|Three months ended September 30,||Percent|
|Total costs and expenses||(2,108,807||)||(1,840,156||)||15||%|
|Basic and diluted loss per share||$||(0.93||)||$||(0.12||)||677||%|
|Nine months ended September 30,||Percent|
|Total costs and expenses||(5,349,371||)||(7,188,034||)||(26||)%|
|Basic and diluted loss per share||$||(1.11||)||$||(0.50||)||122||%|
The significant increase in Other expense for the three and nine months ended September 30, 2016, was due almost entirely to non-cash expenses associated with the warrants issued with our new debt and retiring our old debt. For more information on these transactions, see Capital Raise below."Third Quarter 2016 was an historic quarter on many metrics. As regulated marijuana initiatives continue to gain momentum in the United States, our portfolio companies continue to enjoy substantial revenue growth. We continue to prove that we have the strongest platform in the industry and are poised for continued growth." said Michael Feinsod, Executive Chairman of General Cannabis Current Business Trends and 2017 Outlook
- Based on current trends, General Cannabis anticipates at least $950,000 in revenue from existing operations in the quarter ending December 31, 2016. This would position the company for approximately $3.1 million in 2016 full year revenues -- a significant increase from 2015 revenues of $1.76 million.
- We expect to make more acquisitions in 2017. We are currently evaluating opportunities in all areas of regulated cannabis. We remain well capitalized to help businesses expand rapidly. See our Acquisition Criteria at the end of this release.
- The trend towards state regulated marijuana is accelerating. All of our businesses continue to enjoy significant demand and we are expanding our Iron Protection Group into Arizona. We expect to have this office running, with guards in the field by January 1, 2017. We anticipate IPG will also open offices in Washington, Oregon, and California in 2017.
- We are already working with clients in California as they prepare for the impact of the historic amendments on their ballot. Our Next Big Crop division has the skills and experience to assist operators and investors as they take advantage of regulated cannabis expansion in what is certain to be the largest legal adult use cannabis market in the world (subject to the passing of Amendment 64 on Nov 8, 2016).
- We expect continued growth in Chiefton as we roll out our marijuana specific marketing/advertising agency format.
- GC Supply had a strong quarter and is poised to continue this relationship-based service to our clients in existing and new markets.
- We anticipate rolling out new internally-started initiatives in 2017:
- Next Big Crop's Management Service program is accelerating. We plan to continue our active business of helping licensed producers build, open, and manage cultivation sites and retail locations, with the most cutting edge technologies available.
- Canna Runner, our cash transport business, anticipates a significant increase in 2017, as Colorado Transport Rules go into effect. This IPG subdivision already provides cash transport for numerous Colorado dispensaries.
- A banking solution. Using our corporate headquarters ("The Greenhouse"), and its existing hard assets, we are remodeling the facility to provide a turnkey solution for a banking operator seeking to service the regulated marijuana industry in a standalone facility.
- We are actively hiring new employees. Ending the quarter at 92 employees, we anticipate increasing our employee base to 110 by year end. We are excited that we continue to provide high quality jobs in the cannabis industry.
- General Cannabis continues to maintain an industry leading presence and will be hosting numerous clients and friends at the MJBusiness conference in Las Vegas. Please come by our booth (#148) or hospitality suite (B) at the show. We are also pleased to announce we are co-hosting Cannabis Crush again this year with our industry friends Dixie Elixirs and Leafly.
Capital RaiseIn September, we completed a $3.0 million debt refinancing. We received $2,450,000 of cash for issuing the 12% Notes. $550,000 of our long-term debt was converted into 12% Notes, and we used some of the proceeds to retire all of our other long-term debt, or approximately $912,000. The new capital provides General Cannabis the working capital necessary to actively pursue new acquisitions and investment opportunities. The warrants issued in connection with the debt offering could provide up to $4.725 million of additional proceeds if fully exercised on a cash basis. While certain aspects of the transaction become complicated under GAAP, the non-GAAP summary of the transaction is as follows:
- $3.0 million of 12% notes were issued on September 21, 2016.
- Cash interest is payable quarterly.
- The notes mature on September 21, 2018.
- In connection with the issuance of the Notes, 9,000,000 warrants to purchase common stock were issued.
- If the company's common stock closes above $5 for ten consecutive days, the Company may call the warrants, giving the holder 30 days to exercise.
- The warrants expire on September 21, 2019.
- The warrants have certain anti-dilution and re-pricing provisions. The latter require us, under GAAP, to record changes in the fair value of the warrants as income or expense, which may have a significant non-cash impact to our results of operations.
Safe HarborThis presentation contains forward-looking statements which relate to future events or General Cannabis' future performance or financial condition. Any statements that are not statements of historical fact (including statements containing the words "believes," "should," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. These forward-looking statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as result of a number of factors, including those described from time to time in General Cannabis' filings with the Securities and Exchange Commission. General Cannabis undertakes no duty to update any forward-looking statements made herein.
ContactRobert FrichtelCEO - General Cannabis Corp(303) 759-1300