Awesome Stocks Pump Heats Up Urban Barns Foods, Inc. (PINK:URBF)

Yesterday Urban Barns Foods, Inc. (PINK:URBF) opened with a huge gap up of nearly 100% and closed a good 34% up. An unprecedented volume of 6.5 million shares changed hands. The activity was very likely caused by an ongoing promotional email pump.

The last round of pumps started on January 13, with a number of promoters, among whom were Awesome Stocks. The pump runs on a budget of $30 thousand paid to raise awareness about URBF. The company looks like it could use the boost as its shares traded slowly over the last couple of months.

The goal of Urban Barns Foods is to eliminate or at least drastically shorten the delivery times of leafy greens to the supermarkets. The company has a patent-pending growing system named Cubic Farming. Even though greenhouses have been around for a long time and advancements are being made in their spatial and water-management designs, URBF seems to think they have a new, better solution.

While the company may have a clearly outlined goal, they are somewhat short on funds. Their latest quarterly report dated October, 2012, lists the following numbers:

• $239 thousand in cash
• $308 thousand in liabilities
• $126 thousand net loss
• zero revenue

In the same report the company also states that it would need approximately $1.9 million to proceed with planned operations over the next 12 months. Over 2012 the company issued millions of shares of Class A common stock as payment for consulting services, convertibles payment and as private placements.

The company will be launching its first Cubic Farming facilities on Jan. 17. This move may lead to steady revenue in the following months that can help the company further finance its activities without issuing new shares.

Awesome Stocks who promoted URBF previously touted other companies and once the pumping stopped, the stocks took a significant dip in price. One example is First Corp. (PINK:FSTC). On the final day of the Awesome Stocks promotion, November 14, the stock traded as high as $0.07 but on the very next it started slipping and is now at $0.02 per share.

Traders would be wise to be extra careful with promoted penny stocks that have not proven they can generate revenue yet. While sometimes those provide a short time window to make money, they often move so unpredictably due to the promotions, that one’s entire investment may be lost.