CV Sciences Inc (CVSI)

[Det_Robert_Thorne]

Did you see the terms of the note?

You are assuming stock price will be same or lower.

Of course I am, because CANV isn't showing significant growth or making profits.

Yes, it's possible that some news could drive the stock price above $0.50 by the time the note becomes elligible for conversion, but the quarter ends in six weeks and the 3Q/16 results are due to be issued in mid-November, a couple of weeks before note conversions begin.

Have you looked at the terms of the note for conversion pricing? From page 16 of the 10-Q [emphasis added]:

Beginning on the date that is six months after the Purchase Price Date and continuing until the Maturity Date, Iliad shall have the right to redeem a portion of the Iliad Note in any amount up to the Maximum Monthly Redemption Amount ($275,000, which is the maximum aggregate redemption amount that may be redeemed in any calendar month), for which payments may be made in cash or by converting the redemption amount into shares of Company common stock at a conversion price which is the lesser of (a) the Lender Conversion Price of $0.50 and (b) the Market Price, defined as 70% (“the Conversion Factor”), subject to adjustment as follows: if at any time (1) the average of the three lowest closing bid prices in the previous twenty (20) trading days is below $0.25 per share then the Conversion Factor will be reduced by 10%, (2) the Company is not Deposit/Withdrawal At Custodian eligible, then the Conversion Factor will be reduced by an additional 5%, or (3) there has occurred a “Major Default” then the Conversion Factor will be reduced by an additional 5%.

The price has to be over $0.50 for conversions to occur at $0.50, but as of now, there are no catalysts, other than perhaps the election, to drive the price over $0.50

We've had this discussion before, in 2014 about the selling of restricted $1 shares driving the price down once they came off restriction:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=105150629

And in 2015 about the conversion of the $6.5M in convertible notes announced in May, 2015:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=113941783

Finally, take a look at my analysis of the 2Q/15 results written on Aug 15, 2015, immediately following CANV's announcement of $2.4M in revenue and a loss of $2M:

During the second quarter, the company entered into a Securities Purchase Agreement for notes totaling $6.5M. It appears that these notes will be convertible into common shares, and CANV has filed a registration statement with the SEC indicating that this conversion could add nearly 30M shares to the number outstanding.


Opinion:

CannaVest has a good amount of cash and more than enough inventory to get them through the remainder of 2015 and into 2016. My main concerns are the sequential flattening and decline of revenue growth over the past three quarters and the potential dilution from the notes.

Is the flattening and decline due to the loss of HempMeds as a distributor, or is it due to a more competitive environment?

The company isn't profitable, but if it is able to get legal costs and share compensation costs down, it should be able to squeeze out some profits. Then again, will the potential dilution due to the new notes hurt the EPS?

Gonna be an interesting rest of 2015.

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=116243431