It’s High Time for 1st NRG Corp. (PINK:FNRC)’s Next Promotion

0FNRC.pngIf you read through our articles regularly, you would probably know that when we are covering a penny stock promotion, we regularly include the chart of a company that has been pumped in the past and has failed to live up to the excitement created by the emails. Since 1st NRG Corp. (PINK:FNRC) have been among the most heavily promoted companies over the last couple of months, their stock performance has been discussed many times on these pages. Now that there’s a new promotional effort for them, we’re about to do it again.

Let’s start with the history so far. The pumps for FNRC have been quite a lot and we’re not really sure which is the one that infuriated investors the most. If we had to take a guess, we would probably point to the one from October 2012. All the hype made the price nudge $0.50 per share, however, it was extremely short lived and as soon as the emails stopped, FNRC embarked on a downward slope that they have been following ever since. After the October massacre, we saw promotional emails in November, December, February and all they did was accelerate the fall ever further. With that in mind, we’re struggling to see how Club Penny Stocks who have taken up today’s promotion will be able to lift the stock on their own.

The interesting thing is, FNRC are not like most of the oil and gas exploration companies that we cover in our articles. When we’re doing a research on similar ventures, we most often see some big zeros under the revenues section in their reports. FNRC are a bit different. While it’s not a lot, they have registered $28 thousand in sales over the fiscal 2012. Unfortunately, this is the only pleasant surprise that we got from their financial statement. Here are the rest of the figures as of December 31, 2012:

  • cash: $1,616
  • total assets: $17 million
  • total liabilities: $6 million
  • net loss: $880 thousand

We know what you’re thinking: “$17 million in assets! That’s huge!”. Indeed, it is. However, about $14 million of those assets consist of restricted cash. We wrote about that amount in our previous articles, and we were rather annoyed by the fact that FNRC were not willing to disclose any details about the requirements that they need to meet in order to use the money.

Today, however, they woke up early fired up their computers and wrote a press release which is supposed to give us some more information on these particular assets. The problem is, the information that they give us is not a whole lot.

5FNRC_logo.jpgWe read that FNRC received the money as part of an agreement that they signed with some investors back in 2011. The investors bought some preferred shares and from what we can understand, FNRC will get the cash only if the preferred shareholders are able to convert their stock to common shares at favorable conditions. FNRC‘s performance so far has not allowed them to do so and today’s announcement reveals that FNRC are negotiating changes in the terms of the agreement. In plain English, FNRC will try to convince the holders of the preferred stock that it’s wise to convert it into common shares so that they can release the $14 million.

On the one hand this will mean that FNRC will have funds to finance their operations, but on the other it will create some massive dilution for the long-term shareholders. And with so many common shares about to be issued in exchange for the preferred stock, there will be quite a lot of profit to be made in case the pump works out and the price surges once again. What will be the result of that? FNRC‘s chart for the last six months illustrates it pretty well.

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