Hydrocarb Energy Corp (OTCBB:HECC) Bouncing Around After the 10-K
About an hour and a half after the end of Friday’s session, Hydrocarb Energy Corp (OTCBB:HECC) filed the long-awaited annual report for the period ended July 31. Before we get to see what’s in it, however, we’ll take a look at how it affected the stock performance.
The ticker did start the week on the right foot. On Monday, HECC logged a pretty substantial volume and after gaining 9% it reached a close of $1.09 per share. Not the most explosive of performances, but if you still haven’t gone through it, the surge might have you believe that the 10-K is decent enough. Then again, if you take a look at yesterday’s drop, you’ll probably have second thoughts. On Tuesday, HECC lost a little less than a tenth of its market cap and it stopped at $0.99 per share – pretty much back where it started.
Clearly, investors aren’t sure what to make of the 10-K and the only way to find the reason for this is to finally reveal the figures. Here they are:
- cash: $230 thousand
- current assets: $1.1 million
- current liabilities: $18.2 million
- yearly revenues: $3.9 million
- yearly net loss: $12.6 million
The revenues are 22% down from the ones logged twelve months ago, though it must be said that HECC‘s management team couldn’t really do much to prevent the drop. After all, they are running an oil and gas company and we all know how the oil price has been behaving over the last year. In fact, considering the oil price, HECC actually did rather well.
There’s no getting away from the fact that the company’s financial situation has deteriorated quite a bit, however. In addition to the revenue drop, there’s been a significant increase in the net loss and the cash reserves are nowhere near as substantial as they used to be.
Some of you will also notice that the 10-K shows plenty of toxic debt that is convertible at the typical for Pennyland discount. HECC‘s management team, however, have been quite determined to stop the company from sliding into the all-too-familiar dilutive death spiral. In actual fact, if you check out the press releases, you’ll notice that over the last few months, they’ve been talking more about retiring convertible debt than the actual oil and gas operations. On Monday, they proudly announced that all of the notes that contain floorless conversion provisions have been dealt with before conversion could occur.
They definitely deserve a “Job well done” pat on the back for this. We’ve seen numerous other penny stocks fail in that particular aspect which proves to be quite disastrous for investors. Even so, HECC is far from a risk-free stock. Especially with the uncertainty around the company’s performance and the price of oil.
About twenty minutes after today’s opening bell, the stock is sitting at $1.02 per share.
