Ubiquity Inc (OTCMKTS:UBIQ) Wipes More Of Its Gains

This Tuesday Ubiquity Inc (OTCMKTS:UBIQ) published a new PR announcing that they have been granted three new key patents. On that day the stock of company simply exploded – investors shifted the unprecedented amount of nearly 5.4 million shares and the tremendous buying pressure pushed UBIQ to a close at $0.34 for a gain of over 153%. Was such an overwhelmingly positive reaction warranted though?

Well, UBIQ‘s PR makes it sound as if the patents were just granted to them. If you check the numbers mentioned in the PR you will find that the patents have actually been issued months ago with two of them dating as far back as January. At the same time the press release rather strangely coincided with the a new paid pump for the stock. The newsletter The Wolf Of Penny Stocks touted UBIQ for a $50 thousand compensation while OTCStars bagged  $20 thousand for their services.

The red flags around UBIQ don’t stop there though. So far the company has not filed a single financial report for 2015. Instead it has been trying to get its annual report for 2014 in order. First the company submitted the annual report without getting approval from its registered auditor at the time. But then another problem surfaced – it turned out that the intangible assets of the company had been overstated by $6.3 million.

The lack of more recent financial reports means that investors have to base their decisions on financial results that are now over 11 months old. Not to mention that the financials of the company at the end of last year do not inspire much confidence:

• $102 thousand cash
• $389 thousand current assets
• $3.6 million current liabilities
• $68 thousand annual revenues
• $23 million annual net loss

As if the balance sheet wasn’t depressing enough the subsequent events section of the report shows that UBIQ sold nearly $2.2 million in convertible notes just in the first seven months of the year. These notes can be turned into shares at discounts to the market price ranging from 35% to 45%. During the same period a total of 17,243,000 shares of common stock were sold for cash proceeds of $1,520,500 making the average price of the shares just $0.088.

The multitude of extremely serious red flags quickly put a stop to the positive momentum behind the stock and for the last two sessions UBIQ has been crashing back down. On Wednesday it wiped 13.2% of its value while yesterday the losses were even bigger – the stock closed 17.5% in the red at $0.2435.

Ultimately it is up to you to decide if UBIQ is a sound choice for an investment. Just keep in mind that the recent activity around the stock caught the attention of OTCMarkets and now the profile page of the company carries the skull and crossbones warning sign. 

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