General Cannabis Corp (OTCMKTS:CANN) is still reveling in the success of the last year. Although the value of the stock has dipped in recent weeks, the fact the value is still above its price for most of last year attests to the level of success in the year.
Recently the firm released the year’s financial results and this looks set to spark a massive reaction from the market within the next few days.
Take a look at the stock’s price action over the last year:
General Cannabis Corp. was established in November 1987 and its head office is located in Denver, Colorado. It is a holding company, which specializes in providing lease growing space and similar amenities to accredited marijuana operating companies. It carries out its operations through its different divisions: Finance, Marketing, Security and Operations.
The finance division encompasses the purchase and leasing out of cultivation space and associated amenities to accredited dispensary owners and marijuana growers to carry out their operations. The Marketing division handles the distribution and sale as well as the designing of apparel featuring graphic designs. The Security division offers advanced security such as video surveillance, cash transport and on-site professionals to the accredited cannabis cultivators and retail shops while Operations provides consulting services to the cannabis industry which ranges from compliance, retail operations, and logistical support to facility design, obtaining licenses, cultivation and building services as well as the expansion of the firm’s current operations.
For more information on the company, visit our previous post here.
The firm recently revealed it fiscal 2017 year-end results, the summary of which was that 2017 was a year of change for General Cannabis. Within the last year, the company’s balance sheet has grown by more than 550%, while also raking in record amounts of sales revenues in 2017. According to Robert Frichtel, CEO of the company, General Cannabis Corp successfully paid down a vast portion of the debt on its books during the year, replacing the debt with fresh equity and was also significantly successful in increasing its book value.
The company also improved its liquidity level in 2018, a feat which was largely aided by the reduction of its debt while generating an added $4.2 million via the exercise of stock options and warrants.
Chief Operating Officer, Joe Hodas explained that besides its strategy of growing the business through acquisitions, the company is also focused on growing internally and supporting each of its internal division to achieve profitability. Management attested to investing time across divisions, exploring the staffing models, revenue projections and operational and business challenges.
Based on the results of original management evaluation and observation as well the firm’s currently owned infrastructure, it is possible for General Cannabis to explore the possibilities of new business lines, cross-sale prospects across the divisions and operating efficiencies.
Over the year, it was clearly observed that the business had expanded during the year, and there is the expectation for continued expansion across the country. Management has asserted their commitment to hiring talented executives to support the firm’s development.
At the end of 2017, the firm recorded revenues of $3.5 million, an increase of 18% from the revenues of the previous operating year. Encouragingly, this increase has continued a positive trend of rising revenues over the last four years for the company. However, it is anticipated that as CANN expands its business activity, its consumer base will continue to grow which will help to boost sales revenues in the coming years.
However, the firm recorded cost of sales of $2.7 million, an increase of 28%, which from the previous year. A pointer that the firm may have lost some of its production efficiency in its sales operations given that revenues increased by a more conservative 18% between both years.
In line with the cost of sales, sales, general and administrative expenses jumped by 14%, while the firm incurred non-recurring million and other expenses of $0.2 million and $1.1 million respectively during the year. With no major additional income while there were increases in sales and administrative costs and other costs, operating loss for the year was recorded at $7.04 million, almost the same as the previous year’s operating loss of $7.06 million. Net loss for the year was $8.2million, up from $8.0 million in 2016.
The statement of financial position reveals that the firm is somewhat highly geared. On its books, its total debt is worth an estimated $4.1 million, nearly 30% of which is part of account payables. The firm’s level of debt when computed leads to debt to equity ratio of 0.85. It also has a liquidity ratio of 1.5, which can be considered acceptable for its industry.
CANN enjoyed a very strong performance in the previous year, and this has put the company in a unique position to break more operating and sales records in the new year.
Disclosure: We have no position in CANN and have not been compensated for this article.