Mr. Paul Rosen reports

1933 INDUSTRIES REPORTS Q2 2024 FINANCIALS

1933 Industries Inc. has released its unaudited interim consolidated financial statements for the three and six months ended Jan. 31, 2024, and 2023 (Q2 2024). 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.

Q2 2024 financial highlights

• Total revenues of $4.74-million for Q2 and $10.3-million YTD (year to date);
• Gross profit increase of 543 per cent year over year;
• AMA product revenues increase of 10 per cent year over year;
• Top-five-selling cannabis brand in Nevada.

Management commentary

"A continued disciplined approach to drive cost reductions and optimize operational efficiencies have allowed 1933 to achieve improvements year over year in both total revenues and gross profit. Continued efforts to implement strategic measures to increase cultivation yields, coupled with the enhancements undertaken at the cultivation facility in 2023, continue to bear positive outcomes. AMA is consistently ranked as a top five brand in Nevada, earning the top position in the flower category in December. The quarter was negatively impacted by the trend of December historically being a weak month for the Nevada cannabis industry, while January rebounded to be one of the strongest months in the company's history," said Paul Rosen, chairman and chief executive officer of the company.

Q2 2024 consolidated operating highlights

Revenues

During Q2 2024, the company recorded revenues of $4.74-million, a 10-per-cent increase from $4.3-million in Q2 2023. For the six months ended Jan. 31, 2024, revenues rose to $10.3-million from $9.3-million recorded during the same comparable period in 2023.

Gross profit

In Q2 2024, gross profit was $2.2-million and $6-million year to date, excluding fair value adjustments. Postadjustments, gross profit increased to $1.41-million in Q2 2024 from $50,000 during the same comparable period in Q2 2023. For the six months ended Jan. 31, 2024, gross profit was $3.1-million, a significant improvement compared with $600,000 during the same period in 2023. The increase in gross profit is attributed to operational efficiencies and to the upgrades and facility improvements completed in Q4 2024.

Expenses

Expenses were $2.1-million for Q2 2024 compared with $400,000 for Q2 2023. The increase from the prior year comparable period was primarily due the company receiving a payroll tax refund from the IRS (Internal Revenue Service) of $2-million related to the Coronavirus Aid, Relief and Economic Security Act in Q2 2023. Actual expenses decreased by 11 per cent during the reporting period due to significant operational efficiencies.

General and administrative costs in Q2 2024 were $200,000 compared with $600,000 in Q2 2023. Cost-savings efforts combined with the company's upgrades and improvements undertaken to its cultivation facility in Las Vegas are expected to help stabilize operating expenses and improve net loss in future quarters.

Net loss

During the reporting period, net loss was $700,000 for Q2 2024, and comprehensive loss was $400,000. In comparison, net loss was $400,000 in Q2 2023, and comprehensive loss was $600,000 in the prior-year comparable period. For the six months ended Jan. 31, 2024, net loss declined to $1.1-million from $1.5-million during the same period in 2023. Comprehensive loss year to date decreased to $600,000 from $1.0-million during to the same reporting period.

Q2 2024 key developments

During the six months ended Jan. 31, 2024, the company announced that the upgrades and improvements undertaken to its cultivation facility in Las Vegas have been completed. A large-scale retrofit of the irrigation system was undertaken for the long-term success of the facility. The company added an additional bloom room with 65 lights, thus increasing the total number of lights in the facility's 17 bloom rooms to 806.

On Dec. 29, 2024, the company announced renegotiation of its convertible debentures with an original maturity date of Dec. 31, 2023. Of the total principal of $3,114,000, holders of $3,073,000 agreed to be issued replacement debentures and holders of $41,000 of the convertible debentures were repaid in cash during February, 2024. The renegotiated debentures accrue interest at 10 per cent per annum, may be converted into units of the company and mature on Dec. 31, 2025. Each unit comprised one common share and one common share purchase warrant entitling the holder to purchase one additional common share at a price of five cents for a period of five years from the date of issuance of the new convertible debentures. Interest in arrears resulting from the original debentures remains payable in cash or may be settled through the issuance of units of the company at five cents per unit.

The company also announces that Lisa Capparelli is stepping down from the board of directors in order to pursue other opportunities. The board wishes to thank Ms. Capparelli for her contributions to the company during her tenure as director.

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 brand of wellness products that includes tinctures, gummies, topicals and sports recovery products. The company owns 91 per cent of Alternative Medicine Association LC and 100 per cent of Infused MFG LLC.

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