these agencies’ interpretation of the 2014 Farm Bill, including through
its insertion in various appropriations bills language prohibiting the DEA from using funds to impede state agricultural pilot programs. However, we cannot assure
you that such language will be inserted in future appropriations bills while industrial hemp cultivation continues to be governed by the 2014 Farm Bill. We cannot
assure you that these agencies will change their position concerning the permissible scope of commercial activity under the 2014 Farm Bill.

The 2018 Farm Bill, among other things, removes "hemp" and its derivatives (including its cannabinoids, such as CBD) from the Controlled Substances Act and
amends the Agricultural Marketing Act of 1946 to provide for commercial production of hemp in the United States. The passage of the 2018 Farm Bill and the
promulgation on October 31, 2019 by the USDA of an interim final rule under the 2018 Farm Bill did not eliminate the uncertainty surrounding the permissible
scope of commercial activity involving hemp and hemp products. As of May 27, 2020, the USDA had approved commercial hemp plans for only seventeen states,
thirty-two tribes, and one territory. In states without approved plans (and for individual growers in those states who have not received federal licenses from the
USDA),  cultivation  of  industrial  hemp  continues  to  be  governed  by  the  more  restrictive  2014  Farm  Bill  and  applicable  states’  agricultural  pilot  program
requirements, and commercial production of hemp may violate federal law.

Further, there is uncertainty concerning the timing and manner of implementation of the 2018 Farm Bill in each state. Under the interim final rule, each state may
choose if and when to submit a plan for USDA approval. Until a plan is approved for a growing state, commercial hemp production may not legally begin under
the 2018 Farm Bill under state authority in that state. By way of example, in North Carolina, where Criticality is based, legislation authorizing a state plan was
introduced but did not pass in the last legislative session, there has been no proposed state plan, and the NC Hemp Commission has expressed its opposition to
operating under the existing interim final regulations. In contrast, other states (including South Carolina, from which Criticality sources hemp) have approved plans
and  growers  operating  under  the  2018  Farm  Bill.  Moreover,  individual  growers  (including  some  from  which  Criticality  purchases)  may  choose  to  apply  for  a
federal license and be governed by the 2018 Farm Bill.

Additionally, there is uncertainty created by the 2018 Farm Bill’s decision to leave the states as potential primary regulators of hemp production. States may adopt
regulatory schemes that impose different levels of regulation and costs on the production of hemp. Because many states have not yet obtained USDA approval for
plans for commercial hemp production, the timing of the adoption of state plans cannot be assured. Moreover, the 2018 Farm Bill provides that its provisions do
not preempt or limit state laws that regulate the production of hemp. Accordingly, some states may choose to restrict or prohibit some or all hemp production or
sales. For example, in North Carolina, where Criticality is based, the state legislature previously considered legislation that would have treated “smokeable hemp”
(defined as "harvested raw or dried hemp plant material, including hemp buds or hemp flowers, hemp cigars, and hemp cigarettes") as illegal marijuana under state
law unless produced and used in compliance with specified requirements.

In addition, the status of the current regulations as an interim final rule creates uncertainty as to the ultimate regulatory structure for commercial hemp production.
The current regulations are temporarily in place, pending public notice and comment on the regulations. The USDA has received comments on the interim final
rule,  including  critical  comments  from  the  NC  Hemp  Commission.  The  USDA  may  make  substantive  changes  in  the  regulations  when  final  regulations  are
approved, and, indeed, has already suggested certain potential changes. The interim final rule is set to expire on November 1, 2021, unless extended, to provide
time for a full rulemaking procedure. There is uncertainty what the final rules will be, if any, after the rulemaking procedure, and when they will be adopted.

Further, under the 2018 Farm Bill, the FDA has retained  authority over Food, Drug, and Cosmetic Act-regulated  products containing hemp and its derivatives,
including CBD. Moreover, states have retained regulatory authority through their own analogues to the Food, Drug and Cosmetic Act, and the states may diverge
from the federal treatment of the use of hemp as, or in, food, dietary supplements, vapable products, or topical cosmetic products. We cannot assure you that the
FDA or states (under their Controlled Substances Act and Food, Drug, and Cosmetic Act analogues) will ultimately permit the sale of non-pharmaceutical products
containing hemp-derived CBD.

Changes in the regulations governing cannabis outside of Canada may adversely impact the Company's prospects.
The Company's growth strategy with respect to international expansion of the new business lines continues to evolve as regulations governing the medical cannabis
and industrial hemp industries in the foreign jurisdictions  become  more fully developed. Interpretation  of these laws, rules, regulations, and their application  is
ongoing.  New  laws,  regulations,  and  guidelines  may  be  enacted  and  enforced  or  existing  laws,  regulations,  and  guidelines  may  be  interpreted  or  applied  in  a
manner that could limit or curtail the new business lines expansion plans. Amendments to current laws, regulations and guidelines,

28

more stringent implementation or enforcement thereof, enactment of new laws, the adoption of new regulations, or other unanticipated events, including changes in
political  regimes  and  attitudes  toward  cannabis  and  industrial  hemp,  are  beyond  the  Company's  control  and  could  materially  adversely  affect  the  Company's
international growth prospects.

Furthermore, additional countries continue to pass laws that allow for the production and distribution of cannabis in one form or another. International competition
and limitations placed on Figr by Canadian regulations might lower the demand for any future Figr products on a global scale.

Amendments to current laws, regulations, and guidelines, more stringent implementation or enforcement thereof or other unanticipated events, including changes
in  political  regimes  and  attitudes  toward  the  new  business  lines,  are  beyond  the  Company's  control  and  could  require  extensive  changes  to  the  Company's
international operations, which in turn may result in a material adverse effect on the Company's business, financial condition and results of operations.

We cannot assure you that the Company will be able to expand cannabis operations into legal jurisdictions outside of Canada, or to expand its industrial
hemp operations into other states or internationally, and any such expansion will be subject to risks.
We cannot assure you that any market for cannabis products to be offered by subsidiaries of the Company will develop in any jurisdiction outside of Canada. Laws,
regulations, and perceptions pertaining to cannabis vary widely internationally, and the scope or pace of legalization of medical and adult-use cannabis cannot be
predicted or assured.

Similarly,  we  cannot  assure  you  that  the  Company  will  be  able  to  obtain  the  licenses,  approvals  and  authorizations  necessary  to  source  industrial  hemp  from
growers located in and operating under the agricultural pilot programs of states other than Colorado, New York, North Carolina, and Virginia, or to source hemp
under the 2018 Farm Bill from growers operating under approved state plans (including but not limited to the South Carolina plan) or under the USDA’s umbrella
plan available to individual growers in states without approved plans. We cannot assure you that United States federal or state legislation regulating the distribution
and sale of industrial hemp and hemp will remain unchanged, will be implemented in a way that is favorable to the Company, or will permit the commercial sale of
hemp and hemp products nationally or internationally. If and when additional legal markets for cannabis develop, or the Company is able to expand its industrial
hemp operations, the Company’s pursuit of such markets may expose it to new or unexpected risks or significantly increase its exposure to one or more existing
risk factors, including economic instability, changes in laws and regulations and the effects of competition. These factors may limit the Company's capability to
successfully expand the operations of its subsidiaries into such jurisdictions and may have a material adverse effect on the Company's business, financial condition,
and results of operations.

The Company will become subject to further laws and regulations as it expands internationally.
The  Company  may  expand  the  new  business  lines  internationally.  If  such  international  expansion  occurs,  the  Company  would  become  subject  to  the  laws  and
regulations of (as well as international treaties among) the foreign jurisdictions in which it operates or imports or exports products or materials. In addition, the
Company  may  avail  itself  of  proposed  legislative  changes  in  certain  jurisdictions  to  expand  its  product  portfolio,  which  expansion  may  include  business  and
regulatory compliance risks as yet undetermined. Failure by the Company to comply with the current or evolving regulatory framework in any jurisdiction could
have  a  material  adverse  effect  on  the  Company's  business,  financial  condition,  and  results  of  operations.  There  is  the  possibility  that  any  such  international
jurisdiction  could  determine  that  the  Company  was  not  or  is  not  compliant  with  applicable  local  regulations.  If  the  Company's  historical  or  current  sales  or
operations were found to be in violation of such international regulations the Company may be subject to enforcement actions in such jurisdictions including, but
not  limited  to  civil  and  criminal  penalties,  damages,  fines,  the  curtailment  or  restructuring  of  the  Company's  operations  or  asset  seizures  and  the  denial  of
regulatory applications, each of such circumstances could have a material adverse effect on the Company's business, financial condition, and results of operations.

Violations of applicable law by Figr, including an unlawful transfer of cannabis inventory to jurisdictions, including the United States, in which the sale of
such product is unlawful or within Canada other than for permitted use, may subject the Company to potential criminal sanctions.
Figr is required to comply concurrently with a variety of complex federal, state or provincial, and local laws in each jurisdiction where it operates, or to which it
exports or proposes to export its products, including laws and regulations relating to health and safety, conduct, or operations and the production, management,
transportation, storage, and disposal of our products and of certain material used in our operations. These laws change frequently and may be difficult to interpret
and apply. Compliance with these laws and regulations requires the investment of significant financial and managerial resources, and a determination that we are
not in compliance with these laws and regulations could harm our brand image and business. Moreover, it is impossible for the Company to predict the cost or
effect of such laws, regulations or guidelines upon its future operations.

Under  current  U.S.  federal  law,  it  is  unlawful  to  operate  a  business  from  the  U.S.  that  engages  in  the  possession,  manufacture,  distribution,  and/or  sale  of  a
controlled substance, including cannabis, in a foreign country where such activities are illegal. Although the Company anticipates that Figr will take precautions to
ensure that their operations remain in compliance with all

29

Canadian laws that might apply to such operations, operational decisions of Figr will be made by personnel not located in the United States, and funding of Figr, to
the extent any additional funding is required, would be made by subsidiaries not located in the United States, there is a risk that if Figr were to violate Canadian
federal,  provincial  or  local  law  with  respect  to  the  manufacture,  distribution,  and/or  sale  of  cannabis,  including  an  unlawful  transfer  of  cannabis  inventory  to
jurisdictions,  including  the  United  States,  in  which  the  sale  of  such  product  is  unlawful  or  within  Canada  other  than  for  permitted  use,  that  may  subject  the
Company, its officers, directors, and other parties to potential criminal sanctions, civil fines, forfeitures, and other penalties in the United States.

Further, under current U.S. law, it is unlawful to import controlled substances, including marijuana (that is, cannabis plants, plant parts, or derivatives that do not
qualify as either hemp, the mature stalks of non-hemp plants, the sterilized seeds of non-hemp plants, or derivatives of such mature stalks or seeds), into the United
States, or to transport controlled substances through U.S. territorial waters, on U.S. flagged vessels and U.S. registered aircraft, or accompanied by U.S. citizens or
resident aliens. Accordingly, there is a risk that if Figr were to violate U.S. federal or state law with respect to the manufacture, distribution, sale and/or transport of
cannabis, even outside the United States, that may subject the Company to potential criminal sanctions, civil fines, forfeitures, and other penalties in the United
States.

The presence of THC in Criticality’s CBD products may cause adverse consequences to users of such products that will expose it to the risk of liability
and other consequences.
Criticality’s products are made from industrial hemp, which contains THC, though typically at a low level. As a result of the variability of agricultural products,
certain of Criticality’s products contain varying levels of THC. THC is an illegal or controlled substance in many jurisdictions. Whether or not ingestion of THC
(at low levels or otherwise) is permitted in a particular jurisdiction, there may be adverse consequences to end users who test positive for THC attributed to use of
Criticality’s products through unintentional presence in its products of THC, even if only in trace amounts. In addition, certain metabolic processes in the body
may negatively affect the results of drug tests. Positive tests may adversely affect the end user’s reputation, ability to obtain or retain employment and participation
in  certain  athletic  or  other  activities.  A  claim  or  regulatory  action  against  Criticality  based  on  such  positive  test  results  could  materially  adversely  affect  its
reputation, potentially expose it to material liability and potentially require it to recall its products.

Each of the new business lines faces inherent risk of exposure to product liability claims, regulatory action, and litigation if its products are alleged to
have caused significant loss, injury, or death, which is exacerbated by the fact that cannabis use may increase the risk of serious adverse side effects.
As a manufacturer and distributor of products which are ingested or otherwise consumed by humans, each of the new business lines faces the risk of exposure to
product liability claims, regulatory action and litigation (including class proceedings and individual proceedings) if its products are alleged to have caused loss,
injury or death. Each of the new business lines may be subject to these types of claims due to allegations that its products caused or contributed to injury, illness or
death,  made  false,  misleading  or  impermissible  claims,  failed  to  include  adequate  labelling  and  instructions  for  use  or  failed  to  include  adequate  warnings
concerning  possible  side  effects  or  interactions  with  other  substances.  This  risk  is  exacerbated  for  Figr  by  the  fact  that  cannabis  use  may  increase  the  risk  of
developing  schizophrenia  and  other  psychoses,  symptoms  for  individuals  with  bipolar  disorder,  and  other  side  effects.  Previously  unknown  adverse  reactions
resulting from human consumption of the products of the new business lines alone or in combination with other medications or substances could also occur. In
addition, the manufacture and sale of any ingested or consumable product, involves a risk of injury to consumers due to tampering by unauthorized third parties or
product  contamination.  Any of the new business lines  may  in the future  have to recall  certain  of its products  as a result  of potential  contamination  and quality
assurance concerns. A product liability claim or regulatory action against any of the new business lines could result in increased costs and could adversely affect its
reputation  and  goodwill  with  its  consumers.  We  cannot  assure  you  that  product  liability  insurance  can  be  maintained  on  acceptable  terms  or  with  adequate
coverage  against  potential  liabilities.  Such  insurance  is  expensive  and  may  not  be  available  in  the  future  on  acceptable  terms,  or  at  all.  The  inability  to  obtain
sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could result in the Company becoming subject to
significant liabilities that are uninsured and also could adversely affect commercial arrangements between the new business lines and third parties.

The risk of class-based litigation (and individual litigation) for manufacturers and distributors of cannabis and nicotine e-liquids, THC or CBD vapable oils and
other vaping products, and others involved in the cannabis, hemp and vaping markets, is significant, particularly in the face of increasing health and marketing
concerns, the potential for product recalls or other product-related issues. Both the United States and Canada have highly active plaintiffs’ bars. Recent years have
seen an increasing number of purported class action lawsuits in the United States against manufacturers and distributors of nicotine e-liquids, THC or CBD vapable
oils and other vaping and CBD products. Canada, including each of its provinces and territories, generally has a low bar to class certification and is viewed as a
highly plaintiff-friendly jurisdiction. These circumstances create enhanced risk and exposure for the Company given the nature of its operations, the products it
manufactures, distributes and sells, and its business environment.

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Some of the inventory of the new business lines, including cannabis and hemp, is subject to possible write-offs.
The new business lines intend to hold finished goods in inventory and such inventory have a limited shelf life. Finished goods in inventory may include cannabis,
cannabis  products,  and  hemp  products.  Even  though  it  is  the  intention  of  management  to  review  the  amount  of  inventory  on  hand  in  the  future,  write-off  of
inventory may still be required. Any such write-off of inventory could have a material adverse effect on the Company's business, financial condition, and results of
operations.

The Company could incur substantial liability that may not be covered by insurance.
The Company has insurance  to protect  its assets,  operations  and employees.  While  the Company believes  its insurance  coverage  addresses  all  material  risks to
which it is exposed and is adequate and customary in its current state of operations, such insurance is subject to coverage limits and exclusions and may not be
available  for  the  risks  and  hazards  to  which  the  Company  is  exposed.  In  addition,  we  cannot  assure  you  that  such  insurance  will  be  adequate  to  cover  the
Company's liabilities  or will  be  generally  available  in  the  future  or,  if available,  that  premiums  will be  commercially  justifiable.  If  the Company were  to incur
substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if the Company were to incur such liability at a time
when it is not able to obtain liability insurance, its business, results of operations and financial condition could be materially adversely affected.

In particular, due to the Company's involvement in the new business lines, it may have a difficult time obtaining the various insurances that are desired to operate
its business, which may expose the Company to additional risk and financial liability. Insurance that is otherwise readily available, such as general liability, and
directors  and  officer's  insurance,  may  be  more  difficult  to  find,  and  more  expensive,  because  of  the  regulatory  regime  applicable  to  the  industry.  There  are  no
guarantees that the Company will be able to find such insurance coverage in the future, or that the cost will be affordable. If the Company is forced to go without
such insurance coverage, it may prevent it from entering into certain business sectors, may inhibit growth, and may expose the Company to additional risk and
financial liabilities.

The Company could incur unexpected expenses due to product recalls and any legal proceedings that may arise in connection with product recalls.
Manufacturers and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product defects, such as
contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate or inaccurate labeling disclosure. If any of
the Company's products, including the new business lines, are recalled due to an alleged product defect or for any other reason, the Company could be required to
incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. The Company may lose a significant amount of
sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant attention from management.
Although the Company has detailed procedures in place for testing its products, we cannot assure you that any quality, potency or contamination problems will be
detected in time to avoid unforeseen product recalls, regulatory action or lawsuits. Additionally, if one of the products produced by the Company were subject to
recall, the image and reputation of that product and the Company as a whole could be harmed. A recall for any of the foregoing reasons could lead to decreased
demand for the Company's products and could have a material adverse effect on the results of operations, financial condition and reputation of the Company.

Additionally, product recalls may lead to increased scrutiny of the Company's operations by applicable regulatory agencies, requiring further management attention
and potential legal fees and other expenses.

Hemp plants are vulnerable to specific agricultural risks that may have a material adverse effect on the Company's hemp-related operations.
Hemp plants can be vulnerable to various pathogens including bacteria, fungi, viruses and other miscellaneous pathogens. Such instances often lead to reduced
crop quality, stunted growth and/or death of the plant. Moreover, hemp is phytoremediative meaning that it may extract toxins or other undesirable chemicals or
compounds  from  the  ground  in  which  it  is  planted.  Various  regulatory  agencies  have  established  maximum  limits  for  pathogens,  toxins,  chemicals  and  other
compounds  that  may  be  present  in  agricultural  materials.  If  the  hemp  acquired  by  the  Company  for  supply  to  Criticality  is  found  to  have  levels  of  pathogens,
toxins, chemicals, or other undesirable compounds that exceed established limits, the Company may have to destroy the applicable portions of its hemp crop and
has been required to do so in the past. Should the crops be lost due to pathogens, toxins, chemicals or other undesirable compounds, it may have a material adverse
effect on the Company's business and financial condition.

The Company's cannabis production estimates are based on assumptions that may prove to be inaccurate.
The Company's estimated annual production of cannabis is based on estimated square footage of cultivation space and the amount of dried cannabis cultivated per
plant, which is derived from the historical output of the existing Figr facilities. If Figr is unable to develop the predicted cultivation space, cultivate the predicted
amount of cannabis, or obtain the necessary regulatory approvals, annual cannabis production may be less than predicted,  which could have a material  adverse
effect on the Company's financial condition, and results of operations.

31

A change in control of the Company, including in connection with the Chapter 11 Cases, may affect Figr’s ability to continue to sell its products in certain
provinces in Canada.
Upon change in control of Pyxus, which will occur upon consummation of the Plan, Figr may be required to notify certain Canadian provincial governments with
which it has entered into supply agreements. While the Company does not believe that such a change of control in and of itself will give rise to a termination right
of such provincial governments, due to the wide range of rights afforded to the provincial governments under these contracts, there is a risk that such provincial
governments may terminate the supply agreements under their general termination rights or cease ordering product from Figr. In addition, in the event that any
such change-in-control  transaction  also  resulted  in any change  to the directors  or officers  of Figr, that  the new directors  and officers  will be required  to obtain
security  clearance  from  Health  Canada  in  order  to  hold  such  positions  in  accordance  with  the  Cannabis  Regulations.  Obtaining  security  clearance  requires  a
thorough background check by Health Canada and is a prolonged process. Any delays in obtaining required security clearances, may have a material impact on the
business and operations of Figr.

Risks Relating to Other Aspects of Our Operations

Low investment performance by our defined benefit pension plan assets may increase our pension expense, and may require us to fund a larger portion of
our pension obligations, thus, diverting funds from other potential uses.
We sponsor defined benefit pension plans that cover certain eligible employees. Our pension expense and required contributions to our pension plans are directly
affected by the value of plan assets, the projected rate of return on plan assets, the actual rate of return on plan assets, and the actuarial assumptions we use to
measure the defined benefit pension plan obligations.

If plan assets perform below the assumed rate of return used to determine pension expense, future pension expense will increase. Further, as a result of the global
economic instability or other economic market events, our pension plan investment portfolio may experience significant volatility.

The proportion of pension assets to liabilities, which is called the funded status, determines the level of contribution to the plan that is required by law. In recent
years, we have funded the plan in amounts as required, but changes in the plan’s funded status related to the value of assets or liabilities could increase the amount
required to be funded. We cannot predict whether changing market or economic conditions, regulatory changes or other factors will further increase our pension
funding obligations, diverting funds that would otherwise be available for other uses.

We rely on internal and externally hosted information technology systems and disruption, failure, or security breaches of these systems could adversely
affect our business.
We  rely  on  information  technology  ("IT")  systems,  including  systems  hosted  by  service  providers.  The  enterprise  resource  planning  system  ("SAP")  we  have
implemented throughout the Company, for example, is hosted by Capgemini and our domestic employee payroll system is hosted by Ceridian. Although we have
disaster recovery plans and several intrusion preventive mitigating tools and services in place, which are active inline services or are tested routinely, our portfolio
of hardware and software products, solutions and services and our enterprise IT systems, including those hosted by service providers, may be vulnerable to damage
or  disruption  caused  by  circumstances  beyond  our  control,  such  as  catastrophic  events,  power  outages,  natural  disasters,  computer  system,  or  network  failures,
computer  viruses  or  other  malicious  software  programs,  and  cyber-attacks,  including  system  hacking  and  other  cyber-security  breaches.  For  example,  in  April
2019, the Company discovered that the email accounts of two Canadian employees had been compromised resulting in the unauthorized access of customer and
vendor data. These incidents were neither material nor compromised the Company’s other IT systems. The failure or disruption of our IT systems to perform as
anticipated for any reason could disrupt our business and result in decreased performance, significant remediation costs, transaction errors, loss of data, processing
inefficiencies, downtime, litigation, and the loss of suppliers or customers. A significant disruption or failure could have a material adverse effect on our business
operations, financial performance and financial condition.

We cannot assure you that material weaknesses will not be identified in the future.
We believe that our internal control over financial reporting was effective at March 31, 2020, as reported elsewhere in this Annual Report. Although we intend to
continue to aggressively monitor and improve our internal controls, we cannot assure you that other material weaknesses will not occur in the future. Any failure
to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or
result in misstatements in our financial statements in amounts that could be material. Ineffective internal controls could cause investors to lose confidence in our
reported financial information, which could have a negative effect on the value of our common stock and could also require additional restatements of our prior
reported financial information.

32

Regulations  regarding  environmental  matters  may  affect  the  Company  by  substantially  increasing  the  Company's  costs  and  exposing  it  to  potential
liability.
The Company is subject to environmental, health, and safety laws and regulations in each jurisdiction in which the Company operates. Such regulations govern,
among  other  things,  emissions  of  pollutants  into  the  air,  wastewater  discharges,  waste  disposal,  the  investigation  and  remediation  of  soil,  and  groundwater
contamination, and the health and safety of the Company's employees. For example, the Company's products and the raw materials used in its production processes
are subject to numerous environmental laws and regulations. The Company may be required to obtain environmental permits from governmental authorities for
certain of its current or proposed operations. The Company may not have been, nor may it be able to be at all times, in full compliance with such laws, regulations
and permits. If the Company violates or fails to comply with these laws, regulations or permits, the Company could be fined or otherwise sanctioned by regulators.

As with other companies engaged in similar activities or that own or operate real property, the Company faces inherent risks of environmental liability at its current
and historical production sites. Certain environmental laws impose strict and, in certain circumstances, joint and several liability on current or previous owners or
operators  of  real  property  for  the  cost  of  the  investigation,  removal  or  remediation  of  hazardous  substances  as  well  as  liability  for  related  damages  to  natural
resources. In addition, the Company may discover new facts or conditions that may change its expectations or be faced with changes in environmental laws or their
enforcement  that  would  increase  its  liabilities.  Furthermore,  its  costs  of  complying  with  current  and  future  environmental,  health,  and  safety  laws,  or  the
Company's  liabilities  arising  from  past  or  future  releases  of,  or  exposure  to,  regulated  materials,  may  have  a  material  adverse  effect  on  its  business,  financial
condition, and results of operations.

Derivative transactions may expose us to potential losses and counterparty risk.
We may, from time to time, enter into certain derivative transactions, including interest rate swaps and foreign exchange contracts. Changes in the fair value of
these derivative financial instruments that are not accounted for as cash flow hedges are reported as income, and accordingly could materially affect our reported
income  in  any  period.  In  addition,  the  counterparties  to  these  derivative  transactions  may  be  financial  institutions  or  affiliates  of  financial  institutions,  and  we
would be subject to risks that these counterparties default under these transactions. In some of these transactions, our exposure to counterparty credit risk may not
be secured by any collateral. Global economic conditions over the last few years have resulted in the actual or perceived failure or financial difficulties of many
financial institutions, including bankruptcy. If one or more of the counterparties to one or more of our derivative transactions not secured by any collateral becomes
subject  to  insolvency  proceedings,  we  would  become  an  unsecured  creditor  in  those  proceedings  with  a  claim  equal  to  our  exposure  at  the  time  under  those
transactions. We cannot assure you of the financial stability or viability of any of our counterparties.

To the extent that any of our indebtedness that extends beyond 2021 bears interest at rates based on LIBOR, the interest rates for these obligations might
be subject to change based on recent regulatory changes.
On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.
It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021.
The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is
considering replacing USD LIBOR with a new index calculated by short-term repurchase agreements, backed by Treasury securities. The future of LIBOR at this
time is uncertain. If LIBOR ceases to exist, we may need to renegotiate any agreements extending beyond 2021 that utilize LIBOR as a factor in determining the
interest rate to replace LIBOR with the new standard that is established, which may have an adverse effect on our interest expense and results of operations.

Risks Relating to Ownership of Our Common Stock

Shares  of  our  common  stock  outstanding  immediately  prior  to  the  effectiveness  of  the  Plan  will  be  cancelled  upon  the  effectiveness  of  the  Plan,  and
pursuant to the Plan shares are be issued by New Pyxus upon the effectiveness of the Plan to certain holders of the Second Lien Notes and to the DIP
Lenders, who will, pursuant to the Plan, be deemed to have signed the Shareholders Agreement. We cannot assure you that an active trading market for
the  New  Pyxus  common  stock  to  be  issued  upon  the  effectiveness  of  the  Plan  will  develop  or  be  maintained,  and  the  market  price  of  the  New  Pyxus
common stock may be volatile, which could cause the value of your investment to decline.
Upon the effectiveness of the Plan, all shares of our common stock outstanding immediately prior to the effectiveness of the Plan will be cancelled pursuant to the
terms of the Plan. The shares of New Pyxus common stock to be issued in connection with the effectiveness of the Plan will not initially be listed for trading on
any national stock exchange. We cannot assure holders of New Pyxus common stock that an active public market for New Pyxus common stock to be issued upon
the effectiveness of the Plan will develop or, if it develops, that it will be sustained. In the absence of an active public trading market, it may be difficult for holders
to liquidate their investment in New Pyxus common stock. In the event New Pyxus common stock commences trading, the trading price of New Pyxus common
stock may fluctuate significantly. Numerous factors, many of which we have no control over, may have a significant impact on the market prices of New Pyxus
common stock. The Shareholders Agreement implemented upon the effectiveness of the Plan, which is to be deemed to have been signed by all persons receiving
shares of New Pyxus common stock pursuant to the Plan, includes their agreement not to transfer such

33

shares in certain transactions and to certain person as set forth in the Shareholders Agreement. A description of the Shareholders Agreement is included in "Note
28. Subsequent Events" to the "Notes to Consolidated Financial Statements".

In the event New Pyxus common stock commences trading, the trading price of such common stock may not accurately reflect the value of its business.
Upon the effectiveness of the Plan, ownership of New Pyxus common stock will be highly concentrated, and there will be a limited number of shares available for
trading  on  any  public  market  if  such  a  market  develops.  As  a  result,  future  reported  trading  prices  for  New  Pyxus  common  stock  at  any  given  time  may  not
accurately reflect the underlying economic value of its business at that time. Future reported trading prices could be higher or lower than the price a shareholder
would be able to receive in a sale transaction, and we cannot assure you that there will be sufficient public trading in New Pyxus common stock in the future to
create a liquid trading market that accurately reflects the underlying economic value of its business.

Risks Relating to the Tobacco Industry

Reductions in demand for consumer tobacco products could adversely affect our results of operations.
The tobacco industry, both in the United States and abroad, continues to face a number of issues that may reduce the consumption of cigarettes and adversely affect
our business, sales volume, results of operations, cash flows and financial condition.

These issues, some of which are more fully discussed below, include:

•

•
•
•

•
•
•
•
•
•
•

governmental actions seeking to ascribe to tobacco product manufacturers liability for adverse health effects associated with smoking and exposure to
environmental tobacco smoke;
smoking and health litigation against tobacco product manufacturers;
increased consumer acceptance of electronic cigarettes;
tax increases on consumer tobacco products;
current and potential actions by state attorneys general to enforce the terms of the Master Settlement Agreement, or MSA, between state governments in
the United States and tobacco product manufacturers;
governmental and private bans and restrictions on smoking;
actual and proposed price controls and restrictions on imports in certain jurisdictions outside the United States;
restrictions on tobacco product manufacturing, marketing, advertising and sales;
the diminishing social acceptance of smoking;
increased pressure from anti-smoking groups;
other tobacco product legislation that may be considered by Congress, the states, municipalities and other countries; and
the impact of consolidation among multinational cigarette manufacturers.

Tobacco product manufacturer litigation may reduce demand for our products and services.
Our primary customers, the leading cigarette manufacturers, have faced thousands of lawsuits brought throughout the United States and, to a lesser extent, the rest
of the world. These lawsuits have been brought by different types of plaintiffs, including: (1) individuals and classes of individuals alleging personal injury and/or
misleading advertising; (2) governments (including governmental and quasi-governmental entities in the United States and abroad) seeking recovery of health care
costs allegedly caused by cigarette smoking; and (3) other groups seeking recovery of health care expenditures allegedly caused by cigarette smoking, including
third-party health care payors, such as unions and health maintenance organizations. Damages claimed in some of the smoking and health cases have ranged into
the billions of dollars. There have been many jury verdicts for plaintiffs in tobacco product litigation over the past several years. Additional plaintiffs continue to
file lawsuits. The effects of the previous and current lawsuits on our customers could reduce their demand for tobacco from us.

Legislation and regulatory and other governmental initiatives could impose burdensome restrictions on the tobacco industry and reduce consumption of
consumer tobacco products and demand for our services.
The Tobacco Control Act, which amended the Food, Drug, and Cosmetic Act, extends the authority of the FDA to regulate tobacco products. This act authorizes
the FDA to adopt product standards for tobacco products, including the level of nicotine yield and the reduction or elimination of other constituents of the products,
along with provisions for the testing of products against these standards. The act imposes further restrictions on advertising of tobacco products, authorizes the
FDA  to  limit  the  sales  of  tobacco  products  to  face-to-face  transactions  permitting  the  verification  of  the  age  of  the  purchaser,  authorizes  a  study  to  determine
whether the minimum age for the purchase of tobacco products should be increased and requires submission of reports from manufacturers of tobacco products to
the FDA regarding product ingredients and other matters, including reports on health, toxicological, behavioral, or physiologic effects of tobacco products and their
constituents. The act also mandates warning labels and requires packaging to indicate the percentage of domestically grown tobacco and foreign grown tobacco
included in the product, although the FDA has issued guidance to the industry announcing its intent to enforce the latter

34

requirements until further notice. The FDA has adopted regulations under the act establishing requirements for the sale, distribution, and marketing of cigarettes, as
well as package warnings and advertising limitations.

The  act  directs  the  FDA  to  promulgate  regulations  requiring  that  the  methods  used  in,  and  the  facilities  and  controls  used  for,  the  manufacture,  preproduction
design validation, packing, and storage of a tobacco product conform to current good manufacturing practice. Regulations under the act do not apply to tobacco
leaf that is not in the possession of a manufacturer of tobacco products, or to the producers of tobacco leaf, including tobacco suppliers, tobacco warehouses, and
tobacco  supplier  cooperatives  unless  those  entities  are  controlled  by  a  tobacco  product  manufacturer,  but  do  apply  to  our  U.S.  cut  rag  processing  facility  with
respect to covered tobacco products.

In May 2016, the FDA finalized regulations, which became effective in August 2016, that extend its regulatory authority under the act to tobacco products not
previously covered by its regulations, including vaporizers, vape pens, hookah pens, electronic cigarettes (or, e-cigarettes), e-pipes, and other types of electronic
nicotine  delivery  systems,  including  e-liquids  used  in  these  devices,  as  well  as  pipe  tobacco  and  cigars  (including  little  cigars  and  cigarillos),  and  future  novel
tobacco  products.  These  regulations  require  manufacturers  of  these  additional  tobacco  products  to,  among  other  things  submit  an  application  and  obtain  FDA
authorization to market a new tobacco product (as noted above); register establishment(s) and submit product listing to FDA; submit listing of ingredients; submit
information  on  harmful  and  potentially  harmful  constituents;  submit  tobacco  health  documents;  not  introduce  into  interstate  commerce  modified-risk  tobacco
products (e.g., products with label, labeling, or advertising representing that they reduce risk or are less harmful compared to other tobacco products on the market)
without an FDA order; and include the required warning statement on packaging and advertisements. These regulations apply to certain of our operations that had
not previously been subject to the act, including the processing of pipe tobacco and tobacco for little cigars and cigarillos at our U.S. cut rag processing facility,
and to joint ventures and subsidiaries that develop, produce and sell consumable e-liquids. In addition, the May 2016 regulations make these additional tobacco
products subject to certain existing restrictions on the sale of cigarettes, including then-existing restrictions prohibiting sale to individuals under 18 years of age. In
addition, recent federal legislation established a national minimum purchase age of 21 for tobacco and tobacco-based products, including e-liquids.

The full impact of the act, including the May 2016 regulations and any future regulatory action to implement the act, is uncertain. However, if the effect of the act
and FDA regulations under the act is a significant reduction in consumption of tobacco products, it could materially adversely affect our business, volume, results
of operations, cash flows and financial condition.

Reports  with  respect  to  the  harmful  physical  effects  of  cigarette  smoking  have  been  publicized  for  many  years,  and  the  sale,  promotion  and  use  of  cigarettes
continue  to  be  subject  to  increasing  governmental  regulation.  Since  1964,  the  Surgeon  General  of  the  United  States  and  the  Secretary  of  Health  and  Human
Services  have  released  a  number  of  reports  linking  cigarette  smoking  with  a  broad  range  of  health  hazards,  including  various  types  of  cancer,  coronary  heart
disease  and  chronic  lung  disease,  and  recommending  various  governmental  measures  to  reduce  the  incidence  of  smoking.  More  recent  reports  focus  upon  the
addictive nature of cigarettes, the effects of smoking cessation, the decrease in smoking in the United States, the economic and regulatory aspects of smoking in the
Western Hemisphere, and cigarette smoking by adolescents, particularly the addictive nature of cigarette smoking in adolescence. Numerous state and municipal
governments  have  taken  and  others  may  take  actions  to  diminish  the  social  acceptance  of  smoking  of  tobacco  products,  including  banning  smoking  in  certain
public and private locations.

A  number  of  foreign  nations  also  have  taken  steps  to  restrict  or  prohibit  cigarette  advertising  and  promotion,  to  increase  taxes  on  cigarettes  and  to  discourage
cigarette smoking. In some cases, such restrictions are more onerous than those in the United States. For example, advertising and promotion of cigarettes has been
banned  or  severely  restricted  for  a  number  of  years  in  Australia,  Canada,  Finland,  France,  Italy,  Singapore  and  other  countries.  Further,  in  February  2005,  the
World Health Organization (“WHO”) treaty, the Framework Convention for Tobacco Control (“FCTC”), entered into force. This treaty, which is binding on 181
nations as of March 31, 2019, requires signatory nations to enact legislation that would require, among other things, specific actions to prevent youth smoking;
restrict or prohibit tobacco product marketing; inform the public about the health consequences of smoking and the benefits of quitting; regulate the content of
tobacco  products;  impose  new  package  warning  requirements  including  the  use  of  pictorial  or  graphic  images;  eliminate  cigarette  smuggling  and  counterfeit
cigarettes; restrict smoking in public places; increase and harmonize cigarette excise taxes; abolish duty-free tobacco sales; and permit and encourage litigation
against tobacco product manufacturers.

Due  to  the  present  regulatory  and  legislative  environment,  a  substantial  risk  exists  that  past  growth  trends  in  tobacco  product  sales  may  not  continue  and  that
existing sales may decline. A significant decrease in worldwide tobacco consumption brought about by existing or future governmental laws and regulations would
reduce demand for tobacco products and services and could have a material adverse effect on our results of operations.

35

Government  actions  can  have  a  significant  effect  on  the  sourcing  of  tobacco.  If  some  of  the  current  efforts  are  successful,  we  could  have  difficulty
obtaining sufficient tobacco to meet our customers’ requirements, which could have an adverse effect on our performance and results of operations.
The  WHO,  through  the  FCTC,  created  a  formal  study  group  to  identify  and  assess  crop  diversification  initiatives  and  alternatives  to  leaf  tobacco  growing  in
countries whose economies depend upon tobacco production. The study group began its work in February 2007. In its initial report published later that year, the
study group indicated that the FCTC did not aim to phase out tobacco growing, but the study group's focus on alternatives to tobacco crops was in preparation for
its anticipated eventual decrease in demand resulting from the FCTC's other tobacco control initiatives.

If the objective of the FCTC study group were to change to seek to eliminate or significantly reduce leaf tobacco production and certain countries were to partner
with the study group in pursuing this objective, we could encounter difficulty in sourcing leaf tobacco to fill customer requirements, which could have an adverse
effect on our results of operations.

In addition, continued government and public emphasis on environmental issues, including climate change, conservation, and natural resource management, could
result in new or more stringent forms of regulatory oversight of industry activities, which may lead to increased levels of expenditures for environmental controls,
land use restrictions affecting us or our suppliers, and other conditions that could have a material adverse effect on our business, financial condition, and results of
operations. For example, certain aspects of our business generate carbon emissions. Regulatory restrictions on greenhouse gas emissions have been proposed in
certain countries in which we operate. These may include limitations on such emissions, taxes or emission allowance fees on such emissions, various restrictions
on  industrial  operations,  and  other  measures  that  could  affect  land-use  decisions,  the  cost  of agricultural  production,  and  the cost  and  means  of processing  and
transporting our products. These actions could adversely affect our business, financial condition, and results of operations.

We have been, and continue to be, subject to governmental investigations into, and litigation concerning, leaf tobacco industry buying and other payment
practices.
The leaf tobacco industry, from time to time, has been the subject of government investigations regarding trade practices. For example, we were the subject of an
investigation by the Antitrust Division of the United States Department of Justice into certain buying practices alleged to have occurred in the industry, we were
named  defendants  in  an  antitrust  class  action  litigation  alleging  a  conspiracy  to  rig  bids  in  the  tobacco  auction  markets,  and  we  were  the  subject  of  an
administrative investigation into certain tobacco buying and selling practices alleged to have occurred within the leaf tobacco industry in some countries within the
European Union, including Spain, Italy, Greece and potentially other countries.

Item 1B. Unresolved Staff Comments

None.

36

Item 2. Properties

Our corporate headquarters are located in Morrisville, North Carolina and are leased under an agreement that expires in May 2021. We own a total of 12 facilities
in eight countries. We operate our leaf tobacco processing facilities for seven to nine months per year, corresponding with the applicable harvesting seasons. Our
production facilities in the other products and services segment operate on a year-round basis. We continually compare our production capacity and organization
with  the  transitions  occurring  in  global  sourcing  of  tobacco  and  other  specialty  products.  We  believe  our  domestic  production  facilities  and  certain  foreign
production facilities have the capacity to process additional volumes of tobacco and other specialty products, if required by customer demand.

The following is a listing of the various material properties used in operations, all of which are owned by the Company, as of March 31, 2020:

Location

Leaf - North America Segment

North America

Wilson, North Carolina, USA

Farmville, North Carolina, USA

Danville, Virginia, USA

Leaf - Other Regions Segment

South America

Venancio Aires, Brazil

Ararangua, Brazil

El Carril, Argentina

Africa

Lilongwe, Malawi

Morogoro, Tanzania

Harare, Zimbabwe

Asia

Ngoro, Indonesia

North America

Other Products and Services Segment

Charlottetown, Prince Edward Island, Canada

Simcoe, Ontario, Canada

Item 3. Legal Proceedings

Use

Factory / Storage

Storage

Storage

Factory / Storage

Factory / Storage

Storage

Factory / Storage

Factory / Storage

Factory / Storage

Factory / Storage

Factory / Storage

Factory / Storage

See  Note  23.  "Contingencies  and  Other  Information" to  the  "Notes  to  Consolidated  Financial  Statements"  for  additional  information  with  respect  to  legal
proceedings, which is incorporated by reference herein.

Bankruptcy Proceedings
See Note 28. "Subsequent Events" to the "Notes to Consolidated Financial Statements" for additional information regarding the Chapter 11 Cases.

Item 4. Mine Safety Disclosures

Not applicable.

37

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

PART II

Pyxus’ common stock was previously listed for trading on the New York Stock Exchange ("NYSE"), under the ticker symbol "PYX". As a result of our failure to
satisfy the continued listing requirements of the NYSE, on June 30, 2020, the NYSE filed a Form 25 with the Commission which became effective to the common
stock from the NYSE on July 10, 2020. From June 17, 2020, Pyxus’ common stock has been traded on the OTC Pink Marketplace maintained by the OTC Markets
Group,  Inc.  under  the  symbol  "PYXSQ".  During  such  period,  any  over-the-counter  market  quotations  reflect  inter-dealer  prices,  without  retail  mark-up,  mark-
down, or commission and may not necessarily represent actual transactions.

As of March 31, 2020, there were 10,867 shareholders, including 10,357 non-objecting beneficial holders of our common stock. Upon effectiveness of the Plan, all
shares of Pyxus' common stock outstanding immediately prior to the effectiveness of the Plan will be cancelled, and shares of New Pyxus common stock will be
issued  to  certain  holders  of  the  Second  Lien  Notes  and  the  DIP  Lenders  pursuant  to  the  Plan.  Pursuant  to  the  Plan,  all  persons  receiving  shares  of  New  Pyxus
common stock upon the effectiveness  of the Plan will be deemed to have signed, and therefore will be subject to the terms of, the Shareholders  Agreement. A
description of the Shareholders Agreement is included in "Note 28. Subsequent Events" to the "Notes to Consolidated Financial Statements".

The payment of dividends by Pyxus is subject to the discretion of our board of directors and will depend on business conditions, compliance with debt agreements,
achievement  of  anticipated  cost  savings,  financial  condition  and  earnings,  regulatory  considerations,  and  other  factors.  The  declaration  of  future  dividends  by
Pyxus is at the discretion of our board of directors and subject to our results of operations, financial condition, cash requirements, and other factors and restrictions
under  applicable  law,  and  our  debt  agreements.  See  Note  12.  "Debt  Arrangements  -  Covenants  Limiting  Dividends" to  the  “Notes  to  Consolidated  Financial
Statements” for further information.

38

Comparison of Cumulative Total Return to Shareholders

The following summarizes the cumulative total shareholder return of a $100 investment including reinvestment of dividends and price appreciation over the last
five years in each of the following: the common stock of Old Holdco, Inc., then known as Pyxus International, Inc. and presented in the chart below as “Pyxus
International,  Inc.,”  the  S&P  500  Index,  the  S&P  600  Small  Cap  Index,  and  an  index  of  peer  companies.  The  sole  company  in  the  peer  group  is  Universal
Corporation (UVV).

*$100 invested on March 31, 2015 in stock or index, including reinvestment of dividends.
Fiscal year ending March 31.

Copyright ©2020 Standard & Poor's, a division of S&P Global. All rights reserved.

Pursuant to the terms of the Plan, upon effectiveness of the Plan, all outstanding shares of common stock will be cancelled.

Pyxus

S&P 500

S&P Smallcap 600

Custom Peer Group

Cumulative Total Return

3/15

100.00  $

100.00  $

100.00  $

100.00  $

3/16

159.64  $

101.78  $

96.80  $

125.38  $

$

$

$

$

39

3/17

116.82  $

119.26  $

120.60  $

161.95  $

3/18

236.82  $

135.95  $

135.89  $

115.13  $

3/19

217.18  $

148.86  $

138.01  $

143.37  $

3/20

28.27 

138.47 

102.28 

115.94 

Item 6. Selected Financial Data

Five Year Financial Statements
Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries

(in thousands, except per share amount, ratio and number of stockholders)
Summary of Operations

2020

2019

2018

2017

2016

Years Ended March 31,

   Sales and other operating revenues

$

1,527,261  $

1,801,593  $

1,845,966  $

1,714,750  $

1,904,592 

   Other income, net (1)

   Restructuring and asset impairment charges(7)

   Goodwill impairment(8)

   Operating (loss) income (2)
   Net (loss) income

   Net (loss) income attributable to 
      Pyxus International, Inc.

(Loss) Earnings Per Share Attributable to Pyxus International,
Inc.:

   Basic (loss) earnings per share

   Diluted (loss) earnings per share (3)

   Cash dividends paid

Balance Sheet Data

   Working capital

   Total assets (4)

   Long-term debt (4)
   Stockholders’ (deficit) equity attributable to 
      Pyxus International, Inc.

Other Data

   Common shares outstanding at year end (5)

   Number of stockholders at year end (6)

2,133 

5,646 

33,759 

(11,609)

(270,319)

14,217 

4,946 

— 

87,254 

(71,168)

14,382 

382 

— 

111,904 

51,906 

4,896 

1,375 

— 

87,342 

(63,271)

105,427 

5,888 

— 

206,220 

65,445 

(264,661)

(70,467)

52,436 

(62,928)

65,532 

(28.93) $

(7.78) $

5.83  $

(7.05) $

(28.93) $

(7.78) $

5.81  $

(7.05) $

— 

— 

— 

— 

7.38 

7.38 

— 

443,302  $

591,666  $

711,546  $

797,326  $

1,763,063 

904,316 

1,859,275 

898,386 

1,966,631 

920,143 

1,971,872 

942,959 

815,532 

1,968,198 

910,214 

(78,000)

183,710 

271,866 

203,518 

271,126 

9,191 

10,867 

9,096 

12,969 

9,023 

5,355 

8,963 

4,187 

8,900 

4,465 

$

$

$

(1) As of March 31, 2016, the Company determined that the significant doubt about our ability to control our Zimbabwe subsidiary, Mashonaland Tobacco Company LTD, was
eliminated and recorded a gain of $106,203 upon reconsolidation.
(2) On April 1, 2018, new accounting guidance that changed the presentation of pension service costs in financial statements was adopted on a retrospective basis. The March 31,
2018, 2017, and 2016 balances have been adjusted in accordance with the adoption of this guidance.
(3) For the years ended March 31, 2020, 2019, and 2017, outstanding  restricted shares and shares applicable to stock options and restricted stock units are excluded as their
inclusion would have an antidilutive effect on the loss per share.
(4) On April 1, 2016, new accounting guidance that changed the presentation of debt issuance costs in financial statements was adopted on a retrospective basis. The March 31,
2016 balances have been adjusted in accordance with the adoption of this guidance.
(5) Excluding 785 shares owned by a wholly owned subsidiary.
(6) Includes the number of stockholders of record and non-objecting beneficial owners.
(7) See Note 21. “Restructuring and Asset Impairment Charges” to the “Notes to Consolidated Financial Statements” for further information.
(8) See Note 10. “Goodwill and Other Intangible Assets, Net” to the “Notes to Consolidated Financial Statements” for further information.

40

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview
Pyxus  provides  responsibly  produced,  independently  verified,  and  traceable  agricultural  products,  ingredients,  and  services  to  businesses  and  customers.
Headquartered  in  the  Research  Triangle  Park  region  of  North  Carolina,  we  contract  with  growers  across  five  continents  to  help  them  produce  sustainable,
compliant crops.

Historically,  Pyxus’  core  business  has  been  as  a  tobacco  leaf  merchant,  purchasing,  processing,  packing,  storing,  and  shipping  tobacco  to  manufacturers  of
cigarettes and other consumer tobacco products throughout the world. Through our predecessor companies, we have a long operating history in the leaf tobacco
industry with some customer relationships beginning in the early 1900s. In an increasing number of markets, we also provide agronomy expertise for growing leaf
tobacco. Our contracted tobacco grower base often produces a significant volume of non-tobacco crop utilizing the agronomic assistance that our team provides.
Pyxus is working to find markets for these crops as part of our ongoing efforts to improve farmer livelihoods and the communities in which they live.

We are committed to responsible crop production which supports economic viability for the grower, provides a safe working atmosphere for those involved in crop
production, and minimizes negative environmental impact. Our agronomists maintain frequent contact with growers prior to and during the growing and curing
seasons to provide technical assistance to improve the quality and yield of the crop. Throughout the entire production process, from seed-to-sale, our SENTRISM
traceability system provides clear visibility into how products are produced throughout the supply chain, supporting product integrity.

We  are  continuing  our  transformation  journey  designed  to  diversify  the  Company's  products  and  services  by  leveraging  our  core  strengths  in  agronomy  and
traceability. In general, our diversification focuses on products that are value-added, require some degree of processing, and offer higher margin potential than our
core tobacco leaf business. To support these new business lines, we have broad geographic processing capabilities, a diversified product offering, an established
customer base for our core leaf tobacco business, and a growing customer base.

Our consolidated operations are managed and reported in ten operating segments that are organized by product category and geographic area and aggregated into
three reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. See Note 1. "Basis of
Presentation and Summary of Significant Accounting Policies" for more information.

COVID-19
We have been closely monitoring the impact of the COVID-19 outbreak on our Company and our workforce since January 2020. In March 2020, the World Health
Organization  recognized  the  COVID-19  as  a  global  pandemic.  The  COVID-19  pandemic  and  government  actions  implemented  to  contain  further  spread  of
COVID-19 have severely restricted economic activity around the world. Our businesses have been classified as an "essential" business under governmental shelter-
in-place and similar orders in many of the jurisdictions in which we operate. As such, we are still able to produce and sell products. Our production facilities are
still  operating  but,  in  some  instances,  at  lower  production  levels  than  planned  due  to  the  shelter  in-place  mandates.  While  our  supply  chains  and  distribution
channels have experienced delays, we currently have adequate supply of products to meet the near-term forecasted demand. During the three months ended March
31, 2020, we estimate that between $125 million and $175 million of revenue was delayed in our Leaf - North America and Leaf - Other Regions segments due to
the impact of the COVID-19 pandemic on shipments.

We  implemented  various  measures  to  reduce  the  spread  of  COVID-19  including  the  implementation  of  health  safety  practices,  providing  personal  protective
equipment,  the  implementation  of  travel  restrictions,  work-from-home  policies  where  possible,  restricting  visitors  to  production  locations,  splitting  production
workforce,  reducing  the  on-site  production  workforce  levels,  screening  workers  before  they  enter  facilities,  implementing  social  distancing,  and  encouraging
employees to adhere to prevention measures recommended by the Center for Disease Control and the World Health Organization. In addition, we have developed a
robust Return to Work Program to ensure our employees are returning to a safe working environment as federal, state, and local governments begin lifting their
COVID-19 related restrictions.

Broad  economic  factors  from  the  COVID-19  pandemic,  including  increasing  unemployment  rates  and  reduced  consumer  spending,  may  extend  billing  and
collection  cycles.  Deterioration  in  the  collectability  of  accounts  receivable  from  extended  billing  and  collection  cycles  would  adversely  affect  our  results  of
operations, financial condition, and cash flows, leading to working capital constraints. If general economic conditions continue to deteriorate or remain uncertain
for an extended period of time, our business, results of operations, financial condition, and cash flows will be adversely affected.

Coronavirus Aid, Relief, and Economic Security Act
On  March  27,  2020,  the  Coronavirus  Aid,  Relief,  and  Economic  Security  Act  (“CARES  Act”)  was  enacted.  The  CARES  Act  is  an  approximate  $2.0  trillion
emergency economic stimulus package passed in response to the COVID-19 outbreak that includes

41

provisions for direct financial assistance to Americans in the form of one-time payments to individuals and aid to businesses in the form of loans and grants and
financial assistance to businesses most directly impacted by the COVID-19 pandemic. Included in the CARES Act are numerous income tax provisions, including
changes to the Net Operating Loss (“NOL”) rules and the business interest expense deduction rules under Code Section 163(j). Factors that could affect our ability
to receive funding include, but are not limited to, our filing of the Chapter 11 Cases and the finalization of regulations implementing the statutory requirements of
the  CARES Act.  Due to  the  recent  enactment  of  this  legislation,  there  is  a  high  degree  of uncertainty  around  its  implementation  and  we continue  to  assess  the
potential impacts of this legislation on our business, results of operations, financial condition, and cash flows.

Going Concern
In an effort to address our maturing long-term debt, we have contemplated a number of actions, including reviewing of strategic business alternatives, evaluating
and developing plans for a partial monetization of the our interests in certain subsidiaries in the Other Products and Services segment, and implementing a global
operations efficiency program. After implementing certain of these actions, evaluating other financing alternatives, and the impact of the COVID-19 pandemic, we
determined  that  we  will  not  have  liquidity  to  fund  near-term  operations.  As  a  result,  we  commenced  the  Chapter  11  Cases  on  June  15,  2020.  We  operated  as
“debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 of the Bankruptcy Code and
the orders of the Bankruptcy Court until their emergence from bankruptcy. Our non-debtor entities were not part of the Chapter 11 Cases, and continued to operate
in the ordinary course of business.

The accompanying consolidated financial statements and related notes have been prepared assuming that we will continue as a going concern and contemplate the
realization  of  assets  and  the  satisfaction  of  liabilities  in  the  normal  course  of  business.  The  accompanying  consolidated  financial  statements  do  not  include
adjustments related to the recoverability  and classification  of assets or the amounts and classification of liabilities or other adjustments that might be necessary
should we be unable to continue as a going concern or as a consequence of the Chapter 11 Cases. As a result of our financial condition and near-term maturities of
substantial indebtedness, substantial doubt existed as of March 31, 2020 that we would be able to continue as a going concern. Based on the confirmation of the
Plan by the Bankruptcy Court and the effectiveness of the Plan, there is no longer substantial doubt about our ability to continue as a going concern.

Bankruptcy Proceedings
On June 15, 2020 (the "Petition Date"), the Company (then named Pyxus International, Inc.) and its then subsidiaries Alliance One International, LLC, Alliance
One North America, LLC, Alliance One Specialty Products, LLC and GSP Properties, LLC (collectively, the “Debtors”) filed voluntary petitions (the “Chapter 11
Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) with the Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”) to implement a prepackaged chapter 11 plan of reorganization (“Prepack Plan”) that effectuates a financial restructuring of the Company’s secured debt
(the “Restructuring”). The Company commenced solicitation of the Prepack Plan with a related disclosure statement (“Disclosure Statement”) on June 14, 2020.
The Chapter 11 Cases have been administered jointly under the caption In re Pyxus International, Inc., et al. On August 21, 2020, the Bankruptcy Court issued an
order (the “Confirmation Order”) confirming the Amended Joint Prepackaged Chapter 11 Plan of Reorganization (the “Plan”) filed by the Debtors in the Chapter
11 Cases. This Form 10-K is being signed concurrently with the effectiveness of the Plan. These and other related matters are discussed in greater detail in the
"Note 28. Subsequent Events" to the "Notes to Consolidated Financial Statements" for additional information.

During  the  pendency  of  the  Chapter  11  Cases,  we  expect  our  financial  results  to  be  volatile  as  restructuring  activities  and  expenses,  contract  terminations  and
rejections,  and  claims  assessments  significantly  impact  our  consolidated  financial  statements.  As  a  result,  our  historical  financial  performance  is  likely  not
indicative of our financial performance after the date of the filing of the Chapter 11 Cases. In addition, we have incurred significant professional fees and other
costs  in  connection  with  preparation  for  the  Chapter  11  Cases  and  expect  that  we  will  continue  to  incur  significant  professional  fees  and  costs  throughout  the
Chapter 11 Cases. See Note 28. "Subsequent Events" to the "Notes to Consolidated Financial Statements" for additional information.

42

Results of Operations

Years Ended March 31, 2020 and 2019

Consolidated

(in millions)

Sales and other operating revenues

Total cost of goods and services sold

Gross profit

Selling, general, and administrative expenses

Other income, net

Restructuring and asset impairment charges

Goodwill impairment

Operating (loss) income

Debt retirement expense (income)

Interest expense

Interest income

Income tax expense

Equity in net income of investee companies

Net loss attributable to noncontrolling interests

Years Ended March 31,

Change

2020

2019

$

%

$

1,527.3  $

1,801.6  $

1,302.6 

1,550.8 

224.7 

199.0 

2.1 

5.6 

33.8 

(11.6)

— 

136.7 

3.9 

131.8 

5.9 

(5.7)

250.8 

172.8 

14.2 

4.9 

— 

87.3 

(1.8)

135.6 

3.6 

37.8 

9.6 

(0.7)

(274.3)

(248.2)

(26.1)

26.2 

(12.1)

0.7 

33.8 

(98.9)

1.8 

1.1 

0.3 

94.0 

(3.7)

(5.0)

Net loss attributable to Pyxus International, Inc.*

$

(264.7) $

(70.5) $

(194.2)

*Amounts may not equal column totals due to rounding.

(15.2)

(16.0)

(10.4)

15.2 

(85.2)

14.3 

100.0 

(113.3)

100.0 

0.8 

8.3 

248.7 

(38.5)

(714.3)

(275.5)

Sales and other operating revenues decreased $274.3 million or 15.2% to $1,527.3 million for the year ended March 31, 2020 from $1,801.6 million for the year
ended March 31, 2019. This decrease was due to a 14.4% decrease in leaf volumes attributable to flue-cured oversupply conditions, the timing of shipments in
Africa, North America, and South America, the impact of Hurricane Florence reducing the prior year U.S. crop size (which impacted carryover shipments), and
foreign tariffs on U.S. tobacco reducing Leaf - North America segment volumes, as well as the global impact of the COVID-19 pandemic delaying shipments. This
decrease was partially offset by an increase in cannabinoid revenue in the Canadian provinces of New Brunswick, Nova Scotia, Ontario, and Prince Edward Island
in the Other Products and Services segment.

Cost of goods sold decreased $248.2 million or 16.0% to $1,302.6 million for the year ended March 31, 2020 from $1,550.8 million for the year ended March 31,
2019. This decrease was primarily due to the decrease in volume.

Gross profit as a percent of sales increased to 14.7% for the fiscal year ended March 31, 2020 from 13.9% for the fiscal year ended March 31, 2019. This increase
was driven by favorable  product mix and cost savings from restructuring  initiatives  enacted in the prior year for the Leaf - North America  segment, as well as
favorable foreign currency exchange rate fluctuations resulting in lower raw materials prices and conversion costs for the Leaf - Other Regions segment in Africa,
Europe, and South America. This increase was partially offset by higher conversion costs attributable to Hurricane Florence reducing the U.S. crop size for the
Leaf - North America segment as well as cannabinoid start-up costs incurred in conjunction with sales into New Brunswick and Ontario, which were new markets
for the Company's cannabis subsidiaries, and increase cannabinoid depreciation associated with the additional 210,000 square feet of production capacity placed
in-service at the Prince Edward Island facility for the Other Products and Services segment.

SG&A as a percent of sales increased to 13.0% for the year ended March 31, 2020 from 9.6% for the year ended March 31, 2019. This increase was primarily due
to  the  decrease  in  sales  and  other  operating  revenues  as  well  as  branding,  marketing,  and  advertising  expenses  to  support  growth  of  the  Figr  cannabinoid  and
Humble  Juice  e-liquid  brands  and  the  costs  incurred  to  evaluate  and  develop  plans  for  a  potential  partial  monetization  of  interests  in  subsidiaries  in  the  Other
Products and Services segment, which did not culminate in a transaction. This increase was partially offset by cost savings from restructuring initiatives enacted in
the prior year for Leaf - North America segment, as well as lower accounts receivable write-offs for Leaf - Other Regions segment.

Goodwill impairment charges of $33.8 million for the year ended March 31, 2020 were related to the full write-off of the carrying value of goodwill for each of the
Company's reporting units. See Note 10. "Goodwill and Other Intangible Assets, Net" for additional information.

43

Income tax expense increased $94.0 million or 248.7% to $131.8 million for the year ended March 31, 2020 from $37.8 million for the year ended March 31, 2019.
This increase was driven by substantial doubt regarding the Company's ability to continue as a going concern resulting in full valuation allowances for the majority
of its deferred tax assets. See Note 18. "Income Taxes" for additional information.

Leaf - North America Region Supplemental Information

(in millions, except per kilo amounts)

Kilos sold

Tobacco sales and other operating revenues:

     Sales and other operating revenues

     Average price per kilo

Processing and other revenues

          Total sales and other operating revenues

Tobacco cost of goods sold:

     Tobacco costs

     Transportation, storage and other period costs

     Derivative financial instrument and exchange gains

     Total tobacco cost of goods sold

     Average cost per kilo

Processing and other revenues costs of services sold

          Total cost of goods and services sold

Gross profit

Selling, general, and administrative expenses

Other income, net

Restructuring and asset impairment charges

Goodwill impairment

Operating income

Years Ended March 31,

Change

2020

2019

$

%

36.1 

47.9 

(11.8)

(24.6)

$

192.5  $

250.0  $

5.33 

32.2 

224.7 

153.4 

18.4 

(0.1)

171.7 

4.76 

25.6 

197.3 

27.4 

15.3 

(1.4)

(0.1)

2.8 

5.22 

35.7 

285.7 

210.3 

11.9 

(0.2)

222.0 

4.63 

32.0 

254.0 

31.7 

17.5 

(0.9)

3.2 

— 

$

8.0  $

10.1  $

(57.5)

0.11 

(3.5)

(61.0)

(56.9)

6.5 

0.1 

(50.3)

0.13 

(6.4)

(56.7)

(4.3)

(2.2)

(0.5)

(3.3)

2.8 

(2.1)

(23.0)

2.1 

(9.8)

(21.4)

(27.1)

54.6 

50.0 

(22.7)

2.8 

(20.0)

(22.3)

(13.6)

(12.6)

(55.6)

(103.1)

100.0 

(20.8)

Sales and other operating revenues decreased $61.0 million or 21.4% to $224.7 million for the year ended March 31, 2020 from $285.7 million for the year ended
March 31, 2019. This decrease was primarily due to a 24.6% decrease in volumes attributable to Hurricane Florence reducing the U.S. crop size (which impacted
carryover shipments), foreign tariffs on U.S. tobacco, and the impact of the COVID-19 pandemic delaying shipments. These decreases were partially offset by a
2.1% increase in average sales price due to product mix having a higher concentration of lamina.

Cost of goods sold decreased $56.7 million or 22.3% to $197.3 million for the year ended March 31, 2020 from $254.0 million for the year ended March 31, 2019.
This decrease was primarily due to the decrease in volume.

Gross  profit  as  a  percent  of  sales  increased  to  12.2%  for  the  year  ended  March  31,  2020  from  11.1%  for  the  year  ended  March  31,  2019.  This  increase  was
primarily due to product mix and cost savings from restructuring initiatives enacted in the prior year. These increases were partially offset by higher conversion
costs attributable to Hurricane Florence reducing the U.S. crop size.

SG&A decreased $2.2 million or 12.6% to $15.3 million for the year ended March 31, 2020 from $17.5 million for the year ended March 31, 2019. This decrease
was  primarily  due  to  cost  savings  from  restructuring  initiatives  enacted  in  the  prior  year.  SG&A  as  a  percent  of  sales  increased  to  6.8%  for  the  year  ended
March 31, 2020 from 6.1% for the year ended March 31, 2019. This increase was primarily due the decrease in sales and other operating revenues.

Restructuring  and  asset  impairment  charges  of  $3.2  million  for  the  year  ended  March  31,  2019  were  related  to  a  restructuring  initiative  to  consolidate  the
Company’s U.S. green tobacco processing operations in Farmville, North Carolina into the Wilson, North Carolina facility and repurpose the Farmville facility for
storage and special projects.

44

Goodwill impairment charges of $2.8 million for the year ended March 31, 2020 were related to the full write-off of the carrying value of goodwill for the Leaf -
North America reporting unit during the fourth quarter. See Note 10. "Goodwill and Other Intangible Assets, Net" for additional information.

Leaf - Other Regions Supplemental Information

(in millions, except per kilo amounts)

Kilos sold

Tobacco sales and other operating revenues:

     Sales and other operating revenues

     Average price per kilo

Processing and other revenues

          Total sales and other operating revenues

Tobacco cost of goods sold:

     Tobacco costs

     Transportation, storage and other period costs

     Derivative financial instrument and exchange losses (gains)

     Total tobacco cost of goods sold

     Average cost per kilo

Processing and other revenues costs of services sold

          Total cost of goods and services sold

Gross profit

Selling, general, and administrative expenses

Other income, net

Restructuring and asset impairment charges

Goodwill impairment

Operating income

Years Ended March 31,

Change

2020

2019

$

%

306.7 

352.6 

(45.9)

(13.0)

$

1,236.0  $

1,456.3  $

4.03 

46.6 

4.13 

43.6 

1,282.6 

1,499.9 

(220.3)

(0.10)

3.0 

(217.3)

1,190.0 

(201.0)

989.0 

57.4 

8.2 

65.0 

(3.5)

1,054.6 

1,251.5 

3.44 

33.9 

3.55 

33.6 

1,088.5 

1,285.1 

194.1 

119.0 

13.2 

5.5 

13.7 

214.8 

115.7 

14.9 

1.7 

— 

(7.6)

11.7 

(196.9)

(0.11)

0.3 

(196.6)

(20.7)

3.3 

(1.7)

3.8 

13.7 

$

69.1  $

112.3  $

(43.2)

(15.1)

(2.4)

6.9 

(14.5)

(16.9)

(11.7)

334.3 

(15.7)

(3.1)

0.9 

(15.3)

(9.6)

2.9 

(11.4)

223.5 

100.0 

(38.5)

Sales and other operating revenues decreased $217.3 million or 14.5% to $1,282.6 million for the year ended March 31, 2020 from $1,499.9 million for the year
ended March 31, 2019. This decrease was primarily due to a 13.0% decrease in volumes and a 2.4% decrease in average sales price. The decrease in volume was
attributable  to  flue-cured  oversupply  conditions,  the  timing  of  shipments  in  Africa  and  South  America,  and  the  impact  of  the  COVID-19  pandemic  delaying
shipments. The decrease in average sales price was driven by product mix having a lower concentration of lamina.

Cost of goods sold decreased $196.6 million or 15.3% to $1,088.5 million for the year ended March 31, 2020 from $1,285.1 million for the year ended March 31,
2019.  This  decrease  was  primarily  due  to  the  decrease  in  volume.  This  decrease  was  partially  offset  by  favorable  foreign  currency  exchange  rate  fluctuations
resulting in lower raw materials prices in Africa, Europe, and South America.

Gross  profit  as  a  percent  of  sales  increased  to  15.1%  for  the  year  ended  March  31,  2020  from  14.3%  for  the  year  ended  March  31,  2019.  This  increase  was
attributable  to  favorable  foreign  currency  exchange  rate  fluctuations  resulting  in  lower  raw  materials  prices  and  conversion  costs  in  Africa,  Europe,  and  South
America.

SG&A increased $3.3 million or 2.9% to $119.0 million for the year ended March 31, 2020 from $115.7 million for the year ended March 31, 2019. This increase
was primarily due to lower accounts receivable write-offs. SG&A as a percent of sales increased to 9.3% for the year ended March 31, 2020 from 7.7% for the year
ended March 31, 2019. This increase was due to the decrease in sales and other operating revenues.

Restructuring and asset impairment charges increased $3.8 million or 223.5% to $5.5 million for the year ended March 31, 2020 from $1.7 million for the year
ended March 31, 2019. This increase was primarily due to a cost saving initiative and restructuring plan to repurpose a processing facility in South America for
storage and special projects and process tobacco under a third-party arrangement going forward.

45

Goodwill impairment charges of $13.7 million for the year ended March 31, 2020 were related to the full write-off of the carrying value of goodwill for the Leaf -
Africa reporting unit during the fourth quarter. See Note 10. "Goodwill and Other Intangible Assets, Net" for additional information.

Other Products and Services Segment Supplemental Information

(in millions)

Sales and other operating revenues

Cost of goods and services sold

Gross (loss) profit

Selling, general, and administrative expenses

Other income, net

Restructuring and asset impairment charges

Goodwill impairment

Operating loss

Years Ended March 31,

Change

2020

2019

$

%

$

19.9  $

16.0  $

16.8 

3.1 

64.7 

(9.6)

0.3 

17.3 

11.7 

4.3 

39.6 

0.2 

— 

— 

3.9 

5.1 

(1.2)

25.1 

(9.8)

0.3 

17.3 

$

(88.8) $

(35.1) $

(53.7)

24.4 

43.6 

(27.9)

63.4 

(4,900.0)

100.0 

100.0 

(153.0)

Sales and other operating revenues increased $3.9 million or 24.4% to $19.9 million for the year ended March 31, 2020 from $16.0 million for the year ended
March 31, 2019. This increase was primarily related to the cannabinoid revenue in the Canadian provinces of New Brunswick, Nova Scotia, Ontario, and Prince
Edward Island. The increase was partially offset by a decrease in e-liquids revenue related to a general industry slow-down amid health and regulatory concerns.

Cost  of  goods  and  services  sold  increased  $5.1  million  or  43.6%  to  $16.8  million  for  the  year  ended  March  31,  2020  from  $11.7  million  for  the  year  ended
March 31, 2019. This increase was mainly due to increased cannabinoid revenue in the Canadian provinces of New Brunswick, Nova Scotia, Ontario, and Prince
Edward Island, higher cannabinoid conversion costs driven by lower production levels, higher direct materials costs due to product mix, and increased cannabinoid
depreciation associated with the additional 210,000 square feet of production capacity placed in-service at the Prince Edward Island facility.

Gross  profit  as  a  percent  of  sales  decreased  to  15.6%  for  the  year  ended  March  31,  2020  from  26.9%  for  the  year  ended  March  31,  2019.  This  decrease  was
attributable to higher cannabinoid conversion costs driven by lower production levels, increased cannabinoid depreciation associated with the additional 210,000
square feet of production capacity placed in-service at the Prince Edward Island facility, and product mix having a lower concentration of e-liquids products.

SG&A increased $25.1 million or 63.4% to $64.7 million for the year ended March 31, 2020 from $39.6 million for the year ended March 31, 2019. This increase
was related to branding, marketing, and advertising expenses to support growth of the Figr cannabinoid and Humble Juice e-liquid brands, the costs incurred to
evaluate  and  develop  plans  for  a  potential  partial  monetization  of  interests  in  subsidiaries  in  the  Other  Products  and  Services  segment,  and  higher  premarket
tobacco product application costs for e-liquid products.

Goodwill impairment charges of $17.3 million for the year ended March 31, 2020 were related to the full write-off of the carrying value of goodwill for the Other
Products  and  Services  -  Cannabis,  and  Other  Products  and  Services  -  E-liquids  reporting  units.  See  Note  10.  "Goodwill  and  Other  Intangible  Assets,  Net" for
additional information.

Comparison of the Year Ended March 31, 2019 to the Year Ended March 31, 2018

For a comparison of our results of operations for the years ended March 31, 2019 to March 31, 2018, see "Part II, Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended March 31, 2019, filed with the SEC on June 14,
2019.

46

Liquidity and Capital Resources

Overview
Our liquidity requirements are affected by various factors from our core tobacco leaf business, including crop seasonality, foreign currency and interest rates, green
tobacco  prices,  customer  mix,  crop  size,  and  quality.  Our  leaf  tobacco  business  is  seasonal,  and  purchasing,  processing,  and  selling  activities  have  several
associated peaks where cash on-hand and outstanding indebtedness may vary significantly compared to fiscal year-end. Additionally, our liquidity requirements are
increasingly affected by branding, marketing, and advertising expenses to support growth of the Other Products and Services segment, and legal and professional
costs associated with the Chapter 11 Cases.

As of March 31, 2020, we are in our leaf working capital build. In South America, we are in the process of purchasing and processing the most recent crop, while
the peak tobacco sales season for South America is in its beginning stages. Africa is in the middle of its buying, processing, and selling season and is utilizing
working capital funding as well. Asia, Europe, and North America are still selling and planning for the next crop that is now being grown.

Debtor-in-Possession Financing
The commencement of the Chapter 11 Cases constituted an event of default, and caused an automatic and immediate acceleration of repayment obligations under
the Company's 8.500% Senior Secured First Lien Notes due 2021 ("the First Lien Notes"), its 9.875% Senior Secured Second Lien Notes due 2021 ("the Second
Lien  Notes"),  and  the  Company's  asset-based  revolving  credit  facility  ("the  ABL  Facility").  However,  any  efforts  to  enforce  such  payment  obligations  are
automatically stayed as of the Petition Date, and are subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Borrowings
under  the  ABL  Facility  were  not  available  commencing  on  the  Petition  Date  as  a  result  of  this  event  of  default.  As  described  below,  the  ABL  Facility  was
terminated and repaid on June 17, 2020.

On June 17, 2020, following its receipt on such date of interim approval from the Bankruptcy Court (the “DIP Order”), the Company entered into a multiple draw
superpriority secured debtor-in-possession term loan facility (the “DIP Facility”) in an aggregate principal amount of $206.7 million on the terms and conditions
set forth in the DIP credit agreement (the “DIP Credit Agreement”) between the Company, certain holders of the Company’s 9.875% senior secured second lien
notes due 2021 (the “DIP Lenders”) and Cortland Capital Market Services LLC, as administrative agent and collateral agent, which is guaranteed by certain of the
Debtors’ subsidiaries.

The DIP Facility provides $131.7 million in initial funding, with the ability for Pyxus to borrow up to an additional $75.0 million upon entry of a final order from
the Bankruptcy Court approving the DIP Facility. Drawn amounts under the DIP Facility bear interest at either (1) an Alternate Base Rate plus 9.25%, per annum
or (2) 10.25% plus the LIBOR Rate, per annum, with a LIBOR floor of 1.5%. Undrawn amounts under the DIP Facility are subject to a ticking fee of 3.0% per
annum calculated on a daily basis on the aggregate daily unused amount, accruing commencing on June 17, 2020 and until such commitments have terminated,
which ticking fee is due and payable in arrears on the earlier to occur of a borrowing upon entry of a final order and the date on which such commitments have
terminated. During the continuance of an event of default (as further described in the DIP Credit Agreement), the overdue amounts under the DIP Facility bear
interest at an additional 2% per annum above the interest rate otherwise applicable.

The DIP Credit  Agreement  provides  that  the proceeds  of the  DIP Facility  are  to  be used,  among other  things, to  (a)  effect  the refinancing  of the  ABL Facility
(which occurred on June 17, 2020); (b) pay related transaction costs, fees and expenses; (c) provide working capital and for other general corporate purposes in
accordance with the Budget; (d) make adequate protection payments as authorized by the Court in the DIP Order; (e) pay obligations arising from or related to the
Carve Out (as defined below); and (f) pay restructuring costs incurred in connection with the Chapter 11 Cases.

The maturity date of the DIP Facility is the earliest of (a) December 17, 2020; (b) the date of the substantial consummation (as defined in Section 1101(2) of the
Bankruptcy Code) of a plan of reorganization; (c) the date on which Pyxus and its subsidiaries consummate a sale of all or substantially all of their assets pursuant
to section 363 of the Bankruptcy Code or otherwise; and (d) such earlier date on which the loans shall become due and payable by acceleration or otherwise in
accordance with the terms of the DIP Credit Agreement and the other related documents.

Under the DIP Facility, the DIP Lenders and Cortland Capital Market Services LLC, as collateral agent, subject to the Carve Out and the terms of the DIP Order
and, in each case, other than certain excluded assets, are at all times secured, by (i) a first priority senior priming security interest in and lien upon the DIP Priming
Collateral (as defined in the DIP Order); (ii) a first priority senior security interest in and lien upon the DIP Priority Collateral (as defined in the DIP Order), and
(iii)  a  junior  security  interest  in  and  lien  upon  DIP  Junior  Collateral  (as  defined  in  the  DIP  Order).  The  DIP  Lenders  and  collateral  agent  are  also  secured  by
security  interests  in  substantially  all  of  the  assets  of  certain  non-debtor  subsidiaries  of  Pyxus.  The  Debtors’  obligations  to  the  DIP  Lenders  and  the  liens  and
superpriority claims are subject in each case to a carve out (the “Carve Out”),

47

subject to a cap, that accounts for certain statutory fees, committee professional fees and post-notice professional fees payable in connection with the Chapter 11
Cases.

The DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited
to, payment defaults, material inaccuracy of representations and warranties, covenant defaults, certain events under the Employee Retirement Income Security Act
of 1974 and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of
any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to
the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement.

Upon  the  effectiveness  of  the  Plan,  claims  under  the  DIP  Facility  are  satisfied  in  the  manner  described  in  the  "Note  28.  Subsequent  Events" to  the  "Notes  to
Consolidated Financial Statements" and the DIP Facility terminates.

Foreign Seasonal Lines of Credit
On August 13, 2020, the Company entered into an Amendment and Restatement Agreement ("the Agreement") with TDB. The Agreement sets forth the terms that
govern and supersede the terms of the separate existing foreign seasonal lines of credit for various subsidiaries of the Company with TDB. The original aggregate
maximum  borrowing  availability  under  the  existing  foreign  seasonal  lines  of  credit  was  $255.0  million  and  the  aggregate  borrowings  outstanding  were  $240.5
million as of August 13, 2020. Subject to certain conditions, the Agreement increases the Company's maximum aggregate borrowing capacity to $285.0 million.
Loans under the Agreement will bear interest at LIBOR plus 6%. The Agreement terminates on June 30, 2021, and may be renewed at TDB’s discretion.

Working Capital
The following summarizes our working capital:

(in millions except for current ratio)

2020

2019

$

%

As of March 31,

Change

Cash and cash equivalents

Net trade and other receivables

Inventories and advances to 
tobacco suppliers

Total current assets

Notes payable to banks

Accounts payable

Advances from customers

Current portion of long-term debt

Total current liabilities

Current ratio

Working capital

Total long term-debt

Stockholders’ equity attributable to 
   Pyxus International, Inc.

$

170.2  $

239.7 

768.9 

1,232.4 

540.2 

67.1 

18.8 

45.0 

789.1 

1.6 to 1

443.3 

904.3 

192.0 

311.0 

687.9 

1,238.5 

429.0 

87.0 

16.4 

0.3 

646.8 

1.9 to 1

591.7 

898.4 

(21.8)

(71.3)

81.0 

(6.1)

111.2 

(19.9)

2.4 

44.7 

142.3 

(148.4)

5.9 

(11.4)

(22.9)

11.8 

(0.5)

25.9 

(22.9)

14.6 

14,900.0 

22.0 

(25.1)

0.7 

(78.0)

183.7 

(261.7)

(142.5)

Our working capital decreased to $443.3 million at March 31, 2020 from $591.7 million at March 31, 2019. Our current ratio was 1.6 to 1 at March 31, 2020 and
1.9 to 1 at March 31, 2019. The decrease in working capital is attributable to the increase in short-term borrowings to finance the purchases of larger current year
crop sizes in Africa and South America, as well as the $44.9 million utilization of the Company's ABL revolver due, in part, to the delay in shipments from the
COVID-19 pandemic.

Sources and Uses of Cash
Our  primary  sources  of  liquidity  are  cash  generated  from  operations,  cash  collections  from  our  securitized  receivables,  and  short-term  borrowings  under  our
foreign seasonal lines of credit. We have typically financed our non-U.S. tobacco operations with uncommitted short-term foreign seasonal lines of credit. These
foreign lines of credit are seasonal in nature, normally extending for a term of 180 to 270 days, corresponding to the tobacco crop cycle in that market. These short-
term foreign seasonal lines of credit are typically uncommitted and provide lenders the right to cease making loans and demand repayment of loans. These short-
term foreign seasonal lines of credit are typically renewed at the outset of each tobacco season. We maintain various other financing arrangements to meet the cash
requirements of our businesses. See Note 12. "Debt Arrangements" for additional information.

48

We  utilize  capital  in  excess  of  cash  flow  from  operations  to  finance  accounts  receivable,  inventory,  and  advances  to  tobacco  suppliers  in  foreign  countries.  In
addition, we may periodically elect to purchase, redeem, repay, retire, or cancel indebtedness prior to stated maturity under our various foreign credit lines and
senior secured credit agreement or indentures, as permitted therein.

The following summarizes our sources and uses of our cash flows:

(in millions)

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes on cash

Decrease in cash, cash equivalents, and restricted cash

Cash and cash equivalents at beginning of period

Restricted cash at beginning of period

Years Ended March 31,

Change

2020

2019

$

%

$

(358.6) $

(248.3)

181.4 

159.9 

(7.3)

(24.7)

192.0 

5.8 

195.3 

(21.6)

4.4 

(70.2)

264.7 

3.4 

197.9 

110.3 

(13.9)

181.5 

(11.7)

45.5 

(72.7)

2.4 

(24.8)

44.4 

(7.1)

840.3 

(265.9)

64.8 

(27.5)

70.6 

(12.5)

Cash, cash equivalents, and restricted cash at end of period

$

173.1  $

Net cash used by operating activities increased $110.3 million or 44.4% to $358.6 million for the year ended March 31, 2020 from $248.3 million for the year
ended March 31, 2019. This increase was primarily driven by a higher net loss, as well as higher inventory purchases and advances to farmers driven by larger crop
sizes in Africa and South America.

Net cash provided by investing activities decreased $13.9 million or 7.1% to $181.4 million for the year ended March 31, 2020 from $195.3 million for the year
ended March 31, 2019. The decrease was related to $13.7 million of increased capital expenditures for the continued expansion of the Other Products and Services
segment.

Net cash provided (used) by financing activities increased by $181.5 million or 840.3% to $159.9 million for the year ended March 31, 2020 from $(21.6) million
for the year ended March 31, 2019. The increase was driven by higher net proceeds from short-term borrowings of $99.5 million, the utilization of the Company's
ABL revolver of $44.9 million, a $24.8 million reduction in retirements of long-term debt, and a $12.5 million reduction in purchases of additional noncontrolling
interests.

Fluctuation of the USD versus many of the currencies in which we have costs may have an impact on our working capital requirements. We monitor and hedge
foreign currency costs, as needed.

Approximately  $56.7  million  of  our  outstanding  cash  balance  at  March  31,  2020  was  held  in  foreign  jurisdictions.  If  these  funds  in  foreign  jurisdictions  were
repatriated, the tax cost of repatriation would not have a material financial impact.

Debt Financing
Seasonal liquidity beyond cash flow from operations is provided by our foreign seasonal lines of credit, advances from customers, and sales of accounts receivable.
For  the  years  ended  March  31,  2020  and  2019,  our  average  short-term  borrowings,  aggregated  peak  short-term  borrowings  outstanding,  and  weighted-average
interest rate on short-term borrowings were as follows:

(in millions)

Average short-term borrowings

Aggregated peak short-term borrowings outstanding

Weighted-average interest rate on short-term borrowings

March 31,

2020

2019

$

$

543.1 

712.4 

$

$

6.9 %

556.0 

711.7 

6.6 %

Aggregated peak borrowings for fiscal 2020 occurred during the fourth quarter and were due to the timing of purchases of tobacco and repayments in Africa and
South  America.  Peak  borrowings  for  fiscal  2020  and  fiscal  2019  were  repaid  with  cash  provided  by  operating  activities.  For  further  information  on  our  debt
financing as of March 31, 2020, see Note 12. "Debt Arrangements" to the "Notes to Consolidated Financial Statements".

49

On August 13, 2020, the Company entered into an Amendment and Restatement Agreement ("the Agreement") with TDB. The Agreement sets forth the terms that
govern and supersede the terms of the separate existing foreign seasonal lines of credit for various subsidiaries of the Company with TDB. The original aggregate
maximum  borrowing  availability  under  the  existing  foreign  seasonal  lines  of  credit  was  $255.0  million  and  the  aggregate  borrowings  outstanding  were  $240.5
million as of August 13, 2020. Subject to certain conditions, the Agreement increases the Company's maximum aggregate borrowing capacity to $285.0 million.
Loans under the Agreement will bear interest at LIBOR plus 6%. The Agreement terminates on June 30, 2021, and may be renewed at TDB’s discretion.

Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements within the meaning of Item 303(a)(4) of SEC Regulation S-K.

Aggregate Contractual Obligations and Commitments
The following summarizes our contractual cash obligations and other commercial commitments as of March 31, 2020:

(in millions)
Long-Term Debt Obligations(1)

Short-Term Debt Obligations(2)

Interest on Debt Obligations(3)

Pension and Postretirement Obligations

Operating Lease Obligations

Tobacco and Other Purchase Obligations

Amounts Guaranteed for Tobacco Suppliers

Total Contractual Obligations and Other 
     Commercial Commitments

Payments / Expirations by Fiscal Year

Total

2021

   Years 
2022-2023

   Years 
2024-2025

   After 
2025

$

904.3  $

—  $

903.9  $

0.2  $

585.2 

114.2 

95.5 

49.1 

426.8 

139.0 

585.2 

93.6 

11.9 

14.3 

426.8 

139.0 

— 

20.6 

19.1 

17.9 

— 

— 

— 

— 

19.1 

8.7 

— 

— 

$

2,314.1  $

1,270.8  $

961.5  $

28.0  $

0.2 

— 

— 

45.4 

8.2 

— 

— 

53.8 

(1)  Long-term  debt  obligations  do  not  include  the  effects  of  the  event  of  default  arising  from  the  commencement  of  the  Chapter  11  Cases,  which  caused  an  automatic  and
immediate  acceleration  of  repayment  obligations  under  the  First  Lien  Notes,  the  Second  Lien  Notes,  and  the  ABL  Facility,  or  the  transactions  contemplated  upon  the
effectiveness of the Plan.

(2) Short-term debt obligations consist of the current portion of long-term debt, the ABL revolver, and our seasonal foreign credit lines, and do not include the effects of the
event of default arising from the commencement of the Chapter 11 Cases, which caused an automatic and immediate acceleration of repayment obligations under the First Lien
Notes, the Second Lien Notes, and the ABL Facility, or the transactions contemplated upon the effectiveness of the Plan.

(3) Interest obligations includes interest for long-term debt and the ABL revolver. The projected interest includes both fixed and variable rate debt. The variable rate used in the
projections is the rate that was being charged on our variable rate debt as of March 31, 2020. Furthermore, we assume there will be no additional drawings after March 31, 2020
on the ABL Facility until the maturity on January 14, 2021 in these calculations. These calculations also assume there is no refinancing of debt and do not reflect any of the
transactions contemplated upon the effectiveness of the Plan.

Tobacco and Other Purchase Obligations
Tobacco  purchase  obligations  result  from  contracts  with  suppliers,  primarily  in  Africa,  Europe,  North  America,  and  South  America,  to  buy  either  specified
quantities of tobacco or the supplier’s total tobacco production. Amounts shown as tobacco purchase obligations are estimates based on projected purchase prices
of the future crop tobacco. Payment of these obligations is net of our advances to these suppliers. Our tobacco purchase obligations do not exceed our projected
requirements over the related terms and are in the normal course of business. Other purchase obligations consist primarily of purchase commitments of agricultural
material.

Beneficial Interest in Receivables Sold
We sell accounts receivable under three revolving trade accounts receivable securitization programs. Under the agreements, we receive either 80% or 90% of the
face  value  of  the  receivable  sold,  less  contractual  dilutions  which  limit  the  amount  that  may  be  outstanding  from  any  one  particular  customer  and  insurance
reserves that also have the effect of limiting the risk attributable to any one customer. Our beneficial interest is subordinate to the purchaser of the receivables. See
Note 25. “Securitized Receivables” to the “Notes to Consolidated Financial Statements” for further information.

Amounts Guaranteed for Tobacco Suppliers
In Africa and South America, we provide guarantees to ensure financing is available to our tobacco suppliers. In the event these suppliers should default, we would
be responsible for repayment of the funds provided to these suppliers. We also provide guarantees for the financing of certain unconsolidated subsidiaries in Asia
and South America. See Note 15. "Guarantees" to the “Notes to Consolidated Financial Statements” for further information.

50

        
Planned Capital Expenditures
We are estimating $48.0 million in capital investments for the 2021 fiscal year. We forecast our capital expenditure needs primarily for the continued expansion of
our Other Products and Services segment to be $23.2 million. Other forecasted expenditures are for routine replacement of equipment, as well as investments in
assets that will add value to the customer or increase efficiency.

Tax and Repatriation Matters
We  are  subject  to  income  tax  laws  in  each  of  the  countries  in  which  we  do  business  through  wholly  owned  subsidiaries  and  through  affiliates.  We  make  a
comprehensive  review  of  the  income  tax  requirements  of  each  of  our  operations,  file  appropriate  returns,  and  make  appropriate  income  tax  planning  analyses
directed toward the minimization of our income tax obligations in these countries. Appropriate income tax provisions are determined on an individual subsidiary
level and at the corporate level on both an interim and annual basis. These processes are followed using an appropriate combination of internal staff at both the
subsidiary and corporate levels as well as independent outside advisors in review of the various tax laws and in compliance reporting for the various operations.
We  regularly  review  the  status  of  the  accumulated  unremitted  earnings  of  each  of  our  foreign  subsidiaries.  We  would  provide  deferred  income  taxes,  net  of
creditable foreign taxes, if applicable, on any earnings that are determined to no longer be indefinitely invested. See Note 18. “Income Taxes” to the “Notes to
Consolidated Financial Statements” for further information.

Dissolution
Pursuant to the Plan, the Company will, promptly following the effectiveness of the Plan, commence proceedings for the dissolution and winding up the affairs of
the Company. During such period, the Company’s corporate existence will continue, but its activities will be limited to those matters appropriate to the winding up
and liquidation of its business and affairs.

Critical Accounting Estimates
The preparation of financial statements and related disclosures in accordance with generally accepted accounting principles in the United States ("U.S. GAAP")
requires the use of estimates and assumptions that have an impact on the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent
assets and liabilities. Management considers an accounting estimate critical if it: (i) requires us to make judgments and estimates about matters that are inherently
uncertain, (ii) it is important to an understanding of our financial condition or operating results, and (iii) has a material impact to the financial statements.

We  base  our  estimates  on  currently  available  information,  historical  experience,  and  various  other  assumptions  we  believe  to  be  reasonable  under  the
circumstances.  Actual  results could  differ  materially  from these estimates.  Management  has discussed the development,  selection,  and disclosure  of our critical
accounting estimates with the Audit Committee of the Board of Directors.
Management believes the following accounting estimates are most critical to our business operations and to an understanding of our financial condition and results
of operations and reflect the more significant estimates and assumptions used in the preparation of our consolidated financial statements.

Going Concern
The  accompanying  consolidated  financial  statements  and  related  notes  have  been  prepared  assuming  that  the  Company  will  continue  as  a  going  concern  and
contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not
include  adjustments  related  to  the  recoverability  and  classification  of  assets  or  the  amounts  and  classification  of  liabilities  or  other  adjustments  that  might  be
necessary  should  the  Company  be  unable  to  continue  as  a  going  concern  or  as  a  consequence  of  the  Chapter  11 Cases.  As  a  result  of  the  Company's  financial
condition and the near-term maturities of substantial indebtedness, substantial doubt existed as of March 31, 2020 that the Company would be able to continue as a
going concern.  Based on the confirmation  of the  Plan by the Bankruptcy Court and the effectiveness  of the  Plan there is no longer substantial  doubt about the
Company’s  ability  to  continue  as  a  going  concern.  See  Note  1.  “Basis  of  Presentation  and  Summary  of  Significant  Accounting  Policies” to  the  “Notes  to
Consolidated Financial Statements” for further information.

Income Taxes
Our  annual  effective  income  tax  rate  is  based  on  our  jurisdictional  mix  of  pretax  income,  statutory  tax  rates,  exchange  rates,  and  tax  planning  opportunities
available to us in the various jurisdictions in which we operate. Tax laws are complex, subject to change, and subject to different interpretations by the taxpayer
and  respective  governmental  taxing  authorities.  Significant  judgment  is  required  in  determining  our  tax  expense  and  in  evaluating  our  tax  positions  including
evaluating uncertainties under ASC 740. We record unrecognized tax benefits in multiple jurisdictions and evaluate the future potential outcomes of tax positions,
based upon our interpretation of the country-specific tax law and the likelihood of future settlement. We review our tax positions quarterly and adjust the balances
as new information becomes available.

51

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary
differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. We evaluate the
recoverability  of  these  future  tax  deductions  by  assessing  the  impact  from  changes  in  or  issuance  of  new  tax  law  and  the  adequacy  of  future  expected  taxable
income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of
income inherently rely on estimates. To provide insight, we use our historical experience along with our short and long-range business forecasts. In addition, we
make  adjustments  to  historical  data  for  objectively  verifiable  information  when  deemed  appropriate.  Due  to  declines  in  operating  income,  the  impact  of  recent
global market events, and the Company's capital structure, we have determined it is inappropriate to rely on future earnings to support the realization of deferred
income  tax  assets.  Accordingly,  we  do  not  believe  the  Company  can  support  the  realization  of  deferred  income  tax  assets  to  the  extent  the  value  exceeds
appropriately considered deferred income tax liabilities and carryback opportunities.

We believe it is more likely than not that, a majority of the deferred income tax assets may expire unused and have established a valuation allowance against them.
Although expiration is not assured for the deferred income tax assets, we believe it is more likely than not that, the deferred tax assets will fully expire within the
applicable  statutory  expiration  periods.  However,  deferred  tax  assets  could  become  realizable  in  the  near  term  if  our  overall  capital  structure  is  improved.  The
Company believes it is more likely than not the remaining deferred tax assets will be fully recoverable within the applicable statutory expiration periods. See Note
18. “Income Taxes” to the “Notes to Consolidated Financial Statements” for further information.

Goodwill
Goodwill  is  reviewed  for  impairment  on  an  annual  basis  or  when  triggering  events  occur.  Determining  whether  an  impairment  has  occurred  typically  requires
various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over
which cash flows will occur, their amount, and the asset’s residual value, if any. The measurement of an impairment loss requires a determination of fair value,
which is based on the best information available. We derive the required undiscounted cash flow estimates from our historical experience and our internal business
plans.  To  determine  fair  value,  we  use  our  internal  cash  flow  estimates  discounted  at  an  appropriate  interest  rate,  quoted  market  prices  when  available,  and
independent appraisals, as appropriate. It is reasonably possible that future changes in judgments, assumptions, and estimates utilized in assessing the fair value of
the Leaf - Africa reporting unit could cause the Company to recognize impairment charges on a portion of the goodwill balance for the Leaf - Africa reporting unit.
For  example,  a  future  decline  in  market  conditions  or  under  performance  of  the  reporting  unit  could  negatively  impact  the  estimated  future  cash  flows  and
valuation assumptions used to determine the fair value of the Leaf - Africa reporting unit and lead to future impairment charges.

Based on the sustained decline in the implied value of our long-term debt based on public trading and share price, delays in refinancing our long-term debt, delays
with monetizing a portion of the Figr business, as well as uncertainty in the estimate of future operating results due, in part, to the economic effects of COVID-19,
we concluded that a triggering event occurred in the fourth quarter of fiscal year 2020. As a result, we performed a test of our goodwill for impairment for each
reporting unit as of March 31, 2020. Based on this test, the Company recognized non-cash impairment losses of $33.8 million to write-off the carrying values of
our goodwill for each reporting unit. See Note 10. “Goodwill and Other Intangible Assets, Net” to the “Notes to Consolidated Financial Statements” for further
information.

Pensions and Postretirement Health Care and Life Insurance Benefits
The valuation of our pension and other postretirement health care and life insurance plans requires the use of assumptions and estimates that are used to develop
actuarial valuations of expenses, assets and liabilities. These assumptions include discount rates, investment returns, projected salary increases and benefits and
mortality rates. The significant assumptions used in the calculation of pension and postretirement obligations are:

•

•

•

Discount rate: The discount rate is based on investment yields available at the measurement date on high-quality fixed income obligations, such as those
included in the Moody’s Aa bond index.
Salary  increase  assumption:  The  salary  increase  assumption  reflects  our  expectations  with  respect  to  long-term  salary  increases  of  our  workforce.
Historical pay increases, expectations for the future, and anticipated inflation and promotion rates are considered in developing this assumption.
Cash  balance  crediting  rate:  Interest  is  credited  on  cash  balance  accounts  based  on  the  yield  on  one-year  Treasury  Constant  Maturities  plus  1%.  The
assumed crediting rate thus considers the discount rate, current treasury rates, current inflation rates, and expectations for the future.

• Mortality rates: Mortality rates are based on gender-distinct group annuity mortality ("GAM") tables.
•
•

Expected return on plan assets: The expected return reflects asset allocations, investment strategy, and our historical actual returns.
Termination  and  retirement  rates:  Termination  and  retirement  rates  are  based  on  standard  tables  reflecting  past  experience  and  anticipated  future
experience under the plan. No early retirement rates are used since benefits provided are actuarially equivalent and there are not early retirement subsidies
in the plan.

52

•

•

•

Inflation: The inflation assumption is based on an evaluation of external market indicators, including real gross domestic product growth and central bank
inflation targets.
Expected contributions: The expected amount and timing of contributions are based on an assessment of minimum requirements, cash availability, and
other considerations (e.g., funded status, avoidance of regulatory premiums, and levies, and tax efficiency).
Health care cost trends: The health care cost trend assumptions are developed based on historical cost data, the near-term outlook, and an assessment of
likely long-term trends.

Assumptions  are  set  at  each  year-end  and are  generally  not  changed  during  the year  unless there  is a  major  plan  event  such  as a  curtailment  or  settlement  that
would trigger a plan remeasurement.

Management  periodically  reviews  actual  demographic  experience  as  it  compares  to  the  actuarial  assumptions.  Changes  in  assumptions  are  made  if  there  are
significant  deviations  or  if  future  expectations  change  significantly.  Based  upon  anticipated  changes  in  assumptions,  pension  and  postretirement  expense  is
expected to increase by $560 thousand in the fiscal year ended March 31, 2021 as compared to March 31, 2020. The cash contribution to our employee benefit
plans in fiscal 2020 was $5.9 million and is expected to be $6.3 million in fiscal 2021.

The effect of actual results differing from our assumptions are accumulated and amortized over future periods. Changes in other assumptions and future investment
returns could potentially have a material impact on our pension and postretirement expenses and related funding requirements. The effect of a change in certain
assumptions is shown below:

Change in Assumption (Pension and Postretirement Plans)

     1% increase in discount rate

     1% decrease in discount rate

     1% increase in salary increase assumption

     1% decrease in salary increase assumption

     1% increase in cash balance crediting rate

     1% decrease in cash balance crediting rate

     1% increase in rate of return on assets

     1% decrease in rate of return on assets

Estimated Change 
in Projected 
Benefit Obligation 
Increase (Decrease) 
(in 000’s)

Estimated Change in 
Annual Expense 
Increase (Decrease) 
(in 000’s)

$

$

$

$

$

$

(14,470) $

16,874  $

198  $

(184) $

872  $

(778) $

$

$

86 

(97)

52 

(49)

66 

(70)

(931)

931 

Changes in assumptions for other postretirement benefits are no longer applicable as the benefit is capped and no longer subject to inflation. See Note 19. "Pension
and Other Postretirement Benefits" to the “Notes to Consolidated Financial Statements” for further information.

Recent Accounting Pronouncements Not Yet Adopted
See Note 2. "New Accounting Standards" to the "Notes to Consolidated Financial Statements" for further information.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Derivatives policies
Hedging foreign exchange exposure using forward contracts are specifically contemplated to manage risk in accordance with management's policies and reduce the
risks inherent in currency fluctuations. We do not utilize derivatives for speculative purposes or enter into market risk sensitive instruments for trading purposes.
Derivatives are transaction specific such that a specific contract or invoice determines the amount, maturity, and other specifics of the hedge.

Foreign exchange rates
Our  business  is  generally  conducted  in  USD,  as  is  the  business  of  the  tobacco  industry  as  a  whole.  However,  local  country  operating  costs,  including  the
purchasing and processing costs for tobaccos, are subject to the effects of exchange fluctuations of the local currency against the USD. We attempt to minimize
such currency risks by matching the timing of our working

53

capital borrowing needs against the tobacco purchasing and processing funds requirements  in the currency of the country where the tobacco is grown. Also, in
some  cases,  our  sales  pricing  arrangements  with  our  customers  allow  adjustments  for  the  effect  of  currency  exchange  fluctuations  on  local  purchasing  and
processing  costs.  Fluctuations  in  the  value  of  foreign  currencies  can  significantly  affect  our  operating  results.  In  our  cost  of  goods  and  services  sold,  we  have
recognized exchange (losses) gains of $(4.7) million, $4.0 million, and $(4.1) million for the fiscal years ended March 31, 2020, 2019, and 2018, respectively. We
recognized  exchange losses of $(1.2) million,  $(1.6) million, and $(1.3) million related  to tax balances in our tax expense for the fiscal  years ended March 31,
2020,  2019,  and  2018,  respectively.  In  addition,  foreign  currency  fluctuations  in  the  Euro,  (U.K.)  Sterling  and  Canadian  dollar  can  significantly  impact  the
currency translation adjustment component of accumulated other comprehensive income. We recognized (losses) gains of $(0.5) million, $(9.3) million, and $9.6
million for the fiscal years ended March 31, 2020, 2019, and 2018, respectively, as a result of fluctuations in these currencies.

Our  consolidated  SG&A  expenses  denominated  in  foreign  currencies  are  subject  to  translation  risks  from  currency  exchange  fluctuations.  These  foreign
denominated expenses accounted for approximately 30.2% or $60.1 million of our total SG&A expenses for the year ended March 31, 2020. A 10% change in the
value of the USD relative to those currencies would have caused the reported value of those expenses to increase or decrease by approximately $6.0 million.

Interest rates
We  manage  our  exposure  to  interest  rate  risk  through  the  proportion  of  fixed  rate  and  variable  rate  debt  in  our  total  debt  portfolio.  For  the  fiscal  year  ended
March 31, 2020, a 1% change in variable interest rates would have increased or decreased our reported interest cost by approximately $5.5 million. A substantial
portion of our borrowings are denominated in USD and bear interest at commonly quoted rates.

The Financial Conduct Authority in the United Kingdom intends to phase out LIBOR by the end of 2021. Our seasonal foreign credit lines that contain interest
rates benchmarked to LIBOR will include negotiated terms in consideration of this discontinuation for next season's financing. See Item 1A. "Risk Factors" for
further information.

54

Item 8. Financial Statements and Supplementary Data

Table of Contents

Consolidated Statements of Operations
Consolidated Statements of Comprehensive (Loss) Income
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm

55

Page No.
56
57
58
59
62
64
116

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Consolidated Statements of Operations

(in thousands, except per share data)

Sales and other operating revenues

Cost of goods and services sold

Gross profit

Selling, general, and administrative expenses

Other income, net

Restructuring and asset impairment charges

Goodwill impairment

Operating (loss) income

Debt retirement benefit

Interest expense

Interest income

Loss before income taxes and other items

Income tax expense (benefit)

Income from unconsolidated affiliates, net

Net (loss) income

Net loss attributable to noncontrolling interests

Net (loss) income attributable to Pyxus International, Inc.

(Loss) earnings per share:

Basic

Diluted

See "Notes to Consolidated Financial Statements"

Years Ended March 31,

2020

2019

2018

$

1,527,261  $

1,801,593  $

1,302,582 

1,550,779 

224,679 

199,016 

2,133 

5,646 

33,759 

(11,609)

— 

136,656 

3,850 

(144,415)

131,789 

5,885 

(270,319)

(5,658)

250,814 

172,831 

14,217 

4,946 

— 

87,254 

(1,753)

135,553 

3,629 

(42,917)

37,840 

9,589 

(71,168)

(701)

(264,661) $

(70,467) $

1,845,966 

1,599,775 

246,191 

148,287 

14,382 

382 

— 

111,904 

(2,975)

134,279 

3,271 

(16,129)

(58,764)

9,271 

51,906 

(530)

52,436 

(28.93) $

(28.93) $

(7.78) $

(7.78) $

5.83 

5.81 

$

$

$

56

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Consolidated Statements of Comprehensive (Loss) Income

(in thousands)
Net (loss) income

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment

Pension and other postretirement benefit plans

Cash flow hedges

Total other comprehensive income (loss), net of tax

Total comprehensive (loss) income

Comprehensive loss attributable to noncontrolling interests

Years Ended March 31,

2020

2019

2018

$

(270,319) $

(71,168) $

51,906 

(583)

(405)

3,145 

2,157 

(268,162)

(5,711)

(9,048)

(1,238)

(2,614)

(12,900)

(84,068)

(452)

9,611 

3,613 

1,100 

14,324 

66,230 

(991)

67,221 

Comprehensive (loss) income attributable to Pyxus International, Inc.

$

(262,451) $

(83,616) $

See "Notes to Consolidated Financial Statements"

57

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Consolidated Balance Sheets

March 31, 2020

March 31, 2019

(in thousands)
Assets

Current assets

Cash and cash equivalents

Restricted cash

Trade receivables, net

Other receivables

Accounts receivable, related parties

Notes receivable, related parties

Inventories, net

Advances to suppliers, net

Recoverable income taxes

Prepaid expenses

Other current assets

Total current assets

Restricted cash

Long-term notes receivable, related parties

Investments in unconsolidated affiliates

Goodwill

Other intangible assets, net

Deferred income taxes, net

Long-term recoverable income taxes

Other deferred charges

Other noncurrent assets

Right-of-use assets

Property, plant, and equipment, net

Total assets

Liabilities and Stockholders’ Equity

Current liabilities

Notes payable to banks

Accounts payable

Accounts payable, related parties

Advances from customers

Accrued expenses and other current liabilities

Income taxes payable

Operating leases payable

Current portion of long-term debt

Total current liabilities

Long-term taxes payable

Long-term debt

Deferred income taxes

Liability for unrecognized tax benefits

Long-term leases

Pension, postretirement, and other long-term liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity

Common stock—no par value:

250,000 authorized shares, 9,976 issued and outstanding (9,881 at March 31, 2019)
Retained deficit

Accumulated other comprehensive loss

Total stockholders’ (deficit) equity of Pyxus International, Inc.

Noncontrolling interests

Total stockholders' (deficit) equity

$

170,208  $

2,486 

226,742 

12,997 

5,030 

406 

730,019 

38,877 

7,562 

23,383 

14,658 

192,043 

5,378 

290,097 

20,900 

5,633 

150 

668,171 

19,754 

5,421 

15,934 

15,027 

1,232,368 

1,238,508 

389 

7,450 

67,967 

— 

65,948 

2 

3,038 

— 

48,434 

41,471 

389 

545 

69,459 

34,336 

71,781 

116,451 

3,067 

2,175 

46,168 

— 

$

$

295,996 

1,763,063  $

276,396 

1,859,275 

540,157  $

428,961 

67,094 

11,820 

18,810 

89,928 

5,049 

11,160 

45,048 

789,066 

8,543 

904,316 

22,903 

12,311 

27,843 

74,389 

87,049 

19,054 

16,436 

91,282 

3,728 

— 

332 

646,842 

10,718 

898,386 

26,813 

11,189 

— 

73,308 

1,839,371 

1,667,256 

469,677 

(488,545)

(59,132)

(78,000)

1,692 

(76,308)

468,936 

(223,884)

(61,342)

183,710 

8,309 

192,019 

Total liabilities and stockholders' equity

$

1,763,063  $

1,859,275 

See "Notes to Consolidated Financial Statements"

58

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Consolidated Statements of Stockholders’ Equity

Attributable to Pyxus International, Inc.

Accumulated Other Comprehensive Loss

(in thousands)

Common 
Stock

Retained 
Deficit

Currency 
Translation 
Adjustment

Pensions, 
Net of Tax

Derivatives, 
Net of Tax

Noncontrolling 
Interest

Total 
Stockholders’ 
Equity

Balance, March 31, 2019

$

468,936  $

(223,884) $

(21,979) $

(36,749) $

(2,614) $

8,309  $

192,019 

Net loss attributable to Pyxus International,
Inc.

Stock-based compensation

Other comprehensive (loss) income, net of tax

— 

429 

— 

(61,797)

— 

— 

— 

— 

(430)

— 

— 

311 

— 

— 

369 

Balance, June 30, 2019

469,365 

(285,681)

(22,409)

(36,438)

(2,245)

Net loss attributable to Pyxus International,
Inc.

Restricted stock surrender

Stock-based compensation

Dividends paid

Other comprehensive (loss) income, net of tax

— 

(12)

383 

— 

— 

(16,518)

— 

— 

— 

— 

Balance, September 30, 2019

469,736 

(302,199)

Net loss attributable to Pyxus International,
Inc.

Stock-based compensation

Purchase of noncontrolling interests in a
subsidiary

Other comprehensive income, net of tax

— 

242 

(528)

— 

(21,993)

— 

— 

— 

Balance, December 31, 2019

469,450 

(324,192)

— 

— 

— 

— 

— 

— 

— 

— 

(1,925)

(24,334)

(1,701)

(38,139)

— 

— 

33 

— 

— 

— 

1,789 

(22,512)

1,111 

(37,028)

Net loss attributable to Pyxus International,
Inc.

Stock-based compensation

Other comprehensive (loss) income, net of tax

— 

227 

— 

(164,353)

— 

— 

— 

— 

3 

— 

— 

(126)

— 

— 

— 

— 

1,428 

(817)

— 

— 

— 

576 

(241)

— 

— 

772 

(366)

— 

30 

7,973 

(86)

— 

— 

(480)

(19)

7,388 

(453)

— 

(426)

48 

6,557 

(62,163)

429 

280 

130,565 

(16,604)

(12)

383 

(480)

(2,217)

111,635 

(22,446)

242 

(921)

3,524 

92,034 

(4,753)

— 

(112)

(169,106)

227 

537 

Balance, March 31, 2020

$

469,677  $

(488,545) $

(22,509) $

(37,154) $

531  $

1,692  $

(76,308)

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Statements of Consolidated Stockholders’ Equity (continued)

Attributable to Pyxus International, Inc.

Accumulated Other Comprehensive Loss

(in thousands)

Common 
Stock

Retained 
Deficit

Currency 
Translation 
Adjustment

Pensions, 
Net of Tax

Derivatives, 
Net of Tax

Noncontrolling 
Interest

Total 
Stockholders’ 
Equity

Balance, March 31, 2018

$

473,476  $

(156,348) $

(12,682) $

(32,580) $

—  $

10,962  $

282,828 

Net loss attributable to Pyxus International,
Inc.

Stock-based compensation

Purchase of investment in subsidiary

Other comprehensive (loss) income, net of tax

— 

295 

— 

— 

(759)

— 

— 

— 

Balance, June 30, 2018

473,771 

(157,107)

Net loss attributable to Pyxus International,
Inc.

Restricted stock surrender

Stock-based compensation

Other comprehensive (loss) income, net of tax

— 

(8)

458 

— 

(54,634)

— 

— 

— 

— 

— 

— 

(5,136)

(17,818)

— 

— 

— 

(257)

— 

— 

— 

366 

(32,214)

— 

— 

— 

973 

Balance, September 30, 2018

474,221 

(211,741)

(18,075)

(31,241)

Net (loss) income attributable to Pyxus
International, Inc.

Restricted stock surrender

Stock-based compensation

— 

(20)

402 

(5,095)

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

(1,496)

(1,496)

— 

— 

— 

780 

(716)

— 

— 

— 

(654)

— 

5,531 

(175)

(1,413)

295 

5,531 

(6,441)

15,664 

280,800 

(208)

— 

— 

251 

15,707 

93 

— 

— 

(54,842)

(8)

458 

1,747 

228,155 

(5,002)

(20)

402 

Dividends paid

Impact of adoption of ASU 2018-02

Other comprehensive loss, net of tax

— 

— 

— 

— 

2,931 

— 

Balance, December 31, 2018

474,603 

(213,905)

Net (loss) income attributable to Pyxus
International, Inc.

Stock-based compensation

Dividends paid

Purchase of noncontrolling interests in a
subsidiary

Other comprehensive (loss) income, net of tax

— 

389 

— 

(6,056)

— 

(9,979)

— 

— 

— 

— 

— 

— 

(1,787)

(19,862)

— 

— 

— 

(461)

(1,656)

— 

(2,931)

(877)

(35,049)

— 

— 

— 

— 

(1,700)

— 

— 

(1,591)

(2,307)

— 

— 

— 

— 

(307)

Balance, March 31, 2019

$

468,936  $

(223,884) $

(21,979) $

(36,749) $

(2,614) $

(390)

— 

(523)

14,887 

68 

— 

(330)

(7,012)

696 

8,309  $

(390)

— 

(4,778)

218,367 

(9,911)

389 

(330)

(13,529)

(2,967)

192,019 

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Statements of Consolidated Stockholders’ Equity (continued)

Attributable to Pyxus International, Inc.

Accumulated Other Comprehensive Loss

(in thousands)

Common 
Stock

Retained 
Deficit

Currency 
Translation 
Adjustment

Pensions, 
Net of Tax

Derivatives, 
Net of Tax

Noncontrolling 
Interest

Total 
Stockholders’ 
Equity

Balance, March 31, 2017

$

472,349  $

(208,784) $

(22,293) $

(36,654) $

(1,100) $

3,192  $

206,710 

Net loss attributable to Pyxus International,
Inc.

Stock-based compensation

Other comprehensive income (loss), net of tax

— 

291 

— 

(32,543)

— 

— 

Balance, June 30, 2017

472,640 

(241,327)

Net income (loss) attributable to Pyxus
International, Inc.

Restricted stock surrender

Stock-based compensation

Other comprehensive income, net of tax

— 

(2)

253 

— 

1,024 

— 

— 

— 

Balance, September 30, 2017*

472,892 

(240,304)

Net income (loss) attributable to Pyxus
International, Inc.

Restricted stock surrender

Stock-based compensation

Purchase of additional investment in
subsidiary

Other comprehensive income, net of tax

— 

(6)

270 

— 

— 

88,456 

— 

— 

— 

— 

— 

— 

3,742 

(18,551)

— 

— 

— 

2,349 

(16,202)

— 

— 

— 

— 

726 

— 

— 

459 

(36,195)

— 

— 

— 

459 

— 

— 

(562)

(1,662)

— 

— 

— 

71 

(35,736)

(1,591)

— 

— 

— 

— 

458 

Balance, December 31, 2017

473,156 

(151,848)

(15,476)

(35,278)

Net loss attributable to Pyxus International,
Inc.

Restricted stock surrender

Stock-based compensation

Purchase of additional investment in
subsidiary

Other comprehensive income (loss), net of tax

— 

(223)

544 

— 

— 

(4,501)

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

2,794 

2,698 

Balance, March 31, 2018*

$

473,476  $

(156,348) $

(12,682) $

(32,580) $

*Amounts may not equal column totals due to rounding

See "Notes to Consolidated Financial Statements"

59

— 

— 

— 

— 

592 

(999)

— 

— 

— 

— 

999 

—  $

(90)

— 

— 

(32,633)

291 

3,639 

3,102 

178,007 

(68)

— 

— 

— 

3,033 

(130)

— 

— 

264 

— 

3,167 

(242)

— 

— 

8,497 

(461)

956 

(2)

253 

2,879 

182,092 

88,326 

(6)

270 

264 

1,776 

272,722 

(4,743)

(223)

544 

8,497 

6,030 

10,962  $

282,828 

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Consolidated Statements of Cash Flows

(in thousands)
Operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash used by operating activities:

Depreciation and amortization

Debt amortization/interest

Debt retirement benefit

Asset impairment charges

Remeasurement loss (gain) on foreign currency transactions

Gain on sale of property, plant, and equipment

Gain on insurance proceeds received for destroyed buildings and equipment

Bad debt expenses (recovery)

Loss (income) from unconsolidated affiliates, net of dividends

Stock-based compensation

Changes in operating assets and liabilities, net:

Trade and other receivables

Inventories and advances to tobacco suppliers

Deferred items

Recoverable income taxes

Payables and accrued expenses

Advances from customers

Current derivative asset

Prepaids

Income taxes

Other operating assets and liabilities

Other, net

Net cash used by operating activities

Years Ended March 31,

2020

2019

2018

$

(270,319) $

(71,168) $

51,906 

35,828 

12,875 

— 

34,813 

14,105 

(6,539)

(18)

8,644 

820 

1,231 

(186,334)

(82,639)

105,977 

(2,955)

(15,607)

3,354 

— 

(16,945)

2,462 

(4,849)

7,474 

35,747 

11,843 

(1,753)

891 

(2,383)

(2,080)

(6,038)

6,821 

(3,936)

1,544 

(258,984)

32,725 

9,356 

(884)

7,435 

(5,703)

(3,495)

(1,916)

(2,302)

1,933 

4,066 

33,598 

12,586 

(2,975)

404 

5,396 

(2,704)

— 

(152)

(6,345)

1,189 

(308,433)

17,967 

(78,944)

(557)

(14,007)

(6,834)

2,044 

(9,994)

1,297 

277 

(2,894)

(358,622)

(248,281)

(307,175)

Investing activities:

Purchases of property, plant, and equipment

Intangibles, including internally developed software costs

Proceeds from sale of property, plant, and equipment

Collections on beneficial interests on securitized trade receivables

Loans to unconsolidated affiliates

Insurance proceeds received for destroyed buildings and equipment

Payments to acquire equity method investments

Payments to acquire controlling interests, net of cash acquired

Other, net

(61,063)

(3,236)

9,677 

240,994 

(5,250)

18 

— 

— 

213 

(47,539)

(3,105)

5,148 

242,966 

— 

6,465 

— 

(8,692)

31 

Net cash provided by investing activities

181,353 

195,274 

(22,783)

(231)

3,161 

263,670 

— 

— 

(10,000)

(32,687)

(46)

201,084 

(in thousands)
Financing activities:

Years Ended March 31,

2020

2019

2018

Net proceeds (repayments) of short-term borrowings

Proceeds from revolving loan facilities

$

122,524  $

23,043  $

(62,672)

44,900 

— 

— 

Proceeds from long-term borrowings

Repayment of long-term borrowings

Debt issuance costs

Additional investment in consolidated affiliates

Other, net

Net cash provided (used) by financing activities

500 

(335)

(6,313)

(921)

(480)

159,875 

— 

(25,132)

(5,285)

(13,470)

(788)

(21,632)

— 

(34,961)

(5,374)

— 

(71)

(103,078)

Effect of exchange rate changes on cash

(7,333)

4,416 

1,783 

Decrease in cash, cash equivalents, and restricted cash

Cash and cash equivalents at beginning of year

Restricted cash at beginning of year

Cash, cash equivalents, and restricted cash at end of year

Other information:

Cash paid for income taxes, net

Cash paid for interest

Cash received from interest

Noncash investing activities:

(24,727)

192,043 

5,767 

(70,223)

264,660 

3,373 

(207,386)

473,110 

2,309 

173,083  $

197,810  $

268,033 

20,549  $

26,634  $

121,179 

(4,066)

125,055 

(3,845)

18,691 

118,441 

(2,456)

$

$

Purchases of property, plant, and equipment included in accounts payable

Sales of property, plant, and equipment included in notes receivable

2,087 

334 

7,095 

1,957 

697 

2,218 

Beneficial interests obtained in exchange for transferring trade receivables in a securitization
transaction

229,751 

247,386 

281,601 

See "Notes to Consolidated Financial Statements"

60

1. Basis of Presentation and Summary of Significant Accounting Policies

Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries
Notes to Consolidated Financial Statements
(in thousands, except per share data)

The Company is a global agricultural company with more than 145 years of experience delivering value-added products and services to businesses and customers.
The Company is a trusted provider of responsibly sourced, independently verified, sustainable, and traceable products and ingredients.

The  consolidated  financial  statements  have  been  prepared  in  accordance  with  accounting  principles  generally  accepted  in  the  United  States  of  America  ("U.S.
GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission applicable to annual reporting on Form 10-K.

Going Concern
In  an  effort  to  address  the  Company's  maturing  long-term  debt,  the  Company  contemplated  a  number  of  actions,  including  reviewing  of  strategic  business
alternatives,  evaluating  and  developing  plans  for  a  partial  monetization  of  its  interests  in  certain  subsidiaries  in  the  Other  Products  and  Services  segment,  and
implementing a global operations efficiency program. After implementing certain of these actions, evaluating other financing alternatives, and the impact of the
COVID-19 pandemic, the Company determined that it will not have liquidity to fund near-term operations. As a result, the Company and certain of its subsidiaries
commenced  the  Chapter  11  Cases  on  June  15,  2020.  See  Note  28.  "Subsequent  Events" to  the  "Notes  to  Consolidated  Financial  Statements"  for  additional
information, including the definitions of certain capitalized terms used in Note 1. The Company and such subsidiaries operated as “debtors-in-possession” under
the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of Chapter 11 of the Bankruptcy Code and the orders of the Bankruptcy
Court  until  their  emergence  from  bankruptcy.  The  Company’s  other  subsidiaries  were  not  part  of  the  Chapter  11  Cases,  and  have  continued  to  operate  in  the
ordinary course of business.

The  accompanying  consolidated  financial  statements  and  related  notes  have  been  prepared  assuming  that  the  Company  will  continue  as  a  going  concern  and
contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying consolidated financial statements do not
include  adjustments  related  to  the  recoverability  and  classification  of  assets  or  the  amounts  and  classification  of  liabilities  or  other  adjustments  that  might  be
necessary  should  the  Company  be  unable  to  continue  as  a  going  concern  or  as  a  consequence  of  the  Chapter  11 Cases.  As  a  result  of  the  Company's  financial
condition and the near-term maturities of substantial indebtedness, substantial doubt existed as of March 31, 2020 that the Company would be able to continue as a
going concern. Based on the confirmation of the Plan by the Bankruptcy Court and the effectiveness of the Plan, there is no longer substantial doubt about the
Company’s ability to continue as a going concern.

COVID-19
The  Company  has  been  closely  monitoring  the  impact  of  the  disease  caused  by  the  novel  coronavirus  ("COVID-19")  on  the  Company  and  its  workforce  since
January  2020.  In  March  2020,  the  World  Health  Organization  recognized  the  outbreak  of  COVID-19  as  a  global  pandemic.  The  COVID-19  pandemic  and
government  actions  implemented  to  contain  the  further  spread  of  COVID-19  have  severely  restricted  economic  activity  around  the  world.  The  Company’s
businesses have been classified as an “essential” business under governmental shelter-in-place and similar orders in many of the jurisdictions in which we operate.
As such, the Company is still able to produce and sell products. The Company’s production facilities are still operating but, in some instances, at lower production
levels than planned due to the shelter in-place  mandates.  While the Company’s supply chains and distribution  channels have experienced  delays, the Company
currently has adequate supply of products to meet forecasted demand for fiscal 2021.

The Company implemented various measures to reduce the spread of the virus including working from home, restricting visitors to production locations, splitting
production  workforce,  reducing  the  on-site  production  workforce  levels,  screening  workers  before  they  enter  facilities,  implementing  social  distancing,  and
encouraging employees to adhere to prevention measures recommended by the Center for Disease Control and the World Health Organization.

Principles of Consolidation
The  consolidated  financial  statements  include  the  accounts  of  the  Company  and  its  majority-owned  and  controlled  subsidiaries.  Intercompany  accounts  and
transactions have been eliminated.

Equity Method Investments
The  Company’s  equity  method  investments  and  its  cost  method  investments  are  non-marketable  securities.  When  not  required  to  consolidate  its  investment  in
another  entity,  the  Company  uses  the  equity  method  if  it  (i)  can  exercise  significant  influence  over  the  other  entity,  and  (ii)  holds  common  stock  and/or  in-
substance  common  stock  of  the  other  entity.  Under  the  equity  method,  investments  are  carried  at  cost,  plus  or  minus  the  Company’s  equity  in  the  increases  or
decreases of the investee’s net assets after the date of acquisition. The Company continually monitors its equity method investments for factors indicating

61

other-than-temporary  impairment.  The  Company's  proportionate  share  of  the  net  income  or  loss  of  these  entities  is  included  in  income  from  unconsolidated
affiliates, net within the consolidated statements of operations. Dividends received from the investee reduce the carrying amount of the investment. Distributions
from equity method investees are accounted for based on the cumulative earnings approach to determine whether they represent a return of investment, or a return
on investment.

Variable Interest Entities
The  Company  holds  variable  interests  in  multiple  variable  interest  entities,  which  primarily  procure  or  process  inventory  on  behalf  of  the  Company  or  are
securitization entities. These variable interests relate to equity investments, receivables, guarantees, and securitized receivables. The Company is not the primary
beneficiary of the majority of these entities as it does not have the power to direct the activities that most significantly impact the economic performance of the
entities,  due  to  the  entities’  management  and  board  of  directors’  structure.  As  a  result,  the  majority  of  these  variable  interest  entities  are  not  consolidated.  The
Company holds a majority  voting  interest  and is the primary  beneficiary  of its variable  interest  in Humble Juice  Co., LLC, a consolidated  entity  for which the
related intercompany accounts and transactions have been eliminated. Creditors of the Company’s variable interest entities do not have recourse against the general
credit of the Company.

The Company's investments in unconsolidated variable interest entities are classified as investments in unconsolidated affiliates in the consolidated balance sheets.
The Company's receivables with variable interest entities are classified as long-term notes receivable, related parties and accounts receivable, related parties in the
consolidated balance sheets. The Company's maximum exposure to loss in these variable interest entities is represented by the investments, receivables, guarantees,
and the deferred purchase price on the sale of securitized receivables.

Use of Estimates
The preparation of these consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. These estimates and
assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results may differ from the Company's estimates and
assumptions. Estimates are used in accounting for, among other things, revenue recognition, pension and postretirement health care benefits, inventory reserves,
accounts receivable reserves, bank loan guarantees to suppliers and unconsolidated subsidiaries, useful lives for depreciation and amortization, future cash flows
associated  with  impairment  testing  for  long-lived  assets,  deferred  tax  assets  and  uncertain  income  tax  positions,  intrastate  tax  credits  in  Brazil,  fair  value
determinations of financial assets and liabilities, including derivatives, securitized beneficial interests, and counterparty risk.

Reclassifications
Certain  prior  period  amounts  have  been  reclassified  to  conform  to  the  current  year  presentation  in  the  restructuring  and  asset  impairment  charges  in  the
consolidated statements of cash flows, and the components within inventory.

Subsequent to the issuance of the fiscal year ended March 31, 2019 financial statements, management identified a classification error of an additional investment in
consolidated affiliates in the consolidated statements of cash flows. During the fiscal year ended March 31, 2020, the Company restated its consolidated statements
of cash flows to correct the misclassification. The misclassification resulted in an understatement of net cash provided by investing activities and an understatement
of net cash used by financing  activities  of $13,470 in the  consolidated  statement  of cash flows related  to additional  investments  in consolidated  affiliates.  This
restatement did not affect the consolidated balance sheets, consolidated statements of operations, or consolidated statements of stockholder's equity for any period.

Segment Information
The Company's operations are managed and reported in ten operating segments that are organized by product category and geographic area and aggregated into
three reportable segments for financial reporting purposes: Leaf - North America, Leaf - Other Regions, and Other Products and Services. In reviewing operations,
the Company concluded that the economic characteristics of Leaf - North America operations were dissimilar from the other Leaf geographic operating segments
in  Africa,  Asia,  Europe,  and  South  America,  which  have  been  consolidated  into  one  reportable  segment,  "Leaf  -  Other  Regions".  The  five  other  operating
segments are aggregated into the "Other Products and Services" reportable segment as they do not meet the quantitative thresholds to be individually reportable.
These segment groupings are consistent with information used by the chief operating decision maker to assess performance and allocate resources.

The types of products and services from which each reportable segment derived its revenues during the reported periods are as follows:

•

Leaf - North America ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - North America is more
concentrated on processing and other activities compared to the rest of the world.

62

•

•

Leaf - Other Regions ships tobacco to manufacturers of cigarettes and other consumer tobacco products around the world. Leaf - Other Regions sells a
small amount of processed but un-threshed flue-cured and burley tobacco in loose-leaf and bundle form to certain customers.

Other Products and Services primarily consists of cannabis and e-liquid products. Cannabis was legalized for adult use in Canada on October 17, 2018.
The  cannabis  products  of  the  Company's  Canadian  subsidiaries  are  sold  primarily  to  municipally-owned  retailers  in  the  provinces  of  Prince  Edward
Island, Ontario, New Brunswick, and Nova Scotia in the Canadian market. E-liquids products are sold through retailers and directly to consumers via e-
commerce platforms and other distribution channels.

The  Company  evaluates  the  operating  performance  of  its  segments  based  upon  information  included  in  management  reports.  Corporate  general  expenses  are
allocated to the segments based upon segment selling, general, and administrative expenses. 

Revenue Recognition
The Company's revenue consists primarily of the sale of processed tobacco and fees charged for processing and related services to the manufacturers of tobacco
products. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company’s performance obligations are
satisfied when the transfer of control of the distinct product or service to the customer occurs. For products, control is transferred and revenue is recognized at a
point in time, in accordance with the shipping terms of the contract. For services, control is transferred and revenue is recognized over time using the input method
based on a kilogram of packed tobacco. A kilogram of processed tobacco (or tobacco processing services resulting in a kilogram of processed tobacco) is the only
material and distinct performance  obligation for the Company’s tobacco revenue streams. Consideration is attributed to the performance  of this obligation. The
Company does not disclose information related to its unsatisfied performance obligations with an expected duration of one year or less.

Revenue  is  measured  as  the  amount  of  consideration  to  which  the  Company  expects  to  be  entitled  to  receive  in  exchange  for  transferring  goods  or  providing
services. Contract costs primarily include labor, material, shipping and handling, and overhead expenses.

Assets Recognized from the Costs to Obtain a Contract with a Customer
The Company records product and supply contract intangible assets for the incremental costs of obtaining a contract with a customer if the Company expects the
benefit of those costs to be longer than one year, and if such costs are material. The Company applies a practical expedient to expense costs as incurred for costs to
obtain a contract when the amortization period would have been one year or less. Capitalized costs to obtain a contract are classified as other intangible assets, net
in the consolidated balance sheets.

Contract Balances
The  Company  generally  records  a  receivable  when  revenue  is  recognized  as  the  timing  of  revenue  recognition  may  differ  from  the  timing  of  payment  from
customers. Payment terms and conditions vary by contract, although terms generally include a requirement of payment within 30 to 60 days. The Company applied
a practical expedient not to adjust the transaction price for the effects of financing components when the period between when the Company transfers a promised
good or service to a customer and when the customer pays for that good or service is one year or less. As a result, where the timing of revenue recognition differs
from the timing of payment, the Company determined its contracts do not include a significant financing component.

The  allowance  for  doubtful  accounts  reflects  the  Company’s  best  estimate  of  probable  losses  inherent  in  the  trade  receivables,  net  balance.  The  Company
determines  the  allowance  based  on  historical  experience  and  other  currently  available  information.  The  provision  for  doubtful  accounts  is  recorded  in  selling,
general, and administrative expenses in the statements of consolidated operations.

Significant Judgments
The Company has identified two main forms of variable consideration in its contracts with customers: warehousing fees for storing customer-controlled tobacco
until the customer requests shipment and claims resulting from tobacco that does not meet customer specifications. Warehousing fees are either included in the
price of tobacco based on the customers' best estimate of the date they will request shipment or separately charged using a per-day storage rate. When the Company
enters into a contract with a customer, the price communicated is the amount of consideration the Company expects to receive. Price adjustments for tobacco not
meeting customer specifications for shrinkage, improper blend, or chemical makeup, etc. are handled through a claims allowance that is assessed quarterly. Since
the  Company  has  a  large  number  of  customer  contracts  with  similar  characteristics,  the  volume  of  tobacco  sold  each  year  is  substantial,  and  the  Company  has
historical data related to claims, the Company is able to estimate the amount of expected claims using the expected value method.

63

Taxes Collected from Customers
Certain subsidiaries are subject to value-added taxes on local sales. Value-added taxes on local sales are recorded in sales and other operating revenues and cost of
goods and services sold in the consolidated statements of operations.

Shipping and Handling
The Company elected to account for shipping and handling as activities to fulfill its performance obligations, regardless of when control transfers. Shipping and
handling fees that are billed to customers are recognized in sales and other operating revenues and the associated shipping and handling costs are recognized in cost
of goods and services sold in the statements of consolidated operations.

Cash and Cash Equivalents
Cash  and  cash  equivalents  include  cash  in  banks  and  highly  liquid  investments  with  original  maturities  of  three  months  or  less  and  are  stated  at  cost,  which
approximates fair value.

Inventories, Net
Costs in inventory include processed tobacco inventory, unprocessed tobacco inventory, other tobacco related, and other inventory. Costs of unprocessed tobacco
inventories  are  determined  by the  average  cost  method,  which  include  the  cost  of  green  tobacco.  Costs of  processed  tobacco  inventories  are  determined  by the
average cost method, which include both the cost of unprocessed tobacco, as well as direct and indirect costs related to processing the product. Costs of other non-
tobacco inventory  are determined  by the  first-in,  first-out  method,  which include  costs of packing  materials,  non-tobacco  agricultural  products,  and agricultural
supplies including seed, fertilizer, herbicides, and pesticides.

Inventories are carried at the lower of cost or net realizable value (“LCM”). The Company evaluates its inventories for LCM adjustments by country and type of
inventory. Processed tobacco and unprocessed tobacco are evaluated separately for LCM purposes. The Company compares the cost of its processed tobacco to net
realizable value based on the estimated selling price of similar grades when evaluating those balances for LCM adjustments. The Company also considers whether
its processed tobacco is committed to a customer, whereby the expected sales price is utilized in determining the net realizable value for committed tobacco. In
addition, the Company writes-down inventory balances for estimates of obsolescence. LCM and obsolescence inventory write-downs are recorded in cost of goods
and services sold within the consolidated statements of operations.

Advances to Suppliers, Net
The  Company  purchases  seeds,  fertilizer,  pesticides,  and  other  products  related  to  growing  tobacco  and  advances  them  to  farmers  to  assist  in  crop  production.
These seasonal advances are short term, represent prepaid inventory, and are recorded as advances to suppliers. Upon delivery of tobacco, part of the purchase
price to the supplier is paid in cash and part through a reduction of the advance balance. The advances applied to the delivery are reclassified from advances to
unprocessed inventory.

The Company also has noncurrent advances, which generally represent the cost of advances to farmers for infrastructure, such as curing barns, recovered through
the delivery of tobacco to the Company by the suppliers. Suppliers may not be able to settle the entire amount of advances due in a given year. In these situations,
the Company may allow the suppliers to deliver tobacco over future crop years to recover its advances. Noncurrent advances to suppliers are recorded in other
noncurrent assets in the consolidated balance sheets.

The  Company  accounts  for  its  advances  to  suppliers  using  a  cost  accumulation  model,  which  reports  advances  at  the  lower  of  cost  or  recoverable  amounts
exclusive of the mark-up and interest. The mark-up and interest on its advances are recognized upon delivery of tobacco as a decrease in the cost of the current
crop.  Unrecovered  advances  are  recorded  in  cost  of  goods  and  services  sold  in  the  consolidated  statements  of  operations  for  abnormal  yield  adjustments  or
unrecovered advances from prior crops. Normal yield adjustments are capitalized into the cost of the current crop and are recorded in cost of goods and services
sold as that crop is sold.

Goodwill and Other Intangible Assets
Goodwill represents the excess of purchase price over fair value of net assets acquired and is allocated to the appropriate reporting unit when acquired. A reporting
unit is an operating segment, or one level below an operating segment, referred to as a component. The components within the Company’s operating segments are
aggregated into ten reporting units due to their similar economic characteristics. Goodwill is not subject to amortization and is tested for impairment annually, on
the first day of the fourth quarter of the fiscal year, or whenever events and circumstances indicate that impairment may have occurred.

The Company utilized a qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
In performing the Company’s quantitative assessments, the Company utilized the discounted cash flow (“DCF”) method of the income approach. The future cash
flows of the Company’s reporting units were projected based on estimates of future revenues, gross margins, operating income, excess net working capital, capital

64

expenditures, and other factors. The Company utilized estimated revenue growth rates and cash flow projections. The discount rates utilized in the DCF method
were based on a weighted-average cost of capital ("WACC") determined from relevant market comparisons and adjusted for specific reporting unit risks, country
risk  premiums,  and capital  structure.  A terminal  value  estimated  growth rate  was applied  to  the final  year  of the projected  period  and reflected  the  Company’s
estimate of perpetual growth. The Company then calculated a present value of the respective cash flows for each reporting unit to arrive at an estimate of fair value
under the income approach. The Company then reconciled the estimated fair value of its reporting units to its total public market capitalization as of the valuation
date. An implied control premium was calculated based on the Company’s stock price as of the valuation date and compared to control premiums paid in recent
industry transactions for reasonableness. The carrying amount of goodwill exceeded its fair value. As a result, the Company recorded an impairment charge.

The Company has intangible assets with definite useful lives. These intangible assets are assessed annually and tested for impairment whenever factors indicate
that the carrying amount may not be recoverable. Production and supply contracts are amortized based on the expected realization of the benefit over the term of
the contracts ranging from three to five years. The trade name, customer relationship, and license intangibles are amortized on a straight-line basis over eight, eight
to twenty years, and five to twenty years, respectively. The amortization period is the term of the contract or, if no term is specified in the contract, management’s
best  estimate  of  the  useful  life  based  on  past  experience.  Internally  developed  software  is  amortized  on  a  straight-line  basis  over  three to  five  years  once  the
software  testing  is  complete.  Events  and  changes  in  circumstance  may  either  result  in  a  revision  in  the  estimated  useful  life  or  impairment  of  an  intangible.
Amortization expense associated with finite-lived intangible assets is recorded in selling, general, and administrative expenses in the consolidated statements of
operations, except for production and supply contracts which is recorded against the associated revenues.

Leases
The Company has operating leases for land, buildings, automobiles, and other equipment that expire at various dates through 2040. Leases for real estate generally
have initial terms ranging from 2 to 15 years, excluding renewal options. Leases for equipment generally have initial terms ranging from 2 to 5 years excluding
renewal  options.  Most  leases  have  fixed  rentals,  with  many  of  the  real  estate  leases  requiring  additional  payments  for  real  estate  taxes.  These  lease  terms  may
include  optional  renewals,  terminations  or  purchases,  which  are  considered  in  the  Company’s  assessments  when  such  options  are  reasonably  certain  to  be
exercised.

The  Company  measures  right-of-use  assets  and  related  lease  liabilities  based  on  the  present  value  of  remaining  lease  payments,  including  in-substance  fixed
payments, the current payment amount when payments depend on an index or rate (e.g., inflation adjustments, market renewals), and the amount the Company
believes  is  probable  to  be  paid  to  the  lessor  under  residual  value  guarantees,  when  applicable.  Lease  contracts  may  include  fixed  payments  for  non-lease
components, such as maintenance, which are included in the measurement of lease liabilities for certain asset classes based on the Company’s election to combine
lease  and  non-lease  components.  The  Company  does  not  recognize  short-term  leases,  those  lease  contracts  with  durations  of  twelve  months  or  lease,  in  the
consolidated balance sheets.

As applicable borrowing rates are not typically implied within the lease arrangements, the Company discounts lease payments based on its estimated incremental
borrowing  rate  at  lease  commencement,  or  modification,  which  is  based  on  the  Company’s  estimated  credit  rating,  the  lease  term  at  commencement,  and  the
contract currency of the lease arrangement.

Property, Plant, and Equipment, Net
Property,  plant,  and  equipment  is  stated  at  cost  and  depreciated  using  the  straight-line  method  over  the  estimated  useful  lives  of  the  assets.  Buildings  are
depreciated  over  a  range  of  20  to  30  years.  Machinery  and  equipment  are  depreciated  over  a  range  of  three to  ten  years.  Repairs  and  maintenance  costs  are
expensed  as  incurred.  The  cost  of  major  improvements  are  capitalized.  Upon  sale  or  disposition  of  an  asset,  the  cost  and  related  accumulated  depreciation  are
removed from the balance sheet accounts and the resulting gain or loss is included in other income, net in the consolidated statements of operations.

Long-lived  assets  are  tested  for  recoverability  whenever  events  or  changes  in  circumstances  indicate  that  the  carrying  amount  may  not  be  recoverable.  The
evaluation is performed at the lowest level of identifiable cash flows at which the asset could be bought or sold in a current transaction between willing parties and
may  be  estimated  using  a  number  of  techniques,  including  quoted  market  prices  or  valuations,  present  value  techniques  based  on  estimates  of  cash  flows,  or
multiples of earnings or revenue performance measures.

Capitalized Interest
Interest is capitalized on significant construction in progress using the weighted average interest rate during the capitalization period.

65

Guarantees
The  Company's  guarantees  are  primarily  related  to  bank  loans  to  suppliers  for  crop  production  financing.  The  Company  guarantees  bank  loans  of  certain
unconsolidated  subsidiaries  in  Asia  and  South  America.  Under  longer-term  arrangements,  the  Company  may  guarantee  financing  on  suppliers’  construction  of
curing barns or other tobacco production assets. Guaranteed loans are generally repaid concurrent with the delivery of tobacco to the Company. The Company is
obligated  to  repay  guaranteed  loans  should  the  supplier  default.  If  default  occurs,  the  Company  has  recourse  against  its  various  suppliers  and  their  production
assets. The fair value of the Company's guarantees are recorded in accrued expenses and other current liabilities in the consolidated balance sheets and included in
crop costs, except for the joint venture in Brazil, which are included in accounts receivable, related parties.

In Brazil, certain suppliers obtain government subsidized rural credit financing from local banks that is guaranteed by the Company. Upon delivery of tobacco, the
Company remits payments to the local banks on behalf of the suppliers before paying the supplier. Amounts owed to suppliers are recorded in accounts payable in
the consolidated balance sheets. Rural credit financing repayment is due to local banks based on contractual due dates.

Income Taxes
The Company uses the asset and liability method to account for income taxes. The objective of the asset and liability method is to establish deferred tax assets and
liabilities for the temporary differences between the financial reporting basis and the income tax basis of the Company’s assets and liabilities at enacted tax rates
expected to be in effect when such amounts are realized or settled.

The Company’s annual tax rate is based on its income, statutory tax rates, and tax planning opportunities available in the various jurisdictions in which it operates.
Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in
determining  tax  expense  and  in  evaluating  tax  positions,  including  evaluating  uncertainties.  The  Company  reviews  its  tax  positions  quarterly  and  adjusts  the
balances as new information becomes available.

Deferred income tax assets represent amounts available to reduce income taxes payable on taxable income in future years. Such assets arise because of temporary
differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. The Company
evaluates  the  recoverability  of  these  future  tax  deductions  by  assessing  the  adequacy  of  future  expected  taxable  income  from  all  sources,  including  reversal  of
taxable temporary differences, forecasted operating earnings, and available tax planning strategies. As these sources of income inherently rely on estimates, the
Company uses historical experience and short and long-range business forecasts to provide insight.

The Company believes it is more likely than not that a majority of the deferred income tax assets may not be realized and has established a valuation allowance
against those deferred income assets. Although expiration is not assured for the deferred income tax assets, we believe it is more likely than not that the deferred
tax assets will fully expire within the applicable statutory expiration periods. However, deferred tax assets could become realizable in the near term if our overall
capital structure is improved. The Company believes it is more likely than not the remaining deferred tax assets will be fully recoverable  within the applicable
statutory expiration periods.

Pension and Other Postretirement Benefits

Retirement Benefits
The Company sponsors multiple benefit plans. The Company has a defined benefit plan that provides retirement benefits for certain U.S. salaried personnel based
on years  of service  rendered,  age,  and compensation.  The Company also  maintains  various  other  excess  benefit  and supplemental  plans that  provide  additional
benefits to certain individuals in key positions and individuals whose compensation and the resulting benefits that would have actually been paid are limited by
regulations  imposed  by  the  Internal  Revenue  Code.  In  addition,  a  Supplemental  Retirement  Account  Plan  ("SRAP")  defined  contribution  plan  is  maintained.
Additional non-U.S. plans sponsored by certain subsidiaries cover certain of the full-time employees located in Germany, Turkey, and the United Kingdom.

Postretirement Health and Life Insurance Benefits
The  Company  provides  certain  health  and  life  insurance  benefits  to  retired  U.S.  employees  (and  their  eligible  dependents)  who  meet  specified  age  and  service
requirements. The plan excludes new employees after September 2005 and caps the Company’s annual cost commitment to postretirement benefits for retirees.
The Company retains  the right,  subject  to existing  agreements,  to modify  or eliminate  these postretirement  health  and life insurance  benefits  in the future. The
Company provides certain health and life insurance benefits to retired Brazilian directors and certain retirees located in Europe including their eligible dependents
who meet specified requirements.

66

Plan Assets
The Company's policy is to contribute amounts to the plans sufficient to meet or exceed funding requirements of local governmental rules and regulations. Funding
of our qualified defined benefit pension plans is determined in accordance with the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended by
the Pension Protection Act of 2006.

The Company's investment objectives for plan assets are to generate consistent total investment return to pay anticipated plan benefits, while minimizing long-term
costs  and  portfolio  volatility.  The  financial  objectives  underlying  this  policy  include  maintaining  plan  contributions  at  a  reasonable  level  relative  to  benefits
provided and assuring unfunded obligations do not grow to a level that would adversely affect the Company's financial health. Portfolio performance is measured
against  investment  objectives  and  objective  benchmarks,  including  but  not  limited  to:  Citibank  90  Day  Treasury  Bill,  Bloomberg  Barclays  Intermediate
Govt/Credit, Bloomberg Barclays Aggregate, Russell 1000 Value, Russell 1000 Growth, Russell 2500 Value, Russell 2500 Growth, MSCI EAFE, HFR Absolute
Return, and HFR Equity Hedge. The portfolio objective is to exceed the actuarial  return on assets assumption. Management and the plan's consultant regularly
review portfolio allocations and periodically rebalance the portfolio to the targeted allocations according to the guidelines set forth in the Company's investment
policy.  Equity  securities  do  not  include  the  Company's  common  stock.  The  Company's  diversification  and  risk  control  processes  serve  to  minimize  the
concentration and experience of risk. There are no significant concentrations of risk, in terms of sector, industry, geography, or individual company or companies.

In order to project the long-term investment return for the total portfolio, estimates are prepared for the total return of each major asset class over the subsequent
10-year period, or longer. Those estimates are based on a combination of factors including the current market interest rates and valuation levels, consensus earnings
expectations and historical long-term risk premiums. To determine the aggregate return for the pension trust, the projected return of each individual asset class is
then weighted according to the allocation to that investment area in the trust’s long-term asset allocation policy.

The Company’s plan assets primarily consist of cash and cash equivalents, equity securities, fixed income securities, equity and fixed income funds, real estate
investments,  and  diversified  investments.  Plan  assets  are  measured  at  fair  value  annually  on  March  31,  the  measurement  date.  The  following  are  descriptions,
valuation methodologies, and inputs used to determine the fair value of each major category of plan assets:

•

•

•

•

•

•

Cash and cash equivalents include short-term investment funds, primarily in diversified portfolios of investment grade money market instruments that are
valued using quoted market prices or other valuation methods, and classified within Level 1 or Level 2 of the fair value hierarchy.

Equity securities are investments in common stock of domestic and international corporations in a variety of industry sectors, and are valued primarily
using quoted market prices and generally classified within Level 1 in the fair value hierarchy.

Fixed income securities include U.S. Treasuries and agencies, debt obligations of foreign governments, and debt obligations in corporations of domestic
and foreign  issuers.  The fair  value of fixed  income  securities  is based on observable  prices  for identical  or comparable  assets,  adjusted by benchmark
curves, sector grouping, matrix pricing, broker/dealer quotes, and issuer spreads, and are generally classified within Level 1 or Level 2 in the fair value
hierarchy.

Investments in equity and fixed income mutual funds are publicly traded and valued primarily using quoted market prices and generally classified within
Level 1 in the fair value hierarchy. Investments in commingled funds used in certain non-U.S. pension plans are not publicly traded, but the underlying
assets  held  in  these  funds  are  traded  in  active  markets  and  the  prices  for  these  assets  are  readily  observable.  Holdings  in  these  commingled  funds  are
generally classified as Level 2 investments.

Real  estate  investments  include  those  in  private  limited  partnerships  that  invest  in  various  domestic  and  international  commercial  and  residential  real
estate  projects  and  publicly  traded  REIT  securities.  The  fair  values  of  private  real  estate  assets  are  typically  determined  by  using  income  and/or  cost
approaches or comparable sales approach, taking into consideration discount and capitalization rates, financial conditions, local market conditions, and
the  status  of  the  capital  markets,  and  are  generally  classified  within  Level  3  in  the  fair  value  hierarchy.  Publicly  traded  REIT  securities  are  valued
primarily using quoted market prices and are generally classified within Level 1 in the fair value hierarchy.

Diversified  investments  include  those  in  limited  partnerships  that  invest  in  non-publicly  traded  companies  and  mutual  funds  with  an  absolute  return
strategy.  Their  investment  strategies  include  leveraged  buyouts,  venture  capital,  distressed  investments,  and  investments  in  natural  resources.  These
investments are valued using inputs such as trading multiples of comparable public securities, merger and acquisition activity and pricing data from the
most recent equity financing taking into consideration illiquidity, and are classified within Level 3 in the fair value hierarchy. Mutual fund

67

investments with absolute return strategies are publicly traded and valued using quoted market prices and are generally classified within Level 1 in the fair
value hierarchy.

Foreign Currency Translation and Remeasurement
The Company translates assets and liabilities of its foreign subsidiaries from their respective functional currencies to USD using exchange rates in effect at period
end, except for non-monetary balance sheet accounts, which are translated at historical exchange rates. The Company's results of operations and its cash flows are
translated using average exchange rates for each reporting period. Resulting currency translation adjustments are reflected as a separate component of accumulated
other comprehensive loss in the consolidated balance sheets.

The financial statements of foreign subsidiaries, for which the USD is the functional currency and which have certain transactions denominated in a local currency,
are remeasured into USD. The remeasurement of local currencies into USD results in remeasurement adjustments that are included in net income. Exchange gains
(losses) from remeasurement are recorded in cost of goods and services sold and other income, net within the consolidated statements of operations.

Securitized Receivables
The  Company  sold  trade  receivables  to  unaffiliated  financial  institutions  under  three  accounts  receivable  securitization  facilities.  Under  the  facilities,  the
receivables sold for cash are removed from the consolidated balance sheets. Under the first and second facilities, a portion of the purchase price for the receivables
is paid by the unaffiliated financial institutions in cash and the balance is a deferred purchase price receivable, which is paid as payments on the receivables are
collected from account debtors.

The net cash proceeds received by the Company in cash at the time of sale (cash purchase price) are included as cash used by operating activities in the statements
of consolidated cash flows. The deferred purchase price receivable represents a continuing involvement and a beneficial interest in the transferred financial assets
and  is  recognized  at  fair  value  as  part  of  the  sale  transaction.  The  deferred  purchase  price  receivables  are  included  in  trade  and  other  receivables,  net  in  the
consolidated balance sheets and are valued using unobservable inputs (i.e., Level three inputs), primarily discounted cash flow. On April 1, 2018, the Company
adopted ASU No. 2016-15 and in accordance with this guidance, the net cash proceeds received by the Company as deferred purchase price are included in net
cash  provided  by  investing  activities  in  the  statements  of  consolidated  cash  flows.  Additionally,  cash  obtained  as  a  beneficial  interest  for  transferring  trade
receivables in a securitization transaction has been added as a noncash disclosure to the statements of consolidated cash flows.

The difference between the carrying amount of the receivables sold under these facilities and the sum of the cash and fair value of the other assets received at the
time of transfer is recognized as a loss on sale of the related receivables and recorded in other income, net in the statements of consolidated operations. Program
costs are recorded in other income, net in the statements of consolidated operations.

Stock-Based Compensation
The Company’s shareholders approved the 2016 Incentive Plan (the “2016 Plan”) at its Annual Meeting of Shareholders on August 12, 2016. The 2016 Plan is the
successor  to  the  2007  Incentive  Plan  (the  “2007  Plan”),  which  was  amended  on  August  11,  2011  and  August  6,  2009.  The  2016  Plan  is  an  omnibus  plan  that
provides the Company the flexibility to grant a variety of stock-based awards including stock options, restricted stock, restricted stock units, performance-based
restricted  stock  units,  and  cash-settled  awards  to  its  officers,  directors,  and  employees.  For  stock-based  awards  without  performance  conditions,  the  Company
recognizes stock-based compensation cost on a straight-line basis over the vesting period of the award. For stock-based awards with performance conditions, the
Company recognizes stock-based compensation cost using the accelerated attribution method over the requisite service period when the Company determines it is
probable  that  the  performance  condition  will  be  satisfied.  The  Company  estimates  forfeitures  of  stock-based  awards  using  historical  experience.  Stock-based
compensation expense is included in selling, general, and administrative expenses in the statements of consolidated operations.

Restricted Stock Awards
Restricted stock is a form of common stock that is fully vested on the grant date, is nontransferable, and is not forfeitable, unless certain conditions are satisfied.
The fair value of restricted shares is determined using the quoted market value of the Company’s stock on the grant date and is recognized as compensation cost on
the grant date.

Restricted Stock Units
Restricted stock units differ from restricted stock in that zero shares are issued until restrictions lapse. Certain restricted stock units vest ratably over a three-year
period  and others  vest 50% in the first year  and 25% in each  of the second and third  years. The fair value  of the restricted  stock units is determined  using the
quoted market value of the Company’s stock on grant date and is recognized as compensation cost over the vesting period.

68

Derivative Financial Instruments
The Company uses forward or option currency contracts to manage risks associated with foreign currency exchange rates on foreign operations. These contracts
are  for  green  tobacco  purchases,  processing  costs,  and  selling,  general,  and  administrative  expenses.  The  Company  does  not  hold  derivatives  contracts  for
speculative or trading purposes.

Derivative financial instruments are recorded in other current assets and other current liabilities in the consolidated balance sheets and are measured at fair value.
Changes  in  fair  value  are  recognized  in  earnings,  unless  the  derivative  is  designated  and  qualifies  to  be  in  a  hedge  accounting  relationship.  For  derivatives
designated in a hedge accounting relationship, the Company evaluates hedge effectiveness at inception and on an ongoing basis. If a hedge relationship is no longer
expected to be effective, the derivative in that relationship is de-designated and hedge accounting is discontinued.

Changes in fair value of foreign currency derivatives designated in cash flow hedging relationships are recorded in accumulated other comprehensive loss in the
consolidated  balance  sheets  and  reclassified  to  earnings  when  the  hedged  item  affects  earnings.  Cash  flows  from  derivatives  are  classified  in  the  consolidated
statements of cash flows in the same category as the cash flows from the underlying hedged items.

The Company has elected not to offset fair value amounts recognized for derivative instruments with the same counterparty under a master netting agreement.

2. New Accounting Standards

Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). Under this
guidance, a lessee recognizes assets and liabilities on its balance sheet for most leases, and retains a dual model approach for assessing lease classification and
recognizing expense. This guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leasing arrangements.
The  FASB  subsequently  issued  updates  to  provide  clarification  on  specific  topics,  including  adoption  guidance,  practical  expedients,  and  interim  transition
disclosure requirements. The Company adopted this guidance during the first quarter beginning April 1, 2019 under the modified retrospective approach, which
does not require adjustments to comparative periods or require modified disclosures for those comparative periods. The guidance provides a number of optional
practical  expedients  in  transition.  The  Company  elected  the  package  of  transition  practical  expedients.  The  Company  implemented  changes  to  its  accounting
policies, systems, and controls to align with the new guidance. There is a material impact in the consolidated balance sheets from applying this guidance, which
resulted in the recognition of new right-of-use assets of $43,900 and lease liabilities of $42,064 as of April 1, 2019 associated with the Company’s operating leases.
The  impact  on  the  results  of  operations,  cash  flows,  and  existing  debt  covenants  is  not  material.  The  adoption  of  this  guidance  requires  enhanced  disclosures
regarding the amount, timing, and uncertainty of cash flows arising from lease arrangements.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04
simplifies the test for goodwill impairment as it eliminates step two of the goodwill impairment test by no longer requiring an entity to compare the implied fair
value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this new standard, goodwill impairment is measured as the excess of the
reporting  unit's  carrying  value  over  fair  value,  limited  to  the  amount  of  goodwill.  The  Company  will  continue  to  have  the  option  to  perform  a  qualitative
assessment  to  determine  if  a  quantitative  impairment  test  is  needed.  This  guidance  has  been  early  adopted  by  the  Company  as  of  December  31,  2019  on  a
prospective basis. The adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash
flows.

Recent Accounting Pronouncements Not Yet Adopted
In  June  2016,  the  FASB issued  ASU  No.  2016-13,  Financial  Instruments-Credit  Losses  (Topic  326):  Measurement  of  Credit  Losses  on  Financial  Instruments.
ASU 2016-13 and its related amendments are intended to provide financial statement users with more decision-useful information about the expected credit losses
on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Based on the Company's scoping assessment,
ASU 2016-13 primarily impacts trade receivables. This guidance was early adopted by the Company as of April 1, 2020 using the modified retrospective approach.
The adoption of this new accounting standard did not have a material impact on the Company's financial condition, results of operations, or cash flows.

In  August  2018,  the  FASB  issued  ASU  No.  2018-14,  Compensation  -  Retirement  Benefits  -  Defined  Benefit  Plans  -  General  (Subtopic  715-20):  Disclosure
Framework - Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 updates disclosure requirements for defined benefit plans. This
guidance will be adopted by the Company as of April 1, 2020 using a retrospective approach. The Company does not expect the new accounting standard to have a
material impact on the Company's financial condition, results of operations, or cash flows.

69

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions related to the
approach for intraperiod tax allocations, the methodology for calculating income taxes during interim periods when there are changes in tax laws or when year-to-
date  losses  exceed  anticipated  losses,  and  the  recognition  of  deferred  tax  liabilities  for  outside  basis  differences  in  foreign  investments.  This  guidance  also
simplifies  aspects of the accounting  for franchise  taxes that are partially  based on income, separate  financial  statements  of legal entities  not subject to tax, and
clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The guidance is effective for the Company on April 1, 2021, with early
adoption  permitted.  The  Company  is  currently  evaluating  the  impact  that  this  new  accounting  standard  will  have  on  its  consolidated  financial  statements  and
related disclosures.

3. Revenue Recognition

Product  revenue  is  primarily  processed  tobacco  sold  to  the  customer.  Processing  and  other  revenues  are  mainly  contracts  to  process  customer-owned  green
tobacco. During processing, ownership remains with the customers. Other products and services revenue is primarily composed of revenue from the sale of legal
cannabis in Canada and e-liquids product revenue. The following disaggregates sales and other operating revenues by major source:

Leaf - North America:

Product revenue

Processing and other revenues

Total sales and other operating revenues

$

Leaf - Other Regions:

Product revenue

Processing and other revenues

Total sales and other operating revenues

Other Products and Services:

Three Months Ended March 31,

2020

2019

Years Ended March 31,

2020

2019

77,997  $

7,289 

85,286 

410,519 

4,259 

414,778 

97,055 

$

6,899 

103,954 

192,545  $

32,162 

224,707 

478,877 

2,707 

481,584 

1,236,041 

46,575 

1,282,616 

249,980 

35,738 

285,718 

1,456,280 

43,559 

1,499,839 

Total sales and other operating revenues

4,286 

5,703 

19,938 

16,036 

Total sales and other operating revenues

$

504,350  $

591,241 

$

1,527,261  $

1,801,593 

Significant Judgments
The following summarizes activity in the claims allowance:

Balance, beginning of period

Additions

Payments

Balance, end of period

$

$

Three Months Ended March 31,

2020

2019

Years Ended March 31,

2020

2019

1,410 

$

595 

(545)

1,460 

$

1,460  $

2,018 

(2,348)

1,130  $

1,100 

2,853 

(2,493)

1,460 

1,270  $

177 

(317)

1,130  $

70

Contract Balances
The following summarizes activity in the allowance for doubtful accounts:

Balance, beginning of period

Additions

Write-offs

Balance, end of period

Trade receivables

Trade receivables, net

Three Months Ended March 31,

2020

2019

Years Ended March 31,

2020

2019

(7,247)

(8,646)

— 

(15,893)

242,635 

226,742  $

(9,113)

$

(13,381) $

(4,513)

245 

(13,381)

303,478 

(8,644)

6,132 

(15,893)

242,635 

290,097 

$

226,742  $

(7,048)

(6,657)

324 

(13,381)

303,478 

290,097 

$

Assets Recognized from the Costs to Obtain a Contract with a Customer
Capitalized costs to obtain a contract as of March 31, 2020 and 2019 were $3,676 and $4,225, respectively. See Note 10. "Goodwill and Other Intangible Assets,
Net” for further information.

Other Income, Net
The following summarizes the significant components of other income, net:

Other sales of assets and expenses

Sales of Brazilian intrastate trade tax credits

Receipt of funds held in escrow

Gain on sales of fixed assets

Losses on sale of receivables

Gain from insurance claims

Total

Years Ended March 31,

2020

2019

2018

$

(10,053) $

9,039 

— 

6,539 

(4,803)

1,411 

2,497  $

10,418 

— 

2,080 

(6,816)

6,038 

$

2,133  $

14,217  $

3,379 

11,835 

3,235 

3,612 

(7,679)

— 

14,382 

See Note 23. "Contingencies and Other Information" and Note 25. "Securitized Receivables" for further information.

Taxes Collected from Customers
Value-added taxes were $25,187, $23,188, and $26,033 for the years ended March 31, 2020, 2019, and 2018, respectively.

71

4. Acquisitions

Figr East
On January 25, 2018, a Canadian subsidiary of the Company, acquired 75.0% of the equity in Figr East. Figr East is fully licensed to produce and sell medicinal
cannabis in the Canadian Province of Prince Edward Island. Figr East sells its products directly to patients and through distributors. The Company acquired its
interest in Figr East in exchange for consideration consisting of approximately $32,468 cash, subject to certain post-closing adjustments. The consolidation of Figr
East has been treated as a purchase business combination and as such, the fair value of the assets and liabilities have been recorded at their fair value. The fair
value of the non-controlling interest was $8,117.

For the year ended March 31, 2018, the Company incurred $499 of acquisition-related expenses, primarily consisting of consulting fees, which were accounted for
separately  from  the  business  combination  and  expensed  as  incurred  within  selling,  general,  and  administrative  expenses  in  the  consolidated  statements  of
operations.

Following  the  acquisition,  the  Company  recorded  certain  post-closing  purchase  price  adjustments  that  had  no  impact  on  the  purchase  price.  The  acquisition
allowed the Company to expand its product portfolio into the medical cannabis industry in Canada. The following table summarizes the fair values of the assets
acquired and liabilities assumed as of January 25, 2018:

Cash and cash equivalents

Other receivables

Inventories

Other current assets

Property, plant and equipment

Goodwill

Other intangible assets

Total assets acquired

Accounts payable

Deferred income tax liabilities

Total liabilities

Fair value of equity interest

$

$

436 

442 

2,221 

64 

5,378 

11,597 

30,520 

50,658 

725 

9,348 

10,073 

40,585 

The amounts of revenue, operating loss, and net loss of Figr East in the consolidated statements of operations from and including January 25, 2018 to March 31,
2018 were $235, $(412), and $(288), respectively. As a result, the impact to basic and diluted earnings per share was $(0.03) and $(0.03), respectively.

Unaudited pro forma information summarizes the combined results of the Company and Figr East for the years ended March 31, 2018, as if the companies were
combined as of April 1, 2016. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would
have been achieved had the reconsolidation taken place at the beginning of each period or results of future periods. The following information has been adjusted
for intercompany eliminations as required for consolidation accounting: unaudited pro forma revenue, operating loss, and net loss for the year ended March 31,
2018 were $2,008, $(466), and $(181), respectively. Unaudited pro forma basic and diluted earnings per share were $(0.02) and $(0.02), respectively.

On March 22, 2019, the Canadian subsidiary of the Company acquired an additional 18.0% interest in Figr East for $13,470 in cash. On October 15, 2019, the
Canadian  subsidiary  of  the  Company  acquired  an  additional  1.2%  interest  in  Figr  East  for  $911  in  cash.  As  result  of  these  equity  positions  acquired,  the
subsidiary's ownership level in Figr East increased to 94.3%. Transaction costs associated with the acquisition of additional interest are expensed as incurred within
selling, general, and

72

administrative expenses in the consolidated statements of operations. Below are the effects of changes in the Company’s ownership interest in Figr East on the
Company’s equity:

Net (loss) income attributable to Pyxus International, Inc. shareholders

$

(264,661) $

(70,467) $

52,436 

Decrease in Pyxus International, Inc. equity for purchase of 22.3522 shares in 2019 and
1.4972 shares in 2020 of Figr East:

Paid in capital

Accumulated other comprehensive income (loss)

(528)

33 

(6,056)

(461)

— 

— 

Change from net (loss) income attributable to Pyxus International, Inc. shareholders and
transfer from noncontrolling interest

$

(265,156) $

(76,984) $

52,436 

Years Ended March 31,

2020

2019

2018

Humble Juice
On  April  2,  2018,  the  Company  acquired  51.0%  of  the  equity  in  Humble  Juice.  Humble  Juice  sells  e-liquid  products  and  related  merchandise.  The  Company
acquired its interest in Humble Juice in exchange for consideration consisting of approximately $9,000 cash and $446 contingent consideration, subject to certain
post-closing adjustments. The consolidation of Humble Juice has been treated as a business combination. The assets and liabilities were recorded at their fair value.
The fair value of the non-controlling interest was $5,086.

For the year ended March 31, 2019, the Company incurred $12 of acquisition-related expenses, primarily consisting of consulting fees, which were accounted for
separately  from  the  business  combination  and  expensed  as  incurred  within  selling,  general,  and  administrative  expenses  in  the  consolidated  statements  of
operations.

Following  the  acquisition,  the  Company  recorded  certain  post-closing  purchase  price  adjustments.  The  acquisition  allowed  the  Company  to  expand  its  e-liquid
product portfolio. The following summarizes the fair values of the assets acquired and liabilities assumed as of April 2, 2018:

Cash and cash equivalents

$

Other receivables

Inventories

Other current assets

Property, plant, and equipment

Goodwill

Other intangible assets

Total assets acquired

Accounts payable

Total liabilities

Fair value of equity interest

$

308 

56 

1,048 

6 

8 

7,174 

5,950 

14,550 

18 

18 

14,532 

Revenue,  operating  loss,  and  net  loss  of  Humble  in  the  consolidated  statements  of  operations  from  and  including  April  2,  2018 to  June  30,  2018 were  $2,487,
$(501), and $(256), respectively. As a result, the impact to basic and diluted earnings per share was $(0.03) and $(0.03), respectively.

Unaudited pro forma information summarizes the results of Humble for the years ended March 31, 2019, as if the companies were combined as of April 1, 2017.
The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the
reconsolidation taken place at the beginning of each period or results of future periods. The following information has been adjusted for intercompany eliminations
as required for consolidation accounting: unaudited pro forma revenue, operating income, and net income for the three months ended June 30, 2017 were $1,764,
$526, and $266, respectively. Unaudited pro forma basic and diluted earnings per share were $0.03 and $0.03, respectively.

73

5. Cash, Cash Equivalents, and Restricted Cash

The following summarizes the composition of restricted cash:

Compensating balance for short-term borrowings

Escrow

Other

Total

March 31,

2020

2019

$

$

893  $

1,450 

532 

2,875  $

1,225 

2,894 

1,648 

5,767 

As of March 31, 2020 and 2019, the Company held $0 and $1,082, respectively, in the Zimbabwe Real Time Gross Settlement (“RTGS”) Dollar. RTGS is a local
currency equivalent that, as of March 31, 2020, was exchanged at a government specified rate of 25:1 with the USD.

The Company's Canadian cannabis businesses held $1,297 and $779 of cash, included in cash and cash equivalents, as of March 31, 2020 and 2019, respectively.

6. Inventories, Net

The following summarizes the composition of inventories, net:

Processed tobacco

Unprocessed tobacco

Other tobacco related

Other(1)
Total

March 31,

2020

2019

$

$

485,764  $

178,782 

24,071 

41,402 

730,019  $

455,163 

183,607 

26,385 

3,016 

668,171 

(1) Represents inventory from the other products and services segment.

The following summarizes inventory write-downs:

March 31,

2020

2019

LCM

Obsolescence

Total

$

$

6,051  $

1,707 

7,758  $

3,888 

— 

3,888 

7. Advances to Suppliers, Net

The  mark-up  and  interest  on  advances  to  suppliers,  net  capitalized,  or  to  be  capitalized  into  inventory  for  the  current  crop,  were  $15,468  and  $11,341  as  of
March 31, 2020 and 2019, respectively. Unrecoverable advances and other costs capitalized, or to be capitalized into the current crop, were $6,916 and $4,895 as
of March 31, 2020 and 2019, respectively.

The following summarizes the classification of advances to suppliers:

Current

Noncurrent

Total

March 31,

2020

2019

$

$

38,877  $

1,076 

39,953  $

19,754 

1,740 

21,494 

74

There were $171 and $1,339 of expenses for unrecovered advances from abnormal yield adjustments or unrecovered amounts from prior crops for the years ended
March 31, 2020 and 2019, respectively.

8. Property, Plant, and Equipment, Net

The following summarizes property, plant, and equipment, net:

Land

Buildings

Machinery and equipment

Total

Less: accumulated depreciation

Total property, plant, and equipment, net

March 31,

2020

2019

$

$

33,229  $

253,306 

188,140 

474,675 

(178,679)

295,996  $

32,251 

228,580 

177,750 

438,581 

(162,185)

276,396 

The following summarizes depreciation expense recorded in cost of goods and services sold and selling, general, and administrative expenses:

Years Ended March 31,

2020

2019

2018

Depreciation expense recorded in cost of goods and services sold

Depreciation expense recorded in selling, general, and administrative expenses

$

26,035  $

26,532  $

3,351 

3,157 

26,967 

2,382 

Capitalized Interest
The following summarizes capitalized interest:

Capitalized interest, net at beginning of year

Interest capitalized to property, plant, and equipment, net

Interest capitalized to investments in unconsolidated affiliates

Capitalized interest depreciated or amortized

Capitalized interest, net at end of year

9. Leases

The Company does not have material finance leases.

March 31,

2020

2019

2,929 

2,960 

— 

(123)

5,766 

— 

2,003 

953 

(27)

2,929 

The following summarizes weighted-average information associated with the measurement of remaining operating lease as of March 31, 2020:

Weighted-average remaining lease term

Weighted-average discount rate

5.0 years

9.7%

The following summarizes lease costs for operating leases:

Operating lease costs

Variable and short-term lease costs

Total lease costs

Year Ended

March 31, 2020

$

$

16,792 

6,710 

23,502 

Leases costs for operating leases was $20,846 and $21,829 for the years ended March 31, 2019 and 2018, respectively.

75

The following summarizes supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows impact - operating leases

$

Right-of-use assets obtained in exchange for new operating leases

Year Ended

March 31, 2020

15,625 

10,377 

The following reconciles maturities of operating lease liabilities to the lease liabilities reflected in the consolidated balance sheets as of March 31, 2020:

2021

2022

2023

2024

2025

Thereafter

Total future minimum lease payments

Less: amounts related to imputed interest

Present value of future minimum lease payments

Less: operating lease liabilities, current

Operating lease liabilities, non-current

$

$

14,343 

10,480 

7,403 

5,428 

3,229 

8,244 

49,127 

10,124 

39,003 

11,160 

27,843 

During the year ended March 31, 2020, a wholly owned subsidiary of the Company completed a sale-leaseback transaction for a facility in Europe. Net proceeds
from the sale were $7,084. Under the lease agreement, the Company may continue to occupy the space rent free until March 31, 2021. The transaction resulted in a
gain of $6,400, which is included in other income, net in the consolidated statements of operations.

The following presents the future minimum rental commitments under noncancelable operating leases as of March 31, 2019:

2020

2021

2022

2023

2024

Thereafter

   Total

$

$

15,651 

10,554 

8,483 

6,735 

5,356 

7,324 

54,103 

76

10. Goodwill and Other Intangible Assets, Net

The following summarizes the changes in the Company's goodwill and other intangible assets, net: 

Weighted average remaining useful life in
years as of March 31, 2020

March 31, 2018 balance:

Gross carrying amount

Accumulated amortization

Net March 31, 2018 balance

Additions (1) (2)

Amortization expense

Impact of foreign currency translation

Net March 31, 2019 balance

Additions

Amortization expense

Impairment

Impact of foreign currency translation

Amortizable Intangibles

Goodwill

Customer
Relationships

Production and
Supply
Contracts

Internally
Developed
Software

Licenses (3) Trade Names

Total

8.66

3.00

3.96

16.95

6.00

$

27,546  $

58,530  $

14,893  $

18,812  $

30,339  $

—  $

— 

27,546 

7,174 

— 

(384)

34,336 

— 

— 

(33,759)

(577)

(25,005)

33,525 

5,450 

(4,022)

— 

34,953 

— 

(4,022)

— 

— 

(8,774)

6,119 

— 

(1,894)

— 

4,225 

— 

(549)

— 

— 

(17,828)

984 

1,105 

(563)

— 

1,526 

2,468 

(691)

— 

— 

(243)

30,096 

2,991 

(1,401)

(1,046)

30,640 

195 

(1,666)

— 

(1,505)

— 

— 

500 

(63)

— 

437 

— 

(63)

— 

— 

150,120 

(51,850)

98,270 

17,220 

(7,943)

(1,430)

106,117 

2,663 

(6,991)

(33,759)

(2,082)

65,948 

Net March 31, 2020 balance

$

—  $

30,931  $

3,676  $

3,303  $

27,664  $

374  $

(1) Additions to goodwill, customer relationships, and trade names relate to the acquisition of Humble Juice. Additions to licenses relates to Figr East, Figr Norfolk, and Alliance
One Specialty Products, LLC.
(2) Goodwill activity relates to the Other Products and Services segment.
(3) Certain of the Company's license intangibles are subject to annual renewal.

Goodwill
As  of  January  1,  2020,  the  date  of  the  Company’s  annual  goodwill  impairment  testing  for  fiscal  2020,  the  Company  allocated  $2,795,  $13,669,  $10,933,  and
$7,174 of goodwill to the Leaf - North America, Leaf - Africa, Other Products and Services - Cannabis, and Other Products and Services - E-liquids reporting
units, respectively. As of January 1, 2020, the estimated fair value of the Other Products and Services - E-liquids reporting unit significantly exceeded its carrying
value and the estimated fair value of the Leaf - North America, Leaf - Africa, and Other Products and Services - Cannabis reporting units exceeded the carrying
value by 8.9%, 3.1%, and 5.9%, respectively.

Based on the sustained decline in the implied value of the Company's long-term debt based on public trading and share price, delays in refinancing the Company's
long-term debt, delays with monetizing a portion of the Figr business, as well as uncertainty in the estimate of future operating results due, in part, to the economic
effects of the COVID-19 pandemic, the Company concluded that a triggering event occurred in the fourth quarter of fiscal year 2020. As a result, the Company
performed a test of its goodwill for impairment  (the "Year-End Test") for its reporting units as of March 31, 2020. Based on the Year-End Test, the Company
recognized non-cash impairment losses to write-off the carrying values of its goodwill.

The following summarizes impairment charges to goodwill:

Leaf - North America

Leaf - Other Regions

Other Products and Services - Cannabis

Other Products and Services - E-liquids

Total

$

$

Year Ended

March 31, 2020

2,795 

13,669 

10,121 

7,174 

33,759 

77

Other Intangible Assets, Net
The  carrying  value  of  other  intangible  assets  as  of  March  31,  2020  represents  customer  relationships,  production  and  supply  contracts,  internally  developed
software,  licenses,  and  trade  names.  Amortization  expense  associated  with  finite-lived  intangible  assets  was  $6,991,  $7,943,  and  $5,982  for  the  years  ended
March 31, 2020, 2019, and 2018, respectively.

The following summarizes the estimated intangible asset amortization expense for the next five years and beyond:

For Fiscal Years Ended

Customer
Relationships

Production and
Supply Contracts

Internally
Developed
Software(1)

Licenses

Trade Names

Total

2021

2022

2023

2024

2025

Later

$

$

4,022  $

4,022 

4,022 

4,022 

4,022 

10,821 

30,931  $

870  $

1,397 

1,397 

12 

— 

— 

918  $

1,747  $

63  $

846 

764 

520 

255 

— 

1,745 

1,742 

1,742 

1,689 

18,999 

27,664  $

63 

63 

63 

63 

59 

374  $

7,620 

8,073 

7,988 

6,359 

6,029 

29,879 

65,948 

3,676  $

3,303  $

(1) Estimated amortization expense for the internally developed software is based on costs accumulated as of March 31, 2020. These estimates will change as new costs are
incurred and until the software is placed into service in all locations.

11. Equity Method Investments

The following summarizes the Company's equity method investments as of March 31, 2020:

Investee Name

Location

Primary Purpose

Adams International Ltd.

Thailand

purchase and process tobacco

Alliance One Industries India Private Ltd.

China Brasil Tobacos Exportadora SA

Criticality LLC

Nicotine River, LLC

India

Brazil

U.S.

U.S.

purchase and process tobacco

purchase and process tobacco

extraction of cannabidiol from
industrial hemp

produce consumable e-liquids

Oryantal Tutun Paketleme

Turkey

process tobacco

Purilum, LLC

U.S.

produce flavor formulations and
consumable e-liquids

Siam Tobacco Export Company

Thailand

purchase and process tobacco

The following summarizes financial information for these equity method investments:

The Company's
Ownership
Percentage

Basis Difference

49  % $

49  %

49  %

40  %

40  %

50  %

50  %

49  %

— 

— 

5,515 

865 

1,840 

— 

— 

— 

Years Ended March 31,

Operations statement:

2020

2019

2018

Sales

Gross profit

Net income

Company's dividends received

$

293,163  $

332,245  $

317,183 

50,209 

16,667 

7,348 

52,309 

22,855 

7,300 

53,161 

23,954 

2,826 

Balance sheet:

Current assets

Property, plant, and equipment and other assets

Current liabilities

Long-term obligations and other liabilities

March 31,

2020

2019

$

145,207  $

56,481 

82,377 

6,296 

152,661 

53,103 

89,791 

3,222 

78

Of the amounts presented above, the following summarizes the financial information of the Company's significant equity investee, China Brasil Tobacos
Exportadora SA ("CBT"):

Years Ended March 31,

Operations statement:

2020

2019

2018

Sales

Gross profit

Net income

Net income attributable to CBT

$

170,092  $

191,966  $

200,609 

27,297 

13,446 

6,589 

32,075 

16,502 

8,086 

32,989 

16,575 

8,122 

12. Debt Arrangements

Excluding all long-term credit agreements, the Company has typically financed its non-U.S. operations with uncommitted unsecured short-term seasonal lines of
credit arrangements with a number of banks. These operating lines are seasonal in nature, normally extending for a term of 180 to 270 days corresponding to the
tobacco crop cycle in that location. These facilities are typically uncommitted in that the lenders have the right to cease making loans and demand repayment of
loans at any time. These loans are typically renewed at the outset of each tobacco season. At March 31, 2020 and 2019, the Company may borrow up to a total
$745,516 and $795,934, subject to limitations  as provided for in agreement  governing the ABL facility (as defined below), respectively.  The weighted average
variable  interest  rate  for  the  years  ending  March  31,  2020  and  2019  was  6.9%  and  6.6%,  respectively.  Certain  of  the  foreign  seasonal  lines  of  credit  of
approximately $187,787 and $147,120 have inventories of $124,541 and $63,989 as collateral at March 31, 2020 and 2019, respectively. At March 31, 2020 and
2019, respectively, $893 and $1,225 were held on deposit as a compensating balance.

The  terms  of  the  First  Lien  Notes,  the  Second  Lien  Notes,  and  the  ABL  Facility  (each,  as  defined  below),  are  summarized  below.  See  Note  28.  "Subsequent
Events” for a discussion of the effect of the commencement and proceedings in the Chapter 11 Cases on the First Lien Notes, the Second Lien Notes, and the ABL
Facility.

First Lien Notes 
On October 14, 2016, the Company issued $275,000 in aggregate principal amount of 8.5% senior secured first lien notes due 2021 (the “First Lien Notes”), at an
issue price of 99.085% of the face amount thereof. The First Lien Notes, which bear interest at a rate of 8.5% per year, are payable semi-annually in arrears in cash
on  April  15  and  October  15  of  each  year,  beginning  April  15,  2017,  to  holders  of  record  at  the  close  of  business  on  the  preceding  April  1  and  October  1,
respectively. The First Lien Notes are scheduled to mature on April 15, 2021. The First Lien Notes are guaranteed on a senior secured basis by Pyxus’ subsidiaries,
Alliance  One  Specialty  Products,  LLC,  Alliance  One  International,  LLC,  and  Alliance  One  North  America,  LLC  (the  “Current  Guarantors”),  and  any  future
material domestic subsidiaries are required to guarantee the First Lien Notes on a senior secured basis. The Current Guarantors and any future guarantors of the
First Lien Notes are referred to as the “guarantors.”

Pyxus’ and the guarantors’ obligations under the First Lien Notes and any guarantee of the First Lien Notes (and certain related obligations) and under the ABL
Facility (as defined below) and any guarantee of the ABL Facility (and certain related obligations and obligations in respect of certain hedging arrangements) are
secured by first-priority liens on substantially all of Pyxus’ and the guarantors’ tangible and intangible assets, subject to certain exceptions and permitted liens (the
“Collateral”). Pyxus’ and the guarantors’ obligations under the First Lien Notes and any guarantee of the First Lien Notes (and certain related obligations) have
first-priority  in  the  waterfall  set  forth  in  a  senior  lien  intercreditor  agreement  entered  into  in  connection  with  the  issuance  of  the  First  Lien  Notes  and  the
establishment  of  the  ABL  Facility  (the  “Senior  Lien  Intercreditor  Agreement”)  in  respect  of  the  liens  on  the  Collateral  that  is  not  ABL  Priority  Collateral  (as
defined below), including owned material real property in the United States, capital stock of subsidiaries owned directly by Pyxus or a guarantor (except that, in the
case of foreign subsidiaries, only capital stock of only direct foreign subsidiaries that are material are to be pledged and only 65% of the voting capital stock and
100%  of  the  non-voting  capital  stock  are  to  be  pledged),  existing  and  after  acquired  intellectual  property  rights,  equipment,  related  general  intangibles  and
instruments  and  certain  other  related  assets  of  the  foregoing  and  proceeds  of  the  foregoing  (collectively,  the  “Notes  Priority  Collateral”).  Pyxus’  and  the
guarantors’ obligations under the ABL Facility and any guarantee of the ABL Facility (and certain related obligations and obligations in respect of certain hedging
arrangements)  have second-priority  in the waterfall set forth in the Senior Lien Intercreditor  Agreement in respect of the liens on the Notes Priority Collateral.
Pyxus’ and the guarantors’ obligations under the First Lien Notes and any guarantee of the First Lien Notes (and certain related obligations) have second-priority in
the waterfall set forth in the Senior Lien Intercreditor Agreement in respect of the liens on the Collateral consisting of accounts receivable, inventories, cash (other
than identifiable cash proceeds of the Notes Priority Collateral), deposit accounts, related general intangibles and instruments, certain other related assets of the
foregoing  and  proceeds  of  the  foregoing  (collectively,  the  “ABL  Priority  Collateral”).  Pyxus’  and  the  guarantors’  obligations  under  the  ABL  Facility  and  any
guarantee of the ABL Facility (and certain related obligations and

79

obligations in respect of certain hedging arrangements) have first-priority in the waterfall set forth in the Senior Lien Intercreditor Agreement in respect of the liens
on the ABL Priority Collateral.

If a change of control (as defined in the indenture governing the First Lien Notes) occurs at any time, holders of the First Lien Notes will have the right, at their
option, to require the Company to repurchase all or a portion of the First Lien Notes for cash at a price equal to 101% of the principal amount of First Lien Notes
being repurchased, plus accrued and unpaid interest, to, but excluding, the date of repurchase. The indenture governing the First Lien Notes restricts (subject to
exceptions  and  qualifications)  the  Company's  ability  and  the  ability  of  its  restricted  subsidiaries  to,  among  other  things,  incur  additional  indebtedness  or  issue
disqualified  stock  or  preferred  stock,  pay  dividends  and  make  other  restricted  payments  (including  restricted  investments),  sell  assets,  create  liens,  consolidate,
merge, sell or otherwise dispose of all or substantially all of its assets, enter into transactions with its affiliates, enter into certain sale and leaseback transactions,
create certain dividend and payment restrictions on its restricted subsidiaries, and designate its subsidiaries as unrestricted subsidiaries.

ABL Facility
On October 14, 2016, the Company entered into an ABL credit agreement (the “ABL Credit Agreement”) with certain bank lenders establishing a senior secured
revolving asset-based lending facility (the “ABL Facility”) of $60,000 subject to a borrowing base composed of its eligible accounts receivable and inventory. The
ABL Facility may be used for revolving credit loans, swingline loans and letters of credit from time to time up to an initial maximum principal amount of $60,000,
subject to the limitations described below in this paragraph. Under certain conditions, Pyxus may solicit the ABL Facility lenders or other prospective lenders to
provide additional revolving loan commitments under the ABL Facility in an aggregate amount not to exceed $15,000 (less the aggregate principal amount of any
notes  exceeding  $275,000  issued  under  the  First  Lien  Notes  Indenture).  The  maximum  amount  available  under  the  revolving  credit  facility  is  limited  by  a
borrowing base consisting of eligible accounts receivable and inventory as follows:

•
•

85% of eligible accounts receivable, plus
the lesser of (i) 85% of the appraised net-orderly-liquidation value of eligible inventory or (ii) 65% of eligible inventory valued at the lower of cost (based
on a first-in first-out basis) and market value thereof (net of intercompany profits).

The borrowing base is subject to a $25,000 deduction and customary reserves, which are to be established by the agent for the ABL Facility lenders in its permitted
discretion  from  time  to  time.  At  March  31,  2020,  $44,900  in  borrowings  were  outstanding  under  the  ABL  Facility  and  $15,100  was  available  for  borrowing.
Borrowing  is  permitted  under  the  ABL  Credit  Facility  only  to  the  extent  that,  after  consideration  of  the  application  of  the  proceeds  of  the  borrowing,  the
Company’s unrestricted  cash and  cash  equivalents  would not exceed  $180,000. At March  31, 2020, the Company’s unrestricted  cash  and cash equivalents  was
$170,208.

In  addition,  loans  under  the  ABL  Facility  shall  not  be  made  if  after  incurrence  of  such  loans  there  will  be  more  than  $180,000  of  unrestricted  cash  and  cash
equivalents  in  the  aggregate  in  the  consolidated  balance  sheet  of  the  Company  and  its  subsidiaries.  The  ABL  Facility  permits  both  base  rate  borrowings  and
LIBOR borrowings. Borrowings under the ABL Facility bear interest at an annual rate equal to LIBOR plus 250 basis points or 150 basis points above base rate, as
applicable, with a fee on unused borrowings initially at an annual rate of 50 basis points until March 31, 2017 and thereafter at annual rates of either 37.5 or 50
basis points based on average quarterly historical utilization under the ABL Facility. The ABL Facility is scheduled to mature on January 14, 2021.

In  addition,  customary  mandatory  prepayments  of  the  loans  under  the  ABL  Facility  are  required  upon  the  occurrence  of  certain  events  including,  without
limitation, certain dispositions of assets outside of the ordinary course of business in respect of certain collateral securing the ABL Facility, unrestricted cash and
cash  equivalents  on  the  Company’s  consolidated  balance  sheet  exceeding  $180,000  for  a  period  of  seven consecutive  business  days,  and  certain  casualty  and
condemnation events.

The Company’s obligations under the ABL Facility (and certain related obligations and obligations in respect of certain hedging arrangements) are (a) guaranteed
by the Current Guarantors and are required to be guaranteed by each material domestic subsidiary of Pyxus (collectively with the Company, the “Credit Parties”)
and (b) secured by the Collateral.

The liens and other security interests granted by the Credit Parties on the Collateral for the benefit of the ABL Lenders (and certain related secured parties) are,
subject to certain permitted liens, secured by first-priority  security interests on a pari passu basis with the security interests securing the First Lien Notes, with
respective priorities in a waterfall with respect to portions of the Collateral as set forth in the Senior Lien Intercreditor Agreement described above.

Under the terms of the ABL Facility, if (i) an event of default has occurred and is continuing or (ii) excess borrowing availability under the ABL Facility (based on
the lesser of the commitments thereunder and the borrowing base) (the “Excess Availability”) falls below the greater of (x) $12,500 and (y) 25% of the lesser of
(A) the commitments under the ABL Facility

80

at such time and (B) the borrowing base at such time (such greater amount being the “Cash Dominion Threshold”) for more than three consecutive business days,
the Credit Parties will become subject to cash dominion, which will require daily prepayment of loans under the ABL Facility with the cash deposited in certain
deposit  accounts  of  the  Credit  Parties,  including  concentration  accounts,  and  will  restrict  the  Credit  Parties’  ability  to  transfer  cash  from  their  concentration
accounts to their disbursement accounts. Such cash dominion period shall end when (i) if arising as a result of a continuing event of default, such event of default
ceases to exist, or (ii) if arising as a result of non-compliance with the Excess Availability threshold, Excess Availability shall be equal to or greater than the Cash
Dominion Threshold for a period of 30 consecutive days.

The ABL Credit Agreement governing the ABL Facility contains a covenant requiring that the Company’s fixed charge coverage ratio be no less than 1.00 to 1.00
during any period commencing when Excess Availability is less than the greater of (x) $10,000 and (y) 20% of the lesser of (A) the commitments under the ABL
Facility  at  such  time  and  (B)  the  borrowing  base  at  such  time  (such  greater  amount  being  the  “Financial  Covenant  Threshold”)  until  such  time  as  Excess
Availability has been equal to or greater than the Financial Covenant Threshold for a period of 30 consecutive days.

The ABL Credit Agreement governing the ABL Facility contains customary representations and warranties, affirmative and negative covenants (subject, in each
case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company’s ability to, among other things incur certain guarantees,
merge, consolidate or dispose of substantially all of its assets, grant liens on assets, pay dividends, redeem stock or make other distributions or restricted payments,
create certain dividend and payment restrictions on subsidiaries, repurchase or redeem capital stock or prepay subordinated or certain other material debt (including
the First Lien Notes and the Company’s senior secured second lien notes due 2021), make certain investments, agree to restrictions on the payment of dividends to
Pyxus by its subsidiaries, sell or otherwise dispose of assets, including equity interests of subsidiaries, enter into transactions with affiliates, enter into certain sale
and leaseback transactions.

The ABL credit agreement restricts the Company from paying any dividends during the term of this facility subject to the satisfaction of specified financial ratios.
In  addition,  the  indentures  governing  the  Company's  First  Lien  Notes  and  its  senior  secured  second  lien  notes  due  2021  contain  similar  restrictions  and  also
prohibits the payment of dividends and other distributions if the Company fails to satisfy a ratio of consolidated EBITDA to fixed charges of at least 2.0 to 1.0. At
March 31, 2020, the Company did not satisfy this fixed charge coverage ratio.

Senior Secured Second Lien Notes
On  August  1,  2013,  the  Company  issued  $735,000  in  aggregate  principal  amount  of  its  9.875%  senior  secured  second  lien  notes  due  2021  (the  "Second  Lien
Notes"). The Second Lien Notes were sold at 98% of the face value, for gross proceeds of approximately $720,300. The Second Lien Notes bear interest at a rate of
9.875% per year, payable semi-annually in arrears in cash on January 15 and July 15 of each year, beginning January 15, 2014, to holders of record at the close of
business on the preceding January 1 and July 1, respectively. The Second Lien Notes are scheduled to mature on July 15, 2021. The Second Lien Notes are secured
by a second priority lien on specified property of Pyxus International, Inc., Alliance One International, LLC, and Alliance One North America, LLC. The indenture
governing the Second Lien Notes restricts (subject to exceptions and qualifications) the Company's ability and the ability of its restricted subsidiaries to, among
other things, incur additional indebtedness or issue disqualified stock or preferred stock, pay dividends and make other restricted payments (including restricted
investments), sell assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets, enter into transactions with its affiliates,
enter into certain sale and leaseback transactions, create certain dividend and payment restrictions on its restricted subsidiaries, and designate its subsidiaries as
unrestricted subsidiaries.

The  Second  Lien  Notes  are  guaranteed  by  Alliance  One  International,  LLC  and  Alliance  One  North  America,  LLC.  The  indenture  governing  the  Second  Lien
Notes requires the Company's future material domestic subsidiaries to also guarantee the Second Lien Notes. If a change of control (as defined in the indenture
governing the Second Lien Notes) occurs at any time, holders of the Second Lien Notes will have the right, at their option, to require the Company to repurchase
all or a portion of the Second Lien Notes for cash at a price equal to 101% of the principal amount of Second Lien Notes being repurchased, plus accrued and
unpaid  interest  and  special  interest,  excluding,  the  date  of  repurchase.  In  connection  with  the  issuance  of  the  Second  Lien  Notes,  the  Company  entered  into  a
registration rights agreement that requires the Company to pay additional special interest on the Second Lien Notes, at increasing annual rates up to a maximum of
1.0% per year, if the Company fails to timely comply with its registration obligations thereunder. Pursuant to the registration rights agreement, on December 20,
2013, the Company completed a registered exchange offer in which it offered to exchange for the outstanding Second Lien Notes an equal amount of new Second
Lien Notes having identical terms in all material respects. During the year ended March 31, 2020, the Company did not purchase Second Lien Notes on the open
market.  During  the year  ended  March  31, 2019,  the  Company purchased  $27,260 of the  Second Lien Notes  on the open  market.  All purchased  securities  were
canceled leaving $635,686 of the Second Lien Notes outstanding at March 31, 2019. Associated costs paid were $68 and related discounts were $(2,293) resulting
in net cash repayment of $25,987 and recorded in repayment of long-term borrowings in the consolidated statements of cash flows. Deferred financing costs and
amortization of original issue discount of $472 were accelerated.

81

Covenants Limiting Dividends
The ABL Credit Agreement restricts the Company from paying any dividends during the term of the ABL Facility subject to the satisfaction of specified financial
ratios. In addition, the indentures governing the First Lien Notes and the Second Lien Notes contain similar restrictions and also prohibit the payment of dividends
and other distributions if the Company fails to satisfy a ratio of consolidated EBITDA to fixed charges of at least 2.0 to 1.0. At March 31, 2020, the Company did
not satisfy this fixed charge coverage ratio. The Company may from time to time not satisfy this ratio and failure to meet this fixed charge coverage ratio does not
constitute an event of default.

Foreign Seasonal Lines of Credit
As of March 31, 2020, the Company did not have any long-term foreign seasonal lines of credit outstanding.

Summary of Debt
The following table summarizes the Company’s debt financing:

Outstanding

Lines and

March 31, 2020

March 31, 2019 March 31, 2020

Available

Rate

2021

2022

2023

2024

2025

Later

Letters

Interest

Long Term Debt Repayment Schedule by Fiscal Year

Senior secured credit facility:

   ABL Facility (1)
Senior notes:

8.5% senior secured first lien notes
due 2021 (3)
9.875% senior secured second lien
notes due 2021 (4)
Other long-term debt

Notes payable to banks (5)
   Total debt

Short-term (5)
Long-term:

   Long-term debt current

   Long-term debt

Letters of credit

   Total credit available

$

$

$

$

$

— 

44,900 

15,100 

4.3  % (2)

44,900  $

—  $

—  $

—  $

—  $

— 

270,883 

272,871 

627,147 

630,737 

688 

856 

— 

— 

66 

428,961 

540,157 

192,561 

8.5  %

— 

272,871 

9.9  %
5.2  % (2)
6.9  % (2)

— 

148 

— 

630,737 

148 

— 

— 

— 

148 

— 

— 

— 

148 

— 

— 

— 

79 

— 

1,327,679  $

1,489,521  $

207,727 

$

45,048 

903,756  $

148  $

148  $

79  $

— 

— 

185 

— 

185 

428,961  $

540,157 

332  $

898,386 

898,718  $

45,048 

904,316 

949,364 

5,399  $

7,027 

5,772 

$

213,499 

(1) As of March 31, 2020, $15,100 was available under the ABL facility. Borrowing is permitted under the ABL Credit Facility only to the extent that, after consideration of the application of
the proceeds of the borrowing, the Company’s unrestricted cash and cash equivalents would not exceed $180,000. At March 31, 2020, the Company’s unrestricted cash and cash equivalents did
not exceed $180,000.
(2) Weighted average rate for the twelve months ended March 31, 2020.
(3) Repayment of $272,871 is net of original issue discount of $673 and unamortized debt issuance of $1,456. Total repayment will be $275,000.
(4) Repayment of $630,737 is net of original issue discount of $2,823 and unamortized debt issuance of $2,126. Total repayment will be $635,686.
(5) Primarily foreign seasonal lines of credit.

82

13. (Loss) Earnings Per Share

The following summarizes the computation of (loss) earnings per share:

(in thousands, except per share data)

Basic (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

Shares:

Weighted Average Number of Shares Outstanding

Basic (loss) earnings per share

Diluted (loss) earnings per share:

Net (loss) income attributable to Pyxus International, Inc.

Shares:

Weighted average number of shares outstanding(1)

Plus: Restricted shares issued and shares applicable to stock options and restricted stock
units, net of shares assumed to be purchased from proceeds at average market price(2)
Adjusted weighted average number of shares outstanding

Diluted (loss) earnings per share

Years Ended March 31,

2020

2019

2018

(264,661) $

(70,467) $

52,436 

9,148 

(28.93) $

9,054 

(7.78) $

8,989 

5.83 

(264,661) $

(70,467) $

52,436 

9,148 

— 

9,148 

9,054 

— 

9,054 

(28.93) $

(7.78) $

8,989 

33 

9,022 

5.81 

$

$

$

$

(1) 785 shares of common stock were owned by a wholly owned subsidiary as of March 31, 2020, 2019, and 2018.
(2) Outstanding restricted shares, shares applicable to stock options, and restricted stock units are excluded because their inclusion would have an
antidilutive effect on the loss per share. The dilutive shares would have been 23 and 63 for the years ended March 31, 2020 and 2019, respectively.

Certain potentially dilutive options were not included in the computation of (loss) earnings per diluted share because their effect would be antidilutive. Potential
common shares are also considered antidilutive in the event of a net loss. The number of potential shares outstanding that were considered antidilutive and that
were excluded from the computation of diluted (loss) earnings per share, weighted for the portion of the period they were outstanding were as follows:

Antidilutive stock options and other awards

Antidilutive stock options and other awards under stock-based compensation
programs excluded based on reporting a net loss for the period

Total common stock equivalents excluded from diluted loss per share

Weighted average exercise price

$

Years Ended March 31,

2020

2019

2018

427 

25 

452 

56.64  $

427 

— 

427 

60.00  $

427 

— 

427 

60.00 

83

14. Other Comprehensive (Loss) Income

The following summarizes changes in each component of accumulated other comprehensive loss, net of tax, attributable to the Company:

Currency
Translation
Adjustment

Pensions, Net of
Tax

Derivatives, Net of
Tax

Accumulated Other
Comprehensive Loss

Balances at March 31, 2017

$

(22,293) $

(36,654) $

(1,100) $

Other comprehensive income (loss) before reclassifications

Amounts reclassified to net income, net of tax

Other comprehensive income, net of tax

Balances at March 31, 2018

Other comprehensive (loss) income before reclassifications

Impact of adoption of ASU 2018-02
Amounts reclassified to net loss, net of tax

Other comprehensive loss, net of tax

Balances at March 31, 2019

Other comprehensive (loss) income before reclassifications

Amounts reclassified to net loss, net of tax

Other comprehensive (loss) income, net of tax

Balances at March 31, 2020

9,611 

— 

9,611 

(12,682)

(9,297)

— 

— 

(9,297)

(21,979)

(530)

— 

(530)

(2,121)

6,195 

4,074 

(32,580)

4,145 

(2,931)

(5,383)

(4,169)

(36,749)

(2,825)

2,420 

(405)

1,100 

— 

1,100 

— 

(4,513)

— 

1,899 

(2,614)

(2,614)

(186)

3,331 

3,145 

$

(22,509) $

(37,154) $

531  $

(60,047)

8,590 

6,195 

14,785 

(45,262)

(9,665)

(2,931)

(3,484)

(16,080)

(61,342)

(3,541)

5,751 

2,210 

(59,132)

The following summarizes amounts by component, reclassified from accumulated other comprehensive loss to net (loss) income:

Years Ended March 31,

Affected Line Item in the Consolidated

2020

2019

2018

Statements of Operations

Pension and postretirement plans(1):

Actuarial loss

Amortization of prior service cost (credit)

Deferred income tax benefit

Amounts reclassified from accumulated other
comprehensive income (loss) to net income (loss), gross

Tax effects of amounts reclassified from accumulated
other comprehensive loss to net income

Amounts reclassified from accumulated other
comprehensive loss to net income, net

$

3,111  $

3,238  $

2,513  Interest expense

(666)

— 

(666)

(7,607)

(667) Interest expense

4,448 

2,445 

(5,035)

6,294 

(25)

(348)

(99)

$

2,420  $

(5,383) $

6,195 

(1) Amounts are included in net periodic benefit costs for pension and postretirement plans.

84

Years Ended March 31,

Affected Line Item in the Consolidated

2020

2019

2018

Statements of Operations

Derivatives:

Losses reclassified to cost of goods sold

$

3,331  $

1,899  $

1,818 

Amounts reclassified from accumulated other
comprehensive loss to net income, gross

3,331 

1,899 

1,818  Cost of goods and services sold

Tax effects of amounts reclassified from accumulated other
comprehensive loss to net income

— 

(399)

(382)

Amounts reclassified from accumulated other
comprehensive loss to net income, net

$

3,331  $

1,500  $

1,436 

15. Guarantees

The following summarizes amounts guaranteed and the fair value of those guarantees:

Amounts guaranteed (not to exceed)

$

138,953  $

Amounts outstanding under guarantee(1)
Fair value of guarantees

48,565 

2,791 

143,298 

103,846 

3,714 

(1) The guarantees outstanding at March 31, 2020 expire within one year.

March 31,

2020

2019

As of March 31, 2020 and 2019, the Company had balances of $6,849 and $18,659 due to local banks on behalf of suppliers for government subsidized rural credit
financing.

16. Stock–Based Compensation

The following summarizes stock-based compensation expense:

Restricted stock awards

Restricted stock units

Other

Compensation expense for stock-based compensation plans

Unrecognized stock-based compensation expense

Years Ended March 31,

2020

2019

2018

$

$

$

517  $

714 

— 

1,231  $

501  $

563  $

981 

— 

1,544  $

1,221  $

441 

682 

66 

1,189 

1,095 

The following summarizes the maximum number of shares available for issuance and the number of remaining shares available for issuance as of March 31, 2020:

Maximum number of shares available for issuance

Number of remaining shares available for issuance

2016 Plan

2007 Plan

Total

1,800 

1,142 

209 

209 

2,009 

1,351 

Total equity awards outstanding are 493 shares, inclusive of 427 share awards granted and outstanding under the 2007 plan and 66 share awards granted under the
2016 Plan. Shares issued are new shares which have been authorized and designated for award under the plans.

85

Restricted Stock Awards
The following summarizes the activity in restricted stock:

Restricted Stock

Shares

Weighted Average 
Grant Date 
Fair Value

Restricted at March 31, 2017

Granted

Vested

Restricted at March 31, 2018

Granted

Vested

Restricted at March 31, 2019

Granted

Vested

Restricted at March 31, 2020

— 

28 

(28)

— 

32 

(32)

— 

49 

(49)

— 

Restricted Stock Units
The following summarizes the activity in restricted stock units:

Restricted Stock Units

Shares

Outstanding at March 31, 2017

Granted

Vested

Forfeited

Outstanding at March 31, 2018

Granted

Vested

Forfeited

Outstanding at March 31, 2019

Granted

Vested

Forfeited

Outstanding at March 31, 2020

104 

58 

(45)

(1)

116 

68 

(56)

(4)

124 

2 

(60)

(2)

64 

$

$

— 

26.05 

26.05 

— 

17.48 

17.48 

— 

10.63 

10.63 

— 

Weighted Average 
Grant Date 
Fair Value

16.84 

11.75 

17.61 

17.99 

14.01 

15.94 

14.35 

14.84 

14.90 

18.29 

15.09 

14.57 

14.81 

17. Derivative Financial Instruments

As  of  March  31,  2020  and  2019,  accumulated  other  comprehensive  loss  includes  $531  and  $2,614,  net  of  tax  of  $0  and  $695,  for  unrealized  losses  related  to
designated cash flow hedges, respectively. The Company recorded losses of $3,331, $1,899, and $1,818 in its cost of goods and services sold for the years ended
March 31, 2020, 2019, and 2018, respectively. The Company recorded current derivative assets of $0 and $186 as of March 31, 2020 and 2019, respectively. There
were no derivatives contracts outstanding as of March 31, 2020.

18. Income Taxes

Accounting for Uncertainty in Income Taxes
As of March  31, 2020, 2019, and 2018, the Company’s unrecognized  tax  benefits  totaled  $19,481, $11,663, and $8,342, respectively,  of which $10,648 would
impact the Company’s March 31, 2020 effective tax rate, if recognized. The following summarizes the changes to unrecognized tax benefits:

Balance at April 1

Increase for current year tax positions

Increase (reductions) for prior year tax positions

Impact of changes in exchange rates

Reduction for settlements

Balance at March 31

86

2020

March 31,

2019

2018

$

11,663  $

8,342  $

15,196 

6,425 

4,177 

(1,226)

(1,558)

447 

7,048 

(227)

(3,947)

482 

(7,296)

(40)

— 

$

19,481  $

11,663  $

8,342 

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. During the years ended March 31, 2020 and 2019, the
Company  reduced  interest,  penalties,  and  related  exchange  losses  pertaining  to  unrecognized  tax  benefits  of  $(33)  and  $(1,096),  respectively.  As  of  March  31,
2020, accrued interest and penalties totaled $1,209 and $815, respectively. During the year ending March 31, 2020, the Company reduced its accrued interest and
penalties by $263 related to the expiration of statute of limitations. As of March 31, 2019, accrued interest and penalties totaled $1,175 and $883, respectively.

During  the  fiscal  year  ending  March  31,  2020,  the  Company’s  total  liability  for  unrecognized  tax  benefits,  including  the  related  interest  and  penalties,  and
associated exchange losses, increased from $13,720 to $21,505. The change in the liability for unrecognized tax benefits relates to additional reserves recorded in
the U.S. of $6,280, expiration of statute of limitations of approximately $185 and increases related to prior period foreign positions of approximately $2,880. Of the
change in the liability for unrecognized tax benefits, unrecognized tax benefits of $1,532 and $4,799 were recorded as a reduction of the foreign tax credit and the
U.S.  federal  net  operating  loss  carryforward,  respectively.  The  U.S.  federal  foreign  tax  credit  carryforward  was  reduced  for  certain  positions  reflected  in  the
computation of the transition tax as filed on the U.S. tax return in the fourth quarter. The Company amended its March 31, 2018 U.S. Federal income tax return to
account  for  the  impact  of,  (i)  the  release  of  final  Regulations  under  IRC  Section  965  and  (ii)  changes  in  underlying  facts  and  circumstances.  U.S.  federal  net
operating loss carryforward was reduced to reflect the impacts of certain tax accounting methods on global intangible low-taxed income (“GILTI”).

To the extent that they represent an underpayment of taxes, the Company expects to continue accruing interest expenses related to the remaining unrecognized tax
benefits. Additionally, the Company is subject to fluctuations in the unrecognized tax liability due to currency exchange rate movements.

The Company does not foresee settling material positions currently accrued for in the next twelve months. In addition, it is reasonably possible that the Company's
unrecognized tax benefits may decrease in the next twelve months by $363 due to the expiration of the statute of limitations, but the Company must acknowledge
circumstances can change due to unexpected developments in the law. In certain jurisdictions, tax authorities have challenged positions that the Company has taken
that  resulted  in  recognizing  benefits  that  are  material  to  its  financial  statements.  The  Company  believes  it  is  more  likely  than  not  that  it  will  prevail  in  these
situations and accordingly have not recorded liabilities for these positions. The Company expects the challenged positions to be settled at a time greater than twelve
months from its balance sheet date.

The Company and its subsidiaries file a U.S. federal consolidated income tax return as well as returns in several U.S. states and a number of foreign jurisdictions.
As of March 31, 2020, the Company’s earliest open tax year for U.S. federal income tax purposes was its fiscal year ended March 31, 2017. Open tax years in state
and  foreign  jurisdictions  generally  range  from  three  to  six  years.  In  applicable  jurisdictions,  the  Company’s  tax  attributes  from  prior  periods  remain  subject  to
adjustment

Income Tax Provision
The components of loss before income taxes, equity in net income of investee companies, and minority interests consisted of the following:

U.S.

Non-U.S.

Total

Years Ended March 31,

2020

2019

2018

(111,532) $

(86,315) $

(32,883)

43,398 

(144,415) $

(42,917) $

(86,087)

69,958 

(16,129)

$

$

87

The details of the amount shown for income taxes in the statements of consolidated operations and comprehensive loss are as follows:

Current

    Federal

    State

    Non-U.S.

Deferred

    Federal

    State

    Non-U.S.

Total

Years Ended March 31,

2020

2019

2018

$

$

$

$

$

(1,115) $

2,018  $

— 

22,065 

— 

22,741 

20,950  $

24,759  $

8,247 

— 

22,972 

31,219 

102,658  $

6,129  $

(98,785)

— 

8,181 

110,839  $

131,789  $

— 

6,952 

13,081  $

37,840  $

— 

8,802 

(89,983)

(58,764)

The  reasons  for  the  difference  between  income  tax  expense  based  on  income  before  income  taxes,  equity  in  net  income  of  investee  companies,  and  minority
interests and the amount computed by applying the U.S. statutory federal income tax rate to income are as follows:

Tax benefit at U.S. statutory rate

Effect of non-U.S. income taxes

Tax on future remittances

Foreign tax credits

Change in valuation allowance

Increase (decrease) in reserves for uncertain tax positions

Change in tax rates

Exchange effects and currency translation

Permanent items

Benefit (expense) on income tax payable/recoverable adjustments

Deductible dividends

Withholding tax expense

Benefit of other tax credits

Nondeductible interest

Transition tax after foreign tax credits

U.S. taxes on non-U.S. earnings

Goodwill impairment

Actual tax expense (benefit)

88

Years Ended March 31,

2020

2019

2018

$

(30,328) $

(9,013) $

(1,951)

10,561 

78 

117,553 

10,807 

822 

10,896 

3,791 

810 

(2,140)

2,225 

(721)

2,767 

(1,227)

2,071 

5,775 

462 

(1,038)

(173)

17,622 

5,304 

(66)

12,904 

(677)

(1,163)

(3,046)

2,577 

(377)

1,624 

1,827 

11,073 

— 

(5,098)

(2,137)

(22,735)

1,328 

(106,804)

(5,871)

66,935 

8,282 

(78)

109 

(3,338)

1,868 

(3,176)

1,052 

10,899 

— 

— 

$

131,789  $

37,840  $

(58,764)

The following summarizes deferred tax liabilities (assets):

March 31,

2020

2019

Deferred tax assets:

Reserves and accruals

Tax credits

Tax loss carryforwards

Derivative transactions

Postretirement and other benefits

Unrealized exchange loss

Non-deductible interest carryforward

Other

Gross deferred tax assets

Valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Unremitted earnings of foreign subsidiaries

Intangible assets

Fixed assets

Total deferred tax liabilities

Net deferred tax liability (asset)

$

(11,418) $

(1,486)

(93,024)

(698)

(15,586)

(7,296)

(28,364)

(5,209)

(163,081)

151,058 

(12,023) $

17,254  $

12,251 

5,419 

34,924  $

22,901  $

$

$

$

$

The following summarizes the breakdown between deferred tax (assets) liabilities:

Noncurrent asset

Noncurrent liability

Net deferred tax liability (asset)

March 31,

2020

2019

$

$

(2) $

22,903 

22,901  $

The following summarizes the change in the Company's valuation allowance for deferred tax assets:

(20,539)

(3,159)

(88,924)

(1,580)

(15,465)

(7,793)

(13,607)

(1,531)

(152,598)

36,524 

(116,074)

5,516 

13,936 

6,984 

26,436 

(89,638)

(116,451)

26,813 

(89,638)

Balance at March 31, 2017

Changes to expenses(3)

Changes to other accounts(2)

Deductions(1)(4)

Balance at March 31, 2018

Changes to expenses

Changes to other accounts(2)

Deductions(1)

Balance at March 31, 2019

Changes to expenses(5)

Changes to other accounts(2)

Deductions(1)
Other

Balance at March 31, 2020

$

$

$

$

131,774 

(466)

(274)

(111,292)

19,742 

18,073 

(156)

(1,135)

36,524 

117,633 

(1,207)

(1,926)

34 

151,058 

(1) Currency translation and direct write-off
(2) Accumulated other comprehensive loss
(3) Deferred tax on unremitted earnings of foreign subsidiaries
(4) Release of U.S. valuation allowance and adjustments of $114,288 due to Tax Cut and Jobs Act
(5) Build of global valuation allowances related to the Company’s financial position

89

During the year ended March 31, 2020, the net deferred tax asset balance decreased by $1,700 for certain adjustments not included in the deferred tax expense
(benefit),  primarily  for  deferred  tax  assets  related  to  pension  accruals  recorded  in  equity  as  part  of  other  comprehensive  income  loss,  currency  translation
adjustments, and other items not included in the deferred tax expense (benefit).

For the year ended March 31, 2020, the valuation allowance increased by $114,535, which is inclusive of $(1,207) related to adjustments to other comprehensive
income and $(1,926) due to currency translation adjustments. The valuation allowance increased primarily due to changes in facts and circumstance around the
Company’s  ability  to  rely  on  future  income  to  support  realization  of  deferred  tax  assets,  which  totaled  $117,668.  The  valuation  allowance  is  based  on  the
Company's  assessment  that  it  is  more  likely  than  not  that  a  majority  of  deferred  tax  assets,  primarily  U.S.  net  operating  losses,  deferred  interest  expense,  and
foreign tax credits, will not be realized in the foreseeable future. This is principally due to the impact of the Company's current and foreseeable capital structure.

At March 31, 2020, the Company has U.S federal tax loss carryovers of $370,444, non-U.S. tax loss carryovers of $55,159, and U.S. state tax loss carryovers of
$627,890. Of the U.S. federal tax loss carryovers, $358,739 will expire in 2031 and thereafter and $11,705 can be carried forward indefinitely. Of the non-U.S. tax
loss carryovers, $10,802 will expire within the next five years, $41,239 will expire in later years, and $3,118 can be carried forward indefinitely. Of the U.S. state
tax  loss  carryovers,  $1,495  will  expire  within  the  next  five  years,  $614,383  will  expire  in  later  years,  and  $12,013  can  be  carried  forward  indefinitely.  The
Company is recognizing a tax benefit related to tax losses generated in the current year of $4,758 to be utilized in foreign jurisdictions. As of March 31, 2020, the
Company has foreign tax credit carryovers in the U.S. of $4,555, of which $2,663 will expire within the next five years. These amounts reflect gross net operating
losses ("NOLs") and foreign tax credits for tax return basis, which are different from financial statement attributes primarily due to the reduction of the financial
statement  NOLs  and  foreign  tax  credits  under  the  FASB's  guidance  on  accounting  for  uncertainty  in  income  taxes.  As  of  March  31,  2020,  the  Company  had
Canadian investment tax credit carryforwards of approximately $274 that will expire beyond five years.

Realization  of deferred  tax assets is dependent on generating  sufficient taxable  income in the appropriate timeframe  and of the appropriate character.  Although
expiration is not assured, the Company believes it is more likely than not that a majority of the deferred tax assets will not be realized. As a result, the Company
has recorded a valuation allowance on its deferred tax assets. The amount of the deferred tax assets considered realizable could be reduced or increased if estimates
of future taxable income change during the carryover period.

A provision of $17,254 has been made for U.S. and foreign taxes that may result from future remittances of foreign earnings of $203,510. No provision has been
made  for  U.S.  or  foreign  taxes  that  may  result  from  future  remittances  of  approximately  $381,046  at  March  31,  2020  and  $486,678  at  March  31,  2019  of
undistributed  earnings  of  foreign  subsidiaries  because  the  Company  expects  that  such  earnings  will  be  reinvested  overseas  indefinitely.  Due  to  the  one-time
transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act and fiscal 2020 earnings being subject to GILTI inclusion, additional taxes due with
respect to such earnings or the excess of the amount for financial reporting over the tax basis of the Company’s foreign investments would generally be limited to
foreign  withholding  taxes  if  the  Company’s  indefinite  reinvestment  assertion  changes.  Determination  of  the  amount  of  any  unrecognized  deferred  income  tax
liability on these unremitted earnings is not practicable.

CARES Act
Included in the CARES Act are numerous income tax provisions. Some of the provisions are related to refundable payroll tax credits, deferment of employer side
social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations, and
technical amendments regarding the income tax depreciation of qualified improvement property. These amendments allow, for taxable years beginning in 2019 and
2020, the base for interest deductibility to increase from 30% to 50% of EBITDA. The Company assessed the tax impact of the CARES Act and did not identify
items that that would require revision to the Company's accounting for income taxes.

90

19. Pension and Other Postretirement Benefits

Defined Benefit Plans
The following summarizes benefit obligations, plan assets, and funded status for the defined benefit pension plans:

Benefit obligation, beginning

$

82,099  $

88,283  $

65,886  $

66,228  $

147,985  $

154,511 

U.S. Plans

March 31,

Non-U.S. Plans

March 31,

Total

March 31,

2020

2019

2020

2019

2020

2019

Service cost

Interest cost

Actuarial losses (gains)

Settlements/special termination benefits

Effects of currency translation

Benefits paid

Benefit obligation, ending

Fair value of plan assets, beginning

Actual return on plan assets

Employer contributions

Plan settlements

Effects of currency translation

Benefits paid

Fair value of plan assets, ending

Funded status of the plan

250 

2,562 

3,740 

(2,574)

— 

(5,081)

250 

3,028 

(57)

(4,630)

— 

(4,775)

211 

1,420 

(3,946)

— 

(1,843)

(2,537)

206 

1,527 

4,222 

(440)

(3,120)

(2,737)

461 

3,982 

(206)

(2,574)

(1,843)

(7,618)

456 

4,555 

4,165 

(5,070)

(3,120)

(7,512)

80,996  $

82,099  $

59,191  $

65,886  $

140,187  $

147,985 

32,568  $

37,659  $

63,579  $

63,106  $

96,147  $

100,765 

(590)

4,025 

(2,574)

— 

(5,081)

738 

3,576 

(4,630)

— 

(4,775)

1,634 

1,519 

— 

(2,122)

(2,537)

28,348  $

32,568  $

62,073  $

(52,648) $

(49,531) $

2,882  $

4,183 

2,540 

(468)

(3,045)

(2,737)

63,579  $

(2,307) $

1,044 

5,544 

(2,574)

(2,122)

(7,618)

90,421  $

4,921 

6,116 

(5,098)

(3,045)

(7,512)

96,147 

(49,766) $

(51,838)

$

$

$

$

The following summarizes amounts reported in the consolidated balance sheets for the defined benefit pension plans:

U.S. Plans

March 31,

Non-U.S. Plans

March 31,

2020

2019

2020

2019

Noncurrent benefit asset recorded in other noncurrent assets

$

—  $

—  $

14,745  $

10,389 

Accrued current benefit liability recorded in accrued expenses and other current
liabilities

Accrued noncurrent benefit liability recorded in pension, postretirement, and other
long-term liabilities

Funded status of the plan

(3,264)

(3,151)

(1,227)

(1,167)

(49,384)

(46,380)

(10,636)

$

(52,648) $

(49,531) $

2,882  $

(11,529)

(2,307)

The following summarizes pension obligations for the defined benefit pension plans:

Information for pension plans with accumulated benefit:

   obligation in excess of plan assets:

Projected benefit obligation

Accumulated benefit obligation

Fair value of plan assets

U.S. Plans

March 31,

Non-U.S. Plans

March 31,

2020

2019

2020

2019

$

80,996  $

82,099  $

31,012  $

80,996 

28,348 

82,099 

32,568 

30,400 

19,147 

33,171 

32,559 

20,475 

91

The following summarizes the net periodic pension cost (benefit) for the defined benefit pension plans:

U.S. Plans

March 31,

2019

2020

2018

2020

Non-U.S. Plans

March 31,

2019

2018

Service cost

Interest cost

Expected return on plan assets

Amortization of actuarial losses

Amortization of prior service cost

Special termination benefits

Settlement charges

$

250  $

250  $

280  $

211  $

206  $

2,562 

(1,990)

964 

40 

— 

812 

3,028 

(2,265)

934 

40 

— 

1,206 

3,193  $

2,818 

(2,382)

1,102 

40 

— 

— 

1,420 

(2,415)

901 

2 

— 

— 

1,527 

(2,667)

741 

2 

28 

(75)

183 

1,496 

(2,817)

952 

3 

9 

— 

Net periodic pension cost (benefit)

$

2,638  $

1,858  $

119  $

(238) $

(174)

The following summarizes activity in accumulated other comprehensive loss for the defined benefit pension plans:

U.S. and Non-U.S. Pension U.S. and Non-U.S. Post-

retirement

Total

Prior service (cost) credit

Net actuarial losses

Impact of adoption of ASU 2018-02

Deferred taxes

Balance at March 31, 2019

Prior service credit (cost)

Net actuarial (losses) gains

Deferred taxes

Total change for 2020

Prior service (cost) credit

Net actuarial losses

Impact of adoption of ASU 2018-02

Deferred taxes

Balance at March 31, 2020

$

$

$

$

$

$

(402) $

(41,100)

(2,931)

10,781 

(33,652) $

44  $

(236)

(53)

(245) $

(358) $

(41,336)

(2,931)

10,728 

(33,897) $

1,596  $

(4,507)

— 

(186)

(3,097) $

(732) $

552 

20 

(160) $

864  $

(3,955)

— 

(166)

(3,257) $

1,194 

(45,607)

(2,931)

10,595 

(36,749)

(688)

316 

(33)

(405)

506 

(45,291)

(2,931)

10,562 

(37,154)

The following assumptions were used to determine the expense for the pension, postretirement, other post-employment, and employee savings plans:

Discount rate

U.S. Plans

March 31,

2019

3.91%

2020

3.79%

2018

3.87%

Rate of increase in future compensation

Not applicable

Not applicable

Not applicable

Non-U.S. Plans

March 31,

2020

2.50%

5.99%

2019

2.75%

6.04%

2018

2.59%

5.91%

Expected long-term rate of return on    plan
assets

6.75%

6.75%

7.00%

3.90%

4.46%

4.70%

The following weighted average assumptions were used to determine the benefit obligations for the pension plans:

Discount rate

U.S. Plans

March 31,

2020

3.34%

2019

3.79%

Rate of increase in future compensation

Not applicable

Not applicable

Non-U.S. Plans

March 31,

2020

2.58%

5.75%

2019

2.50%

5.99%

Net loss and prior service costs for the combined U.S. and non-U.S. pension plans expected to be amortized from accumulated other comprehensive loss into net
periodic benefit cost during fiscal 2021 is $(1,251) and $(873), respectively.

92

Plan Assets
The following summarizes asset allocations and the percentage of the fair value of plan assets by asset category:
U.S. Plans

Target Allocations

March 31,

Non-U.S. Plans

March 31,

March 31, 2020

2020

2019

2020

2019

Asset category:

Cash and cash equivalents

Equity securities

Debt securities

Real estate and other investments

Total

—  %

36.0  %

24.0  %

40.0  %

3.6 %

34.8 %

22.4 %

39.2 %

1.4 %

35.2 %

23.4 %

40.0 %

9.1 %

14.6 %

68.2 %

8.1 %

1.2 %

14.4 %

46.6 %

37.8 %

100.0  %

100.0 %

100.0 %

100.0 %

100.0 %

The fair values for the pension plans by asset category are as follows:

U.S. Pension Plans

March 31, 2020

Cash and cash equivalents

U.S. equities / equity funds

International equities / equity funds

U.S. fixed income funds

International fixed income funds

Other investments:

Diversified funds

Real estate and other (1)

Total

U.S. Pension Plans

Cash and cash equivalents

U.S. equities / equity funds

International equities / equity funds

U.S. fixed income funds

International fixed income funds

Other investments:

Diversified funds

Real estate and other (1)

Total

Total

Level 1

Level 2

Level 3

$

1,018  $

547  $

471  $

6,795 

3,058 

5,593 

784 

8,017 

3,083 

6,795 

3,058 

5,593 

784 

8,017 

— 

— 

— 

— 

— 

— 

— 

28,348  $

24,794  $

471  $

March 31, 2019

Total

Level 1

Level 2

Level 3

463  $

—  $

463  $

$

$

7,963 

3,516 

6,669 

962 

9,525 

3,470 

7,963 

3,516 

6,669 

962 

9,525 

— 

— 

— 

— 

— 

— 

— 

$

32,568  $

28,635  $

463  $

Non-U.S. Pension Plans

March 31, 2020

Cash and cash equivalents

U.S. equities / equity funds

International equities / equity funds

Global equity funds

U.S. fixed income funds

International fixed income funds

Global fixed income funds

Other investments:

Diversified funds

Real estate and other (1)

Total

Total

Level 1

Level 2

Level 3

$

5,641  $

5,641  $

—  $

5,906 

1,812 

1,312 

4,995 

33,330 

3,994 

3,223 

1,795 

5,906 

1,812 

1,312 

4,995 

12,009 

3,994 

— 

— 

— 

— 

— 

— 

21,321 

— 

3,223 

— 

$

62,008  $

35,669  $

24,544  $

93

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

— 

Non-U.S. Pension Plans

March 31, 2019

Cash and cash equivalents

U.S. equities / equity funds

International equities / equity funds

Global equity funds

U.S. fixed income funds

International fixed income funds

Other investments:

Diversified funds

Real estate and other (1)

Total

Total

Level 1

Level 2

Level 3

$

745  $

745  $

—  $

5,589 

2,191 

1,379 

6,617 

23,034 

22,012 

2,012 

5,589 

2,191 

1,379 

6,617 

2,220 

— 

— 

— 

— 

— 

— 

20,814 

22,012 

— 

$

63,579  $

18,741  $

42,826  $

— 

— 

— 

— 

— 

— 

— 

— 

— 

(1) Certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy.

The following summarizes the plan assets recognized and measured at fair value using the net asset value and the inputs used to determine the fair value:

March 31, 2020

March 31, 2019

Fair
Value

Unfunded
Commitments

Redemption
Frequency

Redemption Notice
Period

Fair
Value

Unfunded
Commitments

Redemption
Frequency

Redemption
Notice Period

Diversified
funds

Real estate and
other

$ — 

None

Self-Liquidating

None

$

8 

None

Self-Liquidating

None

4,879 

None

Quarterly

60 Days

5,482 

None

Quarterly

60 Days

94

Postretirement Health and Life Insurance Benefits
The following summarizes benefit obligations, plan assets, and funded status for the postretirement health and life insurance benefits plans:

Benefit obligation, beginning

$

4,445  $

4,372  $

2,278  $

2,112  $

6,723  $

6,484 

U.S. Plans

March 31,

Non-U.S. Plans

March 31,

Total

March 31,

2020

2019

2020

2019

2020

2019

Service cost

Interest cost

Effect of currency translation

Actuarial losses

Benefits paid

Benefit obligation, ending

Fair value of plan assets, beginning

Employer contributions

Benefits paid

Fair value of plan assets, ending

Funded status of the plan

Accrued current benefit liability recorded in accrued expenses and other
current liabilities

Accrued non-current benefit liability recorded in pension, postretirement,
and other long-term liabilities

Funded status of the plan

7 

151 

— 

27 

(180)

7 

154 

— 

225 

(313)

— 

161 

(577)

125 

(131)

7 

151 

(291)

413 

(114)

7 

312 

(577)

152 

(311)

14 

305 

(291)

638 

(427)

4,450  $

4,445  $

1,856  $

2,278  $

6,306  $

6,723 

—  $

—  $

—  $

—  $

—  $

180 

(180)

313 

(313)

131 

(131)

114 

(114)

311 

(311)

—  $

—  $

—  $

—  $

—  $

— 

427 

(427)

— 

(4,450) $

(4,445) $

(1,856) $

(2,278) $

(6,306) $

(6,723)

U.S. Plans

March 31,

Non-U.S. Plans

March 31,

Total

March 31,

2020

2019

2020

2019

2020

2019

(355) $

(335) $

(133) $

(153) $

(488) $

(488)

(4,095)

(4,110)

(1,723)

(2,125)

(5,818)

(4,450) $

(4,445) $

(1,856) $

(2,278) $

(6,306) $

(6,235)

(6,723)

$

$

$

$

$

$

The following summarizes net periodic benefit costs for the postretirement health and life insurance benefits plans:

Service cost

Interest cost

Prior service credit

Actuarial losses

Net periodic benefit costs (income)

U.S. Plans

March 31,

2019

2020

2018

2020

Non-U.S. Plans

March 31,

2019

2018

$

$

7  $

7  $

7  $

—  $

7  $

151 

(699)

385 

154 

(699)

402 

141 

(698)

418 

161 

(9)

49 

151 

(10)

31 

(156) $

(136) $

(132) $

201  $

179  $

7 

190 

(11)

40 

226 

The following assumptions were used to determine non-U.S. Plan postretirement benefit obligations:

Discount rate

Health care cost trend rate assumed for next year

      Ultimate trend rate

March 31,

2020

2019

7.94 %

7.07 %

7.07 %

7.98 %

7.33 %

7.33 %

A  one-percentage-point  change  in  assumed  health  care  cost  trend  rates  would  not  have  a  significant  effect  on  the  amounts  reported  for  health  care  plans.  The
annual rate of increase in the per capita cost of covered health care benefits is not applicable as the Company’s annual cost commitment to the benefits is capped
and not adjusted for future medical inflation.

Prior  service  credits  of  $706  and  unrecognized  net  actuarial  losses  of  $(376)  are  expected  to  be  amortized  from  accumulated  comprehensive  loss  into
postretirement healthcare benefits net periodic benefit cost for the combined U.S. and non-U.S. postretirement benefits during fiscal 2021.

95

Cash Flows
The Company expects to contribute $3,991 to its U.S. benefits plans and $1,827 to its non-U.S. benefit plans in fiscal 2021. The Company expects to contribute
$488 to its combined U.S. and non-U.S. postretirement benefit plans in fiscal 2021. The Company’s contributions to the defined contribution plans were $4,747,
$4,939, and $4,627 the years ended March 31, 2020, 2019, and 2018, respectively.

The following summarizes the expected benefit payments to be paid in future years:

2021

2022

2023

2024

2025

Years 2025-2029

20. Segment Information

The following summarizes segment information:

Sales and other operating revenues:

Leaf - North America

Leaf - Other Regions

Other Products and Services

Total sales and other operating revenues

Operating (loss) income:

Leaf - North America

Leaf - Other Regions

Other Products and Services

Total operating (loss) income

Pension Benefits

Other Benefits

U.S. Plans

Non-U.S. Plans

U.S. Plans

Non-U.S. Plans

March 31, 2020

March 31, 2020

March 31, 2020

March 31, 2020

$

8,017  $

3,401  $

6,294 

6,120 

6,032 

6,023 

27,189 

2,865 

2,910 

3,003 

3,205 

16,166 

355  $

305 

302 

297 

291 

1,380 

133 

132 

131 

131 

130 

639 

Years Ended March 31,

2020

2019

2018

$

$

$

224,707  $

1,282,616 

19,938 

1,527,261  $

8,008 

69,149 

(88,766)

(11,609) $

285,718  $

1,499,839 

16,036 

1,801,593  $

10,113 

112,180 

(35,039)

87,254  $

451,383 

1,394,048 

535 

1,845,966 

26,446 

88,742 

(3,284)

111,904 

March 31, 2020

Leaf - North
America

Leaf - Other
Regions

Other Products
and Services

Total

Segment assets

$

266,253  $

1,284,317  $

212,493  $

1,763,063 

Trade and other receivables, net

Equity in net assets of investee companies

Depreciation and amortization

Capital expenditures

28,520 

— 

7,186 

3,930 

207,534 

56,456 

24,187 

14,551 

3,685 

11,075 

4,455 

38,362 

239,739 

67,531 

35,828 

56,843 

96

Segment assets

Trade and other receivables, net

Goodwill

Equity in net assets of investee companies

Depreciation and amortization

Capital expenditures

Segment assets

Trade and other receivables, net

Goodwill

Equity in net assets of investee companies

Depreciation and amortization

Capital expenditures

March 31, 2019

Leaf - North
America

Leaf - Other
Regions

Other Products
and Services

Total

$

243,248  $

1,488,226  $

127,801  $

1,859,275 

18,297 

2,795 

— 

7,065 

4,594 

289,662 

13,669 

57,161 

25,695 

17,325 

3,038 

17,872 

11,845 

2,987 

30,793 

310,997 

34,336 

69,006 

35,747 

52,712 

March 31, 2018

Leaf - North
America

Leaf - Other
Regions

Other Products
and Services

Total

$

366,495  $

1,528,859  $

71,277  $

1,966,631 

46,096 

2,795 

— 

7,435 

4,649 

257,968 

13,669 

57,434 

25,754 

17,017 

335 

11,082 

9,935 

409 

1,632 

304,399 

27,546 

67,369 

33,598 

23,298 

The following summarizes geographic sales and other operating revenues by destination of the product shipped:

Sales and Other Operating Revenues:

United States

China

Indonesia
Belgium(1)

United Arab Emirates

Northern Africa

Other

Total

Years Ended March 31,

2020

2019

2018

213,036  $

246,828  $

180,907 

119,604 

118,819 

100,375 

39,311 

755,209 

184,921 

118,995 

126,694 

78,329 

120,964 

924,862 

291,804 

249,549 

76,364 

137,313 

72,183 

111,971 

906,782 

1,527,261  $

1,801,593  $

1,845,966 

$

$

(1) The Belgium destination represents a customer-owned storage and distribution center from which the tobacco will be shipped on to manufacturing facilities.

The following customers, including affiliates, account for more than 10% of total sales and other operating revenues: Philip Morris International Inc. and China
Tobacco  International  Inc.  for  the  years  ended  March  31,  2020  and  2018,  and  Philip  Morris  International  Inc.,  China  Tobacco  International  Inc.,  and  Imperial
Brands, PLC for the year ended March 31, 2019.

The following summarizes geographic property, plant, and equipment by location:

Property, Plant, and Equipment, Net:

Canada

Brazil

Zimbabwe

United States

Malawi

Tanzania

Other

Total

2020

March 31,

2019

2018

66,823  $

40,027  $

66,211 

49,814 

47,023 

23,413 

18,290 

24,422 

68,647 

51,943 

49,600 

21,948 

16,908 

27,323 

8,590 

72,190 

51,768 

54,233 

21,571 

18,884 

27,045 

295,996  $

276,396  $

254,281 

$

$

97

21. Restructuring and Asset Impairment Charges

The Company continues to focus on efficiency and cost savings across its business. During the year ended March 31, 2020, the Company announced a cost saving
initiative  and  restructuring  plan  to  repurpose  a  processing  facility  in  South  America  for  storage  and  special  projects  and  process  tobacco  under  a  third-party
arrangement going forward. During the year ended March 31, 2019, the Company incurred costs associated with the closing of a processing facility in Europe to
process tobacco under a third-party arrangement going forward and the consolidation of the Company's U.S. green tobacco processing operations into its Wilson,
North Carolina facility and the repurposing of its Farmville, North Carolina facility for storage and special projects. During the year ended March 31, 2018, the
asset impairment charges were incurred due to restructuring of certain operations in Africa.

The following summarizes the Company's restructuring and asset impairment charges:

   Beginning balance

   Period Charges:

      Employee separation charges (recoveries)

   Total employee separation and other cash charges (recoveries)

   Payments

   Ending balance

   Asset impairment and other noncash charges

Total restructuring and asset impairment charges

Years Ended March 31,

2020

2019

2018

$

1,843  $

107  $

4,592 

4,592 

(6,028)

407  $

1,054 

5,646  $

4,055 

4,055 

(2,319)

1,843  $

891 

4,946  $

$

$

189 

(22)

(22)

(60)

107 

404 

382 

There  are  no  employee  separation  and  other  cash  charges  recorded  in  the  Company's  Other  Products  and  Services  segment.  The  following  summarizes  the
employee separation and other cash charges recorded in the Company’s Leaf - North America and Leaf - Other Regions segments:

Beginning balance

Period charges (recoveries)

Payments

Ending balance

Years Ended March 31,

2020

2019

2018

Leaf - North
America

Leaf - Other
Regions

Leaf - North
America

Leaf - Other
Regions

Leaf - North
America

Leaf - Other
Regions

$

$

1,621  $

222  $

—  $

107  $

8 

(1,629)

4,584 

(4,399)

2,668 

(1,047)

1,387 

(1,272)

—  $

407  $

1,621  $

222  $

60  $

— 

(60)

—  $

129 

(22)

— 

107 

The following summarizes asset impairment and other noncash charges:

Leaf - North America

Leaf - Other Regions

Other Products and Services

Total

Years Ended March 31,

2020

2019

2018

$

$

—  $

772 

282 

1,054  $

545  $

346 

— 

891  $

— 

404 

— 

404 

98

22. Related Party Transactions

The following summarizes sales and purchases with related parties:

   Sales

   Purchases

$

16,245  $

120,084 

15,480  $

137,017 

25,257 

101,096 

Years Ended March 31,

2020

2019

2018

The Company’s accounts receivable,  related  parties  and accounts  payable, related  parties,  as presented  in the consolidated  balance  sheets, relate  to transactions
with equity method investees.

23. Contingencies and Other Information

Brazilian Tax Credits
The government in the Brazilian State of Parana (“Parana”) issued a tax assessment on October 26, 2007 with respect to local intrastate trade tax credits that result
primarily from tobacco transferred between states within Brazil. The assessment for intrastate trade tax credits taken is $2,534 and the total assessment including
penalties  and  interest  at March  31,  2020 is  $9,039. On March  18, 2014, the  government  in  Brazilian  State  of  Santa  Catarina  also  issued a  tax  assessment  with
respect to local intrastate trade tax credits that result primarily from tobacco transferred between states within Brazil. The assessment for intrastate trade tax credits
taken  is  $2,192  and  the  total  assessment  including  penalties  and  interest  at  March  31,  2020  is  $5,875.  The  Company  believes  it  has  properly  complied  with
Brazilian law and will contest any assessment through the judicial process. Should the Company lose in the judicial process, the loss of the intrastate  trade tax
credits would have a material impact on the financial statements of the Company.

The Company also has local intrastate trade tax credits in the Brazil State of Rio Grande do Sul and the State of Santa Catarina. These jurisdictions permit the sale
or transfer of excess credits to third parties, however approval must be obtained from the tax authorities. The Company has agreements with the state governments
regarding the amounts and timing of credits that can be sold. The tax credits have a carrying value of $9,378. The intrastate trade tax credits are monitored for
impairment in future periods based on market conditions and the Company’s ability to use or sell the tax credits.

In 1969, the Brazilian government created a tax credit program that allowed companies to earn IPI tax credits (“IPI credits”) based on the value of their exports.
The government began to phase out this program in 1979, which resulted in numerous lawsuits between taxpayers and the Brazilian government. The Company
has a long legal history with respect to credits it earned while the IPI credit program was in effect. In 2001, the Company won a claim related to certain IPI credits
it  earned  between  1983  and  1990.  The  Brazilian  government  appealed  this  decision  and  numerous  rulings  and  appeals  were  rendered  on  behalf  of  both  the
government and the Company from 2001 through 2013. Because of this favorable ruling, the Company began to use these earned IPI credits to offset federal taxes
in 2004 and 2005, until it received a Judicial Order to suspend the IPI offsetting in 2005. The value of the federal taxes offset in 2004 and 2005 was $24,142 and
the Company established a reserve on these credits at the time of offsetting as they were not yet realizable due to the legal uncertainty that existed. Specifically, the
Company extinguished other federal tax liabilities using IPI credits and recorded a liability in Pension, Postretirement and Other Long-Term Liabilities to reflect
that the credits were not realizable at that time due to the prevalent legal uncertainty. On March 7, 2013, the Brazilian Supreme Court rendered a final decision in
favor of the Company that recognized the validity of the IPI credits and secured the Company's right to benefit from the IPI credits earned from March 1983 to
October 1990. This final decision expressly stated the Company has the right to the IPI credits. The Company estimates the total amount of the IPI credits to be
approximately  $94,316  at  March  31,  2013.  Since  the  March  2013  ruling  definitively  (without  the  government's  ability  to  appeal)  granted  the  Company  the
ownership of the IPI credits generated between 1983 and 1990, the Company believes the amount of IPI credits that were used to offset other federal taxes in 2004
and 2005 are realizable beyond a reasonable doubt. Accordingly, at March 31, 2013, the Company recorded the $24,142 IPI credits it realized in other income, net
in the consolidated statements of operations. No further benefit has been recognized pending the outcome of the judicial procedure to ascertain the final amount as
those amounts have not yet been realized.

Other Matters
On October 8, 2019, the City of New York (the “City”) filed a complaint in U.S. District Court for the Eastern District of New York (the “District Court”) against
24 e-liquids companies, including the Company’s Humble Juice subsidiary, seeking an injunction to prevent sales of e-cigarette products to residents of New York
City without adequate age-verification systems and to prohibit marketing e-cigarettes to New York City residents under the age of 21, as well as statutory damages
and  compensation  to  the  city  for  the  costs  of  abating  underage  e-cigarette  use.  Humble  Juice  and  the  City  agreed  to  resolve  the  City’s  claims  without  further
litigation with the entry of a consent order, approved by the District Court on February 24, 2020, under which Humble Juice, while not admitting to any violation
of law, agreed to certain age-verification and age-gating

99

          
procedures and volume limits for website orders with respect to residents of New York City, to specified penalties for failure to comply with these requirements in
the future and to the payment of $1 to the City.

In  addition  to  the  above-mentioned  matter,  certain  of  the  Company’s  subsidiaries  are  involved  in  other  litigation  or  legal  matters  incidental  to  their  business
activities, including tax matters. While the outcome of these matters cannot be predicted with certainty, the Company is vigorously defending them and does not
currently expect that any of them will have a material adverse effect on its business or financial position. However, should one or more of these matters be resolved
in a manner adverse to its current expectation, the effect on the Company’s results of operations for a particular fiscal reporting period could be material.

Asset Retirement Obligations
The Company has identified an asset retirement obligation (“ARO”) associated with one of its facilities that requires it to restore the land to its initial condition
upon  vacating  the  facility.  The  Company  has  not  recognized  a  liability  under  generally  accepted  accounting  principles  for  this  ARO  because  the  fair  value  of
restoring the land at this site cannot be reasonably estimated since the settlement date is unknown at this time. The settlement date is unknown because the land
restoration is not required until title is returned to the government, and the Company has no current or future plans to return the title. The Company will recognize a
liability in the period in which sufficient information is available to reasonably estimate its fair value.

24. Variable Interest Entities

The following summarizes the Company's financial relationships with its unconsolidated variable interest entities:

Investments in variable interest entities

Receivables with variable interest entities

Guaranteed amounts to variable interest entities (not to exceed)

25. Securitized Receivables

March 31,

2020

2019

$

62,407  $

10,099 

59,792 

64,281 

3,273 

67,027 

During  the  year  ended  March  31,  2020,  the  Company  sold  trade  receivables  to  unaffiliated  financial  institutions  under  three  accounts  receivable  securitization
facilities.  Under  the  first  facility,  the  Company  continuously  sells  a  designated  pool  of  trade  receivables  to  a  special  purpose  entity,  which  sells  100%  of  the
receivables to an unaffiliated financial institution. Following the sale and transfer of the receivables to the special purpose entity, the receivables are isolated from
the Company and its affiliates, and upon the sale and transfer of the receivables from the special purpose entity to the unaffiliated financial institutions, effective
control of the receivables is passed to the unaffiliated financial institution, which has all rights, including the right to pledge or sell the receivables. As of March 31,
2020, the investment limit of this facility was $125,000 of trade receivables.

For the first facility, the Company incurred facility costs of $1,010 and $930 during the years ended March 31, 2020 and 2019, respectively. The facility requires a
minimum level of deferred purchase price be retained by the Company in connection with the sales of the receivables to the unaffiliated financial institution. The
Company  continues  to  service,  administer,  and  collect  the  receivables  on  behalf  of  the  special  purpose  entity  and  receives  a  servicing  fee  of  0.5%  of  serviced
receivables per annum. As the Company estimates the expected fee it receives in return for its obligation to service these receivables is at fair value, no servicing
assets or liabilities are recognized. Servicing fees are recorded as a reduction of selling, general, and administrative expenses within the statements of consolidated
operations.

Under the first facility, the special purpose entity is provided an option to terminate the facility agreement upon the failure of the Company to maintain a minimum
shareholder’s  equity  balance.  As of  December  31,  2019  and  March  31, 2020, the  Company  did  not  maintain  the  minimum  shareholder's  equity  balance,  which
would  have  allowed  the  special  purpose  entity  the  option  to  terminate  the  facility  agreement.  The  special  purpose  entity  opted  not  to  terminate  the  facility
agreement and acceptance of receivables continued under the facility. The Company and the special purpose entity have executed a waiver and an amendment to
the facility agreement with effective dates of December 31, 2019 and March 31, 2020, respectively, which resolved the Company's failure to maintain a minimum
shareholders' equity balance.

For the second and third facilities, the Company offers trade receivables for sale to an unaffiliated financial institution, which are then subject to acceptance by the
unaffiliated  financial  institution.  Following  the  sale  and  transfer  of  the  receivables  to  the  unaffiliated  financial  institution,  the  receivables  are  isolated  from  the
Company  and  its  affiliates,  and  effective  control  of  the  receivables  is  passed  to  the  unaffiliated  financial  institution,  which  has  all  rights,  including  the  right  to
pledge or sell the

100

receivables.  Under  the  first  and  second  facilities,  the  Company  does  not  receive  servicing  fee  from  the  unaffiliated  financial  institution  and  as  a  result,  has
established  a  servicing  liability  based  upon  unobservable  inputs,  primarily  discounted  cash  flow.  As  of  March  31,  2020,  the  investment  limit  under  the  second
facility was $125,000 of trade receivables. As of March 31, 2020, the investment limit under the third facility was variable based on qualifying sales.

As servicer of the first and second facilities, the Company may receive funds that are due to the unaffiliated financial institutions which are net settled on the next
settlement date. As of March 31, 2020 and 2019, trade receivables, net in the consolidated balance sheets has been reduced by $9,586 and $5,208 as a result of the
net settlement, respectively. See Note 26. "Fair Value Measurements" for further information.

The second and third facilities do not contain restrictive covenants.

The following summarizes the Company’s accounts receivable securitization information as of March 31:

Receivables outstanding in facility as of March 31:

Beneficial interest

Servicing liability

Cash proceeds for the years ended March 31:

   Cash purchase price

   Deferred purchase price

   Service fees

      Total

March 31,

2020

2019

$

$

$

$

$

135,439  $

27,021  $

43  $

523,521  $

240,994 

455 

764,970  $

210,672 

40,332 

90 

672,333 

242,966 

576 

915,875 

As of March 31, 2020 and 2019, accounts receivable sold and outstanding were $135,439 and $210,672, respectively.

26. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants. The inputs used to measure fair value are prioritized based on a three-level
valuation hierarchy, which is comprised of observable and non-observable inputs. Observable inputs reflect market data obtained from independent sources, while
unobservable inputs reflect the Company's market assumptions. These three levels of inputs create the following fair value hierarchy:

•

•

•

Level 1 inputs - Quoted prices in active markets for identical assets or liabilities.

Level 2 inputs - Quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are
not active, and observable inputs (other than quoted prices) for the assets or liabilities.

Level 3 inputs - Unobservable inputs for the assets or liabilities.

101

       
The following summarizes assets and liabilities measured at fair value on a recurring basis:
March 31, 2020

March 31, 2019

Financial assets

Derivative financial instruments

Securitized beneficial interests

Total assets

Financial liabilities

Long-term debt

Guarantees

Total liabilities

Level 2

Level 3

Total Assets / 
Liabilities, 
at Fair Value

Level 2

Level 3

Total Assets / 
Liabilities, 
at Fair Value

$

$

$

$

—  $

— 

—  $

—  $

27,021 

27,021  $

— 

27,021 

27,021 

358,782  $

848  $

359,630 

— 

2,791 

2,791 

358,782  $

3,639  $

362,421 

$

$

$

$

186  $

— 

—  $

40,332 

186  $

40,332  $

186 

40,332 

40,518 

830,082  $

703  $

830,785 

— 

3,714 

3,714 

830,082  $

4,417  $

834,499 

Level 2 measurements

•

•

Debt:  The  fair  value  of  debt  is  based  on  the  market  price  for  similar  financial  instruments  or  model-derived  valuations  with  observable  inputs.  The
primary inputs to the valuation include market expectations, the Company's credit risk, and the contractual terms of the debt instrument.

Derivatives:  The  fair  value  of  derivatives  is  based  on  the  discounted  cash  flow  analysis  of  the  expected  future  cash  flows.  The  primary  inputs  to  the
valuation include forward yield curves, implied volatilities, LIBOR rates, and credit valuation adjustments.

Level 3 measurements

•

•

Guarantees: The fair value of guarantees is based on the discounted cash flow analysis of the expected future cash flows or historical loss rates. Should the
loss rate change 10% or 20%, the fair value of the guarantee at March 31, 2020 would change by $279 and $558, respectively. The historical loss rate was
weighted by the principal balance of the loans.

Securitized beneficial  interests:  The fair value of securitized  beneficial  interests  is based on the present value of future expected cash flows. Since the
discount rate and the payment speed are components of the same equation, a change in either by 10% or 20% would change the value of the recorded
beneficial interest at March 31, 2020 by $133 and $267, respectively. The discount rate was weighted by the outstanding interest. Payment speed was
weighted by the average days outstanding.

Reconciliation of Change in Recurring Level 3 Balances
The following summarizes the changes in Level 3 instruments measured on a recurring basis.

Beginning balance March 31, 2018

     Sales of receivables/issuance of guarantees

     Settlements

     Losses recognized in earnings

Ending balance at March 31, 2019

     Sales of receivables/issuance of guarantees

     Settlements

     Losses recognized in earnings

Ending Balance at March 31, 2020

Securitized Beneficial
Interests

Guarantees

$

$

48,715  $

247,386 

(250,365)

(5,404)

40,332 

229,751 

(238,437)

(4,625)

27,021  $

5,864 

4,969 

(6,109)

(1,010)

3,714 

2,982 

(3,802)

(103)

2,791 

The amount of total losses included in earnings for the years ended March 31, 2020 and 2019 attributable to the change in unrealized losses relating to assets still
held at the respective dates was $951 and $1,289 on securitized beneficial interests. Gains and losses included in earnings are reported in other income, net.

102

Information about Fair Value Measurements Using Significant Unobservable Inputs
The following summarizes significant unobservable inputs and the valuation techniques utilized:

Fair value at

March 31, 2020 Valuation Technique

Unobservable Input

Range (Weighted Average)

Securitized Beneficial Interests $

27,021  Discounted Cash Flow

2,536  Historical Loss

Discount Rate

Payment Speed

Historical Loss

Tobacco Supplier Guarantees

255  Discounted Cash Flow

Market Interest Rate

3.44% to 3.45%

77 days to 100 days

2.20% to 10.00%

15.00% to 75.80%

Fair value at

March 31, 2019 Valuation Technique

Unobservable Input

Range (Weighted Average)

Securitized Beneficial Interests $

40,332  Discounted Cash Flow

3,502  Historical Loss

Discount Rate

Payment Speed

Historical Loss

Tobacco Supplier Guarantees

212  Discounted Cash Flow

Market Interest Rate

5.0% to 6.5%

67 days to 80 days

2.4% to 10.0%

15.0% to 70.0%

27. Selected Quarterly Financial Data (Unaudited)

The following summarizes selected quarterly financial information:

Year Ended March 31, 2020

First
Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year

Sales and other operating revenues

$

276,670  $

382,981  $

Gross profit

Other income (loss), net

Restructuring and asset impairment charges

Goodwill impairment

Net loss

Net loss attributable to noncontrolling interest

Net loss attributable to Pyxus International, Inc.

Per Share of Common Stock:

Basic loss attributable to Pyxus International, Inc. (1)

Diluted loss attributable to Pyxus International, Inc. (1)

39,712 

2,948 

212 

— 

(62,163)

(366)

(61,797)

(6.79)

(6.79)

60,220 

1,514 

8 

— 

(16,604)

(86)

(16,518)

(1.81)

(1.81)

363,260  $

55,127 

(401)

672 

— 

(22,446)

(453)

(21,993)

(2.40)

(2.40)

504,350  $

1,527,261 

69,620 

(1,928)

4,754 

33,759 

(169,106)

(4,753)

(164,353)

(17.91)

(17.91)

224,679 

2,133 

5,646 

33,759 

(270,319)

(5,658)

(264,661)

(28.93)

(28.93)

Sales and other operating revenues

$

290,989  $

394,876  $

524,487  $

591,241  $

1,801,593 

Year Ended March 31, 2019

First
Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year

Gross profit

Other income, net

Restructuring and asset impairment charges

Net loss

Net (loss) income attributable to noncontrolling interests

Net loss attributable to Pyxus International, Inc.

Per Share of Common Stock:

Basic loss attributable to Pyxus International, Inc. (1)

Diluted loss attributable to Pyxus International, Inc. (1)

49,204 

2,561 

182 

(54,842)

(208)

(54,634)

(6.04)

(6.04)

74,711 

7,991 

1,667 

(5,002)

93 

(5,095)

(0.56)

(0.56)

85,504 

744 

1,556 

(9,911)

68 

(9,979)

(1.10)

(1.10)

250,814 

14,217 

4,946 

(71,168)

(701)

(70,467)

(7.78)

(7.78)

41,395 

2,921 

1,541 

(1,413)

(654)

(759)

(0.08)

(0.08)

103

(1) The sum of the quarterly EPS amounts may not agree to the total for the year as basic and diluted EPS are computed independently for each of the periods presented

28. Subsequent Events

Criticality Acquisition
On April 22, 2020, the Company acquired the remaining 60.0% of the equity in Criticality, LLC in exchange for consideration consisting of $5,000 cash and the
settlement of the Company's $7,450 note receivable from Criticality, subject to certain post-closing adjustments.

Inventories, Net
During  the  quarter  ended  June  30,  2020,  the  Company  recorded  a  $15,056  inventory  LCM  write-down  of  its  inventory  from  the  other  products  and  services
segment due to a shift in expected future products mix in response to market supply conditions and continued market price compression.

Nicotine River, LLC Ownership Exchange
On August 14, 2020, the Company exchanged  its 40.0% ownership interest  in Nicotine River, LLC for an additional  14.3% interest  in Humble Juice Co, LLC
("Humble"), increasing the Company's ownership interest in Humble to 65.3%. Humble is a consolidated subsidiary of the Company.

Foreign Seasonal Lines of Credit
On  May  19,  2020,  the  Company  amended  the  terms  of  its  $105,000  of  foreign  seasonal  lines  of  credit  with  the  Standard  Bank  of  South  Africa  Limited
(“Standard”). The amendment reduced the total credit  limit to $85,000 and changed the maturity date from April 30, 2020 to March 31, 2021 or May 1, 2021,
depending on the line of credit.

On June 29, 2020, the Company amended the terms of its $255,000 of the original aggregate maximum borrowing availability under the existing foreign seasonal
lines of credit with Eastern and Southern African Trade and Development Bank (“TDB”). The amendment changed the anniversary date for renewal to July 31,
2020 and extended the review period for subsequent renewals from March 31, 2020 to July 31, 2020.

On August 13, 2020, the Company entered into an Amendment and Restatement Agreement ("the Agreement") with TDB. The Agreement sets forth the terms that
govern and supersede the terms of the separate existing foreign seasonal lines of credit for various subsidiaries of the Company with TDB. The original aggregate
maximum borrowing availability under the existing foreign seasonal lines of credit was $255,000 and the aggregate borrowings outstanding were $240,500 as of
August  13,  2020.  Subject  to  certain  conditions,  the  Agreement  increases  the  Company's  maximum  aggregate  borrowing  capacity  to  $285,000.  Loans  under  the
Agreement will bear interest at LIBOR plus 6%. The Agreement terminates on June 30, 2021, and may be renewed at TDB’s discretion.

Bankruptcy Proceedings
On  June  15,  2020,  Pyxus  International,  Inc.  and  its  subsidiaries  Alliance  One  International,  LLC,  Alliance  One  North  America,  LLC,  Alliance  One  Specialty
Products, LLC and GSP Properties, LLC (collectively,  the “Debtors”) filed  voluntary petitions (the “Chapter 11 Cases”) under Chapter 11 of the United States
Bankruptcy Code (the “Bankruptcy Code”) with the Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to implement a prepackaged chapter
11  plan  of  reorganization  (“Prepack  Plan”)  that  effectuates  a  financial  restructuring  of  the  Company’s  secured  debt  (the  “Restructuring”).  The  Company
commenced  solicitation  of  the  Prepack  Plan  with  a  related  disclosure  statement  (“Disclosure  Statement”)  on  June  14,  2020.  The  Chapter  11  Cases  have  been
administered jointly under the caption In re Pyxus International, Inc., et al.

The Debtors filed motions with the Bankruptcy Court seeking authorization to continue to operate its businesses as “debtors-in-possession” under the jurisdiction
of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. To ensure its ability to
continue operating in the ordinary course of business both domestically and internationally, the Debtors also filed with the Bankruptcy Court a variety of “first
day” relief motions, including authority to pay employee wages and benefits and vendors and suppliers in the ordinary course of business. The Prepack Plan and
the “first day” relief anticipate that vendors and other unsecured creditors who continue to work with the Debtors on existing terms will be paid in full and in the
ordinary course of business.

Under  the  Bankruptcy  Code,  third-party  actions  to  collect  pre-petition  indebtedness  owed  by  the  Debtors,  as  well  as  most  litigation  then  pending  against  these
entities, are subject to an automatic stay. Absent an order of the Bankruptcy Court providing otherwise, substantially all pre-petition liabilities are administered
under  a  Chapter  11  plan  of  reorganization  to  be  voted  upon  by  creditors  and  other  stakeholders,  and  approved  by  the  Bankruptcy  Court.  However,  under  the
Bankruptcy Code,

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regulatory proceedings (as well as criminal proceedings) are generally not subject to an automatic stay and continue during the pendency of the Chapter 11 Cases.

The commencement of the Chapter 11 Cases constituted an event of default, and caused an automatic and immediate acceleration of repayment obligations under
the First Lien Notes, the Second Lien Notes, and the ABL Facility. However, any efforts to enforce such payment obligations are automatically stayed as of the
Petition Date, and are subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Further borrowings under the ABL Facility
are not available as a result of this event of default.

On June 14, 2020, the Debtors entered into a Restructuring Support Agreement (the “RSA”) with holders (collectively, the “Consenting Noteholders”) of greater
than 92% of the First Lien Notes and greater than 67% of the Second Lien Notes. As set forth in the RSA, including in the term sheets attached thereto (including
all exhibits, annexes and schedules attached thereto, the “Term Sheets”), the Debtors and Consenting Noteholders (collectively, the “RSA Parties”) agreed to the
terms of the Restructuring, which was contemplated to be implemented through the Prepack Plan. On June 15, 2020, the Debtors commenced the Chapter 11 Cases
to implement the Prepack Plan. The RSA contemplates a comprehensive deleveraging of the Debtors' balance sheet.

The commencement of the Chapter 11 Cases constituted an event of default, and caused an automatic and immediate acceleration of repayment obligations under
the Company's 8.5% Senior Secured First Lien Notes due 2021 ("the First Lien Notes"), its 9.875% Senior Secured Second Lien Notes due 2021 ("the Second Lien
Notes"), and the Company's asset-based revolving credit facility ("the ABL Facility"). However, any efforts to enforce such payment obligations are automatically
stayed as of the Petition Date, and are subject to the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Borrowings under the ABL
Facility were not available commencing on the Petition Date as a result of this event of default. As described below, the ABL Facility was terminated and repaid on
June 17, 2020.

DIP Facility
On June 17, 2020, following its receipt on such date of interim approval from the Bankruptcy Court (the “DIP Order”), the Company entered into a multiple draw
superpriority secured debtor-in-possession term loan facility (the “DIP Facility”) in an aggregate principal amount of $206.7 million on the terms and conditions
set forth in the DIP credit agreement (the “DIP Credit Agreement”) between the Company, certain holders of the Company’s 9.875% senior secured second lien
notes due 2021 (the “DIP Lenders”) and Cortland Capital Market Services LLC, as administrative agent and collateral agent, which is guaranteed by certain of the
Debtors’ subsidiaries.

The DIP Facility provides $131.7 million in initial funding, with the ability for Pyxus to borrow up to an additional $75.0 million upon entry of a final order from
the Bankruptcy Court approving the DIP Facility, which was issued on July 20, 2020. Drawn amounts under the DIP Facility bear interest at either (1) an Alternate
Base Rate plus 9.25%, per annum or (2) 10.25% plus the LIBOR Rate, per annum, with a LIBOR floor of 1.5%. Undrawn amounts under the DIP Facility are
subject to a ticking fee of 3.0% per annum calculated on a daily basis on the aggregate daily unused amount, accruing commencing on June 17, 2020 and until such
commitments have terminated, which ticking fee is due and payable in arrears on the earlier to occur of a borrowing upon entry of a final order and the date on
which such commitments have terminated. During the continuance of an event of default (as further described in the DIP Credit Agreement), the overdue amounts
under the DIP Facility bear interest at an additional 2% per annum above the interest rate otherwise applicable.

The proceeds of the DIP Facility are to be used, among other things, to (a) effect the refinancing of the ABL Facility (which occurred on June 17, 2020); (b) pay
related transaction costs, fees and expenses; (c) provide working capital and for other general corporate purposes in accordance with the Budget; (d) make adequate
protection  payments  as  authorized  by  the  Court  in  the  DIP  Order;  (e)  pay  obligations  arising  from  or  related  to  the  Carve  Out  (as  defined  below);  and  (f)  pay
restructuring costs incurred in connection with the Chapter 11 Cases.

The maturity date of the DIP Facility is the earliest of (a) December 17, 2020; (b) the date of the substantial consummation (as defined in Section 1101(2) of the
Bankruptcy Code) of a plan of reorganization; (c) the date on which Pyxus and its subsidiaries consummate a sale of all or substantially all of their assets pursuant
to section 363 of the Bankruptcy Code or otherwise; and (d) such earlier date on which the loans shall become due and payable by acceleration or otherwise in
accordance with the terms of the DIP Credit Agreement and the other related documents.

Under the DIP Facility, the DIP Lenders and Cortland Capital Market Services LLC, as collateral agent, subject to the Carve Out and the terms of the DIP Order
and, in each case, other than certain excluded assets, are at all times during the pendency of the Chapter 11 Cases secured, by (i) a first priority senior priming
security interest in and lien upon the DIP Priming Collateral (as defined in the DIP Order); (ii) a first priority senior security interest in and lien upon the DIP
Priority Collateral (as defined in the DIP Order), and (iii) a junior security interest in and lien upon DIP Junior Collateral (as defined in the DIP Order). The DIP
Lenders and collateral agent are also secured by security interests in substantially all of the assets of certain non-debtor

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subsidiaries of Pyxus. The Debtors’ obligations to the DIP Lenders and the liens and superpriority claims are subject in each case to a carve out (the “Carve Out”),
subject to a cap, that accounts for certain statutory fees, committee professional fees and post-notice professional fees payable in connection with the Chapter 11
Cases. Upon the effectiveness of the Plan, claims under the DIP Facility are satisfied in the manner described below and the DIP Facility terminates.

Confirmation Order
On  August  21,  2020,  the  Bankruptcy  Court  entered  an  order  (“Confirmation  Order”)  pursuant  to  the  Bankruptcy  Code,  which  approved  and  confirmed  the
Amended  Joint  Prepackaged  Chapter  11  Plan  of  Reorganization  of  Pyxus  and  Its  Affiliated  Debtors  (as  supplemented  and  amended,  the  “Plan”).  After  the
satisfaction or waiver of the conditions precedent of the Plan, the Debtors intend to effect the transactions contemplated by the Plan and emerge from Chapter 11
protection. The Confirmation Order and Plan are filed as Exhibit 2.1 and Exhibit 2.2 to the Company’s Form 8-K filed on August 24, 2020, respectively, are filed
as exhibits to this Form 10-K and incorporated herein by reference.

Summary Features of the Plan of Reorganization
Pursuant to the Plan, the business assets and operations of the Company will vest in a new Virginia corporation, Pyxus Holdings, Inc., which will be an indirect
subsidiary of an additional Virginia corporation (“New Pyxus”) which will be renamed Pyxus International, Inc. upon completion of such transfer of assets and
operations. Under the Plan, all suppliers, vendors, employees, trade partners, foreign lenders and landlords will be unimpaired by the Plan and will be satisfied in
full in the ordinary course of business, and the Company’s existing trade and customer contracts and terms will be maintained. New Pyxus will continue to operate
the Company’s business in the ordinary course.

Treatment of Claims and Interests
The Plan provides for the following treatment of claims against and interest in the Company upon the effectiveness of the Plan:

•

•

•

•

•

•

•

Other Secured Claims (as defined in the Plan) will either (i) be paid in full in cash, (ii) be satisfied by delivery of collateral securing any such Claim (as
defined in the Plan) and payment of any required interest or (iii) be reinstated.

Other Priority Claims (as defined in the Plan) will be paid in full in cash.

Holders of First Lien Notes Claims (as defined in the Plan) will receive (i) payment in full in cash of all accrued and unpaid interest on such First Lien
Notes, and (ii) their pro rata share of the Exit Secured Notes (as defined in the Plan).

Holders (as defined in the Plan) of Second Lien Notes Claims (as defined in the Plan) will receive, at the Holder’s election, (i) their pro rata share of
Second Lien Notes Common Stock Pool (as defined in the Plan) or (ii) cash equal to 2.00% of the principal amount of all Second Lien Notes beneficially
owned by such Holder.

Lenders under Foreign Credit Lines (as defined in the Plan) will be paid in the ordinary course of business in accordance with the terms of the relevant
agreement.

General Unsecured Claims (as defined in the Plan) will be paid in the ordinary course of business.

The existing common stock of the Company shall be discharged, cancelled, released, and extinguished and of no further force or effect.

Transactions in Connection with Emergence
As contemplated by the Plan, certain transactions were effected on or prior to the effectiveness of the Plan, including the following:

•

•

•

Three new Virginia corporations (i.e., Pyxus One, Inc. (“New Pyxus”), Pyxus Parent, Inc. and Pyxus Holdings, Inc.) were organized.

Pyxus Parent, Inc. issued all of its equity interests to Pyxus One, Inc. in exchange for 25,000,000 shares of New Pyxus common stock, no par value (such
common stock is referred to as “New Common Stock” and the 25,000,000 shares of which are referred to as the “Equity Consideration”). Pyxus Holdings,
Inc. then issued all of its equity interests to Pyxus Parent, Inc. in exchange for the Equity Consideration.

Pyxus Holdings, Inc. entered into the Exit ABL Facility (as defined below) to borrow cash under Exit ABL Facility which together with cash on-hand is
sufficient to fund (1) the distributions to holders of Allowed Second Lien Notes Claims (as defined in the Plan) that elected to take the Second Lien Notes
Cash Option (as defined in the Plan) and (2) the Existing Equity Cash Pool (as defined in the Plan) (collectively such amount of cash is referred to as the
“Cash Consideration”).

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•

•

•

•

•

Pursuant to an Asset Purchase Agreement, Pyxus transferred to Pyxus Holdings, Inc. all of its assets (including by assuming and assigning all of Pyxus’
Executory Contracts and Unexpired Leases (as such terms are defined in the Plan) to Pyxus Holdings, Inc. in accordance with the Plan, other than those
Executory Contracts and Unexpired Leases that were rejected) and Pyxus Holdings, Inc. assumed all of Pyxus’ obligations that are not discharged under
the Plan (including all of Pyxus’ obligations to satisfy Allowed Administrative Claims, Allowed Professional Fee Claims, Allowed Other Secured Claims,
Allowed  Other  Priority  Claims,  Allowed  Foreign  Credit  Line  Claims,  Allowed  General  Unsecured  Claims,  Allowed  Debtor  Intercompany  Claims  and
Allowed Debtor Intercompany Claims as set forth in the Plan (as such terms are defined in the Plan)) in exchange for (i) Pyxus Holdings, Inc. transferring
the  Equity  Consideration  to  Pyxus,  (ii)  Pyxus  Holdings,  Inc.  transferring  the  Cash  Consideration  to  Pyxus,  (iii)  Pyxus  Holdings,  Inc.  issuing  the  Exit
Secured Notes (as defined below) under the Exit Secured Notes Indenture (as defined below) which, on behalf of Pyxus, was issued to the Holders of
Allowed First Lien Notes Claims (as defined in the Plan) as set forth in the Plan, and (iv) Pyxus Holdings, Inc. issuing the Exit Term Loans (as defined
below) under the Exit Term Facility (as defined below) which, on behalf of Old Pyxus, was issued to the holders of the DIP Facility Claims (as defined in
the Plan) as set forth in the Plan. In addition to the transfer of assets to Pyxus Holdings, Inc., Pyxus Holdings, Inc. made an offer of employment to all
employees of Pyxus and all such employees became employed by Pyxus Holdings, Inc., or a designated subsidiary, upon the effectiveness of the Plan on
the same terms and conditions existing immediately prior to the effectiveness of the Plan.

New Pyxus and Pyxus Parent, Inc., along with each applicable subsidiary of New Pyxus, guaranteed the Exit Secured Notes, the Exit Term Facility and
the Exit ABL Facility.

Pyxus provided for the distribution of (i) Exit Secured Notes to the Holders of Allowed First Lien Notes Claims pursuant to the Plan, (ii) New Common
Stock from the Second Lien Notes Common Stock Pool (as defined in the Plan) to Holders of Allowed Second Lien Notes Claims (as defined in the Plan)
that  elected  to  receive  New  Common  Stock  under  the  Second  Lien  Notes  Stock  Option  (as  defined  in  the  Plan)  pursuant  to  the  Plan,  (iii)  cash  to  the
Holders of Allowed Second Lien Notes Claims that elected to take or are deemed to elect to take the Second Lien Notes Cash Option (as defined in the
Plan), (iv) cash to the Qualifying Holders (as defined in the Plan) of the common stock of Pyxus pursuant to the Plan, and (v) the Exit Term Loans under
the Exit Term Facility and the Exit Facility Shares to the Holders of the DIP Facility Claims pursuant to the Plan.

Pyxus changed its name to Old Holdco, Inc., and New Pyxus changed its name to Pyxus International, Inc.

New Pyxus elected a board of directors comprising J. Pieter Sikkel, Holly Kim, and Patrick Fallon and appointed as its officers the individuals serving as
officers of Pyxus to the same offices held immediately prior to the effectiveness of the Plan.

Third Party Releases
Upon the effectiveness of the Plan, certain Holders of Claims and Interests (as such terms are defined in the Plan), except as otherwise specified in the Plan or
Confirmation Order, were deemed to release and discharge the Released Parties (as defined in the Plan) from certain claims, obligations, rights, suits, damages,
causes of action and liabilities in connection with the Chapter 11 Cases.

Exit ABL Credit Facility
On the Effective Date, Pyxus Holdings entered into an Exit ABL Credit Agreement (the “ABL Credit Agreement”), dated as of August 24, 2020 by and among,
amongst others, Pyxus Holdings, certain lenders party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent to establish
an asset-based revolving credit facility (the “ABL Facility”). The ABL Facility may be used for revolving credit loans and letters of credit from time to time up to
an initial maximum principal amount of $75.0 million, subject to the limitations described below in this paragraph. Under certain conditions, Pyxus Holdings may
solicit the ABL Lenders to provide additional revolving loan commitments under the ABL Facility in an aggregate amount not to exceed $15.0 million. The ABL
Facility  is  required  to  be  drawn  at  all  times  in  an  amount  greater  than  or  equal  to  the  lesser  of  (i)  25%  of  total  commitments  under  the  ABL  Facility  and  (ii)
$18.75 million. The amount available under the ABL Facility is limited by a borrowing base consisting of eligible accounts receivable and inventory as follows:

•

•

85% of eligible accounts receivable, plus

the lesser of (i) 70% of eligible inventory valued at the lower of cost (based on a first-in first-out basis) and market value thereof (net of intercompany
profits) or (ii) 85% of the appraised net-orderly-liquidation value of eligible inventory.

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The ABL Facility permits both base rate borrowings and LIBOR borrowings. Borrowings under the ABL Facility bear interest at an annual rate equal to LIBOR
plus 475 basis points or 375 basis points above base rate, as applicable, with a fee on unutilized commitments at an annual rate of 100 basis points.

The ABL Facility matures on February 24, 2023, subject to extension on terms and conditions set forth in the ABL Credit Agreement. The ABL Facility may be
prepaid from time to time, in whole or in part, without prepayment or premium, subject to a termination fee of 50 basis points upon the permanent reduction of
commitments under the ABL Facility, including maturity. In addition, customary mandatory prepayments of the loans under the ABL Facility are required upon
the occurrence of certain events including, without limitation, certain dispositions of assets outside of the ordinary course of business in respect of certain collateral
securing the ABL Facility and certain casualty and condemnation events. With respect to base rate loans, accrued interest is payable monthly in arrears on the last
business day of each calendar month and, with respect to LIBOR loans, accrued interest is payable monthly and on the last day of any applicable interest period.
Pyxus Holdings’ obligations under the ABL Facility (and certain related obligations) are (a) guaranteed by Pyxus Holdings, Pyxus Parent, Inc. and the Company
and all of Pyxus Holdings’ material domestic subsidiaries, and each of Pyxus Holdings’ future material domestic subsidiaries is required to guarantee the ABL
Facility on a senior secured basis (including Pyxus Holdings, collectively, the “ABL Loan Parties”) and (b) secured by the Collateral, as described below, which is
owned by the ABL Loan Parties.

The liens and other security interests granted by the ABL Loan Parties on the Collateral for the benefit of the lenders under the ABL Facility (and certain related
secured  parties)  are,  subject  to  certain  permitted  liens,  secured  by  first-priority  security  interests  on  ABL  Priority  Collateral  (as  defined  in  the  ABL/Term
Loan/Intercreditor Agreement) with the security interests securing the Term Loan Credit Facility and the Senior Secured First Lien Notes junior thereto, each as
described below. The obligations of Pyxus Holdings and each other ABL Credit Party under the ABL Facility and any related guarantee have respective priorities
in a waterfall with respect to portions of the Collateral as set forth in the ABL/Term Loan/Notes Intercreditor Agreement and the Term Loan/Notes Intercreditor
Agreement described below.

Cash Dominion
Under the terms of the ABL Facility, if (i) an event of default has occurred and is continuing or (ii) excess borrowing availability under the ABL Facility (based on
the lesser of the commitments thereunder and the borrowing base) (the “Excess Availability”) falls below the greater of (x) $7.5 million and (y) 10% of the lesser
of (A) the commitments under the ABL Facility at such time and (B) the borrowing base at such time (such greater amount being the “Cash Dominion Threshold”),
the  ABL  Loan  Parties  will  become  subject  to  cash  dominion,  which  will  require  daily  prepayment  of  loans  under  the  ABL  Facility  with  the  cash  deposited  in
certain  deposit  accounts  of  the  ABL  Loan  Parties,  including  concentration  accounts,  and  will  restrict  the  ABL  Loan  Parties’  ability  to  transfer  cash  from  their
concentration accounts to their disbursement accounts. Such cash dominion period (a “Dominion Period”) shall end when (i) if arising as a result of a continuing
event of default, such event of default ceases to exist, or (ii) if arising as a result of non-compliance with the Excess Availability threshold, Excess Availability
shall be equal to or greater than the Cash Dominion Threshold for a period of 30 consecutive days.

Financial Covenants
The ABL Credit Agreement governing the ABL Facility contains a covenant requiring that the Company’s fixed charge coverage ratio be no less than 1.00 to 1.00
during any Dominion Period.

Affirmative and Restrictive Covenants
The ABL Credit Agreement governing the ABL Facility contains customary representations and warranties, affirmative and negative covenants (subject, in each
case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company’s and its restricted subsidiaries' ability to, among other
things:

•

incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

•

•

•

•

•

•

pay dividends and make other restricted payments;

sell certain assets;

create liens;

consolidate, merge, sell or otherwise dispose of all or substantially all of their assets;

enter into transactions with affiliates; and

designate subsidiaries as Unrestricted Subsidiaries.

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The description of the ABL Credit Agreement and the ABL Facility set forth herein is qualified in its entirety by reference to the ABL Credit Agreement filed as
Exhibit 10.1 hereto, which is incorporated by reference herein.

Exit Term Loan Credit Facility
On the Effective Date, Pyxus Holdings entered into an Exit Term Loan Credit Agreement (the “Term Loan Credit Agreement”), dated as of August 24, 2020 by
and among, amongst others, Pyxus Holdings, certain lenders party thereto and Alter Domus (US) LLC, as administrative agent and collateral agent to establish a
term loan credit facility in an aggregate principal amount of approximately $213.5 million (the “Term Loan Credit Facility”). The aggregate principal amount of
loans  outstanding  under  Debtors’  debtor-in-possession  financing  facility,  and  related  fees,  were  converted  into,  or  otherwise  satisfied  with  the  proceeds  of,  the
Term Loan Credit Facility.

The Term  Loan Credit Facility  permits  both base rate  borrowings and LIBOR borrowings. Borrowings under the Term Loan Credit  Facility  bear interest  at an
annual rate equal to LIBOR plus 800 basis points or 700 basis points above base rate, as applicable. In addition to the cash interest payments, from and after the
first anniversary of the Term Loan Credit Agreement, the term loans under the Term Loan Credit Facility bear “payment in kind” interest in an annual rate equal to
100 basis points, which rate increases by an additional 100 basis points on each of the second, third and fourth anniversaries of the Term Loan Credit Agreement.

The  Term  Loan  Credit  Facility  matures  on  June  24,  2025.  The  Term  Loan  Credit  Facility  may  be  prepaid  from  time  to  time,  in  whole  or  in  part,  without
prepayment  or  penalty.  In  addition,  customary  mandatory  prepayments  of  the  loans  under  the  Term  Loan  Credit  Facility  are  required  upon  the  occurrence  of
certain  events including,  without  limitation,  certain  dispositions  of assets  outside of the ordinary course  of business in respect  of certain  collateral  securing  the
Term Loan Credit Facility and certain casualty and condemnation events. With respect to base rate loans, accrued interest is payable monthly in arrears on the last
business day of each calendar month and, with respect to LIBOR loans, accrued interest is payable monthly and on the last day of any applicable interest period.

Pyxus Holdings’ obligations under the ABL Facility (and certain related obligations) are (a) guaranteed by Pyxus Holdings, Pyxus Parent, Inc. and the Company,
all of Pyxus Holdings’ material domestic subsidiaries and certain of Pyxus Holdings’ foreign subsidiaries, and each of Pyxus Holdings’ future material domestic
subsidiaries, subject to certain limitations (the "Foreign Guarantors") is required to guarantee the Term Loan Credit Facility on a senior secured basis (including
Pyxus Holdings collectively, the “Term Facility Loan Parties”) and (b) secured by the Collateral, as described below, which is owned by the Term Facility Loan
Parties.

The liens and other security interests granted by the Term Facility Loan Parties on the Collateral for the benefit of the lenders under the Term Loan Credit Facility
(and certain related secured parties) are, subject to certain permitted liens, secured by first-priority security interests on the Term Loan Priority Collateral and a
junior lien on the ABL Priority Collateral and the Notes Priority Collateral (in each case as defined in the ABL/Term Loan/Notes Intercreditor Agreement and the
Term Loan/Notes Intercreditor Agreement (together, the “Intercreditor Agreements”). The obligations of Pyxus Holdings and each other Term Facility Loan Party
under the Term Loan Credit Facility and any related guarantee have respective priorities as set forth in the Intercreditor Agreements described below.

Affirmative and Restrictive Covenants
The Term Loan Credit Agreement governing the Term Loan Credit Facility contains customary representations and warranties, affirmative and negative covenants
(subject, in each case, to exceptions and qualifications) and events of defaults, including covenants that limit the Company's and its restricted subsidiaries' ability
to, among other things:

•

incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

•

•

•

•

•

•

pay dividends and make other restricted payments;

sell certain assets;

create liens;

consolidate, merge, sell or otherwise dispose of all or substantially all of their assets;

enter into transactions with affiliates; and

designate subsidiaries as Unrestricted Subsidiaries.

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The description of the Term Loan Credit Agreement and the Term Loan Credit Facility set forth herein is qualified in its entirety by reference to the Term Loan
Credit Agreement filed as Exhibit 10.2 hereto, which is incorporated by reference herein.

Exit Senior Secured First Lien Notes
On the Effective Date, Pyxus Holdings issued approximately $280.8 million in aggregate principal amount of its 10.00% Senior Secured First Lien Notes due 2024
(the  “Notes”)  to  holders  of  Allowed  First  Lien  Notes  Claims  (as  defined  in  the  Plan)  pursuant  to an  Indenture  (the  “Indenture”)  dated  as of  the  Effective  Date
among Pyxus Holdings, the initial guarantors party thereto, and Wilmington Trust, National Association, as trustee, and collateral agent. The Notes bear interest at
a rate of 10.00% per year, payable semi-annually in arrears in cash on February 15 and August 15 of each year, beginning February 15, 2020, to holders of record
at the close of business on the preceding February 1 and August 1, respectively. The Notes mature on August 24, 2024.

Guarantees
The Notes are initially guaranteed on a senior secured basis by the Company, all of the Company’s material domestic subsidiaries (other than Pyxus Holdings) and
the Foreign Guarantors, on a subordinated basis to the guarantees securing the Term Loan Facility and each of its future material domestic subsidiaries are required
to guarantee the Notes on a senior secured basis.

Optional Redemption
At any time prior to August 24, 2022, Pyxus Holdings may redeem the Notes, in whole or in part, at a redemption price equal to the “make-whole” amount as set
forth in the Indenture, plus accrued and unpaid interest, if any, to, but not including, the redemption date. On or after August 24, 2022, the Pyxus Holdings may on
any one or more occasions redeem all or a part of the Notes at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued
and unpaid interest on the Notes redeemed, to the applicable date of redemption, if redeemed during the periods specified below, subject to the rights of holders of
Notes on the relevant record date to receive interest on the relevant interest payment date:

Period

Percentage

From August 24, 2022 to August 23, 2023

From August 24, 2023 to August 23, 2024

On or after February 24, 2024

105.0 %

102.5 %

100.0 %

Mandatory Repurchase Offers
Upon a “Change of Control” (as defined in the Indenture), Pyxus Holdings will be required to make an offer to repurchase the Notes at a price in cash equal to
101% of the principal amount thereof. Upon certain asset sales, Pyxus Holdings may be required to make an offer to repurchase the Notes at a price in cash equal
to 100% of the principal amount thereof.

Certain Covenants
The Indenture contains covenants that will impose restrictions on Pyxus Holdings, the Company and the Company’s subsidiaries (other than subsidiaries that may
in the future be designated as “Unrestricted Subsidiaries” under the Indenture), including on their ability to, among other things:

•

incur additional indebtedness or issue disqualified stock or preferred stock;

• make investments;

•

•

•

•

•

•

pay dividends and make other restricted payments;

sell certain assets;

create liens;

enter into sale and leaseback transactions;

consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets; and

enter into transactions with affiliates.

The description of the Indenture and the Notes set forth herein is qualified in its entirety by reference to the Indenture, which includes the form of the Notes, filed
as Exhibit 4.1 hereto, which is incorporated by reference herein.

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Collateral
The  liens  and  other  security  interests  granted  by  Pyxus  Holdings  and  the  guarantors  on  the  Collateral  for  the  benefit  of  the  noteholders  are,  subject  to  certain
permitted  liens,  secured  by  first-priority  security  interests  on  the  Notes  Priority  Collateral  and  a  junior  lien  on  the  ABL  Priority  Collateral  and  the  Term  Loan
Priority Collateral (in each case as defined in the Intercreditor Agreements. The obligations of Pyxus Holdings and each other guarantor have respective priorities
with respect to the guarantees and the Collateral as set forth in the Intercreditor Agreements described below.

Intercreditor Agreements
The priority of the obligations under each of the Notes, the ABL Facility and the Term Loan Credit Facility are set forth in the two intercreditor agreements entered
into in connection with the Plan, including the issuance of the Notes and the establishment of the ABL Facility and the Term Loan Credit Facility.

ABL/Term Loan/Notes Intercreditor Agreement
The intercreditor relationship between, (i) on one hand, the holders of obligations under the ABL Facility, the guarantees thereof and certain related obligations and
(ii) on the other hand, (A) the holders of obligations under the Term Loan Credit Facility, the guarantees thereof and certain related obligations and (B) the holders
of obligations under the Notes, the guarantees thereof and certain related obligations, is governed by the ABL/Term Loan/Notes Intercreditor Agreement. Pursuant
to the terms of the ABL/Term Loan/Notes Intercreditor Agreement, Pyxus Holdings’ obligations under the ABL Facility, the guarantees thereof and certain related
obligations have first priority liens on the Collateral consisting of ABL Priority Collateral (as defined therein), including certain accounts receivable and inventory
and certain related intercompany notes, cash, deposit accounts, related general intangibles and instruments, certain other related assets of the foregoing entities and
proceeds of the foregoing (other than identifiable cash proceeds of the Term Loan Priority Collateral or the Notes Priority Collateral, each as defined below), with
the obligations  under the Notes and the Term  Loan Facility  having junior priority  liens on the ABL Priority Collateral.  Pursuant to the ABL/Term Loan/Notes
Intercreditor  Agreement,  Pyxus  Holdings’  collective  obligations  under  the  Term  Loan  Credit  Facility  and  the  Notes,  the  guarantees  thereof  and  certain  related
obligations have first priority liens on the Notes Priority Collateral which consists of the Collateral that is not ABL Priority Collateral, including owned material
real property in the United States, capital stock of subsidiaries owned directly by Pyxus Holdings or a guarantor, existing and after acquired intellectual property
rights, equipment, related general intangibles and instruments and certain other assets related to the foregoing and proceeds of the foregoing, with the obligations
under the ABL Facility having junior priority liens on the Notes Priority Collateral.

Term Loan/Notes Intercreditor Agreement
The  intercreditor  relationship  between  and  among  the  holders  of  obligations  under  the  Term  Loan  Credit  Facility,  the  guarantees  thereof  and  certain  related
obligations and the holders of obligations under the Notes, the guarantees thereof and certain related obligations is governed by the Term Loan/Notes Intercreditor
Agreement.  Pursuant  to  the  terms  of  the  Term  Loan/Notes  Intercreditor  Agreement,  Pyxus  Holdings’  obligations  under  the  Term  Loan  Credit  Facility,  the
guarantees thereof and certain related obligations have senior priority liens on the Term Loan Priority Collateral consisting of (i) all assets and property of Pyxus
Holdings and any domestic Guarantor constituting ABL Priority Collateral up to (A) $125,000 minus (B) the aggregate principal amount of loans and the aggregate
face  amount  of  letters  of  credit  outstanding  under  the  ABL  Credit  Agreement,  and  (ii)  all  assets  and  property  of  any  Foreign  Guarantor  constituting  Collateral
securing  the  Term  Loan  Agreement,  with  the  obligations  under  the  Notes  having  junior  priority  liens  on  the  Term  Loan  Priority  Collateral  (the  "ABL  Priority
Collateral Cap"). The liens securing the Notes and the Term Loan Facility on the ABL Priority Collateral in excess of the ABL Priority Collateral Cap will be
secured on a pari passu basis. Further, the guarantees of the Foreign Guarantors in respect of the Notes are subordinated in right of payments to the guarantees of
the Foreign Guarantors in respect of the Term Loan Facility. Pursuant to the Term Loan/Notes Intercreditor  Agreement, Pyxus Holdings’ obligations under the
Notes,  the  guarantees  thereof  and  certain  related  obligations  have  first  priority  liens  on  all  Notes  Priority  Collateral,  with  the  obligations  under  the  Term  Loan
Facility having junior priority liens on the Notes Priority Collateral.

Shareholders Agreement
On August 24, 2020, the Company entered into a Shareholders Agreement (the “Shareholders Agreement”), among the Company and the investors listed therein,
each other beneficial owner of the Company's common stock as of the date of the Shareholder Agreement deemed to be a party thereto pursuant to the Plan and
other persons that may from time to time become parties thereto (collectively, the “Investors”). The Shareholders Agreement provides that each of Glendon Capital
Management LP (together with its affiliates, the “Glendon Investor”) and Monarch Alternative Capital LP (together with its affiliates, the “Monarch Investor”)
shall be entitled to nominate two individuals to serve on the seven-member board of directors of the Company so long as it beneficially owns at least 20% of the
outstanding shares of the Company common stock, or one individual to serve as such a director if it beneficially owns fewer than 20% of the outstanding shares but
at least 10% of the outstanding shares. The Shareholders Agreement provides that the Investors shall take all necessary action to elect such nominees of each of the
Glendon Investor and the Monarch Investor as directors, as well as the election of the chief executive officer of the Company as a director and other individuals
qualifying as independent directors to be selected by Investors that beneficially own 5% or more of the outstanding shares of common stock of the Company, as
determined  by  a  majority  of  the  shares  of  New  Pyxus  common  stock  beneficially  owned  by  such  Investors.  The  Shareholders  Agreement  provides  that  the
chairperson of the board of directors of the Company is to be elected by a majority of the directors that had been nominated by

111

the Glendon Investor (the “Glendon Directors”) and those that had been nominated by the Monarch Investor (the “Monarch Directors”), with the chairperson of
such board to be elected by the board of directors of the Company if the Glendon Directors and Monarch Directors are together fewer than three in number or fail
to appoint  a chairperson.  The Shareholders  Agreement  also  includes provisions for  the removal  and replacement  of the Glendon Directors  at the request  of the
Glendon  Investor  and  the  removal  and  replacement  of  the  Monarch  Directors  at  the  request  of  the  Monarch  Director,  as  well  as  provisions  with  respect  to  the
calling and quorum of meetings of the board of directors of the Company, membership of committees of the board of directors of the Company, and compensation
and insurance of members of the board of directors of the Company.

The Shareholders Agreement also provides for tag-along rights for Investors beneficially owning 1% or more of the outstanding shares of the Company's common
stock (the “1% Investors”) upon the transfer by an Investor or group of Investors of 20% or more of the outstanding shares of the Company's common stock, drag-
along rights upon the transfer of shares by an Investor or group of Investors of 50% or more of the outstanding shares of the Company's common stock, rights of
first offer with respect to the transfer by an Investor, subject to certain exceptions, of 1% or more of the outstanding shares of the Company's common stock, pre-
emptive rights to the 1% Investors upon issuance of new securities by the Company, and demand and piggyback registration rights.

The Shareholders Agreement includes the agreement of the Investors not to transfer shares of common stock of the Company (i) in violation of federal and state
securities  laws,  (ii)  in  a  transfer  that  would  cause  the  Company  to  be  regarded  as  an  “investment  company”  under  the  Investment  Company  Act  of  1940,  as
amended, (iii) in a transfer, at any time that the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934,  as  amended,  that  would  cause  the  number  of  holders  of  the  Company's  common  stock  to  exceed  specified  thresholds,  or  (iv)  in  a  transfer  that  is,  to  the
knowledge of the transferor  after reasonable  inquiry, (A) to any specified competitor  of the Company (B) or to a person that would become either a beneficial
owner of 5% of the outstanding common stock of the Company or a “5-percent shareholder” within the meaning of Section 382 of the Internal Revenue Code and
the  regulations  promulgated  thereunder  (collectively,  a  “5%  Holder”).  The  Shareholders  Agreement  provides  that  the  board  of  directors  may  waive  these
restrictions,  provided that any waiver of the restriction  with respect to a person that would become a 5% Holder upon such transfer may be waived only if the
transferee enters into a joinder agreeing to be bound by the Shareholders Agreement.

Dissolution and Successor Reporting
Pursuant to the Plan, the Company will, promptly following the effectiveness of the Plan, commence proceedings for the dissolution and winding up the affairs of
the Company. During such period, the Company’s corporate existence will continue, but its activities will be limited to those matters appropriate to the winding up
and liquidation of its business and affairs.

Following the effectiveness of the Plan, the common stock of New Pyxus will be deemed to be registered under Section 12 of the Securities Exchange Act of 1934,
as amended, pursuant to Rule 12g-3 thereunder. Accordingly, following the effectiveness of the Plan, New Pyxus will be obligated to file with the Securities and
Exchange Commission annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other filings and to otherwise comply with
requirements applicable to entities with a class of securities so registered.

112

Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Old Holdco, Inc. (formerly Pyxus International, Inc.)

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Old Holdco, Inc. (formerly Pyxus International, Inc.) and subsidiaries (the "Company") as of
March 31, 2020 and 2019, the related consolidated statements of operations, comprehensive (loss) income, stockholders’ equity, and cash flows, for each of the
three  years  in the  period  ended  March  31, 2020, and the  related  notes and the schedule  listed  in  the Index at Item  15 (collectively  referred  to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019,
and  the  results  of  its  operations  and  its  cash  flows  for  each  of  the  three  years  in  the  period  ended  March  31,  2020,  in  conformity  with  accounting  principles
generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of March 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated August 24, 2020, expressed an unqualified opinion on the Company’s internal control
over financial reporting.

Emergence from Bankruptcy

As discussed in Note 1 and Note 28 to the financial statements, on August 21, 2020, the Bankruptcy Court entered an order confirming the plan of reorganization
which became effective on August 24, 2020. Under the plan of reorganization, the Company is required to comply with certain terms and conditions as more fully
described in Note 28 to the financial statements.

Change in Accounting Principle

As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases in effect April 1, 2019 due to the adoption of
Accounting Standards Codification (“ASC”) Topic 842, “Leases.”

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We  conducted  our  audits  in  accordance  with  the  standards  of  the  PCAOB.  Those  standards  require  that  we  plan  and  perform  the  audit  to  obtain  reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina
August 24, 2020

We have served as the Company’s auditor since its fiscal 2006.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.

113

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) designed to provide reasonable assurance that the information required to be disclosed in the reports we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that this information is
accumulated  and  communicated  to  our  management,  including  our  Chief  Executive  Officer  and  Chief  Financial  Officer,  as  appropriate,  to  allow  for  timely
decisions regarding required disclosure. Due to inherent limitations, our disclosure controls and procedures, however well designed and operated, can provide only
reasonable assurance (not absolute) that the objectives of the disclosure controls and procedures are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our
disclosure  controls  and  procedures  (as  required  by  Rule  13a-15(b)  of  the  Exchange  Act),  as  of  March  31, 2020.  Based  on this  evaluation,  our  Chief  Executive
Officer and Chief Financial Officer concluded our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective to provide
reasonable assurance as of March 31, 2020.

Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-
15(f).  The  Company's  internal  control  system  is  designed  to  provide  reasonable  assurance  regarding  the  reliability  of  financial  reporting  and  the  preparation  of
financial statements for external purposes, and includes those policies and procedures that:

pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

i.
ii. provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally

accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and
directors; and

iii. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a

material effect on the financial statements.

Our  management  assessed  the  effectiveness  of  the  Company's  internal  control  over  financial  reporting  based  on  the  criteria  established  in  Internal  Control  -
Integrated  Framework  (2013) issued  by  the  Committee  of  Sponsoring  Organizations  of  the  Treadway  Commission  (COSO).  Based  on  this  assessment,
management concluded that our internal control over financial reporting is effective as of March 31, 2020.

The effectiveness of our internal control over financial reporting as of March 31, 2020 has been audited by Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report presented herein.

Changes in Internal Control over Financial Reporting
As required by Rule 13a-15(d) under the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated our
internal control over financial reporting to determine whether any changes occurred during the three months ended March 31, 2020 that have materially affected, or
are reasonably likely to materially affect, our internal control over financial reporting.

Despite implementing remote work arrangements for most employees due to government shelter-in-place orders imposed in response to the COVID-19 pandemic,
there were no changes that occurred during the three months ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. Subsequent to March 31, 2020, we have not experienced a material impact to our internal controls over financial reporting
due to the continued effects of the COVID-19 outbreak. We are continually monitoring and assessing the circumstances related to the COVID-19 pandemic and
related government shelter-in-place orders on our internal controls to minimize the impact to their design and operating effectiveness.

114

Report of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of Old Holdco, Inc. (formerly Pyxus International, Inc.)

Opinion on Internal Control over Financial Reporting

We  have  audited  the  internal  control  over  financial  reporting  of  Old  Holdco,  Inc.  (formerly  Pyxus  International,  Inc.)  and  subsidiaries  (the  “Company”)  as  of
March 31, 2020, based on criteria  established  in Internal Control - Integrated Framework (2013) issued by the Committee  of Sponsoring Organizations  of the
Treadway  Commission  (COSO).  In  our  opinion,  the  Company  maintained,  in  all  material  respects,  effective  internal  control  over  financial  reporting  as  of
March 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial
statements  as  of  and  for  the  year  ended  March  31,  2020,  of  the  Company,  and  our  report  dated  August  24,  2020,  expressed  an  unqualified  opinion  on  those
financial statements and included explanatory paragraphs regarding the Company's adoption of ("ASC") Topic 842, “Leases,” and Emergence from Bankruptcy.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control  over  financial  reporting,  included  in  the  accompanying  Management’s  Report  on  Internal  Control  Over  Financial  Reporting.  Our  responsibility  is  to
express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are  required  to  be  independent  with  respect  to  the  Company  in  accordance  with  the  U.S.  federal  securities  laws  and  the  applicable  rules  and  regulations  of  the
Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting  includes  those  policies  and  procedures  that  (1)  pertain  to  the  maintenance  of  records  that,  in  reasonable  detail,  accurately  and  fairly  reflect  the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial  statements  in  accordance  with  generally  accepted  accounting  principles,  and  that  receipts  and  expenditures  of  the  company  are  being  made  only  in
accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because  of  its  inherent  limitations,  internal  control  over  financial  reporting  may  not  prevent  or  detect  misstatements.  Also,  projections  of  any  evaluation  of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Raleigh, North Carolina
August 24, 2020

115

Item 9B. Other Information

None.

Item 10. Directors, Executive Officers and Corporate Governance

Current Directors

PART III

The following individuals currently serve as directors, but pursuant to the Plan will be removed from office upon the effectiveness of the Plan, other than J. Pieter
Sikkel who is to continue as a director:

C. Richard Green, Jr. – Age 76, Director since 2003

Retired  since  April  2002.  Non-Executive  Director  of  ITC  Limited,  a  company  in  India  engaged  in  operating  hotels,  agricultural  exports,  and  manufacturing
cigarettes and paperboard, from July 1999 to April 2008. Regional Director of British American Tobacco, a multinational tobacco company, from January 1999 to
April 2002.

Nigel G. Howard – Age 74, Director since 2005

Retired since December 2003. Non-Executive Chairman of Zotefoams PLC, a manufacturer of industrial foams, from January 2007 through March 2016, and Non-
Executive Director of Zotefoams from January 2006 to December 2006. Deputy Chief Executive of The Morgan Crucible Company plc, a designer, developer and
supplier of products made from carbon, ceramic and magnetic materials, from September 2002 to December 2003, and Director of The Morgan Crucible Company
from September 1992 to December 2003. Deputy Chairman, Assam Carbon Products, Ltd., India, March 1977 to August 2005. Mr. Howard does not currently
serve on the board of directors of any other public company, but within the last five years served as a director of Zotefoams PLC.

J. Pieter Sikkel – Age 56, Director since 2011

President  and  Chief  Executive  Officer  of  Pyxus  since  March  1,  2013,  having  previously  served  as  President  from  December  2010  through  February  2013,  as
Executive Vice President – Business Strategy and Relationship Management from April 2007 to December 2010, and as Regional Director of Asia from May 2005
until April 2007. Employed by Standard Commercial from January 1983 until May 2005, serving as Regional Director of Asia from March 1999 until May 2005,
Country  Manager  of  China  from  June  1991  until  March  1999,  and  prior  thereto  in  various  positions  in  South  Korea,  the  Philippines  and  Thailand.  Mr.  Sikkel
served as Chairman of the Board of Directors from August 2018 to February 2020.

Mark W. Kehaya – Age 52, Director since 2005

A founding partner of Meriturn Partners, LLC, an investment firm specializing in restructurings and turnarounds of middle-market companies, since January 2002.
Mr. Kehaya has served as Chairman of AMV Holdings, LLC (f/k/a MadVapes Holdings, LLC), an owner and operator of retail vape shops and manufacturer and
wholesaler  of  related  products,  since  August  2015.  Previously,  Mr.  Kehaya  served  as  Pyxus'  Interim  Chief  Executive  Officer  from  December  2010  through
February 2013; as President, Chief Executive Officer and Chief Operating Officer of Eturn Communications, Inc., a software solutions provider, from November
2000 to October 2001; and from April 1993 until March 2000, was employed by Standard Commercial Corporation (“Standard Commercial”), serving variously as
Assistant to the President, Finance Director of the Tobacco Division, Vice President - Planning, and as Chief Executive Officer of Standard Commercial’s tobacco
processing facility in St. Petersburg, Russia. Mr. Kehaya served as Chairman of the Board from December 2010 to August 2018.

In  connection  with  his  service  as  a  partner  at  Meriturn  Partners,  LLC,  an  investment  firm  specializing  in  restructurings  and  turnarounds  of  middle-market
companies,  Mr.  Kehaya  served  as  interim  Chief  Executive  Officer  of  Prime  Tanning  Co.,  Inc.,  between  March  2009  and  December  2009,  until  a  permanent
replacement could be found. On November 16, 2010, Prime Tanning Co., Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court for the District of Maine.

116

Nathan A. Richardson – Age 49, Director since 2019

Executive  Vice  President  of  Red  Ventures,  LLC,  a  portfolio  of  digital  companies  that  brings  consumers  and  brands  together  through  customized  online
experiences, since August 2019. Previously, Mr. Richardson served as co-founder and Chief Executive Officer of Trade It, Inc., an API network for investing, from
December 2014 to July 2019; advisor and consultant to Bloomberg Media, a global online news and data company, from November 2013 to March 2014 and as
President of AOL Live, a live online video channel, from September 2013 to November 2013.

Martin R. Wade, III – Age 71, Director since 2001

Non-executive Chairman of the Board of Directors since February 2020. Director of Payless Shoesource, Inc., a retailer of footwear and accessories, since August
2017, and Chairman and Interim Chief Executive Officer of Payless from August 2017 to February 2019; President and Chief Executive Officer of Broadcaster,
Inc. (formerly International Microcomputer Software Inc.), a company engaged in the internet service provider and applications businesses, since September 2006;
Chief  Executive  Officer  of  International  Microcomputer  Software  Inc.,  from  September  2001  to  September  2006;  and  Partner  in  Residence  with  Catalyst
Acquisition  Group,  an  investment  firm  focusing  on  the  acquisition  and  restructuring  of  distressed  companies  in  the  United  States  and  internationally,  since
September 2007. Director, President and Chief Executive Officer of Digital Creative Development Corporation (“DCDC”), a developer of entertainment content
companies focusing on broadband content delivery and providing Internet-related business-to-business services, from May 2001 to September 2001, and Director
and Executive Vice President of DCDC from June 2000 to April 2001. Managing Director of Prudential Securities, Inc., a global securities firm, from May 1998 to
June 2000.

On February 18, 2019, Payless Shoesource, Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in the United States
Bankruptcy  Court  for  the  Eastern  District  of  Missouri.  Mr.  Wade  has  served  on  the  board  of  directors  of  Payless  Shoesource,  Inc.  since  August  2017,  when  it
emerged from Chapter 11 proceedings commenced earlier that year, and served as its Chairman and Interim President from August 2017 to February 2019.

Jeffrey A. Eckmann – Age 67, Director since 2013

Retired since April 2008. Group President of Reynolds American, Inc., a manufacturer of consumer tobacco products, from October 2006 to April 2008, Executive
Vice President – Strategy and Business Development of Reynolds American, Inc., from January 2006 to October 2006, and Executive Vice President – Strategy,
Integration, Information Technology and Business Development of Reynolds American, Inc., from September 2004 to January 2006. Senior Vice President and
Chief Financial Officer of Brown & Williamson Tobacco Corporation, a manufacturer of consumer tobacco products, from January 2001 to August 2004.

Joyce L. Fitzpatrick – Age 65, Director since 2012

President of Fitzpatrick Communications, Inc., a public relations firm concentrating in corporate and crisis communications, litigation support, issue management,
media relations and public affairs, since 2002. Prior thereto, Ms. Fitzpatrick was a Senior Vice President at Ruder-Finn, Inc., a multinational public relations firm.

Donna H. Grier – Age 62, Director since 2018

Retired since June 2019. Vice President and Treasurer of E.I. DuPont de Nemours & Company, a Fortune 100 diversified agricultural and manufacturing company
from February 2012 through May 2019. Prior thereto, Ms. Grier served in numerous roles across DuPont including Vice President, General Auditor & Chief Ethics
and Compliance Officer; Finance Director and CFO of DuPont’s Safety & Protection division; Finance Director and CFO of DuPont Europe; Regional Controller
for South America; and Financial Leader for various business units.

John D. Rice – Age 66, Director since 2013

Retired since June 2012. Vice Chairman of Archer-Daniels-Midland Company, a Fortune 30 agribusiness, from November 2010 to June 2012. During his 36-year
career with Archer-Daniels-Midland, Mr. Rice held numerous senior positions, including the roles of Executive Vice President – Commercial and Production from
August 2007 to October 2010, Executive Vice President – Global Risk Management and Marketing from February 2005 to August 2007, and Senior Vice President
– Corn Processing, Global BioProducts and Food from February 2000 to February 2005.

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Executive Officers
The following information is furnished with respect to the Company's executive officers and the capacities in which they serve.

Name

J. Pieter Sikkel

Tracy G. Purvis

Joel L. Thomas

Laura D. Jones

William L. O’Quinn, Jr.

Age

56

58

53

52

51

Title

President and Chief Executive Officer

Executive Vice President - Business Services

Executive Vice President - Chief Financial Officer

Senior Vice President - Human Resources

Senior Vice President - Chief Legal Officer and Secretary

The  business  experience  summaries  provided  below  for  the  Company's  executive  officers  describe  positions  held  by  the  named  individuals  during  the  last  five
years.

J. Pieter Sikkel has served as President and Chief Executive Officer of Pyxus International, Inc., since March 2013, having previously served as President from
December 14, 2010 through February 2013, Executive Vice President - Business Strategy and Relationship Management from May 2007 through December 13,
2010, and as Regional Director of Asia from May 2005 through April 2007.

Tracy G. Purvis has served as Executive Vice President - Business Services since February 2019, having previously served as Senior Vice President - Business
Services  from  September  2018  through  January  2019,  Vice  President  -  Global  Information  Services  from  January  2011  through  August  2018,  Vice  President  -
Chief Application Architect from April 2009 through December 2010, and as Vice President - Chief Technology Officer from May 2005 through March 2009.

Joel L. Thomas has served as Executive Vice President - Chief Financial Officer since January 2014, having previously served as Vice President - Treasurer from
December 2005 through December 2013.

Laura D. Jones has served as Senior Vice President - Human Resources since September 2018, having previously served as Vice President - Human Resources
from January 2011 through August 2018, Vice President - Human Capital from August 2009 through December 2010, and as Vice President - Compensation and
Benefits from May 2005 through July 2009.

William  L.  O’Quinn,  Jr. has  served  as  Senior  Vice  President  -  Chief  Legal  Officer  and  Secretary  since  April  2011,  having  previously  served  as  Senior  Vice
President  -  Assistant  General  Counsel  and  Secretary  from  January  2011  through  March  2011,  and  as  Assistant  General  Counsel  and  Assistant  Secretary  from
August 2005 through December 2010.

Each of these executive officers served in such capacities at the commencement of the Chapter 11 Cases.

Audit Committee
The Board of Directors of the Company (the “Board”) has established an Audit Committee, which currently consists of Ms. Grier (Chair), Mr. Eckmann, Mr. Rice,
and  Mr.  Wade.  The  Board  has  further  determined  that  each  of  Ms.  Grier  and  Messrs.  Eckmann,  Rice,  and  Wade  meet  the  requirements  of  an  audit  committee
financial expert, as that term is defined by the SEC in Item 407 of Regulation S-K.

Delinquent Section 16(a) Reports
Based  on  its  review  of  Section  16(a)  reports  filed  with  the  SEC,  the  Company  believes  that  during  the  fiscal  year  ended  March  31,  2020,  all  reports  for  the
Company’s executive officers and directors that were required to be filed under Section 16(a) of the Securities Exchange Act of 1934 were filed on a timely basis,
except as follows: (i) a Form 4 for each of Laura D. Jones, Tracy G. Purvis, William L. O’Quinn, Jr., J. Pieter Sikkel, and Joel L. Thomas, reporting the vesting of
Restricted Stock Units and forfeiture of shares for withholding taxes on June 13, 2019 was not filed until June 20, 2019, (ii) a Form 4 for Michael E. Shannon
reporting  the vesting  of Restricted  Stock Units on June 13, 2019 was not filed until  June 20, 2019 (iii)  a Form 4 for each  of Laura  D. Jones, Tracy G. Purvis,
William  L. O’Quinn, Jr., J. Pieter  Sikkel, and Joel L. Thomas reporting  the vesting  of Restricted  Stock Units and forfeiture  of shares  for withholding  taxes  on
August 15, 2019 was not filed until August 20, 2019, and (iv) a Form 4 for each of Laura D. Jones, Tracy G. Purvis, William L. O’Quinn, Jr., J. Pieter Sikkel, and
Joel L. Thomas, reporting the vesting of Restricted Stock Units and forfeiture of shares for withholding taxes on March 23, 2020 was not filed until April 2, 2020.

Code of Business Conduct
Pyxus has a Code of Business Conduct that clearly defines the Company’s expectations for legal and ethical behavior on the part of every Pyxus director, officer,
employee and agent. The Code of Business Conduct also governs Pyxus’ principal executive officer, principal financial officer, and principal accounting officer. It
is designed to deter wrongdoing and promote

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honest and ethical  business conduct in all aspects of the Company’s affairs.  Any waiver of the Code of Business Conduct for any director  or executive  officer
would require approval by the Board of Directors and would be disclosed immediately thereafter to shareholders via the Company’s website, www.pyxus.com.

Item 11. Executive Compensation

Executive Compensation

Summary of Executive Compensation Table
The following table reflects the compensation for the two most recent fiscal years for the Chief Executive Officer and the two other most highly compensated
executive officers in the fiscal year ended March 31, 2020 (the “Named Executive Officers”).

Fiscal Year

Salary 
($)

Bonus(1)
($)

Stock Awards(2)
($)

Non-Equity Incentive
Plan Compensation(3)
($)

Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(4)
($)

All Other
Compensation(5)
($)

Total 
($)

2020 $

725,000  $

2019 $

2020 $

700,000  $

442,400  $

—  $

—  $

—  $

—  $

—  $

110,011  $

13,800  $

848,811 

300,000  $

—  $

254,427  $

—  $

156,000  $

52,703  $

23,100  $

1,433,527 

—  $

495,103 

2019 $

429,516  $

80,000  $

150,000  $

117,082  $

82,927  $

—  $

859,525 

Name and Principal
Position

J. Pieter Sikkel

President, Chief Executive
Officer

Joel L. Thomas

Executive Vice President,
Chief

Financial Officer

William L. O'Quinn, Jr.

2020 $

345,000  $

—  $

—  $

—  $

44,624  $

11,301  $

400,925 

Senior Vice President,
Chief

Legal Officer and Secretary

2019 $

335,000  $

40,000  $

90,000  $

91,321  $

74,283  $

11,135  $

641,739 

(1) For fiscal year 2019, the Committee approved discretionary bonuses to Messrs. Thomas and O’Quinn for their leadership and personal contributions in driving
the  transformation  initiatives  and  their  extensive  work  related  to  building  the  new  businesses.  The  amounts  of  the  bonuses  awarded  were  made  based  on  the
subjective determination of the Committee after assessing each individual’s contributions during the year.

(2) Reflects the grant date fair value of awards made in the fiscal year determined in accordance with ASC Topic 718. Values above indicate the grant date fair
value for awards made during fiscal year 2019 of restricted stock units and performance-contingent share units, the grant date values of which are based on the
“target” levels for these awards. The grant date fair value of the performance-contingent share units calculated at the maximum payout level are $200,000 for Mr.
Sikkel,  $100,000 for  Mr.  Thomas  and $60,000  for  Mr.  O’Quinn, which  would  increase  the aggregate  amounts  reported  under this  column  to  $400,000 for  Mr.
Sikkel, $200,000 for Mr. Thomas and $120,000 for Mr. O’Quinn. For a discussion of the assumptions used in the valuation of these awards, see Note 11 of Notes
to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2019. However, for the purpose
of this table, the grant date fair value excludes the effect of estimated forfeitures.

The performance-contingent share unit awards granted in fiscal year 2019 are earned based on the three fiscal-year average adjusted earnings per share for the
performance period beginning April 1, 2018 and ending March 31, 2021. Adjusted earnings per share is defined as the fully-diluted earnings per share of Common
Stock, adjusted to exclude extraordinary gains and losses, restructuring and impairment, debt retirement expense and annual cash incentive award accruals under
the AIP (defined in footnote 3 below). The performance levels are expressed as “threshold,” “target,” and “maximum” and the actual number of shares to be earned
will be contingent upon the three fiscal-year average adjusted earnings per share as of March 31, 2021, with 25% being earned at the threshold level, 100% being
earned at the target level up to 200% being earned at or above the maximum level. If the three-year average adjusted earnings per share as of March 31, 2021 is
below the threshold level, no shares will be earned and performance between threshold and target or between target and maximum will be interpolated based on
actual performance.

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The restricted stock units granted in fiscal year 2019 ratably vest one-third per year over three years after the date of grant in the event that the Named Executive
Officer is still employed by the Company at that time. Upon vesting, one share of common stock is delivered for each vested unit. Once the restricted stock unit
awards vest, 100% of the shares earned/vested, net of taxes, must be held until the earlier of (a) June 13, 2021 or (b) termination of employment.

No stock awards were granted to the Named Executive Officers in fiscal year 2020.

(3) Reflects payments with respect to grants made under the Company’s Annual Incentive Plan (the “AIP”), with award opportunities expressed as a percentage of
annual base salary with payouts based on the level of achievement of performance goals established at the time of the award. AIP performance goals are expressed
as “threshold,” “target,” and “maximum” objectives for the Named Executive Officers, with “threshold” being the minimum level of performance at which payout
under  AIP  awards  begin,  performance  at  the  “target”  level  resulting  in  payment  at  100%  of  the  target  bonus  opportunity  and  achievement  at  or  above  the
“maximum” level resulting in 200% of target bonus opportunity. Performance between “threshold” and “target,” or “target” and “maximum” is interpolated. For
fiscal year 2020, the performance measures selected for the AIP awards were adjusted free cash flow (defined as Adjusted EBITDA as presented in the Company’s
announcements of quarterly and annual financial results minus cash interest and cash taxes minus routine capital expenditures), leverage (defined as the ratio of
adjusted debt (total debt less cash) to adjusted EBITDA), Leaf EBIT (defined as net income plus interest expense plus tax expense for the tobacco leaf business
combined segments) and other segment revenue (defined as net revenue of the total combined other business segments).

(4) Reflects the aggregate change in the actuarial present value of the Named Executive Officer’s accumulated pension benefits plus the Company’s contributions
to  the  Nonqualified  Deferred  Compensation  program  in  fiscal  years  2020  and  2019.  None  of  the  Named  Executive  Officers  earned  above-market  returns  on
deferred compensation during fiscal years 2020 and 2019, respectively.

(5) The following table lists all amounts included in the “All Other Compensation” column of the Summary Compensation Table for fiscal year 2020:

Name

J. Pieter Sikkel

Joel L. Thomas

William L. O'Quinn, Jr.

401(k) Company
Match (a)

Other Prerequisites or
Payments (c)

Total

$

$

$

11,450 

— 

11,301 

2,350  $

—  $

—  $

13,800 

— 

11,301 

(a) Company matching contributions allocated to the Named Executive Officer account pursuant to the Pyxus Savings and Profit Sharing Plan.
(b) Reflects the payment of tax preparation services paid on behalf of Mr. Sikkel.

Employment Agreement
On February 5, 2013, the Company entered into an employment agreement with Mr. Sikkel which was effective as of March 1, 2013 and which contains provisions
relating to termination for cause, termination due to disability, termination other than cause and termination for good reason following a change-in-control of the
Company.  Mr.  Sikkel’s  employment  agreement  has  an  initial  term  expiring  three  years  after  the  effective  date  and  is  subject  to  automatic  annual  renewals
thereafter  absent  notice  of  non-renewal  delivered  by  either  the  Company  or  Mr.  Sikkel  at  least  90  days  prior  to  the  scheduled  expiration.  If  Mr.  Sikkel’s
employment is terminated by the Company without cause, if Mr. Sikkel resigns his employment for good reason or Mr. Sikkel resigns for a change-in-control good
reason within twelve months after a change-in-control of the Company, he will be entitled to receive severance equal to two times his annual base salary payable in
24 monthly installments. In addition to severance payments, in connection with a termination of employment as described above, Mr. Sikkel is entitled to health
care  coverage  benefits  for  up  to  two  years  following  termination  and  payment  of  up  to  $25,000  for  outplacement  services.  If  Mr.  Sikkel’s  employment  is
terminated because of disability, he is entitled to receive payments for 18 months at two-thirds of his annual base salary at time of termination. If Mr. Sikkel’s
employment is terminated by the Company with cause or he separates from employment for any reason other than good reason or following a change-in-control,
the Company is obligated to pay compensation and benefits only to the date of termination or separation. “Good reason” is defined to include any of the following
events occurring within ninety-five days prior to separation of employment: Mr. Sikkel’s base salary is reduced more than fifteen percent unless the reduction is
part  of  and  at  the  same  percentage  as  an  across-the-board  salary  reduction  for  Pyxus’  senior  management,  Pyxus  fails  to  perform  any  material  obligation  or
breaches any material provision of the employment agreement, or Mr. Sikkel is not re-elected to the position of President and Chief Executive Officer; and, Mr.
Sikkel resigns in writing within thirty days after such events arise. Mr. Sikkel’s agreement also contains a world-wide non-competition provision

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for twelve months following a termination or separation of employment. In addition, he is subject to a prohibition on solicitation of the Company’s employees,
customers and vendors, for a period of twenty-four months after any termination or separation of employment.

Non-qualified Deferred Compensation Plan
During  fiscal  year  2020,  the  Named  Executive  Officers  were  participants  in  the  Pyxus  International,  Inc.  Supplemental  Retirement  Account  Plan  (the  "PYX
SRAP"),  established  April  1,  2007.  The  PYX  SRAP  is  a  non-qualified  defined  contribution  supplemental  retirement  plan  established  to  provide  deferred
compensation for a select group of management. Benefits under the PYX SRAP are based on a hypothetical bookkeeping account established for each participant.
Each  fiscal  year,  pay  credits  and  interest  credits  are  added  to  the  account.  The  pay  credit  is  equal  to  a  specified  percentage  of  base  salary,  bonus  and  annual
incentive compensation paid to the participant during the fiscal year. For fiscal year 2020, the pay credit for Mr. Sikkel was 10% and for Messrs. Thomas and
O’Quinn was 7.5%. The interest credit each fiscal year is equal to the beginning account balance times the Moody’s Aa Corporate Bond Yield Average as of the
beginning  of  the  fiscal  year.  However,  the  interest  crediting  rate  cannot  exceed  120%  of  the  applicable  federal  long-term  rate  prescribed  by  the  Secretary  of
Treasury for the first month of the fiscal year. For fiscal year 2020, the interest crediting rate was 3.44%.

Each participant  becomes vested in his PYX SRAP benefit after five years of service, whether or not the service is consecutive. Each of the Named Executive
Officers is vested in the PYX SRAP benefit. However, a participant who is terminated for cause will forfeit any benefits otherwise payable under the PYX SRAP.
Participants must also comply with a non-compete following termination of employment. A participant who violates the non-compete will forfeit all benefits under
the PYX SRAP. However, the non-compete provision will not apply after a change in control, as defined in the PYX SRAP.

Vested benefits are payable in 120 equal monthly installments starting in the seventh month following separation from service, unless the final account balance is
less than $100,000, in which case the benefit will be payable in a lump-sum. The monthly installment amount is based on the final account balance plus interest at
the PYX SRAP’s applicable interest crediting rate for the year. If the participant dies, unpaid installments are payable to the participant’s designated beneficiary.

Aggregate  earnings  in  the  last  fiscal  year  are  not  included  in  the  compensation  reported  for  fiscal  year  2020  in  the  Summary  Compensation  Table  included
elsewhere in this proxy statement.

Pension Plan
As of December 31, 2015, the Pyxus International, Inc. Pension Plan (the "PYX Pension Plan") was amended to close the plan to new participants and to freeze the
plan by eliminating all notional retirement credits under the plan beginning January 1, 2016. The participant’s notional account balance is credited with annual
interest credits. The annual interest crediting rate for each calendar year is equal to the average rate paid on One Year Treasury Constant Maturity Bonds for the
month of November in the preceding year, plus 1%, provided that the interest crediting rate is not less than 3%. The interest crediting rate for calendar year 2019 is
3.00%.

Prior  to  January  1,  2016,  the  PYX  Pension  Plan  covered  all  full-time,  salaried  employees  of  the  Company  and  its  subsidiaries  who  had  completed  30  days  of
employment. Benefits earned under the PYX Pension Plan vest after three years of service with at least one hour of service on or after January 1, 2008 or upon
attaining age 65 while actively employed.

A  terminated  participant  may  elect  to  receive  the  actuarially  equivalent  value  of  his  or  her  vested  accrued  benefit  in  the  form  of  a  lump  sum  payment  or  an
immediate or deferred annuity commencing at any time following termination of employment.

The PYX Pension Plan preserves certain early retirement rights for participants whose benefits include benefits earned under pension plans merged into the PYX
Pension Plan. These provisions will not have a material effect on benefit payments for any of the Named Executive Officers. As of March 31, 2020, Mr. Sikkel was
eligible for early retirement and Messrs. Thomas and O’Quinn were not eligible for early retirement.

Executive Retention Plan
On April 17, 2020, the Board, based on the recommendation of the Compensation Committee, approved the adoption of an Executive Officer Retention Plan (the
“Retention Plan”) for the benefit of the Company’s executive officers, including the Named Executive Officers. Participants in the Retention Plan each received a
one-time retention payment upon entering into a retention agreement with the Company. Under the retention agreements, a participant is required to repay the full
retention payment to the Company in the event that the Company terminates the participant’s employment for “cause” or the participant voluntarily resigns without
“good  reason”  (each  as  defined  in  the  Retention  Plan)  prior  to  the  expiration  of  12  months  from  the  date  of  the  retention  payment  date.  The  amounts  of  the
respective cash retention payment to the Named Executive Officers are set forth in the table below.

121

Name

J. Pieter Sikkel

Joel L. Thomas

Title

President & Chief Executive Officer

Executive Vice President, .Chief Financial Officer

William L. O'Quinn, Jr.

Senior Vice President, Chief Legal Officer

Retention Payment
Amount

$

$

$

1,088,000 

553,000 

345,000 

Outstanding Equity Awards at Fiscal Year-End Table
The following table presents information regarding unexercised stock options and granted but unvested restricted stock unit and performance-contingent share unit
awards held by the Named Executive Officers at March 31, 2020. Pursuant to the terms of the Plan, upon the effectiveness of the Plan all outstanding rights to
acquire common stock will be cancelled.

Number of Securities
Underlying
Unexercised Options
(#) 
Exercisable

Number of Securities
Underlying Unexercised
Options 
(#) 
Unexercisable

Option
Exercise
Price 
($)

Option
Expiration Date

Number of
Shares or
Units of Stock
that Have Not
Vested 
(#)

Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units, or Other
Rights that Have
Not Vested 
($)

Market
Value of
Shares or
Units of
Stock that
Have Not
Vested(1)
($)

Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units, or
Other Rights
that Have Not
Vested (1) 
($)

50,000

50,000

4,000

4,000

10,000

10,000

— $

— $

60.00 

60.00 

3/24/2021

4/17/2022

— $

— $

60.00 

60.00 

3/24/2021

4/17/2022

— $

— $

60.00 

60.00 

3/24/2021

4/17/2022

4,167 (2)
8,333 (3)

2,083 (2)
4,166 (3)

1,250 (2)
2,500 (3)

$

$

$

$

$

$

12,959 

25,916 

6,478 

12,956 

3,888 

7,775 

6,250 (4)

$

149,313 

3,125 (4)

$

9,719 

1,875 (4)

$

5,831 

Name

J. Pieter Sikkel

Joel L. Thomas

William L.

O'Quinn, Jr.

(1) The market value of stock awards is based on the closing price of the Company’s common stock on March 31, 2020, the last trading day of the fiscal year,
which was $3.11 per share.

(2) Restricted stock units granted June 13, 2017. Awards vest ratably one-third per year on each of the first, second and third anniversaries of the grant date.

(3) Restricted stock units granted June 13, 2018. Awards vest ratably one-third per year on each of the first, second and third anniversaries of the grant date.

(4)  Performance-contingent  share  unit  awards  granted  on  June  13,  2018.  The  total  number  of  shares  to  be  earned  under  the  award  will  be  determined  at  the
completion of the performance  periods under the award. For purposes of the number of shares to be reported, as well as for purposes of computing the market
value of the award, we have assumed that target performance is achieved.

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Directors who are employees of the Company are not compensated for their services as directors. The following table represents the fiscal year 2020 compensation
for  all  directors  other  than  Mr.  Sikkel,  and  includes  compensation  paid  to  Daniel  A.  Castle,  who  resigned  as  a  director  on  February  19,  2020.  Compensation
information for Mr. Sikkel is disclosed herein under the section entitled “Executive Compensation.”

Compensation of Directors

Name

Jeffrey A. Eckmann (1)

Joyce L. Fitzpatrick (1)

C. Richard Green, Jr. (1)

Donna H. Grier (1)

Nigel G. Howard (1)

Mark W. Kehaya (2)

John D. Rice (1)

Nathan A. Richardson (1)

Martin R. Wade, III (1)

Former Director

Daniel A. Castle (3)

Director Compensation

Fees Earned or Paid in
Cash

Stock
Awards (4)

Change in Pension Value
and Nonqualified Deferred
Compensation Earnings

Total

$

$

$

$

$

$

$

$

$

$

147,950  $

117,227  $

119,504  $

123,037  $

124,227  $

107,504  $

121,727  $

112,260  $

128,864  $

51,803 

51,803 

51,803 

51,803 

51,803 

51,803 

51,803 

51,803 

52,581 

—  $

—  $

—  $

—  $

—  $

—  $

—  $

—  $

—  $

199,753 

169,030 

171,307 

174,840 

176,030 

159,307 

173,530 

164,063 

181,445 

91,834  $

50,310 

—  $

142,144 

(1) Independent directors received fees, paid quarterly, based on the following annual retainer schedule:

Type of Service

Non-Executive Chairman of the Board

Board Member

Lead Independent Director

Audit Committee Member

Audit Committee Chair

Executive Committee Member

Executive Committee Chair

Executive Compensation Committee Member

Executive Compensation Committee Chair

Governance & Nominating Committee Member

Governance & Nominating Committee Chair

Social Responsibility & Corporate Affairs Committee Member

Social Responsibility & Corporate Affairs Committee Chair

Special Committee Member

Special Committee Chair

Annual Retainer

135,000 

67,500 

20,000 

12,000 

10,000 

3,000 

5,000 

12,000 

7,500 

7,500 

5,000 

7,500 

5,000 

7,500 

5,000 

$

$

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

+ $

(2) Mr. Wade was appointed non-executive Chairman of the Board on February 19, 2020.

(3) Mr. Castle resigned as a director on February 19, 2020.

(4)  Pursuant  to  the  Company's  2016  Incentive  Plan  approved  by  the  shareholders  on  August  11,  2016  (the  “Incentive  Plan”),  (i)  beginning  with  the
December 31, 2018 grant and each quarterly grant thereafter until December 31, 2019, the

123

Board approved non-employee  director equity compensation  to provide for quarterly grants of common stock which rounded to the nearest  ten shares is
equal in value to $21,250 for each non-employee director other than the non-executive Chairman of the Board, if any, and for the non-executive Chairman
of the Board, if any, quarterly grants of common stock which rounded to the nearest ten shares is equal in value to $31,875, in each case determined in
reference to the 15 days’ average closing share price as of the last trading day preceding the grant; and (ii) beginning with the December 31, 2019 grant and
each quarterly grant thereafter, the Board approved non-employee director equity compensation to provide for (a) quarterly grants of common stock which
rounded to the nearest ten shares is equal in value to $21,250 for each non-employee director, other than the non-executive Chairman of the Board, if any,
and for the non-executive  Chairman of the Board, if any, quarterly grants of common stock which rounded to the nearest  ten shares is equal in value to
$31,875, in each case determined in reference to the greater of the 15 days’ average closing share price as of the last trading day preceding the grant or a
deemed value of $20.00 per share; and (b) each non-employee director, other than the non-executive Chairman, if any, to further receive a cash payment
following  each  quarterly  grant  of  common  stock  equivalent  in  value  to  the  difference  between  (w)  the  actual  value  of  the  equity  grant  received  by  such
director at the end of the immediately preceding fiscal quarter, and (x) $21,250; and the non-executive Chairman, if any, to further receive a cash payment
following  each  quarterly  grant  of  common  stock  equivalent  in  value  to  the  difference  between  (y)  the  actual  value  of  the  equity  grant  received  by  such
director at the end of the immediately preceding fiscal quarter, and (z) $31,875. Mr. Castle received a prorated grant for the quarter in which he resigned
from the Board of Directors. The values shown for the common stock reflect the grant date fair value of awards determined in accordance with ASC Topic
718. For a discussion of the assumptions used in the valuation of these awards, see Note 11 of Notes to Consolidated Financial Statements included in Item
8 of this Form 10-K. Pursuant to the terms of the Plan, upon the effectiveness of the Plan all outstanding rights to acquire common stock will be cancelled.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Ownership of Equity Securities

Stock Ownership of Management
The following table provides information as of April 27, 2020, with respect to the direct and indirect ownership of common stock by (1) each director; (2) each of
the Named Executive Officers; and (3) all directors and executive officers as a group. On April 27, 2020, there were 9,190,216 shares of Pyxus common stock
outstanding, which number does not include shares owned by wholly-owned subsidiaries of the Company which are not entitled to vote their shares or to receive
any dividends with respect to such shares. Pursuant to the terms of the Plan, upon the effectiveness of the Plan all outstanding shares of common stock will be
cancelled.

Number of Shares with
Sole Voting and
Investment Power (1)
25,050 

Number of Shares with
Shared Voting and
Investment Power (2)

Number of Shares
Beneficially Owned (1)
(2)

Name of Beneficial Owner

Jeffrey A. Eckmann

Joyce L. Fitzpatrick

C. Richard Green, Jr.

Donna H. Grier

Nigel G. Howard

Mark W. Kehaya (3)
William L. O'Quinn, Jr.

John D. Rice

Nathan A. Richardson

J. Pieter Sikkel

Joel L. Thomas

Martin R. Wade, III (1)
Executive Officers and Directors as a
Group (includes 14 people total)

* Less than 1%.

— 

— 

1,500 

— 

— 

481,525 

— 

— 

— 

— 

— 

— 

483,025 

25,050 

23,910 

33,380 

6,900 

31,402 

568,035 

35,716 

22,050 

5,300 

141,339 

26,029 

30,510 

949,621 

Percent of Class (1) (2)
*

*

*

*

*

6.1  %

*

*

*

1.5  %

*

*

10.1  %

23,910 

31,880 

6,900 

31,402 

86,510 

35,716 

22,050 

5,300 

141,339 

26,029 

30,510 

466,596 

124

(1) Includes shares of common stock that may be acquired upon exercise of options that are currently exercisable or will become exercisable within sixty
days of April 27, 2020, as follows: Mr. Eckmann, 0 shares; Ms. Fitzpatrick, 0 shares; Mr. Green, 0 shares; Ms. Grier, 0 shares; Mr. Howard, 0 shares; Mr.
Kehaya, 50,000 shares; Mr. O’Quinn, 20,000 shares; Mr. Rice, 0 shares; Mr. Richardson, 0 shares; Mr. Sikkel, 100,000 shares; Mr. Thomas, 8,000 shares;
Mr. Wade, 0 shares; and the executive officers, directors and nominees as a group, 178,000 shares.

This number also includes shares owned by minor child(ren) of the reporting person, or held in a trust or other estate planning vehicle over which the
reporting person is understood to have sole voting and investment power.

(2) Includes shares owned by the spouse of the reporting person, either directly, jointly with the reporting person or as custodian for the minor child(ren)
of the reporting person.

(3) For Mr. Kehaya, the amount shown includes, in addition to the 50,000 shares subject to presently exercisable options described in note (1) above: (1)
36,115 shares held directly by Mr. Kehaya over which he has sole voting and dispositive power; (2) 181,404 shares held jointly with Mr. Kehaya’s spouse
over  which  Mr.  Kehaya  has  shared  voting  and  dispositive  power;  (3)  an  aggregate  of  1,848  shares  held  by  Mr.  Kehaya’s  spouse  as  custodian  for  his
children  that Mr. Kehaya may be deemed to beneficially  own; (4) 395 shares owned indirectly  through a 401(k) plan; and (5) 298,273 shares held by
various trusts of which Mr. Kehaya is a co-trustee and over which he has shared voting and dispositive power; but excludes 1,131 shares that may be
subject to recovery in escheatment proceedings in the State of North Carolina.

Stock Ownership of Certain Beneficial Owners
The  following  table  sets  forth  the  only  persons  known  to  the  Company  to  be  the  beneficial  owner  (as  determined  in  accordance  with  Rule  13d-3  under  the
Securities Exchange Act of 1934, as amended) of more than five percent of the outstanding shares of common stock of the Company as of the dates set forth in the
footnotes to the table. Pursuant to the terms of the Plan, upon the effectiveness of the Plan all outstanding shares of common stock will be cancelled.

Name and Address of Beneficial Owner

BlackRock, Inc. (2)
55 East 52nd Street
New York, New York 10055
Mark W. Kehaya (3)
234 Fayetteville Street Mall, Sixth Floor
Raleigh, North Carolina 27601
Donald Smith & Co., Inc., et al. (4)
152 West 57th Street
New York, New York 10019
Dimensional Fund Advisors LP (5)
Building One, 6300 Bee Cave Road
Austin, Texas, 78746
D.E. Shaw & Co., L.P., et al. (6)
1166 Avenue of the Americas, 9th Floor
New York, New York 10036
Morgan Stanley (7)
1585 Broadway

New York, New York 10036

Number of Shares
Beneficially Owned

Percent of Class (1)

592,786 

6.5  %

568,035 

6.1  %

540,161 

5.9  %

473,423 

5.2  %

460,289 

5.0  %

459,933 

5.0  %

(1) All percentages are based on 9,190,216 shares of our common stock outstanding on April 27, 2020, which number does not include 785,313 shares owned by wholly-owned
subsidiaries of the Company which are not entitled to vote their shares or to receive any dividends with respect to such shares.

(2) Based solely on a Schedule 13G/A filed by BlackRock, Inc. on February 5, 2020, reporting information as of December 31, 2019 that indicates that BlackRock, Inc. has sole
voting power over 575,168 shares and sole dispositive power over 592,786 shares. Such Schedule 13G/A was filed by Blackrock, Inc. as a parent holding company with respect
to  the  following  subsidiaries:  BlackRock  Advisors,  LLC,  BlackRock  Fund  Advisors,  BlackRock  Institutional  Trust  Company,  National  Association,  BlackRock  Financial
Management, Inc. and

125

BlackRock  Investment  Management,  LLC.  Such  Schedule  13G/A  reports  that  no one person's  interest  in  the Company’s  common  stock  of reported  as beneficially  owned  is
more than five percent of the total outstanding common shares.

(3) For Mr. Kehaya, the amount shown is as of April 27, 2020 and includes: (1) 36,115 shares held directly by Mr. Kehaya over which he has sole voting and dispositive power;
(2)  181,404  shares  held  jointly  with  Mr.  Kehaya’s  spouse  over  which  Mr.  Kehaya  has  shared  voting  and  dispositive  power;  (3)  an  aggregate  of  1,848  shares  held  by  Mr.
Kehaya’s spouse as custodian for his children that Mr. Kehaya may be deemed to beneficially own; (4) 395 shares owned indirectly through a 401(k) plan; (5) 50,000 shares
subject to presently exercisable options held by Mr. Kehaya; (6) 298,273 shares held by various trusts of which Mr. Kehaya is a co-trustee and over which he has shared voting
and dispositive power; but excludes 1,131 shares that may be subject to recovery in escheatment proceedings in the State of North Carolina.

(4)  Based  solely  on  a  Schedule  13G  jointly  filed  by  Donald  Smith  &  Co.,  Inc.,  DSCO  Value  Fund,  L.P.,  Jon  Hartsel  and  John  Piermont  on  February  10,  2020,  reporting
information as of December 31, 2019, that indicates that Donald Smith & Co., Inc. had sole power to vote 532,400 shares and sole dispositive power over 535,600 shares, DSCO
Value  Fund,  L.P.  had  sole  voting  power  with  respect  to  2,811  shares  and  sole  dispositive  power  over  2,811  shares,  Jon  Hartsel  had  sole  power  to  vote  200  shares  and  sole
dispositive  power over 200 shares, and John Piermont  had sole voting  power with respect to 1,550 shares and sole dispositive  power over 1,550 shares. Such Schedule 13G
reports that to the knowledge of Donald Smith & Co., Inc., with respect to all shares reported in such Schedule 13G owned by advisory clients of Donald Smith & Co., Inc., not
more than five percent of the class of such shares is owned by any one client.

(5) Based solely on a Schedule 13G/A filed by Dimensional Fund Advisors LP on February 12, 2020, reporting information as of December 31, 2019, that indicates that such
person  beneficially  owned  473,423  shares  and  had  sole  voting  power  with  respect  to  448,665  shares  and  sole  dispositive  power  over  473,423  shares.  Such  Schedule  13G/A
reports that: Dimensional Fund Advisors LP is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940 and furnishes investment advice to
four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group
trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Dimensional Funds”); in certain cases, subsidiaries of Dimensional
Fund Advisors LP may act as an adviser or sub-adviser to certain Dimensional Funds; in its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors
LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Company that are owned by the Dimensional Funds,
and may be deemed to be the beneficial owner of the shares of the Company held by the Dimensional Funds; however, all securities reported in such Schedule 13G/A were
owned by the Dimensional Funds and, to the knowledge of Dimensional Fund Advisors LP, the interest of any one such Dimensional Fund does not exceed five percent of the
outstanding shares of the Company’s common stock; Dimensional disclaims beneficial ownership of such securities; and its filing of such Schedule 13G/A shall not be construed
as an admission that it or any of its affiliates is the beneficial owner of any securities covered by such Schedule 13G/A for any other purposes than Section 13(d) of the Securities
Exchange Act of 1934.

(6)  Based  solely  on  a  Schedule  13G  jointly  filed  by  D.E.  Shaw  &  Co.,  L.P.  and  David  E.  Shaw  on  January  10,  2020,  reporting  information  as  of  December  31,  2019,  that
indicates that D.E. Shaw & Co., L.P. had sole power to vote 44,923 shares and sole dispositive power over 460,289 shares, and David E. Shaw had sole power to vote 44,923
shares and sole dispositive power over 460,289 shares. Such Schedule 13G reports that the 460,289 shares reported as beneficially owned by D.E. Shaw & Co., L.P. and David
E. Shaw is composed of (i) 155,930 shares in the name of D. E. Shaw Valence Portfolios, L.L.C., (ii) 111,326 shares in the name of D. E. Shaw Oculus Portfolios, L.L.C., (iii)
1,306 shares in the  name of D. E. Shaw Asymptote  Portfolios,  L.L.C., and (iv) 191,727 shares under the management of D. E. Shaw Investment Management, L.L.C. Such
Schedule 13G further reports that David E. Shaw does not own any shares directly; by virtue of David E. Shaw’s position as President and sole shareholder of D. E. Shaw & Co.,
Inc., which is the general partner of D. E. Shaw & Co., L.P., which in turn is the investment adviser of D. E. Shaw Valence Portfolios, L.L.C. and D. E. Shaw Oculus Portfolios,
L.L.C.  and  the  managing  member  of  D.  E.  Shaw  Investment  Management,  L.L.C.  and  D.  E.  Shaw  Adviser,  L.L.C.,  which  in  turn  is  the  investment  adviser  of  D.  E.  Shaw
Asymptote Portfolios, L.L.C., and by virtue of David E. Shaw’s position as President and sole shareholder of D. E. Shaw & Co. II, Inc., which is the managing member of D. E.
Shaw & Co., L.L.C., which in turn is the manager of D. E. Shaw Valence Portfolios, L.L.C. and D. E. Shaw Oculus Portfolios, L.L.C. and the managing member of D. E. Shaw
Manager, L.L.C., which in turn is the manager of D. E. Shaw Asymptote Portfolios, L.L.C., David E. Shaw may be deemed to have the shared power to vote or direct the vote of
444,923 shares and the shared power to dispose or direct the disposition of 460,289 shares.

(7) Based solely on a Schedule 13G filed by Morgan Stanley on May 14, 2020, reporting information as of May 4, 2020, that indicates that Morgan Stanley has shared voting
power  over  456,468  shares  and  shared  dispositive  power  over  459,933  shares.  The  Schedule  13G  reports  that,  in  accordance  with  the  Securities  and  Exchange  Commission
Release  No.  34-39538  (January  12,  1998)  (the  “Release”),  the  Schedule  13G  reflects  the  securities  beneficially  owned,  or  that  may  be  deemed  to  be  beneficially  owned,  by
certain operating units (collectively, the “MS Reporting Units”) of Morgan Stanley and its subsidiaries and affiliates (collectively, “MS”) and does not reflect securities, if any,
beneficially owned by any operating units of MS whose ownership of securities is disaggregated from that of the MS Reporting Units in accordance with the Release.

126

Equity Compensation Plan Information

as of March 31, 2020

(a)

(b)

Number of Securities to be Issued
Upon Exercise of Outstanding
Options, Warrants and Rights(1)

Weighted-Average Exercise
Price of Outstanding Options,
Warrants and Rights(2)

(c)
Number of Securities Remaining Available
for Future Issuance Under Equity
Compensation Plans (excluding securities
reflected in column (a))(3)

549,526

—

549,526

$60.00

Not Applicable

$60.00

1,351,186

—

1,351,186

Plan Category

Equity Compensation Plans Approved
by Security Holders

Equity Compensation Plans Not
Approved by Security Holders

Total

(1) These shares consist of 122,526 restricted  stock units and performance  share units issued and outstanding under the 2016 Incentive Plan and 427,000 stock
options issued and outstanding under the Company's 2007 Incentive Plan.

(2) The weighted-average exercise price does not take into account restricted stock units or performance share units.

(3)  The  Incentive  Plan  allows  for  these  shares  to  be  issued  in  a  variety  of  forms,  including  stock  options,  stock  appreciation  rights,  stock  awards,  stock  units,
performance awards and incentive awards. Further, the Number of Securities Remaining Available for Future Issuance as set forth in this column (c) will increase
by  the  Number  of  Securities  to  be  Issued  (as  reflected  in  column  (a))  which  are  associated  with  options,  rights  and  warrants  plus  other  stock  awards  that  are
forfeited from time to time.

Pursuant  to  the  terms  of  the  Plan,  upon  the  effectiveness  of  the  Plan  all  outstanding  rights  to  acquire  common  stock  will  be  cancelled  and  outstanding  equity
compensation plans will be terminated.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Independence
The Board has previously determined that the Company's current directors listed herein, with the exception of Mr. Sikkel who is currently President and Chief
Executive Officer of the Company, were independent as that term is defined under the Corporate Governance Standards of the New York Stock Exchange.

Related Party Transactions
The Company annually collects written questionnaires from its officers and directors and engages in an internal process intended to identify transactions involving
the  Company  and  its  officers  or  directors,  including  those  required  to  be  disclosed  pursuant  to  the  proxy  statement  rules  of  the  Securities  and  Exchange
Commission. Based on the information collected, the Company’s Chief Legal Officer initially determines whether any identified transactions are required to be
disclosed under the relevant rules. Information regarding any qualifying transaction(s) is presented to the Audit Committee, which pursuant to its charter makes a
determination as to whether to approve or ratify such transaction(s). The transaction disclosed below was approved and ratified by the Audit Committee pursuant to
these procedures.

During the fiscal year ended March 31, 2019, the Company purchased tobacco from Msamba Estate Limited for approximately $947,300. Msamba Estate Limited,
a commercial tobacco grower in Malawi which has been selling tobacco to the Company and its predecessors since 2001, is owned by the brother of Graham J.
Kayes. Mr. Kayes, who served as Executive Vice President - Business Relationship Management and Leaf until September 2018, and now serves as Executive
Vice President – Business Relationship Management and Leaf of the Company’s subsidiary Alliance One International, LLC, did not have any involvement in the
sales transactions between the Company and Msamba Estate Limited. The price paid to Msamba Estate Limited for the tobacco was at the same price paid to other
Malawi growers for the same grades and types of tobacco.

Board Committees and Membership
The Board has standing Audit, Executive, Executive Compensation, Governance and Nominating, and Social Responsibility and Corporate Affairs Committees.
The following table indicates the current membership of each standing committee of the Board.

127

Committee Membership

Audit

X

Executive

X

X*

X

X

X

X*

Executive
Compensation

Governance and
Nominating

Social Responsibility
and 
Corporate Affairs

X

X

X

X*

X

X

X

X

X*

X*

X

X

X

Mr. Eckmann

Ms. Fitzpatrick

Mr. Green

Ms. Grier

Mr. Howard

Mr. Kehaya

Mr. Rice

Mr. Richardson

Mr. Sikkel

Mr. Wade

*Chair

Item 14. Principal Accounting Fees and Services

Deloitte  &  Touche  LLP  (“Deloitte  &  Touche”),  audited  the  Company’s  accounts  for  the  fiscal  years  ended  March  31,  2020  and  March  31,  2019.  Deloitte  &
Touche has served as the Company’s independent auditors since 2006.

Set forth below are the fees billed to the Company by Deloitte & Touche in connection with services rendered during the fiscal years ended March 31, 2019 and
March 31, 2020:

Audit Fees (1)

Audit-Related Fees (2)

Tax Fees (3)

All Other Fees (4)

Total

FY2019

FY2020

5,652,324  $

1,608,850 

19,000 

— 

7,091,500 

2,549,650 

12,000 

2,695 

7,280,174  $

9,655,845 

$

$

(1) Audit Fees. Audit Fees consist of professional services rendered in the audit of the Company’s annual financial statements, review of the Company’s quarterly
financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as comfort letters, statutory audits,
attest services, consents and assistance with reporting requirements.

(2) Audit-Related Fees. Audit-Related  Fees  consist  of  assurance  and  related  services  performed  by  the  independent  auditor  that  are  reasonably  related  to  the
performance  of  the  audit  or  review  of  financial  statements  and  may  include,  among  others,  employee  benefit  plan  audits,  due  diligence  related  to  mergers  and
acquisitions, internal control reviews and consultation regarding financial accounting and reporting standards.

(3) Tax Fees. Tax Fees consist of services performed by the independent auditor for tax compliance, tax planning and tax advice.

(4) All Other Fees. There were no fees billed or services rendered by Deloitte & Touche during fiscal years 2019 and 2020 other than those described above.

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be provided by the independent auditors. These services include
audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of service and is subject to a
specific budget. The Audit Committee requires the independent auditors and management to report at Audit Committee meetings throughout the year on the actual
fees charged for each category of service.

128

During  the  year,  circumstances  may  arise  when  it  may  become  necessary  to  engage  the  independent  auditors  for  additional  services  not  contemplated  in  the
original pre-approval. In those instances the Audit Committee requires specific pre-approval before engagement. The Audit Committee has delegated pre-approval
authority to the Chairman of the Audit Committee for those instances when pre-approval is needed prior to a scheduled Audit Committee meeting. The Chairman
of the Audit Committee must report on such pre-approvals at the next scheduled Audit Committee meeting.

Item 15. Exhibits, Financial Statement Schedules

PART IV

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. The following consolidated financial statements of Old Holdco, Inc. (formerly Pyxus International, Inc.) and Subsidiaries are filed as part of this report

under Item 8. Financial Statements and Supplementary Data:         

Consolidated Statements of Operations - Years ended March 31, 2020, 2019, and 2018
Consolidated Statements of Comprehensive (Loss) Income - Years ended March 31, 2020, 2019, and 2018
Consolidated Balance Sheets - March 31, 2020 and 2019
Consolidated Statements of Stockholders' Equity - Years ended March 31, 2020, 2019, and 2018
Consolidated Statements of Cash Flows - Years ended March 31, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm

2. All other financial statement schedules are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

129

(b) The following documents are filed as exhibits to this report pursuant to Item 601 of Regulation S-K:

2.01 Order dated August 24, 2020 issued by the United States Bankruptcy Court for the District of Delaware in the case captioned In re Pyxus
International,  Inc.,  et  al.  (Case  No.  20-11570  (LLS)),  incorporated  by  reference  to  Exhibit  2.1 of  the  Current  Report  on  Form  8-K,  filed
August 24, 2020 (SEC File No. 001-13684).

2.02 Amended Joint Prepackaged Chapter 11 Plan of Reorganization filed by the Debtors in the case before the United States Bankruptcy Court
for the District of Delaware captioned In re Pyxus International, Inc., et al. (Case No. 20-11570 (LLS)), incorporated by reference to Exhibit
2.2 of the Current Report on Form 8-K, filed August 24, 2020 (SEC File No. 001-13684).

3.01 Amended and Restated Articles of Incorporation, as amended (filed herewith).

3.02 Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K, filed February 24, 2020 (SEC

File No. 001-13684).

4.01 Specimen  of  Common  Stock  certificate,  incorporated  by  reference  to  Exhibit  4.01  of  the  Quarterly  Report  on  Form  10-Q  for  the  period

ended September 30, 2018, filed November 7, 2018 (SEC File No. 001-13684).

4.02 Indenture dated as of August 1, 2013 among Alliance One International, Inc., Law Debenture Trust Company of New York, as trustee, Law
Debenture Trust Company of New York, as collateral trustee, and Deutsche Bank Trust Company Americas, as registrar and paying agent,
relating to 9.875% Senior Secured Second Lien Notes due 2021, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-
K dated August 1, 2013 of the Company (SEC File No. 001-13684).

4.03 Indenture dated as of October 14, 2016 among Alliance One International, Inc., Alliance One Specialty Products, LLC, as initial guarantor,
and The Bank of New York Mellon Trust Company, N.A., as trustee, collateral agent, registrar and paying agent, incorporated by reference
to Exhibit 4.1 to the Current Report on Form 8-K dated October 14, 2016 of the Company (SEC File No. 001-13684).

4.04 Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (filed herewith).

10.01 Amended  and  Restated  Receivables  Purchase  Agreement  dated  as  of  March  30,  2012  among  Alliance  One  International,  Inc.,  Finacity
Receivables 2006-2, LLC and Finacity Corporation, incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form
10-K for the year ended March 31, 2012, filed June 13, 2012 (SEC File No. 001-13684).

10.02 Second  Amended  and  Restated  Receivables  Purchase  Agreement  dated  as  of  March  30,  2012  among  Alliance  One  International  AG,
Finacity Receivables 2006-2, LLC and Finacity Corporation, incorporated by reference to Exhibit 10.32 to the Company's Annual Report on
Form 10-K for the year ended March 31, 2012, filed June 13, 2012 (SEC File No. 001-13684).

10.03 Second Amended and Restated Receivables Sale Agreement dated as of March 30, 2012 among Finacity Receivables 2006-2, LLC, Finacity
Corporation, Alliance One International AG, Norddeutsche Landesbank Girozentrale, Standard Chartered Bank, the other Purchaser Agents
from  time  to  time  party  thereto,  the  Bank  Purchasers  from  time  to  time  party  thereto,  Hannover  Funding  Company  LLC,  and  the  other
Conduit Purchasers from time to time party thereto, incorporated by reference to Exhibit 10.33 to the Company's Annual Report on Form
10-K for the year ended March 31, 2012, filed June 13, 2012 (SEC File No. 001-13684).

10.04 Amended  and  Restated  Alliance  One  International,  Inc.  2007  Incentive  Plan,  incorporated  by  reference  to  Appendix  A  to  the  definitive

proxy statement of the Company filed on July 11, 2011 (SEC File No. 001-13684).*

10.05 Pyxus International, Inc. Amended and Restated 2016 Incentive Plan (incorporated by reference to Appendix A to the Proxy Statement on

Schedule 14A filed by Pyxus International, Inc. on July 15, 2019 (SEC File No. 001-13684)).*

10.06 Form of Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for

the period ended December 31, 2010, filed February 4, 2011 (SEC File No. 001-13684).*

10.07 Form of Restricted  Stock Unit Agreement (Supplemental  Award), incorporated  by reference  to Exhibit 10.3 to the Company’s Quarterly

Report on Form 10-Q for the period ended December 31, 2010, filed February 4, 2011 (SEC File No. 001-13684).*

10.08 Form of Performance-based Stock Unit Award Agreement, incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on

Form 10-Q for the period ended December 31, 2010, filed February 4, 2011 (SEC File No. 001-13684).*

10.09 Form of Non-Qualified Stock Option Award Agreement incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form

8-K, filed on March 28, 2011 (SEC File No 001-13684).*

10.10 DIMON Incorporated 2003 Incentive Plan, incorporated by reference to Exhibit 10.14 of the Company’s Annual Report on Form 10-K for the

year ended March 31, 2004, filed June 10, 2004 (SEC File No. 001-13684).*

10.11 Alliance One International, Inc. Pension Equity Plan (amended and restated effective January 1, 2009), incorporated by reference to Exhibit
10.04 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2008, filed February 17, 2009 (SEC File No. 001-
13684).*

10.12 Alliance  One  International,  Inc.  Supplemental  Retirement  Account  Plan  (amended  and  restated  as  of  January  1,  2009),  incorporated  by
reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended December 31, 2008, filed February 17, 2009
(SEC File No. 001-13684).*

10.13 Executive Employment Agreement dated as of March 1, 2013 between Alliance One International, Inc. and J. Pieter Sikkel, incorporated by

reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed February 7, 2013 (SEC File No. 001-13684).*

10.14 Summary of executive officer compensation arrangements (filed herewith).*

21 List of subsidiaries (filed herewith).

31.01 Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.02 Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32 Certification by Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished

herewith).**

101 The following materials from the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2020, formatted in XBRL: (i)
Consolidated  Statements  of  Operations  for  the  three  years  ended  March  31,  2020,  2019  and  2018;  (ii)  Consolidated  Statements  of
Comprehensive (Loss) Income for the three years ended March 31, 2020, 2019 and 2018; (iii) Consolidated Balance Sheets as of March 31,
2020  and  2019;  (iv)  Consolidated  Statements  of  Stockholders'  Equity  for  the  three  years  ended  March  31,  2020,  2019  and  2018;  (v)
Consolidated  Statements  of  Cash  Flows  for  the  three  years  ended  March  31,  2020,  2019  and  2018;  (vi)  Notes  to  Consolidated  Financial
Statements; and (vii) Schedule II - Valuation and Qualifying Accounts (submitted herewith)

*Indicates management compensatory plan, contract or arrangement.
**This exhibit is furnished herewith, but not deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise
subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities
Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.

Instruments with respect to long-term debt, the amount of securities authorized thereunder being less than ten percent of the Company's consolidated assets,
have been omitted and the Company agrees to furnish such instruments to the Securities and Exchange Commission upon request.

Item 16. Form 10-K Summary

None.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on August 24, 2020.

SIGNATURES

OLD HOLDCO, INC. (Registrant)

By: /s/ J. Pieter Sikkel

J. Pieter Sikkel 
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities indicated on August 24, 2020.

/s/ J. Pieter Sikkel

J. Pieter Sikkel  
President and Chief Executive Officer and Director 
(Principal Executive Officer)

/s/ Joel L. Thomas

Joel L. Thomas 
Executive Vice President and Chief Financial Officer 
(Principal Financial Officer)

/s/ Philip C. Garofolo

Philip C. Garofolo 
Vice President - Controller 
(Principal Accounting Officer)

/s/ Jeffrey A. Eckmann

Jeffrey A. Eckmann 
Director

/s/ Joyce L. Fitzpatrick

Joyce L. Fitzpatrick 
Director

/s/ C. Richard Green, Jr.

C. Richard Green Jr. 
Director

/s/ Donna H. Grier

Donna H. Grier 
Director

/s/ Nigel G. Howard

Nigel G. Howard 
Director

/s/ Mark W. Kehaya

Mark W. Kehaya 
Director

/s/ John D. Rice

John D. Rice 
Director

 /s/ Nathan A. Richardson

Nathan A. Richardson 
Director

/s/ Martin R. Wade, III

Martin R. Wade, III 
Chairman

AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF

ALLIANCE ONE INTERNATIONAL, INC.

ARTICLE I

Exhibit 3.01

The name of the Corporation is Alliance One International, Inc.

ARTICLE II

The purpose for which the Corporation is formed is to transact any or all lawful business, not required to be specifically stated in these Articles,

for which corporations may be incorporated under the Virginia Stock Corporation Act, as amended from time to time (the “VSCA”).

ARTICLE III

The Corporation shall have the authority to issue 250 million shares of Common Stock, without par value, and 10 million shares of Preferred

Stock, without par value. The rights, preferences, voting powers and qualifications, limitations and restrictions of the authorized stock shall be as
follows:

A. Common Stock

1. Each share of Common Stock shall be entitled to one vote on all matters submitted to a vote at any meeting of shareholders.

2. Except as otherwise required by the VSCA or the Board of Directors acting pursuant to Section 13.1-707 of the VSCA:

(a) Any corporate action, except the election of directors, an amendment or restatement of these Articles,  a merger, a statutory share exchange,

the sale or other disposition of all or substantially all the Corporation’s assets otherwise than in the usual and regular course of business, or dissolution
shall, for each voting group entitled to vote on the matter, be approved at a meeting at which a quorum of the voting group is present if the votes cast in
favor of the action exceed the votes cast against the action;

(b) Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present;

and

(c) An amendment or restatement of these Articles, a merger, a statutory share exchange, the sale or other disposition of all or substantially all the

Corporation’s assets other than in the usual and regular course of business, or dissolution shall, for each voting group entitled to vote on the matter, be
approved at a meeting by a majority of the votes entitled to be cast by each voting group that is entitled to vote on the matter.

3. Subject to the rights of holders of Preferred Stock and subject to any other provisions of these Articles or any amendment hereto, holders of

Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation as may be declared
thereon by the Board of Directors from time to time.

B. Preferred Stock

The Board of Directors may determine the preferences, limitations and relative rights, to the extent permitted by the VSCA, of any class of shares
of Preferred Stock before the issuance of any shares of that class, or of one or more series within a class before the issuance of any shares of that series.
Each class or series shall be appropriately designated by a distinguishing designation prior to the issuance of any shares thereof. The Preferred Stock of
all series shall have preferences, limitations and relative rights identical with those of other shares of the same series and, except to the extent otherwise
provided in the description of the series, with those of shares of other series of the same class.

Prior to the issuance of any shares of a class or series of Preferred Stock, (1) the Board of Directors shall establish such class or series by adopting

a resolution and by filing with the State Corporation Commission of Virginia articles of amendment setting forth the designation and number of shares
of the class or series and the relative rights and preferences thereof, and (2) the State Corporation Commission of Virginia shall have issued a certificate
of amendment.

No holder of shares of any class of the Corporation shall have any preemptive or preferential right to purchase or to subscribe to: (A) any shares

of any class of the Corporation, whether now or hereafter authorized; (B) any warrants, rights, or options to purchase any such shares; or (C) any
securities or obligations convertible into any such shares or into warrants, rights or options to purchase any such shares.

ARTICLE IV

Board of Directors

ARTICLE V

The number of directors shall be set forth in the bylaws of the Corporation, as may be amended from time to time (the “Bylaws”), but in the
absence of such a provision in the Bylaws, the number of directors of the Corporation shall be 13. The Board of Directors of the Corporation shall be
divided into three classes, Class I, Class II and Class III, as nearly equal in number as possible. At each annual meeting of shareholders, the successors
to the class of directors whose terms then shall expire shall be identified as being of the same class as the directors they succeed and elected to hold
office for a term expiring at the third succeeding annual meeting of shareholders. When the number of directors is changed, any newly-created
directorships or any decrease in directorships shall be apportioned among the classes by the Board of Directors as to make all classes as nearly equal in
number as possible. Unless otherwise provided in the Bylaws of the Corporation, if any director resigns or retires as a member of the Board of Directors
of the Corporation or otherwise becomes unable or unwilling to serve as a director, the remaining directors shall fill such vacancy by appointing a
director, and such newly elected director shall hold office for a term expiring at the next annual meeting of the shareholders.

A. Definitions

ARTICLE VI

For purposes of this Article, the following terms shall have the meanings indicated:

(1) “applicant” means the person seeking indemnification pursuant to this Article;

(2) “expenses” includes counsel fees;

(3) “liability” means the obligation to pay a judgment, settlement, penalty, fine, including any excise tax assessed with respect to an employee

benefit plan, or reasonable expenses incurred with respect to a proceeding;

(4) “party” includes an individual who was, is or is threatened to be made a named defendant or respondent in a proceeding; and

(5) “proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative

and whether formal or informal.

B. Limitation of Liability

In any proceeding brought by a shareholder of the Corporation in the right of the Corporation or brought by or on behalf of shareholders of the
Corporation, no director or officer of the Corporation shall be liable to the Corporation or its shareholders for monetary damages with respect to any
transaction, occurrence or course of conduct, whether prior or subsequent to the date hereof, except for liability resulting from such person’s having
engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law.

C.

Indemnification

The Corporation shall indemnify (1) any person who is, was or is threatened to be made a party to any  proceeding, including a proceeding
brought by a shareholder in the right of the Corporation or brought by or on behalf of shareholders of the Corporation, by reason of the fact that such
person is or was a director or officer of the Corporation, and (2) any director or officer of the Corporation who is or was serving at the request of the
Corporation as a director, trustee, partner or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise,
against any liability incurred by such person in connection with such proceeding except that the Corporation shall make no indemnity against the willful
misconduct or knowing violation of the criminal law of any director or officer. A person is considered to be serving an employee benefit plan at the
Corporation’s request if such person’s duties to the Corporation also impose duties on, or otherwise involve services by, such person to the plan or to
participants in or beneficiaries of the plan. The Corporation shall promptly take all such actions, and make all such determinations, as shall be necessary
or appropriate to comply with its obligations to make any indemnity under this Article and shall promptly pay or reimburse all reasonable expenses,
including attorneys’ fees, incurred by any such person in connection with such actions and determinations or proceedings of any kind arising therefrom.

D. Application; Amendment

The provisions of this Article shall be applicable to all proceedings commenced after March 31, 1995 (the initial effective date of Amended and

Restated Articles of Incorporation of the Corporation), arising from any act or omission, whether occurring before or after such date. No amendment or
repeal of this Article shall have any effect on the rights provided under this Article with respect to any act or omission occurring prior to such
amendment or repeal. Nothing in this Article shall restrict the right or obligation of the Corporation under law or under the Bylaws of the Corporation
to provide such other indemnity permissible by law.  

E. Termination of Proceeding

The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not of

itself create a presumption that the applicant engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities
law.

F. Determination of Availability

The Corporation shall take action to indemnify a person seeking indemnification pursuant to this Article VI unless the Corporation determines,

within a reasonable time following such person’s demand upon the Corporation for indemnification, that such person is not entitled to indemnification
pursuant to the terms of this Article VI and applicable law. The determination shall be made:

(a) by the Board of Directors by a majority vote of a quorum consisting of directors not at the time  parties to the proceeding;

(b) if a quorum cannot be obtained under clause (a) of this Article VI(F), by majority vote of a committee duly designated by the Board of
Directors (in which designation directors who are parties may participate), consisting solely of two or more directors not at the time parties to the
proceeding; or

(c) by special legal counsel

(i) selected by the Board of Directors or its committee in the manner prescribed in clause (a) or (b)
of this Article VI(F),

(ii) if a quorum of the Board of Directors cannot be obtained under clause (a) of this Article VI(F)
and a committee cannot be designated under clause (b) of this Article VI(F), selected by a
majority vote of the full Board of Directors, in which selection directors who are parties may
participate, or

(iii) by the holders of Common Stock, but shares owned by or voted under the control of directors
who are at the time parties to the proceeding may not be voted on the determination.

Notwithstanding the foregoing, in the event there has been a change in the composition of a majority of the Board of Directors after the date of the

alleged act or omission with respect to which indemnification, an advance or reimbursement is claimed, other than through successor Directors
approved by the Board of Directors, any determination as to such indemnification, advance or reimbursement shall be made by special legal counsel
agreed upon by the Board of Directors and the eligible person. If the Board of Directors and the eligible person are unable to agree upon such special
legal counsel, the Board of Directors and the eligible person each shall select a nominee, and the nominees shall select such special legal counsel.

G. Advances

1. Unless a determination has been made pursuant to Article VI(F) that indemnification is not permissible, the Corporation (i) shall make advances
and reimbursements for expenses incurred by a director or officer of the Corporation, in any capacity, and (ii) shall, to the extent approved by action of
the Board of Directors, make advances and reimbursements for expenses incurred by any person who is or was serving at the request of the Corporation
as a director, trustee, partner or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in each case in
a proceeding upon receipt of:

(a) a written statement of such director’s or officer’s good faith belief that he has met the standard of conduct described in Article VI(C); and

(b) a written undertaking from such director or officer, executed personally or on his behalf, to repay such advance or reimbursement if it is
ultimately determined that such director or officer did not meet such standard of conduct.

2. The undertaking required by Article VI(G)(1)(b) shall be an unlimited, unsecured general obligation of the director or officer and shall be

accepted without reference to such director’s or officer’s financial ability to make repayment.

3. Authorizations of payments under this section shall be made by the persons specified in Article VI(F), except that if the determination is made

by special legal counsel, such authorization and evaluations shall be made by those entitled under clause (c) of this Article VI(F) to select counsel.

H. Indemnification of Other

The Board of Directors is hereby empowered, by majority vote of a quorum consisting of disinterested directors, to cause the Corporation to
indemnify or contract to indemnify any person not specified in Article VI(C) who was, is or is threatened to be made a party to any proceeding, by
reason of the fact that such person is or was an employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, to the same extent as if
such person was specified as one to whom indemnification is granted in Article VI(C). The provisions of Article VI(D), (E), (F) and (G) shall be
applicable to any indemnification provided hereafter pursuant to this Article VI(H).

I.

Insurance

The Corporation may purchase and maintain insurance to indemnify it against the whole or any portion of the liability assumed by it in accordance

with this Article and may also procure insurance, in such amounts as the Board of Directors may determine, on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability asserted against or incurred by him
in any such capacity or arising from his status as such, whether or not the Corporation would have power to indemnify him against such liability under
the provisions of this Article.

J. Further Indemnity

Every reference herein to directors, officers, employees or agents shall include former directors, officers, employees and agents and their

respective heirs, executors and administrators. The indemnification hereby provided and provided hereafter pursuant to the power hereby conferred by
this Article on the Board of Directors shall not (1) be exclusive of any other rights to which any person may be entitled, including any right under
policies of insurance that may be purchased and maintained by the Corporation or others, with respect to claims, issues or matters in relation to which
the Corporation would not have the power to indemnify such person under the provisions of this Article; provided, however, that no person shall be
entitled to indemnification from the Corporation to the extent that such person has otherwise been indemnified by another person or entity, including
but not limited to indemnification under policies of insurance, or (2) prevent or restrict the power of the Corporation to make or to provide for any
further indemnity, or provisions for determining entitlement to indemnity, pursuant to one or more indemnification agreements, bylaws, or other
arrangements (including, without limitation, creation of trust funds or security interests funded by letters of credit or other means) approved by the
Board of Directors (whether or not any of the directors of the Corporation shall be a party to or beneficiary of any such agreements, bylaws or
arrangements); provided, however, that any provision of such agreements, bylaws or other arrangements shall not be effective if and to the extent that it
is determined to be contrary to this Article or applicable laws of the Commonwealth of Virginia.

K. Severability

Each provision of this Article shall be severable, and an adverse determination as to any such provision shall in no way affect the validity of any

other provisions.

ARTICLES OF AMENDMENT OF THE

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
ALLIANCE ONE INTERNATIONAL, INC.

I. The name of the corporation is Alliance One International, Inc. (the “Corporation”).

II. The amendment (the “Amendment”) adopted is as follows:

The Corporation’s Amended and Restated Articles of Incorporation are amended by adding the following provision at the

end of Article III(A):

4. As of 11:59 p.m. (Eastern Time) on June 26, 2015 (the “Effective Time”), without further action of any kind
on the part of the Corporation or its shareholders, every ten shares of Common Stock outstanding or held by
the  Corporation  in  its  treasury  shall  be  combined,  changed  and  reclassified  into  one  (1)  validly  issued,  fully
paid and non-assessable share of Common Stock, without par value, without any other change in the powers,
preferences and rights or qualifications, limitations or restrictions thereof. There shall be no fractional shares
issued as a result of such combination, change and reclassification, and a holder of record of Common Stock at
the Effective Time who would otherwise be entitled to a fraction of a share shall, in lieu thereof, be entitled to
receive  one  full  share  of  Common  Stock.  Each  certificate  that  immediately  prior  to  the  Effective  Time
represented shares of Common Stock (the “Old Certificates”) shall at and after the Effective Time confer no
right upon the holders thereof other than the right to exchange them for certificates representing that number of
shares  of  Common  Stock  into  which  the  shares  of  Common  Stock  represented  by  the  Old  Certificates  shall
have  been  combined,  changed  and  reclassified,  subject  to  the  adjustment  for  fractional  share  interests  as
described above, pursuant to the provisions hereof.

III.  The  foregoing  Amendment  was  proposed  by  the  Corporation’s  Board  of  Directors,  which  found  adoption  of  the
Amendment  to  be  in  the  Corporation’s  best  interest  and  directed  that  the  Amendment  be  submitted  to  a  vote  at  a  meeting  of  the
Corporation’s shareholders on May 27, 2015.

IV. On April 24, 2015, notice of the meeting of the Corporation’s shareholders, accompanied by a copy of this Amendment,

was given in the manner provided in the Virginia Stock Corporation Act to each of the Corporation’s shareholders of record.

V. The designation, number of outstanding shares, and number of votes entitled to be cast by each voting group entitled to

vote separately on the Amendment was:

Designation
Common Stock, no par value

Number of 
Outstanding Shares
96,436,220

Number of Votes Entitled to be
Cast
88,583,099

The total number of votes cast for and against the Amendment, and the number of abstentions, by each voting group entitled

to vote separately on the Amendment was:

Voting Group
Common Stock, no par value

Votes “For”
51,032,441

Votes “Against
28,835,047

Abstentions
399,251

The total number of votes cast for the Amendment by each voting group was sufficient for approval of the Amendments by

the voting group.

VI.  Pursuant  to  Section  13.1-606  of  the  Virginia  Stock  Corporation  Act,  this  Amendment  shall  become  effective  at  11:59

p.m., Eastern Time, on June 26, 2015.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of Amendment to be executed by its duly

authorized President and Chief Executive Officer as of this 25th day of June, 2015.

ALLIANCE ONE INTERNATIONAL, INC.,
a Virginia corporation

By: /s/ J. Pieter Sikkel
Name: J. Pieter Sikkel
Title: President and Chief Executive Officer

ARTICLES OF AMENDMENT OF THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
ALLIANCE ONE INTERNATIONAL, INC.

I. The name of the corporation is Alliance One International, Inc. (the “Corporation”).

II. The amendment (the “Amendment”) adopted is as follows:

The Corporation’s Amended and Restated Articles of Incorporation are amended by amending Article I to read as follows:

“The name of the Corporation is Pyxus International, Inc.”

III. The foregoing Amendment was proposed by the Corporation’s Board of Directors, which found adoption of the Amendment to be

in the Corporation’s best interest and directed that the Amendment be submitted to a vote at a meeting of the Corporation’s shareholders on
August 16, 2018.

IV. On July 16, 2018, notice of the meeting of the Corporation’s shareholders, accompanied by a copy of this Amendment, was given

in the manner provided in the Virginia Stock Corporation Act to each of the Corporation’s shareholders of record.

V. The designation, number of outstanding shares, and number of votes entitled to be cast by each voting group entitled to vote

separately on the Amendment was:

Designation
Common Stock, no par value

Number of Outstanding Shares
9,821,535

Number of Votes Entitled
to be 
Cast
9,036,222

The total number of votes cast for and against the Amendment, and the number of abstentions, by each voting group entitled to vote

separately on the Amendment was:

Voting Group
Common Stock, no par value

Votes “For”
6,798,968

Votes “Against”
272,999

Abstentions
26,811

The total number of votes cast for the Amendment by each voting group was sufficient for approval of the Amendments by the voting

group.

VI. Pursuant to Section 13.1-606 of the Virginia Stock Corporation Act, this Amendment shall become effective at 12:01 a.m.,

Eastern Time, on September 12, 2018.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned corporation has caused these Articles of Amendment to be executed by its duly

authorized President and Chief Executive Officer as of this 7th day of September, 2018.

ALLIANCE ONE INTERNATIONAL, INC.,
a Virginia corporation

By: /s/ J. Pieter Sikkel
Name: J. Pieter Sikkel
Title: President and Chief Executive Officer

ARTICLES OF AMENDMENT OF THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
PYXUS INTERNATIONAL, INC.

The undersigned, on behalf of the corporation set forth below, pursuant to Title 13.1, Chapter 9, Article 1, Section 604.1 of

the Code of Virginia, states as follows:

I. The name of the corporation is Pyxus International, Inc. (the “Corporation”).

II. Article I of the Corporation’s Amended and Restated Articles of Incorporation is amended and restated in its entirety to

read as follows:

“The name of the Corporation is Old Holdco, Inc.”

III. The Corporation’s Amended and Restated Articles of Incorporation are further amended by including the following as

Article VII thereof:

“ARTICLE VII

“The Corporation shall not issue nonvoting equity securities (as such term is defined in Section 101(16) of
the United States Bankruptcy Code (“Bankruptcy Code”)) to the extent prohibited by Section 1123(a)(6) of
the Bankruptcy Code for so long as such Section 1123(a)(6) is in effect and applicable to the Corporation.”

IV. The foregoing amendments (the “Amendments”) were approved by the order (the “Confirmation Order”) of the U.S.

Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) dated August 20, 2020 in the cases under Chapter 11 of the
U.S. Bankruptcy Code of the Corporation, Alliance One International, LLC, Alliance One North America, LLC, Alliance One
Specialty Products, LLC and GSP Properties, LLC being jointly administered under the caption “In re: Pyxus International, Inc., et
al., Debtors” (Case No. 20-11570 (LSS)) (the “Chapter 11 Cases”). The Bankruptcy Court had jurisdiction with respect to the
Chapter 11 Cases under federal statute. Pursuant to the Confirmation Order, the undersigned individual has been designated by the
Bankruptcy Court to file these Articles of Amendment on behalf of the Corporation.

V. Pursuant to Section 13.1-606 of the Virginia Stock Corporation Act, the Amendments shall become effective at 10:59

a.m., Eastern Time, on August 24, 2020.

[Signature Page Follows]

IN WITNESS WHEREOF, pursuant to the Confirmation Order, the undersigned corporation has caused these Articles of

Amendment to be executed by its duly authorized President and Chief Executive Officer as of this 21st day of August, 2020.

PYXUS INTERNATIONAL, INC.,
a Virginia corporation

By: /s/ J. Pieter Sikkel
Name: J. Pieter Sikkel
Title: President and Chief Executive Officer
SCC ID No. 04354452

DESCRIPTION OF SECURITIES REGISTERED
UNDER SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

EXHIBIT 4.04

The following is a description of the material terms of the common stock, without par value, of Old Holdco, Inc. (“Pyxus” or the “Company”),

which as of the date of the Company’s most recent Form 10-K filed with the Securities and Exchange Commission is the only security of the
Company registered under Section 12 of the Securities Exchange Act of 1934, as amended. The following description should be read in conjunction
with the Company’s amended and restated articles of incorporation, as amended (the “Articles of Incorporation”), and its amended and restated
bylaws (the “Bylaws”), as most recently filed as exhibits to the Company’s periodic reports filed with Securities and Exchange Commission. Upon the
effectiveness of the Plan, all outstanding shares of the Company's common stock are cancelled.

Governing Law

Pyxus is incorporated under the laws of the Commonwealth of Virginia and its internal affairs are governed by the laws of the

Commonwealth of Virginia, including the Virginia Stock Corporation Act (the “VSCA”).

Authorized Capital Stock

The Company’s authorized capital stock consists of 250,000,000 shares of common stock, without par value (the “Common Stock”), and

10,000,000 shares of preferred stock, without par value (the “Preferred Stock”). The cover page of the Company’s most recent Form 10-K filed with
Securities and Exchange Commission sets forth the number of shares of Common Stock outstanding as of a recent date. As of the date of the
Company’s most recent report on Form 10-K filed with the Securities and Exchange Commission, no shares of Preferred Stock were issued and
outstanding.

Common Stock

Voting Rights. Holders of Common Stock are entitled to one vote per share on all matters submitted to a vote at any meeting of

shareholders. Except as otherwise required by the VSCA, the board of directors acting pursuant to Section 13.1-707 of the VSCA, or the provisions
of the Articles of Incorporation (as described below), shareholder action is effective if the votes cast in favor of the action exceed the votes cast
against the action. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election. Under the VSCA, cumulative
voting in the election of directors is permitted if authorized in a corporation’s articles of incorporation. The Articles of Incorporation do not include a
provision authorizing cumulative voting.

The Articles of Incorporation provide that an amendment or restatement of the Articles of Incorporation, a merger, a statutory share

exchange, dissolution or the sale or other disposition of all or substantially all the Company’s assets other than in the usual and regular course of
business requires the approval of a majority of the votes entitled to be cast by each voting group that is entitled to vote on the matter.

Dividend Rights. Subject to the rights of holders of Preferred Stock, if any, holders of shares of Common Stock are entitled to receive

dividends and other distributions in cash, stock or property of Pyxus as may be declared by the Company’s board of directors from time to time.

Preemptive Rights. Holders of Common Stock have no preemptive or preferential right to purchase or to subscribe to any shares of any

class of Pyxus, whether now or hereafter authorized, any warrants, rights, or options to purchase any such shares or any securities or obligations
convertible into any such shares or into warrants, rights or options to purchase any such shares.

Preferred Stock

The Company’s board of directors may determine the preferences, limitations and relative rights, to the extent permitted by the VSCA, of

any class of shares of Preferred Stock before the issuance of any shares of that class, or of one or more series within a class before the issuance of
any shares of that series. Each class or series shall be appropriately designated by a distinguishing designation prior to the issuance of any shares
thereof. The Preferred Stock of all series shall have preferences, limitations and relative rights identical with those of other shares of the same series
and, except to the extent otherwise provided in the description of the series, with those of shares of other series of the same class. Prior to the
issuance of any shares of a class or series of Preferred Stock, the board of directors must establish such class or series by adopting a resolution
and by filing with the State Corporation Commission of Virginia articles of amendment to the Articles of Incorporation setting forth the designation
and number of shares of the class or series and the relative rights and preferences thereof.

Anti-Takeover Provisions

The Articles of Incorporation, the Bylaws and the VSCA contain provisions that may have the effect of impeding the acquisition or control of

Pyxus by means of a tender offer, a proxy fight, open market purchases or otherwise in a transaction not approved by the Company’s board of
directors. These provisions are designed to reduce, or have the effect of reducing, the Company’s vulnerability to an unsolicited proposal for the
restructuring or sale of all or substantially all of its assets or an unsolicited takeover attempt that is unfair to its shareholders.

Authority to Issue Preferred Stock

Under the Articles of Incorporation, the Company’s board of directors may determine the preferences, limitations and relative rights, to the

extent permitted by the VSCA, of any class of shares of Preferred Stock before the issuance of any shares of that class, or of one or more series
within a class before the issuance of any shares of that series. Under this authority, the board of directors could create and issue a class or series of
Preferred Stock with rights, including voting rights, or preferences superior to the Common Stock or with rights, preferences or restrictions that have
the effect of discriminating against an existing or prospective holder of the Company’s capital stock as a result of such holder beneficially owning, or
commencing a tender offer for, a substantial amount of the Common Stock. One of the effects of authorized but unissued and unreserved shares of
Preferred Stock may be to render it more difficult for, or discourage an attempt by, a potential acquiror to obtain control of Pyxus by means of a
merger, tender offer, proxy contest or otherwise. The issuance of shares of Preferred Stock may have the effect of delaying, deferring or preventing
a change in control of Pyxus without any further action by the Company’s shareholders.

Classified Board of Directors

The Articles of Incorporation provide that the board of directors of the Company are divided into three classes as nearly equal in number as
possible. At each annual meeting of shareholders, the successors to the class of directors whose terms then shall expire shall be identified as being
of the same class as the directors they succeed and shall be elected to hold office for a term expiring at the third succeeding annual meeting of
shareholders. When the number of directors is changed, any newly-created directorships or any decrease in directorships shall be apportioned
among the classes by the

2

board of directors to make all classes as nearly equal in number as possible. The Articles of Incorporation provide that, unless otherwise provided in
the Bylaws (and the Bylaws currently do not otherwise provide), if any director resigns or retires as a member of the board of directors or otherwise
becomes unable or unwilling to serve as a director, the remaining directors shall fill such vacancy by appointing a director, and such newly elected
director shall hold office for a term expiring at the next annual meeting of the shareholders.

The classified board of directors is intended to provide continuity of directors and to retain directors with in-depth knowledge of the

Company’s business. The classified board of directors will not prevent an acquisition that is approved by the board of directors. However, the
classified board of directors could have anti-takeover effects by delaying the ability of a party to obtain control of the Company’s board of directors
by electing a majority of the board of directors in a proxy contest.

Affiliated Transactions Statute

Article 14 of the VSCA contains provisions governing affiliated transactions. In general, these provisions prohibit a Virginia corporation from

engaging in affiliated transactions with any holder of more than 10% of any class of its outstanding voting shares, referred to as an interested
shareholder, for a period of three years following the date that such person became an interested shareholder unless:

•

•

a majority of the “disinterested” members of the board of directors of the corporation and the holders of two-thirds of the voting shares,
other than the shares beneficially owned by the interested shareholder, approve the affiliated transaction; or

before the date the person became an interested shareholder, the “disinterested” members of the board of directors approved the
transaction that resulted in the shareholder becoming an interested shareholder.

After three years, any such transaction must meet certain statutory requirements intended to ensure that the transaction is on fair terms or it must be
approved by the holders of two-thirds of the voting shares, other than the shares beneficially owned by the interested shareholder or by a majority of
the “disinterested” members of the board of directors of the corporation.

The Virginia affiliated transaction statute may have the effect of deterring a potential acquisition of the Company that could be beneficial to

our shareholders, unless approved by the board of directors.

Control Share Acquisitions Statute

The VSCA also contains provisions relating to control share acquisitions, which are transactions causing the voting strength of any person
acquiring beneficial ownership of shares of a Virginia public corporation to meet or exceed specified threshold percentages (20%, 33 1/3% or 50%)
of the total votes entitled to be cast for the election of directors. Shares acquired in a control share acquisition have no voting rights unless the
granting of voting rights with respect to the shares is approved by a majority vote of all the votes that could be cast in a vote on the election of
directors by all the outstanding shares other than those held by the acquiring person or any officer or employee director of the corporation.

The acquiring person may require that a special meeting of the shareholders be held to consider the grant of voting rights to the shares

acquired in the control share acquisition.

The VSCA provides that these provisions relating to control share acquisitions do not apply with respect to a public corporation if at the time
of any control share acquisition the corporation’s articles of incorporation or bylaws provide that the provisions of the VSCA relating to control share
acquisitions do not apply with respect that corporation. The Bylaws contain a provision opting out of the control share acquisitions provisions the
VSCA.

3

Transfer Agent and Registrar

American Stock Transfer & Trust Company is the transfer agent and registrar for the Common Stock.

4

In  addition  to  the  compensation  arrangements  filed  as  other  exhibits  to  this  annual  report,  Old  Holdco,  Inc.  (the  “Company”)  has  the  following  compensation
arrangements with its named executive officers.

Summary of Executive Officer Compensation Arrangements

Compensation Arrangements for Named Executive Officers

The board of directors sets the annual base salary for each of the Company’s chief executive officer, chief financial officer and its next most highly compensated
executive officer (such three officers, the “named executive officers”). As of June 1, 2020, the annual base salary rates for the named executive officers were as
follows:

Exhibit 10.14

Named Executive Officer

Base Salary

J. Pieter Sikkel

Joel L. Thomas

William L. O’Quinn, Jr.

$725,000 

$442,385 

$345,050 

SUBSIDIARIES OF THE COMPANY (consolidated as of March 31, 2020)

Exhibit 21

Name of Subsidiary

Organized Under Law Of:

Alliance One (Beijing) Enterprise Management and Consulting Co. LTD. China

Alliance One Brasil Exportadora de Tabacos Ltda.

Alliance One Cut Rag

Alliance One International GmbH

Alliance One International, LLC

Alliance One International Holdings, Ltd.

Alliance One International Services Limited

Alliance One International Singapore Pte Ltd.

Alliance One International Tabak B.V.

Alliance One International Tobacco, Inc.

Alliance One Macedonia AD

Alliance One Myanmar Co., Ltd.

Alliance One Rotag AG

Alliance One Services (Thailand)

Alliance One Specialty Products, LLC

Alliance One Tobacco (Kenya) Limited

Alliance One Tobacco (Malawi) Limited

Alliance One Tobacco Argentina S.A.

Alliance One Tobacco Bulgaria EOOD

Alliance One Tobacco Canada, Inc.

Alliance One Tobacco d.o.o.

Alliance One Tobacco Guatemala, S.A.

Alliance One Tobacco Tanzania Ltd.

Alliance One Tobacco (Uganda) Limited

Alliance One Tutun A.S.

Alliance One Zambia Ltd.

AOSP Investments LLC

FIGR East, Inc.

Eastern Carolina Packaging, LLC

FIGR Canada Holding ULC

FIGR Norfolk, Inc.

Gadora Tobacco P.S.C.

Global Leaf Trading - FZE

Global Specialty Products, LLC

Humble Juice Co., LLC

Intabex Netherlands BV

Kingolwira Tobacco Company Ltd.

Leaf Trading Company Ltd.

Mashonaland Tobacco Company (Pvt.) Ltd.

Mashonaland Tobacco Holdings (Pvt) Ltd.

Mauritius Tobacco Investments Ltd.

Pureag-NC, LLC

P.T. Alliance One Indonesia

P.T. Indonesia Tri Sembilan

Pyxus Agricultural Holdings Ltd.

Pyxus Agriculture Ltd. (Malawi)

Pyxus Agriculture Tanzania Ltd.

Pyxus Agriculture USA, LLC

Rio Grande Tabacos Ltda.

Standard Commercial SA

Brazil

United States

Switzerland

United States

United Kingdom

United Kingdom

Singapore

The Netherlands

United States

Macedonia

Myanmar

Germany

Thailand

United States

Kenya

Malawi

Argentina

Bulgaria

Canada

Serbia

Guatemala

Tanzania

Uganda

Turkey

Zambia

United States

Canada

United States

Canada

Canada

Jordan

Dubai

United States

California

The Netherlands

Tanzania

Russia

Zimbabwe

Zimbabwe

Mauritius

United States

Indonesia

Indonesia

United Kingdom

Malawi

Tanzania

United States

Brazil

Switzerland

Standard Commercial Tobacco Company (UK) Ltd.

Trans-Continental Leaf Tobacco Corporation Ltd.

Twelfth State Brands, LLC

United Kingdom

Liechtenstein

United States

Name of Subsidiary

World Leaf Trading - Africa

World Leaf Trading - Cayman

World Leaf Trading - FZE

Zip Fulfillment LLC

Organized Under Law Of:

Mauritius

Cayman Islands

Dubai

United States

Pursuant to Item 601(b)(21) of Regulation S–K, the Company has omitted some subsidiaries that, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary as of March 31, 2020 under Rule 1–02(w) of Regulation S–X.

In connection with the effectiveness of the Plan, the Company’s interests in all its subsidiaries have been transferred to Pyxus Holdings, Inc.

I, J. Pieter Sikkel, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Old Holdco, Inc.;

CERTIFICATION

Exhibit 31.01

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in

Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f))
for the registrant and have:

a.

b.

c.

d.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

b.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.

/s/ J. Pieter Sikkel

J. Pieter Sikkel  
President and Chief Executive Officer

August 24, 2020

I, Joel L. Thomas, certify that:

1.

I have reviewed this Annual Report on Form 10-K of Old Holdco, Inc.;

CERTIFICATION

Exhibit 31.02

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in

Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f))
for the registrant and have:

a.

b.

c.

d.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

b.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control
over financial reporting.

/s/ Joel L. Thomas

Joel L. Thomas  
Executive Vice President and Chief Financial Officer

August 24, 2020

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Exhibit 32

Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the
undersigned officers of Old Holdco, Inc., a Virginia corporation (the "Company"), does hereby certify, to such officer's knowledge, that:

The Annual Report on Form 10-K for the fiscal year ended March 31, 2020 (the "Form 10-K") of the Company fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition
and results of operations of the Company.

Dated: August 24, 2020

/s/ J. Pieter Sikkel

J. Pieter Sikkel  
President and Chief Executive Officer

/s/ Joel L. Thomas

Joel L. Thomas 
Executive Vice President and Chief Financial Officer