Cannabis Science Inc (OTCMKTS:CBIS) Flies Higher
In early January the stock of Cannabis Science Inc (OTCMKTS:CBIS) reached a high of over 8 cents per share. Last Thursday it closed at $0.013 representing a cumulative loss of nearly 84%. The chart performance was truly a total disaster and the numerous fluff PRs that the company issued had almost no effect on the stock. So what did CBIS decide to do?
This Tuesday the company announced that it is going to distribute a dividend to its shareholders. Not any dividend, mind you, but the one that was filed on a Definitive Schedule 14C on August 18, 2011. After over a four-year wait investors might finally be able to receive 1 common share of a new Class A common stock for every 10 CBIS shares they owned as of December 31, 2010. The company stated that it will try to give a dividend to its more recent shareholders of 1 Class A common share for every 100 shares owned as of the record date of October 9, 2015.
But the company didn’t stop there. CBIS also talked about a potential $15 – 25 million financing raised through the Class A common stock, which is supposed to get a a new separate trading symbol. An eventual uplisting to the NASDAQ national exchange was also mentioned.
Such a flurry of encouraging news was bound to get the attention of the market and, indeed, on the day of the PR CBIS exploded adding 118% to their value and closing at $0.0349. Yesterday the stock continued to move higher gaining another 20.3% for a close at $0.042. There is only one problem though – CBIS is still as dangerous as ever.
The company may talk about its plans for the future but for now the red flags surrounding it are as numerous as they are serious. CBIS finished 2014 with a revenue of exactly $1031 and a net loss of over $16 million. At the end of the first quarter of 2015 the reported financials looked like this:
• $37,524 cash
• $186 thousand total current assets
• $3.8 million total liabilities
• ZERO revenues
• $4.2 million net loss
Last week CBIS were supposed to file their report for the second quarter of the year but instead the company once again submitted a notification of late filing. The Q1 report came more than 2 months after the required deadline so we will see how much time it will take this time.
The Q2 report is rather important because it will show a more up-to-date picture of the share structure of the company. CBIS have been putting their shareholders through a massive amount of dilution. Since the start of 2015 a total of 250 million shares have seen the light of day and over 70 million of them were priced at $0.001. Another 53 million were issued to the executives and the various consultants.
The current spike up the chart could provide investors with opportunities for some quick gains but the risks should not be underestimated. The stock requires extensive due diligence before any money is put on the line. Investors might also want to take a look at the millions of shares issued to insiders as bonuses under the numerous equity compensation plans approved by CBIS. Not to mention that on the same day of the dividend PR a new S-8 registration statement for a 2015 Equity Award Plan was filed.
