Borislav Tonev

Minerco Resources Inc (OTCMKTS:MINE) Registers Its First Green Session For September

by Borislav Tonev September 10, 2013
3MINE.pngAfter years and years of listening to endless promises and bright projections about the hydro-electric and wind projects in Honduras, Minerco Resources Inc (OTCMKTS:MINE, MINE message board)'s shareholders finally have something to cheer about - the launch of the new line of coffee-flavored healthy beverages.

It was clear from the very beginning that they were biting off more than they can chew with the clean energy business. The projects were acquired in exchange for common shares which, in turn, led to some significant dilution. According to some articles (like this one), the deals themselves were a bit shady and the fact that MINE failed to register any sort of revenues from the whole thing is pretty indicative of the magnitude of the flop. As you can see from the chart, the ticker responded accordingly.

Now though, everyone is standing on the edge of their seat, waiting for the new beverage business to flourish and, looking at the message boards, we can see that MINE's management team enjoys a rather strong support from their shareholders. While we still think that comparisons with billion-dollar giants like Monster Beverage Corp (NASDAQ:MNST) are still stretching the mark a bit we can see that MINE have managed to complete some important steps.

Distribution agreements have been signed, websites and Facebook pages have been established and the initial production run has been completed. Perhaps the biggest milestone of them all, however, is the start of the sales. The main distributor, Avanzar Sales & Distribution, LLC announced last week that Level 5 Rise and Coffee Boost should be available in their warehouse on Thursday and that you will be able to buy them through Amazon by October.

Another positive development from the last couple of months is the pre-payment of one of the notes to Asher Enterprises. If you've been around penny stocks for a while, you'd probably know that Asher have something of a reputation for providing toxic debt financing and settling the liability with cash is definitely a wise choice.

Yet, while the trend is generally upward, the ticker's performance isn't as spectacular as we expected and there could be a couple of reasons for this.

For example, one of the first steps that traders take when they're contemplating a new investment is to take a look at the financial statement and, as we mentioned in some of our previous articles, MINE's 10-Q looks quite depressing. Here's a recap of the most important figures once again:

  • current assets: $919 in cash
  • total assets: $26 thousand
  • current liabilities: $1.7 million
  • no revenue since inception
  • quarterly net loss: $194 thousand
  • accumulated deficit: $6.5 million

These are not the sort of financials you expect from a future giant in the beverage industry and when you have in mind the fact that projected expenses over the next two years are estimated at around $3.6 million, things get even more scary.

8MINE_logo.jpgOf course, they could raise some funds by selling equity, but with the numerous unknowns around the success of the Level 5 beverage line, this would probably cause some heavy dilution, which is the last thing the shareholders want to see considering the amount of pressure exerted on their investments over the last couple of years. The number of issued and outstanding shares back in June 2012, for example, was around 80 million. By June 2013, it had reached around 990 million and the increase in the authorized capital back in April could serve as a hint that more stock will see the light of day in the very near future. Unless the new products prove themselves to be a resounding success, the price will suffer from the overflowing number of shares and we reckon that this is definitely something you should keep in mind while deciding whether MINE is the best place for your money.

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