After insiders divest themselves of billions of shares of stock, Epazz, Inc. thumbs its nose at sucker shareholders
October 22, 2014: In Canada, public companies are all required to be fully reporting, even on the Venture Exchange, which was the result of a conglomeration of a number of smaller exchanges, headed up by the morally questionable Vancouver Stock Exchange. If a company's financials are late, trading in the shares are halted with no exceptions and will not resume trading until such time as the financials have been fully updated, perhaps accompanied by some additional documentation as to the business' operations.
Perhaps it is time for the SEC to enact similar standards.
No example can better illustrate the need for stricter regulation than the recent shenanigans undertaken by Epazz, Inc. (EPAZ and EPAZD). Only on the OTCmarkets can one commit such a blatant act of fraud without repercussions. Even in the wildest of the wild west days of the Vancouver Stock Exchange there is no way one could have pulled off the stunt that these shysters have just pulled.
The red flags were out and waving briskly. As an SEC registered reporting company, EPAZ is required to file financials every quarter as Forms 10-Q and 10-K. The company hadn't filed a timely financial since May 2010. It seems that whenever the overdue financials were finally filed, lottery balls were used to generate the numbers as most were the subject of subsequent amendments, some issued almost a year later. The consistently delinquent filings earned the ticker a STOP Sign from OTCmarkets signifying a "No Information" status. Only recently was EPAZ able to regain its "Current Information" designation.
Predictably, and much like we pontificate within our article The Perils Of Investing In Companies With Delinquent Financials, the late financials were intended to delay the revelation of some ugly surprises. By way of example, the Form 10-K filing for the year ending December 2013, which was filed 2 1/2 months late, delivered the unsavory news that in the seven months between filings, an additional 3.33 billion shares of stock had been created. Not surprisingly, the late revelation was preceded by a two and a half month Pump & Dump effort, followed by another three week campaign, in order to create a market for all the new stock.
The also delinquent Form 10-Q filing which provided financials for the quarter ending June 30, 2014 informed us that as of September 29, 2014 there were 7,213,383,508 shares outstanding, an increase of 400 million shares since the July 13, 2014 filing of the 2013 year end. Another Pump & Dump campaign was used to divest many of those new shares just prior to the release of the 10-Q.
But all this was nothing. The big bamboozle was yet to come.
On October 6, 2014, came word through a Form 8-K filing that the stock would be reverse split on a one for 10,000 basis. A press release issued by the company on that same day, announcing a desired uplisting to the OTCQB, but failed to make any mention of the reverse split. Many shareholders woke up to the surprise that they owned one one hundredth of a percent of the shares of EPAZ that they went to bed owning.
Even more astounding, is that according to the 8-K, the one for 10,000 reverse split would result in 33,621,390 shares of the company being issued and outstanding. For this to be the end result a whopping 3,362,139,000,000 shares would have had to be outstanding immediately prior to the reverse split. For that to happen, an absurd 3,354,925,616,492 shares would have had to have been issued between September 29, 2014 and October 6, 2014! For those of you who don't wish to count commas, that's over 3.35 trillion shares created in just one week! That's an increase of over 46,500%! Naturally, the company offers no documentation or justification for the creation of those shares.
|EPAZ CEO Shaun Passley|
For those who bought shares in September at $.0001, the current post reverse split price of about $.20 represents a decline of 80% in share value. But over the last 15 months the trading range saw a high of $.0019 with billions of shares traded. Those are losses that should prove to be intolerable to the gullible public who bought into this scam. Moreover, it should be unacceptable to the regulators.
Only the most foolish of the foolhardy would expect anything but new and rampant dilution of this freshly washed, rinsed and now ready to repeat scam. It will be interesting to see if anybody's learned a lesson here as a new Pump & Dump campaign has already commenced on the reverse split stock, or if EPAZ and its masters will be called on the carpet.