Minerco Resources Inc (OTCMKTS:MINE) took no time in approaching a deep red zone after it made public its financial report for the period ended April 30, 2015. The results shown in the report served as a disappointment to the investors, who were expecting better performance from the company than its counterparts in the pink sheets section.
Disappointing for investors
As per the report released, Minerco Resources Inc (OTCMKTS:MINE) reported a cash balance of mere $99,000 while its current assets stood at $1.6 million for the period. The company’s current liabilities were as high as $5.1 million while its sales number was at $614,000. Though the sales number showed little improvement year-over-year, but the same was on account of deployment of the capital following the purchase of Avanzar. The company’s Gross margin deteriorated to 20% as on April 30, 2015, from 35.9% in April’14.
The company’s operating expenses rose steeply to $1,266,051 from $249,856 year-over-year on account of increase in several major key retailers and increase in infrastructure cost. Minerco Resources Inc (OTCMKTS:MINE) incurred a net loss of $748,666 during the reported period as against the net loss of $52,304 posted in the previous year’s same period. The company cited costs associated with the launch of key business retailers as a reason for a higher net loss. Apart from this, the company’s concerning debt number of $5 million against its scanty revenues and a cash reserve of $99,000 is questioning.
A deeper analysis shows that Minerco Resources Inc (OTCMKTS:MINE) faces the problem of large number of stock issuance. As in June, the company’s total number of outstanding shares stood at 3,496,235,000, which is mostly on account of the conversion of debt into stock. Hence, the company has little to offer to investors, who are fast shunning it now. The stock of Minerco Resources Inc (OTCMKTS:MINE) closed more than 33% below its previous trading price at $0.00280. The total number of shares traded were 21.46 million.