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Friday, October 30, 2020

What Went Wrong for Zenosense Inc (OTCMKTS:ZENO)

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Zenosense Inc (OTCMKTS:ZENO) is a penny stock that was on a monster momentum run into the first 10 days of April. Then it all fell apart. What happened? It’s pretty simple: the stock got hit with the dreaded “skull and crossbones” on OTCmarkets.com and didn’t respond with any kind of press release explaining the situation.

The first factor was a problem, but was easily rectifiable if it was a benign issue. Sometimes it is – ie, sometimes the skull and crossbones is related to something that is tantamount to a misunderstanding. However, when a company gets hit with that designation and doesn’t respond to address it, then it’s absolutely correct for traders and investors to think the worst and behave accordingly.

Zenosense Inc (OTCMKTS:ZENO) casts itself as a company with a primary focus, through its joint venture ownership in MIDS Medical Ltd., of the development of a cost-effective, hand-held Point of Care rapid cardiac diagnostic device, MIDS Cardiac. MIDS Medical Ltd. applies patent-protected magnetic nanoparticle detection technology and a development team with world-class technical expertise.

According to company materials, “the MIDS Cardiac device and test strip is being designed to support a variety of rapid high sensitivity cardiac biomarker tests, with a focus on troponin I and T, to identify or discount Acute Myocardial Infarction with accuracy equal or superior to high sensitivity assays performed on laboratory analyzers.”

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As noted above, ZENO had everything going for it: a strong narrative, plausible supporting data, and a really powerful technical picture. Then the “skull and crossbones” hit. Again, the designation, itself, wasn’t the problem. It’s the fact that, here we are, a month later and management has still not clarified the situation.

There are many theories about what the problem may be. However, if you paw through the company’s latest 10-K, you find a passage that may offer up a clue:

First, there is this:

“We entered into the License Agreement, effective December 4, 2013, which was subsequently amended, with Sgenia, Sgenia Subsidiary and Zenon that was initially oriented towards the development of a MRSA/SA detection device.  Because the License Agreement covered improvements and variations to the device and other devices based on the Sgenia Technology for use in the hospital and health care environments, the License Agreement was amended and specifically extended to include an additional product to be used for the detection of lung cancer in patients.”

“Under the License Agreement, as amended, based on our capital resources and the success of the research activities, we will fund the development of the Sgenia Products pursuant to a research and development plan proposed by Sgenia. Development includes the testing of a potential device. The funding will be provided on an advance basis, per month, based on three development stages during the period to be funded.  In return, we will have the exclusive right to manufacture, formulate, package, market and sell the Sgenia Products world-wide, for 40 years, subject to a limitation on the inclusion of Spain.”

Then, there is this:

“In light of our current inability to fund our operations and fund the Sgenia license and the fact that the Sgenia research is delayed, we reviewed with Sgenia the development schedule and funding requirements for the initial products and requirements to develop the cancer sensory devices, and have agreed in principle to an alternative development schedule which would result in the lengthening of the developmental schedule for these products and an increase of the budget requirements. The schedule and funding will be finalized once we have obtained sufficient funding, for which we cannot give any assurance that we will be able to obtain.”

That, in itself, may or may not be catastrophically problematic. But one wonders if this passage also suggests that the license for the MIDS technology has been undermined by either funding failure or a failure to show sufficient results in research and testing.

We don’t know at this point. This is us in speculation mode. However, the fact is, it really doesn’t matter. The company’s failure to respond to the respond to the situation has opened up a vacuum into which will grow many plausible speculations like the above. And the stock will be trapped under an ocean of supply until or unless we get some morsel of clarification that adjusts and resets that narrative.

Now commanding a market cap of $12.2M, ZENO has a remarkably simple and unique team: “We currently have one employee/officer and one director, Mr. Carlos Jose Gil. We currently have engaged various consultants to help with various accounting, business and public reporting tasks at an at-will basis for the fiscal year of 2016.” Hence, don’t expect any reliable data on cash, debt, or sales anytime soon. You can bet we will update this one again as new information comes into view. For continuing coverage on shares of $ZENO stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

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