RYU Apparel Reports Fourth Quarter and 2017 Year End Results

VANCOUVER, April 9, 2018 /CNW/ - RYU Apparel Inc. (TSXV: RYU) ("RYU" or the "Company"), creators of urban athletic apparel, is pleased to report its financial results for its second full year of operations since relaunching the brand in November 2015.

Revenue for the year ended December 31, 2017 was $3,019,586, 121% higher than revenue of $1,367,043 during the year ended December 31, 2016. After completing its second year of operations, the RYU team is encouraged with its sales record to date and a 46% gross profit for the year.

In Canadian dollars	Three months ended December 31,		Year ended December 31,
	2017	2016	2017	2016
Revenue	$1,166,126	$474,844	$3,019,586	$1,367,043
Gross profit	$529,472	$214,336	$1,382,293	$627,866
Gross profit %	45%	45%	46%	46%

Fourth quarter 2017 results included additional revenue from the Company's new retail store locations in Park Royal South in West Vancouver, Queen St. West in Toronto, and Metrotown in Burnaby. The Metrotown location in Burnaby was only open for one month within the quarter.

The fourth quarter of 2017 is RYU's ninth consecutive quarter of increasing gross profit.

"We are pleased with this quarter and yearly results and the steady progress we are making in our strategic plan," said Marcello Leone, CEO. "Moving forward, RYU remains focused and we have a solid road map in place to position the brand for success. As creators of Urban Athletic Apparel, we are the leader in this new category that evolved from Athleisure."

During the year ended December 31, 2017, the Company achieved the following milestones:

• RYU met its retail store expansion target of five open stores by the end of 2017. The Company currently has five stores in operation and three under construction. In addition to the opening of Park Royal South on March 28, 2017 and Queen St. West in Toronto on September 19, 2017, management opened its first enclosed mall location at Metrotown in Burnaby on November 28, 2017.
• RYU partnered with netamorphosis, an award winning digital and creative agency from New York City, to facilitate and maximize RYU's digital and ecommerce business across the United States and globally. Work has begun to further accelerate and expand e-commerce revenue and performance. High priority tasks were deployed in the fourth quarter of 2017 and will continue into the third quarter of 2018.
• E-commerce revenue grew 125% against 2016. RYU achieved 17% of total revenue from e-commerce in 2017 and it is focused on a clear roadmap to achieve a 65:35 "bricks (65%) and clicks (35%)" business model by the year 2021.
• The fourth quarter of 2017 marked the first full quarter that ryu.com offered international shipping since partnering with Global-E to provide the service. With a target go-live in the third quarter of 2018, a new ryu.com will launch with improved performance, speed and integration as RYU continues to progress towards an omni-channel experience for customers.
• RYU secured its first USA retail store location in Williamsburg, in the New York City borough of Brooklyn. The 2,800 square foot store in the newly renovated Lewis Steel Building on 76 North 4th St. will perfectly connect RYU's urban aesthetic and appeal with Williamsburg's style and community. The store is scheduled to open during the third quarter of 2018.

The Company is also pleased to provide the following 2018 updates:

• RYU's expansion plan is on target to have eight stores by the end of 2018 and to achieve +100% year over year growth in retail revenue. Subsequent to year end the Company secured the leases to its second and third USA store locations in the state of California. This expansion gives RYU exposure in New York City and Los Angeles, the most important urban centers of both coasts of the USA. The three stores have targeted openings in the second and third quarters of 2018.
• RYU continues to enhance its capital structure in 2018:
• On January 19, 2018 the Company closed a non-brokered private placement financing of $5,651,945;
• On February 19, 2018, the Company closed a non-brokered private placement financing of $3,997,808; and
• Year to date, a total of 52,560,615 warrants have been exercised for proceeds of $10,156,352. The Company is pleased to report that 84% of the $0.20 warrants subject to the acceleration of their expiry dates, as announced on February 20, 2018, were exercised by March 29, 2018.

Fourth quarter summary:

• Fourth quarter revenue of $1,166,126 compared with $474,844 in the same period in fiscal 2016. Revenue increased by 146% as it included sales from five versus two retail stores and growth in e-commerce sales. RYU's fifth retail store location at Metrotown in Burnaby was only open for one month within the quarter.
• The fourth quarter of 2017 marks RYU's ninth consecutive quarter of increasing gross profit. Fourth quarter gross profit of $529,472 compared with $214,336 in the same period in fiscal 2016, an increase of 147%. Gross profit percentage of 45% was achieved in the fourth quarter of 2017, in line with 2016.
• Fourth quarter expenses of $3,082,668 compared with $2,008,768 in the same period in fiscal 2016. The increase of 53% is primarily due to the expansion of our retail operations from two to five stores.
• Fourth quarter comprehensive loss was $2,553,196 compared with $1,781,197 in the same period in fiscal 2016. The $771,999 (43%) increase is due to variances in gross profit net of higher occupancy costs and depreciation from running five retail stores versus two as well as additional manpower needs.
• The Company closed non-brokered private placements on December 4^th and December 22^nd raising gross proceeds of $1,784,810 and $563,227 respectively.

Annual summary:

• Revenue of $3,019,586 compared with $1,367,043 in fiscal 2016. Revenue increased by 121% as it included sales from five stores versus two retail stores and growth in e-commerce sales. The Park Royal location in West Vancouver opened March 2017, the Queen St. West location in Toronto opened September 2017, and the Metrotown location in Burnaby opened November 2017.
• Revenue in 2017 was adversely affected following a challenging period of approximately six months during which we experienced shortages in styles and sizes and sold out of bags due to popular demand. In 2017, we dedicated significant resources to produce innovative new products, place inventory deposits to fill gaps, and restock our core items. Deliveries of our 2017 buy plan began at the end of the second quarter of 2017 and are scheduled to continue into the second quarter of 2018.
• Gross profit of $1,382,293 compared with $627,866 in fiscal 2016, an increase of 120%. Gross profit percentage of 46% in the year ended December 31, 2017 was in line with the comparative 2016 year.
• Expenses of $10,590,853 compared with $7,976,992 in fiscal 2016. The increase of 33% is due to the increase in retail operations from two to five stores, investment in additional manpower, and the development of our 2017 marketing strategy.
• Comprehensive loss was $9,200,856 compared with $5,621,662 in fiscal 2016. The loss was 64% higher due to the 2016 recovery of the warrant derivative of $1,518,541, a non-cash item, and the $208,923 gain on settlement of debt for two transactions that took place in 2016. Without these outliers, comprehensive loss during the year ended December 31, 2017 and 2016 would have been $9,208,560 and $7,349,126 respectively. The $1,859,434 (25%) increase is mostly due to the higher manpower and occupancy costs attached to running five versus two retail stores, net of the additional gross profit generated.
• The Company closed a short form prospectus offering, raising gross proceeds of $3,734,441 on February 2, 2017, a non-brokered private placement, raising gross proceeds of $2,252,841 on June 22, 2017, a short form prospectus offering, raising gross proceeds of $3,737,500 on July 25, 2017, a non-brokered private placement, raising gross proceeds of $1,784,810 on December 4, 2017, and a non-brokered private placement, raising gross proceeds of $563,227 on December 22, 2017.

For convenience, copies of the Company's annual consolidated statements of financial position, comprehensive loss and cash flows for the years discussed herein are attached to this news release.  Readers are encouraged to review such statements in their entirety, including the notes thereto, on SEDAR.  Full details of the Company's financial performance can be obtained by viewing the annual consolidated financial statements and corresponding MD&A available on SEDAR.

For regular updates on RYU Apparel visit: http://ryu.com

About RYU
Respect Your Universe is an award winning urban athletic apparel and accessories brand engineered for the fitness, performance and lifestyle of athletically minded men and women. Innovatively designed without compromise and tailored for fit, comfort, and durability, RYU exists to facilitate human performance. For more information, visit: http://ryu.com

On Behalf of the Board

RYU APPAREL INC.
"Marcello Leone"
Marcello Leone, CEO, President and Chairman of the Board
Tel: [phone]

Neither the 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.

This news release contains forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company, such as statements that: (i) the expansion plan is to have eight stores open by the end of 2018 and to achieve +100% year over year growth in retail revenue; (ii) the intention to open its New York and California locations during the second and third quarters of 2018; (iii) that high priority tasks with netamorphosis started to deploy in the fourth quarter of 2017 to accelerate and expand e-commerce revenue and performance and will continue into the third quarter of 2018; (iv) the Company is focused on a clear roadmap to achieve a 65:35 "bricks and clicks" business model by the year 2021; (v) that a new ryu.com will launch with improved performance, speed and integration in the third quarter of 2018, and (vi) that deliveries of inventory are expected to continue into the first quarter of 2018. There are numerous risks and uncertainties that could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information, including the ability of the company to finance operations, the ability of the management team to execute on its business plan, risks in the apparel industry in general, and delays and risks associated with renovating and opening new store locations. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, the Company does not intend to update these forward-looking statements.

RYU APPAREL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in Canadian dollars)
As at

			December 31,  2017	December 31,  2016
ASSETS
Current
	Cash		$                   466,809	$                   767,263
	Accounts receivable		169,439	82,297
	Inventory		2,359,681	1,067,560
	Prepaid expenses and deposits		978,151	263,912
			3,974,080	2,181,032
Non-current
	Deposits		398,292	172,521
	Property and equipment		2,546,729	1,439,500
	Intangible assets		32,432	6,549
			$                6,951,533	$                3,799,602
LIABILITIES AND EQUITY
Current
	Accounts payable		$                  1,178,126	$                     745,894
	Accrued liabilities		384,355	169,404
	Current portion of finance lease		14,068	14,779
	Deferred revenue		121,750	64,732
			1,698,299	994,809
Non-current
	Finance lease		45,070	63,296
	Derivative liability		-	7,703
			1,743,369	1,065,808
Equity
	Share capital		53,008,315	42,230,355
	Share subscriptions received in advance		355,000	-
	Equity reserve		7,469,620	6,927,354
	Deficit		(55,691,865)	(46,491,009)
	Accumulated other comprehensive income		67,094	67,094
			5,208,164	2,733,794
			$                6,951,533	$                3,799,602

RYU APPAREL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Expressed in Canadian dollars)
For the years ended December 31,

			2017		2016
Revenue		$	3,019,586	$	1,367,043
Cost of sales			1,637,293		739,177
Gross Profit			1,382,293		627,866
			46%		46%
Expenses
	Depreciation		455,136		245,794
	Foreign exchange loss (gain)		43,873		(57,246)
	Interest and bank charges		84,774		144,419
	Investor relations		278,475		629,771
	Office and general		2,480,301		1,174,206
	Product creation		508,490		553,855
	Professional fees		560,545		1,020,293
	Salaries and benefits		3,813,468		2,778,121
	Selling and marketing		1,806,097		1,032,523
	Share-based payments		331,513		333,341
	Travel and entertainment		228,180		121,915
			10,590,852		7,976,992
Other items
	Gain on settlement of debt		-		208,923
	Recovery of warrant derivative liability		7,703		1,518,541
Comprehensive loss		$	(9,200,856)	$	(5,621,662)
Loss per share - Basic and diluted		$	(0.04)	$	(0.05)
Weighted average number of common shares outstanding - basic and diluted			217,230,136		106,507,976

RYU APPAREL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in Canadian dollars)
For the years ended December 31,

					2017			2016
Cash flows from operating activities
	Net loss			$	(9,200,856)		$	(5,621,662)
	Items not affecting cash:
		Depreciation			455,136			245,794
		Share-based payments			331,513			333,341
		Foreign exchange			-			(76,230)
		Accrued interest			1,347			108,581
		Gain on settlement of debt			-			(208,923)
		Recovery of warrant derivative liability			(7,703)			(1,518,541)
	Changes in non-cash working capital
		Accounts receivable			(87,142)			223,555
		Inventory			(1,292,120)			14,888
		Prepaid expenses and deposits			(940,010)			(297,821)
		Accounts payable and accrued liabilities			582,585			119,414
		Deferred revenue			57,018			41,014
		Interest paid			-			(128,742)
	Net cash flows used in operating activities				(10,130,232)			(6,765,332)
Cash flows from investing activities
		Property and equipment			(1,448,187)			(551,621)
		Intangible assets			(15,973)			-
	Net cash flows used in investing activities				(1,464,160)			(551,621)
Cash flows from financing activities
		Issuance of common shares			12,072,819			10,001,552
		Share issuance costs			(1,128,387)			(721,981)
		Share subscriptions received in advance			355,000			-
		Short-term loans received			154,000			1,009,050
		Repayment of short-term loans and interest			(154,000)			(2,297,000)
		Exercise of warrants			8,800			-
		Finance lease			(14,294)			(11,923)
	Net cash flows provided by financing activities				11,293,938			7,979,698
Change in cash					(300,454)			662,745
Cash – beginning					767,263			104,518
Cash - end				$	466,809		$	767,263
Supplemental cash flow disclosure
		Common shares issued for settlement of accounts payable		$	-		$	578,660
		Common shares issued for settlement of related party advances		$	-		$	739,050
		Common shares issued for services		$	35,481		$	140,600
		Finder warrants issued for share issuance costs		$	210,753		$	80,992
		Unpaid intangible asset additions		$	16,459		$	-
		Unpaid property and equipment additions		$	107,630		$	168,617

SOURCE RYU Apparel Inc.

Investor Relations: Contact: Anna Brazier, Investor Relations, 1-844-535-2880, [email protected], www.ryu.com; For Media inquiries, contact: Oliver Wheeler, CEO THRSXTY, [phone], [email protected]