By: Tomas Ronolski - AllPennyStocks.com News

Friday, August 29, 2014

There’s lots of hype surrounding the marijuana industry, albeit for medicinal or recreational use. With revamped laws in Canada and a growing trend for legalization in some fashion or another in the United States, the industry is poised for tremendous growth, which has led to a bevy of upstarts elbowing for a position and ballooning valuations of these mostly unproven firms with little more than a dream. Out of the pack will emerge some big winners and other companies will fade into oblivion. Bedrocan Cannabis Corp. (TSX-Venture:BED) looks to have as good of a chance as any to come out of the scrum as the company has a license in Canada and operations in place that are generating a small amount of sales already. Bedrocan holds a license from Health Canada to operate as a licensed producer of medical marijuana under the Marijuana for Medical Purposes Regulations and the Controlled Drugs and Substances Act of Canada, better known as an MMPR license. Currently, the license is up for renewal in mid-December.

Bedrocan has a license and distribution agreement with its stakeholder Bedrocan Beheer BV, which gives Bedrocan rights to Bedrocan BV’s intellectual property for growing and selling medicinal cannabis in Canada. The pact also gives Bedrocan the right to import, sell and distribute Bedrocan BV products in Canada, which it started doing in February. Bedrocan is one of only two companies currently supplying pharmaceutical-grade medicinal cannabis in Canada.

The Toronto-based company (originally called Bedrocan Canada Corp.) was acquired by capital pool company POCML 2 (who subsequently changed its name to Bedrocan Cannabis Corp.) and recently completed a financing that put $11.5 million in cash on its books. POCML effectively had no assets other than about $500,000 in cash. After a hefty reverse split in April by the original Bedrocan, a reverse split by POCML upon completion of the merger and then the addition of shares with the financing, the share structure is back in order, with about 67 million outstanding, according to Quote Media.

Looking past the spider web of the share count getting tossed about (investors should verify outstanding and fully diluted shares), Bedrocan had a decent second quarter in sales. Regulatory filings were made with Sedar on August 20, but the company issued a statement of highlights of Thursday. Bedrocan generated sales of $369,433 during the three months ended June 30, 2014, versus nil a year earlier. In the first three months of the year, sales were $94,841.

Gross profit in Q2 was $114,632 and $160,026 for the first half of the year. Net loss for the latest quarter was $590,768, or 1 cent per share, running the total for the first half of 2014 to $945,403, or 2 cents per share.

Bedrocan ended the second quarter with $14.36 million in cash and cash equivalents and $270,00 in product on hand.

"Our Q2 2014 financial results indicate a strong and stable positioning for Bedrocan as we transition towards domestic production of our medical grade cannabis," stated Marc Wayne, chief executive of Bedrocan Cannabis, in a statement on Thursday.

The Bedrocan chief is alluding to the company’s move to a 52,000 square foot production facility that will have the capacity to produce 4,000 kilograms of medical marijuana annually. Construction is ongoing and the new facility is expected to be completed in December. This is a big step up from the current 3,500 square foot facility Bedrocan operates from today. Bedrocan BV, which has been producing medicinal grade cannabis for 13 years, is managing the construction project.

A renewal of the MMPR license in December and a freshly commissioned facility would uniquely align Bedrocan for consistent domestic production of standardized strains of marijuana, a necessity in the industry and obvious advantage over others trying to break into the medical cannabis business. In a space that is swamped with speculation, Bedrocan has something material and that seems to be helping set it apart from the crowd. Proper due diligence is, as always, encouraged.

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