Pulse Network Inc (OTCMKTS:TPNI) Goes Wild Thanks to a Free Pump
A few minutes before Friday’s opening bell, Damn Good Penny Picks as well as some of their affiliated newsletters decided that it will be a brilliant idea to tout Pulse Network Inc (OTCMKTS:TPNI). The emails said that the pumpers haven’t been compensated, but despite this, the effects of the promotion were absolutely profound.
A relatively small gap up at the open preceded an absolute explosion fifteen minutes later. TPNI skyrocketed out of sub-penny land and it reached an intraday high of almost $0.06 per share. It was clear to everyone that staying at these levels won’t be easy, but even so, few expected the drop to be quite as dramatic. TPNI quickly ran out of steam and it tumbled back down below the $0.01 per share mark. The week was closed at $0.008 which, while a hefty 33% above the value at the end of Thursday’s session, isn’t nearly as remarkable as the intraday peaks.
Basically, TPNI behaved like the typical promoted OTC stock. It surged in the right direction and made a few people happy, and then it plummeted down and made more than a few people unhappy. Normally, promoted OTC stocks tend to fade into obscurity once the pumpers are over with them. Can TPNI stand out from the crowd at least on that front?
Well, unlike many promoted penny stock ventures, TPNI has a revenue-generating business. In fact, by the low OTC standards, the sales figures are quite decent. Unfortunately, the rest of the financials aren’t. Here’s what the latest 10-Q looks like:
- cash: $59,689
- current assets: $313,245
- current liabilities: $6,195,620
- quarterly revenue: $1,319,810
- quarterly net loss: $424,207
Sales for the reported period are actually 20% down from the ones logged during the preceding quarter and a net profit is still nothing but a distant dream. This, in turn, leads to another problem.
For the most part, TPNI has been funding its operations through the sale of stock to its directors and officers. This has caused some dilution, but it must be said that the officers and directors probably won’t be in a hurry to unleash their shares on the open market. As you probably know, if insiders want to get rid of their stock, they need to file some forms with the SEC. Other people, however, are in a much better position.
The people in question hold a debenture which on June 30 had a principal amount of $122 thousand still outstanding and convertible at a 35% discount to the market price. On July 24, the people in question turned $14,000 worth of debt into 6,730,769 shares of common stock (a conversion rate of just over $0.002 per share).
With that in mind, reaching the pump-induced highs from Friday will be really hard. In fact, even staying at these levels might be a problem which is why carefully thinking through all the risks before initiating a position is really important.
