Aurora Cannabis Inc T.ACB

Alternate Symbol(s): T.ACB.WS.U | ACB

Healthcare Cannabis

Aurora Cannabis Inc. is a Canada-based medical cannabis company. The Company's principal business lines are focused on the production, distribution, and sale of cannabis related products in Canada and internationally. The Company’s segments include Canadian Cannabis, European Cannabis and Plant Propagation. The Company's adult-use brand portfolio includes Aurora Drift, San Rafael '71, Daily Special, Whistler, Being and Greybeard, as well as CBD brands, Reliva and KG7. Its medical cannabis brands include MedReleaf, CanniMed, Aurora and Whistler Medical Marijuana Co, as well as international brands, Pedanios, Bidiol and CraftPlant. Its cannabis products are primarily cultivated and manufactured in the facilities in Edmonton, Alberta; Bradford Ontario; Pemberton, British Columbia, and Odense, Denmark. The Company is focused on offering its cannabis products to global medical cannabis market, recreational cannabis market and global hemp-derived cannabidiol (CBD) markets.

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Aurora Cannabis Inc

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Comment by TITOOOon Mar 08, 2017 8:28am

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Post# 25949130

RE:Misleading Results And Mismanagement (II)

TITOOO wrote: Variable costs

Aurora claims to have 5.2 million dollars worth in current assets up from only 1 million in 2015. The liquidation value of these assets is debatable because the vast majority are inventory and biological. Biological assets are an IFERS classification for living animals or plants controlled by a company for economic benefit in the future.

Aurora's buildup of inventory could either be a sign of inefficient management or stockpile in anticipation of legalization. However, The third and most likely possibility is that Aurora is massively overstating the value of its cannabis-based biological assets. In the Consolidated Statements of Comprehensive Loss (Income Statement), Aurora reports an unrealized gain on changes in fair value of biological assets of over 3 million dollars. They use this large non-cash "inflow" to calculate a gross margin of 2.2 million dollars that, if taken at face value, would completely mislead most retail investors.

On a cash basis, the company lost around 800,000 dollars from variable costs alone; the cost of production is significantly higher than sales. Clearly, Aurora is not truly a subscale firm; its business would be unprofitable even if it sold 100x more units. Aurora needs to get its costs down and its sales prices up before worrying about volume. Volume growth will just mean bigger losses if things continue like this.