mCig Inc (OTCMKTS:MCIG) Files Overdue 10-K, Crashes

The long overdue annual report of mCig Inc (OTCMKTS:MCIG) went up yesterday morning and all the excitement that was seemingly building around the stock turned sour. The report’s results sent the price tumbling headlong down the charts. MCIG ended the session 37% down, at $0.029 per share, wiping Friday’s big green day in full, and then some.

While it’s safe to say that investors were not pleased with the performance displayed in the annual report, let’s have a bit of a closer look at what exactly it contains. Here is a brief rundown of the balance sheet, keeping in mind those figures date back to April, when MCIG‘s fiscal year ends:

• $102 thousand in cash
• $14 thousand in total liabilities
• $509 thousand in annual revenues
• $4.8 million in annual net loss

Somehow, the company managed to slice its gross profit in half, even though revenues went up 42% YoY. The looming net loss figure comes from a staggering $4.2 million recorded as “stock based compensation”. While the annual report never really details where that stock based compensation went and who the stock was issued to, rifling through MCIG‘s two quarterlies before the annual reveals that the biggest expense items in those reports are “Consulting” expenses. This is further detailed as arising primarily from common stock issued “for services to our Chief Executive Officer”.

The 10-K states that the company has a monthly burn rate of $25,000 and according to its own estimations has enough money until September – the same September that starts today, not the one next year. What this means is that new dilution is very likely as the company needs the money.

MCIG has an authorized share cap of 560,000,000 and as of Friday had just 284 million outstanding shares, so there is plenty of room for dilution and securing new funding.