Georgi Kamburov

Cannabis Science, Inc. (OTCMKTS:CBIS) Pushed Up By Industry-Wide Surge

by Georgi Kamburov January 2, 2014

This time the industry hype was caused by the first legal sale of marijuana for recreational use in the state of Colorado. For now only a couple of dozen stores were operational but in the coming weeks that number will grow substantially. Regulators have granted 178 licenses for cultivation, 136 for retail stores, 31 for spin-off products and 3 for testing.

CBIS are not directly involved with the recreational use of marijuana and instead have put themselves to the task of developing cannabis formulation-based drugs. In November the company submitted a patent application in Europe that covers the development of drugs treating a variety of neurobehavioral disorders. That however doesn't change the dismal state of the company's financials. 

According to the last quarterly report they filed at the end of September CBIS had: 
  • $462 cash
  • $288 thousand total current assets
  • $3.5 million total liabilities
  • $70 thousand revenues 
  • $1.1 million net loss
They have a negative working capital of more than $3 million, the accumulated deficit has passed $90 million and looking at their cash reserves investors should expect even more dilution of the common stock. Just for the time between September 30 and November 19 when the report was filed CBIS issued another 50 million shares bringing the outstanding amount to 760 million out of the 850 million authorized. 

7PHOTchart1.pngThe current over-enthusiastic prices are not likely to hold for much longer as the company's fundamentals are clearly not capable of supporting them. In a few months another hype-wave might happen as the next state in line legalizes the sale of recreational marijuana but untill then, without any major developments, CBIS is bound to depress back to its previous price ranges. 

The two leading companies in the sector - Medical Marijuana, Inc. (OTCMKTS:MJNA) and Growlife, Inc. (OTCBB:PHOT) also benefited from the increased buying with MJNA climbing up by 16% to $0.155 per share while PHOT had a more subdued gain of 6% to arrive at $0.151 per share.

Type the characters that you see in the box (5 characters).