Rimrock Gold Corp (OTCMKTS:RMRK) is Sinking Fast
Rimrock Gold Corp (OTCMKTS:RMRK) issued a press release earlier today and its headline, it must be said, sounds quite promising. It says that the company has been restructuring its debt and that some fresh financing is on its way.
Unfortunately, once you take a look at the 8-K which accompanies the press release, you’ll see that the cash injection will come courtesy of some convertible notes. You’ll also see that the brand new debt will be convertible into stock at a whopping 65% discount.
In light of this, the performance at the beginning of today’s session isn’t really that shocking. About twenty minutes after the opening bell, RMRK is sitting at $0.0004 (33% in the red). This is shaping up to be the third consecutive red session for the ticker and a potential close of the week at this level would mean that more than half of the market cap has disappeared in a matter of just a few days.
But why are investors so angry?
The truth is, they have already gone through more than enough dilution and the last thing they want to see is more discounted shares hitting the open market. Between April 20 and July 20, a span of just three months, the O/S count grew from just 110 million all the way to 780 million. Ten days ago, the number of authorized shares was raised to 2.9 billion which, coupled with the new convertible notes, suggests that the dilution is far from over.
Yet, some people appear to be genuinely excited by today’s press release. They say that thanks to the proceeds from the new convertible notes, some of the older debt has been retired which is indeed the case. They also say that the new notes won’t become due immediately which will guarantee RMRK‘s shareholders a few dilution-free months. All this sounds reasonable, but is it really enough to urge you to put your money on the line?
Well, there’s not much else. The latest 10-Q, for example, looks like this:
- cash: $2,224
- current assets: $4,583
- current liabilities: $433,698
- NO revenue
- quarterly net loss: $74,919
Theoretically speaking, the fresh cash injection should mean that the balance sheet is in a better shape at the moment, but we mustn’t forget that some of the proceeds were used for retiring old debt. This means that we’ve no way of knowing whether things have been improved at all.
And it’s not like the people running the company have a track record of performing miracles. RMRK is currently headed by a person called Jordan Starkman and he has been involved with a few other penny stock enterprises like Health Advance Inc (OTCMKTS:HADV) and Pacific Green Technologies Inc (OTCMKTS:PGTK).
It’s fair to say that neither of these stocks looks poised to set Wall Street on fire.
