If you enjoy a bit of mystery when investing in a company then AER Energy Resources, Inc. (PINKSHEETS: AERN) may just be the ideal stock. Right alongside the standard name changes and shifts in business operations AERN also spent more than seven years in an apparent blackout according to a July 11, 2011 disclosure statement that was required to confirm with the Pink Sheets so as to “to assist securities brokerage firms and potential investors with “due diligence” compliance.” Obviously this disclosure statement brings up more questions than it does convince potential investors that AERN is a sound move.
By their own accounts AERN is a holding company that operates through their primary subsidiaries, FTPM Resources, Inc. and Global Wealth Group, Inc. Their primary focus through FTPM is “the purchase and sale of fuel and petroleum products with a special focus on the recycling of used motor oil” while the focus through Global Wealth Group, Inc. “is to act as a Facilitator of Cash Flowing Assets in REO properties, Seller Distressed Commercial Properties, Turnkey Real Estate Investments, Non-Performing Notes and Alternative Energy.”
What makes this interesting is AERN is also being heavily promoted right now and according to some of these promotions the company “is in the business of engaging in the acquisition, development and production of crude oil properties in North America,” with their focus “on natural gas and oil properties which are proven developed producing properties, have proven undeveloped reserves and are economically attractive to AERN but are not strategic to major or exploration-oriented independent oil and gas companies.”
Needless to say, AERN’s business operations are a bit confusing and it doesn’t help that the company doesn’t distribute press releases or regularly update shareholders as to what it is exactly that they are doing.
Regardless of the confusion shares of AERN have shot up more than 280% on Monday as their price per share has climbed from an opening of 0.02 to a high of 0.053 and is now trading around the 0.044 – 0.048 range with volume jumping above the 48 million mark by midday. This is obviously the work of promoters as AERN hasn’t produced anything newsworthy.
Back in 1989 when AERN was incorporated as Aerobic Power Systems, Inc., eventually merging with Aerobic Power Systems in 1990 with the surviving corporation adopting the name AER Energy Resources, Inc. in 1991. From 1993 until 2003 AER Energy “was engaged in the development and commercialization of high energy density zinc-air batteries” with their focus on “primary (disposable), rather than rechargeable, zinc-air battery technology and licensing their extensive patent portfolio to large established battery and original equipment manufacturers (“OEMs”) with plans to commercialize the technology.” This was to be done through a technology licensing agreement they had with Dreisbach Electromotive, Inc. which gave AERN exclusive worldwide rights to DEMI’s zinc-air battery patents and technology (including trade secrets) for all applications other than motor vehicles for so long as the AERN wished to use such licensed rights.
That actually produced some impressive results for AERN as they formed a TLAS agreement with Duracell Inc. as well as signing a License and Development Agreement with Rayovac Corporation but by 2003 AERN had sold all of its assets, paid all of its creditors and liabilities and exited the battery development business.
The next time we heard from AERN was in 2010 when they acquired FTPM Resources, Inc. and shifted the focus of their business operations to fuel trading and petroleum marketing with an emphasis in the
recycling of used motor oil. AERN discloses that the industrial waste and brokerage of petroleum products industries are highly competitive with numerous small to mid-size firms engaged in the collection, transportation, treatment and brokerage of virgin and used petroleum products with some of their major competitors being Safety-Kleen, Rio Energy, Inc., and FCC Environmental; all of which seek to purchase feedstock from local, regional and industrial collectors, refineries, pipelines and other sources which can contribute to increasing prices to obtain used motor oil and transmix feedstocks critical to the success of AERN’s business model.
AERN has said it is critical to maintain strong relationships with its feedstock suppliers as well as control costs if they are to remain competitive but with the erratic nature of the market it is difficult to see how AERN can maintain a grip on those factors given the fact they are such a small company, so small that they list one employee including their management in their disclosure statement.
Making things more difficult for AERN is the fact that the business in which they operate is subject to numerous environmental laws and regulations and to be compliant with these ever-changing laws and regulations there is a substantial cost in legal counsel. Just how AERN makes money is unclear as their revenue stream is as difficult to decipher as their business plan and they don’t appear to feel the need to update shareholders too often about this subject.
While the promotions are rolling out and stock sites highlight the potential of AERN just remember the company has done very little to warrant such positive forecasts.