Mr. Chuck Smith reports

BELLROCK BRANDS ANNOUNCES Q3 2020 RESULTS OF MERGED COMPANIES

Bellrock Brands Inc. has provided its Q3 2020 financial results for two of its anchor brands, MM Technology Holdings LLC (Mary's) and Dixie Brands Inc. All figures are stated in U.S. dollars.

Mary's and Dixie posted their Q3 financial statements on SEDAR on Nov. 30 in compliance with the Canadian Securities Exchange regulatory requirements. The statements reflect the financial results for the merged companies prior to the closing of the merger that created Bellrock. Please note that the following results are only for the Mary's and Dixie assets and exclude all other brands currently in the Bellrock ecosystem.

"The third quarter of 2020 proved to be pivotal in laying the foundation of the Bellrock Brands platform, which has emerged from the transaction as the cannabis industry's pre-eminent CPG platform," said Chuck Smith, chief executive officer of Bellrock Brands and formerly president and CEO of Dixie Brands. "While the transaction wasn't formally closed until Oct. 31, the respective teams [as BR Brands and Dixie Brands] worked relentlessly throughout Q3 to advance major integration milestones alongside of marching the merger to completion. This material progress paves the way for the merged company to hit the ground running, all while demonstrating continued robust commercial growth in a COVID-impacted marketplace."

Q3 financial highlights

Mary's

• Total revenue derived from sales of Mary's-branded products for the nine months ended Sept. 30, 2020, was $19,313,989, an increase of $2,115,729 (up 12 per cent) over the same period in 2019.
• Growth experienced in the nine months ended Sept. 30, 2020, versus the prior year was driven by multiple factors: (i) expansion into the evolving Oklahoma market, (ii) accelerating growth in the California market and (iii) legalization of adult-use marijuana in Michigan.
• Gross profit for the nine months ended Sept. 30, 2020, was $9,221,556, an increase of $5,774,868 (up 67 per cent) over the same period in 2019.
• Net income attributed to Mary's in Q3 2020 was $1,419,870 compared with the Q3 2019 loss of $2,948,121, a 148-per-cent improvement directly related to a focus on cost containment and margin improvement. Removing the non-cash-related expenses, the adjusted net gain before non-controlling interest for Q3 2020 was $2,480,639.

Dixie

• Licensing revenue derived from affiliate sales of Dixie-branded products in their related states for the three months ended Sept. 30, 2020, was $4,275,129, an increase of $1,382,234 (up 48 per cent) from the third quarter of the prior year. For the nine months ended Sept. 30, 2020, licensing revenue was $11,216,191, an increase of $3,850,154 (up 52 per cent) from the prior year. Total revenue for the nine months ended Sept. 30, 2020, was $11,596,034, an increase of $3,261,338 (up 39 per cent) versus the prior year.
• Growth experienced in the three months ended Sept. 30, 2020, versus the prior year was predominantly driven by continued revenue growth and increasing market penetration across existing key markets, such as California (up 21 per cent), Colorado (up 20 per cent), Maryland (up 68 per cent) and Michigan (up 595 per cent).
• Gross profit for the three months ended Sept. 30, 2020, and 2019 was $1,851,074 and $1,344,043, respectively, an increase of $507,031 (up 38 per cent). Gross profit for the nine months ended Sept. 30, 2020, was $4,562,794, an increase of $1,118,320 (up 33 per cent) over the same period in 2019.
• Net loss attributed to the company in Q3 2020 was $2,749,893 compared with the Q3 2019 loss of $4,915,807, a 44-per-cent improvement directly related to the impact of the company's path to profitability strategy implemented in Q3 2019. Removing the non-cash-related expenses and interest expenses that are expected to be converted to equity in the proposed transaction, the adjusted net gain before non-controlling interest for Q3 2020 was $504,792.

Q3 operating highlights

Mary's

• Grew California revenue 13 per cent year over year in Q3 through an expanded self-distribution network and increased dispensary penetration;
• Recognized as the No. 2 topical and tincture company in Colorado (source: BDS Analytics, November, 2020);
• Increased licence revenue in Michigan up 35 per cent year over year in Q3, as a result of increasing consumer demand for Mary's products in the medical and adult-use markets;
• Entry into Oklahoma generated an additional $915,000 of revenue year over year;
• Q3 optimization efforts in production and operating expenses led to overall selling, general and administration reductions of $1.7-million.

Dixie

• Received overwhelming shareholder approval at the July 14 annual general and special meeting for the merger with BR Brands, bringing together two highly recognized portfolios including the iconic Mary's and Dixie brands, creating an industry-leading CPG (consumer packaged goods) multistate operator;
• Grew Colorado licensing revenue by 20 per cent in Q3 2020 compared with 2019 through a continued increase in organic consumer demand, demonstrating strong brand health in a mature market. Dixie is the No. 2 edibles company in Colorado's recreational cannabis market (source: BDS Analytics, November, 2020);
• Increased licence revenue in California year over year by 55 per cent in the nine months ended Sept. 30, 2020, via increased dispensary penetration, enhanced brand awareness and increased consumer-driven sales velocity. Dixie's award-winning gummies saw growth in excess of 90 per cent versus the same period in 2019;
• Grew Maryland licence revenue by 68 per cent year over year in Q3, as a result of increasing consumer demand for an established CPG portfolio with stable market penetration;
• Consumer demand continued to exceed expectations in Michigan resulting in a 595-per-cent year-over-year increase in licence revenue for Q3. Dixie is the No. 1 edibles brand in the dynamic Michigan market (source: Leaflink Market Scape, November, 2020).

"Despite the headwinds and common challenges of 2020, I am incredibly proud of the results that the collective Bellrock team managed to achieve," said Chuck Smith, chief executive officer of Bellrock Brands. "Combined, Bellrock has delivered over $30-million in revenue through the end of September, 2020. Continued top-line growth combined with comprehensive cost management has secured the foundation of the Bellrock Brands platform to drive continued growth as the industry's pre-eminent CPG house of brands."

Outlook -- Bellrock Brands

On July 14, 2020, the proposed merger between BR Brands and Dixie Brands was overwhelmingly approved by Dixie shareholders and the transaction was completed on Oct. 31, 2020. Under the terms of the deal, BR Brands combined operations with Dixie assuming the publicly traded platform via a reverse takeover. This transaction has strengthened the balance sheet of the combined entity and is expected to drive upside potential through synergies, as well as operational efficiencies, providing long-term, stable growth for shareholders and a best-in-class product portfolio for consumers across the globe.

The combined company establishes one of the cannabis industry's most comprehensive house of brands anchored by two of the most iconic consumer franchises in the market, Mary's and Dixie. The portfolio also boasts Rebel Coast and Defonce (two emerging Californian brands), a deep CBD (cannabidiol) program including the Mary's CBD, Aceso and Therabis brands, and the strategic partnership with Herbal Enterprises LLC, an affiliate of the AriZona brand. An unrivalled leadership team with deep CPG, financial and capital markets experience will guide one of the largest installed manufacturing and distribution footprints for infused products in the cannabis industry. With 11 brands and over 200 SKUs, Bellrock reaches nearly every key consumer group and addresses the needs of a diverse cannabis consumer base.

Bellrock remains committed to growing shareholder value. The company's buy-and-build growth strategy employs a three-pronged approach to enhancing its platform through strategic acquisitions, prioritizing profitable organic revenue growth, and continuously optimizing its costs and capital structure. On a pro forma basis, assuming BR Brands and Dixie had combined as of Jan. 1, 2020, Bellrock expects to generate in excess of $40-million in revenue in 2020, with clear plans to deliver exponential revenue and cash flow growth in 2021 and beyond.

Both Dixie and Mary's filed their complete Q3 2020 financial statements and management discussion and analysis on SEDAR.

About Bellrock Brands Inc.

Bellrock Brands is a brand- and IP-focused CPG, multistate operator, possessing one of the industry's broadest branded product portfolios catering to the growing and ever-evolving cannabis consumer. Bellrock's portfolio consists of two iconic cannabis brands with deep history, Mary's Brands (a pioneer in the health and wellness segment since 2013) and Dixie (a market-leading tetrahydrocannabinol-infused edibles brand since 2010), as well as two growing, California-based brands, Rebel Coast and Defonce. Together, the Bellrock brands offer a vast spectrum of high-quality cannabis-centric consumer packaged goods. With 11 brands and over 200 SKUs, Bellrock reaches nearly every key consumer group and addresses the needs of a diverse cannabis consumer base. The Bellrock manufacturing and distribution footprint continues to expand and currently spans nine states, and the company owns or manages production facilities in its largest markets.

We seek Safe Harbor.