American Rare Earths & Materials, Corp. (OTC:AREM) is in a trading frenzy after the company announced they will be entering industrial market for rare metals.
The company will be tapping into the market for industrial applications of metals, which includes automotive, electronics, logistics, power transmission, transportation and other industries. This is one step up for the company, which currently supplies rare metals only for consumer markets.
The company has been steadily growing their revenues, over the past year, and through tapping into the market with significantly higher demand, those revenues should be expected to see a heavy boost.[BANNER]
American Rare Earths’ ability to perform without sufficient capital is a totally different story. The company’s balance sheet, for period ending June 30, 2010, is considerably leveraged, with short term assets barely matching the liabilities and long term debt weighting it all down because of large portion of assets being intangible.
The market cap, currently sitting at $8.15 million, is slightly overextended, but partially justifiable because of the news. The short term momentum on share price is already fading away and investors will likely wait for more, possibly material news, before turning more attention to this stock in the future.
AREM business valuation went down because of the continuous losses and constant need for additional funds, which are most often collected through equity sales, exercise of warrants and convertible debt.
