Aurora Cannabis Inc (OTCMKTS:ACBFF) rise from $2.2 to $7.6 within two months has not gone unnoticed by the market. The hard work done by its management to advance the business has seen the firm consistently increase shareholder value and this is reflected in its jumping revenues and high liquidity to support expansion operations.
Take a look at the stock’s price movement over the past year:
Aurora Cannabis, Inc. engages in the provision of medical cannabis. Its activities include cultivating, harvesting, and selling of Canadian medical marijuana. It operates through the Production and Sale of Medical Cannabis; and Patient Counselling and Outreach Services. The company was founded by Terry Booth and Steve Dobler on December 21, 2006, and is headquartered in Vancouver, Canada.
We have previously covered the profile of the company here.
In December, the firm announced that it had signed a non-binding term sheet to make a strategic investment in Micron, and for both companies to collaborate on the optimization of Micron’s technology for the treatment of organic waste generated in the cultivation and production of cannabis products.
Micron has developed a new technology, based on aerobic digestion and subsequent treatment that converts organic waste into clean water that meets municipal effluent discharge standards. The effluent from currently available digester-based treatment systems of organic waste does not meet municipal discharge standards and requires costly further treatment. Many generators of the organic waste elect, instead, to use municipal landfill sites for their organic waste, which is costly and has a negative impact on the environment. The merits of Micron’s technology have been successfully demonstrated with a grocery supermarket chain located in British Columbia, Canada, and Micron has entered into a Memorandum of Understanding with the group to plan for additional installation of Micron’s organic waste digester units at other locations in BC.
Under the terms of the agreement, which the companies anticipate finalizing soon, Micron will install its technology at one of Aurora’s cultivation facilities, where both companies will work on optimizing Micron’s digester technology to deliver a commercially-ready design specifically for the cannabis industry.
Aurora shall have the option, upon successful completion of the optimization program and proven viability, to sign a definitive supply agreement with Micron for the purchase of Micron’s organic waste digestion solution for each of its cultivation facilities at a preferred pricing structure.
In consideration of Aurora’s participation in the optimization process, and pursuant to the terms of a royalty agreement to be entered into between the parties, Micron shall pay to Aurora a royalty equal to 4% of gross revenues generated by Micron from the sale, lease and/or support services agreement pertaining to digesters sold to companies in the business of cultivating or processing cannabis. Micron shall retain all intellectual property pertaining to its digestion system.
Under the terms of the agreement, once finalized, Aurora will have the right to subscribe for up to 6 million shares of Micron at a subscription price of $0.34 per share for aggregate subscription proceeds of $2 million in accordance with the terms and conditions of a subscription agreement to be entered into among the parties, representing a 9% interest in the Corporation on a non-diluted basis immediately post-investment. Upon the first successful sale of a digester within the cannabis industry, Micron shall issue a further 2 million shares to Aurora.
Aurora shall have the right to participate in any future offerings of equity or debt convertible into equity of Micron to allow Aurora not to be diluted in its ownership interest of Micron.
In the same month, the firm signed a binding Letter of Intent with CannaRoyalty Corp, giving Aurora the exclusive right for 90 days to negotiate a final licensing agreement.
This Agreement concerns the acquisition by Aurora of the exclusive rights for Canada, Europe, and Australia to the intellectual property, manufacturing procedures, and the sales and marketing rights related to a portfolio of specialty branded cannabis drug delivery technologies from the MüV brand, to which CannaRoyalty holds the licensing rights.
MüV is a line of cannabis-infused products, developed by CannaRoyalty investee AltMed Enterprises, focused on advanced alternative cannabinoid delivery mechanisms for the medical and the LOHAS (Lifestyles of Health and Sustainability) segments of the market. The line was successfully launched in the U.S. in 2016.
Characterization tests, meeting FDA standards, were conducted, and the data were subsequently reviewed by Aurora on the MüV Metered Dose Inhaler, which was found to achieve the required criteria, validating that the product meets the Aurora Standard of quality and user experience.
The firm’s financial statements reveal that revenues jumped significantly from $1.1 million in 2016 to $13.9 million, an increase of more than 1000%. However, net loss increased by roughly 50% mainly as a result of the increase in selling, general and admin expenses.
The firm is not very highly leveraged with roughly $60 million worth of long and short-term debt on its balance sheet and current assets of $149 million. This borrowing helped to boost its liquidity, with cash in hand jumping from $0.2 million to $123 million.
The consistency of ACBFF’s results shows that its performance in the past year is no fluke. It is likely that it will only increase in value as the market becomes more aware of its potential.
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Disclosure: We have no position in ACBFF and have not been compensated for this article.