Minerco Resources Inc (OTCMKTS:MINE) Drops After Reporting
Many investors had high hopes for Minerco Resources Inc. (OTCMKTS:MINE), especially after all its bold claims and brave proclamations. MINE clearly failed to live up to the hightened expectations the company’s PR had created, as is evidenced by the charts for the session that followed the filing of its latest financial report.
Truth be told, said report gave investors more than a few reasons to lose faith in MINE, and its ability to capitalize on any market – especially the conservative UK market. It announced that as of July 31, 2014, the company had:
- Cash – $304 thousand
- Total Current Liabilities – $1.1 million
- Quarterly Sales – $12 thousand
- Quarterly net loss – $12.5 million
The good news is that most of the net loss is attributed to:
- Loss on Derivative Liability – $7.8 million
- Loss on Debt for Equity Exchange – $2.6 million
This means that the company’s financial standing is not really as horrible as the number next to “net loss” would suggest at first glance. What’s more troubling is the information that can be found on page 24 of the report, under “Outstanding Notes” – “As of July 31, 2014, our obligations under outstanding notes totaled an aggregate principal amount of $305,389”.
MINE having a line of credit or convertible debt is not really surprising. After all, that’s how OTC Markets companies are most commonly financed, and there is nothing wrong with that, as long as it doesn’t drown investor value in toxic.
However, MINE‘s agreements seem to be doing just that, as some of the above-mentioned debt is convertible at “variable conversion price of 50% of the market which shall be calculated as the lowest day during the preceding 20 days before conversion”.