United States Oil and Gas Corp (fka USOG)

[100Pips]

The reply from Crimi, It does make sense that they won't do a R/S while in the private offering. What do you guys think?

As the company has reported, they are currently engaged in a private offering which is available to existing shareholders.


The offering is a convertible note which pays a 10% interest payment per annum until converted into common stock. The holder of the note can convert at their discretion, upon conversion the holder of the note converts at a 20% discount based upon the average price of the previous 5 days trading at the time of notification.


So the conversion price will change but you are correct in stating that if the note holders convert at a time when the average share price is low they will receive a greater amount of stock upon conversion.


The use of the proceeds is for retiring the debt of United Oil and Turnbull as well as some working capital.


I should point out that funding sources for micro cap companies are extremely limited and typical funding sources require even a greater discount starting at 50% and can go as high as 85% This type of funding brings a greater dilution to the company's stock; Most if not all of these types of funding sources have no true interest in the success of the company and will almost always dump their stock position as soon as possible.


By engaging in a private offering available to existing shareholders and individual investors the company hopes to attract investors with a longer view and a true concern for the company's success not just a discount on the stock price.


I do not believe that the company intends to do a reverse split especially while they are engaging in a private offering.