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
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
Qosmos has announced new milestones in the detection of encrypted traffic and in protocol signature coverage. Qosmos latest software can accurately classify traffic encrypted with SSL/TLS (e.g., Google, Facebook, WhatsApp), P2P traffic (e.g., BitTorrent, MuTorrent, Vuze), and Skype, while preserving the privacy of communication content. These new classification techniques mean that traffic optimization, policy enforcement, and user experience are largely unaffected by encryption. In respect wit...
Kubernetes, Docker and containers are changing the world, and how companies are deploying their software and running their infrastructure. With the shift in how applications are built and deployed, new challenges must be solved. In his session at @DevOpsSummit at19th Cloud Expo, Sebastian Scheele, co-founder of Loodse, will discuss the implications of containerized applications/infrastructures and their impact on the enterprise. In a real world example based on Kubernetes, he will show how to ...
Using new techniques of information modeling, indexing, and processing, new cloud-based systems can support cloud-based workloads previously not possible for high-throughput insurance, banking, and case-based applications. In his session at 18th Cloud Expo, John Newton, CTO, Founder and Chairman of Alfresco, described how to scale cloud-based content management repositories to store, manage, and retrieve billions of documents and related information with fast and linear scalability. He addres...
Is the ongoing quest for agility in the data center forcing you to evaluate how to be a part of infrastructure automation efforts? As organizations evolve toward bimodal IT operations, they are embracing new service delivery models and leveraging virtualization to increase infrastructure agility. Therefore, the network must evolve in parallel to become equally agile. Read this essential piece of Gartner research for recommendations on achieving greater agility.
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
SYS-CON Events announced today that Venafi, the Immune System for the Internet™ and the leading provider of Next Generation Trust Protection, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Venafi is the Immune System for the Internet™ that protects the foundation of all cybersecurity – cryptographic keys and digital certificates – so they can’t be misused by bad guys in attacks...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
As the world moves toward more DevOps and Microservices, application deployment to the cloud ought to become a lot simpler. The Microservices architecture, which is the basis of many new age distributed systems such as OpenStack, NetFlix and so on, is at the heart of Cloud Foundry - a complete developer-oriented Platform as a Service (PaaS) that is IaaS agnostic and supports vCloud, OpenStack and AWS. Serverless computing is revolutionizing computing. In his session at 19th Cloud Expo, Raghav...
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
Ixia (Nasdaq: XXIA) has announced that NoviFlow Inc.has deployed IxNetwork® to validate the company’s designs and accelerate the delivery of its proven, reliable products. Based in Montréal, NoviFlow Inc. supports network carriers, hyperscale data center operators, and enterprises seeking greater network control and flexibility, network scalability, and the capacity to handle extremely large numbers of flows, while maintaining maximum network performance. To meet these requirements, NoviFlow in...