1933 Industries Inc (CSE:TGIF) (OTCQX:TGIFF) on Monday said it expects “substantial improvements” during fiscal 2021, with the goal of achieving cash-flow break-even and profitability by the second quarter that ends January 30, 2021.
The company made the forward-looking announcement after reporting fourth quarter and fiscal year 2020 results (both of which ended July 31) that underscored the effects of the COVID-19 pandemic on revenue and income.
For FY20, the company recorded C$12 million in revenue, compared to C$18 million in FY19. Net loss was C$22.2 million versus a loss of C$19.1 million a year before -- which includes a C$2.2 million impairment charge from discontinued operations in California.
For the 4Q, revenue was C$2.4 million, compared to C$5.2 million in the previous year-ago quarter. Net loss was C$7.2 million versus a loss of C$5.7 million year-over-year. 1933 said the decrease in revenues stemmed from the continuing impact of COVID-19 restrictions in Nevada, the substantial loss of tourism due to the pandemic, and the retail limitations where the company's products are sold.
1933 also said both working capital and cash decreased during FY20. Cash was $2.8 million, compared to $17.6 million in FY19. Working capital was $6.1 million, compared to $22.5 million during FY19. Total assets were $46.6 million, compared to $61.7 million in FY19.
Nevertheless, looking forward, the company expects that the availability of high-quality cannabis flower cultivated in-house will increase demand for the company's products and have a positive impact on its gross margins going forward.
“The company is looking to grow market share in its core market of Nevada, where it is well-positioned to take advantage of a large addressable consumer market, a limited licensing regime and attractive cannabis flower pricing,” the company said.
“Management expects that the benefits of these operational efficiencies combined with its ability to supply high-quality cannabis flower to the market will result in substantial improvements that will be realized in fiscal 2021, with the goal of achieving cash flow break-even and profitability by the second quarter of the current fiscal year.”
Paul Rosen, CEO of 1933 Industries, said that he is “understandably disappointed” by the results and that COVID isn’t the sole explanation.
“When I became CEO during the fourth quarter, it was immediately apparent that the company needed to take urgent and decisive action to rectify a number of issues that had contributed to the losses experienced this year,” Rosen said. “Along with our president Eugene Ruiz and our dedicated team of co-workers, we have made material progress on stabilizing 1933 Industries and putting the company on a solid path towards profitability. While there is still more work to be done the company is in a much stronger position going forward from today than these results may indicate."
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