Decision Diagnostics Corp (OTC:DECN) are on the Move
Smartphone and tablet technology has exploded in the past few years and its application is expanding in all sorts of fields, including medical diagnostics and treatment. In a similar way the shares of Decision Diagnostics Corp (OTC:DECN) went through the roof yesterday when they gained a total of 64%. We decided to see what caused the jump.
Promoters, Stock Outlaws sent out an email today touting DECN, but it was post-factum, so that can’t be it. We had a quick look around and we found that a couple of days ago, Forbes published an article about DECN and they said how huge their potential is. We, however, reckon that it’s still quite early to say for sure if they will be successful or not.
DECN have been around for a while and their operations are based solely in the medical field. Their interests include anything from developing a mobile application through which physicians can track their patients’ health problems to marketing and selling well-known medical products. When we had a look through their financial statement, though, we were not convinced that they have been very successful. More worryingly, when compared to the same period of 2011, Q3 of 2012 ended with much more depressing financials. Here are the most important figures from the two 10-Qs:
- cash 2012: $7 thousand
- cash 2011: $14 thousand
- current assets 2012: $4.3 million
- current assets 2011: $4.5 million
- current liabilities 2012: $3.3 million
- current liabilities 2011: $2.5 million
- revenue 2012: $1.2 million
- revenue 2011: $3.5 million
- net loss 2012: $209 thousand
- net loss 2011: $197 thousand
To battle the losses, they have set off to develop a new product that, they say, will bring them rivers of revenue and profit. It’s a one-time strip that you use to monitor the glucose levels in your blood and they say that it will become an absolute hit.
The good news is that it’s already FDA approved and it’s supposed to be on sale right now. How things are going with the sales, however, is anyone’s guess. And it will be at least until DECN present us with a new financial report.
The second thing that could put a spoke in DECN‘s wheels is the fact that they currently don’t have the money to finance the whole new project which means that they will need to borrow a huge amount of money – $56 million over the next 12 months, to be precise. They say that they have already secured the line of credit in their financial statement but in case the sales are not what they expect them to be, they could be in big trouble.
Some more problems could occur from the fact that, according to their latest 10-Q, there has been a complaint against them for infringement of patents. They say that they will defend themselves, but the truth is, we have no idea if the court has already reached a decision. If it is ruled that the plaintiffs are right, DECN will be left without a product, a huge debt and the eventual penalty fees that they will need to pay.
When you consider the fact that they are also part of a newsletter pump, things get even more disturbing. We have seen many companies being featured in such promotions, who have failed to impress once the emails had stopped. DMH International Inc (OTC:DMHI) is one such business, and the people who created the hype around them are the same people who are now touting DECN – Stock Outlaws. The chart on the right shows how catastrophic the effect of the promotion was for DMHI.
That is why we think that despite the promising news, it’s good to carefully weigh the risks before making any conclusions and investing in DECN‘s stock.
