General Cannabis Michael Rendon ACG2021 Section 002 Annual Report Project Directions: GET APPROVAL FOR THE COMPANY YOU WANT TO ANALYZE FROM YOUR PROFESSOR. EACH STUDENT WILL DO A DIFFERENT COMPANY. PREPARE A POWERPOINT PRESENTATION: Modify and enhance this powerpoint template replace any italicized words in this template with your own. Add images, tables, backgrounds, etc.!!! THIS TEMPLATE IS BASED ON THE ANNUAL REPORT PROJECT PAGE 277 IN TEXT (page 283 in ebook). SAVE YOUR PROJECT AS A POWERPOINT--NAME YOUR FILE YOUR THREE INITIALS AND YOUR COMPANY NAME. BE SURE YOUR REPORT INCLUDES A LINK TO THE CORPORATIONS' F/S! SEND YOUR.ppt PRESENTATION AS AN E-MAIL ATTACHMENT TO susan.crosson@sfcollege.edu BY THE DUE DATE LISTED IN COURSE CALENDAR. ALL SUBMISSIONS WILL BE POSTED ON OUR COURSE WEBSITE. GRADES WILL BE ASSIGNED BASED ON WHAT IS DISPLAYED ON THE INTERNET. THE ANNUAL REPORT PROJECT IS WORTH 25 POINTS.
Executive Summary General Cannabis was not in the best financial shape during 2008 and 2009. They had continued losses and stockholders deficits. Since then though they have done much better through the purchase of new companies. In 2010 they said they were changing there primary business and were seeking new business opportunities and were now in the developmental stage. 2009 Annual Report
Part A. Introduction Jim Pakulis 3416 Via Lido, Suite F, Newport Beach, CA December 31, 2009 (using old financials) The company manages multiple dispensaries throughout California as well as processing credit card payments for many dispensaries. They also own and run the largest dispensary and doctor finder on the internet, weedmaps.com. The company s main activity is in California, but they also do business in Alaska, Arizona, Colorado, Delaware, Hawaii, Iowa, Maine, Maryland, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington DC.
Part A. Audit Report Dale Matheson Carr-Hilton Labonte LLP Basically the auditors have said that since inception losses have occurred. There is a stockholders deficiency and the company just isn t raising enough money. Ultimately for the company to continue as a going concern they think it is dependent on raising capital to fund the business.
Part A. Stock Market Information Most recent price of the company s stock: $2.15 Twelve month trading range of the company s stock: $1.50-$4.90 Date of the above information: 9/30/2011 Your opinion about the company stock as an investment? I would buy and hold this stock because more recently it has gone up significantly with changes in the company, but it is also currently low for the year.
Part B. Industry Situation and Company Plans This company has come a long way. It started as a website selling makeup called makeup.com. Since then they have come a very long way and changed their business very much. When they first entered the much newer medical marijuana industry, which is known to be a $120 billion a year industry, they struggled to find their place. But in 2010 they acquired weedmaps media, inc. They no longer just managed several dispensaries throughout California including owning a credit card merchant service called cannapay. They are now able to reap the benefits of ad revenue. With weedmaps.com any person can find a dispensary in there immediate location through a google earth map. Currently medical marijuana is legal in 16 states and Washington DC and that number continues to grow each year. Every year that number grows so does General Cannabis. They are in an emerging industry and I see big things for them in the future. Sources: http://generalcannabis.com/, http://www.marijuanastocks.com/content/general-cannabis-inc-acquiresweedmaps-llc
Part C. Income Statement General Cannabis uses a multi-step income statement. The company was on a decline for profits and continued to incur losses. Since this time they have acquired weedmaps media inc. and have been able to sustain and increase profits substantially since this period. 2009 2008 Gross Profit $119,558 $242,968 Income from Operations ($1,086,027) ($1,195,894) Net Loss ($1,086,027) ($1,195,894)
Part C. Balance Sheet There were few increasing accounts on the balance sheet. The increasing accounts were cash, accounts payable, convertible notes payable, convertible notes payable to related parties, and note payable to related party. So with an exception of cash all their account increases were in payable accounts. Inventory had a pretty significant decrease from 2009 to 2008.
Assets 2009 2008 Current Assets Cash 15,087 48,629 Accounts Receivable 9,747 3,603 Inventory 93,206 323,375 Prepaid expenses and deposits 16,407 47,254 Total Current Assets 134,447 422,861 Equipment 5,541 19.992 Deposit 35,000 70,000 Intangible assets 333,334 333,334 Total Assets 508,322 846,187 Liabilities Current liabilities Accounts payable 476,968 440,509 Accrued liabilities 36,745 71,834 Convertible notes payable 419,392 391,118 Convertible notes payable to related parties 1,821,193 1,226,994 Notes payable to related party 412,906 386,240 Stockholders deficit: Due to related parties 14,637 15,142 Total current liabilities 3,181,841 2,531,837 Common stock $0.001 par value, 200,000,000 authorized; 9,733,442 issued and outstanding 9,733 9,733 Additional paid in capital 3,393,499 3,271,588 Accumulated deficit (6,039,101) (4,953,074) Accumulated other comprehensive loss (37,650) (13,897) Total stockholders deficit (2,673,519) (1,685,650) Total liabilities and stockholders deficit 508,322 846,187
Part C. Statement of Cash Flows Are cash flows from operations more or less than net income for the past two years? There is no cash from operations because it is negative, but the net loss is even bigger. Is the company growing through investing activities, i.e., buying property, plant and equipment and other long lived assets? The company invested in their inventory from 2008 to 2009. What is the company s primary source of financing, i.e., long-term loans, stock sales? Primary source of financing seems to be loans and stock sales. Overall, has cash increased or decreased over the past two years Cash has decreased over the past two years
Part D. Accounting Policies What are the significant accounting policies, if any, relating to revenue recognition, cash, short-term investments, inventories, and property and equipment? Revenue Recognition: The company recognizes revenue once persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed or determinable, and collectability is reasonable assured. Inventory: Inventory consists of finished goods and is valued at the lower cost determined by a first-in, first-out basis, and net realizable value. Equipment: Equipment consists of computer hardware and computer software and is stated at cost and amortized, net of estimated salvage value, using the straight-line method over the estimated useful lives of the assets. List the topics of the notes to the financial statements: Reclassifications, principles of consolidation, use of estimates, inventory, equipment, long-lived assets including intangible assets, foreign currency translation and transactions, financial instruments, revenue recognition, income taxes, loss per share, recent accounting guidance.
Part E. Financial Analysis Liquidity Ratios Working Capital 2008- (2,108,976) 2009- (3,047,3940) The companies working capital decreased significantly from 2008 to 2009 but since then the company has changed very much and become much more profitable. Current Ratio 2008-.167 2009-.042 Their current ratio has also decreased significantly from 2008 to 2009 which is well below a desirable current ratio. Receivable turnover 2008 189.46 2009 69.3
Part E. Financial Analysis Liquidity Ratios Cont. Average days sales uncollected 2008 1.92 2009 5.26 Inventory turnover 2008 1.36 2009-2.67 The company sold its inventory more then twice as fast in 2009 Average days inventory on hand 2008 268.38 2009 136.7 The # of days to sell through all the inventory dropped by more then 150 days from 2008 to 2009.
Part E. Financial Analysis Profitability Ratios Profit margin 2008 (-1.75%) 2009 (-1.60%) From 2008 to 2009 the company has increased each sales dollar by.15% although it is still a loss. Asset turnover 2008-80.73% 2009-99.74% Asset turnover increased by nearly 20% from 2008 to 2009
Part E. Financial Analysis Profitability Ratios Cont. Return on assets 2008 (-1.41%) 2009 (-1.60%) Each dollar invested in 2009 was used slightly less effectively then 2008. Return on equity 2008 70.94% 2009-49.82% Each dollar invested in the business accounted for more then 20% less money from 2008 to 2009
Part E. Financial Analysis Solvency Ratio Debt to equity 2008 (-1.50) 2009 (-1.19)