In the span of just four sessions the stock of Megola Inc (OTCMKTS:MGON) was able to add over 700% to its price and at the end of Monday’s trading was sitting at $0.018 per share. The performance was incredibly impressive but as we warned you in our previous article it was not supported by anything.
The last PR form the company is nearly 6 months old while their fundamentals are extremely discouraging. At the end of 2011 MGON burned through all of its resources and failed to establish any commercial activities. Since then their operations have been rather limited and as of April 30, this year, they reported the following financials:
• $1163 cash and current assets!!
• $205 thousand total liabilities
• ZERO revenues
• $30 thousand net loss
After seeing such dismal numbers some might wonder how is the company managing to entice inventors to put their money into the stock. Well, the answer is quite simple – back in April MGON entered the medical marijuana industry through their subsidiary MedCan Marijuana Inc. MedCan have an agreement to provide venture capital to the private company Green Relief Inc., who have a letter of intent from health Canada as an Licensed Producer and plan begin production soon. The important part is that as a private company investors cannot buy shares in Green Relief.
MGON on the other hand are an extremely risky choice for investment. With no updates about their current operations investors are left to trade in the dark. The company should file its annual report for the fiscal year ending July 31 by the end of the week. If they do submit the report it will reveal the current state of the company and equally as important the number of outstanding shares.
During the first nine months of the fiscal year MGON already issued 30 million shares for services that brought their O/S from 59 million to 89 million. According to investors who have contacted the Transfer Agent of the company currently there are 113 million outstanding shares.
With all this in mind a pullback was more than likely but still yesterday MGON simply got devastated. The stock opened above the previous close and on a couple of occasion spiked even higher but ultimately closed the day at $0.012 wiping more than 33% of its value. For now they are still keeping most of the recent gains but you should approach the ticker with caution. Do your own due diligence and take into account the current volatility of the stock before committing to any trades.
In early trading today the company is down by another 15% at $0.101 per share.