As the final week of July trading commences, cautious traders are hoping to see if America Resources Exploration Inc. (OTCQB: AREN) will be able to sustain the attention they acquired at the end of last week. Fresh off their 10-K filing and a $500,000 financing deal, AREN stock began to see some public exposure on Thursday before placing themselves among the top traded penny stocks Friday after $1.07 million was exchanged. Although the low float indicators are an attractive hook for those in search of a gusher, skepticism surrounds what a pop-up oil exploration company with ties to China is really up to.
Starting out from the beginning, American Resources Exploration was initially incubated as Alazzio Entertainment Corp. of Sophia, Bulgaria with the legal assistance of John T. Root, Jr. Root Jr. is somewhat of an unknown source for traders hunting down penny stocks to be promoted since his 3 year history with SEC filings has only been linked to Toucan Interactive Corp (TCNT), InoLife Technologies, Inc. (INOL) and Mirax Corp. which is now ViewRay Inc. (VRAY).
While INOL was a pre-existing ticker which had multiple name changes and reverse stock splits, a common trait seen with AREN (Bulgaria), VRAY (Russia) and TCNT (Costa Rica) is their initial domiciles. Setting up companies in these rather uncommon locations is a key indicator that this is not your typical penny stock.
What makes America Resources Exploration quite unique is how one month before filing their 10-K on July 15, the company announced that it had acquired a 515 acres oil field (The Rogers and Burns leases) in Atascosa and Frio county, Texas. The deal was said to have included all wells and equipment on the leases of which the property is currently producing commercial quantities of oil from some of the 7 wells on site that were originally drilled by Texaco.
Immediately after filing the annual report, the Company announced a financing deal for up to $500,000 which would be done over a series of payments. The first, $150,000 was said to have been received on June 17 for 1,000,000 shares of AREN at $0.15 per share with the second due to come within sixty (60) days of the agreement date to purchase an additional 750,000 shares at $0.20 per share. The third and final amount to possibly be sold would be within one hundred twenty (120) days of the deal date for up to 800,000 shares, again at $0.20 per share.
So now the common sense begins to kick in as to how a startup company from Bulgaria that had aspirations of renting out a mobile photo booth for events sells its company to Rise Fast Limited, a Hong Kong corporation, which is controlled by Zheng Xiangwu, a resident of Guang Dong Province, China. No one in their right mind starts up such a ridiculous company, spends $200-$300,000 doing all of the SEC filings and such, just so it can be handed off to an offshore owner that had $5,971 in cash and current assets as of March 31, 2015 that suddenly, with some pocket change deal, acquires a parcel of oil producing properties in Texas big that’s producing according to their reports.
In any case, during the 2 day span that AREN shares have been alive, there have been no setbacks as to whether or not the money is there to be made by flipping the ticker during that time space. As this week looks to kick off with a bang for its buck, a cautious approach to AREN stock will be the best way to avoid getting caught up in what will eventually be oil slicked.
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