Cannabis Sativa Inc (OTCMKTS:CBDS) Drops Once More

At the start of the month Cannabis Sativa Inc (OTCMKTS:CBDS) was sitting just below $2.25 per share. As a result of a prolonged slide towards the bottom of the chart however the stock found itself closing at $1.20 last Friday. Although during the weekend no new information was released by the company when the market opened this Monday CBDS managed to move from an opening price of $1.17 to a close at $1.69 for a gain of over 40%.

An undoubtedly impressive performance but as we said the surge wasn’t supported by anything substantial and whatever excitement was shown by investors disappeared almost equally as fast. On Tuesday CBDS crashed by 17.7% while yesterday they corrected by more than 10% and now the stock has almost wiped all of its gains. It should also be noted that yesterday’s drop took place on more than 144 thousand traded shares which is nearly 10 times higher than the monthly average for the stock of 16 thousand shares.

Will CBDS stop crashing though? Back in August the company was supposed to submit its quarterly report for the period ended June 30. The deadline was August 15 but thanks to a notification of late filing CBDS received a 5-day extension. Would you like to guess when was the report actually filed? – Exactly a week ago on October 22, a delay of more than two months. To say that the numbers contained inside the report are simply abysmal would be an understatement:

• $26 thousand cash
• $3.6 million total current assets
• $1 million total current liabilities
• $617 revenues !!!
• $1.98 million net loss

Less than four months ago CBDS had limited cash reserves, generated less than a thousand dollars in three months while at the same time incurred close to $2 million in net loss. Even the impressive current assets start to lose their appeal when you take into account the fact that $3,578,792 of them were prepaids. Taken directly from the report these prepaids consisted primarily of “the issuance of common stock to several parties under various consulting and service agreements for work”.

It should be obvious that even if you believe in the potential of the company’s products you should still approach their stock with caution. Take into account the various risks and adjust your trades accordingly.