IsaCann Biosciences, Inc.
IsraCann Biosciences, Inc. (ISCNF) is Israel’s first pure-play cannabis company. They grow outside Tel Aviv and are trying to produce low cost cannabis for exportation into Europe. ISCNF cannabis stock is listed on the OTC markets and are headquartered in Vancouver, Canada.
Is ISCNF a strong BUY and HOLD?
IsraCann Biosciences Fundamental Analysis
Profile
HQ: Vancouver, BC, Canada
Founded: 2010
Facilities: Tel Aviv, Israel
Symbol: ISCNF (OTC), IPOT (CSE)
Focus: Strong
IsraCann is an Israeli firm focused on cultivation. They’re targeting outdoor grows to utilize the ground and sun in Israel to attempt to make low cost cannabis for export into Europe.
They are targeting production costs of only $0.40 per gram (compared to an average of $1.50 per gram in Canada).
Size: Weak
Market Cap: US $24.27 mil
Enterprise Value: US $21.75 mil
# of employees: 3
Markets: Strong
Secondary: Europe starting with Germany
Majority Subsidiaries: Cannisra crops Ltd, Isracann Holdings Inc, The Cranium
Operations: Neutral
Cultivation:
Current production: They have a JV with 55,000 sq ft
Future capacity: The JV can grow to 160,000 sq ft in greenhouses with lots of outdoor land available to them. Their own facility will be 230,000 sq ft and have capacity of 23,500 kg per year.
Israel was the 3rd country to develop an export framework for cannabis (behind Canada and the Netherlands). They will use this to their advantage and supply Europe with their low cost cannabis.
Israel has 46,000 medical patients with 90,000 anticipated by year’s end.
Distribution:
Direct sales: Yes
Store networks: None
Integration/Diversification:
Vertically integrated: Yes
Horizontally diversified: No
Financials: Weak
2020 Revenue (ttm): $310,346
Outstanding shares (diluted): 135 mil
Return on Equity: -116%
Management: Weak
President, CEO, Director: Darryl Jones
CFO: Yana Popova
COO: Matt Chatterton
Management experience includes investment advising, project management, and accounting.
Branding: Neutral
They will rely heavily on the “made in Israel” brand with a focus on quality. Both cannabis for export as well as CBD products will be explored. Low cost, lots of sun, and good soil are all benefits of growing in Israel.
Valuation: Neutral
Current share price: US $0.1748
Price to Sales: 8.83 (Tobacco industry = 5)
52 week low/high: US $0.0908- $0.549
EV/Revenue: 54.02
Price/book: 1.21
Financing: Weak
After Q3 2020 (August 31st, 2020) they had $3 million of working capital. They raised about $150k through warrants and options. The company has around $1 million in debt.
ISCNF Technical Analysis
Should I buy IsraCann Biosciences?
Follow Stephen Goldman as he evaluates IsraCann Biosciences (ISCNF) using different moving averages, the Aroon Up/Down, and the stochastic RSI.
Remember sound cannabis stock trading strategies include both Fundamental Analysis and Technical Analysis.
Bottom Line: Is IsraCann Biosciences Cannabis Stock a Buy?
Recommendation: Neutral (for now)
IsraCann Biosciences, Inc. is a cannabis cultivator in Israel. They are striving to become a low cost cultivator, which will give them an advantage in exporting their products to Germany and eventually all of the EU.
IsraCann has been slightly delayed in planting their first crop and blame covid-19 as well as licensing. The good news is that the Israeli government has approved rules for export of cannabis. This export will occur at a fixed price of CAD $5.50 per gram. If they are indeed able to produce cannabis at $0.40 per gram there would be fantastic profit margins in supplying the EU with smokable cannabis.
Locally the Israeli market is growing too. With an estimated 200,000 patients consuming an estimated 85 tonnes per year, there should be plenty of demand locally. Although they have no revenue yet from cannabis related businesses, they do have promise. They just need to get that first crop planted.
The company reported losses of $838,792 during the three months ending August 31st, 2020. This is compared to new losses of $894,848 in 2019. They have around $3 million in working capital so they can fund most of 2021 now. Without significant revenue after that from cultivating they will need to raise funds.
We generally like this company, although the management team is slightly inexperienced. If they can have a few successful harvests and export to Germany, there will be revenue to drive stock prices higher. This is at least 5-6 months away however. For the short term, this is rated Neutral but watch it long term for this to switch to Strong.
If you are looking for more productive cannabis companies, check out our Featured Companies Page for many other winners in the cannabis and hemp industry.
