I have poured through all of the recent announcements and Cannavest’s filings. Forget about what Cannavest has been in the past and think about what MJNA just did. MJNA sold “excess inventory” of hemp oil to CannaVest for what will be $35 million in shares. Why is that number important? Prior to the deal, there were 7 million shares of CannaVest outstanding with a market price of $5. If MJNA receive $35 million in shares prices at $5, then MJNA will hold 7 miilion shares of Cannavest or 50% of the company. 97.45% of the rest of Cannavest shares are owned by private equity firms, so they will own 48.7% of CannaVest. This makes MJNA the majority shareholder.
Why is this important? Regardless of what CannaVest was in the past (the previous owner was completed moved out of the company) they meet NASDAQ listing requirements that MJNA cannot. The share price has been over $4 for the required time and they are audited by Turner, Stone who is PCAOB-registered. With MJNA having the required revenues (doesn’t matter if it is cash or revenue in stock), the two companies meet all requirements for full NASDAQ listing.
As an aside, the statement says that the “excess inventory” that CannaVest were sold to MJNA subsidiaries (i.e., Can Chew and Dixie) at a reduced cost, which may have been $0. That means the hemp oil moved from PhytoSphere to Can Chew and Dixie at no cost and MJNA picked up 50% of a company that meets NASDAQ listing requirements.
Sentiment: Strong Buy
If this is what they are planning to do, they essentially own cannavest, how can they write 35M in REV on their balance sheet for what is just a transfer of assets. They are selling to themsleves and listing it as revenue. This should be a red flag for any potential investors!
They didn't just sell the inventory, they sold the whole manufacturing segment.. Seems like buying up shares of a company that don't trade or do anything is a bad deal as the company has 0 track record of being able to do business to any degree. Too risky/shady when they could have sold the business for real cash rather than for an unproven business that has 0 track record.
Sounds logical but somehow sounds a little shady. I hope your right though. That would explain the lack of details until the deal was done. But my faith in the management is dwindling because without some kinda defense against attacks and all of the unanswered questions their shareholder base is losing confidence. They need some kinda announcement to stop the bleeding and update shareholders. I'am long but not happy!
The problem of claiming false revenue remains. FCLS has no money. Their stock is not trading openly on the market and would drop drastically if it did. Thus, the $35,000,000 literally does not exist. If MJNA simply wanted to do what you're stating, they could traded the oil for the shares while not projecting a $35,000,000 in revenue from the transaction. Doing this is likely securities fraud. If it's not securities fraud, then at the very least what will happen is that once FCLS's shares hit the open market, their price will plummet, and then MJNA will have to record a near-$35,000,000 revenue loss on a future report.
Recording the value of shares as revenue is fully compliant with GAAP accounting and it was fully disclosed so there is no fraud. If the shares go down, then it is not recorded as a revenue loss in teh income statement but but as a write-down of asset on the balance sheet.
I also stated this yesterday, you just wrote it up better. I know the company has plans and Im glad Im on board for the run. Its just a matter of time before all this comes out and all these bashers look like idiots!
I have two questions...
1- So you're saying that them being the majority owner of CannaVEST will allow MJNA to uplist quicker because CV already meets nasdaq requirements?.....
and 2- is that even llegal?