NuState Energy Holdings, Inc. (OTCMKTS:NSEH) Turns Green Despite the PR Fiasco

Strange and unusual things occur in Pennyland quite often. Don’t believe us? Take a look at what happened to NuState Energy Holdings, Inc. (OTCMKTS:NSEH) last week.

Not one, but two press releases hit the wire on November 26. The first one informed us that the company has entered into a $50 million credit facility which will help them fund the new revenue generating business. The second one talked about some negotiations with an entity called SAIC-GM-Wuling Automobile – a joint venture formed by SAIC Motor, General Motors Company (NYSE:GM), and Liuzhou Wuling Motors Co Ltd.

Two great pieces of news, no doubt and many people thought that they will be enough to propel the stock into the stratosphere. Their predictions were wrong. In fact, although NSEH hit an intraday high of $0.0014, it finished the pre-Thanksgiving session at $0.0004 (20% in the red).

It wasn’t a particularly good day for the shareholders and it was about to become worse because about an hour after the closing bell, the company announced through an 8-K form that the two press releases were, in fact, fake. Apparently, they have been issued by a third party and were not authorized by NSEH or by the rest of the entities mentioned in the announcements.

Kevin Yates, NSEH‘s CEO, said numerous times through his Twitter profile that his company had nothing to do with the misleading press releases, but despite this, many people thought that the SEC will suspend the stock before the opening bell on Friday. Even more investors reckoned that a massive drop in the share price was inevitable. Once again, the predictions turned out to be inaccurate.

The SEC has apparently come to the conclusion that there’s nothing wrong which is strange, but what’s even more surprising is the fact that NSEH managed to close Friday’s short session at $0.0005 which represents 25% in gains.

So, the stock is basically back where it started and the shareholders (who probably went through a few sleepless nights) are wondering right now: “What will happen next?”.

There’s little doubt in anyone’s mind that NSEH‘s credibility has been damaged. Although Mr. Yates is adamant that his company is completely innocent, investors will probably take every single one of his press releases with a grain of salt from now on. The more experienced ones will most likely base their decisions solely on the information coming from the SEC filings. So, what will they find?

They won’t find any up-to-date financial information, unfortunately. The figures in the latest 10-Q are now twenty months old and they don’t look like much. The only more recent information that we have is that on June 11, 2013, NSEH had less than $1,000 in the bank and only one full-time employee.

If you take a closer look at the filings, you’ll spot a few more issues. The O/S count in May 2013, for example, stood at around 504 million. An 8-K from October 28, however, says that about a month ago, it was sitting at “approximately” 750 million. And while we’re on the subject of the 8-K from October 28, we should also mention what it’s about.

Apparently, there was a legal complaint filed against NSEH by IBC Funds LLC regarding around $259 thousand worth of past-due liabilities. As you can see from the filing, a settlement agreement has been reached according to which NSEH will eliminate the debt by issuing freely tradable common shares at a 50% discount to the prevailing market price.

We’ll leave it up to you to contemplate this fact and to decide what sort of effect it could have on NSEH‘s share structure and stock performance.