Medican Enterprises Inc (OTCMKTS:MDCN) Crashes and Burns
On April 20 Medican Enterprises Inc (OTCMKTS:MDCN) implemented a 1-for-10 reverse split which had two major consequences – it decreased the number of the outstanding shares from over 447 million to 47 million while at the same time the share price of the company jumped from $0.006 to $0.06. Well, all those who chose to stick with the company may now be bitterly regretting their decision.
The performance of MDCN’s stock for the past couple of weeks has been nothing short of a total nightmare and yesterday’s trading was no different. The ticker opened at $0.011 but instead of bouncing upwards it plunged deep into the double-zero price ranges wiping 35% of its value and closing at $0.0068. That is right, in just a month MDCN managed to crash back down to its pre-split prices. This means that all those investors who bought shares of the company before April 20 and are still holding them are now facing losses of nearly 90%.
It should also be noted that yesterday’s traded volume almost reached 41 million shares. Wait a minute, you might think, wasn’t the entire O/S count supposed to be approximately 47 million less than a month ago? Well, there was a reason why MDCN resorted to the reverse split – at the end of 2014 they had $5.6 million in convertible debt. The resulting dilution was massive and the outstanding shares of the company grew tenfold in the span of just four months. Some investors around message boards claim that currently there are 135 million outstanding shares but if that is really the case will be revealed when MDCN file their next quarterly report. And the due date for this report is today actually.
The report will also show if MDCN’s financial state is still as dreary as it was at the end of 2014 when the company had:
• $80 thousand cash
• $113 thousand total assets
• $8 million total current liabilities
• $ZERO revenues
• $56.4 million annual net loss
In addition to the atrocious numbers the company is having massive delays with its planned acquisitions of the two properties in Phoenix, AZ. Even the fact that last week MDCN successfully acquired the CBD branding company TWYNS failed to stop their stock from crashing when investors learned that the deal was going to be done through the issuance of more shares.
A bounce is not out of the question but without significant progress reported by MDCN the ticker will find it extremely hard to form a more prolonged recovery. Due extensive due diligence and take into account the extremely serious red flags before attempting any trades involving the stock.
