Inergetics Inc (OTCMKTS:NRTI) Sinks in Dilution
Inergetics Inc (OTCMKTS:NRTI) announced last Wednesday that their Bikini Ready line of product should pop up on the shelves of numerous Harmon stores before the end of the month. Investors’ reaction was lightning fast.
In a matter of just six and a half hours, they managed to rack up a dollar volume of nearly $180 thousand. At the same time, NRTI tripled its value and it reached a price of $0.0009 per share. A brief intraday peak even suggested that the ticker could try to log a close of over $0.001 for the first time in over three months.
Thursday’s session also started on a positive note, but unfortunately, it all went very wrong, very quickly. The closing bell gave the ticker a break at $0.0007, but it wasn’t able to completely halt the fall. On Friday, NRTI wiped out another 42% of its market cap and it closed the week with a price of $0.0004. So, the news about the deal with Harmon Stores wasn’t enough to keep the stock propped up for long. But is this really that much of a surprise?
The truth is, once you have a good look at the latest 10-Q, you’ll see that in the grand scheme of things, a single distribution deal might not mean much. We certainly aren’t sure if it will be able to solve all the financial issues. There are quite a lot of them:
- cash: $2,067
- current assets: $289,607
- current liabilities: $13,122,138
- quarterly revenues: $200,105
- quarterly operating loss: $469,313
The revenues are more than 29% down from the ones logged at the end of Q1 while on a year-over-year basis, the drop stands at a truly abysmal 62%. As for the balance sheet, we reckon that you should be able to draw your own conclusions. In the meantime, we’ll talk about the elephant in the room – the convertible debt.
NRTI and the toxic debt providers have had a relationship for quite a while, and the results are becoming evident now. During the first six months of the year, the company issued convertible notes with an aggregate principal amount of $632,500 and conversion rates that provide a 38% to 42% discount to the market price. At the same time, the number of issued and outstanding shares ballooned from 143 million to 559 million.
Between June 30 and August 19, NRTI borrowed some more money under various convertible debt arrangements with similar terms and it also issued a further 294 million shares.
In case you haven’t calculated already, the O/S count has grown by no less than 495% in a matter of less than nine months. With a dilution this horrific, the fact that NRTI remains stuck in the lower ends of the triple-zero range isn’t that much of a shock.
