Welcome!

News Feed Item

CannaVest Corp. Announces Filing of Restated Financial Statements

LAS VEGAS, April 25, 2014 /PRNewswire/ -- CannaVest Corp. - ("CannaVest" or "the Company") (OTC BB: CANV) today announced that it has filed restated financial statements and accompanying management's discussion and analysis for the quarters ended March 31, June 30, and September 30, 2013. 

CannaVest Corp - The World's Leading Industrial Hemp Supplier.

As indicated in the Company's Form 10-K filed on March 28, 2014, the restatements were determined to be necessary as a result of the audit of the December 31, 2013 financial statements and following consultation with the Company's external auditors.  The purpose of the restatement is to address the following items, which the Company has identified as requiring correction:

Recognition of revenue
The financial statements for the quarter ended March 31, 2013 reflected revenue and accounts receivable of $192,625 and cost of goods sold of $296,050 that should not have been recognized.  Revenues and accounts receivable in the amount of $192,625 related to the sales value of inventory that was transferred to a manufacturer for inclusion in finished goods and an error in calculating the price of the ending inventory as of the end of the period. The amount of $39,865 was related to the cost of inventory sent for manufacturing being included in cost of goods sold and $256,185 related to errors related to calculating ending inventory.

Prepaid inventory
A portion of the prepaid inventory purchased as part of the Company's acquisition of assets from PhytoSPHERE Systems, LLC ("PhytoSPHERE") was not included in the financial statements as of March 31, 2013.  The resulting understatement of prepaid inventory was $1,260,510.

Inventory
Inventory as originally reported in the financial statements ended March 31, 2013, was understated by $125,027.  This was a result of an overstatement of cost of goods sold in the amount of $296,050, offset by an adjustment for the value of inventory acquired from PhytoSPHERE in the amount of $171,023

Value of intangible assets
Intangible assets as presented in the financial statements as of March 31, June 30 and September 30, 2013 were in error.  As determined by the valuation of the assets purchased from PhytoSPHERE, intangible assets totaled $4,110,000. Net intangible assets previously reported at March 31, 2013 were $33,656,833, which represents an overstatement of $29,683,833.  Net intangible assets previously reported at June 30, 2013 were $4,995,895, which represents an overstatement of $1,228,395 and net intangible assets previously reported at September 30, 2013 were $4,466,666, resulting in an overstatement of $904,666.

Goodwill
As determined by the valuation of assets purchased from PhytoSPHERE, the value of goodwill was $1,855,512.  The Company did not report any goodwill as of March 31, 2013, which resulted in an understatement of $1,855,512.  At June 30, 2013, the Company reported goodwill in the amount of $26,998,125, resulting in an overstatement of goodwill of $25,142,613.  At September 30, 2013, the Company recorded impairment of goodwill in the amount of $26,998,125, resulting in a carrying value of $0.  This resulted in an understatement of goodwill in the amount of $1,855,512.

Amount due to PhytoSPHERE Systems; Additional paid in capital
The amount due to PhytoSPHERE was originally reported as $35 million, pursuant to the terms of the agreement.  Shares to be issued as payment under the transaction were at a set per share price between $4.50 and $6.00.  Subsequently, a valuation determined the price of the transaction to be $8,020,000, which resulted in a per share price of $1.21 per sharebased on the valuation obtained.  Therefore, for the Company's financial reports, the amount due to PhytoSPHERE was adjusted to $8,020,000 and the shares issued as payment pursuant to the transaction were adjusted to $1.21 per share.  This resulted in an overstatement of the amount due PhytoSPHERE and paid-in capital of $23,572,360 and $3,407,640, respectively at March 31, 2013; $18,786,094 and $8,193,906, respectively at June 30, 2013; and $5,185,120 and $21,794,880, respectively at September 30, 2013.

Amortization expense
The restatement of the value of intangible assets has resulted in the overstatement of amortization expense for the quarters ended March 31, June 30 and September 30, 2013 in the amount of $241,167, $367,825 and $323,730, respectively.  The overstatement of amortization expense was $608,992 for the six months ended June 30, 2013 and $932,722 for the nine months ended September 30, 2013.

Impairment of goodwill
The Company originally reported $26,998,125 as an impairment to goodwill for the quarter ended September 30, 2013.  The Company did not record an impairment to goodwill in its restated financial statements.  This resulted in an overstatement of operating expenses of $26,998,125 for the three and nine months ended September 30, 2013.

Research & development expenses
For the quarter ended September 30, 2013, the Company included $137,496 in research and development expenses as a part of general and administrative expenses.  This amount has been reported as research and development expenses in the restated financial statements.

The cumulative impact on the Company's financial statements are described in more detail below.

For the three months ended March 31, 2013

The effect of these adjustments on the condensed balance sheet as of March 31, 2013 is summarized below:


As previously reported



Adjustment



As restated


Accounts receivable

$

1,671,438



$

(192,625)



$

1,478,813


Prepaid inventory


194,206




1,260,510




1,454,716


Inventory


725,000




125,027




850,027


Intangible assets (net)


33,656,833




(29,683,833)




3,973,000


Goodwill





1,855,512




1,855,512


Amount due under the PhytoSPHERE Agreement


30,500,000




(23,572,360)




6,927,640


Additional paid in capital


4,643,357




(3,407,640)




1,235,717


Retained earnings


193,725




344,592




538,317


The effect of these adjustments on the condensed statement of operations for the three months ended March 31, 2013 is as follows:


As previously reported



Adjustment



As restated


Revenue

$

1,275,000



$

(192,625)



$

1,082,375


Cost of goods sold


501,500




(296,050)




205,450


General and administrative expenses


435,559




(241,167)




194,392


Net income


337,941




344,592




682,533


Earnings per share


0.04




0.05




0.09


The effect of these adjustments on the condensed statement of cash flows for the three months ended March 31, 2013 is as follows:


As previously reported



Adjustment



As restated


Net income

$

337,941



$

344,592



$

682,533


Amortization expense


378,167




(241,167)




137,000


Prepaid inventory





(194,206)




(194,206)


Inventory


(402,707)




(101,843)




(504,550)


Accounts receivable


(1,275,000)




192,625




(1,082,375)


For the three and six months ended June 30, 2013

The effect of these adjustments on the condensed consolidated balance sheet as of June 30, 2013 is summarized below:


As previously reported



Adjustment



As restated



Intangible assets (net)

$

4,995,895



$

(1,228,395)



$

3,767,500



Goodwill


26,998,125




(25,142,613)




1,855,512


Amount due under the PhytoSPHERE Agreement


23,750,000




(18,786,094)




4,963,906


Additional paid in capital


10,643,257




(8,193,906)




2,449,351


Retained earnings  (accumulated deficit)


(418,809)




608,992




190,183
















The effect of these adjustments on the condensed consolidated statement of operations for the three months ended June 30, 2013 is as follows:


As previously reported



Adjustment



As restated


General and administrative expenses

$

1,131,660



$

(712,658)



$

419,002


Net income (loss)


(1,060,792)




712,658




(348,134)


Earnings (loss) per share


(0.12)




0.08




(0.04)


The effect of these adjustments on the condensed consolidated statement of operations for the six months ended June 30, 2013 is as follows:


As previously reported



Adjustment



As restated


General and administrative expenses

$

1,222,386



$

(608,992)



$

613,394


Net income (loss)


(274,593)




608,992




334,399


Earnings (loss) per share


(0.03)




0.07




0.04


The effect of these adjustments on the condensed consolidated statement of cash flows for the six months ended June 30, 2013 is as follows:


As previously reported



Adjustment



As restated


Net income (loss)

$

(274,593)



$

608,992



$

334,399


Amortization expense


951,492




(608,992)




342,500


Inventory


(1,832,345)




(1)




(1,832,346)


Accounts receivable


(1,165,059)




1




(1,165,058)


For the three and nine months ended September 30, 2013

The effect of these adjustments on the condensed consolidated balance sheet as of September 30, 2013 is summarized below:


As previously reported



Adjustment



As restated



Intangible assets (net)

$

4,466,666



$

(904,666)



$

3,562,000



Goodwill





1,855,512




1,855,512


Amount due under the PhytoSPHERE Agreement


6,499,998




(5,185,120)




1,314,878


Additional paid in capital


28,330,375




(21,794,880)




6,535,495


Accumulated deficit


(28,551,425)




27,930,847




(620,578)
















The effect of these adjustments on the condensed consolidated statement of operations for the three months ended September 30, 2013 is as follows:


As previously reported



Adjustment



As restated


General and administrative expenses

$

1,115,098



$

(461,226)



$

653,872



Impairment of goodwill


26,998,125




(26,998,125)






Research and development expenses





137,496




137,496



Net income (loss)


(28,132,616)




27,321,855




(810,761)



Earnings per share


(2.81)




2.73




(0.08)

















The effect of these adjustments on the condensed consolidated statement of operations for the nine months ended September 30, 2013 is as follows:


As previously reported



Adjustment



As restated


General and administrative expenses

$

2,337,484



$

(1,070,218)



$

1,267,266


Impairment of goodwill


26,998,125




(26,998,125)





Research and development expenses





137,496




137,496


Net income (loss)


(28,407,209)




27,930,847




(476,362)


Earnings per share


(3.21)




3.26




(0.05)

















The effect of these adjustments on the condensed consolidated statement of cash flows for the nine months ended September 30, 2013 is as follows:


As previously reported



Adjustment



As restated


Net income (loss)

$

(28,407,209)



$

27,930,847



$

(476,362)


Amortization expense


1,480,722




(932,722)




548,000


Impairment of goodwill


26,998,125




(26,998,125)





The restated financial statements and accompanying management discussion and analysis have been filed with the United States Securities and Exchange Commission ("SEC") through the EDGAR system.

"In the process of going through our year end audit, we discussed the issues that had come to light with our external auditors which were primarily attributable to the accounting of the PhytoSPHERE transaction," said Michael J. Mona, Jr., President and Chief Executive Officer of CannaVest.  "While this has been a tough process that we would have preferred not to endure, our goal is and has been that our filings are accurate and that the public can rely on them going forward."  Mona added, "We have a lot of exciting developments in the coming months.  The sooner we can move past this restatement, the better. Once we decided to pursue restating the financial statements, we wanted to move as quickly as possible to insure that the most accurate information is publicly available."

For a further discussion of the Company's financial results for the year ended December 31, 2013, please refer to the Company's consolidated financial statements and related Management Discussion and Analysis, which can be found at www.cannavest.com or EDGAR at www.sec.gov/edgar/searchedgar/webusers.htm

About CannaVest Corp.
CannaVest Corp. is in the business of investing and developing hemp-based cannabinoid companies. CannaVest Corp. develops, produces, markets and sells end-consumer products to the nutraceutical industry containing the hemp plant extract, cannabidiol (CBD). Additionally, the company resells raw product acquired by CannaVest Corp. Pursuant to the company's supply relationships in Europe, CannaVest Corp. seeks to take advantage of an emerging worldwide trend to re-energize the production of industrial hemp and to foster its many uses for consumers. Cannabinoids (cannabidiol/CBD) are natural constituents of the hemp plant, and CBD is derived from hemp stalk and seed. Additional information is available from OTCMarkets.com or by visiting CannaVest.com.

About PhytoSPHERE Systems
Phytosphere Systems is a global phytocannabinoid biotechnology company and a wholly-owned subsidiary of CannaVest Corp. (OTCBB:CANV). The company utilizes advanced cultivation methods and state-of-the-art processing technology leading to development of pharmaceutical, nutraceutical and food products.

Phytosphere Systems, the manufacturer of the CBD-rich hemp oil used in Real Scientific Hemp Oil (RSHO), has developed special cultivars (similar to "strains") that produce hemp that is especially rich in CBD, making it possible for Phytosphere to offer all-natural products with high concentrations of hemp-based CBD. For more information, please visit: Phytospheresystems.com.

About US Hemp Oil
US Hemp Oil seeks to develop the United States industrial hemp industry. The company is dedicated to the procurement, processing, marketing and distribution of bulk wholesale hemp seed, hemp oil, protein, food and hemp body care products. US Hemp Oil currently has three brands: RSHO™, Cibaderm™, and Cibdex™. US Hemp Oil is determined to bring hemp products into the mainstream by creating greater public awareness of and media exposure for the exceptional nutritional profile of hemp and the environmental benefits of growing industrial hemp. For more information, please visit: USHempOil.com.

FORWARD-LOOKING DISCLAIMER

This press release may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward-looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of CannaVest Corp. to be materially different from the statements made herein.

LEGAL DISCLOSURE

CannaVest Corp. does not sell or distribute any products that are in violation of the United States Controlled Substances Act (US.CSA). The company does grow, sell and distribute hemp-based products and are involved with the federally legal distribution of medical marijuana-based products within certain international markets.

Corporate Contact:
CannaVest Corp.
2688 S. Rainbow Blvd., Ste. B
Las Vegas, NV 89146
Office: 866-290-2157

Photo - http://photos.prnewswire.com/prnh/20140403/LA98016LOGO

SOURCE CannaVest Corp.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that Enzu will exhibit at SYS-CON's 21st Int\ernational Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive advantage. By offering a suite of proven hosting and management services, Enzu wants companies to focus on the core of their ...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
"Tintri focuses on the Ops side of the DevOps, which basically is pushing more and more of the accessibility of the infrastructure to the developers and trying to get behind the scenes," explained Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Both SaaS vendors and SaaS buyers are going “all-in” to hyperscale IaaS platforms such as AWS, which is disrupting the SaaS value proposition. Why should the enterprise SaaS consumer pay for the SaaS service if their data is resident in adjacent AWS S3 buckets? If both SaaS sellers and buyers are using the same cloud tools, automation and pay-per-transaction model offered by IaaS platforms, then why not host the “shrink-wrapped” software in the customers’ cloud? Further, serverless computing, cl...
You know you need the cloud, but you’re hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You’re looking at private cloud solutions based on hyperconverged infrastructure, but you’re concerned with the limits inherent in those technologies.
Automation is enabling enterprises to design, deploy, and manage more complex, hybrid cloud environments. Yet the people who manage these environments must be trained in and understanding these environments better than ever before. A new era of analytics and cognitive computing is adding intelligence, but also more complexity, to these cloud environments. How smart is your cloud? How smart should it be? In this power panel at 20th Cloud Expo, moderated by Conference Chair Roger Strukhoff, paneli...
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), provided an overview of various initiatives to certify the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldwide re...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...