Medical Marijuana, Inc. (OTCMKTS:MJNA) Bled Further
Yesterday Medical Marijuana, Inc. (OTCMKTS:MJNA) slipped again, this time in double digits, closing 12% down on increased share volume. The ticker is now 35% down from its peak price for the new year and it’s hard to tell where the bottom is.
MJNA posted another press release yesterday, near the market’s open, but that didn’t help the price stop its descent. Even though in our previous article we applauded the company for not making unnecessary racket and dishing out meaningless PR aimed at generating hype, yesterday’s piece was practically serving that purpose.
MJNA followed in the steps of Cannabis Science, Inc. (OTCMKTS:CBIS) and Hemp, Inc. (OTCMKTS:HEMP) and chimed in with a lengthy joint release with CannaVest (OTCMKTS:CANV), explaining why the farm bill on hemp is a godsend. The release mostly dealt with CannaVest officer Christopher Boucher’s past experience with hemp and the emerging opportunities glimpsed in the farm bill.
MJNA investors seem to have been unable to find sufficient encouragement in the PR, considering it was more focused on CannaVest anyway. CannaVest itself remains a complete mystery. The company issued shares to MJNA for the PhytoSphere deal with share prices collared between $4.50 and $6.00 per share. In late January 2014 CANV issued 10 million shares to satisfy a $6 million convertible note, with shares converting at $0.60. Those 10 million shares were issued to Roen Ventures, LLC, a company that a CANV board member holds 100% interest in, according to a CANV 8-K filing.
The conversion price was adjusted to $0.60 after CANV commissioned an independent valuation firm to run a valuation of their common stock. This pegged CANV restricted common shares at $0.68 per share and unrestricted common stock at $1.13 per share. This valuation took place when CANV was trading at around $20 per share on the open market. The convertible to Roen Ventures was turned into $0.60 shares when CANV was trading at around $60 per share on the market.
MJNA should have acquired a substantial interest in CANV, considering the $35 million worth of shares that CANV should have issued for the PhytoSphere deal. The forthcoming annual report from MJNA should contain more on that topic.
With the FINRA reiterating its warning for the huge volatility and the risks of the marijuana sector, investors should really do their own due diligence and go through all filings and other publicly available information about any stock before they put their money in it.
