Strategic Rare Earth Metals, Inc. (OTCMKTS:SREH) Stirred Up by a Marijuana PR
Strategic Rare Earth Metals, Inc. (OTCMKTS:SREH) announced yesterday that they are “actively pursuing” a joint venture with a medical marijuana company. The press release came out about half an hour after the opening bell and, somewhat predictably, it caused quite a lot of commotion.
Absolutely no details were revealed around the proposed deal and yet, just minutes after the headline hit the wire, the ticker doubled its value to the intraday high of $0.0024. Eventually, it cooled off and finished the day at $0.0013 which is around 8% above its previous close. Nearly $550 thousand worth of shares changed hands during the session which means that the message boards are now buzzing with activity and many people are expecting to see the ticker run even higher. But will it be able to do it?
When you do some research, you’ll see that there are a fair few dents in SREH‘s credibility. The location of their company headquarters (down to the number of suite occupied), for example, is also listed as the principal address a few other penny stocks like Zamage Digital Art Imagng (OTCMKTS:ZMGD) (a triple zero stock with no current filings and a caveat emptor badge on their company profile), King Resources, Inc. (OTCMKTS:KRFG) and Sensor System Solutn (OTCMKTS:SSYO) (two triple zero stocks with a history of failed promotions and no current filings).
Then, when you try to find something more about SREH‘s CEO, Mr. Bill Schaefer, you’ll see that he is also listed as the president of Palisades Petroleum (OTCMKTS:PAPT) and Legends Business Group Inc (OTCMKTS:LGBS). Out of all the companies listed above, LGBS is the only one to have filed a report for the third quarter of 2013. Unfortunately, the statement is nothing to write home about. According to it, as of September 30, they had less than $10 thousand in current assets, around $750 thousand in total liabilities, and an accumulated deficit of $9.3 million.
Hardly the best investment option out there, but having said that, SREH‘s financial situation appears to be even worse. Here’s a summary of the figures as found in their Q3 report:
- current assets: $100 in cash
- total liabilities: $76 thousand
- no revenue
- nine-month net loss: $25 thousand
With the financials above in mind, the press release from yesterday is starting to look like nothing more than an attempt to ride the wave of excitement around the marijuana industry. SREH don’t seem too keen on even telling us who they’re going to partner with and they also seem reluctant to inform us how they’re planning on raising money for the future joint venture.
This means that right now, SREH is an extremely risky stock. The current price and the increased interest are attributable to nothing more than the hype and excitement created by the mention of marijuana. The company’s financial situation certainly isn’t stable enough to support the ticker in the long run which is why carefully considering the risks and doing a lot of due diligence is absolutely essential.
