Ener-Core Inc (OTCBB:ENCR) Wipes Out a Quarter of its Market Cap

The pump for Ener-Core Inc (OTCBB:ENCR) started back in February. It was done primarily through a landing page set up by Tobin Smith as well as some emails and the total budget was quoted to be $2 million (later changed to $1 million).

The ticker did manage to hold the front for a little while and it even registered a 52-week high of $0.90 per share on March 10. Unfortunately, these sort of levels proved to be unsustainable and soon enough, ENCR was eating through significant portions of its market cap on a daily basis. When we last wrote about the stock on September 23, it was barely hanging on to the $0.30 per share mark.

Care to guess where it is now?

During Friday’s session ENCR, managed to lose more than 25% of its value and it finished the week at $0.13 per share.

A truly shocking performance from a stock that was once touted by Tobin Smith as the “next big winner”. Still, is there even a glimmer of hope for a bounce?

The good news is that the pumpers are now gone. The landing page has been brought down and we haven’t received any emails since September. This means that no artificial hype should be wreaking havoc with the share price. In theory, ENCR will now move under its own steam and its faith will be decided by the company’s successes and failures. So, how are things going in that respect?

Let’s take a look at the 10-Q covering the third quarter of 2014 (it was published about fifteen minutes before the end of Friday’s session) and see what it tells us:

  • cash: $4 million
  • current assets: $4.2 million
  • current liabilities: $1.2 million
  • quarterly revenues: $58 thousand
  • quarterly net loss: $2.8 million

The cash position is one of the first thing that draws the attention of the devoted ENCR follower. Thanks to a private placement from September, the company managed to raise some money and that brought a sigh of relief among quite a lot of shareholders. Unfortunately, by the looks of things, the cash will be far from enough. The 10-Q tells us that on November 13, ENCR had around $2.9 million in the bank which means that in a matter of just a month and a half, they managed to burn through around $1.1 million (that’s about $25 thousand per day).

Then we come to the revenues. As you probably know, ENCR‘s main product is called the Gradual Oxidizer and back in July, they managed to sell one in the Netherlands. As a result, they logged $810 thousand in revenues during Q2. Unfortunately, they still haven’t received any additional orders which means that during third quarter, they registered revenues coming only from consulting services. If some additional purchase orders land in ENCR‘s mailbox, the company might be in for a brighter future. If that doesn’t happen, however, the consequences will be quite dire.

All in all, while the technology sounds clever, it’s proving to be very expensive and nobody can say for sure how well it will be received by the big players in the industry. We reckon that all these factors should be considered well before you make up your final mind on ENCR.

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