Breitling Energy Corporation f/k/a Bering Exploration Inc (OTCBB:BECC) Surges Relentlessly

Breitling Energy Corporation f/k/a Bering Exploration Inc (OTCBB:BECC) went through a merger recently and the chart on the right shows that investors seem pretty happy with this action. With good reason, too.

We had a quick look at the SEC filings prior to the asset purchase agreement and we can see that things weren’t going quite to plan. According to the latest 10-Q, they had less than $15 thousand in cash, $755 thousand in working capital deficit, just $19 thousand in quarterly revenues, and a net loss of around $763 thousand. Somewhat predictably, their stock performance wasn’t exactly perfect. At the beginning of 2013, the shares (then under the BERX symbol) were traded for around $0.38 a piece, but by November, they had dropped to just $0.06.

Still, the merger means that BECC is now a completely different company which renders the figures above somewhat irrelevant. There’s a new management team led by Mr. Chris Faulkner (BECC‘s CEO) who promised to lead Breitling to the national stock exchanges when he took the helm. We’ve heard numerous penny stock executives make similarly bold claims, but with BECC, a potential uplisting might not be that far-fetched. The management team published an 8-K/A form containing the unaudited financial statement of the new enterprise on Friday and we can see from it that BECC is now a solid operating company. Here’s a summary of the most important figures as of September 30, 2013:

• current assets: $6.5 million (mostly cash)
• current liabilities: $10.2 million
• quarterly revenues: $24.1 million
• quarterly net income: $942 thousand

There is a rather big working capital deficit and the profit margins aren’t huge, but it’s clear that BECC looks like one of the more solid penny stock companies out there.

Bear in mind, however, that it is still a penny stock and, as such, it’s extremely volatile. The ticker already made an impressive run climbing from around $0.08 per share all the way up to $0.876 and it did it in a matter of just two months. This means that the threat of a correction seems very real at the moment.

What’s more, there are some people who can take advantage of the inflated market cap which, at Friday’s close, hovers around $437 million. We read in Friday’s 8-K that when the new management team took the helm, they wanted to get rid of the public entity’s convertible notes. As a result, millions of shares got issued at prices quite a bit lower than the current one. If the people who got the discounted stock decide to unleash it on the open market, the ticker could take a plunge.

As for the long run, there’s no shortage of people who believe that Mr. Faulkner is capable of putting BECC on the map, but having done a bit of research, we can see that this hasn’t always been the case. Back in 2012, when Breitling was still a privately-held entity, Mr. Faulkner apparently launched an aggressive marketing campaign in a bid to lure in more investors. It’s clear that not everyone was happy with his efforts.

He was also at the helm of a web hosting provider called CI Host – an enterprise that got criticized for poor quality of the service and for some interesting billing practices.

Of course, Mr. Faulkner’s previous endeavors aren’t necessarily indicative of BECC‘s future. We can see that he also has a much more solid footing with his latest company. Even so, doing a lot of due diligence and carefully thinking through every single move is absolutely essential.