After the losses last week, U.S. National Telecom, Inc. (PINK:USNL
, USNL message board
) hit a phenomenal gain. Yesterday, the stock soared
122.22% and managed to trade over 55 million shares for the day.
The only reasonable explanation on the massive trade appears to be the latest news by USNL. It was released yesterday, when the company reported that it has filed with the secretary of state to further reduce its authorized common stock by 500 million shares and was awaiting its effectiveness.
As of April 9, 2012 the company has had 3,475,250,391 shares issued and outstanding of which 3,000,210,033 were restricted and not made for free trading.
The CEO of USNL, Rebecca Guthrie stated that she wanted to provide some stability in the company and its share price and believed that this change will increase the shareholder value.
And while waiting for the effectiveness of the above-mentioned change, investors may have a look at USNL annual report for the past year which turned out to be completely discouraging.
According to its 10-K, the company's operating revenues for 2011 totaled only $7 and no one could guarantee that USNL would produce positive cash flows in future.
At the same time, the company has suffered a net loss of over $192 million, while its cash on hand hardly totaled $151.15.
As USNL has never operated at a profit, the company relies on loans from its officers to remain in business over the next twelve months. However, if USNL does not generate sufficient cash flows, it might not be able to sustain its operation.