Competition in the cannabis space has been fierce in the recent past with the Access to Cannabis for Medical Purposes Regulations issuing over 47 licenses in Canada to date. As such, the need for a ‘mentor’ in the industry has been increasing ever-so.Mentor Capital Inc (OTCMKTS:MNTR) has been playing this critical role in the industry for different cannabis companies within Canada, making significant debt and equity investments in the industry.This move seems to be paying off quite well in the eyes of the market given that their share price has been taken a turn in the recent past as can be seen below: MNTR Daily ChartAs such, this piece will analyze every aspect of the company and assess how long they can hold on to their strategy while maintaining growth and differentiation. Finally, it will assess whether this would be a good buy for any shareholder.Mentor Capital Inc: An OverviewMNTR originally founded as an investment partnership in Silicon Valley, California by the current CEO in 1985 and subsequently incorporated under the laws of the State of California on July 29, 1994. Then it focused on leading edge cancer companies, a move which they later forewent due to regulations set by the government.Currently, Mentor Capital Inc. is a public operating company that provides mezzanine financing to leaders in the cannabis space. They provide a low-cost option for companies trying to enter the public market as well as liquidity and support to ensure the organization is ready for that transition.They currently, however, engage in three main business segments: cannabis and medical marijuana, trash management and corporate and eliminations with significant weight being placed on their cannabis and medical marijuana segments of the business.As we move on, we will look into the financial performance of each of these segments and assess the rationale of investing in each of them.Operations and GrowthAs earlier stated, the company invests in other companies in a bid to generate income resulting from their growth. Over the recent past, they have sought to find suitable companies in the cannabis industry to invest in with some such as G FarmaLabs and Electrum fitting their bill.Their strategy to invest in companies within the sector seems to pan off for them in the recent past. They have made significant investments in the sector with one being their most recent investment in G FarmaLabs, a major cannabis player in the USA, where they have now invested a total of over $1.2 million.Ata Gonzalez, the founder of G FarmaLabs said:
“There is a huge disconnect between cannabis operators and outside businessmen with financial resources. The businessman can build a $20 million facility, but fail to profit in the unique marijuana market. The experienced operator could build a $120 million brand if he could link to responsible financing. Yet, they will both fail to find great success unless a bridge can be built to connect both worlds. Mentor and G Farma provide that money-to-market bridge.”
Source:The company has also boosted their investment in Electrum Partners LLC with a second tranche of $100,000. During this time, MNTR’s CEO exuded confidence in the future prospects of the company based on their business model with the company investing in over 5 other subsidiaries over the period till April 2017.Mentor’s CEO, Chet Billingsley added:
“We refer to the larger medical marijuana and cannabis companies that we are helping to efficiently move into the public market as core holdings and segregate these into a major pure play pool. We at Mentor certainly see Electrum Partners as a great pending candidate for us to work with in this regard.”
Source:Finally, despite the rosy picture painted above, it is important to view their financials to have a lucid view of how this is actually going for them.Assessing their muscleThe $18.4 million company has seen a significant growth in its financial base over the last one year. Their book value grew by over $1.9 million from $4.05 million in December 2016 to $5.99 million in June 2017.Moreover, over the period till June 2017, their revenues stood at $764,549 compared to $667,720 in June 2016, an increase of 14.5%. This, however, has not been the same for all products since 100% of this revenue was generated by the trash management segment of the business in 2016 and 99.4% in 2017.Over these two periods, moreover, the corporate and eliminations segment made losses of $(280,584) and $(307,689) in the three months ended June 2016 and 2017 respectively. In our view, the company’s profits would benefit significantly from them divesting from this segment of their business as would their shareholders.Generally, the numbers, though not enough to make shareholders happy, may put a smile on their faces. The positive trend will go a long way in ensuring their share prices go further upwards.ConclusionMNTR is well positioned in an industry that is ever growing, creating significant demand for itself and thus revenue streams. At current levels, MNTR presents a good opportunity for any investor with a futuristic view.We will be updating our subscribers as soon as we know more. For the latest updates on MNTR, sign up below!Disclosure: We have no position in MNTR and have not been compensated for this article.
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