DENVER, December 10, 2018 – PRESS RELEASE – Dixie Brands Inc., a consumer packaged goods company in the cannabis industry, has announced its financial results for the three-month and year-to-date periods ended Sept. 30, 2018. All figures are stated in U.S. dollars.
“Our revenue growth is accelerating as we realize an increasing return on years of investment in our product portfolio, manufacturing capabilities and distribution network,” said Chuck Smith, president and CEO of Dixie Brands. “With well-recognized brands and over 100 products already being sold in the marketplace, we are well positioned to drive further sales growth through careful deployment of the capital we raised in our recent financing. Our fully-funded business plan targets expansion into four to six new U.S. states and Canada in 2019, applying the successful template we have used in the four states where we already operate. We expect continued momentum in our existing markets combined with expansion both in the U.S. and internationally to generate significant growth in revenue and profitability.”
Financial Highlights
- Revenue was $2,435,000 in the third quarter of 2018, an increase of 110 percent from $1,162,000 of revenue in Q3 2017.
- Year-to-date, revenue was $4,205,000 in 2018, up 60 percent from $2,630,000 in the first nine months of 2017. Growth has been driven by increased sales of Dixie’s THC-infused products in Colorado, Maryland and Nevada, as well as the company’s CBD products.
- Gross profit of $1,038,000 in Q3 2018 was up 102 percent from $514,000 a year earlier, while year-to-date gross profit of $1,936,000 was up 57 percent over 2017. As a percentage of revenue, gross profit margin declined by one percent in both the three-month and nine-month periods, to 43 percent and 46 percent, respectively, as a result of fluctuations in product mix.
- Net loss attributable to the company was $2,404,000 in Q3 2018, compared to $630,000 in Q3 2017. Year-to-date, a net loss of $4,696,000 in 2018 compares to $2,043,000 in 2017. The results were affected by a non-cash charge of $2,187,000, which was recorded in Q3 2018, for the conversion of debt into equity, and by expenses of $803,000 (including $556,000 incurred in Q3 2018) associated with the reverse takeover, Series C financing and public stock listing completed subsequent to Sept. 30. Factoring out these charges, the company would have made a small profit in Q3 2018.
- Dixie had $18,584,000 of cash at Sept. 30, 2018, compared to $44,000 at Dec. 31, 2017. The higher cash balance reflected the receipt of the majority of proceeds from a financing that closed at the beginning of October.
Operating Highlights
- In the third quarter Dixie re-launched operations in California, a state estimated to account for approximately one-third of the total U.S. cannabis market, following a clarification of regulatory requirements in the state. After having established an inventory of products in the third quarter, the company expects to begin generating revenue in California in the fourth quarter of 2018.
- Dixie entered into an agreement with Central Garden & Pet, a distributor with access to thousands of retail locations nationwide, to distribute the company’s Therabis line of pet wellness products.
- New products launched during the third quarter included Sour Smash Gummies and Cucumber-Melon Mints, two product line extensions to the company’s award-winning product portfolio and Mindset, a new brand focused on high quality vape and concentrate products.
Dixie also entered into a services contract with executive recruiting firm, Protis Global, to lead the search for additional executives to join the company’s C-Suite. Some of the new positions Dixie is filling are expected to be announced in Q4 2018.
Subsequent to Quarter-End
- The company closed a Series C financing round on Oct. 1, 2018, raising gross proceeds of $25 million in an oversubscribed, non-brokered private placement.
- Dixie completed a reverse takeover of Academy Explorations Limited on Nov. 27 and began trading on the Canadian Securities Exchange on Nov. 29.
The company has filed its complete financial statements and management’s discussion and analysis at www.sedar.com.
