Is The Excitement Around Cannabis Science Inc (OTCMKTS:CBIS) Over?
In just two sessions the stock of Cannabis Science Inc (OTCMKTS:CBIS) managed to fly over 142% up the chart moving from an opening price of around $0.016 on August 18 to a close at $0.042 on August 19. Yesterday, however, the ticker suffered a rather painful crash as it plunged for the bottom almost immediately after the opening bell. By the end of the session CBIS had slashed close to a quarter of their value closing at $0.0318. Is this the start of another downtrend for the company?
Well, CBIS have been forming a particularly depressing chart since the start of 2015 when the company briefly spiked above 8 cents per share. The recent impressive performance was only possible thanks to a new PR that, admittedly, did contain some encouraging news. CBIS announced that after four years of waiting they will finally distribute the dividend filed on a Definitive Schedule 14C from August 11, 2011, to investors as of the record date December 31, 2010.
CBIS will also try to give their current shareholders something and will attempt to distribute a new dividend with a record date of October 9, 2015. The first dividend will consist of 1 Class A common stock for each 10 common shares while the new one will be 1 Class A common stock for every 100 common shares. The Class A common stock will have a separate trading symbol and will be used by CBIS to accommodate a $15 – 25 million financing. Furthermore CBIS even talked about formally contemplating an uplisting to the NASDAQ national exchange.
The PR may have contained some impressive announcements but investors shouldn’t forget that for now absolutely nothing around the company has actually changed. CBIS are still among the most dangerous pennystocks out there.
There is absolutely nothing that justifies the current market cap of the company of $37.6 million. CBIS finished 2014 with $1031 in revenues and a net loss of $16 million. For the first quarter of 2015 the company reported:
• $37,524 cash
• $186 thousand total current assets
• $3.8 million total liabilities
• ZERO revenues
• $4.2 million net loss
The financial report for the second quarter that was supposed to be filed by the end of last week is still missing. CBIS submitted a notification of late filing which gave them a 5-day extension but keep in mind that the company completed its Q1 report over two months after the required deadline.
The problem is that the atrocious financial state is far from the biggest red flag surrounding CBIS. Oh no, investors must also take into account the fact that the insiders of the company have been receiving hundreds of millions of shares as bonuses. CBIS has approved numerous equity compensation plans and even on the day of the last PR they submitted a brand new S-8 registration statement for a 2015 Equity Award Plan.
And some of the people getting these shares are not particularly fond of holding on to them evidenced by the multitude of form 4s that have been filed. And what do you know, yesterday another form 4 cropped up. It shows that the COO of the company has sold a rather substantial amount of shares during the August 18 and 19 trading sessions. The exact same days that CBIS surged up the chart thanks to the excitement generated by the PR.
If CBIS returns to its usual trading pattern the recent gains could quickly get wiped. That is why we always urge you to do your own due diligence before committing to any trades involving pennystocks.
