Borislav Tonev

MediSwipe Inc (OTCMKTS:MWIP) Climbing Once Again

by Borislav Tonev September 2, 2013
5MWIP.pngIt's pretty clear from the chart on the right that MediSwipe Inc (OTCMKTS:MWIP) is not the most consistent performer on the OTC Markets. We last wrote about them at the beginning of July when they had just broken through the $0.05 per share barrier. Unfortunately, the ticker couldn't withstand the pressure at this sort of heights and instead of continuing the ascend, it dropped rather badly wiping out around a quarter of the value in just over a week.

Typical penny stock behavior, but as you probably know already, MWIP are part of the huge medical marijuana army and you might have heard that the industry went through something of a renaissance at the beginning of last month. On August 9 Dr. Sanjay Gupta, CNN's chief medical correspondent and long-term opponent of medical cannabis publicly announced that he has changed his mind and that he actually likes the idea of treating a number of ailments with the help of weed. That was enough to give small cap companies that are in one way or another related to the pot industry a boost and we saw some impressive movement from ventures like Medical Marijuana Inc (OTCMKTS:MJNA), Growlife Inc (OTCBB:PHOT) and Tranzbyte Corp (OTCMKTS:ERBB). MWIP wasn't to be left behind and it too registered a couple of rather successful sessions. Unfortunately, while some good news around the industry could give a ticker a push in the right direction, it's never going to be a guarantee for long term growth. That's why shortly after the craze around Dr. Gupta's confession subsided, all medical pot tickers started falling down, MWIP being no exception.

By August 22 the price had dropped below the $0.04 per share mark and it looked like MWIP was going to disappoint some investors once again. The last few sessions, however, suggest that a new run is coming and this time, it might just be different. The last day ending in the red was registered on August 27 and since then, MWIP's value has increased by nearly 40%. So, is there really a reason to get excited?

Well, the talk of the day is the spin-off of one of MWIP's subsidiaries - 800 Commerce Inc. An announcement about the documents being filed with FINRA came out on August 26 and another press release went online on Friday informing us that the regulatory organ has confirmed the date of the stock dividend related to the spin-off. Investors seem generally excited about the whole thing and this, in turn, means that the next few sessions will probably be quite eventful, but the truth is, nobody can predict with absolute certainty how the ticker will behave in the long run.

We decided to check the latest SEC filings to see if they could give us a hint about the future of MWIP. You can see from our previous articles that the company's financial situation was less than impressive. Now that the 10-Q for the second quarter of 2013 is out, we can see that some things have changed. The question is: "Is it for the better?". Here are the figures:

  • cash: $116 thousand
  • current assets: $184 thousand
  • current liabilities: $525 thousand
  • quarterly revenue: $38 thousand
  • quarterly net loss: $3 million

The colossal net loss is mainly due to stock based compensation to the management team and will hopefully be a one-time affair. The current assets and cash reserves have improved immensely, but unfortunately, MWIP also have quite a lot more liabilities to cover at the moment. The most interesting part of the report, however, is the revenues section. When you compare the figures to the corresponding quarter of 2012, things don't look too bad, but when you put the Q1 report next to the current statement, you'll see a different story.

The revenues during Q2 have decreased by about 23% and this is due to the termination of the agreement with Alternative Capital Solutions. If you dig into the details, you'll see that most of the earnings are coming from the sales of the hemp infused energy drinks which MWIP currently distribute while their main business, the cloud based products for the medical industry, have yielded less than $8 thousand in proceeds. Not the figures everyone was expecting, and while they say that the monthly recurring billing on their patients software should set things straight, we'll need to wait until the next financial statement to see if they're right. Until then, you should make sure to consider all the risks carefully before making any investment decisions.

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