Ayurcann stock (AYUR.CN), a Canadian cannabis extraction company specializing in the processing and co-manufacturing of pharma-grade cannabis and hemp to produce various derivative cannabis 2.0 and 3.0 products in the medical and recreational market, has recently provided an update on its growth in production and market share in recreational cannabis in Canada. The company also announced it would do a buyback share program.

Corporate update

In the detailed corporate update, the company shared several highlights:

• Ayurcann sold THC and CBD distillate containing over 1 billion milligrams of cannabinoids into the Canadian market for vapes, tinctures, topicals and edibles, working with top selling brands throughout Canada and internationally;
• Ayurcann has been nominated and won 2 industry awards as Top Canadian Processors and Top Tolling Provider in the Canadian Cannabis industry;
• Ayurcann has entered and fulfilled multiple orders from Ontario, Manitoba, Alberta, Saskatchewan, and New Brunswick, with the Fuego Vapes brand establishing itself as top sellers in the provinces;
• Ayurcann is working with 8 recreational cannabis brands and has over 500 provincial listings;
• Ayurcann is launching new SKUs into the market with distillate-focused products leading the way. The vape brands are Bravo6, Xplor and Oy Vapes, and Her Highness for Intimacy oils.

Buyback Program

Ayurcann announced it would acquire up to 6,085,890 common shares in the capital of the Corporation, representing approximately 5% of its issued and outstanding Common Shares. As of February 28, 2022, there were 121,717,818 Common Shares issued and outstanding. On any given day during the NCIB, the Corporation may only purchase up to 15,000 Common Shares, which is equivalent to 25% of the average daily trading volume of 60,000 calculated based on the trading volumes on the CSE over the past 12 months and may purchase once per calendar week.

The company’s board of directors believes that the market price of the Common Shares may from time to time not reflect the underlying value of the Corporation, specifically its growth opportunities and that the proposed purchasing of its Common Shares is in the best interests of the Corporation and represents an appropriate use of corporate funds.

It is positive as it will reduce the number of shares and the float. Businesses carrying out this type of program show that they are confident in their company and their growth forecast. In addition, it augments the trust of current and potential investors in the business.

Fundamentals/Latest Earnings

According to their last financial statement, Ayurcann has $1,886,817 in cash for $9,839,096M in total assets, for only $3M in liabilities.

If we dive deeper into revenue analysis, their B2C brought to the company $599,426, $1,597,925 for the B2B, and $1,022,057 for services. Their most significant expenses are salaries and wages, office and general, and marketing ($214,427, $231,608, $202,365).

Regarding the total number of shares, there currently are 118,769,391 shares outstanding,  3,113,835 options with an exercise price of $0.17, and 24,918,465 warrants with an exercise price of $0.18. The current stock price does not enable the company to exercise these additional assets to leverage more cash.

• Ayurcann reported revenues of $3.2 million for the three months ended December 31, 2021, compared to $1.5 million for the three months ended December 31, 2020, an increase of 106% YoY and 71% increase over the Q1 for the three months ended September 30, 2021. Revenues for the six months ended December 31, 2021, were $5.1 million, a 115% increase over a similar period in 2020.
• Ayurcann reported gross margins of $1.8 million for the three months ended December 31, 2021, compared to $302,000 for the three months ended December 31, 2020, an increase of approximately 500% YoY, maintaining firm control over sales and operating income. Gross margins for the six months ended December 31, 2021, were $2.7 million, compared to $408,000 in 2020, a 569% YoY increase.

Share Movement

The company currently has a market cap of $20 and is traded at $0.17.

The volume has increased steadily over the last 50 days. The steady positive amount of news shared by the company will attract new investors. The buyback program will also augment the average.

For now, we have several walls centered around $0.18 (exercise price for the warrants). There are 139k shares included in selling orders. It might lead to a halt in the increase of stock price. Besides, there are no big selling orders beyond these walls, meaning it will be easier for the stock price to get more value with the increased volume combined. So far, the Bollinger bands indicate daily fluctuations between $0.16 to $0.17, but with the increasing volume, positive data, and the walls being cleared soon, we should not see this price for long.

Bottom Line

Ayurcann is moving toward the right way. Quants Report defines the stock as very undervalued and gives them a fair valuation of $0.31 (100% upside compared to the current SP). More will come as the company expects further sales with its exclusive partnership brands such as; Innocan Pharma, Her Highness, Joints, Hustle & Shake, Bravo6, Lucky Dragon. They are also creating products to meet the demand of Canadian consumers. The company’s undervalued position grants investors an excellent opportunity to either invest in the company or add more to their portfolio.

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