A Free Pump Sends United States Basketball League Inc (OTCBB:USBL) Through the Roof
United States Basketball League Inc (OTCBB:USBL) started off in 1984 and, as the name would suggest, they wanted to create a basketball league. It was never going to be the next NBA, but it seemed at first that they were onto something.
Franchise agreements were signed with approximately forty teams and the 10-KSB for the year ended February 2007 showed that the company managed to log more than $400 thousand in annual revenues. Regular seasons were held and, at least as far as financials were concerned, things weren’t looking too horrific. Unfortunately, something, somewhere, went terribly wrong.
The teams stopped paying their franchise fees and the 2008 season had to be canceled. USBL have been unable to revive the league since then and this has had a rather dramatic effect on the company’s balance sheet. The latest 10-Q, for example, shows that as of November 30, 2013 they had:
- $17 thousand in current assets
- $2.4 million in current liabilities
- $12 thousand in quarterly revenues coming from a lease agreement
- a $21 thousand quarterly net loss
Indeed, when you compare the figures above with the results from the corresponding period of 2012, you’ll see some improvement in the revenues and net loss sections, but on the whole, you can safely say that the report doesn’t belong to a company that is moving forward with its business plan.
Not surprisingly, USBL hasn’t been the hottest ticker on the OTC Markets over the last couple of years. Trading has been virtually non-existent and the stock has barely moved. The lack of any press releases isn’t really helping.
The stock was pretty much dormant, but yesterday, it suddenly woke up. USBL opened with a huge gap up at $0.15 and started climbing. The behavior was unusual at first, but in the afternoon, it became downright bizarre. Lots of buying pressure propelled the ticker to a high of $2.75 per share at one point, potentially giving investors who got in early the chance to cash in on some healthy profits. The pressure at these levels, however, got a bit too much and USBL slipped down, eventually closing the session at $1.30 per share (a whopping 4,233% above its previous value).
If you are one of the lucky few who jumped in at the beginning of yesterday’s session, you can still walk away with a smile on your face, but if you are looking at USBL as a long term investment, you might want to consider the fact that yesterday’s trading was caused by nothing more than a no-compensation alert from Stock Mister.
Indeed, the email caused quite a frenzy, but, especially considering the company’s sorry-looking financial statement and the lack of news, it might have some trouble supporting the ticker in the longer run.
Pretty much nothing is certain at the moment. On the one hand, the impressive figures from yesterday’s session might prompt some more investors to jump in. Then again, a decline in the price and volume seems just as likely. One thing is for sure though: carefully considering the risks before putting any money on the line is absolutely essential.
