$CANA Form 10-K

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Revenues

We generated revenues of $10,725,752 for the year ended December 31, 2014 consisting primarily of property sales in the amount of $10,645,457, as compared with no revenues for the same period ended December 31, 2013. Our cost of sales totaled $9,925,988 for the year ended December 31, 2014. Our costs of sales includes: purchase price, rental expenses, rehabilitation, escrow, closing costs, and commissions. We achieved a gross profit of $799,764 for the year ended December 31, 2014, which represented a 7.5% margin.

Operating Expenses

Operating expenses increased by $340,473 to $506,816 for the year ended December 31, 2014 from $166,343 for the year ended December 31, 2013. Our operating expenses for the year ended December 31, 2014 mainly consisted of general and administrative expenses of $172,034, management fees and expenses of $136,168, marketing and public relations costs of $79,389 and professional fees of $99,306. In comparison, our operating expenses for the year ended December 31, 2013 mainly consisted of professional fees in the amount of $69,919, management fees and expenses of $59,250 and general and administrative expenses of $25,094.

We anticipate our operating expenses will increase as we continue to expand our operations. The increase will be attributable to administrative and operating costs associated with the management associated with the increase in the acquisition, renovation and sale of residential properties and our continued reporting obligations with the Securities and Exchange Commission.

Interest Expenses

We incurred interest expenses of $789,682 for the year ended December 31, 2014, as compared with $89,271 for the year ended December 31, 2013. Also, in 2014, we realized a gain on the settlement of a loan of $70,878. We do not expect the reoccurrence of this income in 2015.

We do, however, expect that interest expenses will increase as we plan to take on more debt to finance our property acquisitions resulting in higher interest expenses.

Net Loss

We incurred a net loss of $426,649 for the year ended December 31, 2014, compared to a net loss of $255,614 for the year ended December 31, 2013.

As of December 31, 2014, we had total assets of $16,622,526 consisting mostly of cash and our real property inventory. We had current liabilities of $17,357,116 as of December 31, 2014.

Operating activities used $7,747,061 in cash for the year ended December 31, 2014, as compared with $5,977,957 used for the year ended December 31, 2013. Our negative operating cash flow for December 31, 2014 was mainly a result of the increase in our real property inventory.

Investing activities used $1,343,288 in cash for the year ended December 31, 2014, as compared with $87,849 used for the year ended December 31, 2013. Our negative investing cash flow for December 31, 2014 was mainly a result of advances to Berkshire Homes, Inc.

Financing activities for year ended December 31, 2014 generated $8,002,000 in cash, as compared with cash flows provided by financing activities of $8,250,000 for the year ended December 31, 2013. Our positive cash flow from financing activities for the year ended December 31, 2014 was mostly the result of our ability to raise debt financing.

To date, we have raised $16, 250,000 through the sale of unsecured promissory notes. We continue to seek out the best financing opportunities in order to deploy funds into business operations that we believe best suited in the cannabis industry, as well as continue to pursue our real estate activities.

As of December 31, 2014, we had $1,098,530 in cash. With the cash on hand, we have sufficient cash to operate our business at the current level for the next twelve months. Our plan, however, is to acquire more properties, and to do this, we intend to fund our expansion through debt and/or equity financing arrangements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our critical accounting policies are set forth in Note 2 to the financial statements.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.

Off Balance Sheet Arrangements

As of December 31, 2014, there were no off balance sheet arrangements.