Cannabis Science Inc (OTCMKTS:CBIS) Explodes Up The Chart
Yesterday Cannabis Science Inc (OTCMKTS:CBIS) issued a new PR that had such a profound effect on the company’s stock that in a single day it added over 118% to its value. This brought it to price levels last visited at the start of May. The daily trading volume experienced a similar explosive growth with investors shifting 93.7 million shares throughout the session, amount that is 90 million shares higher than the monthly average of 3.71 million shares. So what did the PR say in order to cause such a sudden reversal?
Well, quite a lot actually. CBIS stated that after four years investors are finally going to receive the share dividend that was filed on a Definitive Schedule 14C on August 18, 2011. Investors who owned common shares of the company as of December 31, 2010, will receive 1 share of a new Class A common stock for each 10 shares. CBIS will try to issue a new dividend of 1 share of Class A common stock for each 100 shares owned by shareholders as of the record date of October 9, 2015. Both dividends will also include a warrant with an exercise price of $1 for the purchase of 1 additional Class A common share for each special dividend share received.
Although the fact that after such a long wait investors are finally going to received their promised dividend is enough to explain yesterday’s excitement CBIS also announced that it will be applying for a new separate trading symbol for the Class A commons stock to accommodate a $15 – 25 million financing. Even a potential uplisting to the NASDAQ national exchanged was mentioned in the PR.
Everything sounds rather impressive, right? Unfortunately, getting too carried away might be quite dangerous. CBIS is an extremely risky stock that should be approached with caution.
The company was supposed to complete its financial report for the second quarter of the year by the end of last week but they were unable to do so and instead, on August 17, a notification of late filing was submitted. This gives them a 5-day extension but will CBIS manage to meet the deadline this time? Let’s just say that on May 18 a notification of late filing was submitted for the Q1 report. Would you like to guess when the quarterly was finally completed? – Over two months later on July 28. And it showed that the financial state of the company is as dire as ever:
• $37,524 cash
• $186 thousand total current assets
• $3.8 million total liabilities
• ZERO revenues
• $4.2 million net loss
The dilution of the common stock is another major red flag that should not be underestimated. Between December 31, 2014, and July 28, 2015, CBIS issued 250 million shares. 71 million of them came into existence as a settlement of debt at $0.001 each. 52,948,000 common shares were given to executives and various consultants. As of July 27 the outstanding shares had reached 1.28 BILLION. On numerous occasions we have listed OTCMKTS:CBIS) issued a new PR that had such a profound effect on the company’s stock that in a single day it added over 118% to its value. This brought it to price levels last visited at the start of May. The daily trading volume experienced a similar explosive growth with investors shifting 93.7 million shares throughout the session, amount that is 90 million shares higher than the monthly average of 3.71 million shares. So what did the PR say in order to cause such a sudden reversal?” target=”_blank”>the equity compensation plans approved by the company and thanks to which its officers and directors have been issued millions upon millions of shares as bonuses. Guess what? – Yesterday a new S-8 registration statement was submitted for the 2015 Equity Award Plan.
CBIS may have big plans but so far they have been unable to show any meaningful results. Take into account the myriad of red flags surrounding the company and adjust your trades accordingly.