Ubiquity Inc (OTCMKTS:UBIQ) Gets What it Deserves
On April 15, a bit late, but still within the extension period, Ubiquity Inc (OTCMKTS:UBIQ) filed their 2014 10-K. A week later, however, they realized that they had accidentally published it without their certified accountant’s blessing. They announced that the report should not be relied upon, changed the accounting firm, and said that an amendment is coming.
Sure enough, on April 30, they filed a 10-K/A which had been okayed by the new auditors. Sadly, a couple of months later, they oopsed again and announced that in the amendment, they had accidentally overstated their intangible assets by about $6.3 million. Another amendment was prepared and it was published on August 7, a full seven months after the end of the reported period.
We have yet to hear about errors or lack of approval by the auditors which means that the figures should be in line with the truth. The problem is, they’re not very good:
- cash: $102 thousand
- current assets: $389 thousand
- current liabilities: $3.6 million
- yearly revenues: $68 thousand
- yearly net loss: $23 million
The financials are pretty appalling. In fact, if you take the time to compare them to the ones logged in previous years, you’ll see that they have deteriorated quite a bit. The 2014 revenues, for example, are a staggering 66% down from the ones logged in 2013.
That’s not the only problem, unfortunately. Because of the calamities around the 2014 report, UBIQ forgot to publish their 10-Q’s for the first and second quarters of 2015 which means that the most recent financial information is now more than ten months old.
Is this why UBIQ woke up today to find a caveat emptor badge stamped on its profile at the OTC Markets?
No. that came because of the paid pump. The Wolf of Penny Stocks and its affiliated newsletters received $50 thousand and they tried to convince anyone who was listening that investing in UBIQ really is worth it and OTC Stars who pocketed a more modest $20 thousand also pitched in.
The management team issued a press release as well. On Tuesday, just as the pump was starting, they said that they have received a few patents although some people reckon that the intellectual property has actually been protected for months and that the whole press release was nothing more than a helping hand for the pumpers.
Whether that’s the case or not is up to you to decide. There’s no getting away from the fact, however, that on day one, the promotion worked beautifully. UBIQ shot up and after more than doubling its value, it reached a close of over $0.30 for the first time in more than four months. Sadly, yesterday was a bit of a different story. The volume was still quite strong, but instead of pushing the ticker further up, it dragged it 13% down to a close of $0.295. About twenty minutes after today’s opening bell, it’s a further 8% in the red and we have to say that we’re not really surprised by its reluctance to remain afloat.
The lack of current information is enough of a red flag, but there’s even more danger lurking in the Subsequent Events section of the latest 10-K. It says that during the first seven months of 2015, UBIQ issued nearly $2.2 million worth of convertible notes that can be turned into stock at discounts ranging from 35% to 45%. It also says that during the same period, the company sold more than 17 million shares of common stock at an average rate of a little less than $0.09 per share.
