On the background of the heavy indebtedness of USAE, today’s 8-k filing providing additional information on the company’s deal to get rid of a part of its unprofitable business looks encouraging. Obviously, some privileged investors knew about today’s filing and USAE jumped 6.90% to close at $0.107 on 5.7 million share volume.
That trading activity is absolutely a record for the past ten years and exceeds 23 times the average trading volume for the stock. Today’s trading session will show if the share price can break the nearest resistance and the chances seem good. During the last three trading sessions, more than 50% of the trading volume has been shorted.
According to the filed today 8-k, USAE’s unprofitable remanufacturing subsidiary New Century Remanufacturing, Inc. (NCR) has been sold to two former directors of the company. The selling price of $1 is highly impressive, but it seems that some additional information about the further terms of the deal may have the potential to shoot the price up again for a short time.
USAE’s liabilities related to NCR will be canceled and the company will reflect this in its next financial report as a gain of approximately $1.2 million, the amount being classified as income from discontinued operations. Thus, USAE may even book a profit for the current quarter. Unfortunately, this will barely offset the $2.3 million operating loss for the last quarter.
The remaining second unit of the company, called “Multiaxis structural aircraft components”, has some chances to perform better, or at least become actually profitable. It is not really making much more revenues, but at least provides for a positive gross margin and its net loss of $64,000 looks minor as compared to the net loss of $3.3 million from the machine and remanufacturing business.
