Replies to post #179560 on Medical Marijuana Inc (MJNA)

[Det_Robert_Thorne]

A "friendly" arrangement that went "all business"?

I think that "default" may be a little strong. Instead, because Llamas and Mona formed Roen at about the time MJNA sold the Phytopshere operation to CannaVest, that this could have been a "friendly" arrangement between MJNA and Roen where it was assumed that the conversion was a given (a sort-of unannounced share offering). That may be why MJNA has a $936K "Common Stock" entry in the Financing Activities section of the 1Q/13 Statement of Cash Flows, or perhaps it was part of the Additional Paid In Capital:



In addition, in the Spring of 2013, MJNA was discovering that its Board hadn't been following Oregon law with regards to changing the number of Authorized Shares (they followed the same incorrect process as the previous owners/BOD, headed by Bruce Perlowin). When they discovered this error, they issued a series of Articles of Correction with the Oregon Secretary of State, which reset the AS to the current 5B.

That situation could have delayed the conversion and actual issuing of shares to Roen.

Unfortunately, when Mackay acquired Roen from Mona and Llamas in late-2013, the relationship became "all business". Mackay likely discovered the notes in performing his due diligence on Roen, and then once MJNA confirmed that the AS was indeed 5B, Mackay filed the notice to convert the notes.

Of course, this is speculation based on available evidence. If MJNA had put this information into the reports, we wouldn't have to speculate.