Canada NewsWire
VANCOUVER, Nov. 28, 2019
The Company reports revenues of $5.2M in Q4 and $18.1M for the year
VANCOUVER, Nov. 28, 2019 /CNW/ - 1933 Industries Inc. (the "Company" or "1933 Industries") (CSE: TGIF) (OTCQX: TGIFF), a vertically integrated cannabis consumer packaged goods company, is pleased to announce its fourth quarter ("Q4") and audited annual financial results for the period ended July 31, 2019 ("Year End"). All amounts expressed are in Canadian dollars.
Highlights:
Selected Financial Information
All amounts expressed are in Canadian dollars.
Year End 2019 Consolidated Results | ||
July 31, 2019 | July 31, 2018 | |
Revenues | $18,059,774 | $12,550,683 |
Gross margin | $5,296,980 | $6,351,466 |
Cash balance | $17,613,900 | $5,056,183 |
Net loss | ($19,111,991) | ($5,729,052) |
Comprehensive loss | ($19,011,564) | ($4,791,300) |
Adjusted EBITDA loss | ($10,113,913) | ($3,078,700) |
Basic and diluted loss per share | $0.08 | $0.03 |
Total assets | $61,654,094 | $41,339,616 |
Total liabilities | $24,465,690 | $4,356,119 |
Total equity | $37,188,404 | $36,983,497 |
Results of Operations | Q4 2019 | Q4 2018 |
Total revenue | $5,244,946 | $3,828,993 |
Gross margin | $815,690 | $2,197,803 |
Cash balance | $17,613,900 | $5,056,183 |
Net loss | ($5,688,422) | ($3,811,765) |
Adjusted EBITDA loss | ($4,287,416) | ($2,266,992) |
Basic and diluted loss per share | $0.02 | $0.02 |
Total assets | $61,654,094 | $41,339,616 |
44% Year over Year Revenue Growth Without New Facility
The Company's $5.5 million growth in revenues over the prior year is attributed to the steady increase in AMA's number of cannabis plants and total annual plant yield as well as to Infused's significant product distribution expansion in the United States. Infused's Canna Hemp™ brand of CBD health and wellness products are sold in over 800 retail outlets across 46 states, and via the Company's E-Commerce site.
16% Gross Margin Decrease Until New Facility Ramps up Cultivation
The Company saw a decrease in gross margin from $6.4 million to $5.3 million primarily due to increased purchases by AMA of third-party biomass to produce concentrates and final products. The Company anticipates producing sufficient amounts of biomass from its new facility thereby reducing third party purchases, which is expected to significantly improve the realized gross margins. Partially offsetting the increased costs of AMA, Infused has significantly increased its customer base, which has resulted in improved economies of scale in the production of CBD-based products, positively impacting overall gross margin.
$37.7 Million Cash Injection by Financing Activities and Strong Cash Position
Cost-Cutting Measures in Place to Mitigate Loss
The Company's net loss for the year is $19.1 million, attributed to a one-time non-cash impairment loss of Spire Global Strategy and one-time non-cash loss on disposal of property and equipment as well as increases in general and administrative costs as the Company continued to scale up its operations and added staffing and resources to support the Company's growth initiatives. The Company continues to incur costs to support its growing infrastructure requirements.
Significant expenditures during the period include property and equipment expenses related to AMA's 67,750 square foot cultivation facility and 12,160 square foot production facility in Nevada and the purchase of the remaining 9% of Infused for $5.4 million, of which $1.2 million was cash via a promissory note paid during Q4.
The Company saw an overall increase in expenses as it continues to grow in size and scale. The realignment of core business units such as cultivation, extraction and manufacturing assets and cost-cutting measures in place along all divisions have been a focus in order to lower expenses.
Commentary by Mr. Chris Rebentisch, Chief Executive Officer
"Our second year of operations was met by a surge in market volatility, challenging capital markets and a changing regulatory environment. Although not immune to sector-wide stock pressures and volatility, the Company remains positioned with growth and profitability in mind and we continue on target on this path. We are razor-focused on continuing to ensure the long-term viability of the Company. We have implemented cost cutting measures aimed at reducing our current operating expenses, improving efficiencies and strengthening our product offerings while building a sustainable foundation.
Exceeding expectations, we increased revenues by 44% from our previous year while awaiting our new cultivation facility to become operational. We oversaw a 130% growth in revenues for our CBD brand portfolio, as well as a 245% increase of cash to execute on our growth plan. By the end of this fiscal year, we had completed the construction of one of Nevada's largest indoor cultivation facilities for premium craft cannabis and had begun to transfer our cannabis plants to the new facility.
Subsequent to the Year End, we entered the California market with a management agreement for cultivation and manufacturing in the state and continue to make progress on our infrastructure projects in Nevada, while targeting promising markets in Arizona and Colorado. Our proprietary Canna Hemp™ brands are emerging as significant players in the industry and continue to grow across the nation. We have also attracted some of the best brands in the industry as licensing partners as we continue to increase market share in Nevada as one of the largest wholesalers of cannabis products to legal dispensaries.
We forecast strong revenue growth in 2020 as we expand our proprietary portfolio of AMA branded THC flower and concentrates, continue innovating our unique, differentiated, quality-based CBD Canna Hemp™ portfolio and as our recently added licensing partnerships bear fruit. We anticipate significant margin improvements as we complete the build-out of new cultivation and production facilities in Nevada and become less reliant on wholesale biomass suppliers. With our focused vision on delivering the highest quality consumer branded goods, we have a disciplined growth path to scale up operations in 2020 and beyond."
Key Developments During Fiscal 2019
Key Developments Subsequent to Fiscal 2019
Detailed information on the financials and the management's discussion and analysis can be found at https://sedar.com/
About 1933 Industries Inc.
1933 Industries Inc. is a vertically integrated, brand-focused cannabis company with operations in the United States and Canada. Operating through two subsidiary companies, the Company owns leading cannabis brands as well as licensed cannabis cultivation, extraction, processing and manufacturing assets.
Our award-winning proprietary portfolio of brands include: AMA flower and AMA concentrates, CBD-infused Canna Hemp™, Canna Hemp X™, and Canna Fused™. Partners under licensing agreements include Birdhouse Skateboards™, Blonde™ Cannabis, Denver Dab Co., Grizzly Griptape, OG DNA Genetics, PLUGplay, and The Original Jack Herer®.
The Company owns 91% of Alternative Medicine Association, LLC (AMA), and 100% of Infused MFG LLC. 1933 Industries continues to focus its operations in the licensed US cannabis industry as a multi-state operator in Nevada, Colorado and California.
About Canna Hemp™
Canna Hemp™ CBD Relief Cream was named "Best Topical" by Leafy's Best in State: The Top State Specific Products and Experiences of 2018.
http://www.cannahemp.com
https://www.leafly.com/news/strains-products/best-in-state-2018-nevada-cannabis
About Canna HempX™
Canna Hemp X™ was named "Best Topicals for Pain" by Herb's Guide to the Best Cannabis Products on the Planet. Canna Hemp X™ is a CBD sports recovery cream for athletes, bridging the gap between recovery and top performance.
http://www.cannahempx.com
https://herb.co/learn/best-cannabis-products/
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Canadian Securities Exchange) accepts responsibility for the adequacy or accuracy of this release.
Notice regarding Forward Looking Statements: This news release contains forward-looking statements. The use of any of the words "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because the Company can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. These statements speak only as of the date of this news release. Actual results could differ materially from those currently anticipated due to a number of factors and risks including various risk factors discussed in the Company's disclosure documents, which can be found under the Company's profile on www.sedar.com. 1933 Industries undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
View original content to download multimedia:http://www.prnewswire.com/news-releases/1933-industries-reports-fourth-quarter-and-annual-financial-results-for-fiscal-year-2019-300966699.html
SOURCE 1933 Industries Inc.
View original content to download multimedia: http://www.newswire.ca/en/releases/archive/November2019/28/c9103.html