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Alan Brochstein, CFA
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Alan Brochstein, CFA has worked in the securities industry since 1986, primarily with the responsibility for managing investments in institutional environments until he founded AB Analytical Services in 2007 in order to provide independent research and consulting to registered investment... More
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  • Slides From Houlihan's Valuation Of Kannaway For MJNA

    5 weeks ago, MJNA announced that it was buying Kannaway, the MLM that distributes some of its products. The press release, which didn't detail the terms of the transaction, alluded to a valuation analysis performed by Houlihan Capital that suggested Kannaway is worth $120-$242mm, but it didn't share the assumptions that went into that analysis. My initial reaction was cautious:MJNA: It's What They Didn't Say About Kannaway That Should Make You Run Away.

    As a result of litigation between Kannaway and CannaVest, the valuation analysis is now in the public domain. Based on the current price of .11 for MJNA, it appears that the company will need to issue approximately 970mm shares (about 100% of the current outstanding shares) to complete the acquisition. The slides, posted below, indicate that the valuation analysis was based on inputs provided by management. My own review is that they seem outrageously high and unrealistic, not unlike the revenue projections MJNA provided publicly two years ago.

    Alarmingly, the revenues have plunged since the launch of Kannaway (see Slide 15). The company booked revenue of $5.5mm for 2014 (8 months) and provided detail for May to October totaling $4.7mm. This implies that the last two months of the year of about $761K. For the last 2 quarters of 2014, then:

    • Q3: $2.0mm
    • Q4: $1.1mm

    This is NOT a growing enterprise!

    Garbage in, garbage out...

    Click HERE for the entire valuation analysis

    Tags: MJNA, cannabis
    Feb 25 2:30 PM | Link | 3 Comments
  • A Good Time To Grab Some GW Pharma

    UK-based GW Pharma (NASDAQ:GWPH) is allowing long-term investors a good entry today following the release of Q1 results and a conference call that followed. The stock continued to retrace a good portion of its massive rally in early January today but has reversed:

    (click to enlarge)

    Today's low was just above 70, but the stock lifted off of those levels quickly and has gotten back above the lows set near 72 last week and going into the number:

    Read More

    Tags: GWPH, Cannabis
    Feb 04 12:24 PM | Link | Comment!
  • MJNA: It's What They Didn't Say About Kannaway That Should Make You Run Away

    In typical fashion for the company, Medical Marijuana, Inc. (OTCPK:MJNA) dropped an aggressive press release lacking substance in what appears to be a last-ditch effort to interest investors in its comatose stock. Before the market opened on 1/22/15, the company announced that it had signed a "Definitive Agreement to Acquire Kannaway, LLC", a newly formed multilevel marketing organization (NYSE:MLM) that is owned by General Hemp, LLC. General Hemp is controlled by Stuart Titus, who has long ties to MJNA and was able to pull out $7mm from CannaVest (OTCQB:CANV) as he sold into the speculative peak last year as described by Forbes Magazine and detailed in SEC filings.

    The press release described the products, shared some information about the company's success, and trumpeted a valuation by Houlihan Capital of "$119.6-242.7 million". That sounds huge considering MJNA itself is valued by the market at roughly $120mm based upon about 1 billion shares and a recent close near $0.12. In my view, it's what MJNA didn't say that should leave investors concerned:

    Continue

    Tags: MJNA, Cannabis
    Jan 23 11:59 AM | Link | Comment!
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