Will Medican Enterprises Inc (OTCMKTS:MDCN) Stop Its Depressing Performance?

Taking just one look at the chart of Medican Enterprises Inc (OTCMKTS:MDCN) is enough to make it painfully clear just how horrific the performance of the stock has been lately. For nearly six weeks now the company has been obliterating more and more of its share price. Although the picture is nothing short of a total nightmare it becomes even worse when you take into account that on April 20 MDCN performed a 1-for-10 reverse stock split.

Immediately prior the split the stock was sitting at approximately $0.006 but now, just a little over a month later, it has fallen down to $0.0043. This means that those investors who bought the stock before the split are now facing losses of over 90%. During yesterday’s session MDCN did manage to slow down its slide closing just 2% in the red so is it possible that the ticker could be gearing for a bounce?

Well, even if a bounce does indeed occur investors should still be careful when dealing with the company. The red flags around MDCN are both numerous and extremely serious. Let’s start with the quarterly report that was filed on Wednesday. The financial results for the first quarter of 2015 that were contained within were simply atrocious:

  • $9298 cash!!!
  • $73 648 total current assets
  • $9.7 million total current liabilities
  • ZERO revenues
  • $108,6 million net loss

That is right, less than two months ago MDCN had less than $10 thousand in cash, a massive working capital deficit of more than $9.6 million and a net loss of nearly $110 million. Loss from operations just for the first three months of the year surpassed $5.7 million.

Unfortunately this is just the start of the problems around the stock. At the end of March the company had $7.6 million in convertible notes payable. The rampant issuance of shares lead to the reverse split which left the company with around 47 million outstanding shares as of April 20. According to the quarterly report as of May 20 there were 134 million outstanding shares, nearly a threefold increase in just a month. Rather strangely a Schedule 13G filed on May 15 states that MDCN has 146 million outstanding shares.

The depressing financials of the company may explain why MDCN have been unable to close the two acquisitions that were announced months ago, the acquisition of the 67 thousand sq. ft. facility was first mentioned back in December 2014. The latest date for the 7,200 sq. ft. facility is May 31 so we will see if this time the deal will be completed. Keep in mind that a few weeks ago MDCN acquired the branding company TWYNS but the deal had absolutely no effect on the movement of the stock.

MDCN is an extremely risky choice for investment. Any trades involving their stock should be preceded by extensive research and careful planning. Take into account all of the red flags and never put unaffordable sums of money on the line. 

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