CannaPharmaRx Revenue Jumps, But Liquidity Crisis Deepens Amid CTO

TL;DR

**CPMD is a zombie stock; revenue growth is meaningless when the company is drowning in debt and can't even trade its shares.**

AI Summary

CANNAPHARMARX, INC. (CPMD) reported a significant increase in revenue for the six months ended June 30, 2025, reaching $566,927, up from $25,839 in the prior year, primarily driven by cannabis production commenced in 2023. Despite this revenue growth, the company experienced a net loss of $2,104,052 for the six-month period, an improvement from the $6,353,369 net loss in the same period of 2024. The gross loss widened to $1,123,817 from $887,865 year-over-year, largely due to a substantial cost of goods sold of $1,690,744. CPMD's cash position improved to $16,975 as of June 30, 2025, from $2,156 at December 31, 2024, but it still faces a working capital deficiency of $27,756,255 and an accumulated deficit of $103,288,194. A critical risk is the Cease Trade Order (CTO) issued by the British Columbia Securities Commission in 2023, restricting securities trading in Canada, and the lapse of insurance coverage since early 2024. The company entered into a security and royalty agreement with Koze Investments LLC on March 17, 2025, a related party, requiring royalty payments on cannabis sales.

Why It Matters

This filing reveals a company struggling with severe liquidity issues and regulatory hurdles despite a significant revenue increase. For investors, the substantial working capital deficiency of $27,756,255 and accumulated deficit of $103,288,194 signal high financial risk, compounded by the British Columbia Securities Commission's Cease Trade Order which restricts trading. Employees and customers face uncertainty given the 'going concern' doubt and lapsed insurance coverage, which could impact operations and potential liabilities. In the competitive cannabis market, CPMD's inability to secure adequate funding and resolve regulatory issues puts it at a significant disadvantage against better-capitalized and compliant peers.

Risk Assessment

Risk Level: high — The company has a working capital deficiency of $27,756,255 and an accumulated deficit of $103,288,194 as of June 30, 2025, indicating severe financial distress. Furthermore, a Cease Trade Order (CTO) from the British Columbia Securities Commission restricts trading in its securities in Canada, and the company has not paid insurance premiums since early 2024, leaving it exposed to uninsured liabilities.

Analyst Insight

Investors should avoid CANNAPHARMARX, INC. (CPMD) due to its severe liquidity issues, substantial accumulated deficit, and the ongoing Cease Trade Order. The 'going concern' doubt and lack of insurance coverage present insurmountable risks, making any investment highly speculative and likely to result in a total loss.

Financial Highlights

debt To Equity

N/A

revenue

$566,927

operating Margin

N/A

total Assets

N/A

total Debt

N/A

net Income

-$2,104,052

eps

N/A

gross Margin

-198.2%

cash Position

$16,975

revenue Growth

+2100%

Revenue Breakdown

Key Numbers

• $566,927 — Revenue for six months ended June 30, 2025 (Increased from $25,839 in prior year, showing significant growth in cannabis sales.)
• $2,104,052 — Net loss for six months ended June 30, 2025 (Improved from $6,353,369 net loss in 2024, but still a substantial loss.)
• $1,123,817 — Gross loss for six months ended June 30, 2025 (Widened from $887,865 in 2024, indicating high production costs relative to revenue.)
• $16,975 — Cash as of June 30, 2025 (Increased from $2,156 at December 31, 2024, but remains critically low.)
• $27,756,255 — Working capital deficiency as of June 30, 2025 (Worsened from $24,733,636 at December 31, 2024, highlighting severe short-term liquidity issues.)
• $103,288,194 — Accumulated deficit as of June 30, 2025 (Increased from $101,184,142 at December 31, 2024, indicating persistent unprofitability.)
• $1,047,844 — Cash used in operating activities for six months ended June 30, 2025 (Increased from $976,445 in 2024, showing continued cash burn from operations.)
• 662,501,405 — Common shares outstanding as of August 14, 2025 (High share count, indicating potential for significant dilution if equity financing occurs.)
• 2023 — Year Cease Trade Order was issued (Indicates a long-standing regulatory issue restricting trading in Canada.)
• Early 2024 — Last payment of insurance premiums (Company's insurance coverage may have lapsed, exposing it to significant uninsured liabilities.)

Key Players & Entities

• CANNAPHARMARX, INC. (company) — registrant
• British Columbia Securities Commission (regulator) — issued Cease Trade Order
• Koze Investments LLC (company) — related party financier
• Elliot Zemel (person) — manager of Koze Investments LLC and director of CPMD
• Health Canada (regulator) — issued operating license
• Canada Revenue Agency (regulator) — issued cannabis license
• Formosa Mountain Ltd. (company) — lessor of facility
• 2323414 Alberta Ltd. (company) — subsidiary of CPMD
• Network Acquisitions, Inc. (company) — original name of CPMD
• Delaware (regulator) — state of incorporation

FAQ

Risk Factors

• Cease Trade Order (CTO) [high — regulatory]: A CTO was issued by the British Columbia Securities Commission in 2023, severely restricting the trading of CPMD's securities in Canada. This has been ongoing since 2023 and impacts liquidity and investor access.
• Critical Cash Shortage [high — financial]: Cash position stands at $16,975 as of June 30, 2025, a marginal increase from $2,156 at year-end 2024. This is insufficient to cover operational needs and highlights a severe liquidity crunch.
• Working Capital Deficiency [high — financial]: The company faces a substantial working capital deficiency of $27,756,255 as of June 30, 2025, up from $24,733,636 at December 31, 2024. This indicates a significant inability to meet short-term obligations.
• Accumulated Deficit [high — financial]: The accumulated deficit has grown to $103,288,194 as of June 30, 2025, from $101,184,142 at year-end 2024. This reflects persistent unprofitability since inception.
• Lapsed Insurance Coverage [high — operational]: Insurance coverage has lapsed since early 2024, leaving the company exposed to significant uninsured liabilities. This poses a major operational and financial risk.
• Widening Gross Loss [medium — financial]: Gross loss increased to $1,123,817 for the six months ended June 30, 2025, from $887,865 in the prior year, driven by a high Cost of Goods Sold of $1,690,744. This indicates production costs are significantly outpacing revenue generation.
• Increasing Cash Burn [medium — financial]: Cash used in operating activities increased to $1,047,844 for the six months ended June 30, 2025, from $976,445 in the prior year. This demonstrates a worsening operational cash outflow.
• Related Party Transaction [medium — financial]: A security and royalty agreement was entered into with Koze Investments LLC, a related party, on March 17, 2025. This agreement requires royalty payments on cannabis sales, potentially impacting future profitability and cash flows.

Industry Context

The cannabis industry is characterized by rapid growth, evolving regulatory landscapes, and intense competition. Companies face challenges in scaling production, managing high operating costs, and navigating complex legal frameworks. Market access and distribution channels are critical for success, alongside product innovation and brand building.

Regulatory Implications

CPMD is significantly impacted by regulatory actions, most notably the Cease Trade Order restricting its securities trading in Canada. The ongoing nature of this CTO poses a substantial barrier to financing and investor relations. Furthermore, the lapse in insurance coverage creates significant operational and financial risks.

What Investors Should Do

1. Monitor the resolution of the Cease Trade Order: Investors should closely track any developments regarding the CTO, as its lifting is crucial for potential capital raises and improved liquidity.
2. Assess the sustainability of revenue growth: While revenue has increased, the widening gross loss and net loss indicate that current growth is not profitable. Investors need to understand the path to profitability.
3. Evaluate cash burn and liquidity: With critically low cash reserves and a growing working capital deficiency, investors should assess the company's ability to secure further funding to remain solvent.
4. Scrutinize related party transactions: The royalty agreement with Koze Investments LLC requires careful review to ensure it is fair to all shareholders and does not unduly burden the company.
5. Consider the impact of lapsed insurance: The lack of insurance coverage exposes CPMD to significant unmitigated risks that could severely impact its financial stability.

Key Dates

• 2023-01-01: Cease Trade Order Issued — Significantly restricts trading of CPMD's securities in Canada, impacting liquidity and investor access.
• 2024-01-01: Insurance Coverage Lapsed — Exposes the company to significant uninsured liabilities, a critical operational and financial risk.
• 2025-03-17: Security and Royalty Agreement with Koze Investments LLC — A related party transaction that imposes royalty payment obligations on cannabis sales, affecting future profitability.
• 2025-06-30: End of Second Quarter Financial Reporting — Reveals significant revenue growth but continued substantial net loss and worsening working capital deficiency.
• 2025-08-14: Common Shares Outstanding Record Date — Indicates a high number of shares (662,501,405), suggesting potential for significant dilution.

Glossary

Cease Trade Order (CTO)

An order issued by a securities regulator that prohibits a company from trading its securities. (CPMD is subject to a CTO, severely limiting its ability to raise capital and trade its shares in Canada.)

Working Capital Deficiency

Occurs when a company's current liabilities exceed its current assets, indicating potential short-term liquidity problems. (CPMD has a substantial working capital deficiency of $27,756,255, highlighting severe short-term financial distress.)

Accumulated Deficit

The total cumulative net losses of a company since its inception that have not been offset by profits. (CPMD's large and growing accumulated deficit of $103,288,194 signifies persistent unprofitability.)

Cost of Goods Sold (COGS)

The direct costs attributable to the production or purchase of the goods sold by a company. (CPMD's high COGS of $1,690,744 relative to its revenue led to a widened gross loss.)

Gross Loss

Occurs when the cost of goods sold exceeds the revenue generated from sales. (CPMD reported a gross loss of $1,123,817, indicating that its production costs are not yet covered by its sales revenue.)

Related Party Transaction

A transaction between a company and its management, board of directors, or major shareholders, or their close relatives. (CPMD's agreement with Koze Investments LLC is a related party transaction that requires careful scrutiny due to potential conflicts of interest.)

Year-Over-Year Comparison

CPMD has shown a dramatic increase in revenue for the six months ended June 30, 2025, reaching $566,927 compared to $25,839 in the prior year, driven by cannabis production. However, this growth has not translated into profitability, with the net loss improving but still substantial at $2,104,052. The gross loss has widened to $1,123,817 due to high COGS. Critically, the working capital deficiency has worsened to $27,756,255, and the company continues to operate with a significant accumulated deficit. New risks include the ongoing Cease Trade Order and lapsed insurance coverage since early 2024.

Key Financial Figures

• $1,097 — e and six months ended June 30, 2024 of $1,097 and $2,209, respectively, has been recl
• $2,209 — onths ended June 30, 2024 of $1,097 and $2,209, respectively, has been reclassified to

Filing Documents

• canna_10q.htm (10-Q) — 1135KB
• canna_ex48.htm (EX-4.8) — 39KB
• canna_ex311.htm (EX-31.1) — 12KB
• canna_ex312.htm (EX-31.2) — 12KB
• canna_ex32.htm (EX-32) — 5KB
• 0001654954-25-009626.txt ( ) — 5759KB
• isdr-20250630.xsd (EX-101.SCH) — 68KB
• isdr-20250630_lab.xml (EX-101.LAB) — 327KB
• isdr-20250630_cal.xml (EX-101.CAL) — 55KB
• isdr-20250630_pre.xml (EX-101.PRE) — 299KB
• isdr-20250630_def.xml (EX-101.DEF) — 185KB
• canna_10q_htm.xml (XML) — 934KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1

Financial Statements (unaudited)

Financial Statements (unaudited) Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation 25 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 34 Item 4

Controls and Procedures

Controls and Procedures 34

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1

Legal Proceedings

Legal Proceedings 36 Item 1A

Risk Factors

Risk Factors 37 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 37 Item 3 Defaults Upon Senior Securities 37 Item 4 Mine Safety Disclosures 37 Item 5 Other Information 37 Item 6 Exhibits 38

Signatures

Signatures 39 2 Table of Contents CANNAPHARMARX, INC. CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS June 30, 2025 (Unaudited) December 31, 2024 ASSETS Current assets Cash $ 16,975 $ 2,156 Goods and services tax receivable 23,204 18,707 Accounts receivable 114,307 1,747 Inventory 1,043,538 996,250 Total current assets 1,198,024 1,018,860 Non-current assets Equipment, net 129,389 137,237 Right-of-use building, net 5,627,215 5,161,473 Investments 4,518,127 4,518,127 Total assets $ 11,472,755 $ 10,835,697 LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities Accounts payable and accrued liabilities $ 10,012,932 $ 9,276,299 Accrued interest 3,865,183 2,495,337 Notes payable 483,874 6,678,389 Convertible notes 1,298,114 1,298,114 Derivative conversion feature 564,051 1,159,324 Loans payable to related parties 9,941,556 462,818 Royalty payable 56,405 - Liability for right-of-use building, current portion 1,005,099 728,206 Obligation to issue shares 1,727,065 3,654,009 Total current liabilities 28,954,279 25,752,496 Non-current liability Liability for right-of-use building 5,092,561 4,892,838 Total liabilities $ 34,046,840 $ 30,645,334 SHAREHOLDERS' DEFICIT Preferred shares series A, $ 1.00 par value, 100,000 shares authorized, 74,416 issued and outstanding as at June 30, 2025 and December 31, 2024 $ 74,416 $ 74,416 Preferred shares series B, $ 1.00 par value, 3,000,000 shares authorized, 455,000 shares issued and outstanding as at June 30, 2025 and December 31, 2024 455,000 455,000 Preferred shares series C, $ 1.00 par value, 100,000 shares authorized, 100,000 shares issued and outstanding as at June 30, 2025 and December 31, 2024 100,000 100,000 Common shares, $ 0.0001 par value; 5,000,000,000 shares authorized, 662,501,405 issued and outstanding as at June 30, 2025 and December 31, 2024 66,250 66,250 Treasu

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