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Sunday, September 27, 2020

Is Auxly Cannabis Group Inc (OTCMKTS:CBWTF) Ready to Break Out?

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We continue to watch shares of Auxly Cannabis Group Inc (OTCMKTS:CBWTF) show a pattern of potential accumulation at key support. One reason we might be seeing that level of participation here is the company’s recent financial data. A move back above the $0.65 area could represent a squeeze trigger.

Specifically, the company just announced its financial results for the three months ended March 31, 2019. According to its release, “Advanced product R&D, formulation and manufacturing at Dosecann in preparation for the legalization of derivative cannabis products showed progress in several areas including extraction of flower to cannabis resin and development of edible product formulations, with a full product suite to be completed during the third quarter of 2019, and successful production of oil in a bottle for sale in the second quarter of 2019. The company also reported that it completed its first sales of dried cannabis flower.

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, CBWTF just announced its financial and quarterly data for the first calendar quarter of the year, in which it reported progress in its primary business and its first sales of dried cannabis flower.

Even in light of this news, CBWTF hasn’t really done much of anything over the past week, with shares logging no net movement over that period. In addition, the listing has seen interest climb, with an increase in recent trading volume of 12% over the long run average.

Chuck Rifici, CEO and Chairman of Auxly commented: “In the first quarter of 2019, we made significant progress toward our goals for the year: we advanced product development at Dosecann, made progress toward the construction of key infrastructure, advanced licencing and sales at Robinsons, and had our first sales of dried cannabis flower to the market. We are well on track to have our initial range of derivative cannabis products completed and available for sale into the upcoming legal market later this year. With the combination of our cultivation supply, R&D, product development and manufacturing capabilities, and our relentless focus on science and innovation, we look forward to bringing the best cannabis products, brands and experiences to the medical, wellness and adult-use markets.”

Now commanding a market cap of $348M, CBWTF has a significant war chest ($168.4M) of cash on the books, which must be weighed relative to about $115.4M in total current liabilities. One should also note that debt has been growing over recent quarters. CBWTF is pulling in trailing 12-month revenues of $2M. In addition, the company is seeing recent top-line growth, with sequential quarterly revenues growing at 26.3%. We will update the story again soon as developments 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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