Will Cannabis Science Inc (OTCMKTS:CBIS) Stabilize?
After crashing down by more than 24% last Thursday the stock of Cannabis Science Inc (OTCMKTS:CBIS) slowed down its decline logging in a loss of 5.3% and closing at $0.0301 on Friday. Is this a signal that the ticker might be able to hold on to the majority of its recent gains?
Well, when CBIS announced they will try to deliver the dividend they promised investors four years ago the excitement was enormous. The company even stated that it will attempt to give a new dividend of 1 Class A common share for each 100 common shares owned by investors as of the record day of October 9, 2015. In addition the PR that was published talked about a possible $15 to $25 million financing through the new Class A common stock and even mentioned that CBIS are formally contemplating an uplisting to the NASDAQ national exchange.
Quite impressive goals for a pennystock but as we said earlier the positive momentum quickly lost its strength and now CBIS is coming down the chart once more. Even after a cursory amount of due diligence such a turn of events shouldn’t have come as a surprise as CBIS is simply riddled with red flags.
The financial report for the second quarter of the year is still nowhere to be found. On August 17 CBIS submitted a notification of late filing but now even the 5-day extension this gave them is over. It is anybody’s guess when the quarterly might be completed especially if you take into account that the report for the first quarter was filed two months after the required date. Not to mention that the numbers it revealed were as gruesome as always:
• $37,524 cash
• $186 thousand total current assets
• $3.8 million total liabilities
• ZERO revenues
• $4.2 million net loss
Unfortunately the red flags run far deeper than the depressing financials – CBIS has continued to dilute its common stock and since the start of the year 250 million shares have seen the light of day. A significant portion of them, approximately 71 million were issued as a settlement of debt at just $0.001 each. Another 53 million were issued to the executives and the various consultants of the company.
CBIS has been issuing millions of shares as bonuses to its directors quite regularly and just this year multiple new equity compensation plans have been approved. And it seems this isn’t going to change – last week, on the day of the dividend PR, CBIS filed a S-8 registration statement for a new 2015 Equity Award Plan. If you think that the insiders of the company are holding on to their shares think again. On August 18 and 19 when CBIS soared up the chart the COO of the company sold 6.5 million shares on the open market evidenced by this Form 4.
Cannabis Science Inc is an extremely dangerous choice that should be approached with caution. Take into account the various risks and adjust your trades accordingly.
