1933 Industries Q3 2022 Revenue Grows 26.47% YoY, What About Net Loss?

1933 Industries Inc. TGIFF TGIF revenue for Q3 2022 was CA$4.3 million ($3.3 million), compared to CA$3.4 million in Q3 2021.

Q3 2022 Financial Highlights

Gross margin was CA$2.0 million or 47% for Q3 2022 and CA$2.5 million or 73% for Q3 2021. The decrease in gross margin percentage from the prior year is due to refinements to the company's inventory estimates which has resulted in the reclassification of certain costs from inventory to cost of sales.
General and administration expenses were CA$447,021, compared to CA$413,114 during Q3 2021.
Net loss was CA$12.37 million compared to net income of CA$582,673 in Q3 2021.
Adjusted EBITDA was CA$336,104 for Q3 2022 and an adjusted EBITDA of CA$1.4 million for Q3 2021.

The company and Day One Beverages, Inc. mutually agreed to terminate the binding letter of intent between the parties for the company to acquire 100% of all of the authorized and issued shares of Day One. After a full due diligence review, the parties mutually agreed that it would be in their best interests to not move forward with acquisition. Under the terms of the mutual termination, Day One repaid all funds provided by the company via interim loans of approximately $500,000.

Q3 2022 Other Highlights

The company announced the resignation of Mark Baynes from its board of directors and the appointment of Ranson K. Shepherd as a director of the company.
The company announced the sale of Nevada real estate assets for total net proceeds of $1.27 million. The company completed the sale of two parcels consisting of 2.78 acres of M1 zoned land, located in Las Vegas. The company originally purchased the lots for $835,000 in 2017. Proceeds from the sale will be used for general working capital.
In connection with the transaction with Day One, the company entered into a loan agreement where the company agreed to loan up to $500,000 through a line of credit. The line of credit was non-interest bearing until January 31, 2022. Subsequent to January 31, 2022, any borrowing will accrue interest at a rate of 10% per annum until paid in full. Any principal together with all accrued interest and fees thereon, was due and payable on or before December 31, 2022. Up until the principal, together with all accrued interest and fees thereon, is paid back in full, the company had an absolute right to convert any or all of the principal balance, and any accrued amounts of interest and fees thereon, into shares of common stock of borrower. Such conversion to equity shall be based upon borrower's valuation of $4.5 million.
The company issued 372,666 common shares pursuant to the conversion of CA$32,000 of convertible debentures and interest payable on the convertible debentures of CA$5,267.

Developments Subsequent To April 30, 2022

As a result of the termination of the Day One transaction, the loan agreement was also terminated. Pursuant to the termination, the loan receivable plus accrued interest in the amount of $480,515 was due and payable in full on or before June 30, 2022. In addition, on or before June 9, 2022, the company was to be reimbursed for costs incurred of $30,052. On June 28, 2022, the company received the loan repayment and reimbursement for costs incurred.

Photo by Thiago Patriota on Unsplash

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