MariMed Inc.

MariMed MRMD (OTC)

Should you invest in MariMed MRMD (OTC)? Recommendation: See below

Fundamentals

Profile:
HQ: Norwood, MA, USA
Founded: 2011
Facilities: Massachusetts and Nevada
Symbol: MRMD (OTC)

Focus: Strong
MariMed is focused on developing a comprehensive set of hemp and cannabis delivery products targeting patients from across the U.S. and Canada. Marimed is transitioning from a consultant based management and advisory firm to an operator of seed to sale operations through acquisitions and consolidation of its cannabis clients. MariMed is licensing its own hemp and cannabis infused products line for the treatment of certain medical conditions through precision dosing.

Size: Neutral
Market Cap: US $303.1 mil
Enterprise value: $341.8 mil
# of employees: 28

Markets: Neutral
Primary:  Delaware, Massachusetts, Nevada
Secondary:   Illinois, Maryland, Rhode Island
Subsidiaries: Majority Subsidiaries: Mia Development, MariMed Advisors, Mari Holdings, Hatwell Reality
Holdings, iRollie, ARL Healthcare, GenCanna
Minority interests: Betty’s Eddies

Operations: Strong
Cultivation:
Present capacity: None
Future capacity: Marimed is in the process of developing in access of 300,000 square feet of facilities for dispensing, production, and cultivation of legal cannabis and cannabis infused products.

Distribution:
Direct sales: Started direct sales of acquired hemp seed inventory by June 30, 2019 through dispensary and wholesale operation of ARL
Store networks: 10,000 square foot dispensary in New Bedford, Massachusetts is opening by end of 2019. MariMed also intends to open  two dispensariesthe  in Boston Area by the end of 2019.
Supply Agreements: Agreement on large volume discounts on supplies from national vendors of cannabis cultivation and production to be acquired and resold at competitive prices to cannabis licensed clients.

Integration/Diversification:
Vertically integrated: Yes
Horizontally diversified: No

Financials: Neutral
Outstanding shares (diluted): 192.4 mil
Revenue last year: $11.85  mil
Revenue rank in cannabis industry: 34th
EPS: ($0.07)

Management: Strong
CEO: Bob Fireman
CFO: John Levine

MariMed’s CEO and Founder Robert Fireman is known as an early pioneer in the medical cannabis industry and for his expertise in the fields of entrepreneurialism, law and
investment markets. MariMed’s CFO and co-founder Jon Levine has over 25 years of experience in negotiating commercial real estate deals and helping in cannabis tax
reporting requirements for key clients.

Branding: Neutral
MariMed has developed precision infused products for specific medical conditions whichare licensed under company-owned brands like Betty’s Eddies™, Nature’s Heritage™ and Kalm Fusion™ in the form of tablets, powders, dissolvable strips, fruit chews and microwaveable popcorn.

Valuation: Neutral
Current share price: US $1.14
Price to Sales: 8.69
52 Week Low/High: $1.11 to $5.80
EV / Revenue: 9.49
Price to Book: 3.95

Should you invest in MariMed MRMD (OTC)?

Financings: Strong
In 2018, MariMed issued options expiring between December 2020 and November 2024 to purchase 4.72 million shares at prices in the range of $0.14 to $3.73. MariMed also sold $10,000,000 convertible debentures with an interest rate of 6% per annum maturing in three years from issuance, resulting in net proceeds of $9,900,000.

Risks: Neutral
The risks of investing in any cannabis company are currently high given the newness of the market. The risks of investing in this company are higher given the low national footprint, but are decreasing.

Recommendation: Strong
Marimed is focused on transitioning from a management and advisory firm to an operator of seed to sale operations through acquisitions and consolidation of its cannabis clients.

MariMed is building a 10,000 square foot dispensary in New Bedford, Massachusetts which is opening by the end of 2019. MariMed also intends to open additional two dispensaries in Boston Area by the end of 2019.

MariMed has a good chance to be a profitable company, as they have established strong distribution partnerships with multiple vendors. MariMed signed agreements on large volume discounts on supplies from national vendors to be acquired and resold at competitive prices to cannabis licensed clients.

Will it’s stock price improve in the long term? We highly recommend.

MariMed’s revenue from management, licensing, real estate, consulting and supply procurement operations increased 95.3% to approximately $11.9 million from $6.1 million in 2017. Key revenue growth drivers were rental income from facilities in Massachusetts and Maryland leased to tenants, supply procurement services to clients and management fees.

MariMed’s net margin in 2018 was -114.78 as compared to 19.68 in 2017 because of debt settlement and interest expense on notes and debenture payable. Net loss had no impact on MariMed cashflow or liquidity.

MariMed management holds 31.6% of company outstanding shares listed which shows their moderate confidence in long term outlook of the company.

For these reasons, we think MariMed, at or near its current price of $1.14 a share (near it’s 52 week low), is still a very good investment opportunity—though as the price rises this opportunity will eventually disappear. We are cautiously optimistic about its chances.