CannabizMobile, Inc. (LGBI) is almost for sure an outright scam. LGBI is a non-reporting company in the cannabis industry with no revenues and almost no assets. It files reports under the Alternative Pink standards.
The September 30, 2014 quarterly report states that as of the end of the quarter, there were 34,064,017 shares outstanding. 20,065,000 were held by the sole officer and director. According to a poster on the iHub forum for this issuer, he was informed by the transfer agent, Empire Stock Transfer, that there were 395,583,045 outstanding shares on the morning of April 1. On April 1, trading volume was 153 million, closing at $.0024. That is $3.6 million dollars of trades. So, in six months time, the outstanding shares increased 11-fold.
The issuer filed three convertible notes on otcmarkets.com: a $48,275 note due December 31, 2012 payable to Lions Share Ventures, Inc.; a $29,500 note due September 30, 2014 also issued to Lions Shares Ventures; and a #33,612 note due June 30, 2014 also payable to Lions Share Ventures. Other notes also are stated in the 9/30/14 footnotes to have been issued to Lionshare, totalling $628,000.
The notes are all convertible at the greater of $.001 per share or 65% of the bid price on conversion. In order for shares to be issued as free trading, they generally have to go to non-affiliates. That means, that giving effect to the issuance, the shareholder has to hold less than 10% of the total outstanding and at many brokerage firms, less than 5% and less than 20% of the float. But let's go with the 10% for the sake of example. If Lions Share held all the notes as of the date of conversion, it would be an affiliate and could not free up shares unless it filed a Form 144. It did not. But let us also say for the sake of example that Lions Share divided up its Notes with 9 other people. Otherwise, any one of them would be an "affiliate." Lets also say that the assignment of the 9/10th of these notes occurred more than a year before September 30, 2014, after which they started to be converted. I am giving Lions Share the benefit of the doubt on this. (If they had dvided the notes with more than 10 people, it brings into play a public distribution issue.) It boggles the imagination to think that all these assignees are acting independently, and that this is not a public offering without registration.