Decision Diagnostics Corp (OTCMKTS:DECN) Corrects Once More

After an explosive move that brought Decision Diagnostics Corp (OTCMKTS:DECN) to a high of $0.61 cents per share last Friday the stock of the company has started to retrace its steps down the chart. Yesterday the ticker closed nearly 4% in the red at $0.509 per share. Will DECN stabilize at its current price of over half a dollar?

Well, the hype surrounding DECN could indeed last a while longer. Last month the company’s wholly owned subsidiaries, Decision IT Corp. and Pharma Tech Solutions, Inc., filed a lawsuit against the behemoth that is Johnson&Johnson and its Lifescan, Inc. and its Lifescan Scotland Ltd. divisions for patent infringement. According to the PR DECN will be seeking $400-$700 million in compensation and damages. Investors are also speculating about the likelihood of a settlement.

The problem is that if things don’t turn out in DECN‘s favor the stock could quickly find itself plummeting down the chart. The latest financials reported by the company are simply not sufficient to justify the current market cap of over $28 million. At the end of 2015 DECN had:

• $627 thousand cash
• $2.36 million total current assets
• $1.88 million total current liabilities
• $515 thousand total revenues
• $2.77 million net loss

Although the reported revenues are up by $100 thousand on year-over-year basis the rate at which the losses are going up is much higher – the net loss has grown by $900 thousand while the operating loss is up by $1.2 million.

When contemplating whether to put any money into DECN‘s stock you should also take into account the millions of underpriced shares that have been issued as a conversion of debt. During the last quarter of 2015 $597 thousand in debt was turned into 3.3 million shares at average price of $0.18. Earlier this year, however, 2.58 million shares were issued through conversion at an even lower price of just $0.14 per share.