Yesterday, we found a newly issued research report on Med Gen, Inc. We did a little digging and noticed the research report was not unbiased because the company had paid a sum of $10,000 to get the report. So we decided to publish our own opinion.A sum of $10,000.00 might not seem to be a big deal. But for a company, which is struggling to make any profit from their production. Med Gen Inc., spent almost 50% of their first quarter revenue just to pay for their promotional article at hotshotstocks.com site.
In our opinion, A snoring freak without control – would be the best way to describe Med Gen Inc., company. Selling lifestyle products and remedies. Listed on the Nasdaq OTCBB stock exchange market under the symbol MGEN, company provides a whole series of products and remedies to make your lifestyle much better, as they claim.
They have been around since 1996, so far company is struggling to prove their products to be worth anything. In their first quarter ending March 2007, company only managed to generate $20,976 in revenue from selling their products. That’s over 50% less as in the same period in 2006. And more importantly that is less revenue than my gardener generated by planting some roses for me and a few neighbors.
Company's execution of their business plan appears as poor as their products. Surely it is hard to gain marketshare selling lifestyle products, but this company's lack of success is inexcusable to the point that is appears they do not care about their products' sale at all. This company really needs to generate meaningful product revenue in order let us believe this business has a future at all. I reckon, that their product so called SNORenz would not help even my pal stop snoring.
Death Spiral to 1.3 Trillion Shares
After having dug on the company’s report in the U.S security and Exchange security report, we found some disturbing information abou their diluting the stock. As of March 31st, 2007, company had 393,011,265 shares of common stock, .001 per value per share, were outstanding, which is 1500 percent from the same period in 2006. This means existing shareholders suffered a ~95% equity dilution in just one year. What was more disturbing was this appears to be a long term pattern for the company with no sign of let up in the foreseeable future. If the company will continue to dilute their stock at the same 1500% plus rate of last year, by the year of 2010 company will have approximately 1,326,375,000,000 shares in total. And yes that number is 1.3 trillion, I believe more than any other stock on the entire market.
On a positive note, the 1st quarter report it says that the company has 1,201,901 cash. This may help them execute their business plan. However, with heavy operating losses, company and approximately $7,000,000 in debt. We are quite concerned about where this company will get money to pay these future liabilities. But don't listen to our opinion, listen to their auditors who have attached a "Going Concern" to their financial statements.
If Med Gen Inc., top execs are planning to issue an overwhelming number of additional shares, this can cause – a Death Spiral.
This chart illustrates a classic death spiral pattern. This stock has never been sold for $3,000 per share it was always a penny stock. This company's pattern is to continue to make reverse splits, issue new shares, and extend their downward spiral to infinity.
The table below is a portion from their SEC filings on their convertible debenture. As you can clearly see their is a large ammount of warrants and new shares coming to the market over the next few years. In our opinion this is certain to create further supply of stock and without enough demand the price will go................. (lower).
The unavoidable death spiral pressure
| Due Date | Warrants |
03-30-2008 | 740,000 |
05-25-2008 | 740,000 |
08-23-2008 | 100,000 |
08-26-2008 | 500,000 |
10-31-2008 | 600,000 |
02-23-2009 | 600,000 |
04-21-2009 | 30,000,000 |
04-21-2009 | 15,000,000 |
04-21-2009 | 5,000,000 |
02-09-2010 | 5,000,000 |
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