Is MINE a Good Stock to Buy - Ultimate DD (Due Diligence) on Minerco Inc. (MINE)

My Position: 509,000 shares @ $0.012

Company Name: Minerco Inc.

Exchange:Ticker: OTC:MINE

Industry: Medicinal Chemicals and Botanical Products (SIC Code 2833 as listed on their 10Q)

Previous Close Share Price: $0.0072

Oustanding Shares: 13.042 Billion

Market Cap: 93 Million – Micro Cap

BRIEF BACKGROUND ON MINERCO INC.:

“Minerco, Inc. (OTC: MINE), is the world's first publicly traded company specializing in growing, research, production and distribution of psilocybin mushrooms and marketing worldwide. In addition, Minerco seeks to acquire and invest in CBD operating companies' extraction, edibles, topical, white label products etc.” (otcmarkets.com/stock/MINE/profile)

Minerco Inc. also created a cryptocurrency called, SHRUcoin, to enable future customers to purchase their products since psilocybin mushrooms and the like are still considered Schedule 1 drugs in the United States. According to their twitter, a percentage of the proceeds from customers/investors purchasing the SHRU coin will be used to help build water wells. The link to that tweet right here: https://twitter.com/MinercoInc/status/1366439923142819841

ANALYZING THE FINANCIALS:

It is always challenging to analyze the fundamentals of OTC penny stock companies like MINE. I am going to spend significantly less time (than usual) analyzing Minerco Inc.’s fundamentals, because like most other OTC penny stock companies, they really are bad…at least for now. As with most companies in the OTC market, speculation about the potential success of the company is really the biggest driver of investor sentiment and therefore, the stock price. So focusing too much on the fundamentals is ultimately insignificant since investing in MINE is purely a speculation play.

The information that I provide in my PROs and CONs table is pulled from their most recent Semi-Annual report, which was for the 6 months ended January 31st, 2021. Minerco has since been able to erase debt from their balance sheet so the total liabilities will not accurately reflect that change.

Just so that everyone is aware, MINE does not adhere (nor do they have to as a pink sheet penny stock) to SEC filing regulations and their Semi-Annual report is unaudited.

On the OTC Market, MINE is Pink current and has a Verified Profile (as of 12/2020) and is also Transfer Agent Verified. This is good news and always something I look for if I’m going to gamble on a sub-penny stock.

Their next annual report should be filed for July 31st, 2021. This report will give us a better representation of their current financial position.

 

PROS

CONS

·       Total Assets: $1,681,294

 

·       Accumulated Deficit: $38.5 million

o   In other words, their retained earnings balance is a negative $38.5 million

·       No Revenue & Profit

o   MINE doesn’t have product to sale yet.

·       Preferred Stock Dividends Paid: $64,000

o   They have preferred stock, which is never a smart thing to have because those dividends are guaranteed to the preferred stock shareholders.

o   See Additional Notes

·       Net Loss: $391,512

·       No Cash or Current Assets

·       Short Term Debt: $2.6 million

o   See Additional Notes

·       Total Liabilities: $7.9 million

 

ADDITIONAL COMMENTS ABOUT THE FINANCIALS:

  • Short Term Debt (from Semi-Annual report):
    • Most of MINE’s short term debt was not do to the current owners/officers of Minerco Inc. In 2014 (Pre-Julius Jenge) the company had entered into an agreement with Post Oak, LLC to open a line of credit for $2 million dollars. In 2015, they upped it to $3 million. As of January 31st, 2021, $1,551,936 was still outstanding on this line of credit that had been opened years ago.
  • Debt Settlement & Retirement of Shares
    • In February 2021, MINE completed a debt settlement with EROP Capital for debt that they inherited from previous ownership and also retired 477 Million shares back to the treasury. I am not 100% sure if this is the short-term debt above, as I couldn’t link Post Oak, LLC to EROP Capital, but either way this is great news and I’m sure we’ll find out more in the next annual report.
  • Preferred Stock (from Semi-Annual report):
    • In 2011 (Pre-Julius Jenge) the company had authorized 25 million shares of unclassified preferred stock. They then designated 4 classes classes of preferred stock: Class A, B, C, D.
    • Series B, C, and D receive dividends.
    • The most important class we care about is Class B or Series B shares, which are the shares that accrue dividends at a rate of 8%.
    • The company had issued all classes of preferred stock with the most issued to Series A of 1,000. This is why so much money was paid out to preferred stock shareholders.

COMPETITION & COMPETITORS:

The company doesn’t list any key competitors to them in their semi-annual report, but obviously there are a lot of relatively new companies that are popping up in the psychedelic industry. We don’t really know who the big players are going to be and choosing a key competitor now would be purely speculation, in my opinion. What we do know, is that the psychedelic industry will probably be very competitive as the industry starts to mold its key players and weed out the weak ones.

The great thing about the psychedelic industry is that it is actually very broad. If you just look at the whole industry, Minerco Inc. is competing against large, heavily funded biotech companies like Mind Medicine, Atai Life Sciences and many others. But if you take a closer look, the industry can further be broken down by the specific psychedelics each of these companies focuses on. Companies can focus on LSD, mescaline, DMT, MDMA, psilocybin, etc, but it is not common to find a company that has their focus on all of these, especially psilocybin mushrooms. When you look at most of these biotech companies, they are not focused on the growth, production, and distribution of psilocybin mushrooms, but MINE is.

I think MINE has the potential to have a healthy competitive advantage in the broader psychedelic industry. They have a cryptocurrency that will allow customers in countries where psychedelics are still considered a schedule 1 drug, to purchase their products. And while research into the application of psilocybin mushrooms is listed as one of their objectives, I think the bulk of their revenue will come from being a large grower, producer, and distributer of the magic mushrooms. MINE is also interested in CBD and it’s applications, but like I said, I think the growth and distribution of magic mushrooms will be their true money.

RISK FACTORS:

  1. No Revenue
    1. The company currently generates no revenue in sales, because they do not have a product. Their target date to start generating revenue in the Fall of this year.
  2. Dilution of Shareholders
    1. Since they don’t generate any income, MINE will have to continue to raise capital or continue to dilute shareholders in order to fund their start-up expenses.
  3. Liabilities
    1. They still have a lot of liabilities on their previous semi-annual balance sheet. MINE will need to continue to decrease that balance, which it seems like they are.
  4. No Proof of Land
    1. On January 4th, a Newsfile article from Minerco stated that the company had signed a letter of intent (LOI) with the Jamaican firm Lazurus Holistic to grow, process, and extract psilocybin and cannabis for export. A LOI is not the same as a done deal joint venture (JV) and investors are still waiting to see if this JV comes to fruition.
    2. MINE have not been able to provide proof to investors that they procured land.

LOOKING INTO JULIUS JENGE, MINERCO’S CEO:

In this section will provide some quick notes about his prior business experience, social media presence and education and then give you my opinion about whether I believe Julius Jenge can bring value to investors by growing Minerco into a successful company.

LINKEDIN:

  • Julius Makiri Jenge LinkedIn Profile 
    • No profile pic, but 500+ connections.
    • His experiences shows that he is presently the CEO of 3 companies.
      • Minerco, Inc.
      • Mega Media Group Company LTD
      • Mambo Jambo FM Radio LTD
    • His experience doesn’t list TransAtlantic Capital Inc, which he was also the CEO of. He actually just resigned to focus on Minerco, Inc according to this Yahoo Finance article here
      • If you were apart of the Shroom Zoom call in February this is actually something he said he would do, so I am happy to see that he kept his word.

TWITTER:

EDUCATION (according to LinkedIn):

  • Dar es Salaam School of Accountancy
  • Montgomery College
  • Strayer College

MY COMMENTS ON JULIUS JENGE

The reason I did some research on MINE’s CEO is because when it comes to investing in OTC penny stocks, getting an idea of the CEO’s past experience and social media presence can better help me determine whether they are:

  1. Real
  2. Invested in the success of their company.
  3. Possess the potential to build a successful business and bring value to their investors.

Personally, I don’t like that Julius Jenge doesn’t talk about/promote his company on twitter, but that is just a preference and nothing to beat the guy up about. Objectively looking at Julius Jenge, I could understand how some potential investors would get some sketchy vibes. I had those same vibes when I first started gathering information about him, but I was fortunate enough to hear him talk at the Shroom Zoom call in February and he seemed very genuine and invested in the success of Minerco, which put my nerves at ease.

Some people on social media platforms, like Stock Twits, were criticizing Jenge because his English wasn’t fluid (English is his second language). In my opinion, an individual’s ability to speak English well has no bearing on their business acumen and prowess. The ability to speak a language fluently shouldn’t be used as a gauge to judge someone’s success or their ability to achieve success.

Overall, I think that Julius Jenge is genuine and is invested in the success of Minerco Inc. I think he does possess the potential and drive to grow his business and create value for investors.

TOP NEWS (as of March 3rd, 2021):

  • Release of crypto blockchain token, SHRU.
    • Click here for article. 
  • MINE purchased equipment and production line to product 1M Psilocybin capsules daily.
    • Click here for article.
  • Sean Kingston is the newest brand’s ambassador.
    • Click here for article. 
  • Paid off debt to creditor, EROP Capital and retired 477 million shares.
    • Click here for article. 
  • Received $1B valuation.
    • I personally don’t care for this news, because it was a self evaluation, but I am going to leave it here for you to look into.
    • Click here for article.

MY OVERALL OPINION

I am invested in MINE (you can see my position at the top of this post) because I believe the company can really create value for long-term investors. This is obviously a speculation play, typically I would not invest in a company knowing the financials are bad and understanding that there are significant risk factors present. Regardless, I have chosen to take a position in this company because of my belief in the potential success of the company and the potential of the industry that its in.

I think the psychedelic industry is new and will have a lot to offer in the future. MINE is not the only speculation stock that I own in the psychedelic industry, I also have a smaller position in Mind Medicine (MMEDF) and think they will also be a major player in the future. I can’t see the future, but I believe that MINE will eventually exceed the $1 mark. I have no clue how long it will take to get there or if it will even get there, but as a long term investor, I’m not worried. Honestly, I just like the stock. Remember, these are just my opinions and you should read my disclaimer.

DISCLAIMER: I am not a financial advisor. I also do not possess a degree in finance. I am an average dude with a blog that enjoys learning and talking about investing. This blog is for educational purposes only. Any time you are considering investing your hard-earned money in a company you should perform your own due diligence and talk to a financial advisor. 

Older Post
Newer Post

1 comment

  • Its nice seeing a thorough DD from a fundamental investor like yourself. I was trying to do one on MINE as well but came up short on any concrete information to run on like yourself. Ill be watching closely on this one. If you’re interested in another Psyc Stock check out NEON.CN neonmind. High insider ownership and insider buying. As well as a bunch of patents and products out already. Very promising. Havent invested yet but keeping my eyes on that one.

    Keep up the good work my friend!

    Jack P.

Leave a comment

Close (esc)

Popup

Age verification

By clicking enter you are verifying that you are old enough to consume alcohol.

Search

Main menu

Shopping Cart

Your cart is currently empty.
Shop now