10-Q - CANNAPHARMARX, INC. (0001081938) (Filer)

Fri, May 16, 6:38 PM (58 days ago)

### CannaPharmaRx, Inc. (CPMD) - Q1 2025 Financial Summary **Overview:** CannaPharmaRx, Inc. (CPMD) reported its Q1 2025 financial results, highlighting significant financial challenges and operational uncertainties. The company operates in the cannabis cultivation sector, focusing on high-quality medical cannabis and craft products in Canada. **Financial Performance:** - **Revenue:** CPMD reported $335,319 in revenue for Q1 2025, a substantial increase from $25,839 in Q1 2024. The majority of this revenue came from sales to Adjupharm GmbH, a German pharmaceutical company. - **Cost of Goods Sold (COGS):** COGS increased to $837,926 in Q1 2025 from $463,248 in Q1 2024, primarily due to higher direct materials and labor costs, as well as inventory impairment. - **Gross Loss:** The gross loss widened to $502,607 in Q1 2025 compared to $437,409 in Q1 2024, reflecting the higher COGS. - **Operating Expenses:** Operating expenses decreased to $165,093 in Q1 2025 from $352,786 in Q1 2024, mainly due to reduced general and administrative expenses and payroll costs. - **Net Loss:** The net loss for Q1 2025 was $690,594, significantly lower than the $11,715,633 net loss in Q1 2024. This improvement was driven by changes in the fair value of derivative conversion features and obligations to issue shares. **Cash Flow:** - **Operating Activities:** Cash used in operating activities was $601,381 in Q1 2025, an increase from $548,829 in Q1 2024. - **Financing Activities:** Cash provided by financing activities was $600,433 in Q1 2025, primarily from related party loans. **Liquidity and Capital Resources:** - **Cash Position:** As of March 31, 2025, CPMD had $1,208 in cash, down from $2,156 at the end of 2024. - **Working Capital:** The company reported a working capital deficiency of $25,655,955, slightly higher than the $24,733,636 deficiency at the end of 2024. - **Accumulated Deficit:** The accumulated deficit increased to $101,874,736, indicating ongoing financial strain. **Operational Highlights:** - **Growth Strategy:** CPMD plans to expand its cannabis cultivation capacity and enter the European market, focusing on Germany and Israel. The company aims to obtain EU-GMP certification to streamline its supply chain. - **Related Party Transactions:** Significant transactions with related parties, including loans and lease agreements, highlight the company's reliance on external financing. - **Legal and Regulatory:** CPMD faces several legal proceedings, including a $15 million lawsuit from Ataraxia Canada, Inc., and a $10.5 million lawsuit from Bristol Capital Investors, LLC. The company is also addressing regulatory compliance issues with securities commissions. **Future Outlook:** - **Going Concern:** There is substantial doubt about CPMD's ability to continue as a going concern due to inadequate working capital and high accumulated deficits. - **Funding Needs:** The company plans to raise additional capital through equity or debt financing to support its operations and growth initiatives. - **Operational Risks:** CPMD must manage high operational costs, regulatory uncertainties, and potential legal liabilities to ensure long-term sustainability. **Conclusion:** CannaPharmaRx, Inc. faces significant financial and operational challenges in Q1 2025. While the company has shown some revenue growth, it continues to operate at a loss and relies heavily on external financing. Strategic initiatives to expand market reach and improve operational efficiency are crucial for its future success.