USOG rapid gains started shortly after the company registered its securities with the SEC. Alerted again to traders as a huge three-digit gainer yesterday, USOG made two spectacular jumps this week, the one from yesterday leading to a closing price at $0.0092 on almost 103 million shares traded.
Though, the next promise from last Wednesday that was also supposed to add credibility to USOG seems not to have been fulfilled yet. Then, the company announced that its stock will be upgraded from the Pink Sheets to the more prestigious OTCQB market, and that USOG even aims at the NASDAQ as the next step in its long-term strategy. The shares’ registration with the SEC has already become effective, but the stock is still on the Pink Sheets.
According to the filed quarter report, USOG’s main business is to acquire and operate domestic oil and gas service companies. The company reports sales since the acquisition of its first company, Turnbull Oil, Inc. in 2009. In the second quarter of this year a profit was reported, but sales have declined by 10% from the first quarter, implying that if no further decline is to be expected, the shares should trade somewhere between $0.015 and $0.037.
Considering the assets, however, the stock appears extremely overvalued. USOG has only around $92,000 more assets than debts and an over $4 million working capital deficit, putting the further operations under question.
It looks like USOG paid with a $250,000 promissory note for the Turnbill acquisition, and in the middle of July $200,000 of the note were converted into 400 million shares of the company’s common stock. According to the initial agreement, filed with the SEC on Friday, the rest of the amount should have been converted into another 100 million shares by the end of August. But as this is only a small portion of the entire debt, it will hardly raise the value of the company.
