USA Graphite Inc (OTC:USGT) Crashes Despite Filing

Yesterday USA Graphite Inc (OTC:USGT) finally filed its 10-Q, but the stock still crashed hard. The latest tout emails by Stock Castle and the spam emails didn’t help, either.

USGT closed down nearly 21% at $0.701 per share. The volume reached 3.1 million shares.

The 10-Q was supposed to be filed by Jan. 15. Still, yesterday was withing the extension given by the late filing notification. The report is for the quarter ended November 30, 2012 and doesn’t give a lot of new information.

It does confirm that the company had as little as $2,212 in assets. It also shows that some people were holding shares before the whole pump campaign started. Three individuals cumulatively held 22 million shares acquired at $0.0000455. Additionally, 32 unnamed investors held approximately 26.4 million shares they had bought at $0.0227 per share.

10-Q reports usually have the number of outstanding shares (OS) at the latest practicable date. Most often the day the report is filed. USGT, however, doesn’t give the number of OS for any date after November 30, 2012. In the report it’s stated that USGT has issued at least 7 million shares to Nevada Minerals holdings Inc., which means the OS is at least 176.4 million shares.

This may very well be an error. There are a number of mistakes in the report. Note 11 says that as at November 30, 2012, USGT had 175 million authorized shares (AS) and 169.4 million shares issued and outstanding. In at least two other places in the report it is stated that at that time the AS was 800 million, including Note 11 in the interactive version of the filing.

The report also confirms that the touted “acquisitions” are actually just rights and options to acquire mining interests. While USGT may have satisfied the conditions concerning the issuance of shares for the first two deals, there is no mention of it paying the needed cash amounts.

Traders are free to draw their own conclusions and make their own decisions. They may, however, want to consider the worth of a company which can’t file on time, files sloppy reports and hasn’t really proven it can make a dime outside of selling shares. At $0.701 the market valuation of USGT is approximately $118 million.