Hill Incorporated Releases Q3 FY2024 Results

(TheNewswire)

HIGHLIGHTS FOR Q3 FY 2024

• Recently Added DehydraTECH Licensee, Multi-State Operator MariMed Inc., Continued to Roll Out DehydraTECH-Powered Product Initiatives in Q3

• Subsequent to the Quarter, an Exciting New DehydraTECH Licensee, Sweet Buzz By Drecisco, Is Launching New DehydraTECH-Powered Products in Illinois, the Result of Significant Business Development and RD Efforts by Hill Commercialization Partner Dehydr8 During The Quarter

• Licensee 1906 Saw Strong Sales Results from Their Direct-To-Consumer “Drops” Product Line, Produced Using DehydraTECH And Sold Across A Majority of US States

• We Continued to Drive Marketplace Growth on Vin(Zero) Alcohol-Free Wine, Increasing Shipments to Retailers by 12% in Q3 vs Year Ago

• We Narrowed the Net Loss for the Nine-Month Period by 12% vs. Same Period Year Ago

Toronto, ON. — May 30, 2024 — TheNewswire – Hill Incorporated, formerly Hill Street Beverage Company Inc. (TSXV: HILL) ("Hill” or the "Company"), is pleased to announce that it has released its financial results for the three-and nine-month periods ended March 31, 2024 (“Q3 FY 2024”), which can be found at www.sedarplus.com. The progressive bioscience implementation company is dedicated to building pathways to better and healthier living by leveraging deep CPG expertise to commercialize leading-edge technologies, crafting superior cannabis solutions and non-alcoholic beverage products globally. The financial information summarized in this press release is based on data from Q3 FY2024.

Recently Added DehydraTECH Licensee, Multi-State Operator MariMed Inc., Continued to Roll Out DehydraTECH-Powered Product Initiatives in Q3

As we announced on November 16, 2023, leading multi-state operator MariMed is now using the patented DehydraTECH biodelivery technology to power its next generation of cannabis edibles sold under several of its award-winning brands.

In Q2 FY2024, MariMed rolled out improved DehydraTECH-powered products in Massachusetts, Maryland, and Delaware. This quarter, following the commencement of operations in their Mt. Vernon, Illinois processing facility, MariMed began launch development activities for DehydraTECH-powered edibles in Illinois.

Today, the MariMed brands being powered by DehydraTECH include ‘Vibations™‘ all-natural, full-spectrum cannabis drink mix, which recently won first place in the beverages category of the High Times Cannabis Cup in Massachusetts, ‘K Fusion™‘ chewable tablets, and ‘InHouseTM‘gummies. More information on MariMed’s brands can be found at MariMed Brands.

We anticipate that this major multi-state, multi-brand licensee will deliver strong incremental licensing revenues in 2024 as their launches reach full scale and expand across their state footprint.

Subsequent to the Quarter, an Exciting New DehydraTECH Licensee, Sweet Buzz By Drecisco, Is Launching New DehydraTECH-Powered Products in Illinois, the Result of Significant Business Development and R&D Efforts by Hill Commercialization Partner Dehydr8 During The Quarter

As mentioned in prior communications, the business development and launch preparation process for new licensees to develop new or reformulate existing products with DehydraTECH requires significant R&D work, often with new form factor product development, as well as operations planning for state-by-state manufacturing and launches. Major ongoing developmental efforts reached the launch stage in Q3, with an exciting new licensee and its new edibles products being launched in-market after Q3 end. We expect to be able to announce other important launches by new DehydraTECH licensees very soon.

SweetBuzz by Drecisco Farms

In Illinois in April, new DehydraTECH licensee Drecisco Farmshas launched their new ‘”SweetBuzz” DehydraTECH-powered cannabis edibles products including:

• “Sweet Somethings” candy cups

• “Sweet Sparks” chocolatey candies, and

• “Sweet Empowder” dissolvable powder

Drecisco Farms is a social equity craft grow in Illinois, driven by the belief that delicious taste and a quality cannabis experience should be one and the same. Bringing their experience managing and leading a mainstream confectionary company, they are proud to bring their generational confectionary knowledge crafting the candies that consumers have known and loved to a craveable cannabis experience with their brand SweetBuzz.

Licensee 1906 Saw Strong Sales Results from Their Direct-To-Consumer “Drops” Product Line, Produced Using DehydraTECH And Sold Across A Majority of US States

1906 continued to see strong sales from their new direct-to-consumer (DTC) product line across a majority of US states, which offers hemp-derived Delta-9 THC micro-dose versions of their popular ‘Drops’ products, which are also produced using DehydraTECH. This DTC launch at the end of 2023 expanded access of 1906 Drops varieties to a much broader footprint of consumers, adding DTC distribution across approximately 40 states. This initiative adds to the dispensary availability in several legal adult-use states of the higher dose, marijuana-derived delta-9 THC 1906 Drops. 1906 has announced that they are streamlining the dispensary availability of the higher dose, marijuana-derived delta-9 THC 1906 Drops to Illinois, Massachusetts, Missouri, New Jersey, New York and Pennsylvania, exiting those products from the Michigan and Colorado markets. More information on 1906’s products can be found at https://1906.shop/.

The addition of MariMed, and Sweet Buzz By Drecisco Farms to our DehydraTECH licensee ecosystem represents continued expansion by Hill on the key factors driving the growth agenda of our DehydraTECH licensing business:

1. 1)new licensees– increasing our base of active licensees and brands;

2. 2)new states– new state launches expanding the geographic coverage for active licensees or brands;

3. 3)new product form factors– innovation to expand the number of DehydraTECH-powered consumer product forms and types in marketto fill consumer needs and occasions; and

4. 4)deeper penetration of products across operations– driving deeper penetration of the breadth of product forms and brands across current and new states.

The following chart shows the significant advances we have made in the DehydraTECH licensing business, beginning from the December 2020 rights acquisition through the close of Q3 on March 31, 2024. These figures include a reduction in states of 1906 Drops in the dispensary (not DTC) channel but do not add the 40-state footprint of the direct-to-consumer business of 1906 Drops.

We Continued to Drive Marketplace Growth on Vin(Zero) Alcohol-Free Wine, Increasing Shipments to Retailers by 12% in Q3 vs Year Ago

As communicated, the new streamlined commercial model on our alcohol-free business creates a new and different cadence to the business, where dramatic quarter-to-quarter swings on the recognized revenues are planned based on inventory efficiencies and the timing of inventory arrivals. Therefore, the business must be looked at across longer time frames and through different operational lenses. As we adapt to the new cadence of supply shipments and recognized revenues, a key measure of the underlying business in this new model is our case depletions, which represents the shipment figures from our distributor to retailers. Our shipments from warehouses to retail customers increased by a strong 12% during the quarter over same quarter prior year, following 11% growth in Q2. Every month this quarter showed double-digit growth vs. year ago, indicating a strong baseline of growth from our merchandising programs and the new customer base we secured with Save-On-Foods.

About Hill Incorporated (TSXV: HILL)

Hill Incorporated is a progressive bioscience implementation company that is dedicated to building pathways to better and healthier living by leveraging our deep CPG expertise to commercialize leading-edge technologies to craft superior cannabis solutions and non-alcoholic beverage products globally. Our Hill Avenue Cannabis business unit is pioneering the space where craft consumer products meet bioscience by combining our deep CPG commercialization expertise with our rights to use Lexaria Bioscience Corp’s ground-breaking DehydraTECH patent portfolio for product development, licensing and B2B and B2C sales of cannabis ingredients or products on a global scale. Our Hill Street Beverages business unit represents the Company’s legacy alcohol-free consumer beverage marketing and distribution business.

For more information on our business activities visit www.hillincorporated.com, to learn more about our DehydraTECH cannabis biodelivery technology, go to www.dehydratech-thc.com, or to check out Hill Street Beverage’s award-winning alcohol-free wine line-up and order product to be delivered straight to your home, go to www.hillstreetbeverages.com.

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For more information, contact:

Craig Binkley, Chief Executive Officer

Email: craig@hillincorporated.com

Phone: 604-609-6154

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”, “would”, “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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