Maricann Reports Falling Revenue, Rising Losses

Maricann Group Inc. (OTCQB: MRRCFreported its earnings and yet the company didn’t say anything in the press release about the revenues from the quarter and instead said that “results were consistent with expectations” and revenue was expected to increase in 2018. This is always a big red flag when investors have to hunt and search for the numbers.

Sure enough, revenue fell for the three months ending September 30 to C$721,035 from C$892,081. Gross profits also tumbled to C$225,207 from C$477,490. Net losses soared to C$5,379,931 from last year’s C$1,119,537. Net losses for the last nine months were C$57 million versus last year’s C$2.7 million.

The company’s statement read, “Revenue is expected to increase in the first quarter of 2018 when the Company’s joint pharmacy initiative is expected to launch.  Product distribution for this initiative will occur through previously announced exclusive and primary supplier relationships with retail pharmacies.” Marican said it has reserved inventory to be ready for patients when the program begins.

More disturbing is that the company’s statement filed with Sedar said that as of September, it had accumulated a deficit of C$72 million and that the company will need to raise capital in order to fund its operations. So far Maricann has raised C$31 million in convertible debentures.

Maricann Pins Hopes On Germany

Maricann is also pinning its hopes on Germany, but that process has been slowed. In the company statement, Maricann said, “The tender process has been delayed multiple times due to ongoing legal proceedings related to unsuccessful submissions by other applicants in the initial qualifying round.  A further delay in the tender process may occur due to ongoing legal proceedings, however, a final decision may be forthcoming as early as March of 2018.” The company said it had also set aside inventory for European markets.

MariPlant GmbH has been registered as a 95% owned subsidiary in Germany.  The subsidiary will cultivate approved industrial hemp cultivars and extract CBD to be used in its “Mariplant” products.  The company statement read, “It is expected that these CBD products will be distributed through MariPlant’s own online shop in Europe, starting in February of 2018 and it is further anticipated that MariPlant will distribute 25mg CBD metered dose soft gel capsules with VesiSorb delivery technology as its first product offering.”

More Shares

Outstanding shares ballooned as well to 68 million from last year’s 36 million. Maricann’s shares on the OTC Market were lately trading at $1.87, down from the 52-week high of $2.13.

Debra Borchardt

Debra Borchardt is the CEO, Co-Founder, and Editor-In-Chief of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Masters degree in Business Journalism from New York University.


12 comments

  • Tim

    December 2, 2017 at 2:44 am

    Thanks for the article. The financials didn’t have to be mentioned. There isn’t a point to dig into something when its a early industry with expansions happening. Lool at other LPs. Some are taking the same kind of losses. Inccured losses happen.

    Next part. If you called Maricann. I am sure in 2018 it will be better. They made a deal with mckesson a over 100 billion company. Unnamed for privacy reason my guess being a new industry. A 72m deficent. I would like to see a screenshot of that.

    Next part with germany, its a over 1m sq feet ready to get retrofitted. 75k has already neen retrofitted. They have one or the biggest footprint for a facility to get if and when a license.

    The CBD is a smart model to diversify its product then standard dry produce. They jave morenthen 68m shares. If you look at the whole industry with cannabis lps. They have kept the float good. 100m is actually isn’t so bad. Its after that when dilution affects more.

    Now lets see more postives.

    Next month or next their facility is done of 215k SQ feet. One of the first big expansions actually done. The 35m wasn’t for deficit. If you look to prior releases it was for thr 300k+ facility after the 215k. So they can produce 60,000kg plus cannabis.

    They have under 1.00 a gram cannabis dry flower. The company owns a cogen with owning part of a gas company. Anyway I could go on and on. Just this article felt like a bash article or someone not experienced with the MJ space and found it alarming. What ever the case I hope this info helps people have a better clue. You’ll see Maricann share price next year not worth 2.00 area my opinion. Remember this article if you dont invest. Cheers ;).

    Reply

    • Debra Borchardt

      December 2, 2017 at 8:26 pm

      Hi Tim,
      When a company announces its earnings, it is expected that they will actually spell out their earnings. This wasn’t a company update. It was an earnings announcement. After covering corporate earnings for 9 years, you start to see patterns and know where to go in a filing to learn what is happening. Spelling out the negative along with the positive makes for balanced reporting.

      Reply

  • Graham

    December 2, 2017 at 6:38 pm

    This article was recently posted. For new investor this is whats called a bash piece https://www.greenmarketreport.com/maricann-reports-falling-revenue-rising-losses/ This piece is meant to instal fear and doesn’t ask or attempt to answer the question why? Any analyst should ask why and attempt to answer regardless of bearish or bullish this is “A big red flag” that it’s a basher with a short position or simply a lazy person that doesn’t do DD. If it were an honest analysis of the current standings of the company the author would have also looked into why the financials appear as they do, is it a one off event or a trend and how it compares to industry peers. I challenge this author DEBRA BORCHARDT to come into this group and debate myself or any of the other well informed investors in this group. I will debate her on Mari and how it compares to industry peers with much higher valuations or the industry as a whole. DEBRA BORCHART you have been called out you manipulative shorter!

    Reply

    • Debra Borchardt

      December 2, 2017 at 8:30 pm

      Hi Graham,
      Happy to discuss. Nothing that was written was incorrect. It was taken directly from the company’s filing. I do not own any stock in any cannabis company and never take any money to write sponsored content. This was a simple brief covering the company’s earnings, not a stock trading analysis.

      Reply

      • Graham

        December 4, 2017 at 11:18 am

        Hey where’s my second comment that was awaiting moderation since Saturday night. Are you afraid to discuss the company and negative sentiment you attached to it because you are a scam artist short seller

        Reply

        • Debra Borchardt

          December 4, 2017 at 11:33 am

          Graham,
          I’ve stated before that I own no stocks nor engage in short selling. Maricann’s earnings were covered as were several other companies last week, so the company wasn’t “picked on”. It is standard practice when writing an earnings brief to note revenues and losses and whether they went up or down. It is also standard practice to note when a company says it will need additional funding, which we also wrote about when MassRoots said the same thing. This was never a hit piece on Maricann, but a simple earnings brief. GMR has written positive stories on Maricann on November 8 and October 6, so investors can see both the positives and negatives. We reserve the right to moderate comments.
          GMR

          Reply

  • John

    December 4, 2017 at 12:44 pm

    Debra, I’m hearing a lot on different forums about the debenture raise. Most people appear to be happy about it. I’ve been told it will allow the company to double it’s production capacity. There’s also a lot of talk about insider participation. People are saying the financing has some of the highest insider participation in the industry and it shows a lot of confidence from management. Can you comment? I’d like to hear your take on it

    Reply

    • Debra Borchardt

      December 4, 2017 at 1:33 pm

      Hi John,
      Insider participation is always a good sign that they believe in the prospects and are willing to put their own money at risk. It seems like the company just needs additional financing to move the ball closer to the goal posts. They seem to be very transparent about all of the financing arrangements that are happening within this company which is detailed in Note 19 of the filing. I’m sure they will have no problem raising additional money if they need it prior to Germany coming online and the pharmacies in Canada ramping up.

      Reply

      • John

        December 4, 2017 at 2:25 pm

        Can you comment on the revenue? I’m doing some research and it looks like it was affected by losses associated with a wind storm that damaged the facility. Do you think this is why the company said “results were consistent with expectations” ? It looks like the problem was fixed. Do you think revenues should pick back up? Their distribution networks look pretty solid. I’m wondering if the shortfall on revenue is presenting a buying opportunity. If the revenue decline was caused by the wind storm it seem like that should be a one off event. What are your thoughts? Do you think that storms is likely the reason for the decline?
        Thanks

        Reply

        • Debra Borchardt

          December 5, 2017 at 11:36 am

          The storm did affect the company’s inventory and hurt revenues. I’m wondering if insurance will cover it as they mentioned in that loss? This setback could create a buying opportunity as the stock is still lower than its 52-week high, although it has moved from November lows.

          Reply

  • Bryan Joseph

    December 27, 2017 at 9:14 pm

    Debra, I have been following Maricann for 6 months straight. I will have to agree with John and Graham. Your analysis of the company is really irresponsible and you should apologize for writing such a stupid article. How on earth do you or anyone expect a company in the MJ sector to be profitable?. Find me a company in this sector that’s is not trading 10x times future earnings. You need to go back to school my friend and take an accounting 101 course. Maricann is so undervalued that I urge every investor to take this last opportunity and invest in the next BILLION company, yes you heard it right. However, can I suggest you do some serious due diligence on this company? And please do recall the challenge s these LPs have in raising much-needed capital. You article bothers so much stupidity it’s not worth debating. Talk about a smart management team…That’s Maricann Debra. Watch and learn something in the coming months.

    Reply

    • Debra Borchardt

      December 28, 2017 at 7:53 am

      Hi Bryan, Thanks for your feedback. The article is just stating the facts of the company’s filing. There is nothing inaccurate in the numbers reported. I would not be surprised to see this company turn a profit in the future, but this quarter had issues. If you look back, I have written positive stories about this company as well. It’s balanced reporting. Readers trust that GMR reports the negative along with the positive.

      Reply

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