Medican Enterprises Inc (OTCMKTS:MDCND) Corrects Further

So far the stock of Medican Enterprises Inc (OTCMKTS:MDCN) has suffered five consecutive sessions of losses. Yesterday the ticker wiped another 12.9% of its value and dropped to $0.0135 per share. The crash took place on over 34 million traded shares, the biggest volume seen by the company since the reverse split it performed on April 20. Compared to the opening price of $0.06 on that day MDCN is currently sitting over nearly 80% lower.

Last week the company completed the acquisition of TWYNS, a branding company for Cannabidiol (CBD) related enterprises while yesterday the 8-K form covering the deal was filed. Although the acquisition is supposed to bring $400 thousand in annual revenues to MDCN the chart performance of their stock shows that investors are far from impressed. And we can’t blame them when MDCN reported such dismal results for 2014:

• $80 thousand cash
• $113 thousand total assets
• $8 million total current liabilities
• $ZERO revenues
• $56.4 million annual net loss

Furthermore the transaction was done entirely through stock which meant that Medican issued 5 million shares and three additional issuances of 2 million shares will take place six, 18 and 30 months after the date of the agreement.

The fact that the company is continuing to rely solely on its common shares most likely left investors even more depressed. With $5.6 million in outstanding convertible notes at the end of December 2014 the dilution that took place during the first four months of 2015 was truly devastating. The O/S count grew nearly tenfold from 47 million to 447 million. The 1-for-10 reverse split reduced that amount to around 50 million but if there are more convertible notes still outstanding the dilution could continue.

With miserable financials, potential for even more dilution, and two announced acquisitions, one of which was first PRed six months ago, that still haven’t been closed it should be obvious that MDCN is an extremely dangerous choice for investment. In addition investors should also take into account the influence of the quarterly report that is supposed to be submitted by May 15. If the numbers found inside paint a similarly depressing picture MDCN might fall back down to the double-zero price ranges. 

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