Medican Enterprises Inc (OTCMKTS:MDCN) has been running into a number of problems. The company has been working on acquiring a series of properties in the California and Phoenix region. Unfortunately, MDCN has a terrible balance sheet, which has been a cause of worry for its investors. Subsequently, the company has to look towards dilution, so as to complete its property acquisitions.
For its 1Q2015, MDCN reported no revenues, a net loss of $108 million and cash reserves of just $9298. The Phoenix properties are expected to generate some profits for the company. One of the two acquired properties in the Phoenix area is under lease by a medical marijuana dispensary. The dispensary pays $15,000 in rent and 30% of its monthly gross sales. The property had been analyzed by Kalinowski & Associates in December 2014 and was estimated to be worth $2.38 million. However, this assessment only considers the monthly rent in the evaluation and not the 30% dividend.
The second property is yet to be leased to a company, but Medican wants to lease the property to another medical marijuana company. This property has been valued at $2.34 million. MDCN believes that the two properties are growing exponentially in value and will soon reach new heights. Unfortunately, investors still remain unconvinced that MDCN would be able to report revenues anytime soon. The company is more geared towards marijuana property expansions, rather than developing medicines based on marijuana variations.
Dilution has also been an ongoing concern for MDCN, the problem has been accelerating in recent months and the company announced a 15-for-1 reverse split at the end of April. The move was able to bring the outstanding shares to 47 million. Unfortunately, in less than a month’s time the number had reached 134 million and is not at 254 million. As long as the investors remain unimpressed by MDCN, the company has no other choice except severe dilution for keeping its business going.
Medican Enterprises Inc (OTCMKTS:MDCN) saw a total of 134.8 million shares in the market, during the June 16 session to close at a share price of $0.0017 and registering a decline of 10.53%.