Zoompass Inc. (OTCMKTS: ZPAS), the Fintech business, was covered by the editorial team in this article and in this piece. Very recently, the market got to know some bad news. There has been communications regarding the potential promotional activity concerning ZPAS common stock. Thus, the editorial team decided that an update was necessary on this name. Have a look at the recent share price movements:SourceRecent developmentsThe following press releases were announced after we wrote our second piece on ZPAS. On May 8, 2017, it was put out that the company had received several commissions and payments for the delivery of the following units:
- commissions for the delivery of 6,000 mobility products through a sales agent agreement.
- commissions for the sale of 5,000 wireless routers through a separate agency.
- delivered 50,000 prepaid cards through its distribution partner.
- sold 50,000 cards for a unique new program for a national consumer brand.
The fact that the company is seeing an increase in the amount of units sold is positive. Thus, we expect a sales rebound in the next quarter. The business executive of the firm celebrated the news. From the words of the President, Steve Roberts, we selected the following remarkable comments:
"We are also extremely pleased with the developments on the prepaid cards solutions and look forward to the additional revenues generated from the additional prepaid cards entering into the marketplace." Source
Not all the news had been positive. One day later, on May 9, 2017, the company noted that the OTC Markets exchange had contacted the firm to notify that the exchange had identified a "promotional newsletter touting the Company and encouraging investors to purchase the Company's common stock". This is quite serious and is the main reason for this new update. Promoted stocks tend to rise because of the work of the stock promoter. But, later on, usually share price declines when the promo dollars dry up. The company states that it doesn't know anything about the stock promoter, but it did notice the increase in volume:
"During which time the Company's common stock, and volume of trading, rose at a steady and robust rate. Following the Company's forward stock split approved in mid-February of this year, the public announcements thereof shortly thereafter, and DWAC approval from the DTC in the middle of March, the Company's stock began trading actively in late-March. The Company is unaware of the full nature and content of the promotional newsletter and any related promotional activity, the responsible parties and the extent of the email newsletters' dissemination." Source
In addition, in the same press release, ZPAS noted that its directors and main shareholders had not been involved in any stock promotion activities:
"Officers, directors and, to the Company's knowledge, its controlling shareholders (i.e., shareholders owning 10% or more of the Company's securities), of which there are only two, have not, directly or indirectly, authorized or been involved in any way (including payment to a third-party) with the creation or distribution of promotional materials including the subject newsletter" Source
Finally, on May 11, 2017, the company issued another press release stating that the exchange had decided to list the ZPAS common stock on its OTC Pink Current Information. Additionally, the Caveat Emptor symbol has been placed in the company profile to warn investors about the stock promotion.Also, the company noted in the same communication, this warning does not imply that the press releases put out by the company are inaccurate, incomplete or insufficient in any way. But, some shareholders may have inflated the price of the stock, and its price may not represent the fair value of the company. As we said in this other article about another company that had been heavily promoted, this is a very bad sign that may make the share price collapse in the following days. Hence, traders need to trade ZPAS with extreme caution.ConclusionZPAS has released good news recently concerning its business, which we covered in this piece and in the previous ones. Market participants seemed to appreciate the news about the company and pushed up the price of the shares. Everything seemed to be going in the good direction until a few days ago, when the OTC Markets decided to place the Caveat Emptor symbol on the company's profile due to stock promotion. The stock promotion was most likely responsible for most of the share price run-up. This is bad news. Hence, we encourage investors to trade shares with caution. We will be updating our subscribers as soon as we know more. For the latest updates on ZPAS, sign up below!Disclosure: We have no position in ZPAS and have not been compensated for this article.
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