Maxwell Resources Inc. (OTC:MAXE) Prepares for Freefall

It is unclear what caused the movement with the lack of promotional emails. However, Maxwell Resources generally relies on hype, since it holds no real marketable gold prospects. A similar pattern developed in mid-October when a series of press releases increased interest in the stock, but after two weeks MAXE fell predictably as savvy investors departed.

As usual with small cap stocks, MAXE failed to file the report for the quarter ending September 30th. Its latest filing shows the company has the following resources for its gold prospecting operations:

• $227 cash
• $7949 total liabilities
• 9.7 million outstanding shares of common stock at $0.001 par value
• $7094 net loss

The company uses mostly cash to pay its preliminary expenses, and the small sum shows it has very little real activity. On the OTC market, MAXE is possibly a vehicle for creating hype and dumping the millions of underpriced stocks for profit. The stock reaches heights of $1.60 and falls down to a little below a dollar, at least in its current form as Maxwell Resources Inc. Previously, until September, the company went under the name Mericol Inc., which may be a sign its main aim was to attract investors and cause brief spikes in its stock for profit.

Mining prospects are wide-spread business model for penny stock companies which show dramatic movement in their stock. A similar preliminary-stage company, Graphite Corp. (PINK:GRPH) is the typical pump fodder, showing a familiar pattern. After several days of press release hype and buying holders cash in and depress the price, leaving thousands of investors stuck with a useless stock. Unless you want to hold useless shares of a company that owns nothing, you must do your research before following the recommendations of pumpers.