Mr. Paul Rosen reports

1933 INDUSTRIES REPORTS FOURTH QUARTER AND 2023 YEAR-END FINANCIAL RESULTS AND POSTS RECORD REVENUES OF $18.3 MILLION

1933 Industries Inc. has released its fourth quarter (Q4 2023) and audited annual financial results for the year ended July 31, 2023. All amounts expressed are in Canadian dollars.

The company owns 91 per cent of Alternative Medicine Association (AMA), the company's cultivation and production subsidiary focused on the medical and adult-use cannabis market, and 100 per cent of consumer-packaged goods manufacturer Infused MFG LLC (Infused). The company's revenue is derived from wholesale cannabis sales in Nevada (AMA), and from the sale of hemp-derived wellness products (Infused) under the Canna Hemp brand sold across the United States via e-commerce.

Management commentary

"We are pleased to report record revenues of $18.3-million for fiscal 2023, a 46-per-cent increase from fiscal 2022," said Paul Rosen, chairman and chief executive officer of the company. "We are encouraged by this milestone accomplishment, achieved despite experiencing a considerable disruption in our cultivation facility during the third and fourth quarters while the company upgraded and retrofitted its facility, which significantly reduced overall revenue during those two quarters. With those upgrades now completed, we remain focused on continuing to increase overall revenue, while also remaining committed to fine tuning our operations and continuing to cut costs. We anticipate that our disciplined approach will allow us to pursue additional growth opportunities in the future."

Fiscal 2023 and 2022 consolidated operating financing highlights

• Total revenues increased by 46 per cent to $18.3-million in fiscal 2023 from $12.5-million in fiscal 2022. AMA revenues increased by 56 per cent during the reporting period, from $10.9-million in fiscal 2022 to $16.8-million in fiscal 2023.
• Expenses were $12.8-million for fiscal 2023 compared with $20.2-million for fiscal 2022, including a non-cash goodwill impairment relating to AMA of $4.6-million.
• Gross profit, excluding fair value adjustments, was $600,000 for fiscal 2023, compared with $3.2-million during the same period in fiscal 2022. Gross profit, after fair value adjustments, was a loss of $600,000 for fiscal 2023 and a profit of $2.7-million for fiscal 2022. The decrease in gross profit was due to increased production and cultivation costs, delayed harvests, and lower yields while the company upgraded and retrofitted the building's complex irrigation and humidification systems during the reporting period.
• Net loss and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) were a loss of $14.0-million and $7.6-million, respectively, for fiscal 2023, largely attributed to the infrastructure updates to the cultivation facility, compared with a loss of $18.1-million and $4.8-million, respectively, for fiscal 2022.
• Basic and diluted net loss per share was three cents for fiscal 2023, compared with four cents for fiscal 2022.
• Cash was $1.1-million at the end of the reporting period, compared with $300,000 in fiscal 2022.

Q4 2023 compared with Q4 2022 financing highlights

• Q4 2023 revenues increased to $5.6-million from $2.6-million during the comparable period. The 115-per-cent increase in revenue in the current period was primarily due to an increase in AMA revenues resulting from the completion of the retrofit and upgrades to the cultivation facility, and from the plant operating at full capacity. AMA generated significant revenue from the sale of whole cannabis flower.
• Gross profit was $100,000 in the current period compared with a gross loss of $1.9-million in the prior-year comparable period.
• Expenses were $9.2-million in Q4 2023 compared with $2.2-million in Q4 2022. Included in the increase were higher G&A (general and administrative) expenses, a $4.6-million goodwill impairment, higher licence fees, taxes, insurance, legal and auditing fees, and increased share-based compensation due to the timing of the vesting of previously issued stock options.

Outstanding debentures

On Nov. 14, 2023, holders of 10 per cent senior unsecured convertible debentures due Dec. 31, 2023, approved a proposed amendment, which authorizes the company to pursue at its discretion one of the following settlement options:

1. The extinguishment of the debentures upon maturity and the principal debt owed thereunder, excluding any interest in arrears, through the issuance of a new 10 per cent unsecured convertible debenture with a two-year maturity, convertible into units at a price of five cents per unit, each unit comprising one common share of the company and one share purchase warrant, subject to certain acceleration provisions as more particularly defined in the indenture governing the new debenture.
2. The extinguishment of the convertible debentures upon maturity, principal debt and excluding interest in arrears, through the issuance of a unit to the debenture holders, each unit being issued at a deemed price of two cents per $1.00 of principal, and one share purchase warrant exercisable into one additional common share of the company at a price of five cents for a period of five years from the date of issuance.

As at the date of these financial statements, the company has not yet determined which settlement option it will choose.

Financial statements are prepared in accordance with international financial reporting standards. Detailed information regarding the company's financial results as well as management's discussion and analysis can be found at SEDAR+ and on the company's website.

Please note the next financial release dates in accordance with the continuous disclosure schedule set out by the British Columbia Securities Commission.

About 1933 Industries Inc.

1933 Industries is a Nevada-based company, focusing on the cultivation and manufacturing of a large portfolio of cannabis consumer-packaged goods in a variety of formats for both the wholesale and retail markets. Its product offerings through its in-house brands include: wholesale flower, prerolls and extracted products under the AMA and Level X brands for the Nevada market; and Canna Hemp, a national cannabidiol (CBD) brand of wellness products that includes tinctures, gummies, topicals and sports recovery products. The company owns 91 per cent of Alternative Medicine Association LC (AMA) and 100 per cent of Infused MFG LLC (Infused).

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