Decision Diagnostics Corp (OTCBB:DECN) Shows no Signs of Slowing Down

As you might have heard already, Decision Diagnostics Corp (OTCBB:DECN) won a very important legal battle recently. The prolonged struggle with Johnson & Johnson (NYSE:JNJ) is now over and the tormented shareholders finally have something to cheer about. But are things really so simple?

Well, one thing’s for sure – investors seem extremely excited. The message boards are full of people who have been waiting for this moment for quite some time, a Seeking Alpha contributor wrote an article last week explaining how optimistic he is about the future, and Lions of Wall Street decided to remind us that everything is going to be better than anyone has ever expected.

Not surprisingly, all the enthusiasm is reflected in the stock performance. The announcement about the favorable court ruling came out about and hour before the start of November 5’s trading session and since then, DECN has registered only two days in the red. The dollar volume broke through the roof yesterday when more than $633 thousand worth of shares changed hands bringing the price up to the $1 per share mark. A new 52-week high of $1.02 was also logged and some people seem to believe that, from now on, the only way is up. Are they correct though?

Well, we’ve seen quite a lot of tickers make similarly impressive runs in the right direction and we know that they are often accompanied by a few corrections here and there. Car Charging Group Inc (OTCMKTS:CCGI)’s 10% drop from yesterday is, we reckon, a classic case in point and should be borne in mind by the people who want to trade DECN for a day or two. The strong interest, however, suggests that the upward trend will continue in the longer run.

At this point, the more skeptical among you would probably point out that the latest 10-Q is not entirely convincing. The Q3 report came out about an hour after Friday’s closing bell and when you compare it to the results from the second quarter, you’ll see that DECN‘s cash reserves have decreased by around 74%, while the revenues have shrunk by nearly a fifth.

That’s absolutely true, but the end of the JNJ lawsuit means that the revenues from the GenStrip glucose test strips should reappear in the the future financial statements, while the problems with the money on hand will probably be solved by the $12.5 million line of credit that we talked about yesterday.

In fact, the only immediately obvious factor that could throw a serious spanner in the works is the negative bottom line. We can see that even when the GenStrip sales were not hampered by the JNJ lawsuit, DECN were working at a rather substantial loss and, as of right now, there can be no guarantees that the tables have turned.

Despite the favorable developments and the potential shown by DECN, we reckon that bearing the unknowns in mind and doing a lot of due diligence before making your final decision could save you a lot of unpleasant surprises in the future.

DECN isn’t the only OTC company to gather quite a lot of attention during yesterday’s session. Liberator Medical Holdings, Inc. (OTCBB:LBMH) announced its uplisting to the NYSE MKT and jumped by nearly 10%. Fresh Healthy Vending International Inc (OTCBB:VEND), on the other hand, gained no less than 26%, but unfortunately, it would appear that it’s propelled by nothing more than a paper mailer pump which warrants some extra caution when playing with it.