Dominovas Energy Corp. (OTCMKTS:DNRG) Explodes Into Action
Dominovas Energy Corp. (OTCMKTS:DNRG) increased its market value an astounding 1303% yesterday, when it announced what it called a “partnership with the United States government”.
This sort of thing has been seen on the OTC Markets hundreds of times – a small company announces that it is going to have something to do with something related to the US government, and investors fly into a frenzy of buying. This particular case saw the company’s market value spike all the way to $6 million on a dollar volume of $2.5 MILLION.
64 million shares changed hands out of DNRG‘s 90 million shares outstanding – with such numbers, even calling the session eventful and exciting looks like a gross understatement.
Investors simply couldn’t get enough of DNRG, once it became clear that it is to be part of an initiative aimed to “accelerate private sector investment in Africa’s power sector over the next several years”. But was their excitement really warranted?
Sure, landing a partnership with the US government could end up being a big deal, but there’s more to DNRG than that:
- NO CASH ON HAND!
- Prepaids – $15 thousand
- Convertible debt – $330 thousand
- Current Liabilities – $1.1 million
- Net loss – $228 thousand
Those horrendous numbers are the closest thing to a summary of DNRG‘s financial standing that can be gleaned from its latest report, for the quarter ended February 28, 2015. Suffice it to say, these balance sheets don’t look like the accounts of a company that’s poised to exploit the vast opportunities its partnership could represent.
No, rather the reports make DNGR look like just another mediocre OTC Markets company – idle and unimpressive.
And the more due diligence is done, the bleaker the picture gets. For instance, it turns out that on Oct. 27, 2014, DNGR became issued a convertible note to Kodiak Capital Group for the principal amount of $165 thousand, for unspecified services. Somewhere along the way, that sum somehow doubled – but the report doesn’t really clarify how that happened, just as it doesn’t really help discern the conversion discount provisions.
This particular section of the 10-Q is so confusing, sparse and outright badly written that it’s really unclear whether Kodiak could still convert debt into stock at a 50% discount of the lowest closing bid price for the thirty sessions prior to conversion. Suffice it to say that if this is the case, there is currently a frightening amount of DNRG shares that could drown the ticker in toxic dilution at any given moment in the immediate future. What’s more frightening is the realization that after such a jump, the results could be pretty much the same even without the 50% discount.
Add the fact that the company was the target of a paid pump for $50 thousand not 20 days ago, and it should be obvious exactly how risky an investment DNRG actually is at the moment.
