A Small Pump and a Big Drop for Minerco Resources Inc (OTCMKTS:MINE)
Minerco Resources Inc (OTCMKTS:MINE) got pumped last week and we should say from the start that the results were less than impressive. High Rising Stocks received $3 thousand, Fabulous Penny pocketed $2 thousand while Opening Bell Report were compensated $1 thousand and the three outfits began pumping MINE before the start of Thursday’s trading. The session that followed ended with around 8% in gains but the low volumes suggests that not a lot of people were paying attention.
Probably that’s why, a few more alerts hit our inbox after the closing bell and this time, they really did have an effect on the chart movement. On Friday, MINE managed to shift more than 140 million shares, but unfortunately, the results of all the trading were rather disappointing – nearly a third of the value was wiped out. A catastrophic end to such a small-scale pump, but then again, it’s hardly surprising considering MINE‘s historical performance under the promotional pressure. Back in June, the ticker received a $10 thousand pump and it did manage to climb a little. Unfortunately, it took MINE just a couple of weeks to wipe out all the gains.
Yet, despite the disappointing performance, some posters around message boards seem confident that the ticker is going to weather all the difficulties and will eventually show some sustainable growth. Is this the case though?
If the press releases are anything to go by, it would appear that the answer is yes. As we mentioned in our previous articles, the sales of the brand new energy shots started back in September and we read that they are already available in numerous retail chains. You can also buy them online and some new additions to the management team should help the distribution grow at an even higher rate. MINE‘s CEO, Mr. John Powers, addressed the shareholders in an open letter and outlined the main milestones for 2014. If he and the rest of the management team manage to stick to the plan, thing should really take off. Unfortunately, predicting their chances of success is really difficult.
For one, we still have no idea how well the Level 5 energy shots are doing in terms of sales. The latest report came out on November 14 but it covers the fiscal year that ended July 31. As we mentioned already, the sales of the beverages started in September which means that the 10-K still contains no revenues. The rest of the figures aren’t that inspiring either:
- cash: $123 thousand
- current assets: $124 thousand
- current liabilities: $2.3 million
- annual net loss: $547 thousand
When you compare the 10-K with the previous reports, you’ll see that MINE have managed to improve their cash position, but you’ll also note that there’s quite a lot more debt.
Which brings us neatly on to the company’s biggest problem – the convertible notes. The report informs us that during the twelve months ended July 31, MINE issued a mind-boggling 1.1 billion shares in exchange for just $320 thousand worth of debt. As we mentioned in our previous articles, they did manage to pay off some notes in cash, but there is now new debt outstanding which can be turned into common stock at a discount that can go as high as 50%. Which, by the way raises the risks of future paid pumps even further.
Investors will be anxious to see the future reports and find out how well the sales of the Level 5 energy shots are doing. If the losses continue, the management team will probably be forced to issue more convertible notes which in turn could result in even more dilution and even more erratic movements up and down the charts.
Other promoted stocks that showed quite a lot of volume on Friday include Tiger Oil and Energy Inc (OTCMKTS:TGRO) who jumped by as much as 50% after being propelled by a $2.5 million pump, and Cambridge Heart, Inc. (OTCMKTS:CAMH) whose stock climbed by no less than 176% because of a few emails that have apparently been put together for free.