1933 Industries, Inc.CSE: TGIF

Financial Statements - For the Three Months Ended October 31, 2024 and 2023

Mar 11, 2025 at 9:26 PM UTC · Issued by 1933 Industries, Inc.

1933 INDUSTRIES INC.

Condensed Interim Consolidated Financial Statements For the three months ended October 31, 2024 and 2023 (Unaudited - Expressed in Canadian dollars)

Notice of Disclosure of Non-auditor Review of the Condensed Interim Consolidated Financial Statements for the Three Months Ended October 31, 2024 and 2023

Pursuant to National Instrument 51-102 Continuous Disclosure Obligations, part 4, subsection 4.3(3)(a) issued by the Canadian Securities Administrators, if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the interim financial statements have not been reviewed by an auditor.

The accompanying unaudited condensed interim consolidated financial statements of 1933 Industries Inc. for the interim periods ended October 31, 2024 and 2023, have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as issued by the International Accounting Standards Board, and are the responsibility of management.

The independent auditors, MNP LLP, have not performed a review of these unaudited condensed interim consolidated financial statements.

February 26, 2025

1933 INDUSTRIES INC.

Consolidated Statements of Financial Position

(Unaudited - Expressed in Canadian dollars)

				October 31,	July 31,
			Note	2024	2024
ASSETS		$	$

Current		241,610
Cash		449,184
Receivables	5	2,121,363	2,008,667
Inventory	6	2,369,568	2,725,525
Biological assets	7	279,407	425,729
Prepaid expenses and deposits	8	404,416	374,720
				5,416,364	5,983,825
Property and equipment	9	10,746,821	10,884,527
Total assets		16,163,185	16,868,352
LIABILITIES
Current		4,215,705
Accounts payable and accrued liabilities	10,16	4,863,718
Income tax payable		66,453	64,313
Current portion of lease liability	11	495,242	439,763
Note payable	12	54,877	54,455
				4,832,277	5,422,249
Convertible debentures	13	3,036,821	2,869,327
Lease liability	11	13,481,353	13,412,248
Total liabilities		21,350,451	21,703,824
SHAREHOLDERS' DEFICIENCY		83,856,671
Share capital	14(b)	83,856,671
Reserves	14(c)	10,799,089	10,795,979
Accumulated other comprehensive loss		(580,740)	(787,569)
Deficit		(97,986,329)	(97,399,298)
Deficiency attributable to shareholders of the Company		(3,911,309)	(3,534,217)
Non-controlling interest		(1,275,957)	(1,301,255)
Total shareholders' deficiency		(5,187,266)	(4,835,472)
Total liabilities and shareholders' deficiency		16,163,185	16,868,352
Nature of operations and going concern (Note 1)
Approved and authorized for the issue on behalf of the Board of Directors:
/s/ "Brian Farrell"	/s/ "Paul Rosen"
Director			Director

The accompanying notes are an integral part of these consolidated financial statements.

1933 INDUSTRIES INC.

Consolidated Statements of Loss and Comprehensive Loss

(Unaudited - Expressed in Canadian dollars, except share numbers)

Three months ended

October 31,

		2025	2024
	Note	(Note 22)
		$	$
Revenues		3,993,007	5,283,382
Cost of sales		(2,756,077)	(1,501,570)
Gross profit, excluding fair value adjustments		1,236,930	3,781,812
Change in fair value due to biological		411,780
transformation		-
Fair value adjustment on sale of biological assets		(341,271)	(2,135,789)
Gross profit		1,307,439	1,646,023
Expenses (income)		63,938
Accretion expense		-
Depreciation	9	20,814	8,496
Foreign exchange		-	(440)
Gain on sale of property and equipment	9	294,690	288,695
General and administration	15,18	482,124	450,687
Interest expense		776,886	845,219
License taxes and insurance		(14,407)	-
Management and consulting fees	16	183,552	145,162
Other income		(96)	(15)
Professional fees		(38,275)	77,578
Share-based compensation	16	3,110	8,954
Wages and benefits		112,932	202,099
		1,885,268	2,026,434
Loss before income tax expense		(577,829)	(380,411)
Current income tax expense		-	-
Net loss for the period		(577,829)	(380,411)
Net loss from discontinued operations	22	(4,173)	(13,978)
Foreign currency translation adjustment		227,098	193,521
Comprehensive loss for the period		(354,904)	(200,868)
Net loss attributable to:		(587,031)
Shareholders of the Company		(362,786)
Non-controlling interest		5,029	(31,603)
Foreign currency translation adjustment
attributable to:		206,829
Shareholders of the Company		184,391
Non-controlling interest		20,269	9,130
Comprehensive loss attributable to:		(380,202)
Shareholders of the Company		(178,395)
Non-controlling interest		25,298	(22,473)
Net loss per share		(0.00)
Basic and diluted		(0.00)
Weighted average number of shares		490,471,657
Basic and diluted		461,233,870

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1933 INDUSTRIES INC.

Consolidated Statements of Cash Flows

(Unaudited Expressed in Canadian dollars)

Three months ended October 31, 2024

	2025	(Note 22)
Operating activities	$	$
(586,175)
Net loss for the period	(380,411)
Adjustments for:	247,059
Depreciation included in cost of sales	402,184
Change in fair value due to biological transformation	(411,780)	-
Fair value adjustment on sale of biological assets	341,271	2,135,789
Accretion expense	63,938	-
Depreciation	11,439	19,338
Gain on sale of property and equipment	(14,407)	-
Interest expense	480,790	455,263
Share-based compensation	3,110	8,954
Changes in non-cash working capital:	(109,832)
Receivables	(207,276)
Inventory	355,957	(811,140)
Biological assets	216,831	(2,102,832)
Prepaid expenses and deposits	(29,696)	126,639
Accounts payable and accrued liabilities	(649,279)	272,126
Income tax payable	2,140	89,230
Net cash (used in) provided by operating activities	(78,634)	7,864
Investing activities	14,407
Proceeds from sale of property and equipment	(321,919)
Net cash provided by (used in) investing activities	14,407	(321,919)
Financing activities	(359,510)
Repayment of lease liability	(339,698)
Repayment of note payable	-	(11,554)
Net cash used in financing activities	(359,510)	(351,252)
Effect of exchange rate on changes on cash	204,215	281,688
Change in cash from discontinuing operations	11,948	54,218
Change in cash from continuing operations	(219,522)	(383,619)
Cash, beginning of period	449,184	1,092,562
Cash, end of period	241,610	763,161

Supplemental disclosure with respect to cash flows (Note 18)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1933 INDUSTRIES INC.

Consolidated Statements of Changes in Shareholders' Equity (Deficiency)

(Unaudited - Expressed in Canadian dollars, except share numbers)

				Accumulated			Total
				other		Non-	shareholders'
	Common			comprehensive		controlling	equity
	shares	Share capital	Reserves	loss	Deficit	interest	(deficiency)
	#	$	$	$	$	$	$
Balance, July 31, 2023	461,233,870	82,387,033	10,335,086	(594,933)	(95,820,123)	(1,570,215)	(5,263,152)
Share-based compensation	-	-	8,954	-	-	-	8,954
Non-controlling interest	-	-	-	-	-	(31,603)	(31,603)
Foreign currency translation adjustment	-	-	-	184,391	-	9,130	193,521
Net loss for the period	-	-	-	-	(362,786)	-	(362,786)
Balance, October 31, 2024	461,233,870	82,387,033	10,344,040	(410,542)	(96,182,909)	(1,592,688)	(5,455,066)
Shares issued - conversion of convertible
debentures $0.05	29,237,787	1,469,638	(16,704)	-	-	-	1,452,934
Issuance of convertible debentures $0.05	-	-	437,172	-	(437,172)	-	-
Share-based compensation	-	-	31,471	-	-	-	31,471
Non-controlling interest	-	-	-	-	-	219,902	219,902
Foreign currency translation adjustment	-	-	-	(377,027)	-	71,531	(305,496)
Net loss for the period	-	-	-	-	(779,217)	-	(779,217)
Balance, July 31, 2024	490,471,657	83,856,671	10,795,979	(787,569)	(97,399,298)	(1,301,255)	(4,835,472)
Share-based compensation	-	-	3,110	-	-	-	3,110
Non-controlling interest	-	-	-	-	-	5,029	5,029
Foreign currency translation adjustment	-	-	-	206,829	-	20,269	227,098
Net loss for the period	-	-	-	-	(587,031)	-	(587,031)
Balance, October 31, 2024	490,471,657	83,856,671	10,799,089	(580,740)	(97,986,329)	(1,275,957)	(5,187,266)

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

1933 INDUSTRIES INC.

Notes to the Consolidated Financial Statements

For the three months ended October 31, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

1. NATURE OF OPERATIONS AND GOING CONCERN

1933 Industries Inc. (the "Company") was incorporated pursuant to the provisions of the Business Corporations Act of Alberta and later continued into the Province of British Columbia. The Company is a publicly traded company with its registered office located at 300 - 1055 West Hastings Street, Vancouver, British Columbia, Canada. The Company's common shares are listed under the symbol "TGIF" on the Canadian Securities Exchange and under the symbol "TGIFF" on the OTCQX.

The Company operates in the medical and recreational cannabis sectors in Nevada, USA. Alternative Medicine Association ("AMA"), a 91% owned subsidiary of the Company, is licensed in the State of Nevada as (i) a cultivation facility; and (ii) a production facility for edible, or cannabis-infused products. Infused Mfg ("Infused"), a 100% owned subsidiary of the Company, is focused on developing, and manufacturing hemp and cannabidiol ("CBD") infused products and brands for retail sale and use in jurisdictions where permitted. During the year ended July 31, 2024, Infused operations were discontinued (Note 22).

While some states in the United States ("U.S.") have authorized the use and sale of cannabis, it remains illegal under federal law and the approach to enforcement of U.S. federal laws against cannabis is subject to change. The Company assumes certain risks due to conflicting state and federal laws because the Company engages in cannabis related activities in the U.S. The federal law relating to cannabis could be enforced at any time and this would put the Company at risk of being prosecuted and having its assets seized. The Company may be irreparably harmed by a change in enforcement policies of the federal government depending on the nature of such change.

Given the current illegality of cannabis under U.S. federal law, the Company's ability to access both public and private capital may be hindered by the fact that certain financial institutions are regulated by the U.S. federal government and are thus prohibited from providing financing to companies engaged in cannabis-related activities. The Company's ability to access public capital markets in the U.S. is directly hindered as a result. The Company may, however, be able to access public and private capital markets in Canada in order to support continuing operations.

Going concern

The Company has not yet achieved profitable operations and during the three months ended October 31, 2024, the Company incurred a net loss of $577,829 (2024 - $380,411). As at October 31, 2024, the Company had an accumulated deficit of $97,986,329 (July 31, 2024 - $97,399,298) and a working capital of $584,087 (July 31, 2024 - $561,576). These factors represent a material uncertainty that may raise significant doubt regarding the Company's ability to continue as a going concern. As a result, the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.

These condensed interim consolidated financial statements for the three months ended October 31, 2024 and 2023 ("financial statements") have been prepared on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for at least the next twelve months.

The Company evaluates if the going concern assumption at each reporting period is appropriate and will consider removing the going concern and uncertainty note when the Company can depend on profitable operations or is confident of obtaining additional debt, equity or other financing to fund ongoing operations until profitability is achieved. These financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. Should the Company be unable to obtain additional capital in the future and the Company's ability to continue as a going concern be impaired, material adjustments may be necessary to these financial statements. Such adjustments could be material.

2. BASIS OF PREPARATION

Statement of compliance

These financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, using accounting policies consistent with IFRS® Accounting Standards issued by the International Accounting Standards Board ("IASB") and the IFRIC® Interpretations of the IFRS Interpretations Committee. As such, these financial statements do not contain all the disclosures required by IFRS for annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements for the years ended July 31, 2024 and 2023 ("Annual Financial Statements").

These financial statements were approved by the Board of Directors and authorized for issue on February 26, 2025.

1933 INDUSTRIES INC.

Notes to the Consolidated Financial Statements

For the three months ended October 31, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

2. BASIS OF PREPARATION (continued)

Basis of measurement

The financial statements have been prepared using the historical cost basis, except for biological assets, which are measured at fair value, as specified by IFRS Accounting Standards, as well as information presented in the consolidated statements of cash flows.

Functional and presentation currency

These financial statements are presented in Canadian dollars. The functional currency of the Company is the Canadian dollar. References to "CAD" are to Canadian dollars and "USD" or "USD$" are to United States dollars.

Basis of consolidation

These financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances are eliminated on consolidation. Control exists where the parent entity has power over the investee and is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are included in the financial statements from the date control commences until the date control ceases.

A summary of the Company's subsidiaries included in these financial statements as at October 31, 2024 is as follows:

		Country of	Percentage	Functional
Name of subsidiary	Abbreviation	Incorporation	Ownership	Currency	Principal Activity
1080034 B.C. Ltd.	0034 BC	Canada	100%	CAD	Inactive
1933 Management Services Inc.	FNM	USA	100%	USD	Holding company
1933 Legacy Inc.	Legacy	USA	100%	USD	Inactive
Infused Mfg LLC	Infused MFG	USA	100%	USD	Discontinued
FN Pharmaceuticals LLC	FNP	USA	100%	USD	Inactive
					Cannabis cultivation
Alternative Medicine Association LLC	AMA	USA	91%	USD	and production
AMA Productions LLC	AMA Pro	USA	100%	USD	Inactive
Spire Secure Logistics Inc.	Spire	Canada	100%	CAD	Inactive

3. MATERIAL ACCOUNTING POLICIES

These financial statements were prepared using accounting policies consistent with those in Note 3 to the Annual Financial Statements.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in accordance with IFRS requires the Company to make estimates and judgments, in applying accounting policies. Management continually evaluates these estimates and judgments based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and judgments which may cause a material adjustment to the carrying amounts of assets and liabilities. The Company's interim results are not necessarily indicative of its results for a full year. The significant estimates and judgments applied in the preparation of these financial statements are consistent with those applied and disclosed in Note 4 to the Annual Financial Statements.

1933 INDUSTRIES INC.

Notes to the Consolidated Financial Statements

For the three months ended October 31, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

5. RECEIVABLES

A summary of the Company's receivables is as follows:

	October 31,	July 31,
	2024	2024
	$	$
Trade receivables	2,032,002	1,934,292
Other	89,361	74,375
	2,121,363	2,008,667
A summary of the Company's aging of receivables is as follows:

	October 31,	July 31,
	2024	2024
	$	$
Current	1,608,143	1,214,726
1 - 30 days	569,668	480,608
31 - 60 days	49,379	199,623
61 - 90 days	61,244	63,689
> 90 days	189,847	472,387
	2,478,281	2,431,033
Expected credit loss provision	(356,918)	(422,366)
	2,121,363	2,008,667
A summary of the Company's Expected Credit Loss provision is as follows:

		$
Balance, July 31, 2023		442,131
Provision for expected credit loss		92,511
Recovery for expected credit loss		(112,276)
Balance, July 31, 2024		422,366
Provision for expected credit loss		42,378
Recovery for expected credit loss		(107,826)
Balance, October 31, 2024		356,918

As at October 31, 2024, trade receivables are presented net of lifetime expected credit losses of $356,918 (July 31, 2024 - $422,366). During the three months ended October 31 31, 2024, general and administration included a provision for expected credit losses on trade receivables of $42,378 (2024 - $7,282).

6. INVENTORY

A summary of the Company's inventory is as follows:

	October 31,	July 31,
	2024	2024
	$	$
Raw materials	304,205	301,866
Harvested cannabis and trim	1,235,296	1,081,219
Cannabis oil and equivalent	196,772	281,713
Finished goods	633,295	1,060,727
	2,369,568	2,725,525

During the three months ended October 31, 2024, the Company recorded $2,756,077 (2023 - $1,501,570) for inventory expensed to cost of sales.

1933 INDUSTRIES INC.

Notes to the Consolidated Financial Statements

For the three months ended October 31, 2024 and 2023 (Unaudited - Expressed in Canadian dollars, except where noted)

7. BIOLOGICAL ASSETS

A summary of the Company's biological assets is as follows:

	$
Balance, July 31, 2023	414,075
Capitalized production costs	9,660,412
Transferred to inventory upon harvest	(9,845,503)
Effects of movement in foreign exchange	196,745
Balance, July 31, 2024	425,729
Capitalized production costs	2,016,369
Transferred to inventory upon harvest	(2,163,193)
Effects of movement in foreign exchange	502
Balance, October 31, 2024	279,407

As at October 31, 2024, the carrying value of biological assets comprises cannabis plants. On average, the grow cycle is approximately 13 weeks (July 31, 2024 - 13 weeks).

The fair value less costs to sell is estimated using an expected cash flow model which assumes the biological assets will grow to maturity, be harvested, converted into finished goods inventory, and sold in the retail cannabis market. The fair value measurement for biological assets is categorized as Level 3 (as defined in the fair value hierarchy - Note 19). These estimates are subject to volatility in market prices and several uncontrollable factors, which will be reflected in profit or loss on biological assets in future periods.

The following significant unobservable inputs, all of which are classified as Level 3 on the fair value hierarchy, were used by management as part of the model:

Selling price - calculated as the weighted average selling price for all expected grades and strains of cannabis based on actual selling prices of the fair value of cannabis forms on a per pound basis.
Yield per plant - represents the number of grams of finished cannabis that are expected to be obtained from each harvested cannabis plant.
Stage of growth - represents the weighted average number of weeks out of the expected 13-week growing cycle that cannabis plants have reached as of the measurement date.
Wastage - represents the weighted average percentage of cannabis plants expected to fail to mature to the point of harvest.
Post-harvestprocessing costs - calculated as the cost per gram of harvested cannabis to convert into finished dry bulk flower ready to be packaged into finished goods.

A summary of the Company's significant unobservable inputs used in the model to estimate fair value less costs to sell is as follows:

	October 31,	July 31,
	2024	2024
Estimated sales price per gram (1)	$3.48	$2.73
Weighted average stage of growth	6 weeks	5 weeks
Expected yield per plant	82 grams	182 grams
Wastage	1.64%	1.05%
Post-harvest processing cost per gram (2)	$0.97	$1.51

Estimated sales price per gram input is translated from USD$2.50 (July 31, 2024 - USD$1.98).
Post-harvestprocessing cost per gram input is translated from USD$0.70 (July 31, 2023 - USD$1.09).

Increases in costs required up to the point of harvest, harvesting costs and selling costs will decrease the fair value of biological assets, while increases in sales price and expected yield for the cannabis plant will increase the fair value of biological assets.