Shares of Cannabis Medical Solutions Inc. (OTC: CMSI) jumped more than 200% in today’s trading. The penny stock reached a high of $0.86 in trading and at last check was up by 149.13% to $0.720, with volume up from daily average of 79,000 to 1.71 million. Based in Ashland, Oregon, Cannabis Medical Solutions provides online and wireless merchant payment solutions for medical marijuana dispensaries and high risk merchant accounts and services.
The surge in the penny stock comes on the back of an announcement made by the company that its board of directors and majority shareholders voted for issuance of dividend for each of the company’s shareholders. The company will start distributing the dividend on June 1, 2010. The company also announced that its board authorized an increase in the shares of its common stock from 250 million to 500 million. As per the resolution approved by the company’s board, each of the company’s shareholders will receive an additional nine shares of common stock for each share they own.
Kyle Gotshalk, Cannabis Solutions’ CEO, said that the company’s board believes that the increase in the number of shares and stock dividend will be beneficial to the company and its shareholders, as it would give the company flexibility in its operations and planning and also in responding to developments in its business, including potential acquisitions, financings, and other corporate purposes. The move is very interesting as in its latest 10K filing, the company said that it did not intend to pay any dividend in the foreseeable future, as it may not have sufficient funds.
The announcement boosted the stock, which is subject to volatility, considering the company’s operating history and lack of profits. Also, the relatively unknown status of the company makes its shares subject to price fluctuations. The penny stock has a 52-week range of $0.05-$0.86, with the high of $0.86 reached in today’s trading. It has a beta of 1.19, which again implies volatility. Currently, the stock is trading above its 50-day and 200-day moving averages.