The prolonged slip is no doubt a disconcerting sight for all MJNA shareholders. At the same time, those who are long on the stock and believe it has the potential to recover and go higher had an excellent opportunity to load more shares by the bucket. This may have taken place but it could have been in amounts that could not offset those scrambling in panic.
To recap, MJNA have been taking steps to improve investor confidence and uplist to OTC by issuing an audited quarterly and a full-year report including future guidance. There was one somewhat disturbing highlight nested in the yearly update that had the potential to raise some eyebrows. MJNA previously announced the sale of the entire PhytoSphere hemp oil inventory for the sum of $35 million, with the first $4.5 million installment already paid up. The yearly update detailed that payment was being made with the stock of the purchasing entity, CannaVEST Corp, f.k.a. Foreclosure Solutions, an OTC traded company, currently bearing the FCLS ticker and expecting a symbol reassignment in the immediate future, whose shares are valued at $5.00.
Virtually all shares of CannaVEST were held beneficially by three entities as of December 31, 2012, as per the furnished Schedule 13D forms. They came to own the shares by acquiring them from FCLS's former sole director and officer and other shareholders through a stock purchase agreement dated November 2012, for the sum of $375 thousand. The money was loaned to each of the buyers by Mr. Stuart Titus, associated with one of the three purchasing entities. While CannaVEST still operated as Foreclosure Solutions prior to the acquisition, the company had not generated revenue and had $163 in total assets. In order to fulfill its payment obligation for the hemp oil using only shares and following the first installment model, CannaVEST would have to issue a little over 6 million new shares, diluting its stock by about 75%.
Where MJNA is headed remains to be seen. The ongoing price drop seems to be scaring investors away but the future will show how things will play out.