TORONTO--(BUSINESS WIRE)--DionyMed Brands Inc. (“DionyMed” or the “Company”) (CSE: DYME) (OTCQB: DYMEF), a multi-state cannabis brands, distribution and delivery platform, announced today its consolidated financial results for the fourth quarter and its audited financial results for the fiscal year ended December 31, 2018. All figures are reported in US dollars, unless otherwise indicated.

DionyMed develops and markets its award-winning, wholly-owned “house” brands and sells a curated portfolio of third-party brands. DionyMed reaches customers through its Distribution and Direct-to-Consumer platform. The Distribution business distributes and sells to over 875 retail dispensaries in California and Oregon. The Direct-to-Consumer platform sells products online and delivers directly to customers.

$ in 000s For the three months ended December 31, 2018 For the ten months ended December 31, 2018 Revenue stream Distribution 3,514 8,130 Direct-to-Consumer 1,993 1,993 Total Reported Revenue 5,507 10,123 Gross revenue of logistics product delivered through the Company 1 3,495 6,175 Revenue of total product processed through the Company 9,002 16,298 Hometown Heart prior to Master Services Agreement being effective 7,194 n/a Proforma 16,196 n/a

1 Based on contractual arrangements with these customers, the Company only recognizes the net service fees of the product values processed through its distribution network. The Company is adjusting these contracts to recognize the full value of products with an expected completion date by the end of Q2 2019.

For the three-month period ended December 31, 2018, the Company recognized record revenue of $5.5 million, in addition to $3.5 million of gross value of product processed through the Company for third parties not included in the above, for a total of $9.0 million of product sales by or through the Company in the quarter.

For the ten-month period ended December 31, 2018, the Company recognized revenue of $10.1 million, in addition to $6.2 million of gross value of product processed through the Company for third parties not included in the above, for a total of $16.3 million of product sales by or through the Company during the period.

The Distribution business recorded revenue of $3.5 million plus an additional $3.5 million in gross value of product processed through the Company for a total of $7.0 million of product sales by or through the Company’s distribution business.

The Direct-to-Consumer business recorded revenue of $2.0 million through Hometown Heart, which was consolidated by the Company commencing on December 13, 2018. Hometown Heart recorded an additional $7.2 million of revenue for the quarter, prior to December 13, 2018, for total revenue of Hometown Heart of $9.2 million for the full fourth quarter.

The Company reported Adjusted EBITDA loss of $9.3 million for the fourth quarter of 2018 and $19.0 million for the fiscal year ended December 31, 2018.1

1 Adjusted EBITDA is a non-IFRS measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company believes that Adjusted EBITDA is a realistic indicator of operating performance and is useful in performing year-over-year comparisons. However, this non-IFRS financial measure should be viewed as a supplement to, and not a substitute for, the Company’s results of operations reported under IFRS. Adjusted EBITDA is defined and reconciled in the Company’s management discussion and analysis for the fiscal year ended December 31, 2018, available at www.sedar.com



Fourth Quarter and Fiscal-Year 2018 Highlights

$ in 000s For the three months ended December 31, 2018 For the ten months ended December 31, 2018 Distribution incl. gross revenue of logistics product 1 7,009 14,305 Direct-to-Consumer 1,993 1,993 Revenue of total product processed through the Company 9,002 16,298 Distribution 875 1,898 Direct-to-Consumer 1,086 1,086 Total Gross Profit 1,961 2,984 Gross Margin % 21.7 % 18.3 %

1 Based on contractual arrangements with these customers, the Company only recognizes the net service fees of the product values processed through its distribution network. The Company is adjusting these contracts to recognize the full value of products with an expected completion date by the end of Q2 2019.

Financial

Completed a $25.7 million (C$35 million) pre-RTO financing

Fourth quarter product sales reached $9.0 million, including $5.0 million of products processed through the Company’s Distribution business, but not recorded as revenue

Product sales for the ten-month period ended December 31, 2018 reached $16.3 million, including $6.2 million of gross value of product processed through the Company, but not recorded as revenue

Gross profit was $2.0 million for the fourth quarter, representing a gross margin of 21.7% of Company revenue

Gross profit was $3.0 million for the ten-month period ended December 31, 2018, representing a gross margin of 18.3% of Company revenue

Gross margins in the Distribution business for the three- and ten-month periods ended December 31, 2018 were 12.5% and 13.2%, respectively

Gross margins in the Direct-to-Consumer business were 54.5% for both the three- and ten-month periods ended December 31, 2018

Operational

Acquired the assets of Rise Logistics, a technology-focused distribution company in California, in June 2018

Acquired the assets of Winberry Farms, an award-winning concentrate and vape cartridge brand in Oregon, in August 2018

Effective December 13, 2018, subsequent to exercising its option to acquire all the shares of Hometown Heart (the “Hometown Shares”), the Company transferred all of the Hometown Shares to a single individual who was a former owner of shares of Hometown Heart in consideration for the grant of an irrevocable option (the “Option”) to re-acquire the Hometown Shares for a nominal amount following the receipt of all required regulatory approvals. The Company and Hometown Heart entered into a master services agreement (the “Master Services Agreement”) which gives the Company control over Hometown Heart and provides Hometown Heart with management, labor administration, marketing, branding, professional, banking, record-keeping, intellectual property, governance, and other support services. The Company has consolidated the accounts of Hometown Heart in its consolidated financial accounts since December 13, 2018 as a result of the Master Services Agreement and the Option. Hometown Heart generated total revenue of $8.9 million for the three-month period ended December 31, 2018.

The Company continues to improve its gross margins and platform efficiency to reduce costs and improve its Adjusted EBITDA. The Company remains focused on additional opportunities to grow its platform both organically and through acquisitions in current markets and new markets including Colorado and Michigan.

“In 2018, DionyMed quickly evolved into a leading cannabis brands platform as a result of our dual channel strategy for reaching cannabis consumers in California and beyond. With over 90% penetration into the California retail dispensary market and more than 1 million deliveries from the largest Direct-to-Consumer platform in the industry, DionyMed is increasing brand equity and awareness for both house and third-party cannabis brands.” said Edward Fields, CEO of DionyMed. “Our efforts in 2018 successfully laid the groundwork for growing one of the most efficient cannabis brands platforms, and we are now accelerating growth in contribution margin, new user adoption (six times since the end of the first quarter), and top line revenue (ten times since the end of the first quarter) .”

He continued, “We will continue to scale our dynamic cannabis brands platform building one of the industry’s leading cannabis brand portfolios leading to continued financial growth, with first quarter 2019 revenue increasing to $14.2 million, an increase of 155% from the fourth quarter of 2018. As our award-winning Winberry Farms continues to drive sales and margin expansion in California, Oregon and Nevada. We are adding new brands, including edibles innovator Blue Kudu (pending) and CBD Alive, to our brands portfolio. We remain focused and committed to enhancing our distribution and Direct-to-Consumer fulfillment of these leading cannabis brands in new markets throughout the US as regulations and markets continue to open and evolve.”

To be added to the DionyMed e-mail distribution list, please e-mail DionyMed@kcsa.com with DionyMed in the subject line.

About DionyMed

Founded in 2017, DionyMed is a multi-state cannabis brands platform, supporting cultivators, manufacturers and award-winning brands in the medical and adult-use cannabis markets. DionyMed sells branded products in every category from flower to vape cartridges, concentrates and edibles. DionyMed serves cannabis consumers through retail dispensary distribution and direct-to-consumer fulfillment with its growing portfolio of award-winning brands. Learn more at dionymed.com and follow @DYME_Inc on Twitter and LinkedIn.

Forward-Looking Information and Statements

This news release contains certain "forward-looking information" within the meaning of applicable Canadian securities legislation and may also contain statements that may constitute "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking information and forward-looking statements are not representative of historical facts or information or current condition, but instead represent only the Company’s beliefs regarding future events, plans or objectives, many of which, by their nature, are inherently uncertain and outside of the Company’s control. Generally, such forward-looking information or forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or may contain statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “will continue”, “will occur” or “will be achieved” and include, without limitation, statements with respect to growth of the Chill platform, the expansion of the Company’s US operational footprint and product portfolio, the launch of additional brands such as Blue Kudu, the expansion of the Company’s opportunities in new markets and statements that imply that pending acquisitions will be completed, that acquired brands will be expanded and that acquisitions will provide benefits to the Company and its business and statements with respect to future growth of the Company.

In connection with the forward-looking information and forward-looking statements contained in this press release, the Company has made certain assumptions, including but not limited to: the growth rate of the Chill delivery platform staying the same or increasing, the market for cannabis continuing to grow and expand geographically, future revenues being at least as high as current revenues (for purposes of annualizing revenue), and the Company continuing to identify and successfully acquire brands, assets and businesses that will advance its business objectives .

By identifying such information and statements in this manner, the Company is alerting the reader that such information and statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such information and statements, including but not limited to: uptake of the Chill platform decreasing or the Company not being able to scale the Chill platform, failure to launch additional brands such as Blue Kudu successfully or at all, the Company being unable to complete pending acquisitions, material changes in the Company’s business plan, there being material fluctuations in the Company’s share price and certain other risk factors set out in the annual information form of the Company available on the Company’s profile on SEDAR at www.sedar.com.

Although the Company believes that the assumptions and factors used in preparing, and the expectations contained in, the forward-looking information and statements are reasonable, undue reliance should not be placed on such information and statements, and no assurance or guarantee can be given that such forward-looking information and statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information and statements. The forward-looking information and forward-looking statements contained in this press release are made as of the date of this press release, and the Company does not undertake to update any forward-looking information and/or forward-looking statements that are contained or referenced herein, except in accordance with applicable securities laws. All subsequent written and oral forward-looking information and statements attributable to the Company or persons acting on its behalf is expressly qualified in its entirety by this notice.

The financial filings are available for review on the Company’s SEDAR profile at www.sedar.com.