Cannabis Sativa Inc (OTCMKTS:CBDS) Explodes Up The Chart

For four sessions in a row Cannabis Sativa Inc (OTCMKTS:CBDS) were unable to reverse their downward course and as a result their stock crashed from on opening price of $1.90 on October 27 to a close at $1.14 on October 30. Not only that but last Friday a new 52-week low of $1.01 was also registered.

And this was the exact opening price of CBDS when the market resumed trading yesterday. However, instead of continuing its depressing downtrend and falling below the $1 mark the stock managed to rally and finished the day with a massive gain of nearly 31% and a close at $1.49 per share. It seems that the sudden change in investors’ sentiment was caused by the new PR that was published by the company.

In it CBDS announced a new special dividend of 1.5 restricted common shares for each company share owned as of the record date of November 16. Yesterday was also the payment date for the previously announced dividend of KUSH shares; back in June CBDS decided to spin-off their KUSH subsidiary. The payment of the new special dividend is going to take place as of the close of business on December 4.

Yesterday’s press release had another huge news to announce – CBDS have filed an application for an uplisting to the NASDAQ Capital Market. For a company to leave the OTC and move on to a national exchange would be truly massive but is such a favorable outcome even remotely realistic?

Let’s start with the last reported financial results of CBDS. The quarterly report covering the period ended June 30 and filed with a considerable delay on October 22 contained the following numbers:

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

No matter how enthusiastic you are about the potential of CBDS a balance sheet such as this doesn’t inspire much confidence about their chances to get approved by the NASDAQ. With cash that according to the report was enough to keep them going for just two weeks, negligible revenues and an enormous net loss of close to $2 million CBDS is in a dire state indeed. Back in June the company tried to raise $300 thousand through a convertible note but even that attempt failed as evidenced by the 8-K form submitted on October 6.

The hype generated by the new dividend and by the NASDAQ application could be enough to keep the stock headed upwards for now but sooner or later the underwhelming fundamentals could once again start depressing the share price. At the moment CBDS commands a market cap of $24 million but can such a valuation be supported? The answer will become clear in two weeks when the next quarterly report should be filed.