United Treatment Centers Inc. (OTCMKTS:UTRM) Soars After Share Retirement

United Treatment Centers Inc. (OTCMKTS:UTRM) stock enthusiasts mobilized last Wednesday, as the company announced that it had successfully retired approximately half of its outstanding common stock. Since then, UTRM share prices have risen more than 200%.

Retiring large portions of a company’s common stock is always a big deal for investors, as the event more often than not affects the company’s market standing. In this case, the retirement of 3 out of the 6 billion shares of common stock in circulation, along with the hype the news created, took UTRM from $0.0025 all the way up to $0.0076 in just three sessions. But should investors really be all that excited?

Even though UTRM is currently climbing the charts with a record number of trades, potential buyers should be wary. As usual, the fact that the marijuana hype is currently launching a ticker sky-high doesn’t guarantee the future success of the company in question.

There is a very good reason why UTRM stock was worth $0.0001 in January 2014. The numbers given in the company’s latest financial report, covering the period ended Sept 30, 2013 show that reason rather well. UTRM‘s boastful aspirations to become the top legal adviser and information provider of the cannabis industry and community were impressive indeed, but the record of the company’s commercial success so far is extremely underwhelming:

  • Cash – $743
  • Total assets – $67 thousand
  • Total liabilities – $734 thousand
  • Quarterly revenues – $48 thousand
  • Quarterly net loss – $25 thousand

Unlike many other companies in this sector, UTRM does seem to be making some revenues. The problem is, said revenues cost significantly more money than they make. The infinitesimal amount of cash on hand that the company has as a result of this turn of events, is also worth considering.

The company seems to be concentrating on a new line of business lately, but as it stands, its claims that it is on its way to becoming the Google (NASDAQ:GOOG) of the marijuana world, sound positively laughable. Judging by UTRM‘s previous commercial achievements, a healthy dose of skepticism may not be out of place in this case.

Another marijuana stock that soared on Friday is Tranzbyte Corp. (OTCMKTS:ERBB). It was not nearly as successful as UTRM, but still managed a 24.67% growth over the course of a single session.

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