In our previous update of General Cannabis Corp (OTCMKTS:CANN), we noted that the company’s business for 2017 was very promising, as the company made several moves to cover the cannabis demand in the US, which we appreciated. Well, the company seems to be on fire, as it has recently put out the Q1 2017 earnings release, wherein operating results greatly improved.
Regarding the price action, the share price keeps sliding. At this point in time, the share price is trading around the $1.5 level. Volume has picked up recently and market participants look to be accumulating a position. This increase in volume most of the times means that a reversal may occur soon. Additionally, the company keeps sending interesting news. Have a look at the chart:
For those who don’t know about General Cannabis Corp, it provides resources for the the cultivation, production, and retail side of the cannabis business. The company owns a diverse range of operating divisions that provide real estate, consulting, security, financing, and distribution services to the Cannabis sector. It is, at the end of the day, a holding company focused on this high growth industry. Let’s review the recent announcements. We start with the latest quarterly results.
On May 15, 2017, the company announced its Q1 2017 results. We believe that the most interesting item was the increase in revenues by 119% over the first quarter of 2016 of the company’s operations segment. Conversely, the security division experienced 16% decrease in revenue, as the wholesale cannabis prices in Colorado declined and the company decided to only select well-capitalized clients. The security division is risk-averse, which is good. Robert Frichtel, Chief Executive Officer of General Cannabis, explained the 119% increase in revenue in the following way and also added that the robust pipeline will continue for the next year.
“Next Big Crop, our Operations segment, had record revenues in the first quarter of 2017.With 29 states and the District of Columbia now having legalized medical marijuana, of which eight states also legalized recreational use, Next Big Crop has expanded its business by assisting companies submitting applications to acquire licenses, and have also signed new contracts to provide operational consulting and products. Next Big Crop is developing a robust pipeline of business for the next year.”
Additionally, it was noted that the Iron Protection Group, which is the security division, had a decrease in revenue, but it was exploring more opportunities in California.
“The continued product price declines in the Colorado market has led to a decrease in overall security guard usage throughout the state. To balance this, Iron Protection Group is expanding into California and is broadening the suite of services it provides to clients.” Source
On the balance sheet, we saw the following capital structure. Note that the cash on hand and the property plant and equipment are the most important assets, the most important liabilities are other current liabilities.
- Cash and Cash Equivalents: $407,000
- Property Plant and Equipment $1,711,000
- Other Current Liabilities: $12,160,000
- Long Term debt: $841,00
Additionally, the retained earnings of the firm are $47,055,000 as of March 31, 2017. This is quite a large amount. Why is it important? These are called non operating losses, and the good news is that they are tax deductible. Hence, this is good news, as the company will not have to pay taxes for long time. Additionally, if another Cannabis company acquires CANN, it will not have to pay taxes either.
In addition, we got to know other good news. Recently, Goldman Capital Management Inc. acquired 65,000 shares of the company. It was registered on March 30, 2017. In addition, the following executives of the firm own shares and seem to be waiting for a turnaround.
|FEINSOD MICHAEL||1,500,000||Aug 24, 2016|
|FRICHTEL ROBERT LAWRENCE||906,000||Oct 16, 2016|
|BOOCKVAR PETER||30,000||Nov 16, 2016|
General Cannabis Corp keeps sending interesting news to the market. This time the quarterly earnings report showed that the company’s operations segment had reported an increase in revenue of 119% over the previous Q1 2016. This is good news. But, that is not all. The CEO said that the growth should continue. In addition, the company’s security division showed a decline in this quarter, but the company reacted by expanding the business in California. Finally, we saw that some market participants disclosed large stakes in the company, which may mean that they do not fear the recent decline in the share price. This is always a good sign. To sum up, try to be alert on this stock, it may surprise again soon. We will be updating our subscribers as soon as we know more. For the latest updates on CANN, sign up below!
Disclosure: We have no position in CANN and have not been compensated for this article.