Minerco Resources Inc (OTCMKTS:MINE) Pops Out of the Blue

8MINE.pngWe haven’t written about Minerco Resources Inc (OTCMKTS:MINE) since December and there is a very good reason for this – the stock performance over the last three months hasn’t been that interesting. Apart from one or two spikes, the volumes remained negligible and although the price fluctuated a bit, it failed to make any significant moves. Until yesterday that is.

The first few minutes after the opening bell were pretty uneventful, but then, MINE exploded and surged towards the higher end of the charts. Unusually high volume kept it up throughout the day and a few minutes before the end of the session it logged an intraday high of $0.0029 per share (a whopping 70% above Monday’s close). It failed to sustain the pressure and when the closing bell rang, it was sitting at $0.0025 which presents a respectable 47% in gains.

A remarkable performance for a ticker that seemed all but forgotten until a couple of days ago, but we can see that a lot of people around message boards are asking one and the same question: “What caused the sudden surge?“. We were wondering about that too and so, we decided to take a look.

The thing is, after a lot of digging around, we couldn’t find a single reason for the record-breaking volume and the price gains. MINE hasn’t issued any press releases for more than a month, their latest SEC filings are dated January 27, and there aren’t even any promotions currently running for the ticker. Of course, the huge interest is prompting some of the traders to speculate on upcoming news, contracts, and other exciting developments, but we probably don’t need to tell you that basing your investment decision on message board rumors isn’t really a good call.

Still, there are some people that saw the extreme volumes yesterday and decided to jump in without doing a lot of due diligence. Where are they standing right now?

If MINE‘s press releases are to be believed, things are going along rather well. They officially launched their energy drinks back in September and since then, they have made numerous press releases about the huge demand for the products, about additional orders, about new appointments to the management team and about the bright future in 2014.

Unfortunately, they have failed to transform the enthusiasm from the PR articles into a decent balance sheet. In fact, the latest 10-Q shows us that MINE‘s financial situation is deteriorating by the minute. Here’s a summary of the most important figures as of October 31:

  • current assets: $85 thousand in cash
  • current liabilities: $3.4 million
  • quarterly revenue: $0
  • quarterly net loss: $2.7 million

The most peculiar thing about the report is, without a doubt, the revenues section. MINE said that their products have appeared on the shelves of numerous retail stores in Southern Carolina on September 17. A few weeks later, on October 11, they launched the energy shots on Amazon. Shareholders were expecting to see at least a month worth of sales in the latest 10-Q and yet, for some reason, they got disappointed.

10MINE_logo.jpgThere’s another major problem as well. As we wrote in some of our previous articles, around 1.1 billion new shares saw the light of day between July 31, 2012 and July 31, 2013. In September, MINE told us that from now on, they will stay away from further convertible financing instruments, but it would appear that the stock issuance hasn’t stopped. The latest 10-K shows us that as of November 11, there were around 1.5 billion shares issued and outstanding. According to OTC Markets’ website, the OS count on January 1 was closing in on the 1.7 billion mark and we read in one of the latest 8-K filings that between January 14 and January 23, MINE issued nearly 66 million new shares of common stock.

There are still plenty of convertible notes outstanding which could suggest that the dilution won’t stop here. This, we reckon, is something you should definitely keep in mind while making your investment decision.

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