Cirque Energy Inc (OTCMKTS:EWRL) Aiming for the Stars

Although the company profile at OTC Markets’ website still doesn’t reflect it, EWRL changed its name from Green Energy Renewable Solutions, Inc. to Cirque Energy Inc (OTCMKTS:EWRL) back in August. The change was the result of the acquisition of a private company called Cirque Energy II, LLC which was completed back in May and was supposed to give the ticker a new start.

As with all such mergers, the management team were quick to issue a press release informing the shareholders about the transaction and the bright future. Reading through the PR, we can see that the future was indeed bright back then, at least according to the people steering EWRL. They said that the acquisition will “enable the company to successfully transition from planning to operations” and that Cirque brings “financing resources that will facilitate securing contracts and implementation“. Bold claims, you would agree, but right now, about five months later, they sound somewhat out of place.

EWRL filed the financial statement covering the third quarter of 2013 on Monday and looking at it, we can see that the “financing resources” that Cirque brought with it have either run out, or were non-existent in the first place. Here’s a summary of the most important figures:

• cash: $15 thousand
• current assets: $16 thousand
• current liabilities: $1.2 million
• no revenue
• quarterly net loss: $425 thousand

It’s pretty clear that EWRL‘s financial position is not that great at the moment but when you compare the latest 10-Q with the results from the second quarter, things look even more disturbing. They have managed to raise some cash during the months between June and September, but there’s no getting away from the fact that the liabilities are also mounting. So is, by the way, the number of outstanding shares. Between August 26 and November 19, a total of 23 million EWRL shares saw the light of day and the authorized capital (which was increased to 300 million shortly before the Cirque acquisition) might suggest that more stock will be issued in the future, which will, inevitably lead to some dilution.

Unfortunately, it’s not been plain sailing in terms of operations, either. Just a week after the merger with Cirque, on May 23, EWRL announced their intention to acquire some assets related to the Davison Landfill located near Flint, Michigan. The landfill was formerly owned by a bankrupt privately owned company and since EWRL was the only bidder, the deal seemed to be in the bag. Unfortunately, less than two months later, another press release came through announcing that the agreement has been terminated.

Despite this, the management team seemed optimistic and said that they are looking forward “to commencing operations by the end of the 3rd quarter“. As you can see from the figures above, these projections turned out to be a bit stretched.

Yet, for all the previous failures, the ticker seems to be on a winning spree at the moment. The last three sessions ended with some increased trading volumes as well as some healthy gains and yesterday’s closing bell saw EWRL stand at $0.04 per share. The reason for the rally can be found in a couple of press releases. The first one came out on November 20 and announced a joint development agreement with Northrop Grumman Corporation (NYSE:NOC) while the second one is from Monday and it informed us about some debt restructuring.

The latter is indeed a welcome piece of news since it means that Asher Enterprises, a well-known toxic debt provider, is no longer a creditor of the company. Still, the future financial statements should give us a better understanding of how beneficial the restructuring has been to the company’s position.

Pretty much the same thing can be said about the NOC deal. Having a contract with a $25 billion NYSE-listed company is all well and good, but it will mean nothing if EWRL fail to stick to the agreement. The figures in the latest financial statement suggest that they might have some problems.

You should also keep in mind that EWRL was once among the paid pumpers’ favorite tickers. Quite a lot of campaigns have been carried out in the past and the results have been less than impressive. Although the stock has not been mentioned in a pump since August, failure to avoid future promotions could result in drops similar to the one displayed by Fresh Healthy Vending International Inc (OTCBB:VEND) over the last couple of days.