1933 Industries : Financial Statements - For the Three and Nine Months Ended April 30, 2023 and 2022

1933 INDUSTRIES INC.

Condensed Interim Consolidated Financial Statements

For the three and nine months ended April 30, 2023 and 2022

(Unaudited - Expressed in Canadian dollars)

Notice of Disclosure of Non-auditor Review of the Condensed Interim Consolidated Financial Statements for the Three and Nine Months Ended April 30, 2023 and 2022

Pursuant to National Instrument 51-102Continuous 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 April 30, 2023 and 2022, have been prepared in accordance with the 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.

June 29, 2023

1933 INDUSTRIES INC.

Condensed Interim Consolidated Statements of Financial Position (Unaudited - Expressed in Canadian dollars)

				April 30,	July 31,
			Note	2023	2022
				$	$
ASSETS
Current
Cash		1,694,672	363,274
Receivables	4,19	2,197,227	1,343,273
Inventory	5	4,328,699	5,861,394
Biological assets	6	445,751	1,311,192
Prepaid expenses and deposits	7	1,011,689	396,546
Assets held for sale	8	-	3,071,337
				9,678,038	12,347,016
Property and equipment	9	11,819,842	12,170,940
Goodwill	10	4,739,712	4,491,721
Total assets		26,237,592	29,009,677
LIABILITIES
Current
Accounts payable and accrued liabilities	11,19	2,560,661	2,755,626
Income tax payable		1,745,768	1,050,251
Current portion of lease liability	12	158,192	290,582
Convertible debentures	14	4,457,873	4,574,279
				8,922,494	8,670,738
Lease liability	12	13,467,444	12,816,214
Total liabilities		22,389,938	21,486,952
SHAREHOLDERS' EQUITY
Share capital	16(b)	82,248,922	81,855,012
Reserves	16(c)	10,320,949	10,157,141
Accumulated other comprehensive loss		(401,695)	(1,034,349)
Deficit		(87,046,392)	(82,456,203)
Equity attributable to shareholders of the Company		5,121,784	8,521,601
Non-controlling interest		(1,274,130)	(998,876)
Total shareholders' equity		3,847,654	7,522,725
Total liabilities and shareholders' equity		26,237,592	29,009,677
Nature of operations and going concern (Note 1)
Subsequent event (Note 24)
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 condensed interim consolidated financial statements.

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1933 INDUSTRIES INC.

Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited - Expressed in Canadian dollars, except share numbers)

		Three months ended	Nine months ended
			April 30,		April 30,
	Note	2023	2022	2023	2022
		$	$	$	$
Revenues		4,073,142	4,256,280	13,335,368	9,930,426
Cost of sales	5	(3,181,529)	(2,474,488)	(8,435,719)	(6,385,625)
Gross margin, excluding fair value adjustments		891,613	1,781,792	4,899,649	3,544,801
Change in fair value due to biological transformation	6	(1,748,185)	833,301	(2,220,734)	2,756,157
Fair value adjustment on sale of biological assets		(740,582)	(604,400)	(3,700,450)	(1,716,877)
Gross margin		(1,597,154)	2,010,693	(1,021,535)	4,584,081
Expenses (income)
Accretion expense	14	-	-	-	10,434
Change in fair value of warrant liability	13	-	(10,146)	-	(380,146)
Depreciation	9	69,678	97,746	291,115	291,082
Foreign exchange loss (gain)		(201)	(731)	(52,034)	44,786
Gain on disposal of assets held for sale	8	-	-	(63,481)	-
Gain on sale of property and equipment	9	-	(527,446)	-	(527,446)
General and administration	9,17,19	411,052	447,021	1,126,661	1,144,374
Goodwill impairment	10	-	11,472,845	-	11,472,845
Interest expense	12,14	421,585	440,046	1,273,512	1,335,139
Interest income		-	(14,907)	-	(14,907)
License, taxes, and insurance		411,539	1,080,836	1,797,066	2,617,880
Management and consulting fees	19	150,000	107,000	428,000	321,677
Other income	18	-	-	(2,962,283)	-
Professional fees		91,700	425,698	701,235	972,459
Share-based compensation (recovery)	19	21,896	(17,510)	164,824	8,138
Wages and benefits	19	187,999	167,264	646,760	713,428
		1,765,248	13,667,716	3,351,375	18,009,743
Loss before income taxes		(3,362,402)	(11,657,023)	(4,372,910)	(13,425,662)
Current income tax expense		-	(718,368)	(515,534)	(718,368)
Net loss for the period		(3,362,402)	(12,375,391)	(4,888,444)	(14,144,030)
Foreign currency translation adjustment		181,255	140,235	655,655	140,145
Comprehensive loss for the period		(3,181,147)	(12,235,156)	(4,232,789)	(14,003,885)
Net income (loss) attributable to:
Shareholders of the Company		(3,123,786)	(12,371,044)	(4,590,189)	(14,157,756)
Non-controlling interest		(238,616)	(4,347)	(298,255)	13,726
Comprehensive loss attributable to:
Shareholders of the Company		(2,948,149)	(12,233,835)	(3,957,535)	(13,993,103)
Non-controlling interest		(232,998)	(1,321)	(275,254)	(10,782)
Net loss per share
Basic and diluted		(0.01)	(0.03)	(0.01)	(0.03)
Weighted average number of shares outstanding
Basic and diluted		457,534,847	450,699,319	454,014,638	450,699,319

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

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1933 INDUSTRIES INC.

Condensed Interim Consolidated Statements of Cash Flows (Unaudited - Expressed in Canadian dollars)

	Nine months ended
		April 30,
	2023	2022
	$	$
Operating activities
Net loss for the period	(4,888,444)	(14,144,030)
Items not affecting cash:
Change in fair value due to biological transformation	2,220,734	(2,756,157)
Fair value adjustment on sale of biological assets	3,700,450	1,716,877
Accretion expense	-	10,434
Change in fair value of warrant liability	-	(380,146)
Depreciation	291,115	291,082
Unrealized foreign exchange gain	(2,210)	(467,579)
Gain on disposal of assets held for sale	(63,481)	-
Gain on lease termination (recorded in general and administration)	-	(11,976)
Gain on sale of property and equipment	-	(527,446)
Goodwill impairment	-	11,472,845
Interest expense	276,488	274,651
Interest income	-	(14,907)
Share-based compensation	164,824	8,138
Changes in non-cash working capital:
Receivables	(853,954)	(766,456)
Inventory	2,607,814	(2,119,191)
Biological assets	(5,055,743)	1,000,317
Prepaid expenses and deposits	(615,143)	(128,908)
Accounts payable and accrued liabilities	(194,965)	1,711,893
Income tax payable	515,534	718,368
Net cash used in operating activities	(1,896,981)	(4,112,191)
Investing activities
Purchase of property and equipment	(302,301)	(14,871)
Proceeds from sale of property and equipment	-	1,622,001
Proceeds from sale of assets held for sale	3,134,818	-
Loan receivable advanced	-	(606,061)
Net cash provided by investing activities	2,832,517	1,001,069
Financing activities
Repayment of lease liability	(259,793)	(252,374)
Net cash used in financing activities	(259,793)	(252,374)
Effect of exchange rate on changes on cash	655,655	(76,300)
Change in cash	1,331,398	(3,439,796)
Cash, beginning of period	363,274	4,405,849
Cash, end of period	1,694,672	966,053

Supplemental disclosure with respect to cash flows (Note 20)

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

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