CannaVEST Corp (OTCMKTS:CANV) Sinks To Record Lows
The stock of CannaVEST Corp (OTCMKTS:CANV) suffered another depressing session yesterday. During the trading day the ticker registered a new 52-weeks low of $0.038 and although it bounced up and finished the day at $0.049 that price still represented a loss of 14%. At the start of November CANV were sitting just below the $1 per share mark but now, just month later, they are down by more than 50%.
On November 16 the company submitted its financial report for the third quarter of the year but it failed to change the negative sentiment towards the stock. In fact CANV began sliding downwards at an even greater speed. So let’s take a look and see if the financial results were indeed that underwhelming. As of September 30 CANV had:
• $1.12 million cash
• $20.1 million total current assets
• $2.15 million total current liabilities
• $4.15 million product sales
• $989 thousand net loss
A pretty impressive balance sheet for a pennystock company but there are some things that must be taken into account. The massive sales of over $4 million generated during the quarter was primarily a result of a $2 million product sale to a single customer – Medical Marijuana Inc (OTCMKTS:MJNA), another pennystock company. Earlier this year CANV entered into a settlement agreement with MJNA and certain parties related to MJNA and thanks to it in the quarterly report CannaVEST recorded litigation revenue of $756 thousand.
So far, however, nothing can explain the drastic loss in chart positions. Well, back in March CANV entered into a securities purchase agreement for up to $6.5 million deliverable in five tranches. In order to receive the money the company has to issue convertible notes that can be turned into shares at a conversion price featuring a 40% discount. The first note in the principal amount of $510 thousand was issued on May 19, the closing date of the deal, and some investors are speculating that it is now being turned into shares. If heavily discounted shares are being unloaded on the market the effects on CANV‘s share price could indeed be devastating.
The risks around CANV should not be underestimated. Do your own due diligence and never put unaffordable sums of money on the line.
