CannLabs, Inc. announced a reverse merger with SpeedSport Branding on Friday, June 13th. As part of the merger, CannLabs acquired Carbon Bond Holdings, a cannabis testing lab, and the symbol changed from SDSPD to CANL on July 10th. CannLabs sold $500,000 of preferred stock and issued warrants to purchase 20 million shares. The investor also agreed to provide $750,000 in additional funding. CannLabs acquired Carbon Bond for 59 million shares and swapped SpeedSport for 111.5 million shares, leaving 65.5 million shares outstanding. The merger and high demand for cannabis stocks drove the share price up 369% to close at $1.38.

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3. On Friday the 13th
CannLabs, Inc.
announced its reverse merger
with SpeedSport Branding

4. CannLabs trades on the Over The
Counter Bulletin Board (OTCQB)
under symbol SDSPD until July
10, 2014, when the symbol will be
symbol CANL on the OTCQB

5. Carbon Bond Holdings, Inc.,
a leading cannabis testing lab,
became a wholly owned subsidiary
of CannLabs

6. CannLabs sold 500,000 shares of
Series A Convertible Preferred
Stock for $500,000 and issued five
year warrants to purchase
20,000,000 shares of common
stock at $0.15

7. The investor agreed to lend
$750,000 in additional funding
in three tranches through
November 15, 2014

8. CannLabs agreed to file an SEC
registration statements covering the
resale of the common stock
underlying the Series A
Convertible Preferred Stock and
the warrants

9. CannLabs acquired
Carbon Bond
for 59,295,000 shares

10. CannLabs also swapped out
SpeedSport Branding
for 111,545,535 shares,
leaving it with 65,520,000
shares outstanding

11. Of these, 87.8% are held by
the new shareholders,
9.5% by the old pre-merger
shareholders

12. Another 30,048,077 shares can be
issued to the Series A Preferred
Stock on conversion at a
conversion price of $0.01664,
and another 20,000,000 shares on
exercise of the warrants at $0.15

13. This compares nicely with the
closing price of $1.38. The
preferred stock and the warrants
limit conversions to 4.99% of the
outstanding stock, which can be
increased to 9.99%

14. Friday June 13, the
stock traded closed at
$1.38, up 369%

15. 110,585 shares were traded
OTCShortReport.com shows that
82,266 shares of this volume was
sold short, or 74.39 %

16. Presumably much of this short
was from market makers forced
to meet the demand after the news

17. SpeedSport Branding was a
development company, a
small motorsports organization
participating in road racing

18. It showed almost $100,000
in shareholders equity,
and a small loss on $22,000 in revenue
for the last quarter
It was split off in exchange for the
cancellation of stock

19. Cannabis is a hot item
in the OTC market,
so much so that the SEC
found it necessary
to issue a warning in May

20. Despite this warning,
adding the stock from the
warrants and the convertible
preferred to the outstanding stock
and valuing it at $1.38, gives a
market cap of $147 million

21. If the investor can convert
the preferred into common
and sell at $1.38,
it turns its $500,000
into $41,446,346

22. Throw in a full conversion
of the warrants at $1.38
and you get a $24,600,000 kicker
for total proceeds of $66,066,346
on the $500,000 investment

23. The investor breaks even
on its $500,000 investment
if it converts and sells
at less than two cents per share

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