Dominovas Energy Corp. (OTCMKTS:DNRG) Crashes As Hype Dissipates
Dominovas Energy Corp. (OTCMKTS:DNRG) manged to make a nice little bounce two sessions ago after making a bold announcement, but once the excitement that surrounded it was gone, the ticker headed straight down again.
The news that “former GE Capital veteran Eric Fresh” and “select institutions” such as Overseas Private Investment Corporation and the Africa Development Bank, are to help fulfill DNRG‘s plans was cause for much optimism. It reassured investors that there is hope for DNRG to turn profitable in the future – which in turn caused many to commit to the company’s stock. As a result more than 11 million DNRG shares changed hands in that session alone.
If the announcement is accurate, DNRG‘s potential for profit and creating investor value in the far future seems to have grown significantly. However, a bit of due diligence reveals that it is not the far future that DNRG investors ought to worry about – it is the present state of the company’s affairs that they should be wary.
Because there is currently a serious risk factor that threatens DNRG investor value – and, as it is more often than not the case with dubious OTC Markets pinksheets penny stocks, that risk factor is called “toxic funding”.
To elaborate – a noteholder by the name of Kodiak Capital Group currently owns a convertible note for the aggregate of $330 thousand. That fact is not all that frightening in and of itself, however said note has a “conversion price for each share equal to the lowest closing bid price for the common stock for the thirty trading days ending on the trading day immediately before the conversion date multiplied by 50% at any time up to [and after] April 28, 2015.”
That’s right – in the next two weeks, Kodiak can convert up to a third of a million dollars into DNRG stock at a rate of $0.0022 per share. If Kodiak did so and then proceeded to dump said shares on the market, we could be looking at 150 MILLION NEW SHARES entering circulation.
Needless to say that such a move could have catastrophic results – and that the most recent crashes we’ve witnessed could be taken as proof that such dumping is already taking place. That would certainly explain why DNRG crashes so hard after each bounce, in spite of the news that keep hitting the web being all good.
