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 TidalScale will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. TidalScale is the leading provider of Software-Defined Servers that bring flexibility to modern data centers by right-sizing servers on the fly to fit any data set or workload. TidalScale’s award-winning inverse hypervisor technology combines multiple commodity servers (including their ass...
SYS-CON Events announced today that Avere Systems, a leading provider of hybrid cloud enablement solutions, will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Avere Systems was created by file systems experts determined to reinvent storage by changing the way enterprises thought about and bought storage resources. With decades of experience behind the company’s founders, Avere got its ...
The next XaaS is CICDaaS. Why? Because CICD saves developers a huge amount of time. CD is an especially great option for projects that require multiple and frequent contributions to be integrated. But… securing CICD best practices is an emerging, essential, yet little understood practice for DevOps teams and their Cloud Service Providers. The only way to get CICD to work in a highly secure environment takes collaboration, patience and persistence. Building CICD in the cloud requires rigorous ar...
Microsoft Azure Container Services can be used for container deployment in a variety of ways including support for Orchestrators like Kubernetes, Docker Swarm and Mesos. However, the abstraction for app development that support application self-healing, scaling and so on may not be at the right level. Helm and Draft makes this a lot easier. In this primarily demo-driven session at @DevOpsSummit at 21st Cloud Expo, Raghavan "Rags" Srinivas, a Cloud Solutions Architect/Evangelist at Microsoft, wi...
Containers are rapidly finding their way into enterprise data centers, but change is difficult. How do enterprises transform their architecture with technologies like containers without losing the reliable components of their current solutions? In his session at @DevOpsSummit at 21st Cloud Expo, Tony Campbell, Director, Educational Services at CoreOS, will explore the challenges organizations are facing today as they move to containers and go over how Kubernetes applications can deploy with lega...
Today most companies are adopting or evaluating container technology - Docker in particular - to speed up application deployment, drive down cost, ease management and make application delivery more flexible overall. As with most new architectures, this dream takes significant work to become a reality. Even when you do get your application componentized enough and packaged properly, there are still challenges for DevOps teams to making the shift to continuous delivery and achieving that reducti...
We all know that end users experience the Internet primarily with mobile devices. From an app development perspective, we know that successfully responding to the needs of mobile customers depends on rapid DevOps – failing fast, in short, until the right solution evolves in your customers' relationship to your business. Whether you’re decomposing an SOA monolith, or developing a new application cloud natively, it’s not a question of using microservices – not doing so will be a path to eventual b...
In his session at 21st Cloud Expo, Raju Shreewastava, founder of Big Data Trunk, will provide a fun and simple way to introduce Machine Leaning to anyone and everyone. Together we will solve a machine learning problem and find an easy way to be able to do machine learning without even coding. Raju Shreewastava is the founder of Big Data Trunk (www.BigDataTrunk.com), a Big Data Training and consulting firm with offices in the United States. He previously led the data warehouse/business intellige...
In a recent survey, Sumo Logic surveyed 1,500 customers who employ cloud services such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). According to the survey, a quarter of the respondents have already deployed Docker containers and nearly as many (23 percent) are employing the AWS Lambda serverless computing framework. It’s clear: serverless is here to stay. The adoption does come with some needed changes, within both application development and operations. Tha...
As hybrid cloud becomes the de-facto standard mode of operation for most enterprises, new challenges arise on how to efficiently and economically share data across environments. In his session at 21st Cloud Expo, Dr. Allon Cohen, VP of Product at Elastifile, will explore new techniques and best practices that help enterprise IT benefit from the advantages of hybrid cloud environments by enabling data availability for both legacy enterprise and cloud-native mission critical applications. By rev...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, will lead you through the exciting evolution of the cloud. He'll look at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering ...
SYS-CON Events announced today that Ryobi Systems will exhibit at the Japan External Trade Organization (JETRO) Pavilion at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Ryobi Systems Co., Ltd., as an information service company, specialized in business support for local governments and medical industry. We are challenging to achive the precision farming with AI. For more information, visit http:...
Amazon is pursuing new markets and disrupting industries at an incredible pace. Almost every industry seems to be in its crosshairs. Companies and industries that once thought they were safe are now worried about being “Amazoned.”. The new watch word should be “Be afraid. Be very afraid.” In his session 21st Cloud Expo, Chris Kocher, a co-founder of Grey Heron, will address questions such as: What new areas is Amazon disrupting? How are they doing this? Where are they likely to go? What are th...
As you move to the cloud, your network should be efficient, secure, and easy to manage. An enterprise adopting a hybrid or public cloud needs systems and tools that provide: Agility: ability to deliver applications and services faster, even in complex hybrid environments Easier manageability: enable reliable connectivity with complete oversight as the data center network evolves Greater efficiency: eliminate wasted effort while reducing errors and optimize asset utilization Security: imple...
High-velocity engineering teams are applying not only continuous delivery processes, but also lessons in experimentation from established leaders like Amazon, Netflix, and Facebook. These companies have made experimentation a foundation for their release processes, allowing them to try out major feature releases and redesigns within smaller groups before making them broadly available. In his session at 21st Cloud Expo, Brian Lucas, Senior Staff Engineer at Optimizely, will discuss how by using...