Nutech Energy Resources Inc (OTCMKTS:NERG) Gets Investors Excited Once More
For most of yesterday’s trading the stock of Nutech Energy Resources Inc (OTCMKTS:NERG) was sitting further down in the red and it seemed that the company was going to log in its third session in a row of sizable losses. In the last hours of the session, however, the sentiment towards the stock changed and NERG soared upwards. When the closing bell rang the ticker was sitting at $0.0138 for a gain of over 60%.
The reason for the stock’s bounce was the new PR that NERG published. The press release itself didn’t contain much useful information but it announced that on Thursday the company was going to release news on a major acquisition. If you take a look at the recent announcements by NERG you might understand why this was enough to get investors buying once more.
In July NERG stated that they have a patented technology to produce natural gas without pumping water out of the ground from inside a well and that this will allow them to reduce the overhead costs of natural gas production by as much as 60%. More recently however that percentage seems to have been increased to the staggering 80%. In addition NERG have plans to acquire 7000 thousand wells located on State and Federal land in the state of Wyoming, they are waiting for regulatory approval to acquire 200o wells, and have an agreement to acquire Emerald Operating and Rocky Mountain Exploration Wells. Not to mention the company’s believe that it could very well uplist to the NASDAQ national exchange in early 2016.
Getting overly-excited, however, may not be wise. While there is a possibility that NERG‘s financial state may have improved significantly in the past months as of August 31 the company had:
• ZERO assets !!!
• $4,916,766 current liabilities
• ZERO revenues
• $347,306 twelve-month net loss
You must admit that this is hardly the balance sheet of a NASDAQ worthy company. The red flags run far deeper than the depressing financials though. The latest report revealed that at the end of August NERG had over $765 thousand in outstanding convertible debt that is convertible into shares at a 50% discount. The company has also agreed to issue as much as 245,234,219 common shares at $0.006 as a satisfaction of previously issued convertible debt.
The amount of the authorized shares of the company also raises some concerns. While the latest quarterly states that NERG had 250 million authorized shares it also shows that in January the company amended its Articles of Incorporation increasing the A/S from the aforementioned 250 million to 35 BILLION shares. In this filing however it is stated that the authorized shares were increased to 65 BILLION.
Investors should also take into account the fact that last month NERG got targeted by a paid pump. On December 2 another email alert was sent but it appears that the pumpers have now moved on to their next picks.
If NERG manages to keep investors excited with its PRs the stock could be able to stay above the 1 cent per share mark. Don’t forget, however, that just a little over a month ago they were sitting deep into the double-zero chart territories. Take into account the various risks and adjust you trades accordingly.
