General Cannabis Archives - Green Market Report

General Cannabis (CANN) reported a 19% decrease in losses for the year ending December 2017 with revenue of $8.2 million versus last year’s revenue of $10.1 million. The loss per share was $0.40 versus last year’s loss per share of $0.66. The company said that as of December 31, 2017, it had an accumulated deficit of $34.8 million. Revenues for 2017 increased 18% to $3.5 million from $2.9 million. It had net cash of $5 million at the end of December 2017 versus $800,000 at the end of 2016.

“Fiscal 2017 was a transformative year for General Cannabis.  Our balance sheet has never been stronger.  Along with generating record revenues in 2017, we successfully paid down substantial amounts of debt, raised new equity, and significantly increased our book value,” said Robert Frichtel, Chief Executive Officer of General Cannabis.  “Our liquidity continued to improve in 2018, as we paid off all of our debt and generated an additional $4.2 million through the exercise of warrants and stock options.”

Chiefton Apparel

Revenues for the apparel line Chiefton recovered in the fourth quarter. The company said in its filing that in 2017 it experienced a drop in apparel sales and an increase in consulting revenue, as it dedicated resources to launching the design agency.   “Expenses for the design business during the first six months of 2017 were high, as we tried different approaches to establishing its operations, which negatively impacted costs and expenses.  We believe we now have an efficient model for Chiefton Design, with manageable, moderate recurring expenses.  In the third quarter of 2017, we hired a new managing director to drive Chiefton Supply’s apparel business, which contributed to increased sales in the fourth quarter of 2017.”

Security Segment

Revenues decreased 16% to $1.8 million in 2017 from last year’s $2.2 million due to the loss of a significant customer as a result of the drop in wholesale cannabis prices in Colorado. General Cannabis said that it was partially offset in the third quarter of 2017 by organic growth and our acquisition of Mile High.  The filing stated, “Costs and expenses typically vary with changes in revenue, however, the increase in costs and expenses in 2017 compared to 2016, relates primarily to overtime and training time for guards as our customer base recovered from the decline experienced during the first six months of 2017.  We also incurred additional expenses in 2017 for our expansion into California and overhead from the Mile High acquisition.”

Operations Consulting

Revenues in 2017 increased 193% to $1.2 million over last year’s $432,000 primarily due to General Cannabis’ assisting companies submitting applications to acquire licenses in states that recently legalized cannabis like California and adding a significant two-year contract in July 2017 to manage the cannabis grow facility for a customer.  Costs and expenses increased in 2017 primarily due to the company hiring new consultants to meet current and expected future demand for services, as well as the cost of the products sold.

Additional Management Comments

“Along with growth through acquisitions, we are also focused on organic growth and driving each segment to profitability,” said Joe Hodas, Chief Operating Officer of General Cannabis.  “I have spent extensive time with each of our segment leaders, diving into staffing models, revenue projections and challenges.  With initial analyses in hand and the existing General Cannabis infrastructure, I believe we can capitalize on new lines of business, cross-sale opportunities between segments, and operating efficiencies.  I am eager to work with the great team in place here at General Cannabis to drive strong top line and bottom line results.”

Michael Feinsod, Executive Chairman of General Cannabis, stated:  “Our business expanded during the year, which positions us for continued national expansion.  We will continue to hire talented executives to support our growth.  General Cannabis has never been in a better position to take advantage of our strong infrastructure and continue to focus on growth through acquisitions.  Our strong platform and corporate team can quickly help entrepreneurial cannabis companies achieve success.”

Colorado-based General Cannabis Corp (CANN), announced its highest quarterly revenue results for the fourth quarter ending December 31, 2017, and paid down its long-term debt.

The company delivered approximately $990,000 in revenues for an increase of 27% over last year’s fourth quarter. Annual revenues increased 15% to $3.5 million versus last year’s $2.9 million. The company did not report whether it had a profit or loss for the quarter or the year. There was no formal filing for the earnings, only a press release.

General Cannabis is the parent company for three underlying companies. Next Big Crop is a consulting firm, Iron Protection provides security services and Chiefton is cannabis clothing and graphic design.

Revenues

Iron Protection Group experienced decreases in revenue due to the drop in wholesale prices in Colorado. Revenues fell 11% for the quarter and 16% annually. The company acquired Mile High Protection Services in August 2017 to reduce its dependence on the cannabis industry. This company segment received a license to operate in California and hopes to see growth from this market in 2018.

Next Big Crop consulting was the most successful of the three companies with revenues increasing 323% for the quarter and 193% annually, although no sales figures were given in the press release.

Chiefton was reported to have a 95% increase in revenue for the quarter and a 26% increase for the year. The company said that it had added a new managing director in August 2017 to focus on its apparel business, which positively impacted revenues for both apparel sales and design revenue.

Elimination Of Debt

General Cannabis said in the press release that it had paid down all of its existing long-term debt.  The statement read, “In addition to raising $4 million through a capital raise in 2017, we have received an additional $3.5 million in funds through the exercise of warrants and stock options in 2018.  We used a portion of these funds to pay off the remaining $1,621,250 due under our 12% Notes in January 2018, and to pay off the $1,370,000 due under the Infinity Note in February 2018.”

“Our continued growth in revenue is a reflection of our ability to pursue opportunities from the expanded legalization of medical and recreational cannabis in numerous states,” said Robert Frichtel, Chief Executive Officer of General Cannabis.  “We also have achieved a significant milestone in the Company’s history, paying down our long-term debt.”

“We are now well positioned to continue our growth,” Frichtel added, “and focus on achieving profitability within each of our operating divisions.”