2020 has been a challenging year for the global economy and the cannabis sector has not been immune to this. We have been focused on identifying companies that are recording strong growth during the pandemic and want to highlight a business that we are excited about.
During the last year, Chemesis International Inc. (CSE:CSI) (OTCQB:CADMF) (FRA:CWAA) has been executing on a series of growth initiatives that have left it better positioned to capitalize on the US cannabis market and is an opportunity that we are closely following. Today, we have provided an update on Chemesis and this is a stock that we will continue to keep on our radar.
A Growth Story to be Aware Of
Last month, Chemesis released third quarter financial results that showed impressive growth on a comparative basis and the improved numbers caught our attention. From the balance sheet to the cash flow statement, the company was able to strengthen its fundamental story in the third quarter and this is a trend that we are excited about.
During the quarter, Chemesis generated more than $4.5 million of revenue while gross margins improved by more than 10%. When compared to the prior quarter, the company recorded strong growth on a number of key metrics, and we are favorable on how the story has advanced over the last year.
Chemesis recently hired Josh Rosenberg as President and we are favorable on the direction that he is bringing the business. With a proven track record of success in the global food service and the product distribution market, we believe that he adds a lot to the management team and will monitor how he continues to drive the story forward.
Prior to joining Chemesis as President, Josh led the successful buyout of Accent Food Services and transitioned the enterprise to a private equity ownership model. Under his leadership, the company’s revenue grew by more than 500% and would service more than 750,000 customers per day. We believe that Josh adds important expertise to the management team and believe that the market under-appreciates this aspect of the business.
A Business that was Positively Impacted by the COVID outbreak
Chemesis is one of the few businesses to be positively affected by the COVID outbreak and we find this to be of significance. During the third quarter, the company realized an increase in demand for its products and this is a trend that we are bullish on. The fact that the business was able to grow is significant and leaves us confident in the management team’s ability to execute during the crisis.
One of the ways that Chemesis has advanced the business during COVID is through an exclusive partnership with Via-Touch Media for its VICKI self-checkout solution. Chemesis has exclusive rights for VICKI machines across North America and plans to announce its initial roll-out strategy in the near future.
Another important aspect of the story is related to the strengthening of the balance sheet. In May, Chemesis raise more than $1 million through two private placements and we are favorable on the move to shore up the balance sheet. The capital will make it easier for Chemesis to execute on previously announced growth initiatives and we will monitor how the team puts the capital to work.
Has Visible Growth Prospects
Going forward, Chemesis will make sure that its dispensaries remain operational during the pandemic and will continue to take steps to ensure that consumers can access the products they need in a minimal contact manner. Following the capital raises, the company is in a stable financial position and will continue to focus on executing on a sustainable business strategy that brings the operation down a path of profitability.
At current levels, we find the risk-reward profile to be favorable and will monitor how the management team is able to execute on the US cannabis market. While we are favorable on the opportunity in Puerto Rico, we believe that the opportunity in California and in strategic US markets is the most significant for the long-term success of the business.
We believe that Chemesis has significant potential catalysts for growth and are of the opinion that the market does not fully appreciate this aspect of the story. If you are interested in learning more about the opportunity, please send an email to email@example.com to be added to our distribution list.
Pursuant to an agreement between StoneBridge Partners LLC and Chemesis International we have been hired for a period of 365 days beginning July 15, 2018 and ending July 15, 2019 to publicly disseminate information about (CSI) including on the Website and other media including Facebook and Twitter. We are being paid $5,000 per month for a period of 3 months. We own zero shares of (CSI), which we purchased in the open market. We plan to sell the “ZERO” shares of (CSI) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (CSI) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information. This contract has been renewed for a period of 180 days beginning on August 2, 2019 and ending on February 2, 2020. This contract has been renewed for a period of 60 days beginning on January 27th, 2020 and ending on March 27th 2020. This contract has been renewed for a period of 180 days beginning on May 15th, 2020 and ending on November 15th 2020.
Published at Mon, 20 Jul 2020 11:47:08 +0000