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7/10/17

Cannabis Wheaton (CBW.v): An interesting seven days in store (from IKN425)

From IKN 425, out last night. CBW is already down 10% today and at the lowest price since late March, when this bullshit scam pump began.


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Cannabis Wheaton (CBW.v): An interesting seven days in store
I’ve written a lot about Cannabis Wheaton (CBW.v) on the blog, due at first to its extremely shady structural background and then following up as new and dirty details came to light (from very well placed sources, I might add). However, this is the first time CBW has had a mention here, the more serious side of what I get up to, because CBW has a couple of dates in its diary which may well affect the stock price considerably and there’s a clear trade opportunity showing now. Three things to consider:

1) On March 14th, CBW (at that point still called Knightswood Financial Corp) closed a financing by selling 18,272,773 units at 5.5c each, raising gross proceeds of $1,005,003. One unit was one share plus a full warrant priced at 7c. That placement comes out of escrow tomorrow, July 10th.

2) Then on March 21st CBW closed a second tranche of the same placement run, sell 7,237,883 units at the same terms. This second tranche comes out of escrow on July 17th.

3) But then the twist came, as on March 24th these two-faced rip-off merchants ran a three-for-one forward split of company shares, which means every share and warrant they sold magically becomes three. Therefore in the next seven days, starting tomorrow Monday, 76,531,968 shares and 76,531,968 warrants (7c strike, now 2.33c) of CBW.v become free trading in a stock that’s been artificially held up and even after selling pressure last week closed at 87c. In other words, it’s payola time for the people at the centre of this scam.

Assuming the debentures and special warrants sold this month at $1.00 apiece are converted (they won’t be) CBW now has around 330m shares out. Just under half of those shares were under lock and key due to the March financings, they’re about to hit the market. In this blog post dated June 13th (19) I did a bit of basic balance sheet work and ballparked a share price of 50c for CBW if they managed to close the placement and get that $50m on board, which they have done. I think that’s still a pretty reasonable prognostic so if you’re looking for a short candidate in this market, look no further.