Cannabis Science Inc (OTCMKTS:CBIS) Is Highly Volatile
After two impressive sessions of climbing up the chart yesterday the stock of Cannabis Science Inc (OTCMKTS:CBIS) returned to crashing. The ticker wiped nearly 15% of its value and closed at $0.023. Will the company manage to hold on to at least some of its recent gains?
CBIS has tried to keep investors excited by regularly posting new PRs. The company is also waiting for an approval by FINRA for its two dividends – the one with a record date nearly 5 years ago and the more recent one with a record date of October 9. Apart from the distribution of the dividends on Monday CBIS announced that they are going to begin their drug development program with IGXBio Inc.
Glancing over the numerous PRs coming from CBIS might leave you with the impression that the company is moving steadily forward with its business plans but a closer look will reveal quite a lot of red flags. From as early as January Cannabis Science have been talking about the release of new products that were supposed to be sold in the Netherlands, Spain and California while the drug program with IGXBio was first announced more than five months ago at the end of May.
So, despite being operational for years CBIS has had some rather big difficulties delivering on its promises and the financial state of the company definitely reflects it. The financial report for the quarter ended June 30 contained the following numbers:
• $2,504 cash
• $177 thousand total current assets
• $4.2 million total current liabilities
• ZERO revenues
• $6.1 million net loss
Having almost non-existent cash reserves, ZERO revenues for the first half of 2015, working capital deficit of over $4 million, and an accumulated deficit just shy of $120 million is not exactly confidence inspiring. Investors should also note that although the company has failed to generate any revenues its net loss for the second quarter of the year was nearly four times bigger than the same period last year.
Leaving the dreadful financials aside let’s move on to the incessant dilution of the common stock. At the end of 2014 CBIS had a little over 1 BILLION outstanding shares. As of October 8, however, the O/S had surpassed 1.3 BILLION shares. 163 million of the newly issued shares saw the light of day between January 1 and April 30 as part of various agreements. Among the people who received shares are some of the officers and directors of the company.
It should be obvious that CBIS is an extremely risky choice. They have yet to demonstrate any meaningful results. At the same time the recent increase of the authorized shares to 3 BILLION will allow the company to continue diluting its common stock. Take the red flags surrounding the stock into account and adjust your trades accordingly.
