Hot Stocked - Nov 2014
"A lot of stocks in the cannabis industries suffered from the outcome of the midterm elections in which the Republicans got a firm grip of the Senate and the House of Representatives, despite the fact that in the same time the vote for legalization in Oregon, Washington D.C. and Alaska was positive. One of those companies was CannaVEST Corp. (OTCMKTS:CANV, CANV message board).
After a small rise in its price during the second half of October due to the anticipation of the upcoming vote, the ticker made some serious corrections on November 5 and November 6 when it lost 19.12% and 8.73% on hefty volumes.
CANV was even touted by EGM FIRM INC’s Daily Stock Reporter on November 6, but this didn’t manage to bring a positive outcome in the session. Still, unlike other stocks in the industry like Medical Marijuana, Inc. (OTCMKTS:MJNA) and Cannabis Science, Inc. (OTCMKTS:CBIS), CANV did manage to return to an upward course.
This might be due to the significant numbers that were listed in their report for the second quarter. Here are those of prime interest contained in their balance sheet for the period ended June 30.
cash: $9.27 million
current assets: $17.98 million
total assets: $23.36 million
current and total liabilities: $976 thousand
quarterly revenues: $3 million
gross profit: $1.79 million
net income $8.04 million
In the interest of fairness it is good to note that the net income is mostly comprised of gain on sale of equity investment and that the operating income after all the spending sits at $131 thousand. Yet, the company is one of the few in the industry that is operating at a profit from actual product sales, despite the fact that it is still small.
This is most probably the reason why CANV managed to go above the $3 per share mark once again and closed yesterday’s session at $3.20, generating a daily dollar volume of $574 thousand. The percentile gain, however, was small and as of the writing of this article CANV has slipped 1.56% in just over an hour of trading, so things might get bloody once more.
This is reason enough for you to do your due diligence and weigh out the risks before putting any money on the line."
August 2014
"There's little doubt in anyone's mind that CannaVEST Corp (OTCMKTS:CANV, CANV message board) was the strongest mover during the marijuana craze that took over the OTC Markets in the first few months of 2014. At the beginning of the year, the stock was hovering around the $30 per share mark but on February 21, it hit a high of a mind boggling $201. As you can see, the performance back then was absolutely explosive. Right now, things are a little bit different.
Yesterday CANV logged its fourth red session in a row, it incinerated another 24% of its value, and it closed the day at $3.30, 98.3% below the 52-week high registered five and a half months ago. So, how do investors feel about that?
Some are understandably livid. They reckon that the SEC should step in and suspend CANV because millions of dollars worth of investments went down the drain during the stock's catastrophic downfall. Others couldn't disagree more. They say that an impressive bounce is imminent and that a buyout from a big pharmaceutical company is a very real possibility. Who should you trust? The more forward-looking investors, or the skeptics?
This decision is up to you to make. While you're contemplating the options, however, we should note that unlike a large portion of the small cap marijuana-related companies out there, CANV is an operating entity with plenty of cash and revenues. Here's what the 10-Q covering the first quarter of 2014 shows:
cash: $8.3 million
current assets: $15.8 million
current liabilities: $270 thousand
quarterly revenues: $2.6 million
quarterly net loss: $118 thousand
As you can see, while not perfect, CANV's balance sheet is relatively solid when compared to the reports presented by some of their small cap counterparts. If the company continues to grow, we might just see it bouncing from the bottom. There is, however, one thing that could potentially hamper the ticker's progress.
Once you take a closer look at the SEC filings, you'll see that there's no shortage of people who can profit from CANV's current share price. Between December 31, 2013 and March 31, 2014, the O/S count grew from just over 15 million to more than 32 million. Perhaps more worryingly, virtually all of the newly printed shares were issued at some bargain prices.
First, on January 27, when CANV opened the day at $85 per share, Bart Mackay, one of the company directors, received 10,000,000 shares as a conversion of a $6 million note (the conversion rate comes in at $0.60). Forbes saw this and they named him “The First Pot Stock Billionaire”. During an interview, he told them that CANV's share price might be a little too high for its own good (as it turns out, he was right) and he said that he has no intention of selling his shares on the open market. Reading through the rest of Forbes' article (if you haven't already) might be a good call.
Mr. Mackay isn't the only person who can benefit from CANV's current market cap. During the first quarter of 2014, the company completed a private placement and sold 7,250,000 shares at a price of $1 a piece. In April, when the market price was hovering between $38 and $19, CANV sold a further 781 thousand shares for total proceeds of around $1.1 million ($1.50 per share).
If the issuance of discounted stock continues, the ticker might be dragged further down. That's why carefully considering the risks before putting your money on the line is absolutely essential."
