Universal Bioenergy, Inc. (OTC:UBRG) Erases Gains

Investors are dropping Universal Bioenergy, Inc. (OTC:UBRG) as if they touched a hot coal, and indeed coal is what made the company look so promising. But with more than 40 million shares sold, UBRG lost the positions from the last days, sliding more than 36% to $0.0038. Not even the published annual report helped hold UBRG in place, and served as a proof of our warnings that this ticker would move in disproportion to its business achievements. UBRG0416.png

The latest business outlook from the 10-k form holds some encouraging news. UBRG would not undertake new equity financing, and thus would avoid dilution. Instead, the financing would happen through convertible debt, which may in the end have the same effect, should the investors decide to convert. On the plus side, UBRG has working projects with natural gas, and plans to expand its coal revenues, but with a stock in the double-zero range, any real business achievement would lag the usual sharp peaks and corrections. NORX0416.png

The latest 10-Q shows the following gains and losses from a lucrative, but risky energy business:

  • $6,158 cash
  • $ 8.3 million total current liabilities
  • $7.3 million total current assets
  • $8.6 million revenues
  • $1.9 million net loss

UBRG chose a bad day for its spike, as outside the OTC markets the Dow Jones industrial average had its worst day this year, dropping 1.8% to 14,599 points. Oil prices also slid, abandoning the heights that propped the earnings of many energy companies. But the closer reason for the slump may be the investors’ decision to take whatever good fortune they achieved and not expose themselves to the risk anymore.

The next few days will show if UBRG will still present itself as an attractive buying opportunity, as it has all the prerequisites- accessible price, still strong interest and a potential to generate robust volumes. There is still no new promotional activity around the stock, and the pumpers are busy with another gem from the energy sector, Norstra Energy, Corp. (OTC:NORX). The ticker went up significantly, then sold off as the promoters invited more investors, but in the past few days mounted an upward trend and stands yet again at 58 cents, ready for a new day.

Whatever the larger market conditions, it is best to be aware that UBRG shows a few red flags, so be prepared for sharp losses in the short term.

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