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Sunday, November 29, 2020

We Have Lift-Off in Auxly Cannabis Group Inc (OTCMKTS:CBWTF)

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A little over a week ago, we posted a piece gauging the bottom potential for Auxly Cannabis Group Inc (OTCMKTS:CBWTF), suggesting that we might be carving out an important low in the stock. Since then, we have seen a jump of as much as 60% and a breakout above the 50-day simple moving average. The action has been red-hot, and clearly part of a larger momentum move by the cannabis space in general. But the stock has certainly had its own catalysts at work.

As a case in point, the company just announced that it has entered into a share purchase agreement with KGK Science Inc. to acquire all of the issued and outstanding shares of KGK for total consideration of $12,300,000 payable in cash and common shares of the Company. According to the release, “KGK is a leading health and wellness-focused private contract research organization based in London, Ontario, and the Company expects to leverage KGK’s expertise and research abilities to further the Company’s product development efforts through collaboration with the Company’s wholly-owned subsidiary, Dosecann Inc.”

Auxly Cannabis Group Inc (OTCMKTS:CBWTF) trumpets itself as an investment company that seeks to provide investor returns through streams and capital appreciation in the Canadian cannabis industry.

The company operates as a cannabis streaming company. It provides funding for cannabis facility expansions, operations, and initial construction in exchange for minority equity interests and a portion of the cultivation production.

The company was formerly known as Knightswood Financial Corp. and changed its name to Cannabis Wheaton Income Corp. in May 2017. Cannabis Wheaton Income Corp. was incorporated in 1987 and is based in Vancouver, Canada, and became known as Auxly Cannabis Group Inc over recent months.

According to company materials, “Auxly Cannabis Group is a collective of entrepreneurs with a passion for the cannabis industry past, present and future. Our mandate is to facilitate growth for our partners by providing them with financial support and sharing our collective industry experience. Our partners all have different visions, voices and brand values, and all share a common goal—to build a world-class industry based on ethics, diversity, quality and innovation.”

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As noted above, Auxly has been on the mend in rather dramatic fashion. Recent action has seen 42% added to share values of the stock over the past week of action, a rally that has pushed up against longer standing distributive pressure in the stock. Market participants may want to pay attention to this stock. CBWTF is a stock with a past that has featured a litany of sudden rips to the upside.

What’s more, the name has registered increased average transaction volume recently, with the past month seeing 89% above the average volume levels in play in this stock over the longer term.

Hugo Alves, President of Auxly commented, “The addition of KGK to the Auxly platform adds a significant amount of depth to the company’s knowledge base and abilities in the creation of value-added cannabis products backed by research and science. We believe KGK’s track record of success as a leading health and wellness-focused contract research organization in North America is a testament to their ability to add a significant amount of value to Auxly’s midstream business segment. We look forward to working with the team at KGK and beginning observational and clinical studies and other research initiatives to support our product development efforts and medical supply channel execution.”

Currently trading at a market capitalization of $416.6M, CBWTF has a significant war chest ($206.4M) of cash on the books, which stands against virtually no total current liabilities. The company is pre-revenue at this point. This is an exciting story, and we look forward to a follow-up chapter as events transpire. Sign-up for continuing coverage on shares of $CBWTF stock, as well as other hot stock picks, get our free newsletter today and get our next breakout pick!

Disclosure: we hold no position in $CBWTF, either long or short, and we have not been compensated for this article.

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