Will Decision Diagnostics Corp (OTCMKTS:DECN) Stop Crashing?
After a brief resurgence of two positive sessions yesterday the stock of Decision Diagnostics Corp (OTCMKTS:DECN) found itself plummeting towards the bottom of the chart once more. With over 482 thousand traded shares the negative sentiment pushed the stock to a close nearly 19% in the red at $0.154 per share. In late April DECN reached a high of more than 60 cents per share but at the moment they are sitting almost 75% lower.
Even the tremendous victory over the industry leviathan Johnson & Johnson (NYSE:JNJ) that DECN announced at the start of the month failed to get investors even remotely excited. Back in September 2011 JNJ began a series of lawsuits against DECN and its subsidiary PharmaTech Solutions. After nearly five years of patent litigation battles on June 2 the company announced that it has won and its GenStrip and GenUltimate! glucose test strips are now “officially, legally and justly available for sale”.
The fact that a pennystock company has managed to win in court over none other than JNJ should have been enough to put investors into unspeakable enthusiasm and as a result of the intense buying DECN‘s stock should have soared to new price ranges. Instead, the ticker slumped down on the day of the announced and continued to crash for the next three sessions. What could explain the negative reaction displayed by the market?
Several things actually. After years and years of waiting investors were denied the right to know the exact monetary compensation that JNJ paid due to the court’s decision to make the amount of the cash settlement confidential. Furthermore, DECN announced that they won’t be pursuing the maximum settlement of damages instead opting to try and beat JNJ “in the marketplace, own their market share and capture their earnings.” The fact that the money DECN received for its years of legal battles is going to be put in its entirety into a fund dedicated to IP insurance policies that should protect the company’s products from any potential future litigation wasn’t accepted warmly, either.
Now that DECN are finally able to freely sell their test strips it remains to be seen how their balance sheet is going to improve. At the end of March the company had:
• $1.4 million cash
• $3 million total current assets
• $3.8 million total current liabilities
• $163 thousand quarterly revenues
• $1.4 million quarterly net loss
Using caution when approaching the stock of the company is strongly advisable. Before putting any money on the line you should take the necessary time to do your own due diligence.
