Is Decision Diagnostics Corp (OTCMKTS:DECN) Starting To Hesitate?
On April 20 a Forbes contributor published an article about Decision Diagnostics Corp (OTCMKTS:DECN) and it reinvigorating the hype around the stock of the company. As a result the ticker began soaring up the chart yet again and is currently on a streak of four consecutive sessions in the green. After yesterday’s gain of 8% the company is currently sitting at $0.57 per share.
During last Friday’s trading DECN registered their current 52-week high of $0.61. Can the company stabilize at its current record high price ranges, though? The outcome of yesterday’s session may have been positive but it should be noted that the stock actually closed below its opening price of $0.59.
Back in March DECN announced that it had filed a lawsuit against none other than Johnson&Johnson and its divisions Lifescan, Inc and Lifescan Scotland Ltd. alleging infringement against two of the company’s patents. This lawsuit was also the subject of the aforementioned Forbes article. DECN is seeking compensation in the range of $400 million to $700 million.
With the company mentioning such sums it is no wonder that their stock has been flying higher and higher up the chart but investors should remember that there are no guarantees that the lawsuit will end in DECN‘s favor. And underestimating the risks when trading a pennystock may lead to a lot of headaches. Especially when you take into consideration that DECN‘s current financial state is far from encouraging. The company finished 2015 with:
• $627 thousand cash
• $2.36 million total current assets
• $1.88 million total current liabilities
• $515 thousand total revenues
• $2.77 million net loss
Compared to 2014 the revenues generated by the company show a sizable increase of nearly $100 thousand but the positive effects of this achievement simply cannot offset the massive increase in DECN‘s losses. On year-over-year basis the reported net loss has grown by $900 thousand while the operating loss is up by nearly $1.2 million.
The issuance history should also be taken into account. In 2015 around 535 thousand fresh preferred E shares saw the light of day while around 300 thousand got converted into common shares. At the end of December there were 687 thousand preferred E shares still outstanding and each and one of them is convertible into 14 common shares. Then, there is the conversion of debt – in the last quarter of 2015 3.3 million shares were issued for just $597 thousand in debt. This means that on average each share was priced at $0.18. Looking through the subsequent events section of the annual report reveals that in February, this year, $366 thousand of debt had been converted into 2.58 million shares at an average price of $0.14.
Basing your investment decision solely on hype is rarely a wise move. The risks around DECN demand the use of caution and before putting any money on the line you should do your own due diligence.
