Minerco Resources, Inc. (OTCMKTS:MINE) Is Trying To Recover
Since the start of August the stock of Minerco Resources, Inc. (OTCMKTS:MINE) has been wiping more and more of its value and it seemed that the downwards trend would never come to end. In fact, just a couple of days ago, last Thursday to be precise, the stock dropped down to its lowest point for the past seven months of $0.0022. With the start of this week though it seems that investors sentiment has drastically changed.
On Monday MINE registered a 3% gain which although not that impressive was the company’s third session in the green for November. Yesterday the positive momentum picked up even more speed and this time the stock surged upwards by more than 19% and closed at $0.0037. But will it manage to retrace its steps to the price ranges posted earlier in the year?
Well, on November 7 Minerco submitted their annual report for the fiscal year ending July 31 and it contained the following results:
• $304 thousand cash
• $906 thousand total current assets
• $1.1 million total current liabilities
• $12 381 sales
• $12.5 million net loss
Admittedly, the cash reserves are not that impressive while revenues are minimal at best but as a whole the balance sheet is not that bad for a pennystock company. It should be pointed out that nearly $7.9 million of the net loss was registered as loss on derivative liability.
In the months following the reported period MINE has been able to progress with its business plan. The company expanded the reach of its VitaminFIZZ enhanced sparkling water to the UK with a distribution agreement with J.D.’s Food Group, Ltd. while in the U.S. it is available in more than 600 retail outlets. On November 10 the fourth production run of the product consisting of 30 thousand cases was announced. In a letter to the shareholders the CEO of the company also said that for now actual revenues cannot be stated with the exact numbers expected to be announced in the financial report covering the first quarter of their fiscal 2015.
It appears that MINE is moving in the right direction but why did their stock price refuse to do the same for almost all of 2014? Undoubtedly a big role in the depressing chart performance has played the massive dilution of the common stock. During the 12 months covered by the annual report the number of outstanding shares doubled growing from 1.2 billion to 2.4 billion. At the end of July, this year, MINE still had around $300 thousand in outstanding convertible notes and the issuance of shares hasn’t slowed down. As of October 31 there were 2.8 billion outstanding shares.
Minerco might be able to form a more prolonged upwards trend if their revenues show a sizable improvement but they will have to address the ballooning number of outstanding shares. Even if you believe in the potential of MINE’s products you should still use caution when dealing with the stock. Do your own due diligence and adjust your investment accordingly.
