Hill Street Reports 85% Increase in YOY Sales for Q2FY20
Toronto, Ontario--(Newsfile Corp. - March 2, 2020) - Hill Street Beverage Company Inc. (TSXV: BEER) ("Hill Street" or the
"Company") reported its fiscal Q2 2020 financial results for the three-and six-month period ended December 31, 2019. A
complete set of financial statements and Management's Discussion & Analysis has been filed at www.sedar.com. All dollar
figures are quoted in Canadian dollars.
FQ2 2020 Financial Highlights
Quarterly gross revenue improved 85% to $973,710 versus the same quarter a year ago;
Gross profit for the quarter improved 30% to $294K vs $225K y/y;
Net loss improved 39% to $882K for the quarter, compared to a net loss of $1.4 million y/y;
Hill Street reports strong revenue increases in the second quarter as well as year over year results. Gross sales were up 85%,
continuing the company's growth in alcohol free wine and beer sales. The increase in revenue for the quarter was driven by sales
of the Entertainer's Pack, a gift pack of three bottles of Vin(Zero) alcohol free wines, launched in time for the important holiday
season, and a shift in some revenue from Q1 to Q2 due to retailer orders coming in late for the quarter.
The Company closed its calendar year with the announcement of a successful promotional program with major retailers,
featuring the Entertainer's Pack, a value priced offering in a gift box for the holidays. The Entertainer's Pack contained three
Vin(Zero) bottles, a Chardonnay, Merlot, and Brut Blanc. The trio of products represented a nice cross section of products to
appeal to most palates. The Entertainer's Pack has now been made available to major retailers on a "year-round" basis with
updated packaging and was distributed during the period to a complete sell out on its offering. Hill Street expects to see the
Entertainer's Pack on retail shelves more often based on feedback from major retailers, including during summer sales and
other holiday periods. The on-shelf presence was impactful and attracted great sell through.
Overall, for the six months ended December 31, 2019, the Company reports a year-over-year increase in sales in the same
period of 13% as the Company drives to increase distribution, monitor sell through and analyze industry trends in anticipation of
its pending launch of cannabis infused beverages, expected to be later in 2020. With the announcement of a distribution
agreement in Q1 of a new retailer Fortino's, Hill Street anticipates a continued trajectory of growth as the third quarter opens.
Hill Street's second quarter was also highlighted by a significant change in strategy for its cannabis infused production plan. The
Company announced the termination of its acquisition of OneLeaf Cannabis in Regina, Saskatchewan, and the signing of a nonbinding
letter of intent with Peak Processing of Windsor, Ontario, to provide co-packing (or manufacturing) services for cannabis
infused beverages. This fundamental shift in strategy away from owning a cannabis cultivation facility was based on the dramatic
turn of sentiment amongst investors in the capital markets towards cannabis cultivation, which has seen the cannabis indexes
drop by as much as two-thirds during the last two quarters. As a result, in Q2 the Company focused on working with licensed copacking
production partners.
In December 2019, the Company closed a private placement of approximately $800,000, providing it with working capital to
continue its operations in preparation for the launch of cannabis infused beverages in 2020.
Results of Operations
The following table summarizes certain financial information of the Company for the three months ended December 31, 2019
and December 31, 2018. It also summarizes certain financial information for the six months ended December 31, 2019 and the
six months ended December 31, 2018.
Results for the Period Ended
Quarter
Ended
December 31,
2019
Quarter
Ended
December 31,
2018
Six Months
Ended
December 31,
2019
Six Months
Ended
December 31,
2018
Gross Revenue $973,710 $527,652 $1,487,476 $1,321,591
Chargebacks, finance fees, and listing fees -$284,434 -$132,296 -$468,761 -$414,574
Net Revenue $689,276 $395,356 $1,018,715 $906,945
Direct Costs $395,228 -$169,569 $547,264 $464,444
Gross profit $294,048 $225,787 $471,451 $442,501
Operating Expenses (Excl. One-time & Non Cash) $698,337 $1,153,607 $2,069,752 $1,675,410
Other One-time Expenses $345,870 $222,298 $522,463 $891,720
Non Cash Expenses $107,600 $262,493 $262,582 $483,779
Loss before other Income (Expense) -$867,759 -$1,412,611 -$2,383,346 -$2,608,408
Other income (Expenses)
Public Company Listing Fee - - - -$918,345
Foreign exchange gain (loss) -$1,433 -$1,168 -$13,757 -$16,055
Write-off of inventory
Write-off of intangibles
-$23,466
-
-$59,449
-
-$23,466
-$8,000
-$67,456
-
Other Income - $32,208 - $32,848
Loss and comprehensive loss for the period $882,658 $1,443,020 $2,428,569 $3,577,416
Basic and diluted loss per common share $0.01 $0.02 $0.02 $0.05
About Hill Street Beverage Company Inc. (TSXV: BEER)
Founded in 2008, Hill Street Beverage Company is the world's most award-winning company exclusively focused on alcohol-free
beer, wine, and adult format beverages. Hill Street products include: Hill Street Craft Brewed Lager, Vin(Zero) wines, and
Vintense wines. Hill Street's award-winning products have won the Retail Council of Canada's Grand Prix, and numerous medals
and accolades including three Gold, two Silver, and two Bronze Medals at the U.S. Open Beer Championships, and a
prestigious Double Gold Medal at the San Francisco International Wine Challenge. Hill Street is currently applying for
appropriate licenses to permit the production and sale of cannabis infused beverages in Canada, with the view of having infused
products available for sale once the regulations permit. www.hillstreetbeverages.com
For further information:
Terry Donnelly, Chairman and CEO, Hill Street Beverage Company Inc.,
terry@hillstreetbevco.com, (416) 543-4904;
Follow Hill Street on Twitter https://twitter.com/hillstreetbevco
and on Facebook https://facebook.com/hillstreetbevco
FORWARD-LOOKING STATEMENTS
Statements in this press release may contain forward-looking information. Any statements in this press release that are not
statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified
by terms such as "may", "should", "anticipate", "expects", and similar expressions. The reader is cautioned that assumptions
used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances, such as future
availability of capital on favourable terms, may cause actual results to differ materially from those predicted, as a result of
numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. The
reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered
reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from
those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary
statement. The forward-looking statements contained in this press release are made as of the date of this press release. The
Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements,
whether as a result of new information, future events or otherwise, except as required by securities law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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