What does Abattis Bioceuticals Corp. (ATTBF) do?
Abattis Bioceuticals Corp. originally sought to be a vertically-integrated company serving the medical marijuana and natural health products industries. They’ve slowly evolved away from that model to reduce overhead. The company’s now focused on generating revenue from its natural tonics, elixirs and blends, many of which contain its proprietary botanical blend ingredient PhytoNOS. The company’s also seeking a Controlled Substance License (CSL) with Health Canada via subsidiary Northern Vine Labs so it can possess and produce cannabis.
Three reasons to invest in Abattis Bioceuticals Corp. stock (ATTBF)
1) Rapid sales growth. ATTBF’s sales grew from $7,720 (CAD) in 2014 to $91,940 (CAD). That’s a gain of more than 1,000 percent. Yes, it’s fairly easy to grow when you’re only doing $7,000 (CAD) in sales per year, but their numbers are at least moving in the right direction. 2016 could be a defining year for the company.
2) China bound. Last month, Abattis announced a partnership with China’s Jaingsu to export Abattis’ line of Phtnos Superfruit tonics and VitaGum to mainland China. From their MD&A:
On August 10, 2016, Abattis announced that it has entered into an exclusive distribution agreement with the Jiangsu Regent Granary Trading Co., Ltd. (“Jaingsu”). Jaingsu is one of a select few that is exporting Canadian beef to China They also export canola, dried fruit and will also include Abattis’ line of Phtnos Superfruit tonics and VitaGum in mainland China. Jaingsu will utilize its network and sales experience to cultivate a market for Abattis offering. Jaingsu has certain sales revenue targets under the agreement; failure to achieve such targets will allow Abattis to terminate the Agreement.
The report continues:
“For the 2016 fiscal year, Abattis will continue with its focus as a bioceutical production and sales company, with projected launches of an extended Saskatoon Berry-based tonic range, an expanded Botanical Blends elixir line, as well as sales of the proprietary botanical blend ingredient PhytoNOS. The Company expects a pipeline of products to be deployed into retail and professional channels as well as the direct sales channel and wholesale distribution markets and to focus on further enhancing its international associations and trade.”
3) Diversification. Abattis has its hands in a lot of pots (so to speak). Altogether, the company lists ten subsidiaries:
- Abattis Bioceuticals International Inc.
- Animo Wellness Corporation
- BioCell Labs Inc.
- Biocube Green Grow Systems Corp.
- iJuana Cannabis Inc.
- Instant Payment Systems LLC
- National Access Pharmacy Corp.
- North American BioExtracts Inc.
- Northern Vine Canada Inc.
- Phytalytics LLC
There are pros and cons to this approach. Too many subsidiaries can be the sign of a company that doesn’t have one core strength. Most of Abattis’s acquisitions/subsidiaries stay true to the company’s core focuses, though: medical marijuana and natural health products.
Abattis seems to do a good job of cutting off businesses that don’t prove profitable. In 2014, one of their subsidiaries, Phytalytics, sought and received an analytics laboratory testing license in Washington state. Despite capturing some 9 percent of the state’s testing market share, the business proved unprofitable and operations were suspended in October of 2015.
Northern Vine Labs is seeking a Controlled Substance License (CSL) with Health Canada. “Northern Vine’s first inspection in support of obtaining this License was completed on January 29, 2016,” the company wrote in a recent MD&A. It sounds like they’re headed in the right direction.
The bottom line on Abattis Bioceuticals Corp. stock (ATTBF)?
Are the three reasons listed above good enough to invest in Abattis Bioceuticals stock? Sales growth is impressive, but you have to keep in mind ATTBF is still in the red. The company generated $91,940 (CAD) in sales last year, but it spent more than that in advertising alone (C$129,758). It also burnt through $420,309 (CAD) in legal fees and $1.1 million (CAD) in management and consulting fees. All told, the company lost nearly $6 million (CAD) in 2015. Without ongoing and significant cash infusions (or another spike in revenue), ATTBF could face a cash crunch. As of Sept. 20, 2015, the company had just $157,758 (CAD) on hand. I’d hold out until their revenue grows even more.
Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here and marijuana stocks here. Full disclosure: I do not own a position in ATTBF, and I do not plan to initiate one in the next 72 hours.