Cannabis Science Inc (OTCMKTS:CBIS) is in a terrible state if its recent earnings report is anything to go by. Its net loss continues to balloon, a situation that is not being helped by slow growth in revenue. For the full year ending December 31, 2015, the company says it generated revenues of $44,000, which led to a net loss of $19.1 million.
Red Flag
The financial report should continue to evoke valuation concerns on the street given that the company boasts of a market cap of about $22.5 million. Cannabis Sativa has already warned that it will continue to post losses over the next two years, which further raises doubt about its long-term prospects.
Cannabis Science Inc (OTCMKTS:CBIS) woes could further be exacerbated by the fact that its balance sheet had $62,000 in cash as of the end of 2015 fiscal year. The balance sheet does not give the company the much-needed protection. The company could thus struggle to ink financing deals in future given that its entire business is dependent on a single federally prohibited product.
Stock Dilution Concerns
Dilution of the common stock is another concern that should continue to deal its sentiments a big blow going forward. As of the start of 2015, Cannabis Sciences had about 1 billion shares in the market. By the end of the year, the company had over 1.58 billion shares in the market.
In 2016 alone, Cannabis Sciences has unleashed an additional 242 million shares into the market. Given that about 103 million 0f the new shares are free trading shares issued at a price of just $0.01 a share, should further raise concerns over the dilution levels on the stock.
Away from the concerns, Cannabis Science Inc (OTCMKTS:CBIS) has been inking deals on the sidelines as it looks to bolster its prospects in the industry. The company recently announced plans to break ground on a 10-acre McDermitt drug development facility.
