Will Medican Enterprises Inc (OTCMKTS:MDCN) Reverse Its Direction?
From an opening price of $0.06 on May 20 the stock of Medican Enterprises Inc (OTCMKTS:MDCN) managed to drop to a close at $0.0011 on June 2. The performance has been a total disaster while the losses amounted to more than 98%. The picture gets even worse when you factor in the 10-for-1 reverse split MDCN were forced to implement.
On June 3 however the stock broke its streak of 11 consecutive sessions in the red after it closed with a gain of 9% at $0.0012. Yesterday the ticker tried to move higher reaching a high of the day of $0.0016 but failed and by the time of the closing bell had fallen back to $0.0012 closing flat. Still, are the last two sessions signaling a possible reversal or are they nothing more than a brief stop on the road to the triple-zero price ranges?
We have been discussing the red flags around MDCN for quite a while and unfortunately they are still as serious as ever. The low market price could be viewed by some investors as an appealing entry point but the risks surrounding the stock should not be underestimated.
MDCN were supposed to complete the acquisition of the 7,200 sq. ft. facility in Phoenix, AZ, by the end of May. Four days after that deadline though there is still no official confirmation of the successful closing of the deal. This acquisition was first announced way back in mid-January. The deal for the second property in Phoenix that was announced in December 2014 hasn’t been completed, either.
At the same time the financial results of the company inspire little confidence. The financial report covering the first quarter of 2015 contained the following numbers:
• $9298 cash!!!
• $73 648 total current assets
• $9.7 million total current liabilities
• ZERO revenues
• 5.7 million loss from operations
• $108,6 million net loss
As if this wasn’t enough though let’s now talk about the crippling dilution of MDCN’s common stock. As we said earlier the company had to implement a 10-for-1 reverse split after its outstanding shares ballooned from 48.7 million at the end of 2014 to 447 million as of April 15, 2015. After the split the O/S was reduced to less than 50 million. If some investors thought that this would mean the end of the dilution they were sadly mistaken as just a little over a month later MDCN had reached 134 million outstanding shares. There is no information about the current O/S of the company but it is safe to assume that it is much higher because out of the last six sessions the daily traded volumes have fluctuated between 133 million and 206 million.
Last month the company did complete two acquisitions but they had absolutely no impact on the performance of the ticker. It is obvious that investors are still waiting for the initial two deals to be closed. If this time the company delivers on its words the stock could hope to recover at least some of its losses. However if the silence continues MDCN could obliterate even more of their value.
