Elray Resources Inc (OTCMKTS:ELRA)’s Volatile Swings Continue

Elray Resources Inc (OTCMKTS:ELRA) should publish their Q3 report within the next couple of weeks and we’re pretty sure that plenty of people are rather eager to get their hands on it. We, for one, are also willing to take a look at the 10-Q because it should answer quite a lot of questions.

It should tell us, for example, whether ELRA have finally changed the location of their corporate headquarters. The current one is in Las Vegas and once you do some research, you’ll see that it’s a virtual office which appears to be used by many other OTC companies like Global Resource Energy Inc (OTCMKTS:GBEN), Rimrock Gold Corp (OTCMKTS:RMRK), Patriot Gold Corp. (OTCMKTS:PGOL), American Graphite Technologies Inc (OTCBB:AGIN), Glow Holdings, Inc (OTCMKTS:GLOH), and Alkame Holdings Inc (OTCMKTS:ALKM).

ELRA‘s next 10-Q should also tell us whether the management team has somehow managed to strengthen the balance sheet a little bit. As you probably know, the company’s financials weren’t too encouraging at the end of the second quarter. Here’s a summary of the figures in case you haven’t seen them already:

  • cash: $99 thousand
  • current assets: $193 thousand
  • current liabilities: $9.7 million
  • quarterly revenues: $45 thousand
  • quarterly net loss: $1.5 million

Recent press releases tell us that things around ELRA and its newest acquisitions are going well. They said last week, for example, that wagering in one of their live dealer casino facilities has exceeded $10 million for the month of October which sounds good enough, but only the balance sheet can tell us if the huge growth in revenues can be turned into a positive bottom line.

The most burning questions that the 10-Q can answer, however, are related to the share structure and the absolutely catastrophic dilution that is taking place at the moment.

As we mentioned in our previous articles, the number of issued and outstanding shares shortly after the last reverse split stood at just over 5.6 million. That was in May, but by August, the O/S Count had grown to nearly 140 million. A Schedule 13 form from October 3 tells us that at the beginning of last month, it was hovering around 490 million and a more recent statement of ownership informs us that it’s bordering on the 590 million mark. An 8-K from October 30 tells us that a further 248 million shares will be issued to various entities as a conversion of $755 thousand worth of notes. Plenty of people are speculating on the O/S count at the moment, but the truth is that we won’t be able to say for sure what it actually is until we see the Q3 report.

All in all, there’s a lot of uncertainty around ELRA at the moment and there’s not much investors can do but hope that the next 10-Q can clear most of the doubts. But does this mean that you should stay away from the stock until we see the report?

That, of course, is up to you to decide. Just make sure you bear in mind the ticker’s extreme volatility before you jump in. Last week, for example, ELRA smashed through the $0.001 barrier and in a matter of a single day, it managed to surge to $0.0035 per share. During the very next session, however, it incinerated a whopping 57% of its value and it once again dropped to just $0.0015. Friday saw it recover around 35% which means that it’s starting the new week at just under $0.002, but we doubt that, with the volatile swings in mind, someone is willing to run the risk of predicting what its next move will be. That’s why, carefully thinking through every single move is absolutely crucial.

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