Cannabis Science Inc (OTCMKTS:CBIS) Moves Up

Yesterday the stock of Cannabis Science Inc (OTCMKTS:CBIS) managed to jump up back above $0.02 after it closed the session with a gain of 6.3%. It seems that the quarterly report the company filed on Monday didn’t faze investors much. Or maybe the rather positive research report that was issued yesterday managed to offset the grim numbers from the quarterly. After all the analysts that issued the research report gave CBIS a price target of 10 cents per share. How realistic is such a valuation though?

Even now when the stock is sitting 5 times lower than that target CBIS commands a market cap of nearly $26 million and this is based on 1.22 billion shares, the number of outstanding shares they had back at the end of June. As of November 20, however, the O/S of the company has surpassed 1.41 billion. We will leave up to you to decide if the fundamentals of the company are enough to support support such a market capitalization – less than two months ago CBIS had:

• $4791 cash
• $138 thousand total current assets
• $5.1 million total current liabilities
• $4150 revenue
• $3.9 million net loss

You are not mistaken, at the end of September the company had less than $5000 in cash and even less in revenues. At the same time the losses are simply staggering with CBIS reporting a net loss of more than $14 million for the first nine months of 2015.

Investors are also waiting for the dividends the company promised. At the end of October CBIS stated that they will advise their shareholders on the required steps for the dividend after it gets approved by FINRA. The approval was supposed to take a week or so but it has been nearly a month since then. Keep in mind that one of the dividends was first promised and approved almost five years ago.

The red flags surrounding CBIS simply cannot be ignored. The company has been talking about new products for quite a while, not to mention that they have been operating for years, but so far there have been almost no meaningful results . The picture gets even grimmer when you add the constant dilution of the common stock and the millions of shares that have been issued to insiders as part of the numerous stock compensation plans. That is why you should approach the stock with caution and only after doing extensive due diligence.