1933 Industries Inc. (CSE: TGIF) (OTCQX: TGIFF) reported that its revenue increased 44% to $18.1 million in Canadian dollars for the fiscal year ending July 31, 2019. The revenue for 2018’s fiscal year was $12.5 million. Still, the company reported that it had a net loss of $19.1 million.
1933 noted that $5.0 million was attributed to a one-time non-cash impairment write-down of a non-performing subsidiary, $3.4 million in biomass purchases, non-cash share-based compensation of $2.2 million, $1.5 million in interest payments, a one-time non-cash loss on disposal of property and equipment of $1.9 million and a non-cash accretion expense of $1.2 million. The company also delivered an adjusted EBITDA loss of $10.1 million, compared to $3.1 million in 2018.
The total revenue for the fourth quarter was $5.4 million versus last year’s $3.8 million for the same time period. The net loss for the quarter was $5.6 million versus last year’s net loss of $3.8 million.
“Our second year of operations was met by a surge in market volatility, challenging capital markets and a changing regulatory environment,” said Chris Rebentisch, Chief Executive Officer. “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.”
Gross margins fell dramatically to $815,690 (16%), compared to $2,197,803 (57%) during Q4 2018. Gross margins for fiscal 2019 were $5,296,980 (29%), compared to $6,351,466 (51%) during fiscal 2018, a decrease of 17% The decrease in the gross margin percentage from the prior year is primarily due to increased purchases by AMA of third-party biomass to produce concentrates and final products. The company said it expects to be producing sufficient amounts of biomass from its new facility, 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.
Rebentisch added, “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.”