I'm doing a tribute to the 24 days of Christmas by going over the financial statements of 24 companies that are considered downrange, speculative, and just plain high risk.
Our first six stops is fondly captured here
, the second one is here
, and the third set is here
All opinions are my own, and certainly not a recommendation for or against any of them, or to buy or sell.
Many are companies I've never looked at before. In some cases, I'd never even heard of them. I limited myself to 45mins to each, and kept mainly to most recent financial statements and MD&A's. You'll likely know more about the company than me if you're following them. This is only my reactions with a brief commentary about what I saw in the financial statements. IN - Inmed Pharmacuetical
- Another pharma. Specifically leaves THC out of their scope
- Relatively clean capital structure
- Heavy IR expense, likely web development, brand build, props. Should look really good for that cash, shouldn’t be recurring
- Lots of cheap optionality forward, matches dev cycle timeline.
- Very specific applications, only two they’ve got on - a rare skin disease and glaucoma. - The former is probably chasing a high return, latter is the big one. Pain mgmt next, years away.
- Exec pay heavy, seems typical.
- Will need another raise in about 9 mos given cash burn. 28MM in stack, but few likely available to wring cash out of.
- Spending consistent QoQ
Boring. Financials look relatively clean. Risk centres on whether their potential treatment for glaucoma is better than existing therapies. If you know any specializing clinical ophthalmologists, I’d ask them. Rare disease drugs usually are chasing high cost drugs paid for by public systems. Again, pharma isn’t my wheelhouse. But I have a high investor interest in the end use THC and CBD. Because I’m a commodity guy, that’s why. TGIF - Friday Night Inc.
- Tried to start as booze outfit, looks like it flopped. Maybe just a buy in by someone, or they’re absorbing the losses from it slowly
- Note 1 in financials sums up exposure to nation level risk. Earnings aren’t in Canada
- 32MM of cheap (cheap) warrants out there. Somebody hit a payday.
- 5 year $0.16 call options. Big payday as well.
- The two previous items helps to describe the typical shitty capital structure of the sector. Positive is that these guys have earnings to help support.
- Been building out for awhile, shows sophistication.
- Not sure what $650k in ‘power equipment’ exactly is
- Looks like they convert to CAD at the cash register level, no fx exposures. Nice change of pace from everyone else.
Blech to branding. If it was a car, it’d have flames painted on the sides and a naked chick shaped air freshener. Hard to pin the back story, there is one. Earnings are there, assets getting picked up, including land for expansion or grow. Diversifying a little, doesn’t look like they’re focusing on much but core business. Business risk is in competitive environment in Nevada and customer retention important - might be a gazillion of them there soon. I ran out of time trying to get my head around their story, store location(s) should reveal target market. Relatively straightforward financials, revenues will need to increase to support market cap and internal hurdle rate. Potential to move up a weight class with solid growth in earnings. ICC International Cannabis Corp
- Restated financials for first 6 mos of 2017 - ugh. Not surprisingly.
- Companies in Columbia, British Virgin Islands, sales to Mexico yada yada.
- Unwinding multi-national’s financials sucks in mature industries, let alone those in expansion mode.
- 2 dozen Sedar filings past 45 days, multiple topics/filings. They’re going to need more server memory at Sedar
- Capital structure typical, less busy than others in terms of # of transactions
- Licensing costs will hit margins
- Has land and buildings in/near production. More than a section of land (1 mile2 ) outdoor for hemp alone.
- Bought $3MM greenhouse for cannabis.
Financial statements that report on operations in multiple jurisdictions are complex relative to a single one. ICC have assets, permits, but few sales to report. Logistics and movement of psychoactive substances across borders is not simple either. If one is looking to invest in something like this, best to have a really good handle on where the outfit is at, and how well it can execute. Way beyond the purposes of this crawl. All I can say has been said. MGW - Maple Leaf Green World
- No license yet
- No hedging of forex, what is up with this sector? $400k dumped, likely on unhedged capital commitments. Would’ve cost a few grand to have taken that out.
- Does have cash. They’ve promised a 30,000 sq/ft up and running by Dec31st. Build appears to have been slow.
- Expansion plans into BC and Nevada, early stages. JV in California. Ambitious.
- Not alot of optionality in capital structure, but long dated. Same expensive stuff, lots less of it. Will likely be alot more of it soon given their ambition.
- Cheap in operating so far, modest, looks focused on build out.
- A civilized 14 pages.
- Looks head down, ass up (that means working hard)
- No downstream branding or licensing yet. A pure grower at this point, feels like it’ll stay that way.
Current cash won’t support all the hopes and dreams, will need alot more. Needs to monetize any production asap. Fair amount of shares out there. Will probably be back to markets/private placement shortly. Threat is that it’s late to the party. If they’re real and execute with precision, could be really something. That’s a definite positive. Too many in this space step over dollars to pick up nickels, this one looks austerely managed. Needs license pronto. VGW - Valens GroWorks
- Pretty typical for the space and where they are at
- Dedicated off take of product through Canopy
- Pretty expensive mgmt at this stage relative to others
- Not a ton of optionality in capital structure as of Aug. Starting to increase by transactions since.
- Pricy lease, looks like they’re going to own the building or are upgrading. Not very large at 625kg/year. 38k sq/ft claimed expansion potential.
- Extraction focused, has a lab as subsidiary
- Couple of promises of expansion about Nanaimo & Columbia
- Some sort of Arizona tie in, doesn’t look like anything other than a hobby
- No update to corporate presence beyond initial roadshow and top heavy for size, at least in intro.
Pretty ‘family’ in nature through related payments and all. Looks fallow at the moment awaiting license upgrades. Not a very professional feel, looks splatter gun. Also looks to be getting there, but can't get a feel about ops. Still raising money. Potential, but could be hamstrung by lack of capacity. Throughput revenue on extraction would be sexy, but unknowns abound about capacity and planned operating end state. TRTC - TerraTech Corporation
- Looks like peer of TGIF
- No CDN financials, US:OTC market
- Elves balked, started talking about resistance and power to the people.
- If you heard about it here first, you are in the same sleigh as me.
Execution looks good in-stores. I know nothing else. Consider this one like a Christmas gift you have to assemble.
That’s it. The elves are gassed again, and are looking for the rum I hid after their last fiasco. I'm thinking about giving it back to them, they've been filling shot glasses with the liquids left in the drink mats on the bar.
I am grateful to have gotten this last one out of them. I attached several that were left out and reasons below - just to ensure you get all the Dive Bar goodies that are in the finger bowl.
There isn’t much salt left on the peanuts though, the elves had licked it off before putting them back.
Merry Christmas from us here. We might post a naughty and nice list out of the 24 looked at if the elves are willing.
- GBLX - pharma-ish sorta-like. Infomercial feel. I have no clue about company.
- DVA/LXX - primarily delivery technology
- DOJA - too much change going on in current business combination for a quick look
- CRZ - all over the map in geography and revenue stream exposure. Ultimately peripheral to value chain.
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