Portlogic Systems Inc. (OTCMKTS:PGSY) Receives a Caveat Emptor Badge
Portlogic Systems Inc. (OTCMKTS:PGSY) issued its latest press release mere minutes after Friday’s closing bell. It said that the company is working on a special video conferencing system. The press release informed us that it will support up to sixteen participants, it said that it will have HD quality, and it contained more technical terms and abbreviations than was strictly necessary. What it didn’t do was explain why there’s a Caveat Emptor sign on the company profile at the OTC Markets. We’ll now do our best to answer this question.
It’s not that difficult, really. The skull and crossbones badge was placed because of the massive paid promotion that’s been running for the last week or so. As we mentioned in some of our previous articles, a total budget of $200 thousand per week was set aside and part of it was spent on Breakaway Stocks’ massively optimistic landing page. Another portion was distributed among several promotional newsletters who are still trying to spread the word around. The latest email arrived about an hour before today’s opening bell and it was sent by Inside Wall Street Reporter who pocketed $10,000 for their efforts.
The OTC Markets saw the pump, they didn’t like it, and they placed the Jolly Roger flag on PGSY‘s profile. This happened after the end of Thursday’s session and, naturally enough, it had an effect on the ticker’s behavior on Friday. During the last session of the week PGSY lost more than a fifth of its market cap and it slid to a close of $0.91 per share. But how should that influence your investment decision?
Well, unlike an SEC suspension or a trading halt from FINRA, the Caveat Emptor won’t actually affect whether or not you can trade the stock. It’s a warning and as with all warnings, you can choose to ignore it.
You might reckon that Breakaway Stocks’ “PGSY is the next Skype” argument is simply too strong to dismiss. Don’t forget, however, that “the next Skype” wants to launch the brilliant new video conferencing system in a little more than a month and yet, its financial statement looks like this:
- cash: $1,156
- total assets: $63,473
- current liabilities: $1,118,203
- quarterly revenues: $122,768 (an 85% drop on a year-over-year basis)
- quarterly net loss: $39,650
Even if you reckon that the VoIP sector of the fiercely competitive IT industry can be turned on its head with what in this particular field is less than beer money, you still have to think about the fact that someone is splashing out on a paid pump. Once you dig a bit further into PGSY‘s SEC filings, you’ll see that for a selected few, investing in a promotion might not be such a bad idea, actually.
We’re talking, of course, about the people who received 2,250,000 shares of common stock at a rate of just $0.02 apiece several months ago. Actually, we’ve been talking about them since last week.
About thirty-five minutes after the opening bell, PGSY is traded at $0.80 per share (a further 12% in the red).
