Successful management of the business side of a public company doesn’t always translate to increased value for existing shareholders. Right now, United States Oil & Gas Corp. (PINK:USOG) could be a good example.
For months now the general trend for USOG stock has been down. Yesterday the price closed at $0.0017 again after approximately 10 million shares changed hands. The price didn’t pull significantly back up even after the annual report which shows significant growth in revenue and decrease of expenses and net loss.
The continuing decline is at least partly due to the company’s way of handling it’s share structure. Since the beginning of the year, USOG has issued at least 406,827,975 shares of its common stock on top of the reported 1,590,690,900 as of December 31, 2010.
This dilution was the result of debt conversion, which may prove to be good for USOG balance sheet, but it still hurts current shareholders. The debt conversion and other payments in stocks have brought the number of OS to 2,232,811,829 up to Apr. 12.[BANNER]
USOG is being promoted for today’s session. It is not clear what the effect of the paid campaigns will be. One that took place on Mar. 11 clearly worked out well, but the next on Apr. 16 didn’t seem to do much.
Even with the dilution and the fact that USOG is still losing money, if the company continues to grow it’s revenue it could turn profitable at some point. The oil and gas market will remain one of the most dynamic for the foreseeable future.
It will be interesting to see how traders will solve the equation with the dilution stacked up against the relatively positive business developments and the promotions.