KAYA HLDGS INC COM USD0.001 (OTCMKTS:KAYS) Consolidating Before Heading Higher

KAYA HLDGS INC COM USD0.001 (OTCMKTS:KAYS) exploded up the charts last December and traded 6 million shares some days. It went from trading close to $0.10 to hit the $0.55 level in just a few days. Have a look at the price action.SourceBusinessKaya Holdings, Inc. was founded in 1993. The company has acquired large amount of expertise in running different types of businesses under many different names. These names include NetSpace International Holdings, Inc., or Alternative Fuels Americas, Inc. It was not until March 2015 that this business entity was finally called Kaya Holdings, Inc. KAYS owns two subsidiaries: Alternative Fuels Americas, which is based in Florida, and Marijuana Holdings Americas, Inc., which runs its operations from Oregon and owns ownership interest in four Oregon limited liabilities companies, namely MJAI Oregon 1 LLC., MJAI Oregon 2 LLC, MJAI Oregon 3 LLC, and MJAI Oregon 4 LLC.As it is stated in the last annual report, "in January 2014, KAYS incorporated a subsidiary, Marijuana Holdings Americas, Inc. a Florida corporation. Through entities controlled by MJAI, KAYS has focused on the development of opportunities within the legal recreational and medical marijuana sectors in the United States". However, it was not until July 2014 that the company started selling shares publicly as a medical marijuana company and opened its first Kaya Shack™ Medical Marijuana Dispensary in Portland, Oregon. Later, in April 2015, the company started growing its own own medical marijuana. In the annual report, KAYS disclosed that it was the first publicly traded U.S. company to own a majority interest in a vertically integrated legal marijuana enterprise in the United States. Additionally, in October 2015, the company opened another store. This move was made right after Oregon accepted the legal sale of recreational marijuana through MMDs.However, we believe that the biggest news about the company had not been announced yet. In December 2016, the OLCC recreational license for one of the stores arrived. The market appreciated this news in December 2016 and pushed up the shares in March and May, when the licenses for other stores were received.SourceSourceWe identified a great catalyst reading the annual report.

"Our OLCC License for the Central Salem Kaya Shack™ Marijuana Superstore (Kaya Shack™ OLCC Marijuana Retailer License #4) has been filed and is pending completion, inspection and final licensing. We expect to complete construction and licensing during the second quarter of 2017 and commence recreational and medical sales at this location as soon as possible thereafter." Source

Financial reportsThe latest quarterly earnings were released on May 22, 2017.

• Net Sales: $144,861
• Cost of Sales: $69,617
• Total Operating Expenses: $609,714

From these numbers, we conclude that the company should be working on reducing salaries, wages, and general as well as administrative costs. The revenue line is positive, and is better than that of many other marijuana companies that we have assessed here. However, in order to return a positive P&L account, those expenses need to be reduced. The balance sheet situation is as follows as of March 31, 2017. Note the tax deductible net operating losses accumulated, and the cash on hand:

• Cash: $1,254,000
• Total assets: $1,772,000
• Current liabilities: $8,250,000
• Total liabilities: $20,753,000
• NOLs: ($32,803,000)

The NOLs are quite markable. As mentioned earlier, when the company is able to reduce the wages, salaries and SG&A costs, the profit will be positive. Then, the company will be able to pay less taxes thanks to the tax deductible NOLs. Additionally, the company noted the increase in its cash in hand in the press release:

“While sales were down approximately $100,000 for Q-1 2017 versus the same period in 2016 (as we were only able to conduct recreational sales at one outlet as compared to two outlets in the same period in 2016), our cash position has increased by over 700% to in excess of $1.2mm as of the close of Q-1, for the same relevant periods” Source

On the top of it, the annual report, which was disclosed on April 18, 2017, showed a big increase in revenues.

"Results of operations in the Form 10-K show that for 2016, KAYS’ 2016 revenues were just under $1 million, a year-over-year increase of approximately 200% in comparison to 2015." Source

ConclusionThe market pushed up the company's share price in December 2016, because the company received licensing for its stores. Additionally, in 2017, the share price increased as a result of new licensing, as well as the release of the annual report and the quarterly results. The increase in cash on hand and revenues were also responsible for the share price upward trend. The company expects to receive more licenses. Thus, we encourage readers to be alert on this ticker. The share price may spike again. To sum up, there is a lot to like in Kaya Holdings, Inc. We will be updating our subscribers as soon as we know more. For the latest updates on KAYS, sign up below!Disclosure: We have no position in KAYS and have not been compensated for this article.