Medican Enterprises Inc (OTCMKTS:MDCN) Digs a Hole in the Ground

Medican Enterprises Inc (OTCMKTS:MDCN) first popped up at the end of March when, without the help of any press releases or updates, it managed to run from less than $0.001 all the way to more than $0.01 per share. The stock also hit an intraday high of $0.05 at one point and, naturally enough, it attracted our attention. We immediately spotted a few problems.

The hype train was fueled by the pending acquisitions of some properties in Arizona and California, and indeed, they were supposed to be closed before the end of March. A closer look at the SEC filings, however, revealed that the closing date of these deals had been postponed a few times. The reports also revealed that MDCN is not exactly flush with cash which put some serious question marks around the successful completion of the acquisitions. The stock supporters were plentiful back then, however, and they couldn’t care less.

They weren’t bothered about the historical performance, either. MDCN had dropped from over $4 per share in Q1 of 2014 to less than $0.001 about a year later, but the people who were jumping in three months ago simply failed to notice this. They also overlooked the dilution and the toxic debt that was threatening to depress the stock.

Last but not least, when we told our readers about the reverse split that had been approved in January, many of MDCN‘s fans appeared to be convinced that there’s nothing to worry about. They said that they had talked to the management team who had assured them that there will be no reverse split. They continued saying that MDCN is behaving like a “blue chip stock” and they insisted that it can some day reach $0.20.

What happened next shattered their rosy hopes and dreams.

First, on April 15, the 2014 10-K went online and it showed that the company was still in a rather big financial mess. It also revealed that the dilution discussed in our articles from March had been very much real. Five days later, another fear was confirmed.

The aforementioned reverse split was effectuated and 10 old MDCN shares were transformed into 1 new one. The shareholders were understandably outraged. The ticker opened April 20’s session with a split-adjusted price of $0.06 per share, but it started tumbling down immediately and just three weeks later, it was back in the sub-penny ranges. The bad news didn’t stop there.

In May, the report for the first quarter was published and it once again showed some quite dismal figures in the balance sheet. The 10-Q also revealed just how apocalyptic the dilution had been. The number of issued and outstanding shares had grown from less than 45 million immediately after the split all the way to nearly 135 million four weeks later.

A lot of toxic debt was still outstanding at the end of the first quarter and it would appear that some of it has now been converted. Yesterday, in a matter of just six and a half hours, investors traded nearly 600 million shares (more than four times the last reported O/S count).

Last week, MDCN suffered another blow. The company announced that the number of issued and outstanding shares has been raised to 10 billion and it also said that the acquisitions that got everyone so excited at the end of March won’t happen. Since then, MDCN has registered four consecutive red sessions and after a 37% drop yesterday, it stopped at $0.0005 per share.

To give you an idea of how nasty MDCN has been to some people we would like to present you with a hypothetical scenario. Imagine that you invested $1 into the stock back at the end of March when it peaked to around $0.05 per share. This bought you 20 shares of common stock, but, thanks to the reverse split from April, you are now left with just 2 shares. At the moment, these 2 shares cost $0.001 which means that out of the $1 that you invested three months ago, you have lost $0.999.

Keep that in mind when you see the next sub-penny OTC company that is about to complete a massive acquisition.