LOS ANGELES, CA / ACCESSWIRE / January 30, 2020 / Ventura Cannabis and Wellness Corp. (CSE:VCAN)(“Ventura” or the “Company”) releases financial statements for the period ending November 30, 2019. Highlights include:
- Cannabis revenue for the quarter was $501,000 as compared to $402,000 last quarter, representing a 24% growth quarter over quarter or 96% annually; organic growth accounts for the overwhelming majority of the revenue growth.
- Cannabis Revenue Trend:
- FY 2019 – $0
- 2020 Q1 – $92,000
- 2020 Q2 – $406,000 (341% increase quarter over quarter)
- 2020 Q3 – $501,000 (24% increase quarter over quarter)
- Cannabis Revenue Trend:
- Gross margins for cannabis operations were 34%, however, as with most U.S. cannabis assets, free cash flow continues to be limited.
- Gross Margin Trend:
- 2019 Q3 – 22%
- 2020 Q2 – 31%
- 2020 Q3 – 34%
- Gross Margin Trend:
- Cash remained roughly neutral quarter over quarter, as the Company continued to await regulatory approvals for new assets:
- 2020 Q2 – $4,531,000
- 2020 Q3 – $4,483,000
- Total assets grew to $19,182,000 as accounts payable decreased by $500,000 between Q2 and Q3 of this year.
- Management continues to work to dispose of or unwind the addiction services assets, as well as reduce liabilities and define the contingent liabilities more clearly. (see note 7)
“We had a fantastic quarter for revenue growth, the overwhelming majority of which was organic,” said Mr. Chris Heath, CEO of Ventura. “For the third quarter in a row we have seen revenue growth, but this quarter was different. We have proven to ourselves and the market that we can acquire brands and businesses and improve them quickly, increasing our market share and reducing our post-acquisition multiple. We are now very well positioned for future revenue growth; first, we have a solid team on the west coast of the U.S. that has years of experience in the full supply chain of cannabis, from seed to sale, with a proven track record for three consecutive quarters. Second, we have contracts in place where we expect to manufacture, distribute and dispense cannabis products in California and Oregon, and we are working on several other west coast states in the U.S. for acquisitions and licenses. Lastly, we have no debt and we are operating our cannabis assets above breakeven.”
For future quarters, the management is focused on several key accomplishments to continue market share and revenue growth:
- Appoint Lloyd Kaplan as Chairman of the Board, effective March 1st, 2020, with a mandate to initiate capital markets communication and develop relationships in the capital markets to enable continued revenue growth. Because of the taxation and regulatory framework in the U.S, cannabis assets generally do not yet yield significant cash flow. The strategy for all companies in this sector is to build brand loyalty and market share for when the U.S. Federal prohibition is lifted or the U.S. tax frame work is changed. Ventura Cannabis plans to work with capital market participants to continue to fuel revenue growth in future quarters.
- Finalize ownership of assets that provide licenses to manufacture, distribute and sell branded products in California and Oregon, focusing on post acquisition revenue growth and generating limited but positive cash flow. These assets are projected to require most of our cash balance, and inorganic revenue growth will be the immediate result of the acquisitions.
- Divest from the addiction business units working to reduce liabilities and better understand and deal with potential contingent liabilities. The Company has reserved the majority of its post-acquisition cash for these matters.
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Certain statements contained in this presentation constitute “forward-looking information” as such term is defined in applicable Canadian securities legislation. The words “may,” “would,” “could,” “should,” “potential,” “will,” “seek,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “expect,” “confident” and similar expressions as they relate to the Company. Such statements reflect the Company’s current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties, and assumptions. The forward-looking information included are made as of January 30, 2020, and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. VCAN holds or is acquiring marijuana assets in the United States. Previously disclosed acquisitions are still subject to closing. Marijuana is legal in each state VCAN is looking to operate, however marijuana remains illegal under US federal law, and the approach to enforcement of US federal law against marijuana is subject to change. Shareholders and investors need to be aware that adverse enforcement actions could affect their investments and that the Company’s ability to access private and public capital could be affected and or could not be available to support continuing operations.
SOURCE: Ventura Cannabis and Wellness Corp.
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