Borislav Tonev

Dominovas Energy Corp (OTCMKTS:DNRG) is Running Again

by Borislav Tonev February 9, 2016

The chart on the right belongs to Dominovas Energy Corp (OTCMKTS:DNRG, DNRG message board). Do we really need to comment on it? Yes, we do because people are once again interested in the stock.

About seven months ago, DNRG was quietly bumbling along the lower end of the double-zero range and people didn't really care about the company all that much. Then, the management team announced that DNRG has been named as a partner in President Obama's Power Africa initiative and the stock shot through the roof.

In a matter of just two sessions, DNRG managed to climb from less than a penny all the way to over $0.20 per share. After the inevitable correction, the ticker moved sideways for quite a while before sliding down to less than $0.02 last week.

Not really an uncommon sight in Pennyland – a stock gets overhyped and reaches levels it simply can not hold for long, it then slips back down and people who aren't careful are left disappointed. DNRG is not completely done, though.

Yesterday, after sitting practically idle for quite a while, it spiked again. After shifting more than 4.3 million shares and logging a dollar volume of over $111 thousand, DNRG closed the session with a price of $0.027 which is a respectable 55% above last week's close.

Shareholders once again have President Obama to thank. Yesterday, he signed the Electrify Africa Act which is supposed to build on the Power Africa program. DNRG's name wasn't mentioned anywhere in the news, but people still seem to be convinced that the small OTC enterprise can get a slice of the $7 billion investment reported by journalists.

People are excited about the future and that's somewhat worrying because in their enthusiasm, they seem to have forgotten about DNRG's huge financial problems. On November 30, for example, the company's statement looked like this:

  • cash: $23 thousand
  • current assets: $38 thousand
  • current liabilities: $2.2 million
  • NO revenue
  • quarterly net loss: $814 thousand

We can talk at some considerable length about how horrific the 10-Q is, but we reckon that the figures speak pretty well for themselves. What we can't do is blame the management team for not trying to convince us that things will be better in the near future.

A few months ago DNRG announced that an entity called Graecrest Energy Solutions has agreed to commit up to $1.2 billion in capital for the development of the company's RUBICON system. Then, the management team forgot to disclose the deal in the SEC filings.

More recently GHS Capital agreed to buy up to $7.5 million worth of DNRG stock at a 20% discount to the market price. The S-1 form underlying the said agreement was declared effective a few weeks ago.

The effects (or lack thereof) of these deals should be apparent in the 10-Q's and 10-K's to come. Plenty of people will be keeping their fingers crossed in the weeks and months to come, but while they're at it, they mustn't forget that like many of its OTC counterparts, DNRG has a history of funding its operations with the use of toxic debt. Unlike the financing deals outlined above, the convertible notes have already affected the company.

Between April 30 and November 13 of last year alone, DNRG issued more than 48.7 million shares at an average price of less than $0.004 per share in order to satisfy notes, but despite the exuberant stock printing, there was plenty of convertible debt still outstanding at the end of November. The discounts range from 40% to 50%.

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