Inergetics Inc (OTCMKTSNRTI) Plummets Down The Chart
On Wednesday Inergetics Inc (OTCMKTS:NRTI) announced that their Bikini Ready Lifestyle brand of products would become available at Harmon Stores over the next month. The news put investors into a real buying frenzy and during the session the record for the company amount of nearly 306 million shares got traded. The buying pressure pushed the stock to an intraday high of $0.0011 and although NRTI closed a bit lower at $0.0009 it still represented gains of exactly 200%.
On the very next day however NRTI reversed its direction and suffered a painful crash. The company wiped 22.2% of its value and closed at $0.0007 per share. It seems that the numerous extremely serious red flags that surround Inergetics might have caused some investors to quickly sell their holdings.
It is true that NRTI are a revenue generating company but that does not mean that they are in an encouraging financial instate. On the contrary, the company’s balance sheet looks rather horrendous – as of June 30 NRTI reported:
• $2067 cash
• $289 thousand total current assets
• $13.1 million total current liabilities
• $200 thousand revenues
• $677 thousand net income
Compared to the same period last year the generated revenues have dwindled by more than 60%. Even though NRTI finished the second quarter of 2015 with a net income thanks to a $2.3 million gain on fair market valuation of derivatives if you take the six month period since the start of the year the company has incurred a net loss of $3.8 million. The working capital deficit of NRTI stands at over $12 million while the accumulated deficit is approximately $96.6 million.
Investors have a lot more to worry about though. Back in March 2014 the outstanding shares of the company were 64.6 million. A year and a half later that amount has ballooned to over 852 million outstanding shares, an increase of over 1200%. The rampant dilution has devastated the share price of the company. Despite having 2 BILLION authorized shares in the subsequent events section of the quarterly report NRTI stated that they were not able to issue the full Series G Preferred dividend. The management team will try to amend the Certificate of Designation in order for the dividend to be issued.
In addition, as of June 30 NRTI were in default on around $3.2 million of its outstanding notes. The company also failed to make the payments that were due July 1, 2014, January 1, 2015 and April 1, 2015 and as a result received notice from Martha Stewart Living Omnimedia that the license agreement between the two companies was going to be terminated.
In an 8-K form filed on September 14 Inergetics announced that they have entered into a $1 million purchase order financing. While the deal will provide the company with the necessary funds to keep their operations going for a while according to the terms of the agreement all of the obligations owed to the entities providing the money are convertible into common shares at the lower of $0.07 or a 38% discount from the lowest price a share was bought or sold during the ten trading days preceding the date of the conversion.
If the crushing dilution caused by the conversion of debt continues unchecked NRTI may find it extremely hard to leave the triple-zero price ranges. If you are determined to trade the stock make sure to do your own research before putting any money on the line.
