Strategic Global Investments, Inc. (OTCMKTS:STBV) Digs a Hole in the Ground

It all started on February 3. Strategic Global Investments, Inc. (OTCMKTS:STBV) jumped out of nowhere and registered some impressive volumes while surging towards the penny per share mark. We wrote about the run back then and if you take a look through our article, you’ll see that STBV‘s climb was propelled by nothing more than rumors about the company’s entrance into the marijuana industry. Not surprisingly, it slipped and, over the following four sessions, it managed to incinerate around 70% of its value.

On February 10, the management team decided to confirm the speculations and officially announced that they have entered “meaningful negotiations” for the acquisition of a marijuana growing facility which, apparently, was a good enough reason for the paid pumpers to jump in. A peculiarly-timed change in the business plan, you would agree, but nevertheless, it was bound to cause some stir on the market.

The so-called green rush has prompted numerous penny stocks to switch to the marijuana industry and the results have been pretty much identical – skyrocketing share prices. At first, STBV was no exception. It climbed up again and in just six and a half hours, it managed to gain no less than 71%. Shareholders were happy about the new business plan and new investors were jumping in on the bandwagon, excited about the huge opportunities presented by the cannabis sector. Everything suggested that STBV was going to continue on its upward run at least for a few more days, but then, something terrible happened.

On February 11, shareholders and investors woke up to find out that the company’s share structure information has been updated on the OTC Markets’ website. And it revealed some bad news.

According to it, there are now a whopping 100 billion shares authorized and 12 billion of them were issued and outstanding as of February 11. The float hovers around the 4.6 billion mark and, as if these figures weren’t bad enough, some diligent investors found out that there is a huge possibility of more stock issuance in the near future.

This 1-A document was filed on January 13 and it shows that STBV want to sell a mind-bending 30 billion shares of common stock in order to raise just $3 million. Investors now know that the stock is being diluted severely and everyone is running for the exits.

Not surprisingly, this is affecting the ticker. Of the last ten sessions, only two ended in the green. The cumulative losses amount to around 87% and the fact that even the pumpers decided to take cover should give you an idea of how embarrassing the drop is. Is it that surprising though?

We have written our fair share of articles on STBV and if you have been following them closely, you’ll see that we’ve tried to warn investors numerous times about the signs of severe dilution that we’ve seen in the company’s financial statements. That said, even we were surprised by its magnitude.

One thing is for sure: the colossal number of outstanding shares means that if STBV is to sustain any sort of respectable levels, the management team will need to show us some seriously solid business operations. Unfortunately, on that front, things don’t appear to be particularly promising either.

They seem excited about their acquisition of an enterprise called Bearpot Inc, but the fact of the matter is that, as we wrote in our previous article, there’s almost no information about their future daughter company available on the internet. The financial statements show that STBV‘s previous endeavors haven’t exactly been a resounding success as well.

All in all, they don’t have much room for mistakes and the same goes for the people who are still contemplating a potential investment. Being extremely careful and doing a lot of due diligence is, as always, absolutely essential.