SUNNIVA INC (OTCMKTS:SNNVF): An Emerging Cannabis Player

Sometimes, the best time to enter into a new business model is right after the celebration of the IPO. Most market participants usually don't have the due time to assess the financial shape of the company and its trajectory. Thus, opportunities can appear for those who study the newly listed company.

Following this rationale, we took the time to read about one of the celebrated recently registered companies in the international exchanges. We are talking about SUNNIVA INC. (OTCMKTS:SNNVF), a North American provider of medical cannabis products and services, which is said to be growing at over 5,000 patients a month.

Check the following video, in which the founders explain how this fantastic growth pace is achieved by one of the subsidiaries of SNNVF. It will help understand how the whole business operates:

https://youtu.be/UmSNmTbF1ak

Now, have a look at how the share price increased right after the first market participants were able to buy the first stocks. The shares commenced being exchanged for less than $8, but not for a long time. After only ten days, an unexpected momentum pushed up the share price from $8 to touch the $15 mark. We believe that it took the market some days to study the materials received from SNNVF. Market participants understood that the company could represent an opportunity, the share price commenced running. The stock returns have been extraordinary.

After the initial spike, the share price diminished to $10, as the market participants tried to profit from the previous movement. Right now, it is above the psychological level of $10. If the longs continue to sell shares, the share price could again hit the $8 mark. Conversely, if they believe that there is room for more stock returns, it could go up to again test the previous resistance of $15.

Check out the following chart and form your own opinion:

YTD chart for SNNVF

SUNNIVA INC Business Overview

The company is a biopharmaceutical corporation, headquartered in Calgary, Canada, and was founded in 2014. It serves as a vertically integrated medical cannabis business focusing on the cultivation, production, and distribution of a broad range of therapeutic solutions both in the US and Canada.

Since the company is vertically integrated, it would be difficult to describe its all kinds of activities. We could read that it owns ten different subsidiaries, but we will mention only three business segments that are highlighted on the company's website:

- CP Logistics, LLC: it is developing Sunniva Campus, a state-of-the-art, purpose-built greenhouse facility in Cathedral City, California. The new facilities will be built in two phases. Phase I includes 246,000 square feet of greenhouse space with 78,000 square feet of header house and breezeway for a total of 324,000 square feet. Phase II is expected to increase the greenhouse by 180,000 square feet. The total production at the end of the second phase is expected to be equal to 40,000 kg per year. It is expected that the company will be following the cGMP (Current Good Manufacturing Process) standards.

- Natural Health Services Ltd: it owns and operates a Canadian network of medical cannabis clinics. Its activity consists of connecting patients and licensed producers as well as physicians. Additionally, the company provides technology infrastructure to physicians, patients, and licensed producers to comply with the rules of Health Canada.

- Full-Scale Distributors, LLC: it commercializes private-label vaporizers through its brand; Vapor Connoisseur. The company provides devices to over 80 top names in the North American marketplace. The brand is said to be known for its "high quality and innovative therapeutic delivery devices."

The Recent Developments show that the company seems to be growing at a high pace

Honestly, the company did not have a lot of time to issue so many press releases and information to the market participants, since it was recently listed in Canada and the U.S. However, the information that we could consult notes the fantastic trajectory of SNNVF.

About the greenhouse facility in Cathedral City, we could get to know that the project received in October 2017 a Conditional Use Permit clearing the path for construction of the new facility. In the same announcement, we could also read that it is expected to be completed in the next three years. This further information is critical. It shows when the first revenues will be received.

The general tone in the new press release was optimistic. We selected the following words:

“Sunniva Campus represents a substantial step forward for the cultivation, production, and distribution of cannabis products to meet the needs of patients in California. This purpose-built production facility will make the most of advanced greenhouse technology and ensure that patients across the state have access to trusted, consistent products free from the pesticides that are unfortunately all too common within the industry today.” ,” said Dr. Anthony Holler, CEO, Sunniva

Regarding the Natural Health Services, the market got to know in November 2017 that the subsidiary surpassed 100,000 active medical documents and 76,000 active patients, growing at over 5,000 patients a month. The management explained that growth pace with the following words:

“Consumers are increasingly turning to cannabis for relief from a broad range of medical conditions. Our clinics allow patients to come in and talk freely and openly with knowledgeable medical professionals who are equipped to prescribe the appropriate strain and dose to ensure positive outcomes." said Dan Vass, President, NHS

Additionally, we read some information about the business of Natural Health Services. In the press release, it was mentioned that this subsidiary operates a network of 8 medical clinics in Canada and is specializing in medical cannabis under Access to Cannabis for Medical Purposes Regulations.

With the cannabis industry growing at high pace, we believe that the company commenced very early in this business and the know-how created will help the company differentiate from the new companies trying to enter this flourishing sector.

New Management and more money to finance the growth

In January 2018, the company presented its newly appointed CFO, Mr. David Negus, CPA, CA. He brings his experience as Vice President, Corporate Controller at Lululemon Athletica as well as 20 years financial leadership in companies growing quickly. Furthermore, the company added Mr. Vinayak Shastry as President of Sun CA Holdings, Inc. (California).

In addition, the company noted a private placement, in which gross proceeds of CAD$12.13 million were raised. In total, CAD$50 million had been raised right before the company started the sale of the shares. We appreciate this fac because it shows that the company has contacts and recognition outside the financial markets.

The Company has approximately 26.6 million basic shares outstanding and 36.9 million shares on a fully diluted basis.

Conclusion

Currently trading with a market cap of $293 million, SNNVF is an exciting story among small caps. It seems that the financial information has not been adequately distributed to the market participants in the United States (Check the OTC Markets website). This situation gives us an edge. Reporting CAD$0.714 million in cash, CAD$58,911 million in total assets and CAD$29.29 million in total liabilities in September 2017, the financial shape seems good.

Additionally, the number of assets is increasing at a high pace; 129% as compared to the total assets shown in December 2017. Regarding the revenue line, the information is also beneficial. It reported a total of $10.2 million in revenue for the nine months ending September 30, 2017.

To sum up, this a name to have on your trading radar.

We will be updating our subscribers as soon as we know more. For the latest updates on SNNVF, sign up below!

Disclosure: We have no position in SNNVF and have not been compensated for this article.Image courtesy of Cannabis Culture via Flickr