Cannabis Science Inc (fka CBIS)

[qwertytrader]

I wonder how this is effecting cbis right now. i wonder if they are under investigation as well......it would make sense

Startup boss under investigation — company


San Francisco Business Times - by Ron Leuty
Tuesday, July 14, 2009, 2:45pm PDT


Ousted Cannabis Science Chairman, President and CEO Steven Kubby
distributed company funds for personal gain, signed financial and share agreements without board consent and blocked the access of other officers and directors to a company account, the company said in a regulatory filing.

The San Francisco startup (OTCBB: CBIS), which wants to tap the active ingredient in marijuana to develop a lozenge to treat hypertension, said it has started an internal investigation of Kubby's "apparently fraudulent activities," according to the filing with the Securities and Exchange Commission.

Fired as president and CEO last week as the company said he failed in his fiduciary duties, Kubby resigned from the Cannabis Science board on Friday. At least two of Kubby's hires over the past two months — COO Ray Carr and vice president of research and development Mary Ruwart as well as another employee, Lee Wrights, also have resigned.

Carr and Ruwart are husband and wife.

The company appointed Dr. Robert Melamede, the retired chairman of the biology department at the University of Colorado at Colorado Springs, as CEO. Melamede had been Cannabis Science's chief scientific officer.

The company said in its SEC filing that Kubby signed financial and share agreements with Ruwart, Carr and a private party that were not disclosed to or approved by the board, "using unauthorized company shares as collateral or consideration for his personal gain." Another deal with an
"indepedent financial group" could have diluted or damaged shareholder interest, the company said in its SEC filing.

The company also alleged that Kubby accepted funds into a company
account that he had blocked — and removed access by other officers
and directors — and distributed company funds for his personal gain, according to the SEC report. That happened "while leaving essential obligations of the company unmet," according to the SEC filing.

Cannabis Science also said Kubby made "libelous accusation" against company directors and a key consultant "while misrepresenting his own actions to the public and the media in a manner injurious to the
company's interests."

Kubby, a former candidate for the Libertarian Party presidential
nomination and the Libertarian candidate for California governor in 1998, wrote to the website Independent Political Report that he was ousted after Carr uncovered unusual contracting contracts by another person connected with the company.

Cannabis Science went public in April, after it bought a public shell. Its legal address is in San Francisco, but Kubby said last month that the company largely has been operated from his home in Oakland.

Kubby has said that he started the company after he developed the
lozenge to treat his rare, typically fatal form of adrenal cancer.

rleuty@... / [phone]


http://www.bizjournals.com/sanfrancisco/stories/2009/07/13/daily34.html