AusCann

Shaping The Future of Medicinal Cannabis Brands

Fundamentals.

Overview:
HQ: Perth (Joondalup), WA (Western Australia), Australia
Incorporated: Sept 2014
Symbol: ACNNF (OTC)
Facilities:
Exchanges: OTC, Auss exchange
Licenses: Got production license in Aug 2017. One of a few Aussie companies to have production and sales licenses. Is also the only Australian co to also have import, export licenses

CEO: Elaine Darby. She has degrees in microbiology, biochemistry and law. She was an award-winning winemaker and has experience in international business, and is the daughter of a former MP from West Australia (politician).

Focus: Producing and selling medical cannabis to patients in Australia, and soon, South America. They are focused on cannabis treatments for pain, plus other conditions. This is a $9 billion market in Australia alone.

Size:
Market Cap: $250 Mil
Enterprise Value: $227 Mil
Size within cannabis industry: roughly 25th of 200+
Size among cultivators: roughly 15th of about 40
# of employees: NA

Markets: Strong (they are well-positioned to be a leader in Australia, few licenses granted so far)
Primary: Initially Australia and Tasmania, where medical MJ is legal, but adult use is not (nor expected soon). Also Chile, through DayaCann joint venture partner, Fundación Daya.
Secondary: South America. It has an export license, and recently harvested 620 kgs in Chile. AusCann sees South America as significant. There were legislative changes recently in Argentina, which has now joined Chile, Colombia and Uruguay in legalizing medical cannabis.

Subsidiaries, Interests: Strong (alliance with Canopy, others)
Majority Subsidiaries: Yes
Minority interests: Yes

Agreements:
– AusCann is 10% owned by Canopy Growth, the biggest cannabis company in the world.
– Canopy has agreement with Auscann to import MJ for AusCann to distribute till Auscann produces more.
– Has a partnership with Tasmanian Alkaloids Pty Ltd. to distribute medical cannabis in Tasmania. TasAlk produces 40% of the world’s alkaloid raw material.
– Partnership with DayaCann, the only licensed medicinal cannabis grower in Chile.

Operations: Weak to Neutral

Future capacity: Unknown
Company info is not highly informative.

Distribution: Neutral
Direct sales: Claims to have 24,000 patients, but last revenue report was only $200k.
Store networks: Has agreement with leading Australian pharmacy API to distribute medical cannabis through nationwide pharmacy network.
Supply agreements: It will import from Canopy Growth to (help) supply local market initially.

Integration/Diversification: Neutral
Vertically integrated: not yet, but they have licenses to produce and distribute, so they could
Horizontally diversified: no

Financials: Weak  (revenue still very low)

Management: Good
Chairman: Dr Mal Washer, former member of Parliament for 15 years. Past chair of the Alcohol and Other Drugs Council of Australia. He has extensive experience in agricultural and horticultural activities and currently operates a commercial avocado plantation in Western Australia bringing highly relevant medical and horticultural expertise and experience to AusCann.
CEO/COO: Elaine Darby (see above)
CMO (medical): Dr. Danial Schecter
CFO:   ms. Raegen Main
Dir of Biz Dev: Dr Stewart Washer, has been CEO in medical tech, biotech, agrifood co’s
CSO: (science?) Dr Patty Washer

Branding: Weak (not developed yet)

Valuation: Neutral
Current share price: $0.78
Price to Sales: 1300 (Tobacco industry = 3)
EV / revenue: 1180

Financings: Raised $12 million and $33 million in recent capital raises. In July 2018, announced it will raise AUS$8 million more –US$5.8 mil—from investors.

Risks: In addition to all the normal risks of investing in the cannabis industry, which are high, Auscann risks are higher, since less is known about the company (they put out little news, and we don’t even know their production plans yet), they have very little revenue yet, and they operate in Australia, which we have less personal experience with.

Recommendation: Weak (until further news is known, and revenue generated)

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Technicals.

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