Increasing revenues, controlled expenses, 40% increase in value; that’s what every investor wants to hear and early too. But it wasn’t always this way at Medicine Man Technologies Inc (OTCMKTS:MDCL).
In today’s piece we will share with you just how the company was able to acquire an essential target company to expand its operations and how the company’s management was able to assure investors of its potential in spite of its declining results.
Before we, give you the details, take a look at the price movement below:
Between July and September 2017, MDCL’s stock price tumbled from $1.58 to $0.9 largely due to losses announced in the quarter, but positive signs shown from its recent $1m equity raise and announcements that it has secured 12 new clients has helped the stock to an almost complete full recovery in the last two months, as it is currently trading at $1.38.
For those not familiar with MDCL; here is a brief profile of the company.
The company was established by Andrew Williams under the name of Medicine Man Technologies, Inc. in March 2014, and secured its first client/license in April 2014, generating revenues through sales of consulting and licensing services. It engages in the cultivation, marketing, and distribution of medical and recreational cannabis. It provides supply chain, cultivation, dispensary, processing, and feasibility consulting.
To date, the company has provided guidance for several clients that have successfully secured licenses to operate cannabis businesses within their state. It currently has twenty eight active clients in 12 US states and Puerto Rico.
The company focuses on working with clients to utilize its experience, technology, and training to help secure a license in states with newly emerging regulations, deploy the Company’s highly effective variable capacity constant harvest cultivation practices through its deployment of Cultivation MAX (a program designed to support its ability to compete in the industry by allowing Medicine Man Technologies to optimize existing cultivation facilities of other companies to improve yield, consistency, quality, and efficiency) and eliminate the liability of single grower dependence.
On October 2 2017, it was announced that Medicine Man had entered into twelve new license and service agreements including two Arkansas dispensary application support agreements, two Puerto Rico cultivation deployment agreements, one Canadian LP cultivation services deployment agreement, two Ohio dispensary application support agreements, one South Africa client cultivation consulting agreement, one Pueblo, Colorado cultivation support agreement (greenhouse deployment), one Michigan cultivation services client and two California cultivation clients.
The Company already currently has fifty-eight active clients in California, Oregon, Colorado, Nevada, Illinois, Michigan, Arkansas, Pennsylvania, Florida, Ohio, Maryland, and Puerto Rico in the United States and territories, and Australia, Canada, and South Africa, internationally.
Additionally, the Company’s Denver Consulting Group (DCG) team recently secured a dispensary license for a Long Beach, California client and expects to engage new clients in Ohio as well as Michigan in the near-term. With this new client win, the DCG unit currently accounts for ten accounts from Medicine Man’s current client base.
Brett Roper, Medicine Man’s CEO, commented:
“We have seen a substantial uptick in international discussions as Medicine Man’s reputation and new client pipeline continues to grow, highlighted by potential clients visiting from Germany, Australia, and Israel in recent weeks. These inquiries have been driven by a need among cannabis growers to create both a higher quality; GMP based indoor growing environment as well as a desire to increase the efficiency of operating cultivation related facilities. I feel that our indoor and greenhouse highly efficient cultivation related methodology provides this advantage to clients such as these and more importantly, provides us with a substantial advantage in generating quality leads.”
In August 2017, the firm secured a $1M equity investment from a single accredited investor and announced plans to secured additional investment capital as it deems wise in the very near future.
Board Chairperson, Mr. Andrew Williams, and CEO, Mr. Brett Roper, also purchased shares in this offering (25,000 and 30,000, respectively), paying modest premiums to the recent price represented in the marketplace to ensure that the investment capital goes directly to the Company rather than to traders in the open market.
Andrew Williams, Co-founder and Chairman of the Board, was quoted saying:
“Medicine Man Technology is a leading cannabis consultancy and ‘brand warehouse’ company in the U.S., providing first class cannabis consulting and technology, nutrients, and dispensary advisory services to a growing number of innovative cannabis companies across the country. Our technology solutions optimize yields and quality of product for our clients, helping to improve business performance and ultimately maximize their profits. This capital gives us additional resources to quickly and strategically expand our solutions to capture additional market share across the emerging, legal cannabis market.”
Revenues increased by 489% to $882,353 in the second quarter of 2017, compared to $149,766 realized in the second quarter of 2016, largely due to higher consulting-based revenues and the contribution of the newly acquired Pono Publications and Success Nutrient businesses. The new acquisitions generated $352,158 of revenue in the second quarter of 2017,more than double the revenues of their parent company in the first quarter.
In spite of the increased revenue, the company recorded a net loss in the quarter owing to extraordinary one-time expenses related to acquisition costs and stock compensation totaling $4,579,019. With the payments completed, a balance sheet revealing that 85% of all liabilities had been settled and its assets now 3 times larger than its liabilities, the company is poised to rake in consistent positive results in the short and medium term
Medicine Man Technologies has shown a commitment to grow and its management has already begun to pursue this goal with clear results. Look for the stock price to start reflecting the positive strides made.
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Image courtesy of Katherine Hitt via Flickr
Disclosure: We have no position in MDCL and have not been compensated for this article.