Auxly Stock Hits Year-Low as Curative Foreclosure Fails to Excite

Auxly stock

Auxly stock is currently hovering around a 2019-low after Auxly Cannabis Group’s (TSXV:XLY) (OTCQX:CBWTF) takeover of Curative Cannabis failed to excite investors following disappointing quarterly results.

Curative Foreclosure

Last week, Auxly Cannabis Group announced that it had completed the foreclosure process on the share collateral of Curative Cannabis after Curative failed to pay over $21.2 million CAD owed to Auxly. Auxly had been in possession of the 125 total shares of Curative as collateral on the loan, and so the foreclosure actually involved very little effort on Auxly’s behalf. Auxly Cannabis is now in control of a 31,000 square foot facility in Chatham; however, Auxly shares are down about 7% since the announcement.

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Auxly Cannabis Group was engaged in a dispute with Curative over the value of the collateral assets, with the two parties agreeing to a period of forbearance on November 15. At the time, Curative owed Auxly $17.5 million CAD as a result of interest and the ongoing payment of construction costs by Auxly to protect the value of the facility. However, Curative Cannabis executives David Shpilt and Scott Fitzgerald failed to find necessary funding in the forbearance period amidst some uncertainty regarding third-party funds in escrow. Today, Auxly shares are trading for $0.63 in Toronto.

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Analysts Remain Hopeful on Auxly Stock

Also last month, Auxly Cannabis Group reported its third-quarter results, which failed to excite the market. Despite revenue nearly doubling year-on-year, it fell by 40% from the previous quarter despite the high hopes of investors in Auxly stock. Cannabis sales accounted for just $115,000 CAD; however, the imminent arrival of the 2.0 market could be a major catalyst for growth for the Canadian cannabis firm, which predicts revenue to climb in December once the new wave of products hit shelves.

Analysts remain hopeful that Auxly stock can be the fastest-growing pot stock on the market in 2020, despite slumping over 30% since the beginning of the year. The launch of Auxly’s 2.0 products are expected to drive a massive 3,000% increase in sales to $184.44 million CAD in 2020, but just like the first year of legalization, only time will tell.

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