My colleague Chris Sandburg covered Cannabis Science Inc. (OTCMKTS:CBIS) in this fantastic article last month. The company is delivering more information and shares are moving, thus we decided to write a new piece about this name. If this is the first time that you are reading about this ticker, you need to know that some people have posted big gains in a very short period of time. The shares were trading close to the level of $0.01 six months ago and are being exchanged now for $0.0815.
Take a look at the following chart:
Since my colleague wrote his piece, the share price moved down from $0.10 to $0.08. Here is the graph:
What are the latest news?
On March 2, 2017, the company reported that Raymond C. Dabney, its President, CEO and Co-Founder, will be delivering a speech at the Global Health Catalyst (GHC) Summit at Harvard Medical School on April 28-30, 2017. If you have not heard yet about this business executive, let me give you some information about him as it is stated in the website of the company:
"Mr. Raymond C. Dabney, President & CEO, brings 25 years of experience in corporate finance, corporate structure, corporate communications, sales and marketing for public companies. Mr. Dabney has significant experience in public and private venture capital, early stage equity/debt financings and regulatory compliance." Source
Without any doubt, more important than the speech of the CEO was the announcement on March 8, 2017 of the delivery of the first greenhouses with full tracking and reporting protocols to be delivered for the operations that the company runs in California and Nevada. The CMO, Dr. Allen Herman, was quoted in the press release as follows:
"Having control over our own supply chain will greatly increase our efficiencies, including the time and cost required to have processed product readily available for development into all our formulations. We will soon launch our observational studies for specific cannabinoid combinations targeting critical ailments. We will be growing a variety of cannabinoid combinations for our formulations and testing. Each formulation is designed to target a specific critical ailment; to work using a particular delivery mode; and to have the potency to drive maximum positive results in patient usage," Source
The company claims to have received "hundred emails" from customers interested in its clinical research. According to the press release, the company will answer these mails once the studies that the company conducts finish successfully. The company plans to start working with animals shortly and will concentrate on the following:
- Cancers
- PTSD
- Pain management
- HIV/AIDS
- Neurological conditions including sleep disorders
In addition, on March 27, 2017, Cannabis Science noted in another press release that the company had increased its production of its self-medicating patient product line in California. We did not appreciate that the communication did not include a detailed description of this production increase, but it did include many comments from experts in the Cannabis industry. Cannabis Science seems to be releasing information only to move the shares, given the amount of communications and the lack of financial or production figures. Investors need to be aware of this bad practice. Do not restrain yourself if you are shareholder. You should be ready to contact the investors’ relations telephone number if you want to request more information about the company and its operations. They may not tell you new information that they did not disclose, but they could indicate you where you can find a more detailed description of the company's operations and production levels.
State of the balance sheet
The company has not yet filed its new audited 10-k for the fiscal year 2016. Thus, we will be using the 10-k issued for the year 2015. The most important reported assets were the following:
- Cash: $61,917
- Prepaid expenses: 156,750
- Total Current Assets: 314,914
- Deposits: $971,500
- Equity Method investee: $128,927
- Goodwill: $170,689
- Intangibles: $215,000
- Total assets: $1,801,030
We believe that the amount of goodwill, equity method invested and intangibles may be a warning for investors. These are the assets that may or may not be recoverable in the near future. Investors need to be sure that these assets will deliver future cash flows before making an investment in this company. As we always suggest, the investors need to take these articles as the beginning of a future research.
The most important liabilities are the following:
- Accrued expenses, primarily management fees: $1,614,654
- Notes payable to stockholders: $1,406,513
- Total liabilities $4,415,517
- Total stockholders' deficit: ($2,614,487)
The company shows a large amount of accumulated deficit delivered from other business ventures. Thus, the company may be interesting as a target for other bigger competitors, as this deficit will make the buying company pay much less if it has profits. It is also important to mention that if this acquisition happens, the acquiring company will have to assume the debt of Cannabis Science, which is not small.
(If you do not understand the financial accounts that we have showed in this article, we encourage you to contact your financial advisor before making any investment in this company)
Conclusion
Cannabis Science keeps sending communications to investors. Shareholders should be happy that the company is so clear about its daily operations. We have seen other company operating with many more millions that disclose much less than Cannabis Science. This is really very good. However, we believe that the company should deliver more detailed figures about its production.
In addition, shareholders and potential investors need to investigate further the assets hidden in this company and figure out their real value. We may do this task in the future, so please subscribe if you want to obtain more information. We will be updating our subscribers as soon as we know more. For the latest updates on CBIS, sign up below!
Disclosure: We have no position in CBIS and have not been compensated for this article.
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