Medical Marijuana Inc (MJNA)

[Det_Robert_Thorne]

Unusual stuff in the filing

Granted I'm used to reading 10-Ks and 10-Qs filed on EDGAR, and I'm not an accountant, but there's some stuff in this filing that makes me wonder about the CPA.

OTOH, maybe because of the SA article, they rushed it out before proofreading it more carefully.

1) This is really minor, but in the Statement of Income, they show on the top line Income of $5.19M, but that should be $5.19M in Revenue

2a) They don't break down the revenue by division or show licensing versus other revenue, as they have in past reports.

2b) The Subsequent Events section strongly implies that the $4.5M revenue for part of the CBD inventory (the $35M deal) occurred in Q1/13, so what were the revenue drivers in Q4/12?

3) They put R&D into the Assets side of the balance sheet. I've always thought that R&D was an operating expense, and shown in the Statement of Income, not on the Balance Sheet.

4) They report the CBD inventory at $8.7M, recognizing it at "net realizable value" (NRV), which according to Investopedia, is:

The value of an asset that can be realized by a company or entity upon the sale of the asset, less a reasonable prediction of the costs associated with either the eventual sale or the disposal of the asset in question.

http://www.investopedia.com/terms/n/nrv.asp#ixzz2KLnuKckw

What I think that means is that the CBD in inventory can be sold for about $8.7M.

Yet in the "Subsequent Events" section of the report, they say they sold all the inventory for $35M, and received the first installment of $4.5M.

But if they valued the inventory at $8.7M under NRV, then how could they sell it for $35M? Why did they not value the inventory at $35M?

Maybe when they said they sold all their inventory, they meant to say that they agreed to sell most of their current $8.7M inventory and a large percentage of their 2013 production for $35M?

Most other things look okay.

Finally, they now report authorized shares as 950M, and 808M outstanding shares (which is up 72M from the 736M reported in Q3).

P.S., I'm not trying to bash, as I like what the company is doing, especially the CBD business, which can be a big winner for them.