Tuesday, April 30, 2013

CannaVest Deal

In the recent Pr from Michelle Sides she breaks down the Cannavest Deal for us to better understand. You can make your own decisions as you should be doing in the first place
"The payment structure is as follows: CannaVest is paying MJNA $35 million through the end of 2013. The payments can be made in stock or cash, or a combination of both (please look at legal disclosure for exact terms). If CannaVest pays in stock, MJNA becomes the majority shareholder in CannaVest and gets to realize a cost savings in production, while also the increase in value it may get from the continued growth of the brand. If CannaVest pays in cash, MJNA realizes a substantial increase in its cash position. To date MJNA received in the 4th quarter a $4.5m dollar payment in CannaVest stock payment towards its licensing obligation, and as disclosed in subsequent filings, the Company has also received $4.5m and a $1.5m payment in stock from CannaVest, for a total stock payment of $10.5m towards licensing and partial inventory. The first payment of $4.5mil was 100% credited as licensing, the second and third installments are credited as an inventory purchase. The details of the transaction will be addressed in our first quarter filings, on or before May 15, 2013. The balance of the $24.5m paymentsconsideration will be broken up between inventory purchases first, then against the production contracts and the agricultural production team that was acquired by CannaVest as part of the transaction. In conclusion, we feel very positive about the transaction with CannaVest. As it pertains to MJNA, we are able to maintain our cost for raw materials through an exclusive licensing agreement, and over time decrease our costs of raw materials while increasing our profit margins. This will decrease our operating expenses by over $10 million dollars this year alone (which encompasses the cost of our next production run, new equipment, leasing and expansion), free our cash flow up for additional product launches, and no longer have the day to day managerial and operational burdens related to raw material procurements. Our team and I have been working tirelessly 7 days a week to create this raw ingredients pipeline and now that it is built we no longer have to keep up that pace, we can use that time to devote to our consumer products and clinical development. "

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