Medical Marijuana, Inc. (OTCMKTS:MJNA) Bombs After Q2 Results
For two days the whole sector involved with medical marijuana was enjoying a bit of a resurgence with Medical Marijuana, Inc. (OTCMKTS:MJNA) taking the lead once again. The company doubled its value on the massive volume of 37 million shares. Such interest in the stock hadn’t been displayed since February this year.
The industry-wide upswing was sparked by CNN’s chief medical expert Dr. Sanjay Gupta’s announcement that he has changed his longtime firm stance against the medical benefits of Marijuana. During the production of his documentary named “Weed” the doctor came across many patients who experienced vast improvementd after being prescribed medical marijuana.
Unfortunately for MJNA‘s shareholders most of the gains made by the stock were destroyed during yesterday’s crash. The ticker slashed 32% of its value and tumbled down to $0.15 on an even bigger volume of 47 million shares. For a brief moment it plummeted to a low of just $0.016. Apparently the market wasn’t exactly enthralled by the freshly published quarterly report.
For the second quarter of 2013 MJNA disclosed the following results:
- $1.7 million cash
- $22 million total current assets
- $579 thousand total liabilities
- $834 thousand revenues
- $6 million net income
Well, you might ask yourselves how can MJNA be crashing with such stellar numbers especially for a pinksheet company. The answer is quite clear when you read the entirety of the report. On its own the company has a a gross profit of $230 thousand and a net loss of $350 thousand, while revenues subsided significantly from the $2 million posted the previous quarter.
The positive bottom line is achieved through the third installment payment of $8 million made by CannaVEST for assets owned by PhytoSphere Systems, LLC, entity owned 80% by MJNA. By the end of the year CannaVEST are supposed to make the final two payments of $10 million and $6.5 million. The problems is that only $725 thousand of the transferred funds were cash while the other $7 million took the form of CannaVEST common shares.
The sales of their much-hyped CanChew Gum amounted to a little more than $9 thousand while their 60% owned joint venture Red Dice Holdings managed to get $150 thousand. On the other hand Red Dice owes the company more than $1.7 million. Some investors found the lack of dilution as a positive sign which it undoubtedly is. But currently MJNA is unable to issue any shares when the outstanding amount is 946 million out of the 950 million authorized.
Left on its own the ticker is prone to moving towards the bottom gathering the strength to jump upwards only when supported by hype. Investors should do their own due diligence and decide whether all the risks around MJNA are worth it.
The stem cell company Brainstorm Cell Therapeutics, Inc. (OTCBB:BCLI) also had a disastrous session losing 17% and closing at exactly 17 cents. Arch Therapeutics Inc (OTCBB:ARTH) did almost exactly the same and dropped 18%. Since July 8 the company has been supported by a pump campaign that has as of this Monday burned through a budget of $1.3 million.
