Umbra Applied Technologies Group Inc (OTCMKTS:UATG) Crashes

tags: UATG

At the end of the July 20 trading session the stock of Umbra Applied Technologies Group Inc (OTCMKTS:UATG) had fallen down to around $0.004 per share. On July 21, however, the CEO released a new letter to the shareholders and its effect was tremendous. The stock skyrocketed up the chart and in just two sessions it increased its value fivefold reaching a close at $0.024 this Monday.

The explosive appreciation pushed UATG to some highly unstable price ranges and yesterday even a new PR couldn’t save the stock from plunging downwards. The company stated that on Thursday it will reveal “the release date of a revolutionary new product” during a podcast delivered by the CEO. The podcast will be available only on UATG‘s downloadable app. As we said, instead of jumping in in anticipation of the announcement investors decided to shed their holdings and as a result UATG suffered a crash of over 18% and dropped to a close at $0.0191.

If the company is finally ready to launch a product it will be a massive step forward because despite its extremely positive projections for the future so far UATG‘s financial results have been nothing short of depressing. According to the latest financial report as of March 31, 2016, the balance sheet looked like this:

• $4,784 cash
• $204,784 total current assets
• $570 thousand total liabilities
• ZERO revenues
• $408 thousand net loss

We will leave it up to you to decide how feasible a potential uplisting to a higher exchange really is when just a couple of months ago the company was in such a dismal financial state.

Back in January UATG announced a share repurchase program of up to $2 million in stock over the next 24 months. So far, however, there have been no PRs announcing the buyback of any amount of shares. In fact, the exact opposite has been happening – the shareholders of the company have been put through a severe dilution of the common stock.

UATG began 2016 with about 38.5 million outstanding shares. By March 31, a period of just three months, that amount had nearly tripled with the O/S surpassing 93 million. By May 23 the outstanding shares had grown to 106 million and if you open the OTCMarkets profile page of the company you will see that by June 21 another 10 million shares had seen the light of day. Out of the freshly issued shares over 41 million came into existence as a conversion of preferred B shares. As of May 23 UATG had 7.35 million outstanding preferred B shares out of the 8 million authorized.

The volatility of UATG‘s stock in the sessions preceding Thursday’s podcast and the ones immediately following it could allow the more opportunistic traders to walk away with some quick gains. Underestimating the risks, though, could be rather dangerous. Even if you believe in the potential of the company you should still use caution when putting any money into the stock. 

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