1933 Industries Inc. (CSE: TGIF) (OTCQX: TGIFF) announced its first-quarter 2020 financial results for the period ended October 31, 2019. Total revenues for the quarter for 1933 were $3.9 million, down 26% from its previous quarter, mainly due to the decline in market share for vape and distillate sales in the recreational market in Nevada. The company said that vaping accounts for 25% of cannabis sales in Nevada while the nationwide decline was 15% during the first week of September, at the state level, Nevada saw a drop of 32% in vape sales.
The net loss for the quarter was $3.8 million, which was lower than the fourth-quarter net loss of $5.6 million. 1933 said in a statement that the decrease in the net loss was due to company-wide cost-cutting measures in order to cut expenses. “All non-essential consulting services were cut as the company remains committed to achieving profitability and increasing shareholder value. Adjusted EBITDA loss was $1.8 million for Q1 2020 compared to $1.0 million for Q1 2019. Expenses were $5.9 million for Q1 2020 and $4.7 million for the same period in 2019.”
“Company revenues for Q1 2020 were impacted by lower than expected sales from vape products, largely attributed to the rampant use of vitamin E acetate in black market products,” said 1933 CEO Chris Rebentisch. “Despite weakness in this segment, we anticipate a recovery in vape sales across both our AMA and Infused subsidiaries as well as the demand in the supply chain for distillate normalizing in Nevada in early 2020. With over 100+ SKUs across 5 product lines as intellectual property and 8 licensing partners, we believe that our diversified product portfolio and product mix will aid us in sustaining our future growth.”
He went on to add, “Cannabis sales continue to remain strong in Nevada, reaching $639 million in its fiscal year ended June 30, while 80% of sales occur in Clark County, according to the Nevada Department of Taxation figures. Over the last two years of operations, we have built AMA and Canna Hemp into valuable and respected brands, we have attracted the top brand names in the industry as our partners in Nevada, and we are expanding our physical footprint to build a sustainable foundation for growth. Our current cash position allows us to continue our operations, service debenture interest obligations and fund our capital needs. We are confident that we will achieve significant growth in 2020, driven by our expanded cannabis production in Nevada, our near-term entry into the California market, increased distribution into new markets for our Canna Hemp line and the development of products in support of our licensing agreements.”
It was a busy month for 1933 even after the quarter ended. The company announced the execution of a two-year licensing agreement AMA and The Pantry Company Inc. in which the company will begin the buildout of a GMP-approved commercial kitchen, to be located in its extraction facility in Las Vegas, Nevada. Then 1933 announced a second licensing agreement with OG DNA Genetics. The agreement will grant 1933 Industries license to the DNA brand for the production and sale of hemp-derived CBD products.