Last Friday, the value of United States Oil & Gas Corp. (PINK:USOG) stock crumbled down by 16%, while volume surged up significantly and reached 114 million shares. At the end of that dramatic performance, USOG stock had dropped down to $0.0026 per share.
On Jan. 05, USOG surprised its shareholders with an 8-K form, which announced some changes in the company's debt instruments. First, it became clear that USOG had deferred the payment of the principal and outstanding interest on a promissory note from Dec. 2010 to Dec 2012. The promissory note was in the amount of $4 million and was dated March 2010.
Second, USOG revealed that it would issue an 8% convertible note for $40 thousand as a result of the securities purchase agreement with Asher Enterprises. The note would allow the creditor of USOG to convert the principal and all outstanding interest into shares of the company's common stock at 45% of their market price.
Although the 8-K form hinted that USOG might be having some liquidity problems, the overall market reaction to the news was positive as the stock price made a sieries of price jumps. The followed market retaliation, however was fierce, as it relegated USOG stock considerably lower in the sub-penny stock realm.
A couple of days ago, an iHub user dug one of my older articles out of the crypt and posted it on the USOG message board with the aim to start a discussion over the company's practical office. Unexpectedly, this caused a downpour of comments whether this is the actual corporate address of USOG not.
In this regard, it is my own conviction that any management which cares for its business should be vigilant about the accuracy of the corporate information published on the internet, especially on sources such as otcmarkets.com. Therefore, no matter, whether this is the actual address or not, either case speaks volumes about USOG.
Strangely enough, it seems that most of the penny stock investors deny to realize that in the case of pink sheets the light at the end of the tunnel is more often than not an onrushing train.
The price chart at the bottom of the previous article on USOG gives a very figurative notion about the delusions of penny stocks investors. Back in November, 85% of all the voters have predicted that the price of USOG stock would increase. However, the shares of USOG have lost almost half of their value since then, which was foreboded by only 6% of the voters.
And last but not least I would like to pay attention to the latest quarterly report of the company. Although, on paper, USOG has a positive net worth of $300 thousand, it has tangible net worth deficit of around $3 million. In addition, the income statement shows that despite of the increased revenues, gross margins have worsen as compared with the previous year. Moreover, USOG had finished the quarter with a $50 thousand net loss, whereas in 2009 the company had a net income of $400 thousand.
To make the picture of USOG even more colorful, I would like to remind the investors' circle that USOG has been the object of one of the most massive and costly stock promotions throughout 2010.