Cannabis Science Inc (OTCMKTS:CBIS) Moves Up On New PR
Yesterday Cannabis Science Inc (OTCMKTS:CBIS) decided to congratulate the entire state of Pennsylvania for becoming the 24th state to legalize marijuana for medical purposes. Although the press release was little more than fluff it appears to have been enough to get investors fired up. Indeed, during yesterday’s trading the stock of company surged by nearly 13% and returned to $0.021 per share. The traded volume for the session surpassed the monthly average with investors shifting over 35.8 million shares.
Many may find such an overwhelming reaction to a press release that has nothing to do with the current operations of the company rather puzzling. Not to mention that apparently the people supporting CBIS are in no way disturbed by the fact that the company still hasn’t filed its annual report for 2015. The report was due on March 30 but CBIS were granted a 15-day “grace” period through a notification of late filing. In it the company stated that it failed to complete the report on time due to “unanticipated delays” but that it expects to file it within the extension period. Well, that didn’t happen and now the OTCMarkets profile page of the company is marked with the Pink Limited Information sign.
Since the start of the month CBIS has published 5 different press releases but not even one of them addresses the missing annual report. Instead the company has been pumping out borderline ecstatic PRs about its deal for 360,000 sq ft licensed cannabinoid grow and formulation processing operation in Nevada. Deal for which no concrete details have been revealed despite the numerous PRs and that has not been covered by an 8-K filing.
The problem is that without knowing the specifics of the deal and without having the opportunity to see a more recent picture of CBIS‘s financials investors are left to trade in the dark. Even worse, if you open the last financial report, which covers the quarter ended September 30, 2015, you will see that back then CBIS were in a dreadful financial state with:
• $4791 cash
• $138 thousand total current assets
• $5.1 million total current liabilities
• $4150 revenue
• $3.9 million net loss
For the first nine months of 2015 the company reported the exact same $4150 in revenues and a net loss of more than $14.3 million. Just for comparison the net loss for the entire 2014 was $16.8 million.
Adding to the mixture the frequent sale of shares by insiders, the numerous stock compensation and equity award plans, and the dilution of the common stock and investing in the company gets even riskier. Keep in mind that despite the distribution of some of the personal shares of the CEO, Mr. Raymond C. Dabney, being labeled as a “Personal Loyalty Gift” and a “Personal Thank You Gift” the main reason that drove Mr. Dabney to do it was FINRA’s refusal to approve the two dividends that had been previously proposed by the company.
