Medical Marijuana Inc (MJNA)

[Det_Robert_Thorne]

The only surprise might be Mark-to-Market

I've been wondering if $MJNA might try Mark-to-Market accounting on the value of it's Cannavest stock in order to artificially inflate the balance sheet as an asset.

The first quarter shares were acquired at $5.50, IIRC, and on March 28, 2013, Cannavest stock closed at $15, so on the 720K shares they received, that's a Mark-to-market increase in the value of those shares of $6.84M, which they could record as an asset worth $10.8M.

Normally, I would say that's a great thing, except for the fact that there is no way to establish what those shares are actually worth if they could sell them, since Cannavest has traded only 100 shares in the last eight trading session, and yesterday's 100 share sale at $13.50 was down $6.50 from the $20 close on April 25.

Considering that MJNA now holds 1.72M shares after the latest payment, that $6.50 decline represents an $11.2 loss in the value of those shares.

So Mark-to-Market accounting for the value of the shares could be a nice, but illusory, surprise, because the shares are so illiquid.