Small cap tech stocks Epazz Inc (OTCMKTS: EPAZ) and Pulse Network Inc (OTCBB: TPNI) have been getting some attention lately in various investment newsletters. That’s due in part to a few paid for promotions on behalf of both of these stocks. Of course, there is nothing wrong with properly disclosed promotions, but investors with a long term time horizon need to be more cautious as promotions tend to help traders. With that said, do these two small cap tech stocks have what it takes to succeed? Here is a quick reality check:
Epazz Inc (OTCMKTS: EPAZ) Issues an Earnings Report and Warns of Short Sellers
Small cap Epazz is an enterprise-wide software company that specializes in providing customized web applications to the corporate world, higher education institutions and the public sector. Epazz’s unique BoxesOS applications can create virtual communities for enhanced communication, provide information and content for decision-making, and create a secure marketplace for any type of commerce all through the medium of the Internet. On Friday, Epazz fell 6.25% to $0.0015 for a market cap of $2.41 plus EPAZ is down 87.4% over the past year and down 97% over the past five years according to Google Finance.
What’s the Catch With Epazz Inc? According to various disclosures, transactions of $400, $2k and $2.5k have or will occur to mention Epazz in various investment newsletters. At the beginning of August, Epazz reported that revenues last year totaled $1,193,217 for a 1,000% increase compared to when the company first began publicly trading just a few years ago, and they “continue to grow at record setting levels.” The press release also noted that Epazz is currently in negotiations to acquire several other B2B software companies as part of its long-term strategic growth plan to acquire profitable B2B software companies. However, the press release did not mention net losses of $1,907k (2012) and $337k (2011) plus net income of $121k (2010). At the end of March, Epazz had just $14k in cash to cover $847k in current liabilities and $1,030k in long-term debt. Moreover and a day before the press release about earnings, Epazz reported the “Company's awareness of shareholders' frustrations” with the performance of the stock over the last few months and that notably, there is data that leads to the “possibility that over 100 million shares have been shorted in the month of July alone.” There was no mention about who was paying for all the promotions.
Pulse Network Inc (OTCBB: TPNI) Pats Itself on the Back
Small cap Pulse Network provides a cloud-based platform focused on content marketing and event solutions that helps clients ranging from Fortune 500 companies to small and mid-size companies boost awareness, drive lead generation and enhance client engagement through content marketing, campaign management and event registration with a social and digital backbone. On Friday, Pulse Network closed at $0.500 for a market cap of $45 million plus TPNI is up 42.9% since last May according to Google Finance.
What’s the Catch With Pulse Network Inc? According to various disclosures, a transaction or transactions of $7.5k have or will occur to mention Pulse Network in various investment newsletters. Last week, Pulse Network the Pulse Network issued two pat on the back type of press releases. Specifically, the Pulse Network announced that Robert Collins and Katherine Hee have joined the company as Content and Digital Strategy Director and Director of Business Development, respectively; plus the company issued a press release about its annual Inbound Marketing Summit that was just held in San Francisco where hundreds of experts in content marketing, social media mobile marketing and the latest Web tools came together to share their experience and to network. A quick look at Pulse Network’s financials for the fiscal years ending at the end of March reveals revenues of $3,757k (fiscal 2013) and $4,158k (fiscal 2012); net losses of $1,280k (fiscal 2013) and $37k (fiscal 2012); and $32k in cash to cover $2,238k in current liabilities and $3,383k in total liabilities at the end of March. That’s not exactly a great performance and I don’t see any press release from the company patting itself on the back for “achieving” it.